Research on the need of government for dragon fruit supply chain in binh thuan province in vietnam

MEIHO UNIVERSITY Graduate Institute of Business and Management MASTERS THESIS Research on the Need of Government for Dragon Fruit Supply Chain in Binh Thuan Province in Vietnam In par

MEIHO UNIVERSITY Graduate Institute of Business and Management

MASTERS THESIS

Research on the Need of Government for Dragon Fruit Supply Chain in Binh Thuan

Province in Vietnam

In partial fulfillment of the requirements for the degree of

Masters of Business Administration

Advisor: Dr Ron Chuen Yeh Co-advisor: Dr Vo Phuoc Tan Graduate Student: Tran Tam Phuc

ACKNOWLEDGEMENTS

At first, I would like to say thank you so much to the Board of Management of Ho Chi Minh City University of Industry and the Board of Management of Meiho University, Taiwan for giving me a chance to participate this EMBA program

Specially thank to Prof Dr Ron Chuen Yeh, Chairman of Graduate Institute of Business and Management of Meiho University (MU Taiwan) for valuable instructions and advisory given me in completing this research

Thank you so much to Dr Nguyen Tai Phuc, Dr Vo Phuoc Tan and other Professors and Staff as well as Classmates at Postgraduate Studies Department of Ho Chi Minh City University of Industry in Vietnam for valuable and meaningful supports given for me during the time studying at HUI

Many thanks to Professors, administrative Officers and Classmates of EMBA program

in Taiwan for supports and encouragement given me when I was in Taiwan

Regards and Best Wishes!

Research on the Need of Government for Dragon Fruit Supply Chain in Binh Thuan Province in

Vietnam ABSTRACT

Dragon fruit (named in Vietnamese as Thanh Long) has been imported into Vietnam for

a long time It has really become a type of goods that significantly affected the living of people in Binh Thuan from 1990 until now Binh Thuan was considered as a major place in manufacturing of dragon fruit in Vietnam Developing dragon has brought many direct benefits for this agricultural area such as creating extra jobs for local workforce, improving the effectiveness of land use, diversifying local products, etc

The study was conducted to identify the necessity of state support for dragon planting activities by farmers and dragon trading activities by traders in the supply chain of dragon fruit in Binh Thuan Two hundred questionnaires were sent to 100 farmers who specialized in planting dragon and 100 small traders who specialized in dragon trading in Binh Thuan province Results of data analysis using SPSS showed that the state support of capital, technology, quality assurance and product consumption was essential for the farmer; the state support of capital, packaging and storage, business transactions and marketing was necessary for traders

Keywords: Dragon Fruit, Supply Chain, State Support, GAP, Binh Thuan Province, Vietnam

Research on the Need of Government for Dragon Fruit Supply Chain in Binh Thuan Province in

Vietnam Contents

ACKNOWLEDGEMENTS I ABSTRACT II Contents III Tables V Figures VI

Chapter 1 Introduction 1

1.1 Background and Motivation 1

1.2 Research Purpose and Objectives 2

1.3 Research Scope and Limitations 3

1.4 Definition of Terms 3

Chapter 2 Literature Review 5

2.1 Overview of Binh Thuan Province 5

2.2 Dragon Fruit in Binh Thuan Province 6

2.3 Supply Chain of Dragon Fruit in Binh Thuan Province 8

2.3.1 Farmers 9

2.3.2 Traders 10

2.3.3 State management agencies 13

Chapter 3 Research Methodology 15

3.1 Research Process 15

3.2 Survey Method 16

3.3 Research Instrument 16

3.4 Sampling Method 16

3.5 Data Collection 16

3.6 Reliability and Validity 16

3.7 Data Analysis 16

Chapter 4 Data Analysis and Result 18

4.1 Descriptive Analysis 18

4.2 One-sample t Test 19

4.2.1 Farmers 19

4.2.2 Traders 21

Chapter 5 Conclusion and Discussions 24

5.1 Conclusion 24

5.2 Discussion 24

Reference 27

Attachment 1 – English Questionnaire to Famers 33

Attachment 2 – English Questionnaire to Traders 36

Attachment 3 – Vietnamese Questionnaire to Famers 39

Attachment 4 – Vietnamese Questionnaire to Traders 42

Tables

Table 2-1 Cost and Price of Dragon Fruit Exported to Europe 12

Table 3-1 Cronbach’s Alpha of the Investigated Questions for Farmers and Traders 16

