Quarterly Journal of International Agriculture No. 3/13
Investments of Rural Households in Northeast Thailand and the Future of Small Scale Farming
Lena Hohfeld and Hermann Waibel
Leibniz Universität Hannover, Germany
Abstract
This paper analyses investments of some 2000 farm households in rural villages in
three provinces of Northeast Thailand. We use a multinomial logit model to analyse
the determinants of different types of investments in agriculture as well as small scale
enterprises and a hurdle model to investigate the intensity of investments in
agriculture. Results show that only 30% of rural households undertake investments and
most investments made are small. Only households with larger land sizes tend to
invest and wealthier households are more likely to invest larger amounts. Female
headed households, those with older household heads as well as households in remote
areas invest less. Access to finance increases the probability of investing in small scale
enterprises, but does not influence agricultural investments. Households with larger
investments in agriculture tend to not invest in non-farm activities. The paper
demonstrates implications for rural development and agricultural policy in Thailand
and other Asian emerging market economies.
Keywords: farm investments, hurdle model, Thailand, rural development, vulnerability to poverty
JEL: Q12, R11, O13, O12
Vol. 52 (2013), No. 3: 217-236