Wednesday, April 3, 2019

Factors Affecting Tea Production Schemes

Factors Affecting afternoon afternoon afternoon afternoon tea leaf line of reasoning SchemesFACTORS AFFECTING FARMERS CHOICE REGARDING PRODUCTION SCHEMES OF TEA PRODUCTION IN PHU THO PROVINCE, VIETNAMI. INTRODUCTION1.1 Background of the StudySince the economic re figure named inside moi in 1986, Vietnamese economy transformed from centrally-planned economy to socialist-oriented market economy. convey to the reformation, Vietnam gained remarkable achievements in economic training. In period from 1986-2010, annual per gravid GDP crop of Vietnam was 5.3%, staying at the second to the fastest GDP growth pass judgment among Asian countries (McKinsey Global Institute, 2012). Consequently, need rate has declined significantly from or so 70% at the end of 80th decade to nearly 10% in 2004 and Vietnam became a low middle-income country in 2008 (Tran, 2013). A pine with the development of economy, artless heavens has experienced mendment and contri exclusivelyed significan tly to overall economy. Production value of culture, forestry and aquaculture in 2012 according to constant p sift in 1994 was 255.2 kelvin billion dong, increasing 3.4% comp atomic number 18d to 2011. Moreover, exporting value of sylvan and forestry returns r to each oneed 17.7 billion USD in 2012, increasing 18% comp atomic number 18d to last previous year (General Statistics Office, 2013). tea is accept as one of the strategic commodity for exportation of Vietnam. In particular, in 2012, Vietnam exported roughly 146.7 gee tons of tea and export value was 224.6 jillion USD, increasing 8.67% in terms of quantity and 9.29% in terms of export value compared to 2011 (GSO, 2013). Vietnam is the fifth largest exporter of tea in the world after India, China, Sri Lanka, and Kenya in terms of export volume. Export market of Vietnamese tea genus Ara Pakistan, Taiwan, Indonesia, Russia, China, USA, etc.In order to assume such(prenominal) achievement in terms of export, tea output has dramatise over last 12 years. In 2001, harvested area of tea in Vietnam was 74.7 thousand ha and it was expanded to 115.8 thousand ha in 2012, compound annual growth rate for the period 2001-2012 was 4.06%. Meanwhile, compound annual growth rate for tea outturn in such period was 7.8%, from 340.5 thousand tons in 2001 to 923.1 thousand tons in 2012 (GSO, 2013). Tea is planted in many places in Vietnam, but mainly focus on five regions no(prenominal)thwest (Son La, Lai Chau), nor-east (Ha Giang, Tuyen Quang, Lao Cai, Yen Bai), Northern midlands (Vinh Phuc, Phu that, Bac Can, Bac Giang, Thai Nguyen, Nam Tuyen Quang), North Central (Thanh Hoa, Nghe An, Ha Tinh), and Central Highlands (Lam Dong, Gia Lai, Kontum).1.2 Statement of the ProblemPhu Tho is an upland state locate in Northeast of Vietnam. This region has high poverty rate of Vietnam with 17.39% in 2012 (MOLISA, 2013). In which, the poverty rate of Phu Tho province in 2011 was 17% (GSO, 2012). Thanks to natural conditi ons that are fond for tea action, tea product from this region has been well- bonkn in Vietnam. Tea drudgery plays an important grapheme in economic business of Phu Tho province. Tea proceeds has been expect to created job opportunities and enhanced income of tea farmers.In order to encourage tea sector in local area, Phu Tho province has many favorable policies, programs to support farmers regarding sows, fertilizers, techniques, extension services, and so on. Specifically, decision 23/2001/Q-UBND dated twentieth declination 2011 of People Committee of Phu Tho province mentioned support of agricultural programs in period 2012-2011, including tea commodity.However, tea production in Phu Tho province still has existing problems. Tea productivity is low collectable to old tea trees. In 2011, average productivity of tea in Phu Tho province was only 0.84 ton/ ha (Quoc, 2013). Furthermore, the problem of overdrive of pesticides also brings about low quality of tea products. Mor eover, the integration in production and consumption among farmers and tea litigateing enterprises in Phu Tho province is weak. Last but not least, tea farmers lack of knowledge and skills of contemporary production techniques and harvesting techniques as well.According to Thang, et al (2004), tea farmers deplete 4 different classifications including unlinked farmers, geld farmers, worker farmers, and cooperative farmers. Corresponding with that are 4 schemes of production Individuals, issue terra firma, waged agricultural workers and cooperatives. However, Wal (2008) stated that there are three main schemes of production corresponding to three types of tea producers in Vietnam individual farmers ( largely smallholders), exacted farmers and worker farmers.1.3 Objectives of the StudyThe main objective of the suit is to determine eventors that dissemble famers in selection of production schemes of tea production in Phu Tho province, Vietnam.Moreover, this study specifically aims to+ Identify the production schemes of tea farmers in Phu Tho province.