Table 4-1 Descriptive Statistics for Farmers 18

Table 4-2 One-Sample t Test to State Capital Support for Farmers 19

Table 4-3 One-Sample t Test to State technical support for farmers 20

Table 4-4 One-Sample t Test to State Quality Support for Farmers 20

Table 4-5 One-Sample t Test to State Consumption Support for Farmers 21

Table 4-6 One-Sample t Test to State Capital Support for Traders 21

Table 4-7 One-Sample t Test to State Packing and Labeling Support for Traders 22

Table 4-8 One-Sample t Test to State Business Transaction Support for Traders 22

Table 4-9 One-Sample t Test to State Marketing Support for Traders 23

Figures

Figure 2-1 Model of Supply Chain of Dragon Fruit in Binh Thuan Province 8 Figure 3-1 Research Process 15

Research on the Need of Government for Dragon Fruit Supply Chain in Binh Thuan

Province in Vietnam Chapter 1 Introduction

This chapter includes: (i) Background and Motivation, (ii) Research purpose and objectives, (iii) Research scope and limitation; and (iv) Definition of terms

1.1 Background and Motivation

Dragon fruit has rich nutrition with attractive color Vietnam mainly exported dragon fruit to Asian market in which Taiwan market consumed up to 50% of the total amount exported The amount of dragon fruits exported in 2006 three times greater than the one in

2004 However, the amount exported in recent years has been decreasing, especially to European markets (from 80% to 40% in 2008) The cause identified was the extreme increase

of growing land areas (i.e., unplanned cultivation) without paying attention to quality required by consumers as well as competitive prices In years of 2007 and 2008, although the percentage of amount exported increased, the export price relatively decreased and was not stable due to the competition with other countries such as Thailand, Israel, Colombia, etc., their dragon fruit was varied and better in quality with competitive advantage of fees (e.g., transport fees)

Decision No 518/QĐ-CTUBND (issued on April 3, 2005 by Chairman of Binh Thuan province and referred to dragon fruit development from 2006 to 2010) and Document No 705/UBND (issued on March 1, 2005 by the People's Committee of Binh Thuan province and referred to implementing plan of 2005) mentioned one of main tasks of the Department

of Agriculture and Rural Development of Binh Thuan was to build a comprehensive proposal for developing and improving the efficiency of dragon fruit To Taiwan market, although the large demand existed, the fruit had not been imported into the market due to the dragon fruit ban issued on March 1, 2009 for the dragon fruit exported without heat treatment (Congthuong, Apr 1, 2009)

The situation of production and consumption in Binh Thuan dragon fruit could be summarized as follows: (i) a majority of farmers who produced dragon fruit were small individuals Although some cooperatives had been formed, however, they did business inefficiently (ii) it was not easy to have advanced technology transferred, especially to carry out production according to the VietGAP; (iii) there was no link between farmers and dragon exporters; (iv) the purchasing of dragon primarily occurred right at gardens by private traders Producers, therefore, were usually dependent on private traders It could be said that the production and consumption of dragon fruit, at present, was completely spontaneous and not being organized Producers and traders were not aware of the responsibility for the trade mark of their product yet

1.2 Research Purpose and Objectives

The current situation of state management, production and consumption of dragon fruit

in Binh Thuan mentioning above theorized that state support to production and consumption

of dragon fruit in Binh Thuan was necessary Therefore, the study aimed to examine the necessity of state support for planting and trading dragon fruit in Binh Thuan province

There were two research objectives:

1 Identify the necessity of state support for the farmers planting dragon fruit;

2 Identify the necessity of state support for traders trading dragon fruit

There were eight associated research questions developed:

