Solution for pangasius market development in the mekong delta

There have been many difficulties and challenges in the process of catfish production and exports, such as the competition, commercial barriers, the unqualified breed, the instable out p

MINISTRY OF EDUCATION AND TRAINING

CANTHO UNIVERSITY

NGUYEN VAN THUAN

SOME SOLUTIONS FOR DEVELOPING THE MARKET OF PANGASIUS

IN MEKONG DELTA

A brief of the dissertation Major in Agricultural economics

Supervisor Assco Prof VO THANH DANH, PhD

2015

TABLE OF CONTENTS

CHAPTER 1 INTRODUCTION 1

1.1 RATIONAL 1

1.2 OBJECTIVE OF DISSERTATION 1

1.2.1 General purpose 1

1.2.2 Practical purpose 1

1.3 RESEARCH QUESTION 1

1.4 LIMITS OF DISSERTATION 1

1.4.1 The extent of the research 1

1.4.2 The locations of research 1

1.4.3 Objectives of the research 1

1.4.4 Subjects of the research 1

CHAPTER 2 LITERATURE REVIEW 2

CHAPTER 3 RESEARCH METHODOLOGY 2

3.1 RESEARCH DESIGN 2

3.2 DATA COLLECTION 4

3.2.1 Secondary data 4

3.2.2 PRIMARY DATA 4

3.3 DATA ANALYSIS 5

3.3.1 Descriptive statistics: 5

3.3.2 Discovery agent analysis method: 5

3.3.3 Confirmatory Factor Analysis- CFA 5

3.3.4.Recurrent analysis 5

CHAPTER 4 : RESULTS AND DISCUSSION 6

4.1 DESCRIPTION OF STUDY AREA 6

4.2 EVALUATION OF CURRENT PRODUCTION, PROCESS AND CONSUMTION OF PANGASIUS IN MK 7

4.2.1 Current production 7

4.2.2 Current process and consumption of catfish in MK 8

4.2.3 The difficulties of production, procee and consuming catfish 8

4.3 ANALYSIS OF PEPE’ MARKET STRUCTURE 8

4.3.1 Analysis of market structure (S) 8

4.3.2 Analysis of market Conduct 9

4.3.3 Analysis of the factors of Structure and Conduct to Performance9 4.4 ANALYSIS OF MARKET STRUCTURE OF PANGASIUS RAISERS 11

4.4.1 Analysis of market Structure (S) 11

4.4.2 Analysis of market Conduct (C) 12

4.4.3 Analysis of the affects on market structure, Conduct and its

effects 13

4.4.4 Conclusion of analyzed results: 15

4.5 SOLUTIONS FOR DEVELOPMENT OF CATFISH 17

CHAPTER 5: CONCLUSION AND PROPOSAL 18

5.1 CONCLUSION 18

5.2 RECOMMENDATION 19

CHAPTER 1 INTRODUCTION

1.1 RATIONAL

Pangasius industry is seen as one of the main aquacultural industry of the whole country in general, and of the Mekong Delta in particular because its export turn-over occupied 26% of total export turn-over of the whole aqualcultural industry [1] Thus, pangasius raising has strongly grown for the recent many years According to data from General Statistics Office of Vietnam (GSO), areas for pangasisus in 2013 came up 5,950 hectares, manifold in 2003 (2,700 hectares) [2] EU and North America are the biggest pangasisus importing markets, two main import-catfish markets, nearly 50% of total quantity and 50% of export turn-over [3]

However, pangasisus industry has faced problems of capital, while prices of inputs have highly increased accompanied with more and more tariff and non-tariff barriers from importing countries Although Pangasius Export Processing Enterprises (PEPEs) have given a lot of efforts in approaching many various importing countries, they seem not to be successful in facing trade barriers Generally, the problems as mentioned above more or less made changes in market structure and conduct of pangasius industry, and thus in market performance From the problems as mentioned above, the research on

“Solutions for development of pangasius market in Mekong Delta” becomes very necessary aiming to

urge this industry to develop stably and sustainably in the coming years

1.2 OBJECTIVE OF DISSERTATION

1.2.1 General purpose

Analyzing the activities of the catfish market and boosting it more effective in Mekong delta

1.2.2 Practical purpose

Following are the specific aims of this research:

(1) Analyzing the current situation of the catfish production and consumption in Mekong delta (2) Analyzing the structure of the catfish market in Mekong delta

(3) Identifying the influential factors affecting the effectiveness of the catfish markets

(4) Suggesting some solutions for upgrading the effectiveness of catfish

1.3 RESEARCH QUESTION

1 What are the advantages and disadvantages of the catfish production and consumption in Vietnam

2 What are the strategies for catfish competition market?

3 What are influential factors affecting to the market effectiveness?

1.4 LIMITS OF DISSERTATION

1.4.1 The extent of the research

The research focuses on the Catfish export in Mekong delta (MK) in Vietnam due to its quantity for export is about 97% Besides this research mainly focuses on the two imported markets, that is EU and North America with the total of more than 50%