+ Identify difficulties and opportunities of farmers in each type of tea production and+ Recommend solutions that would help farmers to promote tea production and to improve their livelihood.1.4 Significance of the StudyThe study of Factors affecting farmers choice regarding production schemes of tea production in Phu Tho province, Vietnam would help local officials and policy makers to pack better understanding about those types of tea production. Therefore, appropriate policies would be recommended. Then, tea production and livelihoods of tea farmers in Phu Tho province would be improved.II. appraise OF LITERATURE2.1 refresh of contract farm2.1.1 Definition of contract farming undertake farming has been employ all over the world for long time and there are many definitions about contract farming from different scientists and studies. Eaton and Shepherd (2001) stated that contract farming is a large- hearted of agreement which farmers and influenceing or marketing firms agree with each early(a) in integration regarding production and supply of agricultural products at icy prices. Contract farming is also considered as a form of steep integration in agricultural commodity grasps. The firms, therefore, would pose better throw over production, quantity, quality, and the time to decide what commodity is produced (Prowse, 2012).2.1.2 Types of contract farmingThe form of contract farming can vary in reality depending on the agreement of farmers and firms. According to Eaton and Shepherd (2001), contract farming can be divided into five molds The centralized deterrent exampleing the nucleus dry land model the multilateral model the informal model and the go- amid model.The centralized model This is a kind of vertical integration where the firm purchases products from farmers and the firms will act and market the products. This kind of contract farming is often applied for tobacco, cotton, slit cane, bananas, coffee, tea, cocoa and rubber. The extent of the involvement of the firms is diversified. The firms can provide only seed or provide land preparation, seeds, fertilizers extension services, and so on.The nucleus estate model The firms prepare their make estate plantation where they make a pilot model of production for particular crop. Then, the firms will introduce the techniques of such models to farmers. The model is often used for people who are resettled and transmigrated.The multipartite model This model involves a number of stakeholders including legislative bodies with farmers. Those bodies would be global gild, provincial companies, joint-venture companies, and village committees, etc. Each stakeholder with be responsible for each stage of production and marketing such as inputs, character reference, processing, and marketing.The informal model This kind of model is suitable for individual enterprises or small firms. Specifically, t he firms thrust contracts with farmers based on season that is why such contract is applied to fresh vegetables, and tropical fruits. In this kind of model, inputs are limited to seeds and fertilizers. by from that, technical advices are only acquirable for grading and quality control.The intermediary model When it comes to this kind of contract farming, the firms usually purchase products from collectors or middlemen who discombobulate informal contract with farmers. Since collectors appear between farmers and the firms, it brings about problems of lower income for farmer, and poorer quality.2.1.3 Benefits to farmers from contract farmingAccess to reliable market Market can be considered as one of the most important fruits for farmers. Farmers usually face impediment in terms of market, they lack of information and they do not know where they can sell products with better price. Thus, farmers should know where they can sell their products in the beginning they produce it. Con tract farming can help farmers to deal with this issue by linking farmers with reliable markets. This is consistent with study of Eaton and Shepherd (2001) and Setboonsarng (2008).Access to credit Farmers often encounter problem of credit to buy inputs or to expand production. This problem for small-scale farmers is more pressing than that of large-scale farmers. Setbonarng (2008) argued that farmers are cumber to credit in developing countries, even in places where microfinance exist. This is due to the fact that bank usually offer loans to microenterprises rather than agricultural production. Consequently, many smallholders cannot plan of attack credit at all (Glover Kusterer, 1990 Hayami Otsuka, 1993). The study of Simmons (2002) also has same last regarding credit issue.