1 Do the farmers need state capital support?

2 Do the farmers need state technical support?

3 Do the farmers need state quality assurance support?

4 Do the farmers need state product consumption support?

5 Do the traders need state capital support?

6 Do the traders need state packing and labeling support?

7 Do the traders need state business transaction support?

8 Do the traders need state marketing support?

1.3 Research Scope and Limitations

Participating in the supply chain of dragon fruit were stakeholders such as farmers, cooperatives, small traders, wholesalers and retailers, exporters, and end-used consumers Due to the limitation of time and finance, the study focused on examining the necessity of state support for planting dragon fruit to farmers and for trading dragon fruit to traders in the two districts of province where dragon fruit mostly planted They were Ham Thuan Nam district and Ham Thuan Bac district

1.4 Definition of Terms

Dragon fruit

Dragon fruit trees (Hylocerut undatus) belongs to the cactus family (Cactaceae), originally come from Central and South America Dragon fruit was planted in the appropriate domain of dry land Climatic conditions and land in Binh Thuan was very suitable for planting dragon fruit They were quickly harvested (one year after beginning planting) The average amount harvested was from 20 to 30 tons per hectare (Axis Research, 2006)

Supply chain

A supply chain is a system of organizations, people, technology, activities, information and resources related to moving a product or service from supplier to customer The operation of the supply chain conversion of natural resources, raw materials and components into finished products delivered to the end customer Supply chain associated with the value chain (Wikipedia, 2009)

GAP (Good Agricultural Practices)

As defined by FAO, 2003 GAP was "manufacturing process (of a specific unit) to ensure environmental, economic and social sustainability of the units, the product must make good and safe" The rules, standards, regulation of GAP were set out in recent years by the production units, non-governmental organizations and government to establish a technological process for producing good food specific production facilities

Binh Thuan province

Binh Thuan was a coastal province in South Central, located in the Southeast Economic Region, a close relationship and influenced strongly the impact of key economic localities south With total natural area of 7830 square kilometers and a population of 1,165,599 people, population density of 149 people per square kilometer, distributed in the province including 8 districts (including 5 mountain districts and 1 island district), 1 town and 1 city with 126 units of communes, wards and towns (Statistical Yearbook of Binh Thuan, 2006)

Chapter 2 Literature Review

Chapter 2 includes: (i) Overview of Binh Thuan Province; (ii) Dragon Fruit in Binh Thuan province; (iii) Supply Chain of Dragon Fruit in Binh Thuan province

2.1 Overview of Binh Thuan Province

Binh Thuan was a coastal province in south central region and located in the Southeast economic region Therefore, it had a close relationship and was strongly influenced by the Southern key economic zone Its natural area totally was 7,830 square kilometer with a population of 1,165,599 and the population density was 149 people per square kilometer The province included eight districts, one town and a city with 126 units of communes, wards and towns Binh Thuan province was 200 kilometer far from Ho Chi Minh City, 250 kilometer far from Nha Trang city The national highway 1A and the Thong Nhat national railway ran through the province In addition, the national highway 28 connected Phan Thiet city of the province with the Southern highlands and the national highway 55 connected Vung Tau city (the center of oil and gas services and tourism in Vietnam) These geological characters together with the attraction of major political, economic and cultural cities such as

Ho Chi Minh City, Vung Tau city, Da Lat city and Nha Trang city had created favorable conditions for Binh Thuan It would be a good opportunity for the province to diversify its economic output And, dragon fruit was one of such output

Binh Thuan was located in the tropical climate zone with much sunshine and wind, without winter There were two seasons The rainy season was from May to October; sunny season was from November to April The average temperature was 26 oC The average humidity was 78-85 percent in a year The average rainfall was 800 - 2000mm per year Such climate characters, generally speaking, affected the industry and residential life However, it had become a favorable opportunity for the development of a variety of industrial trees with high economic value such as the dragon fruit Binh Thuan province was relatively flat with many alluvial plains that suitable for the development of agricultural crops and industrial trees such as dragon fruit The land areas that was capable for agricultural production was about 680,087 hectare in which the land for planting dragon fruit

was about 7,000 hectare (2.48%) A plan of expanding the areas for planting dragon fruit had been made by the province