1.4.2 The locations of research

The five cities or provinces with large scale of catfish production in the Mekong Delta are: An Giang, Dong Thap, Cantho, Ben tre and Vinh Long To the Ministry of Agriculture and Rural Development (MARD) the total area of catfish production is 5,477 hectares (5,018 hectares in MK); with the output of 930.690 tons (figure 14) The turn-over of the 5 locations is 859.303 tons (92% of the MK) (4) That is the reason why the research is focused on these 5 locations (Index 1.1)

1.4.3 Objectives of the research

Asian catfish market structure and its effective activities of catfish market in MK

1.4.4 Subjects of the research

The catfish aqua cultural households, processing and exporting businesses are the two subjects to be researched

CHAPTER 2 LITERATURE REVIEW

The structure of SCP (Structure-Conduct-Performance) has been applied, it describes and indicates the changes in market structure to the change activities of market producers directing to the practical results such as the price, the product quality and its new product values The changes in the Structure (S) possibly influence directly or indirectly to the Performance (P) through the Conduct (C) There is the mutual interaction among this structure of SCP that leads to different results For example the research on the different activities of fishery businesses

Structure SCP has been applied in doing research in different fields such as: Gronhaug 1984 (5), Craene, 1995 (6), Jasjko 1999 (7), Egdell, 2000 (8), Delome, 2002 (9) and Cabral, 2003 (10) Those researchers have mentioned about the market structure influencing to the market effectiveness such as the quantity, the scale of factors influenced to the quality of the products, the import and export barriers Also the Performance factor influenced to the integrated mechanism of market and price policy involved

in the process The Conduct factor influenced to the increase or decrease of the product, the improved quality, the effects of improvement and investment, variety of products, prices and stable jobs to do

Many other domestic researchers applied the SCP structure For examples: Luu tien Thuan, 2005(11); Nguyen phu Son, 2007 (12); Le xuan Sinh, 2007 (13); Vo thi Thanh Loc, 2009 (14) Nguyen tri Khiem, 2010 (15) Le nguyen Doan Khoi, 2011 (16); Le gia Nho& Nguyen phu Son, 2011(4); Le xuan Sinh ,2011 (17) With different researches applied with structure SPC, the relation of cause and effect can be found in market activities and its effects, and also the variables in market activities There have been many difficulties and challenges in the process of catfish production and exports, such as the competition, commercial barriers, the unqualified breed, the instable out put prices, the dishonesty of some businesses, the risks of pollution in fish raising and processing, the limit of approaching new markets and business administration Those above mentioned are all studied in this research

Through literature review, research methodology, the study structure are all related to fishery market in Vietnam, the researcher is applying the SCP structure to do this research with the following reasons: (1) SCP has been applying spread in Vietnam; (2) SCP is suitable to the catfish market in Vietnam at the moment (3) This structure is relatively simple, can be easily combined with other financial data analysis indicating the panorama of catfish in MK So the methodology and other measures in doing this research will be introduced in the following chapter, chapter 3

CHAPTER 3 RESEARCH METHODOLOGY

In this diagram, the factors are supposed to influence on the factor of market Among of them, the international competition (S1) is expected to influence actively in direct or in indirect on the

production (P1) The more international competition increase the more the fish raisers and businesses make higher qualified, various, added value products The international competition can be seen through advertisements, price deduction and polishing its trade marks Competition also directly influences to market performance ( C) such as the strategy of business of producers (C1) like upgrading products, technological process, fixing the price, improving the distribution network or increasing the expenses for advertisement and promotion Competition also actively influences to the process of production ensuring the output products (C2) As the customers requirements of better, safer, more stable products, the quality assurance and environment protection must be focused The competition influences to the choice

of in-put raw material providers with its prestige and higher quality (C3)

Figure 3.1 Design of Eleni theory, 2009

The State policies are closely related to the encouragement of infrastructure improvement to overcome the polluted water resources, modern production assembly line, standard quality products, encouraging the linkage between the raisers and businessmen in using healthy breeds It is also supposed

to influence to the 3 variables (C) mentioned above The expenses of production and process in the

(C 1 )

Product assurance

(C 2 )

Usage of input materials

(C 3 )

Product effectiveness

(P 1 )

Price effectiveness

(P 2 )

structure (S3) also influence to the variables (C) The aqua cultural food, qualified breeders, epidemics, undergoing any change greatly affect on the output prices Besides the short of the capital, the certification of qualified products of course effects to the raisers and businessmen (C)

Finally, the advantages of competition (S4) such as the needs of catfish consumption in Vietnam, the barriers of custom and non- customs, the increase of business and negative competition is a great deal of matters to the producers and businessmen The structure hereby is expected that the market activities of the raisers and businessmen (C) are effective to the prices (P2), the quality of the products (P1) All these variables are measured by Likert measurement

