Tài liệu Enhanced value added solutions for pineapple product contributing to increase income for poor households in tien giang province

MISNISTRY OF EDUCATION AND TRAINING CAN THO UNIVERSITY NGUYEN QUOC NGHI ENHANCED VALUE ADDED SOLUTIONS FOR PINEAPPLE PRODUCT CONTRIBUTING TO INCREASE INCOME FOR POOR HOUSEHOLDS IN TIEN GIANG PROVINCE ABSTRACT OF DISSERTATION Specialization: Agricultural Economics Code: 62 62 01 15 Can Tho, 11-2015 The research was completed at Can Tho University Supervisors: Assoc. Prof. Mai Van Nam Opponent 1: .......................................................................................................... Opponent 2: .......................................................................................................... The dissertation will be defended before the council of the school level at: ....... hour ........ date ......... month ........ year .......... Learn about the dissertation in the library: - Learning Resource Center – Can Tho University - Vietnam National Library CHAPTER 1. INTRODUCTION 1.1. RATIONALE The study demonstrates the urgent and high practical significance based on the following establishments: (i) Tien Giang has the largest raw materials of pineapples in Viet Nam with over 15,000 ha (Tien Giang Statistical Office, 2014 ) and pineapples are considered “Tree of poverty reduction” of Tien Giang province, (ii) the potential market of pineapple industry is more growing, especially the US, EU, Japan, Korea ( FAO, 2013), (iii) The link among the actors in the pineapple product chain in Tien Giang is still very “fuzzy”, (iv) there are many points “unanswered”, towards valueadded (VAT) of pineapple product which had not been studied and exploited properly, (v) The received value of poor households who planting pineapple was inappropriate to the investment and the their cultivating exist many risks, (vi) Value Chain is an effective approach of managers, policy-makers aiming to improve the income of poor households. Thus, the issue is given to tackle: (1) Improving the received benefits for poor households who have been planting pineapple through improving the value-added of pineapple products; (2) enhancing the VAT for the pineapple products through the value chain upgrading. Therefore, the study of solutions to improve the value added pineapple products contributed to improved income for poor households in Tien Giang province. This should be considered as a subject with high imperatives. 1.2. RESEARCH OBJECTIVES 1.2.1. General objective The dissertation aimed to analyze the activities of the stakeholders involved in the pineapple value chain in Tien Giang province and analyze the VAT, VAT distribution between the stakeholders who are in the pineapple value chain as well as detect the bottlenecks that need to improve in order to enhance the economic value of the chain, through which proposed a number of solutions to improve the income of poor households who have been planting pineapples in Tien Giang province. 1.2.2. Specific objectives The specific objectives of the dissertation need to be addressed as follows: (i) analyze the production and consumption situations of pineapple products of the poor households in Tien Giang province, (ii) analyze the activities of the stakeholders involved in the pineapple value chain as well as the VAT and VAT distribution among the stakeholders who are in the pineapple value chain, (ii) Compare the VAT between groups of pineapple grower (the poor, the non-poor) and the impact of VAT distribution to income towards group of pineapple producers in Tien Giang Hamlet, (iv) Propose solutions to enhance the value added for the pineapple products contributing to improve the income for poor households in Tien Giang province. 1.3. RESEARCH QUESTIONS In this dissertation, the research question should focus on resolving the following: (1) What is the situation of production and consumption of pinapple products of the poor households in Tien Giang province like? (2) How much does each stakeholder involved in the value chain created the value added for the pineapple products like? (3) How is the distribution of VAT among the stakeholders in the pineapple value chain? (4) What are measures and policies implemented to enhance the VAT of pineapple products as well as improve the income for poor hosueholds in Tien Giang Province? 1 1.4. RESEARCH OBJECTS AND RESEACH SPCOPE Research objects: VAT generated in each stakeholder who participated in Tien Giang pineapple value chain as well as the distribution of VAT and net VAT of stakeholders in the value chain which are the research objects of the dissertation. In particular, solutions aims to improve the income of the poor, through it, it focuses on enhancing the VAT in the pineapple value chain. Space scope: The Tan Phuoc pineapple materials (pineapple productivity accounted for over 99% of Tien Giang province). Research space of the stakeholders in the value chain was expanded by the method of linking the value chain of GTZ (2007). Time Scope: Research time was determined just ended at the time of the study, it means that the most recent harvest pineapples. The research period for each stakeholder will be allocated by the method of linking the value chain. Content scope: The VAT of pineapple products influenced by many random factors and existed outside the control of the households (natural disasters, epidemics), these elements are not mentioned in the dessertation. Due to limited resources, the dissertation didnot analyze the pineapple export value chain in international consumer markets. Besides, in the processing of the value chain, the content-related analysis of the value of waste after processing (martial pineapple, crushed pineapple) is not mentioned and analyzed in this dissertation. CHAPTER 2: LITERATURE REVIEW 2.1. RESEARCH FOR THE VALUE CHAIN DUE TO THE POOR Pro-poor growth is one of the goals outlined the most in promoting the development of the value chain (ADB, 2007; FAO, 2004). Pro-poor growth emphasized the importance of work to do for the poor to participate directly in production, in economic growth and independence on social welfare (FAO, 2004). Agricultural Policy Support Service Organization of FAO has developed the guidance towards the value chain analysis for the rural development and the poor. The methods begin with a comprehensive analysis of economic or agricultural areas which are the most important. Based on the evaluation of the factors that make a distinction between the poor and the rich in the value chain, the manufacturing subsectors are determined in accordance with the