An Analysis of Relationship Quality and Loyalty Between Farmers and Agribusiness Companies in the Rice Industry: Using Multi-Group Analysis

Le Thi Dieu Hien and Jonghwa Kim ()
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Le Thi Dieu Hien: Department of Agricultural and Resource Economics, Kangwon National University, Chuncheon 24341, Republic of Korea
Jonghwa Kim: Department of Agricultural and Resource Economics, Kangwon National University, Chuncheon 24341, Republic of Korea

Agriculture, 2024, vol. 14, issue 12, 1-22

Abstract: Rice is an important agricultural product in Vietnam; however, the rice industry faces several challenges, particularly weak linkages between farmers and enterprises. The Vietnamese government has introduced the Large Field Model (LFM) program to improve cooperation between farmers and agribusiness companies. Despite these efforts, its implementation remains limited, and contract violations are common. This study investigated the factors affecting relationship quality (RQ) and loyalty (LO) between farmers and agricultural companies in the LFM, focusing on comparing cooperative and non-cooperative participating farmers. Using the Partial Least Squares–Multi-Group Analysis (PLS-MGA) method, this study assessed the different effects of factors such as price satisfaction (PS), payment terms (PTs), and support policies (SPs) on RQ and LO among two groups. The findings indicated that RQ has a stronger influence on LO in farmers with cooperative participation than those who exhibit non-cooperative participation. PS was the most significant factor influencing RQ in both groups, whereas PT was influential only for cooperative participating farmers. SP did not significantly affect RQ in either group. Finally, agricultural companies and policymakers should strengthen partnership management in agricultural supply chains by addressing gaps in support policies, developing appropriate pricing strategies, being flexible in negotiating payment terms, and improving the legal framework related to contract enforcement.

Keywords: Mekong Delta; PLS-MGA; relationship quality; loyalty; rice farmer (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2024
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