3.2.2 PRIMARY DATA

3.2.2.1 Identification of survey pattern

Catfish raising households have been changed greatly, encountered difficulties so when carrying out the survey, the collected survey patterns came up to just 9 % of 3.033 households, about

262 households with the divergence of 6% The collected data patterns counted on Slovin’s formula

n = N/(1+Ne2) = 3.033(/1+3.033x0,062) = 262 households

3.2.2.2 Sample collecting method

Sample survey collected through multiple-step method First step: Cluster Sampling: Allocated and listed out the villages and districts with large raising areas households In each province the researcher selected one typical district with large raising areas For example: In Dong Thap province, there are Lai Vung and Chau Thanh selected districts; In An Giang with Chau Phu and Phu Tan; In Cantho with On mon, Thot Not and Vinh Thanh; In Vinh Long with Mang Thich, Vung Liem; In Ben Tre with Chau Thanh, Cho Lach and Giong Trom Among of 262 selected households, the researcher got 40 survey samples Just a few of selected samples in Ben Tre province due to most of the raising households have contracted with companies in raising catfish The survey samples are shown in Table 3.1 Step 2: After identifying the number of samples in each province, the following step is the at random data collection The research used Rand Function with Excel software in showing the list of the household done in step 1 attached in Table 3.3

Table 3.1 Survey samples in 5 provinces

3.2.2.3 Data collection methodology

* Interview of productive households

Some Catfish raising households were selected at random using direct interview and available questionnaires

* Interview of process and export businesses

The process and export business were interviewed using the method of integrated chains sourced from the catfish raising households

* Interview of different agents involved in the chain of catfish production and consumption This method learns much about the agents involved in the chain of production by using questionnaires The interviewees were fish breed providers, aqua materials, food and medicines, fishery administrative officials at the local, traders, and aqua experts

3.3 DATA ANALYSIS

3.3.1 Descriptive statistics:

Descriptive statistics applied in research to reach the aims 1 and 2 to describe the productive and consuming catfish research locations; to describe the data used in the structure, the situations of production, consumption, business, income of different agents involved in the catfish raising in MK Descriptive statistics generalize the measurements, data description, tables of frequency analysis, development index, The Mean, The Max and STD Deviation

3.3.2 Discovery agent analysis method:

SERVPERF measurement

SERVPERF measurement is the derivation of SERVQUAL introduced by Cronin & Taylor (1992) identifying the quality of service by measuring perception service instead of using measurement of SERVQUAL They assumed that the quality of service reflected by perception quality without expected quality as well as the estimation of the 5 values Paying attention that the source of SERVQUAL, the other elements and the surveyed variables of SERVPERF like SERVQUAL This measurement is named Perception Model

- Reliability of Cronbach’s alpha

Assuring the reliability excludes incorrect variables then goes on the analysis of different factors Assuring reliability of variables related to the market structure, performance and market effectiveness of the raisers and business as in the Appendix 3.1 and 3.2, based on the coefficient of Cronbach’s alpha of variables measurement The coefficient of variables lower-achieving 0, 3 will be excluded To the researcher, a good measurement is in the range of 0, 7-0,8 To Nulnally and Bernstein (1994) an accepted measurement is much more or equal to 00, 6

- Exploratory Factor Analysis- EFA

This method is applied to identify the category of structure evaluation, the performance and market effectiveness of the two agents: the raisers and the process and export businesses

Exploratory Factor Analysis belongs to multi variables analyzed and technically independent, it means there are no dependent and independent variables but it has a kind of interrelationships between the two EFA used to reduce survey variables K turns to be more significant F ( F<k) The deduction bases on the linear relation of different factors and survey variables

3.3.3 Confirmatory Factor Analysis- CFA

Confirmatory Factor Analysis applied to assure measured variables representatives for good constructs The CFA is the following step of EFA CFA is applied to reconfirm mono and poly variables converging and distinguished values of the measure to evaluate effective market of productive households and process and export businesses in MK

3.3.4.Recurrent analysis

The application of recurrent analysis to reach the aim 4 including 3 steps Step 1: Recur renting all variables of Structure market (from S1 to S4) has an indirect impact on Conduct (P1 and P2) and all

variables of Performance market (C5 to C7) has the impact on the variables of P1 and P2 The equation

of Recurrent applied in this step (applied OLS)

Ph = a0 + b Si

i i

∑

= 4

1

+ c Cj j

j

∑

= 3

1

+ e (1)

a bi (i= 1,2,3,4) and cj (j=1,2,3) is bêta cofefficient and e is error

b P is the indicator of effectiveness of market performance

c Si is the variables of market structure thứ i

d Cj: is the variables of market conduct thứ j

e h = 1,2 (1: the effect of variety of products; 2 the effect of price )

The followings are the Recurrent coefficient based on Equation 1

Step 2: Some of the variables connected in Equation 1 could be not statistically significant Through the improvement of structure, the connection will be excluded and then turn into a form of new Recurrent Equation The following Equation shows direct impact on dependent and independent variables Step 3:

