Determinants of water melon production at farm household level in tien giang provice

This study is required to find out the potential factors impact to Tien Giang's water melon production based on production function model, theory of farm household economics and SWOT ana

VIETNAM- NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

DETERMINANTS OF WATER MELON

PRODUCTION AT FARM HOUSEHOLD LEVEL

IN TIEN GIANG PROVINCE

A thesis submitted in partial fulfilment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

ACKNOWLEDGEMENTS

I would like to express my deep thankfulness to board of professors, doctors, teachers and staffs of Vietnam - Netherlands Programme for Master of Arts in Development Economics for all their instruction, help and support during my study here

Firstly, I would like to express my special thankfulness to my supervisor Dr Tran

Tien Khai who devoted to his students by all his enthusiasm, advice, encouragement

and guidance I could not finish my thesis without his support I also want to thank to

Professor Nguyen Trong Hoai who always follow closely and listen each

expectation of all the students to guideline and support during this study programme I

also would like to give my attitude of admiration to Dr Peter Calkin about his

ability to read thesis research design (TRD), to give comments on TRD for all students, and especially his ability to work tirelessly through discussion directly with each student to give them his advice And I applied your valuable advice into my research

I am also thankful for the helping from Mr Tran Ngoc An- Director of Agricultural

Seed Center of Tien Giang Province who introduced me to Tien Giang's Rural and Agriculture Development Department, Tien Giang's Plant Protection Department, Agri-extension station of each district, and Plant Protection station of each district; gave me good information on farm household survey questionnaires; and advised me how to collect sufficient data I give my thanks for enthusiastically helping to persons

in charge of at each district (Go Cong Tay, Go Cong Dong, Cai Be, Cai Lay, Chau Thanh, Cho Gao, Tan Phuoc) Especially, my research could not implement without the co-operation, support and ready to answer my questionnaires of farmers or their farm household Thank you very much to 1 77 farmers who have been planting water melon around the Tien Giang province

Finally, this research would not have been finished without the patience, motivation from my parents who now is living in Go Cong Tay Their support is throughout surveys to collect data I always appreciate high for your helping

Thank you very much all of you!

ABSTRACT

Tien Giang belongs to basin of Vietnam Mekong River Delta which has good weather and soil conditions for agriculture, forestry and aquaculture Beside of rice as a main crop, Tien Giang has been carrying out the converting agricultural structure program, growing diverse crops like fruits, vegetables, and short-term industrial plants etc Especially, in recent years, farmers have a chance to get good income from water melon crops because a water melon crop is only two-month which could give high yield and good quality It not only is consumed in Vietnamese markets, but also exported to Chinese market and Cambodian markets by bordering However, Tien Giang's water melon has not developed to a sustainable level yet because farmers' cultivation still brings spontaneous nature, lacks concentration and specialization Moreover, there have not yet had any clear information about economic efficiency of this fruit which is provided for provincial authorities

That is one of reasons which the author implemented this research to evaluate the productive resources utilization for water melon production and the economic efficiency from 2010's summer-fall crop Production function under log-log and Cobb-Douglas forms and SWOT analysis are applied In this research, the author used the primary data through direct interview of 1 77 respondents at 7 districts across Tien Giang province

The study results showed that soil has not affected much to water melon yielding yet now However soil will be the most important constraint factor to water melon yield because pest damage can be more seriously if water melon is cultivated continuously

at the same location And water melon is a special vegetable need to be taken care carefully; so, farmers should consider the production area which is suitable with their ability to plant and to gain the highest yield Investment more in fertilizer had less effect to water melon yielding change; however, we should fertilize more phosphate fertilizer P205 during land preparation period for acid sulphate soil Labor is also

considered as a determining factor, in which growing years of producers play the most important role in yielding change In addition to, farmers have not cared to market information, agricultural extension services in locations, etc yet In general, although farmers lack support of many organizations, water melon yielding which farmers gained is relatively high because of utilization of productive resources well

TABLE OF CONTENTS

Page

A CKN 0 WLEDG EMENTS

CERTIFICATION

ABSTRACT

CHAPTER 1: PROBLEM STATEMENT !

1.1 Research context 1

1.2 Research problem 1

1.3 Goal and specific objectives of the study 2

1.4 Research question 2

1.5 Scope ofresearch 3

1.6 The organization of the thesis 3

CHAPTER 2: LITERATURE REVIEW 5

2.1 Theoretical framework 5

2.1.1 Theory of farm household economies 5

2.1.2 Production function 8

2.1.3 Production factors of farm household 11

2.2 Empirical studies 12

2.3 Analytic framework of this research 17

CHAPTER 3: RESEARCH METHODOLOGY 19

3.1 Analytical framework 19

3 1.1 Model specification 19

3.1.2 Variables indication 20

3.1.3 Sign expectation 20

3 1.4 Variables description 21

3.2 Data collection and sample distribution 24

3.2.1 Sample size 24

3.2.2 Sample distribution 25

3.2.3 Sampling framework 26

3 2.4 Pre-testing of the questionnaires 26

3.2.5 Orientation to collect data 26

3.2.6 Limitation of data source and collection 27

3.3 Analysis methods 27

3 3 1 Analysis methods 27

3.3 2 Usefulness of the research.: 28

CHAPTER 4: ANALYSES OF WATER MELON PRODUCTION IN TIEN GIANG PROVINCE AND INFLUENCES OF INPUT USES ON WATER MELON YIELD 29

