FACTORS AFFECTING INPUT PROCUREMENT IN DEBT OF RICEFARMERS IN AN GIANG PROVINCE

RESEARCH OBJECTIVESINTRODUCTION PURCHASE OF INPUTS IN DEBT AND DEFAULT OF RICE FARMERS FARMERS TO PROCURE INPUTS IN DEBT FOR RICE FARMERS TO AVOID GETTING INDEBTEDNESS AND DEFAULT... RE

FACTORS AFFECTING INPUT PROCUREMENT IN DEBT OF RICE FARMERS IN ANGIANG PROVINCE

MASTER PROJECT

TUTOR : DR NGUYEN MINH HA STUDENT: PHAN BA NGOC PHUONG – MBAVB4

FEBRUARY, 2012

RATIONALE OF THE STUDY

RATIONALE OF THE STUDY

INTRODUCTION

95% of farmers lack

of capital for production and they

fall in debt chronically

RATIONALE OF THE STUDY

INTRODUCTION

RESEARCH OBJECTIVES

INTRODUCTION

0 100 200 300 400 500 600

1990 1994 2000 2004 2008 2009 2010

Plant Protection import value (Mil USD)

RESEARCH OBJECTIVES

INTRODUCTION

PURCHASE OF INPUTS IN DEBT AND DEFAULT

OF RICE FARMERS

FARMERS TO PROCURE INPUTS IN DEBT

FOR RICE FARMERS TO AVOID GETTING INDEBTEDNESS AND DEFAULT

Theory #1:

The economy

is developed or inefficient.

under-Theory #2:

Poor people lack skills and abilities.

Theory #3:

Capitalism causes poverty

Theory #4:

Social and political force cause poverty

Theory #5:

Poor people make choices

Theory #6:

Social welfare programs cause poverty

Source: Blank (2003)

REVIEWING PREVIOUS STUDIES

INTRODUCTION PREVIOUS

STUDIES

RESEARCH METHODS

FARMERS IS THEIR POVERTY

DEBT HOLDINGS BY AGE FOLLOWS THE LIFE CIRCLE PATTERN IN ALL COUNTRIES

JONATHAN (2003)

KE & MALI (2008)

CREDIT (IN KIND OR IN CASH) DETERMINED

BY HOUSEHOLD HEAD, HOUSEHOLD SIZE, HOUSEHOLD INCOME, INPUT EXPENDITURE, AND FARMER’S EXPERIENCE IN FARMING

MOST LOANS FOR BUYING INPUTS &

MACHINERY RISE WITH FARM SIZESHAMIKA (2003)

THE OVERUSE OF INPUTS HAS CAUSED FARMERS TO FALL INTO DEBT

HELENA ET AL.,

(2003)

REVIEWING PREVIOUS STUDIES

INTRODUCTION PREVIOUS

STUDIES

RESEARCH METHODS

LOAN ET AL.,

(2011)

FARMERS FEEL COMPELLED TO DEAL WITH TRADRES WHO HAVE PREVIOUS FUNDED THEIR NEEDS OR WORKING CAPITAL IN PRODUCTION

NARAYANAMOOR

THY (2006)

THE PARALLEL INCREASE IN THE COST OF INPUTS UNDER THE LIBERALIZED TRADE REGIME AND INCOME DECLINE, LEADING

TO LOSES, DEBTS AND BANKRUPTCIES THE ROOT OF THE INDEBTEDNESS WAS INFORMAL MONEY LENDER WITH

EXORBITANT INTEREST RATEROSANNA ( 2003)

A CUMBERSOME PROCEDURE OF LOAN ISSUE, WHICH REQUIRES TIME AND

TRANSACTION COST, DISCOURAGES THE BORROWERS IN APPROACHING TO FORMAL FINANCIAL INSTITUTIONS FOR CREDIT

LAKHWINDER &

SINGH ( 2008)

H2 HOUSEHOLDER’S CHARACTERISTICS AFFECT POSITIVELY PURCHASE OF INPUTS IN DEBT

H3 HOUSEHOLDER’S EXPENDITURE HAS A POSITIVE IMPACT ON INPUTS PROCUREMENT IN DEBT

H4 FARM SIZE AND ASSET OF FARMERS AFFECT POSITIVELY PURCHASE OF INPUTS IN DEBT

H5 NATURAL CALAMITIES AND PESTILENT INSECT INFLUENCE

ON RICE FARMERS TO PROCURE INPUTS IN DEBT

RESEARCH METHODOLOGY

INTRODUCTION PREVIOUS

STUDIES

RESEARCH METHOD

_ RICE FARMERS IN 5 COMMUNES IN TINH BIEN DISTRICT, ANGIANG PROVINCE

_ SAMPLE SIZE: 250

TWO WEEKS FOR DATA COLLECTION

PART THREE

INTRODUCTION PREVIOUS

STUDIES

RESEARCH METHOD

DATA ANALYSIS PROCESS

INTRODUCTION PREVIOUS

STUDIES

RESEARCH METHOD

Input data in excel

Data test and initial processing

Transfer data into S.P.S.S software

Data analysis

Descriptive statistic (quantitative)