To replace the result of coefficient (2) into coefficient (1) there will be final result

Cm = d0 + f Si

i i

∑

= 4

1

+ e (m≠j) (2)

- m = 1,2,3 and j = 1,2,3; Cm và Cj: Variables of market Performance thứ m

- Si: Variables of market Structure thứ i

- fi và gj is beta coefficient of indepent variables and e is error

CHAPTER 4 : RESULTS AND DISCUSSION

4.1 DESCRIPTION OF STUDY AREA

The natural conditions in Mekong delta ( MK) create favorable conditions to develop catfish Geographically speaking, there are many extended areas with deposites of silt, islets along the bank of Hau and Tien rivers and in river branches so the water irrigation is a great advantage: Heavy soil, silt are water absorbed with low acidity in soil Besides the water exchange is favorable thanks to the daily tides Waterlogging is not a matter in rainy season, neither the shortage of water in the dry The quality

of water is good with the acidity below 0,4 % The suitable areas for fish raising include An Giang, Dong Thap, Cantho, Vinh Long provinces Those locations are mainly silt soil, lying along large river with good-quality water and favorable water drainage and the level of over-flooded water is just about 0,5 – 2 m So the intensive aqua culture concetration in those areas (Tien Giang, Ben Tre, Tra Vinh, Soc trang and Hau Giang) are potentially developed

MK with relatively favorable socio-economical conditions can develop greatly the catfish raising With abundent labor forces, increasing aqua product quality, applying modern production techniques …the expansion of scale production in those areas is advangeous The trend of shifting from agriculture to fishery also shows the potiential of fishery development in MK Although the infra structure ( power and transportation ) has been improved recently, the much more needs for production are still existing

4.2 EVALUATION OF CURRENT PRODUCTION, PROCESS AND CONSUMTION OF

PANGASIUS IN MK

4.2.1 Current production

The areas of catfish raising in MK has reduced from 6.012 hectare in 2008 to 5.477 hectare in

2013, about 3,4 % per year In 2008 , “boom” development, the areas of raising catfish was 6.012 hectares and then gradually reduced to 4.951 hectares in 2011 In 2012 due to export market recovery, high purchases of raw materials from the raisers made a great deal of raising hectares up to 5.469 At the end of 2013 the area was 5.477 hectares Among it 5.000 hectares were in 5 provinces : An Giang, Dong Thap, Cantho, Vinh long and Ben tre ( appendix 1.1 )

Up to the year of 2012, there were 3 kinds of catfish production: household / farm with 1.748,4 hectares ( 48 % ); business with 1.761,6 hec ( 49.1 % ); cooperative with 77,3 hec ( 2,2 %) ( Results of survey of NTTS in 2012) In 2013, household / farm reduced to36,2%; Cooperative with 4,1% and business increase 59,7 % ( Provincial Department of Agriculture and Rural Development in 2013 ) ( except Kien Giang and Soc trang) It is found that catfish production needs capital and whenever the prices change unfavorably, the household and cooperative could not maintain the stable production and they turned to be wage-earners for businessmen or investors

Though the gradually reduction of aqua cultivation areas, the production quantity has increased with slow tempo, just around 0,4 % per year The highest productivity of catfish raising areas is about 300-400 ton/hec in islet areas in river Far off the river area the productivity is about 150-200 ton/hec The average size of catfish is about 0,7- 1,2 kg / fish for the first harvest, and 0,8 – 1,1kg / fish for the second harvest

Turn-over catfish raised in 2013 was over 1 million tons, among of it Dong Thap 33%, An Giang 21% Ben Tre 14%, Cantho 13 % and Vinh Long 9% These 5 provinces reached 90% catfish as raw materials of MK Through the survey of 262 households in research areas of those 5 provinces it is found that their ages and experiences suitable to the development in now-aday competative situations The percentage of wage-earners is still high Generally speaking, the labor force, productive areas and capital are still limited so the aqua culture is just small and unplanned scale

The catfish production is a complicated process Different raising housholds breed fish in water

in different time, as well as the time of crop harvest The big businesses produce fish in large scale but they could not find potiential customers so they have to alternately breed fish in water in different raising ponds

At the moment, in the MK the fish breed providers are still limited in number and in quality The fish raiser hardly find healthy fish breeders The households use fish breed size of different levels ( smallest less than 0,5 cm, biggest one is 4 cm) leading to the great expenses of different levels ( 90 millions ) The average capital investment is about 450 millions/ ha The percentage of undergoing a loss

is high ( 24%); in some cases come up to 90% Most of households use process aqua food about 79% The others use home-made food or either of the two The price of home-made aqua food is about ¾ of the process one ( 8.500 VND/kg compared to 11.710 VND/ kg ) By the survey it is known that the home-made aqua food mainly are rice bran, dried seafish, soya and potatoe powders