Generally speaking, due to owning a rich category of land, Binh Thuan province could develop the biodiversity with types of plants such as forest trees, long-term industrial crops, fruit trees and other short-term industrial crops Therefore, dragon fruit was considered as a suitable type of plant for the land Dragon fruit was also considered as having higher economic feature than other type of plants because it could be alive in nutritious-poor lands What required for dragon fruit were only enough water supply and a good drainage The advantages of Binh Thuan province for dragon fruit development were the high number of sunny days per year, high humidity, and average humidity, much different between day and night temperatures that were much favorable for industrial trees such as dragon fruit

2.2 Dragon Fruit in Binh Thuan Province

Dragon fruit was suitable for planting in tropical dry climate regions The suitable temperatures were from 50 Celsius to 55 Celsius It was also appropriate for planting in areas with strong light Dragon fruit was imported into Vietnam 100 years ago by French In the past, dragon fruit was planted and supplied for the King and aristocratic families only (Lo, 2001) From 1990, dragon fruit had a quick development and become one type of industrial trees that had high economic value Binh Thuan was the province where the area for planting dragon fruit was largest in Vietnam In the province, the areas for planting dragon fruit mainly located in the two districts Ham Thuan Nam and Ham Thuan Bac that nearly accounted for 90 percent of the total output of the province

From 1996, the areas for planting dragon fruit in Binh Thuan continuously expanded The tree has gradually become the key industrial tree in some regions of the province that brought higher revenue for local production and business Profit from production and business of dragon fruit helped the province to reduce poverty, enriched farmers and increased revenue for local government budget By recognizing the comparative advantage of planting and trading dragon fruit, the local government of Binh Thuan province, in recently, paid more attention to the research and transfer of science and technology in order to promote the production and consumption dragon

A majority of dragon fruit produced for export Domestic consumption only accounted for from 10 percent to 20 percent Market for exporting dragon fruit rapidly expanded in recent years China and Hong Kong were the two main oversea markets of export dragon fruit and was the gate to the international market With the advantages of having the largest export market and good quality, dragon fruit had become the key fruit in exporting Vietnamese fruit and had more important position than other fruits In Vietnam, the area of planting dragon fruit accounted for only 1% of total areas of planting fruits of the country but

it accounted for up to 9 percent of the total exporting fruit It was also considered as one of

40 key agricultural products exported by Vietnam at present and in the future by the Ministry

of Industry and Trade

Most of dragon fruit were exported at borders Its business needs to be paid much attention because the product always needs to be fresh The fluctuation of market price caused difficulty for gardeners and exporters A great amount of dragon fruit was exported but the revenue gathered, in contrast, was small Becoming a member of World Trade Organization was an opportunity but also a challenge for Vietnamese fruit, viewed from the aspect of product quality and food hygiene and safety, etc., According to the Department of Trade and Tourism of Binh Thuan province, dragon fruit was exported to 12 countries and territories with an average increase of 30 percent per year in recently In 2006, Binh Thuan exported about 25,500 tons of dragon fruit with a total value of 13.5 million USD The countries imported a large number of dragon fruit were Hong Kong, Taiwan, Thailand and Singapore To European market, the Netherlands was the country that imported the largest number of dragon fruit

According to the Ministry of Industry and Trade and the Department of Industry and Trade of Binh Thuan, the exported amount of dragon fruit in the first 6 months of 2007 was 29,600 tons which were worth US$15.5 million There were 20 different oversea markets However, the exported amount of dragon fruit was declining due to improper harvest and storage techniques as well as poor standards of hygiene As a result, many shipments of dragon fruits were stopped at seaports or border gates because of poor quality of the product (Ministry of Industry and Trade) In the past, many shipments of dragon fruits towards Japan were thrown away due to the issue concerning fruit flies In February 2007, the export turnover of dragon fruit to the European market was worth US$ 400,000 The export turnover

to Japan was worth less than US$ 4,000 One of the corresponding causes was that dragon fruit of Vietnam was considered as having low reputation brands and not full enough meeting

of EUREPGAP standards (standards of Good Agricultural Practices of Europe) or ASIANGAP (standards of Good Agricultural Practices of Asia) yet In addition, there were a large amount of dragon was being traded on market under commercial brand names of importers

