How contracted tree farmers engage in and benefit from inclusive value chains: Evidence from Vietnam

In contrast to agricultural crops, long-term tree contract farming (CF) for high-quality timber production under sustainable forest practices contributes to social and economic development, as well as environmental conservation. However, there is limited understanding and insufficient literature on the motivations and benefits of tree growers participating in timber and its associated value chains. This study aims to address these gaps by examining the factors influencing tree grower participation in the tree CF model in Vietnam. We analyzed national panel data of 1272 timber plots in 12 provinces from 2008 to 2018 using penalized maximum likelihood estimation. Additionally, we conducted a local survey of 55 tree producers and stakeholders to compare the household financial performances under the contract versus non-contract and their benefits in the respective value chain. Our findings confirm that households benefit significantly from CF and gain more by delaying harvest for three additional years with forest certification, compared to harvesting timber at year five for woodchips. We recommend increased investment from international and national businesses, as well as government programs, to support tree CF. Future research should explore the roles and impacts of various stakeholders and intervention to better understand and improve tree CF and their inclusive value chains. • This study examines factors influencing smallholder participation in tree contract farming, financial performance and value chains. • Three-party timber CF enhances enterprise land access and secures raw materials, and increases household revenue. • Households continue harvesting young trees for low-profit woodchip production, limiting their potential for higher earnings. • Tree producers can triple their income with 8-year certified timber under CF compared to the 5-year woodchip production cycle. • Government and businesses should promote certified timber production under CF, with a focus on including impoverished households.