Nowaday the trend of cosumption in the world focuses on the clean and sustainable material resources It means the catfish products to be process by the standard to ensure the safety and sustainability of products However, on site of survey there was just 19,8 % of production households applied one or more than one standards requested VietGap standard has been applied the most, the other standards are BMP, GlobalGap, ASC and BAP

To sum up, the current catfish production in MK is still insfficient due to the short of productive plans in right time, the quality of fish breed, the clean and healthy fish breed, the standard of process production The system of aqua food providing is good and abundant, especially creating more favorable conditions for producers with financial assistance policies The process of production is still in a small scale, lacking of the econmic cooperation although the assistance of local authorities, internationl projects, programs of upgrading the capacity of production have greatly contributed to catfish production Also, the producers have received market information and prices from different media

4.2.2 Current process and consumption of catfish in MK

In 2012 the catfish for export reduced 2,3 % of the total out-put of fishery for export compared to the year of 2011 Shrimp for export reduced from 14,7 % (2011) to 17,1% (2012) of total out-put of fishery Since November 2012 the total out-put of fishery has increased 1,9% compare to the year of 2011, but the total out-put for export of catfish and shrimp have gradually reduced 5,2 % and 5,4% ( table4.5 ) Table 4.22 shows that catfish and shrimp are stategic products for export in Vietnam, reaching 2/3 total out-put of fishery for export

About the catfish, in 2013 there were 3 leading companies for export : Vinh Hoan An Giang fishery for export, and Hung Vuong companies Those 3 companies reached 33,6 % the total out-put fishery for export among 20 other leading companies in the country It is known that the catfish production is with medium range of competition in export is not so tense The instable markets of export, needs of consumption, prices of import… so the fishery development depends mainly on the top 20 companies

4.2.3 The difficulties of production, procee and consuming catfish

In the process of catfish ,as raw material, the households and businesses have encountered many difficulties: the instable out-put prices, the increasing price of fish breed, the low quality fish breed, diseases, the lack of capital for production The most difficulty is the instable prices to buy domestic catfish as raw material for production To sum up, the situation of catfish for export in 2012 is going down since the beginning of 2012 Turn-over of export from 2,8 USD/kg in January down to 2,4 USD/kg compared to the year of 2011 the main reason for this reduction is because of the economic crisis of the 2 markets of EU and North America in the year of 2012

4.3 ANALYSIS OF PEPE’ MARKET STRUCTURE

4.3.1 Analysis of market structure (S)

After checking the agree with the measurement of market structure ( S) market conduct ( C) and market performance( P) the process and export catfish businesses go on the analysis of EFA and CFA The results show that there are 4 factors of S in the model including (1) domestic and foreign competition (2) State policies for encouraging the quality assurance of the products and the cooperation

of businesses (3) competition capacity of business ( 4) Technical barriers Among of them, group 1 consists of 4 variables; group 2 consists of 3 variables; group 3 consists of 3 variables and group 4 with

2 variables ( figure 4.3.1)

4.3.2 Analysis of market Conduct

Like the analysis of structure in figure 4.3.1 The results of Conduct show 2 factors: The change

of recognition to market orientation (2) Investing money to protect environment and managing the output quality Among of them, the factor C1 was with 5 variables, factor C2 was with 5 variables, shown in figure 4.3.4 These 2 variables are transferred to recurrent Equation of Performance (P) in the following step These variables are shown in figure 4.3.2

Figure 4.3.2 Results of CFA (1st time) of C measurement (standard)

4.3.3 Analysis of the factors of Structure and Conduct to Performance

4.3.31 Recurrent variables of Performance (P) to Structure (S) and Conduct (C)

The measuring variables of results of market Performance of catfish process and export (P1 and P2) and the variables of Structure (S) and Conduct (C) has been identified with 4 factors of S including (1) domestic and foreign competitors (2) State policies for encouraging the quality assurance of the products and the cooperation of businesses (3) competition capacity of business ( 4) Technical barriers

of imported countries with 2 factors ©: (1) The change of recognition to market orientation (2) Investing money to protect environment and managing the output quality So the recurrent variables are shown as followed:

Ph = a0 + b Si

i i

∑

= 3

1

+ c Cj j

j

∑

= 2

After analyzing the relation of variables in the model, results of analysis shows the indepent

variables in the model with multi added linear (with Pearson coefficient of relation < 0,8) ( Index

4.3.7).So independent variables S1, S2, S3, S4, C1 và C2 to recurrent model 4.3.8 is reasonable

Result of analysis of recurrent equation 4.3.8 showing in detail in index 4.3.3 và 4.3.4, and revealed

the following equation :

P1 = -0,079S1 + 0,177S2 + 0,133S3 - 0,081S4 + 0,623C1 + 0,161C2 (4.3.9)

(-0,703) (1,309) (0,754) (-0,456) (3,307) (1,125)

