The effect of farm size on economic efficiency: a case study of Vietnamese pangasius farms

Despite an expansion of production, pangasius farmers have experienced economic challenges in Vietnam. The aim of this study was to identify optimum economic alternatives for pangasius farmers. A single-stage stochastic frontier analysis was used to estimate the economic efficiency of pangasius farms and investigate the farm size-economic efficiency relationship using cross-sectional data collected on Vietnamese pangasius farms. The study found a nonlinear relationship between farm size and economic efficiency, with economic efficiency increasing until the farm area reached a threshold of 26.9 ha, then falling due to transaction and agency costs under asymmetric information. The farming experience of the decision-makers negatively affected efficiency. Similar to previous studies, we found feed and fingerling costs were essential input factors for farms. Based on these results, we recommend three strategies for improving the economic efficiency of farms are: providing timely market information to farmers; determining the optimal farming scale depending upon the specific farmer's available resources; and using a good quality of fingerlings and feed.