The cultivated area for planting dragon fruit in Vietnam was expected to expand up to 17,000 hectares in 2010 In order to enhance the competitiveness in the market, Vietnam should develop effective business strategies concerning farming techniques, safety, quality and, especially, the technical treatment involving storage The issue of using overweight-dose

of agrochemicals was still a big problem that considerably affected the export quantity of dragon fruit Many European countries, and recently, even the China, have warned the possibility of issuing a ban for Vietnamese exported dragon fruit if the problem would not be resolved completely (Ministry of Industry and Trade, 2007)

2.3 Supply Chain of Dragon Fruit in Binh Thuan Province

Figure 2-1 Model of Supply Chain of Dragon Fruit in Binh Thuan Province

(Source: Axis Research)

2.3.1 Farmers

The average area of dragon fruit production for each farmer household in Ham Thuan Bac was about 0.5 hectares; in Ham Thuan Nam was 0.75 hectares per Doing business in producing as individual was the major form of the production A fairly large number of farmer households owned area from 10 to 20 hectares; while a smaller number of farmer households owned the area from 50 to 100 hectares The majority of farmers focused on production only, not the sales that relatively relied on traders who purchased right in the garden Some farmer households owned big farms that may have both production and purchasing for exports (Southern Fruit Research Institute) The province had 8,262 hectares

of dragon fruit, in which the harvested area was 5,281 hectares, with 10,000 farmer households working on 0.5 hectares in average The total output in 2006 was 120,000 tons, with an average of 22.7 tons per hectare (Farmers’ Union of Binh Thuan province)

The average area of production was 0.67 hectare; the average output was 39 tons per hectare, that worth 121,036 million VND per hectare; the average profit was 71,201 million VND per hectare To be profitable, the farmers had to charge 49,958 million VND for every hectare, consequently, the average profit rate was 142.52% Thus, it seems very clearly that

in Binh Thuan, in future, there is certainly not any plant that could replace dragon fruit trees for about 30 years (Research Center of Binh Thuan dragon fruit) There was a growing area

of dragon fruit in Binh Thuan made mostly by individual farmers Many of them had good technical understanding of dragon fruit yielded high economically efficient output with more creativity However, no farmer household dealt business to commercial companies directly; the primary trades were done via traders or mediators This made disadvantage for farmers Consequently, the farmers often got fewer beneficiaries than actual value of their product produced.

The farmers growing dragon fruit usually encountered some difficulties in the process of cultivation and consumption such as: Great costs for head support, especially for small farmers; Investment in electrical transformers for power system against grid for season; Price remained high without special support Almost farming techniques were mostly applied based on their own experience of producing; There was a fair lack of cultivating knowledge; Bank of Agriculture & Rural Development did not have a policy or fund supporting investment and development, especially a favorable mechanism (loans, lending norms and

procedures) to create conditions for farmers to access loans easier; The expansion of electricity grid networks for cultivation both in remote areas with limited support of electricity price; New knowledge concerning cultivation techniques and seed were not widely delivered to people via organizing seminars, leaflets, films, etc., by the local officers of the province; No model and correct safety regulations existed; No sense of high compliance with regulations to ensure stable quality and uniform; Lack of knowledge shared among farmers; Product quality was not unified in the same garden or among the farmers; Product diversification had mainly taken by the plant in the province, at the same source; Most products did not meet the standard of exporting and most did not meet the safety regulations for food safety for producers and the environment.

