Scientific report: "The factors affecting the productivity of fabric and fabric channel selection consumption of fresh produce cloth in Thanh Ha district, Hai Duong Province, Vietnam" pptx

The study was designed to identify and estimate the effects of factors on lychee production and the choices of fresh lychee marketing channels of producers in Thanhha district, Haiduong

Factors affecting lychee productivity and the choices

of fresh lychee marketing channels of producers in Thanh

ha district, Hai duong province, Vietnam

Các yếu tố ảnh hưởng đến năng suất vải và sự lựa chọn kênh tiêu thụ vải tươi của người sản xuất vải ở huyện Thanh Hà, tỉnh Hải Dương, Việt Nam

Nguyen Anh Tru

Faculty of Accounting and Business Management

TÓM TẮT

Vải là một sản phẩm có giá trị cao, được trồng ở nhiều địa phương khác nhau ở Việt Nam như Hải Dương, Bắc Giang, Quảng Ninh, Lạng Sơn, v.v… Ở Việt Nam, vải được trồng đầu tiên ở huyện Thanh Hà, tỉnh Hải Dương Tuy nhiên, trong những năm gần đây thu nhập của người trồng vải có xu hướng giảm do ảnh hưởng của điều kiện thời tiết, sự tăng giá vật tư đầu vào (phân bón, thuốc bảo vệ thực vật, v.v…) và sự giảm giá của sản phẩm vải Mặt khác, người sản xuất phải đối mặt với nhiều khó khăn trong sản xuất, thu hoạch và tiêu thụ vải tươi Nghiên cứu này được thực hiện nhằm xác định và đánh giá ảnh hưởng của các yếu tố đến năng suất vải và lựa chọn các kênh tiêu thụ vải tươi của người sản xuất vải ở huyện Thanh Hà, tỉnh Hải Dương Các phương pháp nghiên cứu bao gồm lựa chọn địa điểm nghiên cứu, chọn mẫu và phân tích mô hình kinh tế lượng Trong phương pháp kinh tế lượng, hàm sản xuất Cobb-Douglas và mô hình logit đã được sử dụng để đánh giá ảnh hưởng của các yếu tố đến năng suất vải và lựa chọn kênh tiêu thụ vải tươi của người sản xuất vải ở huyện Thanh Hà, tỉnh Hải Dương

Từ khóa: Kênh tiêu thụ, logit, lựa chọn, năng suất, vải tươi

SUMMARY

Lychee is a high value commodity Lychee is planted in the different provinces in Vietnam such

as Haiduong, Bacgiang, Quangninh, Langson, etc Thanhha district in Haiduong province is considered as one of the original production areas of lychee in Vietnam However, benefits of lychee production in Thanhha district, Haiduong province tended to be declined in recent years because of climate, increasing in input prices (fertilizer, chemical, pesticides, etc.) and decreasing in lychee prices Lychee producers had to face therefore several challenges in production, postharvest and marketing of fresh lychee The study was designed to identify and estimate the effects of factors on lychee production and the choices of fresh lychee marketing channels of producers in Thanhha district, Haiduong province Research methodologies are used in the study consisted of selection of the study area, sampling design and econometric analysis In terms of econometric analysis, the Cobb-Douglas production function and the binary logit model are used to evaluate the effects of factors on the lychee productivity and the choices of fresh lychee marketing channels of producers in Thanhha district, Haiduong province

Key words: Choices, fresh lychee, logit, marketing channels, productivity

1 INTRODUCTION

Lychee is a high value commodity Hence,

commercial lychee growing has advantages to

improve the farmer’s income The profit generated

in producing lychee is estimated to be five times

more than that by rice production (Vandeveer,

2000)