Regression analysis Sampling

statistic

PROPOSED RESEARCH MODEL

INTRODUCTION PREVIOUS

STUDIES

RESEARCH METHOD

Rice farmers purchase inputs indebt or on credit

Rice farmers’ low income and lack of capital for cultivation

Households' expenditure for living needs

Farm size and assets

Householder's characteristics

Consuming very inputs for crops

High input cost

Depending upon input traders

Bank's complicated procedures

Pestilent insects G1

DESCRIPTIVE STATISTICS

INTRODUCTION PREVIOUS

STUDIES RESEARCH METHOD EMPIRICAL RESULTS

MULTI CO-LINEARITY TEST

INTRODUCTION PREVIOUS

STUDIES RESEARCH METHOD EMPIRICAL RESULTS

REGRESSION MODEL HAS A DETECTION OF MULTI

CO-LINEARITY:

_ T-STATISTIC IS LOW

_ CORRELATION BWT CSE09 & CSE10 IS 0.97 (HIGH)

(SEE MORE IN APPENDIX 1)

Change Statistics

Watson

Durbin-R Square Change

F Change Change Sig F Model 1 0.739 0.546 0.494 8.245 0.546 10.560 0 1.435 Model 2 0.740 0.547 0.495 8.237 0.547 10.595 0 1.467

DURBIN – WATSON IS AT INTERVAL OF 1 TO 3 THERE IS NO

EVIDENCE OF AUTOCORRELATION IN THE RESIDUALS.

(NGUYEN TRI CAO & VU MINH CHAU, 2010; NGUYEN TRONG HOAI ET AL., 2009)

THE NULL HYPOTHESIS OF NO AUTOCORRELATION IS ACCEPTED.

EMPIRICAL RESULTS

INTRODUCTION PREVIOUS

STUDIES RESEARCH METHODS EMPIRICAL RESULTS

Variables Unstandardized Coefficients Standardized Coefficients Unstandardized Coefficients Standardized Coefficients

  B Std.Error Beta Sig B Std.Error Beta Sig.

has the same expectation as aforementioned and previous studies.

Reddy (2007): high cost, low remuneration, declining growth, and debt

impacts diectly and is positively proportional to

has the same direction in descriptive statistics & initial expectation.

Ke & Mali (2008): higher income, less spending because of a surplus.

has inversely relation to

has the same research expectation as mentioned in chapter two Farmers are prone to apply the sciencetific & technical progress has inversely propotional to

has not match with research expectation.

Shamika (2003): most loans for purchase of inputs rise with farm size

is positively propotional relation to

the un-standardized coefficient reflected research’s expectation.

Wan & Cratty (2007): bigger household size leads the poverty worst and lacks of capital for production -> procure inputs in debt

has positively propotion relationship to have the same expectation as forecasted in previous part.

Le (2002): householder pocesses many assets that has a higher repayment capacity and default may be lower.

are inversely prone to has the contrary to the research expectation.

Singh & Lakhwinder (2008):the root cause of the indebtedness was informal money lenders with exortbitant rate.

has positively propensity relation to

is evidenced through 99% level of confidence for regression coefficient Cash shortage

(+CSE)

INTRODUCTION PREVIOUS

STUDIES RESEARCH METHOD EMPIRICAL RESULTS CONCLUSION

Rice farmers purchase inputs in debt

Rice farmers’ low

income and lack of

capital for cultivation

Farm size and assets

Householder's

characteristics

High input cost

Depending upon input

traders

Cost shortage (+CSE)

Selling price (-RSP)

Interest of purchase

of inputs in debt (TIR)

Household size (+HHD)

Householder’s experience (-HHR)

Cost of rice production (+TCT)

Rice growing area (+RGL)

Asset’s pocession TVA) & (-RSA)

INTRODUCTION PREVIOUS

STUDIES RESEARCH METHOD EMPIRICAL RESULTS CONCLUSION

PRODUCTION COSTS (varieties, fertilizers, pesticides, rental land, land preparation, irrigation, after-harvest, etc) play important role in rice cultivation So rice

farmers have to use costs by the most effective way:

1 Variety: (1) Good quality for domestic & export market; (2) High-yield breeding; (3) short growing period, pest resistance, and tolerance diificult conditions.

2 Fertilizer & Pesticide: complying with dosage or technician’s recommendations as well as avoiding use expensive products which have the same ingredient concentration.

3 After-harvest (harvesting, collecting, threshing, drying, storage, transportaion, and milling): the rice farmer

should associate together to enhance agricultural mechanization & to build warehouse, drying ground, transportation means

INTRODUCTION PREVIOUS

STUDIES RESEARCH METHOD EMPIRICAL RESULTS CONCLUSION

GOVERNMENT’S ROLE: They should fix gaps in “rice value chain”:

1 Farm input aspect: Government should put more control over input distribution to

ensure kinds of input, input’s origin, quality, and selling price.

2 Rice farmer aspect: The government should release “floor selling price” to rice to protect paddy farmers’ income The government should expand lending for rice production

investment with preferential treatment by zero or very low interest rate.

3 Relevant Parties The government shoul provide or support capital and low interest rate

to relevant parties in rice value chain to help them in buiding warehouses, drying grounds, transportation means, teachnologies, export markets, and management skills

SELLING PRICE & PADDY GROWING EXPERIENCE : Paddy farmers should follow official instructions in synchronization that makes good image, quantity and quality for rice

 they will have seasonal and negotiable power

to their products

INTRODUCTION PREVIOUS

STUDIES RESEARCH METHOD EMPIRICAL RESULTS CONCLUSION

Chosen farmers may not represent the majority

THANKS FOR JO

INING!