Result of equation 4.3.9 shows the variables of C1 affects statistically 5% on P1 variable The change of business recognition of market orientation affects actively in qualified product production to meet the market needs About Effective variables of price, the result of analysis shown in equation 4.3.10 :

P2 = 0,341S1 -0,391S2 +0,382S3 +0,084S4 +0,214C1 - 0,102C2 (4.3.10)

(1,522) (-1,446) (1,083) (0,239) (0,569) (0,359)

The results of equation 4.3.10 shows the changes in market Structure as well as in Performance affect nothing to the prices of catfish sale That is really true to the situations of catfish consumption of process and export businesses in Vietnam The prices completely depend on the buyers In the survey, the businessmen believed that was the lack of the linkage of business Added to this, the role and market approaching of VASEP is very weak and limit in finding better market The effort of product advertisement is still passive, leading to hardly finding new output products

So the results of these analyses are really true in reality Although State has given out many policies for encouragement, the effects are still limit, especially a good price deserved for their efforts in doing business with new critical thinking and with high quality products

4.3.3.2 Recurrent variables of Performance

By the theory and practical, in the process of market Performance, the market activities done by business affected by the changes of Structure and the upgraded effectiveness of market To verify this issue, the researcher analyzed the recurrent multi variables of C variable to S Structure variable and among of C variables

Ch = a0 + b Si

i i

∑

= 3

1

+ c Cj

h j j

C1 = 0,102S1 + 0,255S2 + 0,280S3 -0,016S4 + 0,461C2 (4.3.12)

(0,886) (2,003) (1,596) (-0,088) (3,890)

The results show that the investion for environment protection and quality assurance affect actively

on the changes of business recognition of market orientation That is true in reality, based on businesses

‘s opinions they beileive that the serious recgulation of quality assurance make change the leaders’ and workers’ awareness in business with the view point “ Selling out what the markets need, not what the businesses possess ”

C2 = -0,005S1 +0,026S2 + 0,239S3 -0,314S4 + 0,798C1 (4.3.13)

(-0,032) (0,142) (1,004) (-1,336) (3,890)

The results of Equation 4.3.13 shows C1 variable affects to the significance of C2 about 1% It means the change of recognition of market orientation in doing business affects actively on business in investing expenses for environment protection, waste water treatment, enhancing the quality assurance

to ensure the quality of output products followed the State policies

4.3.4 Conclusion of analysis results:

By the analysis research, the model showing the relationship between variables of (S) and (C) and (P) in figure 4.3.5

Figure 4.3.5 shows the change of recognition of market orientation in doing business affects actively on business in investing expenses for environment protection, waste water treatment, enhancing the quality assurance to ensure the quality of output products

Figure 4.3.3 shows the active interaction of the change of recognition of market orientation in doing business affects actively on business in investing expenses for environment protection, waste water treatment, enhancing the quality assurance to ensure the quality of output products

Figure 4.3.3 SCP model of PEPEs

4.4 ANALYSIS OF MARKET STRUCTURE OF PANGASIUS RAISERS

4.4.1 Analysis of market Structure (S)

After checking the suitability of measurement as well as the analysis of EFA and CFA, it is found that the 5 factors of (S) are all analyzed including groups : (1) international competition; technical and commercial barriers (3) Policy of quality product and breed guarantee (4) environment production; (5) the linkage of production and consumption Among of them, group 1 with 4 variables; group 2 with

0,623 0,789

2variables; group 3 with 2 variables, group 4 with 3 variables and group 5 with 1 variable The groups of elemental variables and surveyed variables show in Figure 4.4.2

Figure 4.4.2 Results of CFA (5 th time) of S measurement (standard)

4.4.2 Analysis of market Conduct (C)

As the process done with S variables, the check of measurement, the analysis of EFA and CFA,

it is found that there are 5 group C in the model including (1) the change of business recognition (2) Ensuring hygienic condition in production (3) Enhancing checking quality product (4) Selecting prestige input material providers (5) Investing expenses for environmental protection Among of them, group 1 with 6 surveyed variables; group 2 with 4; group 3 with 2; group 4 with 4 and group 5 with 3 The interrelated among C variables shows in figure 4.4.3 and the followed equations:

Figure 4.4.3.CFA Results ( 3rd times)of C standard measurement

4.4.3 Analysis of the affects on market structure, Conduct and its effects

4.4.3.1 Recurrent variables results of Performance (P) on Structure (S) and Conduct (C)

The measurement of P variables of catfish raising households (P1) (P2) , S variables and C variables has been identified with 5 S variables: S1 International competition; S2 technical and commercial barriers S3 Policy of quality product and breed guarantee S4 environment production protection; (5) the linkage of production and consumption are factors come from the analysis confirmed; and the 5 C variables: (C1) the change of business recognition (C 2) Ensuring hygienic condition in production (C3) Enhancing checking quality product (C4) Selecting prestige input material providers (C5) Investing expenses for environmental protection So the model of recurrent multi variables shows

in the following equation:

j

∑

= 5

1

+ e (4.4.7)