poor. Due to development purposes for the poor, the Asian Development Bank studied to build of practice modular towards the value chain analysis which titled “The making value chain more efficient for the poor” or “ The marketing performance booster for the Poor” (ADB, 2007). This is a very appropriate approach to the study of agricultural products, particularly products related to the poor. According to ADB (2007), the starting point and the orientation of value chain analysis of ADB is to improve market efficiency for the poor. 2.2. RESEARCH FOR THE PINEAPPLE VALUE CHAIN Applying of the value chain theory GTZ (2007) and combining tools for the poor DFID, Lirne (2009) conducted the study on the pineapple value chain in SriLanka. The study showed that the growers cultivated pineapple with small scale and they did not have any rights to negotiate the business. The study had proposed the establishment of 2 cooperatives to increase the ability to negotiate and support households minimize transaction costs. The study of Preeyanat (2013), it studied on the balance between supply and demand for the canned pineapple value chain in Thailand. Besides the application of the value chain theory, Preeyanat (2013) also used the quantitative models to identify factors that influence consumer decision-canned pineapple and factors affecting output pineapple in production. Results showed that demanding for canned pineapple was higher than fresh pineapple; this was the premise of cannedpineapple technological processing development in Thailand. Applying the value chain theory of Gereffi (1994), Linda (2011) studied the efficiency of in Ghana through a value chain analysis. Research results indicated that the bio-pineapple production cost was not large, households produced with small scale which was not undermined by production costs and gained high profits. Moreover, households who have been growing bio-pineapple product could sign contracts with pineapple exporters in Ghana. In addition, the study confirmed that the pineapple production followed safety standards and brought many profitable and better selling prices than normal production. 2.3. RESEARCH FOR ADVANCING THE VALUE ADDED OF AGRICULTURAL PRODUCTS David et al (2000) found out 2 approaches for researching the VAT of agricultural products. The first is innovation; this approach focused on improving the existing processes, procedures, products and services. Gjerding et al (1997) suggested that awareness of innovation was limited by its usefulness in economics and management. Overall, the value added innovative activity development on the farms or agriculture laboratory was the national source of growth through changed in the type of product or production technology (Kraybill and Johnson, 1997). In addition, technological innovation method was a specific type of innovation. The second was the coordination; this approach focused on the arrangement between the producers and agricultural markets. Horizontal coordination related to the synthesis, integration of individuals of the same level of the value chain. Longitudinal coordination included in contracting, strategic alliances, licensing agreements and sole ownership of the market in many different stages of the value chain (Peterson and Wysocki, 1997). Stern et al (1996) proved that the effective market included in many factors: appropriate products related to consumer tastes, profit margin in the relationship between marketing costs and profit, seasonal price and uniform price between markets. Besides, the results of USAID (2008) also pointed out the factors of the market efficiency including: price level and stability, net profit, profit and cost, quantity and quality products. Lambert et al (1998) showed that there are two ways to increase the VAT, the first way is to improve production efficiency, thereby expanding the amplitude between the value of output and intermediate input costs, and the second way is changing the form, function, quantity and characteristics of product to increase the disparity between the value of output and input costs. 2.4. OVERVIEW OF LITERATURE REVIEW Through overview domestic and foreign materials related to the agricultural value chain, especially the study of pro-poor value chain, increasing value of agricultural products. Table 2.1 indicates the source of document, content successor to the dissertation and some broken slot found in the reference documents. 3 Table 2.1: Overview literature review Sources Viorel Leahu et al (2011), Hualiang Lu (2006), Tran Tien Khai (2011), Nguyen Phu Son (2012), Vo Thi Thanh Loc (2014) Identifying broken slot The study approached the theoretical value chain of Kaplinsky & Morris (2001) and “Linking value chain – ValueLinks” GTZ (2007) succeeded in assessing the impact of the economic value chain to local society, Combining research the value-added products for each market based on two channel, ability to participate in the value perspectives both socio- chain of the household. However, these economic and studies have not demonstrated statistical Fullbright administration issues, significance in terms of the impact of the Consultancy (2008), upgrading the value value chain or the value added of agricultural Mahesh Ghimiray chain products to the household income, not clarify (2007), Peniel Uliwa differences, differences in VAT, VAT (2010), Zuhui Huang distribution of household groups in the value Zhejiang (2009), chain. Anita msabeni (2010) ADB (2007), Vo Thi Thanh Loc et al(2011), Cong Thang et al (2004) Lirne (2009), Preeyanat Eapsirimetee (2013), Linda Kleeman (2011) Nguyen Van Hoa (2011), Nguyen Trinh Nhat Hang (2013), Tran Thanh Truc et al (2006) Content successor Most research focused on analyzing the stakeholders involved in the value chain, the value-added of products through stakeholders in each major market channels, some research divided according to domestic channels and Research results are export channels. Few research have focused fundamental to propose on the households, especially the poor, which policy in order to were learned about VAT, net VAT generated promote the from group of households in the value chain participation in market and factors affecting the VAT and net VAT for the poor of them. The impact of the use of resources to the economic efficiency towards households in the value chain as well as the content “unanswered”of many researches on the agricultural value chain. Inapproach, detailed analysis of the household resources, the ability to use inputs Look at the of households but just exploit the value chain characteristics of from