With 14,000 hectares of planted area and

production of 21,813 tons, Haiduong becomes the

second largest lychee producing province after

Bacgiang province Additionally, Haiduong is

known as an origin of important varieties of lychee

in Vietnam such as Thieu, Thieu Thanhha and Lai

Thanhha After the economic transformation in the

country, production and marketing of fresh lychee

have changed In Thanhha district (Haiduong

province), there are various stakeholders who

participate in production, processing, marketing

and distribution of fresh lychee These included

growers, collectors, processors, wholesalers,

retailers and consumers

The study mentioned factors affecting lychee

productivity, included producers’ experience, and

number of family labor, capital, planted area,

manure, fertilizers, pesticides, density, gender and

participation in the lychee association In the other

word, several factors that affect the choices of fresh

lychee marketing channels of producers in Thanhha

district, Haiduong province, included producers’

experiences in lychee growing, number of family

labor, volume of lychee, selling prices, distance to

markets, gender of producers and participation in

the lychee association

In this study, influences of these factors are

estimated through applying the binary logit model

Research objectives

 Estimate the factors that affect the lychee

productivity in Thanhha district, Haiduong

province;

 Estimate the effects of factors on the

choices of fresh lychee marketing

channels of producers in Thanhha district,

Haiduong province

2 METHODS

2.1 Selection of the study area

The study covered Thanhha district (Haiduong

province) due to the following reasons: 1) Thanhha

district is known as an origin of lychee tree in

Vietnam; 2) the quality of lychee in Thanhha district is greater than that in other locations; 3) lychee planted area (5,600 hectares) and productivity (15,000 tons/year) in Thanhha are ranked as the second largest lychee production zone behind Chilinh district (Haiduong province); and 4) lychee distribution and marketing in Thanhha district has to face several challenges

2.2 Sampling design

According to Salvatore and Reagle (2002), a random sample size (n) is satisfied if it is at least equal

to 5% of the population size (N) and the number of observations is at least equal to 30 (n ≥ 30)

There are 25 communes (N = 25) in Thanhha district Lychee is cultivated in all of communes in Thanhha However, Thanhha is divided into three lychee cultivated zones consisting of zone 1 (5 communes), zone 2 (16 communes), and zone 3 (4 communes) Therefore, the study included only three communes in each zone (n = 3) Three communes (Thanhson, Thanhbinh and Viethong) were selected because: (1) farmers in these communes have more experiences in lychee cultivation compared to other locations; (2) these communes have the largest lychee planted area and highest lychee productivity in Thanhha district; (3) lychee markets are quite active in these communes; and (4) lychee planted area of each commune is over 60% of total agricultural area

According to the Chairman of three communes (Thanhson, Thanhbinh and Viethong), there are 880 lychee farms in Thanhson, 763 lychee farms in Thanhbinh and 679 lychee farms in Viethong Based on population above, the sample respondents given the criteria (n = 5%N; n ≥ 30) were selected: Thanhson commune (44 farmers); Thanhbinh commune (39 farmers); and Viethong commune (34 farmers) Lychee farmers were chosen randomly from the lists of farmers provided

by heads of villages Therefore, a total of 117 farmers were interviewed in the study (Figure 1)

2.3 Econometric analysis

2.3.1 The Cobb-Douglas production function

The Cobb-Douglas production function is used

to assess the impacts of determinants (explanatory variables) such as producers’ experience, number

of family labor, capital, planted area, manure, fertilizers, pesticides, density, gender and participation in the lychee association on the lychee productivity (dependent variable)

Figure 1 Number of lychee farmers interviewed in Thanhha district, Haiduong province, Vietnam

The Cobb-Douglas production function form:

Y = A.X1

α1

X2

α2

X3 α3

X4 α4

X5 α5

X6 α6

X7 α7

X8 α8

eβ1.D1 + β2.D2 +Ui (1)

Where:

Y: lychee productivity (kg/sao)

A: the intercept that reveals combined impact of

these fixed factors on lychee productivity

X1: producers’ experience in lychee growing

(years)

X2: family labor (person)

X3: started capital of farmers when growing

lychee (VND 1,000)

X4: planted area of lychee (sao)

X5: manure (kg/sao/year)

X6: fertilizers (kg/sao/year)

X7: pesticides (VND 1,000/sao/year)

X8: tree density (tree/sao)

D1: gender dummy variable (male = 1; female = 0)

D2: participation in the lychee association

dummy variable (member = 1; non-member = 0)