4.1 Introduction ofTien Giang province and its water melon production 29

4.1.1 Overview ofTien Giang province 29

4.1.2 Climate condition 30

4.1.3 Soil condition 30

4.1.4 Water melon production in Tien Giang 32

4.1.5 Market and product competitiveness 33

4.2 Analyses of water melon production in Tien Giang province 36

4.2.1 SWOT analysis 36

4.2.2 Description of water melon production in Tien Giang through farm survey 37

4.2.3 Analyses the influences of input uses to water melon yield by econometrics analyses 55

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS • 63

5.1 Conclusions 63

5.2 Recommendations 65

CHAPTER 6: LIMITATION 68

REFERENCES 69

APPENDIX 1 71

APPENDIX 2: 76

CHAPTER 1: PROBLEM STATEMENT

1.1 Research context

Tien Giang's water melon is one of the fruit trade-mark which is exported to China and Cambodia through border trade However, water melon production has not been really stable yet at present In 2007, the total water melon productive area of Tien Giang is 3,779 hectares, and output is 70,847 tons In 2008, the total water melon productive area is only 2,954 hectares, and output is also only 55,754 tons (Tien Giang's Rural and Agriculture Development Department) The water melon cultivation in Tien Giang currently brings spontaneous nature, lacks concentration, lacks specialization, lacks market information, strongly price fluctuation, and market demanded quantity depends much on wholesalers or distributors even also changes according to season At the producer's perspective, there is not currently available information on economic efficiency and ability to contribute profits from water melon planting into the income structure of farm households Although there are many unknown information related to water melon cultivation and trading, but the author only is interested in the supply side, especially the economic efficiency

of planting water melon in Tien Giang province

This research also assumes that the following weaknesses need to be strengthened

in water melon production process a) low entrepreneurial ability of farmers of both genders and all ages; b) ability to confront bad natural conditions of farmers such as suddenly and usually climate change; c) water melon quality for market

1.2 Research problem

It is not yet known what factors lead farmers to gain the highest water melon output Farmers of various types will react differently to each different factor This study is required to find out the potential factors impact to Tien Giang's water melon production based on production function model, theory of farm household economics and SWOT analysis

Page 1

This study focused on evaluating the effectiveness of using inputs for water melon production, including resources in term of land, labor, capital (capital includes cash capital and physical capital such as fertilizer, seeds, etc) In addition to, market information also need to be considered to provide enough to certain markets, not surplus or deficit

1.3 Goal and specific objectives of the study

Tien Giang is one of provinces in the core economic region in Western Vietnam However, agriculture still plays a crucial role in economic development The overall goal of the study is to advance the efficiency of agricultural production and improve the lives of farm households in Tien Giang province through water melon output

The specific objectives of the study are to:

1 Identify the potential factors which impact strongly to water melon production process in order to indicate the right ways and approaches to gain higher productivity

2 Estimate economic efficiency of different factors of production used in water melon cultivation

3 Make recommendations and strategic suggestions for government policy and farmer groups to enhance the profitability of water melon production to farmers

1.4 Research question

The above research objectives mentioned the most important purpose of this research is to identify the potential factors impact to water melon production and estimate economic efficiency of those factors of production in water melon cultivation Therefore, the author gives research question to address the objective such as:

Which factors that impact potentially on Tien Giang's water melon production? How is economic efficiency of factors that impact to water melon production estimated?

1.5 Scope of research

This research can not cover all factors impact to water melon production because of still other factors lie behind the above factors and weaknesses It only studies some factors like inputs (productive area, labor, fertilizer, seed, etc), market information and growing years of farmers Tien Giang has 8 districts (Go Cong Tay, Go Cong

(My Tho City) and 1 town (Go Cong Town) Through 177 questionnaires is interviewed directly from farmers, who planted water melon at least 1 year, across Tien Giang province within 3 months (from October to December 2010), this study will have enough data and information to analyze

1.6 The organization of the thesis

Chapter 1 presents the rationale of this research including the research context, research problem, goal & specific objectives of the study, research questions, scope

of research and the organization of the thesis

Chapter 2 is literature review This chapter provides: (1) theory about farm household economies, production function and production factors of farm household; (2) empirical studies; and (3) analytic framework of this research

Chapter 3 introduces research methodology including analytical framework (the regression model, variable indication, sign expectation, variable description), data collection and sample distribution and analysis methods

Chapter 4 presents the analyses of water melon production in Tien Giang province and influences of input uses on water melon yield In this chapter, the author describes the overall picture of Tien Giang province in terms of overview of Tien