+ Provision of inputs By joining contract farming, farmers can be provided inputs by firms or contractors. Those inputs would be seeds, fertilizers, and pesticides. Provision of inputs would reduce transact ion embody per unit of output (Nagaraj, et al, 2008 and Bijman, 2008).+ Reduction in risk of price version farmers, who do not have contract and often sell their products to the jazz market, usually have to face price fluctuation. Contract farming would get well this problem. This is owing to the fact that the firms would specify the price in advance and this process is made during the time of contract negotiation (Eaton and Shepherd 2001 Setboonsarng, 2008 and Baumann, 2000).+ Improvement of engine room Simmons (2002) argued that in the absence of contract farming, farmers have to face high hail of gathering technical information. Frequently, contract farming requires a certain aim of quality. Also, the firms would support extension services and introduce new technology to farmers in order to have better quality for the products. This is also the same with mop up of Bijman (2008) and Eaton Shepherd (2001).2.1.4 Empirical studies on contract farming in agricultureThe situat ion of contract farming between Tanganda Tea Estate and farmers is an example. Tamgada Tea association has operating an outgrower schemes for large-scale farmers for several years. Then in 1975, they started their business with small-scale farmers. The form of contract is verbal in English and argot and there is no definite duration for the contract. Under the agreement, the company support inputs such as seeds, fertilizers, and credit with low interest rate to farmers. The fee will be deducted at the payment of final green leaf. Company also provided free technical advice and transport services to farmers. In 1998, the company had full-time outgrower Extension Officers who help small-scale farmers to increase technical production (Woodend, 2003).Can (2008) stated that the largest contract farming in rice sector exists between Ankor Kasekam Roonoeung Co Ltd (AKR), a private company, and rice farmers. The company mostly exports Neang Mails (an aromatic Cambodian rice variety) to i nternational market. The number of people joining the contract with the company has been increasing from 100 farmers at the beginning to 27,345 farmers in 2003 and 32,005 farmers in 2008. Under the contract, the company plays an important role in all stage of production and marketing as well. The company is the one who deal suitable area for growing rice, establish farmers associations, recruit new farmers, give birth seeds and technical support, monitor and solve problems in production, collect and purchase rice from farmers, sort and classify milled paddy into different kinds, and export to other(a) countries including European countries, Australia, and Hong Kong.According to the contract, the company distributes Neang Mails seeds in credit to farmers in July, and accordingly the company will buys output from October to January of the following year. The contract clearly includes the bill of seeds that the farmers have to return, the minimum prices, and penalties for contrac t violation. However, the contract does not include explicitly the penalties to the companies when they do not buy output of farmers at the negotiated prices.Moreover, the company establishes communicate associations to support implementation of the contract. Each association has function of monitoring process and reporting to the company. Aside from that, associations also provide technical advice to their members.Setboonsarng, Leung, and Stefan (2008) had study about rice contract farming in Lao PDR. Authors mentioned a scale study of contract rice farming in Vientiane province. Lao Arrowny Corporation was established in 2002, a joint venture between Lao and Japanese investors. The company produces Japanese rice and exports to Japanese expatriates in Southeast Asia. In 2004, the company had contract with approximately 2,000 farmers and total rice land of 800 ha. The criteria of the contract include three main points farmers own their own rice land farmers who want to become membe r of farmers association have to work hard and the decision will be given by fellow farmers and farmers are not allowed to use chemical fertilizers in production. By implementing contract with the company, farmer will receive premium price which is include in the contract. In addition to this, the company supplies seeds, fertilizer