Agricultural growth will require a transformation out of traditional production, low-input, low-productivity agriculture that characterizes most of rural developing countries. In Vietnam, many farmers have moved towards commercial agriculture, but the factors, progress, and impact of this phenomenon remain unclear. This study, therefore, targets an agricultural based area, Kon Tum Province, as a case study.

Situated on the Highlands in Vietnam and with ethnic minorities (Bana, Xedang, Gie Chieng, etc.) constitutes 54% of the total population, Kon Tum province is largely economically based on agriculture. Most smallholder farmers are still using the traditional cultivation using hoe technology and rely heavily on family labor as well as a large majority of the farmers operate at the subsistence, smallholder level, with intensive agriculture being uncommon.This leads to poor soil quality, low productivity and low market value in output markets for farmers. Thus, sustainable development of agriculture through smallholder commercialization enables farmers benefit from increased income and out of the subsistence-oriented agriculture that is considered as one of poverty reduction and rural development policies.. 

The main objective is to analyze the socio-demographic determinants, current levels, and the benefits or risks of market participation of smallholder farmers. Primary data was collected via survey through questionnaires, designed by multi-stage sampling method. A total of 334 households farmer were distributed from three communes in Dak Ha and Sa Thay districts. Data analysis involved the use of descriptive statistics and application of Logit model on SPSS software version 18.  

Descriptive findings indicated that the level of commercialization in the study area is very high for all farmers. The reason it is high even for the lower income farmers is linked to their need for cash more to purchase food as the other consumptions. The findings from the Logit regression analysis showed that gender, age, family labor, distance to nearest market, farm inputs, production level (in terms of value) and total landholding size played a significant role in output market participation decision. Moreover, the findings from two Stage Least Square (2SLS) estimations found that household production and consumption level (in value terms) were the key determinants of the degree of commercialization. Finally, the welfare outcomes of smallholder farmers at differing levels of commercialization were represented by expenditure on education, health, food, clothes and shoes from the findings of one-way ANOVA analysis. This means that smallholder farmers with higher degree of commercialization increased household consumption level. Therefore, the results showed farmers can be better integrated with the market if better support services are provided and efforts to enhance farmers‟ access to technology and assets are strengthened. It also revealed the significant of commercial agriculture to the improvement of productivity, per capita income and thereby the standard of living in the area. 

Some relevant policy implications can be drawn from the findings of this study that can help to design appropriate intervention mechanisms to improve the smallholder commercialization in the study area. Firstly, transforming the subsistence-oriented production system into a market-oriented production system as a way to increase the smallholder farmer‟s income and reduce rural poverty. Secondly, the fact that education level has become important determinants of farmers‟ participation in the output markets and suggests the role of policies geared towards keeping children at school and enhancing to eradicating illiteracy for ethnic minority groups. Lastly, there is need for investment in areas such as improvement of road networks, transport systems and setting up modern market infrastructure (i.e. station of processing/preservation, products collection points) through increased public investment.