households to consumers. This is the stakeholders involved most important bottleneck of Vietnam’s in the pineapple value agricultural sector, because farmers who chain, analysis of major produce products that people are investing a market channels lot of efforts and enthusiasm but are subjected to the most disadvantaged in the value chain. A strong understanding of the technical The research focused on technical aspects of characteristics of producing pineapples and solutions to pineapples and propose enhance pineapple productivity, less solutions to improve the attention to socio - economic efficiency. technical efficiency 4 Increasing the VAT for David Coltrain et al agricultural products (2000), Gjerding et al through improving (1997), Peterson và production efficiency, Wysocki (1997) thereby expanding the Quattri Maria spread between the value (2012), Lambert et of the product and the al (1998) cost of inputs. Not focused on exploiting efficiency of the household market as well as identify causes that made decrease in the value of agricultural output markets. This is the key point that need to exploit in agricultural product market in Vietnam Source: Synthesis of author 2.5. APPROACH METHODOLOGY AND RESEARCH FRAMEWORK 2.5.1. Approach methodology The dissertation applied the approach “input” for the efficiency of agricultural production of Farrell (1957) and “output” of the value chain of Kaplinsky & Morris (2001), the method of linking the value chain of GTZ (2007) and enhance the market for the poor (ADB, 2008). Measuring the effectiveness of agricultural production of Farrell (1957) The value-added and income of the poor who are pineapple growers The value chain of Kaplinsky and Morris (2000), method of approach to the value chain of GTZ (2007) and tool of supporting for the poor (M4P) Source: Proposed by author Figure 2.1: Way to research approach 2.5.2. Research framework Based on the approach the domestic and foreign findings through evaluating literature review, to address the research objectives given, the research framework of the dissertation was proposed as follows: Source: Proposed by author Figure 2.2: General research framwork 5 With the proposed research framework, the dissertation focused on detecting bottlenecks towards efficiency of input resource utilization and bottlenecks of input market efficiency. In particular, bottlenecks on the efficient use of inputs are detected through the approach of production efficiency of Farrell (1957); Whereas the bottlenecks of market efficiency is determined through the value chain approach of Kaplinsky and Morris (2001), GTZ (2007) and ADB (2007). SWOT matrix analysis (strengths, weaknesses, opportunities, threats) for the value chain is essential for establishing the strategic upgrading of the pineapple value chain. Through it, promoting the value added of pineapple products aiming to improve the household income for the poor households who have been participating in the value chain. CHAPTER 3: METHODOLOGY 3.1. DATA COLLECTION 3.1.1. Secondary data The information about the area and pineapple productivity in Tien Giang province was collected from Tien Giang Statistical Office (2014). The information on the situation of production, area and productivity of Vietnam pineapple was collected from the website of the Centre for Information and Statistics - Food Security Information (http://fsiu.mard.gov.vn/) and information about the situation in the world pineapple production obtained from the statistical website of the FAO organization (http://faostat.fao.org/). 3.1.2. Primary data Primary data was collected according to two methods which are quick interview participatory (PRA twice at the study area) and direct interviews with each of the stakeholders in the value chain of the pineapple in Tien Giang following the appropriate sampling method (households were selected by the conditional quota method and other stakeholders were selected by the method of liking the value chain of GTZ (2007). Table 3.1: The object survey of the dissertation No 1 2 3 4 5 6 7 8 9 Stakeholders in the chain Agricultural supplies dealers Seed production facilities The poor households growing pineapple The no-poor households growing pineapple Traders Pineapple granary Wholesalers Processing businesses Retailers Chain supporters Total Source: Survey data, 2014 6 Number of observation 5 7 98 128 20 15 12 3 37 10 335 3.2. DATA ANALYSIS Data Envelopement Analysis (DEA) was used to analyze the pineapple production efficiency of the poor, thereby identifying the bottlenecks in the use of input resources of the poor. At the same time, the Linear Regression Analysis was used to determine the elements of household resources that affect to the pineapple production efficiency of the poor. Toolkit value chain analysis was used to illustrate the diagram of the value chain, analyze the value added of the pineapple products and the distribution of value-added between stakeholders in the value chain. Sensitivity analysis method was used to evaluate the impact of VAT, the distribution of the VAT to income of households growing pineapples. Methods of SWOT matrix analysis and expert consultants were used to make the scientific basis for proposing solutions to improve the value added of pineapple product contributed to improve the income for the poor households in Tien Giang. CHAPTER 4: FINDINGS AND DISCUSSIONS 4.1. SITUATIONS OF PINEAPPLE PRODUCTION AND CONSUMPTION OF THE POOR HOUSEHOLD 4.1.1. Situation of pineapple production of the poor household Pineapple seed: The poor households used the Queen Pineapple seed accounting for 88.78%, others used Cayen, Spanish and some seeds are unknown origin. Origins of pineapple varieties which was cultivated by poor households are diverse. There was 24.49% of poor households use own pineapple varieties, 27.55% of poor households buy seeds from traders but no clear information about the type of seed, while about 23.47% of poor households had to buy or asked from neighbors. Information about production techniques: The information of poor households was accessible mainly from extension officers (accounting for 48.98%), followed by the local acquaintances (occupying 37.76%), and the Farmer’s Association also was quite important (accounting for 29.59%). Capital investment in production: Poor households used capital of loans accounted for 50%. For the loans of the poor, Bank for social policies was prioritized loans (accounting for 52.27%), Bank for Agriculture and Rural Development was 42.05% of households. Some poor households accessed the capital from associations, acquaintances and private loans. Cultivation area: According to the survey results, the average area of cultivating pineapples of the poor household was 9,083m2. In particular, the leased land accounted for significant proportion. Most poor households have colonized the area planted under 10,000 m2 (accounting for 61.23%). 