Among, h = 1 and 2 (1: effective product (qualified product); 2: effective prices (good price)

i = 1,2,3,4; j = 1,2,3,4,5; e là sai số đo lường

Result of analysis of recurrent equation 4.4.7 shown in Index 4.4.6 và 4.4.7, and shown in the

a change of qualified products to the market requirement, an overcome of technical barriers from the buyers and the hot international competitiors A typical example, some raising households have applied the standard of production issued by ASC (Aquaculture Stewardship Council) and current applied the best standard of fishery BAP( The Best Aquaculture Practices) Although the consumption of this

current applied standard for production is still limit , just about 20-30% of export catfish turn-over It could be the productivity applied this standard is not very high or the little need of consumers in different imported countries

4.4.3.2 Recurrent variables of Conduct market (C)

Analysis of used recurrent variables and its relation to C variables and S variables and among C variables eachothers bases on the following recurrent variables :

Ch = a0 + b Si

i i

∑

= 4

1

+ c Cj j

j

∑

= 5

1

+ e (4.4.10)

Among, h = 1,2,3,4,5 (1: Change of business recognition 2: Safe and hygienic production 3: Enhancing checking product quality 4: Selecting prestige investors 5: Investing for environment protection

i = 1,2,3,4,5; j = 1,2,3,4,5 (j≠h); e is error

After analyzing the relation of variables in the model, results of analysis shows the indepent

variables in the model with multi-added linear (with Pearson coefficient of relation < 0,8) ( Index

4.3.9.So independent variables S1, S2, S3, S4,S5,C1,C2,C3,C4 and C5 in recurrent model 4.4.10 is reasonable Result of analysis of recurrent equation 4.4.10 showing in equations from 4.4.11 to 4.4.15 as followed ( Index 4.4.8 to 4.4.12)

4.4.4 Conclusion of analyzed results:

From analyzed results of 4.4.3.1 and 4.4.3.2 it is found that the changes in S as well as the efforts

of the raiser C and is not affected on the market prices (P2) It means that all prices are decided by the buyers However the changes in S and the efforts C of the raisers are affective directly or indirectly to produce good-qualified products meeting the market needs (P1) The relation of S and C and P variables shows in figure 4.4.5 By the figure 4.4.5 the conclusion can be as followed:

- The P2 prices could not come out from the changes of structure S even the great efforts of catfish raisers However their efforts C of the raisers help them produce output products with high quality, meeting the need of market quality requested (p1) The main reason is the market prices mainly decided

by the process and export businesses Those businesses also depend on the foreign consumers They could not actively decide the prices to buy catfish as raw materials but they could decide the prices depending on a certain concrete contract with import business

– Model 4.4.4 shows that there are 4 factors affect directly to qualified products To produce hygienic products (C2) affects greatly on qualified products but the expenses invested for environmental protection (C5) just a little In reality the raisers and businesses rarely pay attention to the long-term effects of environment pollution The reason of lacking environment protection is that the raisers want to make use of the area for catfish production and for intensive production ignoring the tidy up of catfish raising ponds

- The surprising thing that can not be explained is that the enhancing the check of quality of

products (C1) can not bring to good quality of products By the survey, the selection of aqua breed and food depends on their experiences or regular customers or not The check of input and output quality products is not much concerned by the raisers or businesses

- The analysis in figure 4.4.5 shows the interaction between variables (C); C1 and C2 are the most strongly It means that the changes of business recognition in the raisers affect strongly on the hygienic products as the request from the consumers as well as the recognition of market

orientation of the producers

Figure 4.4.4 Model SCP of catfish households

Figure 4.4.5 shows that among of Performance variables affect on each others and C2 and C5 are the most strongly Each item affects on the other items To produce hygienic products and the expenses invested for environmental protection are two important items that directly and indirectly product well-qualified products to the markets

- A surprising result of Structure variables S1 does not directly and indirectly affect on the qualified products to the need of consumption market Instead the variables of State policies encouraging the qualified products, the linkage of sellers and buyers and environment protection affect on the qualified products as the requested from markets It means that the role of State intervention in catfish production

is very important in the pressure of nowadays competition

4.5 SOLUTIONS FOR DEVELOPMENT OF CATFISH

- Synthesizing all the analysis the researcher proposes some solutions:

As the analysis of 4.3 and 4.4 it is found that the raisers and the process and export businessmen could not reach the effects of market in prices due to the decision of foreign buyers One of the reason is there is no linkage of the process and export businesses in the aspect of consumption and of marketing though in Vietnam with the presence of VASEP

The first proposal is “Enhancing and consolidating the linkage among the process and export business “via the assistance of VASEP in forecasting market and commercial promotion With this

linkage there would be more perfect market This makes more strength for exporting, bargaining export prices After the case of “ anti-dumping “in 2003, there have been many active changes in qualified products even though there is no stable prices for export products The export market of Vietnam catfish

is considered as “by oneself “so there should be a tight linkage of product consumption There should be the plan of market sharing among export businesses with the help of VASEP If the plan could be carried out the more stable prices in international markets for Vietnam export catfish