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Giang province, climate condition, soil condition, water melon production in Tien Giang, and market and product competitiveness In addition to, the author also presents the analyses of water melon production in Tien Giang province (SWOT analysis, description of water melon production in Tien Giang through farm survey, analyses the influences of input uses to water melon yield by econometrics analyses)

Chapter 5 IS the last one is presented conclusion and recommendation for provincial authorities to help farmers get a higher productivity and especially get a higher benefit

CHAPTER 2: LITERATURE REVIEW

2.1 Theoretical framework

2.1.1 Theory of farm household economies

Logical deductions from a set of prior assumptions about household goals, and about market nature in which households make their decisions explain peasant economic behavior The farm household is taken as a single decision-making unit for purposes of economic analysis; the household maximizes a single utility function, then profit maximization and utility maximization coincide; all input and output markets are fully formed and competitive then profit maximization is always

a component of utility maximization, even though there may be several other variables in the utility function; differences in the logic and predictions of different theories arise from different assumptions about the working of factor and product markets rather than from different assumptions about household goals; varying assumptions about labor markets and the allocation of household labor time are often the critical feature which distinguishes one theory from another; and household economic behavior depends on social relations which make markets work in certain ways for some peasants and in different ways for other peasants (Frank Ellis, 1993)

2.1.1.1 Farm household

Labor force in agriculture is mainly the performance of farmers So in agriculture, the notion of firm is determined easily because agricultural farm is usually related to farm household And every household has farm of different sizes On average farms are very small in parts of sub-Saharan Africa and South and East Asia; see, for instance Bangladesh, China, Democratic Republic of the Congo, Egypt, Indonesia, India, and Korea In these countries almost of farms are under two hectares In other hand, the holding is mostly thousand hectares in West European countries Farms have also many different types such as family farms or business farms or farm enterprises The specialized farm enterprises wholly linked to the market economy

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Therefore there are still difficulties in making distinctions between farms in term of size of farm resources and nature of production (Boussard 1987) (cited in Tran Tien Khai, 2001 )

Peasants are farm households They access to a piece of land, utilize mainly family labor in farm production They are located in a larger dominant economic and political system that could affect their production behavior, but fundamentally they are characterized by partial engagement in input and output markets, which are often imperfect or incomplete (Ellis 1992, 9-1 0) (cited in Mariapia Mendola, 2007) Peasant farm households account for no less than a quarter of the world's population According to Bardhan and Udry 1999, most are in developing countries where they can represent up to 70 percent of the national population (cited in Mariapia Mendola, 2007) According to Ellis's point of view, peasants also occupy

a large proportion of humankind living in developing countries

Hunt (1991) identifies peasant farms as both production and consumption units: a proportion of produce is sold to meet their cash requirements and financial obligations, and a part is consumed by them (cited in Mariapia Mendola, 2007)

2.1.1.2 Farm's decision-making

This is one of main theories of farm economics Farmers make decision base on their maximization of utility The neo-classical economics supposes that in conditions are limited resources in production factors and technical availability of production, farm has behavior of maximization of utility function According to Ellis 1993, utility maximization is full income maximization Brossier et al ( 1997) expressed the problem of identifying profit maximization in agriculture by the following formula: (cited in Tran Tien Khai, 2001 )

II=P-CV -CF-KA- WA

'

• I

Where: II is the profit

P is output value

CV is all variable charges of exterior-bought factors

CF is fixed charges paid to interior

revenue

2.1.1.3 Economy of scale

Economy of scale is a conception come from the neo-classical theory of production

It refers to cost advantages that a firm obtains because of expansion There are many factors that cause average unit cost of producer fall as the volume of output is increased The notion of economy of scale concluded that it is very difficult for small farms to exist due to higher unit cost, less competitiveness in comparison to large farms

2.1.2 Production function

Production functions have been used as a fundamental tool to analyze economy in the neo-classical tradition A production function is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs Firms tum inputs into outputs (or products or productivity) in their production process Inputs are called are production factors include anything that firm used in production process For example, in a bakery, inputs include labor force (labor from workers); raw materials, such as flour and sugar; and the capital invested to buy ovens, mixers, and other requirements needed to produce outputs like bread, cakes, and pastries

We can divide inputs into the broad categories of labor, materials, and capital Labor inputs include skilled worked (carpenters, engineers) and unskilled workers (agricultural workers), as well as the entrepreneurial efforts of the firm's managers Materials include steel, plastics, electricity, water, and any other goods that the firm buys and transforms into final products Capital includes lands, buildings, machinery and other equipment, as well as inventories

The following production function describes the relationship between input and output A production function indicates that a firm can obtain the highest output Q from every specified combination of inputs:

It relates the quantity of output (Q) to the quantities of the inputs such as capital (X1), labor (X2), materials (X3) and etc (Robert and Daniel, 2009)

And a quadratic production function is shown in the following figure All points below are technically feasible, and all points on the function show the maximum quantity of output obtains at the specified levels of inputs