4.1.2. Situation of pineapple consumption of the poor Forms of communication with buyers: According to the survey, the poor households were active to contact the buyers (representing 84.86%). However, the buyer proactively contact to the poor accounts for 13.13%. Poor households have sold pineapples through intermadiates which was very little (approximately 1.10%). Output market of the poor: The majority of the poor households have sold pineapples for long distance traders (accounting for 75.52%). Enterprises were also a 7 significant output stakeholder for poor households (accounting for 15.70%). Moreover, poor households sold pineapples to wholesalers/ pineapple granary (accounting for 8.08%), retailers or local traders. Forms of price decision: This represented the negotiating power of poor households in the market. Poor households themselves decided price which was very little (accounting for 3.06%), mostly pineapples were sold at market prices (accounting for 68.37%) and the buyers decided (representing 28.57%). 4.1.3. Pineapple efficiency production of the poor Based on estimated results of technical efficiency (TE), allocative efficiency (AE) and cost efficiency (CE) of poor households produced pineapples (Table 4.1) showed that poor households produced pineapple achieved technical efficiency which was relatively high, while distribution efficiency of resources and cost efficiency stayed at an average level Table 4.1: The pineapple production efficiency of the poor Value of efficiency 1.00 0.90 – 0.99 0.80 – 0.89 0.70 – 0.79 0.60 – 0.69 0.5 – 0.59 0.4 – 0.49 < 0.40 Average (optimum efficiency) Standard deviation Technical efficiency 19.39 7.14 14.29 22.45 20.41 13.27 3.06 0.00 Allocative Efficiency 0.00 1.02 4.08 16.33 31.63 25.51 9.18 12.24 0.769 (19) 0.589 (0) 0.448 (0) 0.161 0.144 0.144 Cost efficiency 0.00 1.02 4.08 3.06 2.04 17.35 33.67 38.78 Source: DEA analysis redults from survey datat, 2014 Note: (optimum efficiency): A number of households reached at optimum efficiency; According to the estimated results TE, AE and CE (Table 4.1) showed that poor households produced pineapples achieved production efficiency at average level. The average level of technical efficiency of poor households was 0.769 that was correlative width (0.479 to 1.0). This result implied that the poor should have used about 76.9% amount of the input to get productivity levels. In addition, the results also suggested that households had TE less than 1 which should conducted to minimize the inputs to practice saving and achieve technical efficiency. Allocative efficiency of poor households growing pineapples reached at average level (AE = 0.589), in the range from 0.224 to 0.952. The results also showed that the cost efficiency of the poor household was low and large degree of dispersion. There is no household achieved the optimum cost efficiency (CE = 1). This result showed that the total production cost of poor households should fall to 55.2% if they just reached pineapple productivity at current. With the current level of productivity, DEA analysis results (Table 4.2) showed that the poor wasted a lot of inputs, especially waste of seeds, fertilizers and family labor. 8 Table 4.2: The amount of input waste of the poor Inputs Seeds (tree 1000 m2) Fertilizers (kg/1000 m2) Pesticides (litre/1000 m2) Stone gas (kg/1000 m2) Fuel (litre/1000 m2) Renting labor (day/1000 m2) Family Labor (day/1000 m2) Reality 2,847.56 87.80 78.43 0.57 2.65 2.00 12.32 Wastage 83.60 14.00 32.64 0.14 0.68 0.18 1.71 Source: DEA analysis results from the survey data, 2014 4.1.4. Influence of production resources to the technical efficiency and allocative efficiency of resources of the poor planting pineapples In agriculture, factors relating to production resources are quite diverse and they can exist as physical forms as land, means of production, labor resources (Marsh, 2007). The rational use of productive resources would like to bring high efficiency in agricultural production. In particular, human resources and labor resources are considered important factors leading. Human resources are expressed not only in quantity but also in quality of labor used in agriculture. There are many labor qualities like elements of knowledge, skills and experience. Besides, education was considered a key issue in the development. People who have high education can help households enhance the ability to get information and easily apply the advanced science and technology in production, efficiently use the inputs. This led to help households cultivate more efficient (Huffma, 1977; Foster and Rosenzweig, 1996; Yang, 2004). Also, in the field of farming, land was a prominant means of production and not replaceable, more or less farming size also was a factor affecting the production efficiency of the household (Nguyen The Nha, Vu Dinh Thang, 2004). Based on the relevant information reviewed obove, whereby regression models assessed the impact of production resources to the technical efficiency and allocative efficiency of pineapple growers were set as follows: TE = β0 + β1EXPERIENCE + β2EDUCATION + β3TECHNICAL APPROACH + β4OWN CAPITAL + β5AREA AE = B0 + β1 EXPERIENCE + β2 EDUCATION + β3TECHNICAL APPROACH + β4OWN CAPITAL + β5AREA In particular: β0 is the original coefficent (constant); βi is the impact coefficent of the independent variables with the dependent variable. The dependent variable is measured by the technical efficiency (TE) or allocative efficiency of resources (AE) of pineapple growers. According to the analysis results (Table 4.3), the testing of models of regression models were guaranteed: The model had statistical significance (= 0.000 Sig.F), variance inflation factor (VIF) of the variables in the model were less than 10. This showed the variables were given into the model; there was no multicollinearity phenomenon (Mai Van Nam, 2008). Also, the results of heteroskedasticity testing (IM-test) proved phenomenon of error variance change in the model was negligible. 