(α1,…, α8): coefficients of explanatory

variables (X1,…, X8)

β1: coefficient of gender dummy variable

β2: coefficient of participation in the lychee association dummy variable

e: natural lagarithms (e = 2.718) Ui: error term

Based on equation (1), we can transform the Cobb-Douglas function to logarithm form:

LnY = LnA + α1lnX1 + α2lnX2 + α3lnX3 + α4lnX4 + α5lnX5 + α6lnX6 + α7lnX7 + α8lnX8 +

β1D1 + β2D2 + Ui (2) Parameters (α1,…, α8) and (β1, β2) are estimated

by OLS (Ordinary Least Square) methodology through SPSS 12.0 program

2.3.2 The binary logit model

The binary logit model was applied to estimate the effects of explanatory variables on marketing channel choices of lychee producers (dependent variable) The explanatory variables affecting marketing channel choices of producers consisted

of producers’ experiences in lychee growing, number of family labor, volume of lychee, selling prices, distance to markets, gender of producers and participation in the lychee association Then, the

Thanhha district (n = 117)

Zone 1

Villages

Thanhson commune

(44 farmers)

Thanhbinh commune (39 farmers)

Viethong commune (34 farmers)

parameters were estimated by maximum likelihood

technique throughout the SPSS 12.0 program In

logit model, the dependent variable is generated

from binary response This model is based on the

cumulative logistic probability function It is used

assuming that the probability of an individual

making a choice is a linear function of the

individual attributes (Pindyck and Rubinfeld,

1981) The logit technique allows examination of

the effect of a number of variables on the

underlying probability of a dichotomous dependent

variable

In the binary logit model, marketing channel

choices of producers (dependent variable) obtained

2 values:

P = 0: if producers sell lychee to consumers

P = 1: if producers sell lychee to local collectors

Linear form of the logit function:

Ln[Pi/(1 – Pi)] = α + ßiXi + εi (3)

Where: i presents the individual i,

εi is error term

The parameters were estimated by maximum

likelihood technique The marginal effects of Xi on

Pi were measured by taking partial derivative of Pi

with respect to Xi In logit model, marginal effect

represents the change in probability affected by a

unit change in Xi, ceteris paribus

The logit function form:

Ln[Pi/(1 – Pi)] = αo + α1.X1 + α2.X2 + α3.X3 + α4.X4

+α5.X5 +β1.D1 + β2.D2 + εi (4)

Where:

Pi: the probability of marketing channel choices

αo: intercept, that implies the combined impact

of these fixed factors on decisions of

producers in marketing channel selection

X1: producers’ experiences in lychee growing

(years)

X2: number of family labor (person)

X3: volume of lychee (ton/year)

X4: selling prices (VND 1,000/kg)

X5: distance to markets (km)

D1: gender dummy variable (male = 1; female = 0)

D2: participation in the lychee association dummy

variable (member = 1; non-member = 0)

α1,…, α5: coefficients of explanatory variables

(X1,…,X5)

β1: coefficient of gender dummy variable

β2: coefficient of participation in the lychee

association dummy variable

εi: error term

3 RESULTS

3.1 Factors affecting the lychee productivity

In Thanhson commune

R squared equaled 0.866 implied that 86.6% changes of lychee productivity are affected by explanatory variables in the model and the rest (13.4%) changes due to other variables Producers’ experience, number of family labor, capital and gender had positive effects on lychee productivity 1% increasing in producers’ experience, number of family labor and capital, respectively led to increasing 1.59%, 20.45% and 0.01% in lychee productivity, respectively, ceteris paribus This implied that if producers have more experience, labor, and capital then they gain higher productivity Variables (planted area, manure and density) affected negatively lychee productivity 1% increasing in planted area, manure and density, respectively led to decreasing 3.66%, 0.32% and 15.71% in lychee productivity, respectively, ceteris paribus Other variables were not significant (Table 1)