According the following figure 2.2, from points A, B, and C, the production function is rising It means that the additional units of inputs is used, the quantity of outputs also increases At point C, the additional units of inputs is used, the additional output does not produced, in fact, total output begins to decline because the inputs is under utilized

At point A, as additional inputs are used, output increases at an increasing rate, and both marginal physical product (MPP) and average physical product (APP) is also increasing The inflection of point A is point X Diminishing marginal returns starts

at point X because from point A to C, the output increases at a decreasing rate as additional inputs are used Point B is tangent between APP and MPP At this point

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Figure 2.2: Quadratic Production Function

Source: http:/ /www.wordiq.com/definition/Production function

Moreover, the Cobb-Douglas functional form of production function is used widely

Wicksell (1851-1926), and tested against statistical evidence by Charles Cobb and Paul Douglas in 1900-1928

For production, the simplest formula of Cobb-Douglas function 1s (Haughton, 1986)

(1)

Where: Q is total production, His productive area, Lis labor input

a., 1-a are the output elasticity of labor and productive area, respectively

The general productive function is given as follow

So, solution is the productive function is changed as follow

2.1.3 Production factors of farm household

CAPITAL

m!

Figure 2.3: The three main factors of production of farm household

Land, labor and capital are referred to as "factors of production" Each factor is plays a unique role in the production of goods

2.1.3.1 Land

According to Ellis ( 1993 ), land is part of the social status of the family within village or community Land has traditional regulations such as land ownership right, inheritance right, immigrant policy, agrarian policy, and formation of land market For instance, land ownership help farmers get finance easier from bank or financial funds due to its collateral security Addition to, according to Tracy 1993, Price and Palis 1997, most farmers prefer to own the greater part of land because land is the most valuable thing they can bequeath from this generation to other generations (cited in Iran Tien Khai, 2001) From now, land still is the most valuable resource which every people cares best

.2.1.3.2 Capital

Agricultural capital is production cost includes resources in agriculture and agriculture It can refer to assets such as buildings, machinery, equipment, fertilizers, feeds, and inventory (unsold products), etc According to Mundlak, Larson and Butzer ( 1997), there are two kinds of capital: fixed capital and capital of

non-Page 11

- - - - - - -

-agricultural origin - livestock and orchards Fixed cost not only differs from capital

of agricultural origin in the method of construction, but also fundamentally in terms

of market and pricing Capital of agricultural origin is produced largely by resources

in agriculture and therefore its cost of production is largely independent of the

markets for nonagricultural inputs which are often imperfect As such, farmers may

face noncompetitive prices for their fixed investment inputs Also, fixed investment

depends on outside finance On other way, capital includes cash capital and physical

capital such as fertilizer, seed, etc

Capital is considered to be a scarce resource for farmers in rural of developing

countries because of low development of formal credit system and lack of

govenunentsupport

2.1.3.3 Labor

Labor means that human effort used in production, is the population work in

agriculture (hired labor and household labor) Agricultural labor force in rural of

developing countries are plentiful, their free-time is so much

2.2 Empirical studies

Tran Tien Khai (200 1) used data of the Project Competitivite de la filiere rizicole

dans la region du Mekong, Vietnam including information of rice production from

150 rice farms in four agro-ecological regions during period 1995-1998 Log-linear

and Cobb-Douglas models of production and supply function are applied

The production function with log-log is followed:

Ln Q = Ln A+ IaiLnXi + L~iDi

and the production function with log-linear is followed:

Ln Q =A+ Iaixi + L~iDi

where Q is rice productivity of farm household in year, A is angular coefficient, Xi

is input variables such as land, labor, investment cost of farm household in year and

Di is dummy variables which be able to influent to yielding in terms of farm size, agricultural ecology, etc

To estimate the elasticity of rice supply with rice price and agricultural material price, a simple rice supply function is designed as follow:

Ln Q = Ln A + ~)xiLnXi + L~iDi

where Q is rice productivity of farm household in year, A is angular coefficient, Xi

is variables which influent to rice supply ability of farm household such as land, labor price, fertilizer price, rice price, and Di is dummy variables which be able to influent to yielding in terms of farm size, agricultural ecology, etc

He concluded that rice land stock and water availability were still most important constraint factors to increase paddy output Investment more in fertilizers only generated small marginal return, except the case of potash And investment more capital also had less effect to change the paddy output in present cultivation level

Similar to Iran Tien Khai's research, Nguyen Thi Lien, Nguyen Xuan Hai, Pham Hoai Vu, and Trinh Thi Long Huong in "Rice Production" (Dominique Haughton, Jonathan Haughton, Sarah Bales, Truong Thi Kim Chuyen, Nguyen Nguyet Nga,

+ L~iDi to analyze factors which effect to rice productivity

Purano Baneshwor, Kathmandu (2002) used the Cobb-Douglas production function

of the following type is estimated:

Y = e'6 Ka Lo-a) U

where Y = real GDP, () = constant term (shift factor), L = labor force, K = real capital, U = random error term, and () and a are the parameters to be estimated

Page 13

This equation assumes constant returns to scale as most empirical growth accounting studies have undertaken A logarithmic transformation of the above equation would be:

This paper concluded that the maJor source of growth is basically the capital accumulation process in Nepal's context The major factor contributes to economic growth in developing as well as in developed economies bases on factor productivity And intangible factors such as advances in education and technology, economic policy environment, "learning" and etc have also contributed to higher factor productivity

However, in the Nepalese context, the contribution of factors of production such as labor and capital can not be estimated clearly because information on these variables is not also clear and the economic growth not accounted for by labor and capital can not be generalized for factor productivity gain The factor productivity will emerge as a negative contributor to economic growth if the true accounting norm is applied to Nepalese context

Jacklin (2008) in "estimates the production, restricted cost, and restricted profit functions using North Dakota agriculture sector data from 1960-2004" also used the Cobb-Douglas function to represent the production function characterized as:

A'

In y, ,., a0 + L aJt In x,_ 1

( } ~ ~ A .n., '

where a 1, , ak are the input elasticity, and E denotes the error term

Jacklin's thesis estimates the Cobb-Douglas production function by the means of a quantile regression approach An ordinary least squares regression (OLS) is based

on the mean of the distribution of the regression's variable And results were parameters of the production function obtained from estimation both traditional OLS and quantile regression are not significant statistically between the agricultural inputs and aggregate output for the period 1960-2004 using aggregate state level data for North Dakota agriculture

The Ricardian method (Mendelsohn et al., 1994) is also a cross-sectional approach

to studying agricultural production The Ricardian approach assumes that each farmer wishes to maximize income, subject to the exogenous conditions of his or her farm Farmland net revenues (V) reflect net productivity This principle is captured in the following equation:

(4)

where Pi is the market price of crop i, Qi is the output of crop i, X is a vector of purchased inputs (other than land), F is a vector of climate variables, H is water flow, Z is a vector of soil variables, G is a vector of economic variables such as market access and Px is a vector of input prices (see Mendelsohn et al., 1994) The farmer is assumed to choose X to maximize net revenues given the characteristics of the farm and market prices The Ricardian model is a reduced form model that examines how several exogenous variables, F, H, Z and G, affect net revenues

The Ricardian approach (Mendelsohn et al., 1994) is the primary method that J Wang et al., (2009) used in his/her analysis The farmer chooses the crop and inputs for each unit of land that maximizes:

Page 15

where n is net annual income, P qi is the market price of crop i, Qi is a production function for crop i, Xi is a vector of annual inputs such as seeds, fertilizer, and pesticides for each crop i, Li is a vector of labor (hired and household) for each crop

i, Ki is a vector of capital such as tractors and harvesting equipment for each crop i,

C is a vector of climate variables, IRi is a vector of irrigation choices for each crop

i, W is available water for irrigation, S is a vector of soil characteristics, P x is a vector of prices for the annual inputs, P m is a vector of prices for each type oflabor,

P n is the rental price of capital, and Pir is the annual cost of each type of irrigation system Equation (5) is an expanded equation from equation (4) Li and Ki are two main determinants to identify the physical effect to crop yield or crop productivity

Furthermore, Coelli ( 1996) measure technical efficiency for the agricultural production through data envelopment analysis (DEA) approach The core

technology for production, (2) it does not need the distribution assumption for inefficiency term

Cristina (1998) used a constant returns to scale function of the three primary factors

of production such as land, labor, capital to estimate value added in agriculture This production function is considered as a useful tool for development, growth and macro-economists They often estimate the production function both the factors of production and intermediate inputs while there are many estimations of production function that assume constant returns to scale Moreover, there were some estimations of value added as a function of two factors of production such as labor and capital The usage of land may be negligible in other sectors, land is an important source in agriculture

In general, economists applied widely the production function in their researches such as analyze factors which affect to rice productivity; or measure technical efficiency for the agricultural production; or estimate value added in agriculture of the three primary factors of production - land, labor, capital; etc And base on those empirical studies, the author recognizes that main factors which directly affect to water melon production are land, labor, seed, fertilizers and pesticides and dummy variables (market information, agri-extension services in location, having information from agri-extension) Furthermore, the author applied production function under log-log and Cobb-Douglas form to (1) represent the relationship between water melon productivity and input uses variables; (2) represent the relationship between water melon productivity and dummy variables; (3) consider water melon productivity will change how many % when every input variable changes 1 %; (4) to consider water melon productivity will change how many % when every dummy variable changes 1%

2.3 Analytic framework of this research

Conceptual model is constructed by combining factors of production of farm household and some other factors that physical effect to water melon productivity

The author finds out the potential factors which connect closely and directly to water melon production Figure 2.4 "conceptual framework" illustrates (1) the relationship between the water melon yield with input uses variables such as productive area, labor, chemical fertilizer amount, pesticides, seed, etc; (2) the relationship between the water melon yield with dummy variables such as market information, agri-extension service in location and information from agri-extension; (3) and the relationship between input use variables and dummy variables in water melon production process of Tien Giang province From result of those relationships, farmers should have suitable effects to get higher productivity and consider how to minimize cost of those factors to get higher profit