9 Table 4.3: Impact of production resources to the technical efficiency and allocative efficiency of resources of poor households growing pineapples Production sources of poor households Impact of production sources on TE Impact of production sources on AE Impact Significance VIF Impact Significance VIF coefficient level coefficient coefficient level coefficient Experience Education Technical progress approach Proportion of own capital Farming area Constant Sig.F of model Coefficient R2 (%) IM-test 0.002 0.015 0.072 0.000 1,08 1,06 0,001 0,007 0,206 0,000 1,05 1,06 0.046 0.000 1,01 0,017 0,000 1,04 -0.020 0.183 1,03 0,058 0,000 1,09 0.000 0.733 0.659 0.000 1,12 0.000 22.00 0.35 -0,000 0,434 0,000 0,000 1,03 0.000 6.56 0.13 Source: Survey data, 2014 Based on the analysis results (Table 4.3) showed that education and technical progress positively affected to TE and AE in pineapple cultivating of the poor. When participating in technical training, poor households accessed to new farming methods, knew how to produce following quality, increased productivity, economizely used of inputs in order to match with available production resources. Analysis results demonstrated that if the poor accessed more and more agricultural extension and technical training programs, the TE and AE of poor households would be enhanced. This showed the important role of accessing technical progress to improving TE, AE in pineapple productivity of the poor. Besides, the results also confirmed the role of education level which positively affected to TE, AE of pineapple growing households. For poor households, if the level of education was more and more increasing, TE and AE would increase. This result is consistent with research by Yang (2004), Huffman (1977), Foster and Rosenzweig (1996). These are important factors to keep in mind if you would like to build the advanced pineapple manufacturing in development strategies which is specialized farming pineapple areas of Tien Giang Province. Besides, self-production capital accumulation was positive impact on poor households growing pineapples AE. This can be explained that, if the poor autonomy of their investment as much (little use of loans), poor households will be less pressure on the finance in production and get negotiating position during the purchase of inputs. In fact, the survey showed that poor households were restrictive financial conditions will be disadvantaged in buying the inputs. The poor quality of fertilizers and pesticides in this case has significant impact on AE of poor households. In addition, research results also showed that the production area adversely affected towards AE of poor households. If farming levels unchanged, poor households would be very difficult to "manage" well field when expanding production scale, the distribution of the imported input factors would inevitably considerable waste (fertilizers, pesticides, laubor). 10 4.2. THE VALUE CHAIN OF PINEAPPLE PRODUCTS IN TIEN GIANG PROVICE 4.2.1. Describe the value chain of pineapple product in Tien Giang Province The market channel of the pineapple value chain diagram in Tien Giang province has been compiled from the value chain of each stakeholder of market participants. Based on the pineapple distribution of each stakeholder to buyers, flow rate of corresponding products would be shown on the diagram of the value chain in order to ensure the ratio at the input actors of the chain (households) and the output actors of the chain (consumers) were equal to 100% of the output of the whole chain. Table 4.4: Distribution of pineapple productivity through stakeholders of the value chain Output distribution Stakeholders (A) Households (100%) Local traders Pineapple granary Long-distance traders Wholesalers in level 1 Wholesalers in level 2 Business 1 Retailers Customers (100%) Objects for selling output of A Pineapple granary Local traders Long-distance traders Businesses Retailers Total Pineapple granary Long-distance traders Retailers Total Wholesalers in level 1 Retailers Total Wholesalers in level 2 Retailers Businesses Total Wholesalers in level 2 Retailers Total Retailers Domestic customers Total European customers Asian customers Total Domestic customers Total domestic customers Total of export / external customers The proportion of output delivered to objects (%) (*) 10.95 0.11 71.44 17.22 0.28 100.00 27.27 63.64 9.09 100.00 99.00 1.00 100.00 65.56 11.49 13.14 100.00 82.98 17.02 100.00 90.00 10.00 100.00 80.00 20.00 100.00 100.00 71.29 28.71 The corresponding proportion of the value chain (%) (**) 10.95 0.11 71.44 17.22 0.28 100.00 0.03 0.07 0.01 0.11 10.87 0.11 10.89 46.88 13.14 11.49 70.51 59.23 1.85 61.08 50.23 5.67 55.90 22.97 5.74 28.71 65.62 100.00 Source : Survey data, 2014 1 For processing business, the consumption of these stakeholders have been converted to the production of fresh pineapples with an average conversion rate of the product is: 1 tonne = 4.26 tonnes fresh pineapple 11 Note: * The proportion of output distribution volume is calculated based on the following formula: Volume sales of the ith stakeholder th % distribution of stakeholder A to output the i stakeholder = x 100% Total volume inputs of stakeholder A ** The corresponding proportion of the value chain is the rate (%) of the pineapple flow that is consumed through the stakeholders which is calculated based on the total proportion of pineapple input from previous stakeholders (except households) which has a weight is a percentage of each product sold stakeholders. For example: 27.27 x0.11 % pineapple flow of traders sold to pineapple granary = 100 Input Production Collector Processing 0.11% 10.95% Pineapple granary 1.85% 10.87% 5.67% Wholesa ler in level 1 9.02% 0.03% Labor market (renting labor) 0.11% Wholes aler in level 2 46.88% 50.23% Loacal trader Househo ld 71.44% 65.62% Dosmestic consumer Retailer 0.01% 0.07% Agricultural supplies dealer Consuming Trading 13.14% Long-distance trader Business 11.49% 28.71% 17.22% Seeding production base European, Korean, Japanese consumers 0.28% Quyet Thang (winning decision) cooperation Extension system Department of rural development Investment and trade promotion center Department of science and technology Research institute of southern fruit Credit institutions (Bank for social policies, Bank for agriculture and rural development Source: Survey data, 2014 Figure 4.1: Diagram of the pineapple value chain in Tien Giang 4.2.2. The key channels in the value chain of pineapple products Overall, the pineapple value chain in Tien Giang is operated through many market channels. However, there are 5 major market channels transporting the volume of products which generated high value added for the whole chain. The remaining channels were mainly intermediate channels or there was product flow passing very little. In the fifth primary market channel, channel 1, channel 2 and channel 3 had an important