Over the past 20 years, the focus of agricultural policy in Vietnam has shifted from achieving rice self-sufficiency (in the 1980s) to maximizing rice production and exports (through much of the 1990s) to promoting crop and income diversification (since the late 1990s). Diversification into high-value agricultural commodities is viewed as a key strategy to raising rural incomes and reducing rural poverty. As a result, the government has a number of programs and policies to promote new crops, particularly in the upland regions, which tend to be poor.

This study examines the patterns and trends in income diversification in the Northern Uplands of Vietnam, the poorest and most subsistence-oriented region of the country. How much diversification is occuring and which households are participating? How much does crop diversification contribute to income growth? What are the experiences and perceptions of farmers and local officials regarding government efforts to direct the process of crop diversification? To address these questions, we make use of three sources of data: provincial data on economic structure and agricultural production; household survey data from 1993, 1998, and 2002; and an IFPRI survey of farmers and local officials regarding their experiences with diversification.

The study finds that, although the Northern Uplands is poor, sparsely populated, and subsistence-oriented, it exhibits many of the trends found in the Vietnamese economy as a whole: rapid growth in GDP per capita, a falling share of agriculture in GDP, and an increasing share of crop production that is marketed. The share of land planted to rice has declined (though rice production per capita has risen), while the share allocated to fruit and tea has increased. The household survey data indicate that rural income growth has occurred through roughly proportional growth in crop income, non-crop agricultural income, and non-agricultural income. Crop diversification, defined as the shift from low-value to high-value crops, accounted for about 8 percent of the growth in crop income over 1993-98. Yield increases, particularly for rice and maize, were a much more important source of rural income growth. The diversification survey revealed a large majority of rural households have seen improvements in their standard of living, improvements they credit to various factors, most importantly higher crop yields. The survey also revealed frequent experimentation with new crops, although some of these experiments do not succeed. Failures are usually related to marketing problems. Farmers give high priority to government efforts to promote new crops, but even higher priority on support for existing crops. The implications of these findings for agricultural policy and programs are discussed.