!UEH-=i~s , ~~·~., ,_ l \

L~~ -~ .:.::-::.: : ~= -~- Page 17

l

•• I

igure 2.4: Conceptual framework

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Analytical framework

3.1.1 Model specification

Base on the above production function model and the above empirical researches and conceptual model of this research, the regression model is generally specified as follow:

ln Q = ln A+ :Lailn Xi+ :L ~izi

The regression model for this study is suggested as follow:

where: Q is water melon yield per hectare of 2010's summer-fall crop

)4is labor cost per hectare of 2010's summer-fall crop

X8 is having agri-extension service in location of 2010's summer-fall crop (O=no, 1 =yes)

(O=no, 1 =yes)

~o B10 are coefficients that effects of variables (productive area, land rent cost, land preparation cost, labor cost, seed cost, fertilizer cost, growing year of producer, market information, etc) to water melon yield

!l is error terms (regression residual) which means there are other factors that influence which effects to water melon yield

Page 19

This research will estimate the economic efficiency of using inputs uses such as productive area, land rent, land preparation, seed, chemical fertilizer amount and pesticides to water melon yield change For instance, if chemical fertilizer amount rises more 1%, water melon yield changes how many % In addition to, it also considers effect of dummy variables such as agri-extension service in location, market information, etc to changes of water melon yield

3.1.2 Variables indication

per hectare (X 5), fertilizer cost per hectare (X6), growing year of producer

agri-extension (X 9), market information (X 10)

3.1.3 Sign expectation

The first period, in general, if we use additional labor or additional fertilizer or additional productive area, the water melon yield will increase However, we should use these within a suitable limit If we use additional labor so much, the water melon yield still increase, but will not offset labor cost Using labor is not effective Furthermore, if we use additional fertilizer over-limit, this will make water melon yield decrease Addition to, the author used productive area squared to consider that

if we increase more productive area, water melon output continues to increase or not This reflects the economic of scale If the productive area is too small, it is difficult to get profit However, if increasing productive area to a certain level which producers is not enough ability to manage, take care, and invest, etc, it leads

to decreasing in water melon output And that level is level which output gained optimal So sign expectation is negative

Table 3 1: Sign expectation

-VND/ha)

-location O=No

1 =Yes

extension O=No

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;:

in tons per hectare

The productive area squared (AreaSquared) is estimated by the cultivated land used

The land rent cost (LandRent) is measured in million of Vietnamese Dong (VND) per hectare Water melon could not be grown perfectly in already cultivated soils due to rich resources of deadly diseases Cultivation systems like those in new soils

or in soil ofintercropping cycle of 1-2 seasons water melon in 2-3 years So farmers must rent a good soil everywhere across Tien Giang to be able to plant crop by crop

The land preparation cost (LandPre) is estimated by preparing cultivated land for

hectare In this research, this cost includes cost of plastic cover, ash cost, coir cost and irrigated cost Plastic cover can give better water melon cropping as this kind of material can reserve water for plants, controls weeds and even some diseases and insects as well Ash and coir is mixed into soil before covering plastic Irrigated cost for water melon is very little; so the author calculated into land preparation cost

The labor cost (Labor) used in the model included the population work in

labor cost is calculated by the total household working days multiply the opportunity cost In this research, the author based on the hired labor cost to calculate the household labor cost For instance, the hired labor is paid 4 million VND for 2 months The author also calculated 4 million VND for 2 month for the household labor

The seed cost (Seed) 1s measured m million of Vietnamese Dong (VND) per hectare

The fertilizers cost (Fertilizer) refer to the sum of pure weight of nitrogen, phosphate, potassium, complex fertilizers and cattle manure which were used for land prepare stage, fertilizer lined stage, seedlings support stage, fruit support stage and sideline production activities during the study period In addition to, this variable also includes pesticides in which insecticide, fungicide, herbicide, plant protection drugs, disease prevention drugs and product stimulation fertilizer It is measured in million of Vietnamese Dong (VND) per hectare

The growing year of producer (Experience) is estimated by year numbers which producer has in their water melon production process It is measured by year number

The having agri-extension service in location (Extension) is measured by dummy variable

The having information from agri-extension is measured by dummy variable as well

Market information available (M) is very important in agricultural production in general, and in water melon production in particular For example, due to lacking of such market information from research organizations, farmers in Tien Giang automatically grew water melon in area as large as they could afford to invest without any consultants from market studies This problem could also result in low price of water melon on New Year Holidays Besides, price is also influenced by demand and supply in city markets or in nearby province markets The variability in

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agricultural prices reflects the market risk faced by agricultural producers It is measured by dummy variable

Agricultural production depends on the natural conditions such as climate changes, floods and other relatively unpredictable disasters, insect and disease invasions and season, etc As scientific evidence becomes more convince through the large and good documents that the climate change impacts strongly to agriculture (e.g Matthews and Wassmann, 2003; Parry et al., 2004; Tao et al., 2006; etc) Therefore, this factor is omitted in this research