role, consumed large quantities of fresh pineapple production in the domestic market. While, channel 4 and channel 5 created products as processed pineapples and exports. Channel 1 (households => long-distance traders => wholesalers in level 2 => retailers => domestic customers). Channel 1 consumed the most pineapple products of whole chain. Most households sold pineapples to long – distance traders (accounting for 71.44%). Then long - distance traders shipped pineapples to the wholesale market in Ho Chi Minh City (Hoc Mon and Binh Dien market ...). There, pineapples were distributed for wholesalers in level 2 who came from the districts of HCMC or from the south eastern provinces by long distance traders (representing 12 46.88%). Wholesalers in level 2 continued to distribute products to retailers at the “satellite markets” around. Channel 2 (households => long-distance traders => retailers => domestic consumers). After harvesting, the pineapple volume of households was sold to long – distance traders (accounting for 71.44%). Long distance traders not only sold to wholesalers in level 2, they but also sold directly to retailers (mainly retailers in Ho Chi Minh City). The amount of long distance traders sold directly to retailers accounted for 13.14% of the total of chain. The retailers would then distribute pineapples to consumers (at the market, street vendors, and trolleys). Channel 3 (households => pineapple granary => wholesalers in level 1 => wholesalers in level 2 => retailers => domestic customers). Through surveying, approximately 10.95% of the pineapple output was sold to the pineapple granary. These pineapple granary focused on some communes of Tan Phuoc district (Hung Thanh, My Phuoc and Tan Lap 2). The pineapple granary could buy pineapples at the farm or farmers could also take the pineapple to pineapple granary. The pineapple granary was built near river or roads to facilitate for big means of transportation (trucks, boats). Then pineapples were distributed to wholesalers in level 1 (representing 10.87%) to get price fluctuation. Wholesalers in level 1 had transports with large capacity to buy pineapple pineapple granary. Then they sold pineapples to wholesalers in level 2 (accounting for 9.02%) at their business place, wholesalers in level 2 continued to distribute to retailers. Channel 4 (households => long-distance traders => businesses => exports). Similar to channel 1 and channel 2, traders bought pineapples with high volumes from farmers. However; there was a difference of product rank from channel 4. It meant that after collecting the pineapple from farmers, traders classified pineapples into many different kinds. If most of pineapples were type 1, traders would transport to wholesale markets in Ho Chi Minh City, the products were type 2 and type 3 were moved to the processing businesses for consumption (accounting for 11.49%). Sometimes, if pineapple was low quality (small, ugly shape), long-distance traders would make a bulk purchase pineapple without classifying. Channel 5 (households => businesses => exports). Households not only sold pineapple to pineapple granary and traders; they but also sold directly to processing enterprises. Volume of pineapples were sold by households to processing enterprises accounted for 17.22% the total output of the whole chain. When selling pineapples for processing enterprises, farmers could sell the pineapple with many different levels (due to businesses were not fussy fruit size). After the collecting, the enterprises would process pineapple products (canned, frozen, solid) exported to different markets such as the EU, South Korea, Japan and so on. 4.2.3. The value added and net value added of stakeholders in the key channels of the value chain In the primary channels of pineapple product, each stakeholder would like to generate VAT and regain different net VAT. Table 4.5 indicated the VAT and net VAT of stakeholders in the major market channels of the pineapple value chain. 13 Table 4.5: The value added and net value added of stakeholders in the major of the pineapple value chain Unit: VND/kg Households Pineapple Traders Wholesalers Wholesalers Businesses Retailers Items granary in level 1 in level 2 Channel 1: households => long - distance traders => wholesalers in level 2 => retailers => domestic customers Selling price (1) 5,130.93 6,952.62 9,589.33 11,632.28 Intermediate cost (2) 630.97 5,130.93 6,952.62 9,589.33 Value added (3) 4,499.96 1,821.69 2,636.71 2,042.95 Additional cost (4) 1,419.25 548.36 585.07 325.74 Net value added (5) 3,080.71 1,273.33 2,051.64 1,717.21 % net value added (6) 37.93 15.68 25.26 21.14 Channel 2: households => long-distance traders => retailers => domestic customers Selling price (1) 5,130.93 6,677.70 9,238.80 Intermediate cost (2) 630.97 5,130.93 6,677.70 Value added (3) 4,499.96 1,546.77 2,561.10 Additional cost (4) 1,419.25 548.36 665.74 Net value added (5) 3,080.71 998.41 1,895.36 % net value added (6) 51.56 16.71 31.72 Channels 3: households => pineapple granary => wholesalers in level 1 => wholesalers in level 2 => retailers => domestic customers Selling price (1) 5,306.87 6,040.17 6,945.76 9,589.33 11,632.28 Intermediate cost (2) 630.97 5,306.87 6,040.17 6,945.76 9,589.33 Value added (3) 4,675.90 733.30 905.59 2,643.57 2,042.95 Additional cost (4) 1,419.25 359.56 464.14 685.07 325.74 Net value added (5) 3,256.65 373.74 441.45 1,958.50 1,717.21 % net value added (6) 42.03 4.82 5.70 25.28 22.16 Channel 4: households => long-distance traders => businesses => exports (customers) (*) Selling price (1) 5,130.93 5,530.00 9,344.25 Intermediate cost (2) 630.97 5,130.93 7,676.69(**) Value added (3) 4,499.96 399.07 1,667.56 Additional cost (4) 1,419.25 267.02 1,325.83 Net value added (5) 3,080.71 132.05 341.73 % net value added (6) 86.67 3.72 9.61 Channel 5: households => businesses => exports (customers) (*) Selling price (1) 5,050.00 9,344.25 Intermediate cost (2) 630.97 7,196.69(**) Value added (3) 4,419.03 2,147.56 Additional cost (4) 1,419.25 1,625.83 Net value added (5) 2,999.78 521.73 % net value added (6) 85.18 14.82 Source: Survey data, 2014 Note: (3) = (1) – (2); (5) = (3) – (4); (6) = (5)/𝛴𝑛𝑒𝑡𝑉𝐴𝑇 (*)Channel of low rank consumption was higher than others. (**)IIncluding material cost (buying pricef) and additives to processed pineapple products Households: Households were an actor playing production role which created the first value added for the pineapple in the value chain. VAT due to households produced in the market channel was quite high, ranging from 4,419.03 to 4,675.90 VND/kg. Channel 3 (sold to pineapple pineapple granary) was a channel which created the highest VAT. This was the reason that farmers received the highest net VAT as 3,256.65 VND/kg. At channel 4 and channel 5, farmers created VAT and regained lower net VAT than channels 1, 2, 3 because the pineapples of two channels which mostly brought the low level were suitable for processing enterprises. When considering the percentage of net VAT distribution in market channels, farmers were always the stakeholder received the highest net VAT distribution, ranging from 34.35% to 86.67%. 