In Thanhbinh commune

R squared equaled 0.764 implied that 76.4% changes of lychee productivity are affected by explanatory variables in the model and the rest (23.6%) changes due to other variables Producers’ experience, number of family labor and capital had positive effects on lychee productivity 1% increasing in producers’ experience, number of family labor and capital, respectively led to increasing 0.45%, 28.27% and 0.01% in lychee productivity, respectively, ceteris paribus This implied that if producers have more experience, labor, and capital then they gain higher productivity Other variables were not significant (Table 1)

In Viethong commune

R squared equaled 0.863 implied that 86.3% changes of lychee productivity are affected by explanatory variables in the model and the rest (13.7%) changes due to other variables Capital had positive effects on lychee productivity 1% increasing in capital led to increasing 0.02% in lychee productivity, ceteris paribus This implied that if producers use more capital then they gain higher productivity Density affected negatively lychee productivity 1% increasing in density led to decreasing 17.08% in lychee productivity Other variables were not significant (Table 1)

Table 1 Estimation of coefficients affecting lychee productivity in Thanhha district,

Haiduong province, Vietnam, 2007

(n = 44)

Thanhbinh (n = 39)

Viethong (n = 34)

Overall (n = 117)

Producers’ experience in lychee growing (years) 1.597** 0.456NS -0.623NS 1.078**

Number of family labor (person) 20.453*** 28.277** 2.588 NS 16.162***

Pesticides (VND 1,000/sao/year) -0.105NS -0.070NS 0.486NS -0.009NS

Participation in the lychee association dummy

NS

18.753NS 24.436NS 18.218**

Note: 1 sao equals 360 square meter

***, ** and * mean significant at the 1%, 5% and 10%, respectively

NS means not significant

Source: Based on survey data, 2007

In the overall model (Thanhha district)

R squared equaled 0.798 implied that 79.8%

changes of lychee productivity are explained by

explanatory variables in the model and the rest

(20.2%) changes of lychee productivity due to other

determinants Variables (producers’ experience,

number of family labor, capital, and participation in

the lychee association) had positive effects on

lychee productivity 1% increasing in producers’

experience, number of family labor and capital,

respectively led to increasing 1.07%, 16.16% and

0.01% in lychee productivity, respectively, ceteris

paribus This implied that if producers have more

experience, labor, and capital or they participate to

association then they gain higher productivity Variables (planted area and density) affected negatively lychee productivity 1% increasing in planted area and density, respectively led to decreasing 1.96% and 9.33% in lychee productivity, respectively, ceteris paribus If farmers have large planted area of lychee (30 sao) then it is so difficult for them to consider planting protection, irrigation, harvest, fertilizers and so on

On the other hand, some farmers planted lychee with a rich density (13 trees/sao) Based on scientists, the appropriate density of lychee tree was

8 trees per sao Therefore, they gained lower productivity compared to others Other variables were not significant (Table 1)

Table 2 Coefficients of the logit model on marketing channel choices of producers

in Thanhha district, Haiduong province, Vietnam, 2007

Producers’ experience in lychee growing (years) 0.027NS (α1) 1.027

Participation in the lychee association dummy variable -0.749NS (β 2) 0.473

Note: ***, ** and * mean significant at 1%, 5%, and 10%, respectively

NS means not significant

Source: Based on survey data, 2007

3.2 Influences of factors on the choices of fresh

lychee marketing channels

The binary logit model was used to estimate

the effects of explanatory variables on marketing

channel choices of producers (dependent variable)

Of 117 producers interviewed, 97 producers sold

fresh lychee to local collectors, whereas 20

producers traded these fruits to consumers

3.2.1 Influences of qualitative variables on the

choices of fresh lychee marketing channels

Assumption: β1 and β2 were coefficients of

qualitative variables in the model

Exp (B) of gender dummy variable was 2.792

(e1.027 = 2.7181.027)implied that the number of male

producers was greater than that of female producers

by 2.792 times (Table 2)

In the model, variables (producers’ experience

in lychee growing, number of family labor and

participation in the lychee association) were not

significant (Table 2)

3.2.2 Influences of quantitative variables on the

choices of fresh lychee marketing channels

Assumption: α1, …, α5 were coefficients of

quantitative variables in the model

In terms of quantitative variables, we could

measure the expected values by:

∂P/∂Xi = {Exp(Xi, α)/[1 + Exp(Xi, α)]2}.αi Let Exp(Xi, α) = a, we have:

∂P/∂Xi = [a/(1 + a)2].αi

 The effect of volume of lychee (X3) on marketing channel choices

∂P/∂X3 = [a/(1 + a)2].α3 = [0.992/(1 + 0.992)2](-0.008) = -0.002 = -0.2% implied that if the volume of lychee increases by 1 unit, then the probability of producers selling to local collectors decreases by 0.2%, ceteris paribus Because of excess supply of fresh lychee and the shorter storage time, producers have to sell fresh lychee as soon as possible (Table 2)

 The effect of price variable (X4) on marketing channel choices

∂P/∂X4 = [a/(1 + a)2].α4 = [0.848/(1 + 0.848)2](0.060) = 0.0148 = 1.48% implied that if the price increases by 1 unit, then the probability of producers selling to local collectors increases by 1.48%, ceteris paribus Because of the increase in price, producers prefer to sell to local collectors to reduce transportation cost, save time, and gain higher profits (Table 2)

 The effect of distance variable (X5) on marketing channel choices

∂P/∂X5 = [a/(1 + a)2].α5 = [0.791/(1 + 0.791)2](0.183) = 0.045 = 4.5% implied that if the distance increases by 1 unit, then the probability of producers selling to local collectors increases by

4.5%, ceteris paribus because producers want to

reduce transportation cost and save time (Table 2)

4 CONCLUSION AND POLICY

IMPLICATIONS

There were several factors affecting the

lychee productivity and the choices of fresh

lychee marketing of producers in Thanhha district,

Haiduong province In the overall model,

variables (producers’ experience, number of

family labor, capital, and participation in the

lychee association) had positive effects on lychee

productivity Variables (planted area and density)

affected negatively lychee productivity Other

variables were not significant In terms of the

binary logit model, results showed that selling

price, distance to market and gender dummy

variables had positive and significant influence on

the choices of marketing channels of lychee

producers Exp(B) of gender dummy variable was

2.792, implied that in terms of marketing channel

choices, the number of male producers was greater

than that of female producers by 2.792 times

Coefficient (α3 = -0.002) implied that if the

volume of lychee is increased by 1 unit, then the

probability of producers selling to local collectors

decreases by 0.2%, ceteris paribus Coefficient (α4

= 0.0148) implied that if the selling price

increases by 1 unit, then the probability of

producers selling to local collectors increases by

1.48%, ceteris paribus Coefficient (α5 = 0.045)

implied that if the distance to market increases by

1 unit, then the probability of producers selling to

local collectors increases by 4.5%, ceteris paribus

Other variables were not significant

Based on estimated coefficients in overall model (Thanh Ha district), lychee producers should increase labor force and capital as well as participation in the lychee association to improve lychee productivity In the other word, farmers should not plant lychee with a rich density because

of lower productivity

Volume of lychee, selling price and distance to market affected marketing choices of producers in terms of selling lychee Excess supply of fresh lychee led to decline in selling price If selling price and distance to market increase, then producers tend to sell fresh lychee to local collectors because they expect to reduce transportation cost and gain higher profit Transportation roads and distribution networks of fresh lychee should be reorganized to improve benefit of lychee producers

REFERENCES

Gujarati, D.N (2005) Basic Econometrics, 4th Edition Tata McGraw-Hill Publishing Company Limited, New Delhi, India

Haiduong Department of Agriculture and Rural Development (2006) Report on Aspects and Solutions for Improvement of Economic Efficiency of the Thieu Lychee Tree in Haiduong province

Hellin, J and M Meijer (2006) Guidelines for Value Chain Analysis Food and Agriculture Organization of the United Nations (FAO), Rome, Italy

Tru, N.A (2008) The Value Chain Analysis of Lychee in Haiduong Province, Vietnam MS Thesis at the University of the Philippines Los Banos, Philippines