Besides enhancing the linkage, to ensure qualified products, enough catfish raw materials for

businesses there should be the linkage among raising catfish households and from this they can share

experience and resources in producing and consuming products The survey of 262 raising households shows that just ¼ of them participating in cooperative or clubbing for production Most of them are self

or private production This limits the linkage of the raisers, process and export businesses to ensure the quality as the requests from the buyers

As the analysis of 4.4, there is no active sign of market prices though with many supportive policies from Vietnamese government One of the main reasons is the continued unbalance of need and meets relation in providing catfish materials due to the small scale production The unbalance leads to unstable prices for sale The linkage should be in large-scale of raising fish among regions or provinces The Catfish Association and Dept of Agriculture and Rural Development of different provinces should establish the economic cooperation organization where productive plans are made based on the need of input materials of the process businesses via the information from VASEP

To improve the prices of catfish raw materials and export, besides the two solutions mentioned

above, there should be the linkage of the process and export businesses and other economic cooperative organization for raising catfish as productive materials

After 2010 there already was this kind of linkage in some locals, as a kind of contracts signed among businesses or cooperatives It showed the instability in this linkage due to the unwillingness of sharing risks and interests in production In order to enhance the stability of this kind of linkage, there should be a contract of process to finished products between raisers and businesses with low-risk or high- risk in production There are the mutual share of risk and interest and capital among of the shares

of the businesses

To sum up, to develop the catfish production in MK, there should be 3 main solutions as followed:

1) More strongly enhancing and consolidating the linkage among of the process and export businesses

2) Establishing the linkage among of the raisers with the form of economic cooperative organizations in each and among of locals

3) Realizing the linkage among of businesses and economic cooperatives of raising, processing and exporting catfish in the form of mutual contracts or shares

CHAPTER 5: CONCLUSION AND PROPOSAL

5.1 CONCLUSION

During recent 7 years (since 2008), the area of raising cat fish in Mekong Delta has been generally increasing This is due to the fact that it could be international competitions, the high demand of the market in quality, and especially some households give up planting fish production because of the instable price status of raw products Until 2013, the total area of cultivation had been approximately 5,500 ha, with the yield of raw products being up to over 1 million tons In addition, top 5 provinces with the highest productions were An Giang, Dong Thap, Can Tho, Vinh Long, Ben Tre Now, there are

2 owners of producing raw material being households and businesses Raisers in Mekong Delta with 10-years experience has only finished junior high schools They find it hard to be familiar with modern and advanced technology, procedures Over 60% households have to hire more workers in planting process

Production scale was still small, average area per household was only 1 ha with 2 ponds This makes technology difficult to be applied Over 90% households surveyed lack capital to produce, which affects the efficiency of production seriously However, many local credit agencies have helped households solve the problem The interest that they have to pay is just only 1% per month 1.5 crops are harvested in each year A crop lasts 7.5 months averagely, which makes household receive more risks The proportion of household using unidentified breeders is still high (over 40%) The percentage of breeders used is just only 17 % It can be inferred that the potential health risks and the increase of cost price This is because production of identified breeders is not equaled with the demand Most households use processed food (over 78%) while only 12% use home-made food Therefore, the cost price is depends on the food’s price Most households pay the food by cash, which is also a financial problem for those lacking starting capital

Around 20% households have applied the standards of production of VietGap, ASC, BAP and BMP, mainly with VietGap (more than 80%) so it is hard to find stable export markets The buyers do not accept those mentioned standards In addition to this, 87% households with substandard ponds leading to environmental pollution risks in future

Although raising households have been trained and advised about catfish production, knowledge of business and market, their awareness and understanding is still a limit They provide more than 80% catfish products for businesses There is no tight linkage between the raisers and the business The linkage among the raisers is not popularly applied, just about 25% of them This leads to low power in production market When they sell catfish to business, they are paid by cash or transfer and sometimes with lengthening the payment for a long time The market information known by catfish producers through mass media The high prices of aqua food make change of the output products then the interest own by the producers is always low, leading to the situation called “suspended ponds”

Catfish turn-over has the trend of reduction due to the catfish fillet down prices The proportion of catfish fillet exporting to Europe has decreased but to Asia increased In the process catfish for export the businesses have encountered some difficulties: the price of catfish being raw materials are always changeable due to instable production , the catfish price for export has reduced, rough sea…are some reasons interfering the linkage between business and raisers

To the process and export businesses, the market structure shows clearly the competition between domestic export business and foreign import business and also among of domestic businesses themselves State policies related to better aquaculture production lead to the linkage of businesses and

to improve business competence for Vietnamese Market Structure affects on business recognition and

on pushing the investment for environment protection on managing the product quality However the direct and indirect influences of market Structure and Conduct are not powerful enough for business to