3.2 Data collection and sample distribution

n = minimum sample size

Z = 1.96 at 95% confidence interval obtained from standard statistical table

Applying the above equation, the minimum needed sample size needed is about 97

So the total 177 respondents is chosen to interview directly is larger than the minimum needed sample size It will be good representative for this research

3.2.2 Sample distribution

The following table is the sample size is distributed according to water melon output in 2008 of each area across Tien Giang province

Table 3.2: Sample size of each district across Tien Giang province

Water melon yield of each district in 2008 Percentage Sample size City/District (tons) (o/o) (households)

My Tho City 360 0.65 1

Go Cong Town 312 0.56 1 TanPhuoc 4,386 7.87 14

Cai Lay 9,526 17.09 30 Chau Thanh 6,270 11.25 20 Cho Gao 10,117 18.15 32

Go Cong Tay 5,711 10.24 18

Go Cong Dong 2,704 4.85 9

Total 55,754 100.00 177

Source: Tien Giang's Rural and Agriculture Development Department

Base on above table 3 2, total My Tho city and Go Cong town have only 2 questionnaires This figure is very little, will not influent to the final result of this research so much So the author will plus 1 questionnaire more into total of Cai Be's questionnaires, and plus 1 questionnaire more into total of Cho Gao's questionnaires

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3.2.3 Sampling framework

According to Tien Giang Rural Development and Agriculture Department, they have not had the statistics yet such as how many households plant water melon, which households planted water melon and which households still have not planted water melon yet Therefore, in this research, the author uses the proportional sampling framework to choose the research sample Based on water melon output of each district, the author calculates the sampling distribution proportion of that each district Therefore, the author will choose sample and collect information such as:

14 samples of Tan Phuoc, 53 samples ofCai Be, 30 samples ofCai Lay, 20 samples ofChau Thanh, 33 samples ofCho Gao, 18 samples of Go Cong Tay and 9 samples

of Go Cong Dong

3.2.4 Pre-testing of the questionnaires

The questionnaire was designed and pre-tested by about 20 farmers who have many growing years to water melon production though face to face interview The author spent 30 to 45 minutes at the farmers' field to exchange information and calculation cost related to water melon Then the final questionnaire form was finished base on their important feedbacks

3.2.5 Orientation to collect data

Firstly, the author contacted Mr An- Director of Agricultural Seed Center of Tien Giang Province and presented clearly the overall idea of this research Then Mr An supported the author how to approach and request the respondents to be interviewed and he introduced person in charged of each district to the author

Secondly, the author presented the overall idea and particular ideas of this research

to them So they organized each small meeting (about 1 0 respondents) and the author interview directly to collect data This main survey was implemented about 3 months (October, November and December 2010) and the main approach way is each farmer was interviewed face to face by the author

3.2.6 Limitation of data source and collection

Our famers have not had habit to record everything in their crop yet When the author interviews them face to face, they must spend time to remember This make the data can be different compared to the real In addition to, due to their moving, data is collected from Cai Be district is the almost same with data is collected from Cai Lay district or Go Cong Tay district For example, Mr Nguyen Van Be has 10 growing year in water melon He planted water melon in soil of all districts in Tien Giang He compared the difference between districts for me However, this difference is just a little in chemical fertilizer amount, labor cost The author want to mention here is a farmer can help me answer 2 or 3 questionnaires in each different district

The linear regression analyze in SPSS (Statistical Package for the Social Sciences)

is the second method the author used to run regression to find out which variables are important, which variables are optimal Furthermore, the structured interview is also used to collect information and figures to run the linear regression model The structured interview through oral interview had been carried out for individuals or representatives of particular organizations in order to obtain reliable information or experiences regarding to water melon cultivation through well structured questionnaires Reliably collected information had been subsequently analyzed in such a manner required by objectives of investigation

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Beside the linear regression model, SWOT (Strength Weakness Opportunity Threat) analysis is the third approach that the author used in this research The author analyzes strength, weakness, opportunity, threat of water melon cultivation Base on results of both those approaches, the author will make conclusions and suggestions for my research

-3.3.2 Usefulness of the research

By reviewing all related literature and analyzing the data by usmg the linear regression model, SWOT analyzes, this research is anticipated to find out that which determinants impact positively to water melon yield and which determinants impact negatively to water melon output in Tien Giang province And that effect will be significant for farmers

The results of this research will suggest suitable policies for government to encourage farmer plants more water melon and improve their living standards

CHAPTER 4: ANALYSES OF WATER MELON PRODUCTION IN TIEN GIANG PROVINCE AND INFLUENCES OF INPUT USES ON WATER MELON YIELD

4.1 Introduction ofTien Giang province and its water melon production

4.1.1 Overview of Tien Giang province

Tien Giang is an agricultural province of Mekong River Delta which is in the key economic region of the South It is about 70 km to the south from Ho Chi Minh City, and about 90 km to the north from Can Tho City Tien Giang province locates

at 105°50' - 106°45' east longitude and 10°35' - 10°12' north latitude It borders with Long An and Ho Chi Minh City in north-east and north, Dong Thap province

in west, Ben Tre & Vinh Long province in south, East Sea in east

Tien Giang spreads along the northern shore of the Tien River (a tributary of the Mekong River) with a length of 120 km Tien Giang province has natural area is 2,481.77 km2 and represent about 6% of the Mekong River Delta, 8.1% of the south key economic region, 0.7% of the Vietnam country