14 Pineapple granary: was one of the intermediate stakeholders transporting the quite volume of whole chain. In channel 3, this actor created value added as 733.3 VND/kg and received 373.74 VND/kg net VAT, while the distribution of net VAT of pineapple granary was 4.82%. The reasons that net VAT and the percentage of net VAT distribution of pineapple granary were quite low due to specific activities of the pineapple pineapple granary which only especially transported the product to get price fluctuation at the time of business. Long-distance traders: this was a stakeholder which presented at most of channels of value chain. Long-distance traders brought pineapples to many markets and distributed them to next actors in the value chain. The range of VAT which traders created in the channel as from 399.07 to 1821.69 VND/kg; corresponding to net VA, traders regained from 132.05 to 1273.33 VND/ kg pineapples. If calculated per unit of product, channel 1 was a channel that long distance traders created the highest value added and got the most net VAT. Channel 4 was a channel which consumed the pineapple kinds of low rank, so this also created the lowest value-added channel for long-distance traders. The rate of net VAT distribution at channel 1 and channel 2 of long-distance traders was about 16.0%. While at Channel 4, long-distance traders only got net VAT distribution as 3.72%. Wholesalers in level 1: A commercial actor played an important role in the channel 3, wholesaler in level 1 collected pineapple from pineapple granary and distributed them to the wholesalers in level 2. In this channel, wholesalers in level 1 generated VAT as 905.59VND/ kg and received about net VAT as 441.46 VND/ kg. Correspondingly, the proportion of net VAt distribution of wholesalers in level 1 received at the channel as 5.7%. Wholesalers in level 2: as agent’s next long-distance traders and wholesalers in level 1 and wholesalers in level 2 were also a significant role in distribution activities towards pineapples to the domestic markets. At channel 1 and channel 3, wholesalers in level 2 generated VAT respectively 2,636.71 VND/kg and 2,643.57VND/kg and regained net VAT as 2,051.64VND/kg and 1,958.50 VND/kg. When considering the percentage of net VAT distribution in market channels, wholesalers in level 2 was an actor which received high net VAT distribution (after farmers producing pineapples), equivalent to 25.0%. Processing enterprises: At channel 4 and channel 5, the enterprises were actors contributing to increase the additional value for the pineapples through processing operations and exports. At Channel 4, the value added created by businesses calculated per unit’s products as 1,667.56 VND/kg and received net VAT as 341.73 VND/ kg, the percentage of net VAT distribution of business in this channel was 9.61%. While at channel 5, businesses generated VAT as 2,147.56 / kg and received about net VAT as 521.73 VND/kg and the proportion of net VAT distribution of business received 14.82%. Thus, collecting pineapples from farmers helped businesses create the value added and get the net VAT better. Retailers: In the domestic market, retailers were actors that could bring fresh pineapples to consumers. In the market channels, VAT created ranges from 2,042.95 to 2,561.10 VND/kg and received net VAT respectively from 1,717.21 to 1,895.36 VND/kg pineapples. In particular, channel 2 was a channel that retailers generated the 15 highest added value and get the most net VAT. Correspondingly, the proportion of net VAT distribution also was the highest with a value of 31.72%. This suggested that, if reduced commercial intermediaries, retailers would increase profitability and improve the rate of profit distribution. 4.2.4. The net value added and allocation of the net value added of the poor and non-poor in the key channels In each market channel of the pineapple value chain, the poor and non-poor households received net VAT and the percentage of net VAT distribution were very different. The difference of net VAT and the rate of allocation between 2 groups were shown in Table 4.6 below. Table 4.6: Net value added and Net value added distribution of the poor and non-poor in the pineapple value chain The key market channels Channel 1 Channel 2 Channel 3 Channel 4 Channel 5 Unit: VND/kg Non-poor households Poor households VAT (VND) 4,233.75 4,233.75 4,170.89 4,300.40 4,219.38 Net VAT(VND) The proportion of distribution (%) 2,582.36 2,582.36 2,519.50 2,649.01 2,567.99 32.04 29.70 32.37 80.73 79.06 VAT (VND) Net VAT(VND) 4,732.49 4,732.49 4,832.29 4,689.88 4,609.03 3,490.96 3,490.96 3,590.76 3,448.35 3,367.50 The proportion of distribution (%) 40.87 38.04 43.34 84.05 89.26 Source: Survey data, 2014 In channel 1 and channel 2, the poor received 2,582.36 VND/ kg when they sold pineapples for long-distance traders. Although net VAT of poor households received as the same as for selling long-distance traders in channel 1 and channel 2 , the percentage of net VAT distribution that poor households received was different from the market channel 1 (32.04%) market and channel 2 (29.7%). Net VAT of poor households in the channel 3 when sold to pineapple granary as 2,519.5 VND/ kg, this value was lower than the channel 1 and channel 2, but the percentage of net VAT distribution of the channel was higher than both channel 1 and channel 2, the ratio was 32.37%. In market channels 4 and 5 (channel of export market), poor households received VAT equivalent to channel 1, 2 and 3, however, the percentage of net VAT distribution was received which was highest (from 79.06 % to 80.73%). Thus, the the Net VAT of channel export market improved, the poor would receive as much net VAT distribution. Compared net VAT and he rate of net VAT distribution between the non-was always higher than than the poor. The difference of net VAT between non-poor was higher than the poor around 1,000 VND/ kg and net VAT distribution rate equivalent to 10% in almost all market channels. The main reason to make up the difference in VAT and net VAT in pineapple production