Farmers had to rely on traders heavily because they did not have sufficient information

of as well as lacked trading experience Some farmers actively want to look for market for their own products; however, they lacked many of the facilities, especially post-harvest technology Because of trading without having based on formal contracts, the farmers often have to bear some unfair dealing in business The farmers also had little opportunities to approach official projects concerning standard good practice in agriculture such as the GAP project which help farmers improve their production methods to meet the requirements GAP regulation

2.3.2 Traders

Consumption of dragon fruit operated under the control of small and medium sales vendors with business transactions taken right in the gardens This force significantly contributes to product movement in supply chain, while they do not pay much attention on preliminarily classification as well as applying post-harvest technology Some small sellers buy the whole garden area and then use drugs to make fruit have quick growth and to increase output This is actually harmful to consumers, farmers, garden dragon and the environment, although their current businesses still play an important role in the distribution

of dragon fruit in supply chain This kind of business would affect quality brand name and reputation of Binh Thuan dragon fruit in future According to statistics of the province, there are six big enterprises specializing in business of exporting dragon fruit besides other 40

which worth of US$ 13.6 million The key markets settled were Hong Kong, Taiwan, Singapore, Thailand, Malaysia, China, and recently, Germany, the Netherlands

Traders play an important position in the value chain of Binh Thuan dragon fruit The traders themselves also met many difficulties such as: (1) Capital: they need capital for equipment, however, it was not easy and comfortable to approach loans; (2) Transactions: Not all relationship between farmers and traders were stable for a long duration of time Only

a few traders retained good trade relations with farmers from year to year There was no organization or local wholesalers responsible for exchanging market information or facilitating business dealings between the traders and farmers; (3) Post-harvest technology: A few traders had effective facilities as well as professional knowledge of post-harvest technology; (4) Label: there was lack of awareness of the importance of labels and trade brands; (5) Export Promotion and Brand building: the current export promotion activities was not matched with the actual outcome of dragon fruit produced; (6) Export price: the export price continuously decreased although such a price of Vietnamese dragon fruit was still higher than other foreign competitors due to the high cost of transfer; (7) the Agricultural Bank neither offered priority policies nor facilitate traders and businesses to approach loans more conveniently; (8) The was no promotion of business transactions in the market for both farmers and traders; (9) Likely farmers, the traders have not obtained support and training on professional techniques as well as good agricultural practice guidance concerned process after harvest; (10) the export promotion program for dragon fruit was not officially recognized and implemented as the key export promotion program of the nation

Table 2-1 Cost and Price of Dragon Fruit Exported to Europe

Components in the supply chain Price

(VND/kg)

Cost (VND/kg)

Percentage of total product value

Water, water pumping systems; electricity

Washing, sorting, processing, labels,

(Source : Southern Institute of tree fruit, 2006)

Table 2-1 shows that Vietnamese farmers obtain only 3.75% value of the products, the Vietnamese traders get 5.71%, the export enterprises 7.95%, and the distributors in Europe receive 78.46% This is due to the small-scale method of agricultural production as well as the low capability of promoting commercial transactions and negotiating for contracts (Alain, 2007)

2.3.3 State management agencies

State agencies concerning supply chain of dragon fruit were: (1) the Provincial People’s Committee; (2) the Department of Agriculture & Rural Development; (3) the Office of Plants Protection; (4) the Binh Thuan Department of Science and Industry; (5) the Binh Thuan Department of Commerce & Tourism; and (6) the Binh Thuan Association of Dragon fruit

Provincial People’s Committee has issued guidance for the Agriculture & Rural

Development Dept, Science & Industry Dept., Tourism & Commerce Dept to execute their state managerial functions in establishing plans to participate fairs and expo’s, to advertise products and build trademark for dragon fruits of Binh Thuan In addition, the People’s Committee of the province has issued decision to adjust earth surface plan in order to develop dragon fruit trees of Binh Thuan for the period of 2005-2010, and to support enterprises to enlarge their working facilities

Department of Agriculture & Rural Development is under the supervision of the

Provincial People’s Committee This Department is the office that establishes plans for the cultivation of dragon fruits in the province, manages agricultural services from selecting species, farming techniques, applicable steps in farming process… and organizes training courses through the support of Farming Encouragement Centers, directs the Farming Encouragement Centers to establish demonstration models of technological advances, farming systems, and orders the Plants Protection Office to observe and train farmers the rules for protecting plants and human consequently In addition, this Department should have technical specialists to care for and “cure diseases” for plants as requested by farmers