Tien Giang's terrain is relatively flat, neutral alluvial soil, less acids along the Tien River, and represent 53% of the province It suitables for a wide variety of plants and animals Population of Tien Giang is about 1.67 million in the year 2009 (population density is 672.9 person/km2), representing approximately 9.8% population of the Mekong Delta region, 11.4% population of the south key economic region and 1.9% of the national population It should be considered that Tien Giang is the second province from Ho Chi Minh City after Long An province

to other provinces in the south Tien Giang has 10 distric-level administrative units (8 districts, 1 city, 1 town) and 169 commune-level administrative units, of which,

My Tho city is the second grade city

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4.!1.2 Climate condition

I

T'en Giang has equatorial and monsoon tropical climate, so the average temperature islhigh and hot all year Annual average temperature is 27- 27.9°C There are two

sciason starts from May to November Tien Giang is situated in the range of low r+nfall, average rainfall 1 ,210 - 1,424 mrn/year and distributed decrease from north

tQ south, from west to east; average humidity of 80 - 85% There are 2 main wind 4rections: north-east (dry season) and south-west (rainy season), average speed of

rarts of the districts such as Cai Be, Cai Lay, Chau Thanh, Cho Gao, My Tho city

and one part of Go Cong Tay where has the fresh (sweet) water source This is the most favorable soil for agriculture and it is used the whole

+ Salinity soil: 14.6% of the total natural area (34,552 hectare), occupying large

About the characteristic of soil as favorable as alluvial soil; but it is affected by salinity water from the sea during dry season

+Acid sulphate soil: 19.4% of the total natural area (45,912 hectare), is distributed mainly in low-lying region of Dong Thap Muoi in north of 3 districts Cai Be, Cai Lay, Tan Phuoc

+ Mound sandy soil: 3.1% of the total natural area (7 ,3 3 6 hectare), scattered in the districts of Cai Lay, Chau Thanh, Go Cong Tay and is the most concentrated in Go Cong Dong because the mound sandy soil has high terrain, light mechanical composition, mainly to residential land and cultivation of fruit trees, vegetables

Overall, the province's soil is mostly alluvial soil group (53%) because of the fresh water sources It is advantage for forming the high-yield rice fields and orchards professional cultivation of the province; the rest 19.4% ( 45,912 hectare) is alkaline soil group and 14.6% (34,552 hectare) is salinity alluvial soil group In recent years, it is focused reclamation, production area's expansion, improvement and increase more crops through the development & exploitation program of Dong Thap Muoi, Go Cong fresh-water program (Chuang trinh ngQt h6a Go C6ng), has gradually expanded the productive area

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Table 4.1: Land use structure at Tien Giang province

Until now, over 90% the total area was used with following objectives:

:soil type Square Structure Square Structure Square i Structure

(hectare) (%) (hectare) (%) (hectare) I (%)

:The total square 233.922 100.0 232.609 100.0 236.663 i 100.0

ii Ag;t.i.nllhu-al soil 165.408 70.7 184.883 9.48 181.505 76.69 Rice soil 102.438 43.79 106.953 45.98 112.832 47.68 Fruit soil 47.486 20.30 64.573 27.76 65.996 27.89 Forestry soil 11.341 4.85 3.974 1.71 8.265 3,492

4.1.4 Water melon production in Tien Giang

Water melon has been commercially grown in many provinces of the country In recent years, water melon is considered as a cash crop of farmers who apply advanced cultural practices such as using plastic sheets (agricultural materials) to cover soil, formula of fertilizers, especially new wide adapted and high yield varieties Water melon is an alternative crop for rice in certain areas in Mekong Delta region (Do Minh Hien, Nguyen Thanh Tung 2006)

Cultivation of rice in Tien Giang has been practiced since years; however, income from rice field to farn1ers is not high (3-4 millions VND/hectare) due to 3 rice crops

in a year with an average production of around 14.2 tons/hectare/year (crop 1 has average 4.5 tons/hectare, crop 2 has average 4.2 tons/hectare and crop 3 has average 5.5 tons/hectare) Moreover, at present, risk of gain loss is still high because of insects, pests, diseases, and strongly weather changes In recent years, water melon

is encouraged to cultivate rotationally with rice in a system of 2 rice crops and 1 water melon crop or 1 rice crop and 1 vegetable crop and 1 water melon crop or 2 water melon crops and 1 rice crop or 2 water melon crops and 1 vegetable crop alternatively, etc Water melon can give the average yield is 22 tons/hectare/crop Water melon yield even can reach from 25 to 30 tons/hectare/crop if good cultural