activities between the poor and non-poor households due to: (i) Input: Due to limited financial human conditions so the poor selected the poor quality inputs as well as farming followed the habitual which didn’t focus on the scientific mode of production. It led to cause waste of inputs and lead to low productivity. (ii) Outputs: Conditions for farming position were less favorable compared to non-poor households, the ability to negotiate lower decision, so the poor have sold products without high price. The cause has made the poor create added value and get net VAT always regained lower than the non-poor. 16 4.2.5. The value added and the value added allocation of actors in the pineapple product value chain Table 4.7 showed that farmer was the actor that created the highest value added with 4,515.67 VND/kg, corresponding to 30.78% of the whole chain. Thanks to the activities of classification, wholesalers in level 2 is the second actor which is the highest value added generated in the value chain, with 2,641.70 VND/kg, corresponding to 18.01% of the total value added of the chain. Local traders created the lowest VAT which was 503.90 VND/kg accounting for only 3.43% of the value added of the chain. With the intermediate costs in the whole chain was higher VAT generated by actors showed that collection, trading and processing of the chain was not really effective, these agents can not raise VAT by measures expanding between input costs and output prices, especially in processing. Table 4.7: The value added and distribution of the value added of actors in the pineapple value chain Unit: VND/kg Households LongBusinesses Wholesalers Wholsalers Retailers distance in level 1 in level 2 traders Selling price (1) 5,146.64 5,653.90 6,040.17 6,548.82 9,344.25 6,945.76 9,589.33 11,032.28 Intermediate cost (2) 630.97 5,150.00 5,306.45 5,085.27 7,388.69 6,040.17 6,947.63 9,082.24 Value added (3) 4,515.67 503.90 733.72 1,463.54 1,955.56 905.59 2,641.70 1,950.04 % value added (4) 30.78 3.43 5.00 9.98 13.33 6.1 18.01 13.29 Prepaid cost (5) 1,419.25 343.74 359.56 548.36 1,475.83 464.14 635.07 365.74 % prepare cost (6) 25.29 6.13 6.41 9.77 26.30 8.27 11.32 6.52 Net value added (7) 3,096.42 160.16 374.16 915.18 479.73 441.45 2,006.63 1,584.30 % net value added (8) 34.18 1.77 4.13 10.10 5.30 4.87 22.15 17.49 Total costs (9) 2,050.22 5,493.74 5,666.01 5,633.63 8,864.52 6,504.31 7,582.70 9,447.98 Profits/costs (10) 1.51 0.03 0.07 0.16 0.05 0.07 0.26 0.17 Source: Survey data, 2014 Note: (3) = (1) – (2); (4) = (3)/𝛴𝐺𝑇𝐺𝑇; (6) =(5)/𝛴𝐶𝑃𝑇𝑇; (7) = (3) – (5); (8) =(7)/𝛴𝐺𝑇𝐺𝑇𝑇; (9) = (2) + (5); (10) = (7)/(9) Items Local Pineapple traders granary In other aspects, the net VAT was generated in the whole chain and net VAT of each actor gained corresponding with production efficiency/business of each actor. Farmers and wholesalers in level 2 were actors got net VAT and there were high production efficiency/business in the chain. Total net VAT of chain was 9,058.03 VND/kg, which the net VAT of households contributing as 3,096.42 VND, accounting for 34.18%. Overall, net VAT of actors got positive. The research results also showed that the actor had high net VAT; output of production/business was low. Therefore; when assessing investment performance, we need to consider two criteria was: capital cycle and actual volume of pineapple. This issue will be discussed at the contents 4.2.6. 4.2.6. Compare investment performance among the actors who involved in the value chain The results of the analysis (the 4.8) showed that, farmers are actors which had profit margin/highest costs, including non-poor households had profit margin/higher cost nearly 2 times the poor. With 1 VND investment costs, poor households generated 1.12 VND profit, while non-poor households generated 1.9 VND. In commercial actors, wholesaler in level 2 was an actor which had profit margin/highest cost. However, in order to assess the exact the efficiency of investment in business/production of each actor, it needed to consider yielding / year and pineapple production volume / transaction in the year of each agent. According to 17 the calculation results (Table 4.8), although farmers were actors that created profit margins / highest cost but recorded only once in the first year of capital. While other actors have some capital cycle times greater than households. Moreover, with the huge volume of transactions, the commercial actors were subjected to effective operation than farmers many times. Table 4.8: investment efficiency of actors involved in the pineapple value chain Profit margin 1.12 1.90 0.16 0.03 0.07 0.05 0.07 0.26 0.17 Objects Poor households Non-poor households Long-distance traders Local traders Pineapple granary Businesses Wholesalers in level 1 Wholesalers in level 2 Retailers Number of capital cycle/year(1) 1 1 60 75 92 4 84 60 60 Volume (ton/year) 12.18 30.39 2,177.55 1,404.12 2,606.99 17,807.16 2,180.42 113.67 43.56 Rate of return/year(2) 1.12 1.90 9.60 2.25 6.44 0.20 5.88 15.60 10.20 Source: Survey data, 2014 (1) number of capital cycle/year = number of operating days in he year /number of days capital cycle (2) rate of return/year = profit margin * number of capital cycle/year 4.2.7. Compare the pineapple value added of the poor and non – poor in the value chain The testing results on the VAT difference between the poor and non-poor households showed that the difference had statistical significance of VAT and net VAT. The VAT of Pineapple product was created larger other by non-poor about 500 VND/kg and net VAT of non-poor households received which was higher than poor households about 1,000 VND/kg. Indeed, a production resource of poor households was limited. Lack of financial advantages makes the poor lose negotiating power when buying inputs. Buying agricultural materials with paying at different times making use of price inputs rise. Lower selling prices with higher production costs, it was the cause to the added value created on the low product and net VAT rregained to be lower. Table 4.9: Compare the pineapple value added of poor households and non-poor households Indicators Unit Selling price Intermediate cost Value added Prepaid cost Net value added VND/kg VND /kg VND /kg VND /kg VND /kg Poor households Non-poor households 4,894.97 672.12 4,222.85 1,651.39 2,571.46 5,339.32 599.47 4,739.85 1,241.53 3,498.32 The level of The level of significance significance testing testing t* Levene* 0.001 0.000 0.251 0.068 0.040 0.000 0.365 0.000 0.073 0.000 Source: Survey data, 2014 *Note: The test results with confidence level 95%, corresponding to the level of significance α=5% 18