Office of Plants Protection is in charge of the duty of foreseeing possible diseases that

may harm dragon fruits; training farmers know how to protect harvest from insects, or assisting them how to use insecticides for best result but safe for human health

Binh Thuan Department of Science and Industry To study new farming technology

and transfer to the Agriculture Department

Binh Thuan Department of Commerce & Tourism is a professional office of Binh

Thuan People’s Committee that does the management functions of all commercial and tourist activities including import and export, trading in local markets This department coordinates with the Center of Support Services of Binh Thuan to organize training courses for the members of Binh Thuan Dragon fruit Association and those farmers planting dragon fruits to know how to do the cultivation and trading of dragon fruit for export, in an effort to update knowledge of applicable technologies for better economic result in the cultivation and exportation of dragon fruits

Binh Thuan Association of Dragon fruit has been established to support the

development of dragon fruit in the region But it did not bring result as expected Just only several members participate in the association activity Until now it has not fully developed its functions Farmers have not known the benefits and income they can have from this organization and the participation is not effective

Comments

Binh Thuan dragon fruit producers are mainly individuals without forms of cooperative groups set up Some cooperatives have just established, however, the initial operation were less effective The real experience showed that it was difficult to transfer technical progress and is not easy to make the production process follow VIETGAP There is no link between farmers and dragon-exported enterprises As a result, there is existence of unfair competition, lack of responsibility to consumers The origin of the product will never be transparent With production and sales formed as mentioned above, it would be hard for technical advanced transferring in production; the efficiency of business operation is low; and the producers bear more risk Purchasing procedure mostly occurs right in the gardens or fields Therefore, farmer’s benefit totally depends on kindness of traders Producers generally much relies on expected floating market prices that are often not stable and more risk It can be said that is a production base completely spontaneous and lack of organizational management Producers and traders are not aware of and responsibility for brand name and trademarks of dragon fruit

Chapter 3 Research Methodology

Chapter 3 includes: (1) Research Process; (2) Survey Method; (3) Research Instrument; (4) Sampling Method; (5) Data Collection; (6) Reliability and Validity; and (7) Data Analysis

3.1 Research Process

Figure 3-1 Research Process

1 Identify problem

2 Identify motivation

3 Identify research objectives

4 Identify research model

5 Develop questions for interview and survey

3.2 Survey Method

The survey with self-administrative questionnaires was conducted

3.3 Research Instrument

There were two questionnaires developed to gather data concerning opinion of necessity

of state supports for the two research subjects: a group of farmers who professionally planted

dragon fruit and traders who professionally traded dragon fruit

3.6 Reliability and Validity

The reliability of questionnaires was examined by Cronbach’s Anpha with the 5-level

Liket scale Table 3-1 presents the result of examining Cronbach’s Anpha of questionnaire

for farmers and questionnaires for traders

Table 3-1 Cronbach’s Alpha of the Investigated Questions for Farmers and Traders

Farmers - Cronbach's Alpha Traders - Cronbach's Alpha

3.7 Data Analysis

Based on the eight research questions, there were eight hypotheses formed:

Hypothesis 1: State capital support is necessary for farmers

Hypothesis 2: State technical support is necessary for farmers

Hypothesis 4: State product consumption support is necessary for farmers

Hypothesis 5: State capital support is necessary for traders

Hypothesis 6: State packing and labeling support is necessary for traders

Hypothesis 7: State business transaction support is necessary for traders

Hypothesis 8: State marketing support is necessary for traders

One-sample t Test was used to test these eight hypotheses One-sample t Test method is used to compare the actual measured data and desired or supposed values (or verification values) gained though references or estimation of researchers (Huck, Cormier & Bounds, 1974) The test values were 3, 4 and 5 which were equivalent to the assessment of “Neutral” and “Necessary” and “Completely necessary” for each type of state support A null hypothesis H0 of no difference existed between the actual estimated data and desired or supposed values in opinion of necessity of each type of state support was set up The result of analyzing by One-sample t Test will show if the hypothesis H0 would be rejected or would not be rejected