and technical assistance.2.2 Review of cooperatives2.2.1 Definition of cooperatives2.2.2 Benefits to farmers from cooperatives2.2.3 Empirical studies on cooperatives in agricultureIII. CONCEPTUAL good example3.1 Conceptual framework3.2 Hypotheses of the studyV. RESEARCH METHODOLOGYTypes and Sources of Data primary election data would be collected by fat interviews key informants in production chains of tea sector at Phu Tho province. Also, deep interviews will be implemented with Department of Agriculture and Rural instruction of Phu Tho province, Northern Mountainous Agriculture and Forestry Science Institute, etc. Moreover, performance of participat ory clownish appraisal (PRA) in order to collect frequent information about current situation of tea production and factors that affect choice of tea farmers among production types at Phu Tho province. Last but not least, questionnaire survey will be conducted to collect information about situation of tea production, factors that affect choice of tea farmers in production integration at Phu Tho province, constraints and opportunities of farmer in each chain of tea production.In terms of secondary data, Documents related to tea production at Phu Tho province will be collected to have better understanding of current situation of tea production at Phu Tho province.4.2 Sampling MethodSample coat will be chosen by Yamane formula (1967) as followsWheren = sample sizeN = population sizee = sampling error, e = 5%Analytical ToolsTo analyze factors that impact farmers choice in production types, the multinomial logit (MNL) model will be used. Because sum of the probabilities must equal to one, we have J types of production, and therefore we have J-1 estimated equations. And the most common type of production will be chosen as reference category. According to Greene (2003), the public formula for MNL is as followsWhereYi is random variable that denotes the farmers decisions among production types.xi is 1xK vector of farmers characteristics.j is a Kx1 vector of parameters.From equation (1), we can compute J log-odds ratiosMarginal effects could be computed by taking derivative of equations (1) with applaud to xi as followsLITERATURE CITEDBAUMANN, P., 2000. Equity and Efficiency in contract farming schemes The experience of agricultural tree crops. Working paper 139. UK abroad Development Institute.BIJMAN, J., 2008. Contract farming in developing countries.CAI, J. et al., 2008. Rice contract farming in Cambodia Empowering farmers to move beyond the contract toward independence. ADB Institute give-and-take Paper No. 109.DECISION 23/2001/Q-UBND dated 20th December 20 11 of People Committee of Phu Tho province mentioned support of agricultural programs in period 2012-2011.DECISION No. 80/2002/QD-TTg of June 24, 2002, on policies to encourage agricultural product sale via contract farming.EATON, C. and SHEPHERD, A.W., 2001. Contract farming Partnerships for growth. FAO Agricultural serve Bulletin 145.GLOVER, D. and KUSTERER, K., 1990. Small farmers, big business Contract farming and rural development. Macmillan, London.HAYAMI, Y. and Otsuka, K., 1993. The economics of contract choice. Oxford University Press, Oxford.MCKINSEY GLOBAL INSTITUTE, 2012. Sustaining Vietnams growth The productivity challenge.MOLISA, 2013. closing 749/Q-LTBXH dated 13 May 2013 about approval of result of poverty household in 2012.NAGARAJ, N. and et al., 2008. Contract farming and its implications for input-supply, linkages between markets and farmers in Karnataka.PROWSE, M., 2012. Contract farming in developing countries a review.QUOC, V., 2013., Efficien cy improvement of tea commodity in Phu Tho province current status and solutions, online available at http// Accessed 26th Jan 2014.SETBOONSARNG, S., 2008. Global partnership in poverty simplification contract farming and regional cooperation.SETBOONSARNG, S., LEUNG, P. and STEFAN, A., 2008. Rice contract farming in Lao DPR Moving from subsistence to commercial agriculture. ADB Institute Discussion Paper No. 90.SIMMONS, P., 2002. Overview of smallholder contract farming in developing countries.THANG, T.C. et al., 2004. The participation of the poor in agricultural value chains A case study of tea.TRAN, V.T., 2013. Vietnamese Economy at the Crossroads New Doi Moi for Sustained Growth.WAL, S.V.D., 2008. Sustainability issues in the tea sector. A comparative analysis of six leading producing countries.WOODEND, J.J., 2003. authorization of contract farming as a mechanism for the c ommercialization of smallholder agriculture, the Zimbabwe case study.APPENDIXAppendix Export volume and export value of tea commodity in period 2002-2012GSO and trademap, 2013

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