Technical Efficiency of Irrigation Water Use of Robusta Coffee Production in the Dong Nai river basin (Vietnam): A case study of Lam Dong province45234

Technical Efficiency of Irrigation Water Use of Robusta Coffee Production in the Dong Nai river basin (Vietnam): A case study of Lam Dong province Nguyen Dinh Tien1 *, Tran Nhat Lam Duyen2, Nguyen An Thinh1, Nguyen Truc Le1 VNU University of Economics and Business, Vietnam National University, Hanoi, Vietnam VNU School of Interdisciplinary Study, Vietnam National University, Hanoi, Vietnam * Correspondence: ndtien.up@gmail.com Abstract: Recent prolonged dry periods and lack of irrigation water have severely affected the productivity of coffee farms’ in the Central Highlands of Vietnam This paper analyzes the efficiency of irrigation water use for Robusta coffee (Coffea canephora) in Lam Dong province A Cobb-Douglas production function was used to determine coffee productivity’s response to the application of irrigation water and other production factors using data collected from 194 farmers while the Technical Efficiency (TE) and Irrigation Water Use Efficiency (IWUE) were analyzed using a Data Envelopment Analysis (DEA) model The production function analysis using Cobb-Douglas shows that the volume of irrigation water, amount of working capital, labor and farm size significantly influence coffee productivity It also shows that indigenous farmers are more efficient in utilizing irrigation water than the (mostly Kinh) migrant farmers The study findings further suggests that preventing and mitigating water shortages in coffee farms requires national policy support such as better access to credit and extension services, training, land management and household-level effort to improve farming practices, through the application of appropriate technologies and traditional knowledge Keywords: Data Envelopment Analysis (DEA); efficiency; irrigation water; Robusta coffee; Vietnam Introduction Vietnam and Brazil share the world top producers of Robusta coffee (Coffea canephora) In Vietnam, coffee is the second largest export-earning crop that supports the livelihood of over million people in rural areas, with export value exported of USD 3.74 billion, accounting for 3% of national GDP in 2012 (Amarasinghe et al.2015) The coffee production also plays important role in poverty reduction in Vietnam’s rural areas (Kotecha et al 2002; WB 2004) The majority of Vietnam’s coffee area is concentrated in the Central Highland (Marsh 2007) with 95% of Robusta coffee planted mainly in the provinces of Dak Lak, Gia Lai, Kon Tum and Lam Dong (Haggar and Schepp 2012; Giungato at al 2008) Robusta coffee is profitable when it is grown intensively with large inputs of fertilizer, water and labor (Marsch 2007) However, the main production constraints of coffee producers in the Central Highlands are water, which is insufficient to meet the increasingly competing demands of agriculture, industry and households, as well as poor irrigation management (Amarasinghe et al 2015; Dewbre 2010) Farmers’ practices of overirrigation leads to depletion of groundwater reserves (Amarasinghe et al 2015; D’haeze et al 2005; Ahmad 2001; Technoserve 2013) while 56.6-95% of water for coffee irrigation is mainly generated from groundwater (Marsch 2007; Hagger and Schepp 2012) In 2016, about 470 hectares of coffee in the West Highland and South-East region had insufficient water during the dry season (MONRE 2016) According to the West Highlands Agriculture and Forestry Science Institute (2016), only about 72% of the regions’ households were able to secure sufficient amounts of water to irrigate their coffee farms Although Vietnam is one of the most competitive coffee producers worldwide, the sustainability of coffee production has been challenged by climate change, deforestation, and insufficient irrigation water (Technoserve 2013; Nguyen et al 2019; Luong and Tauer 2009) National programs, such as the Vietnam-Netherlands Partnership on Water for Food & Ecosystems (WFE) and the German-Vietnam project―Integrated Water Resources Management Vietnam, Planning and Decision Support, have been implemented to promote sustainable use of water resources (Long et al 2009) These programs mainly determine the levels of water supply and demand and consequent water surpluses or deficits (Jolk et al 2010) Such studies have neither presented estimates for water use efficiency nor proposed key determinants that affect water use efficiency It is necessary to undertake research on water use in coffee production, with the aim of understanding whether irrigation water use is efficient in hotpot areas or not This paper aims to calculate Technical Efficiency (TE) and proposes a measure for Irrigation Water Use Efficiency (IWUE) based on the concept of input-specific technical efficiency for Robusta coffee production in Lam Dong province, Central Highlands Vietnam Improving allocation and technical efficiency of coffee farmers is fundamental to increasing farm-level total factor productivity, returns to coffee farmers and stabilizing the region’s underling agro-ecology (Cheesman et al 2007) Materials and methods 2.1 Study area The selected Lam Dong province is located in the southern part of Central Highlands Vietnam The province has several fertile high plateaus, and a large percentage of the province is forested (Jolk et al 2010) In 2017, the total cultivated area in the province was 279,000 ha, of which 160,000 (24.5% of total area) was planted with coffee Since 2010, the total area of coffee plantations has increased by 12,000 By 2020, the total area planted with coffee over 20 years of age, will be 60,000 (DARD 2017) Lam Dong province with its warm tropical climate and distinct dry and rainy seasons influenced by the South Asian monsoon is suitable for coffee production Coffee is a key cash crop of Vietnam with Lam Dong province accounting for 23% of total national land area allocated to coffee production However, coffee production is severely constrained by the lack of irrigation water, especially during the dry months when the level of groundwater drops significantly Currently, the main water supply source is surface water (80%) while the remaining 20% is sourced from groundwater However, surface as well as ground water have become polluted due to intensive agricultural production (DARD 2017) During the dry season of November 2013 to April 2014 for example, the amount of coffee produced from about 3,600 of planted area was reduced by 20%, while agricultural crop production from 36,200 dropped by 5% due to the shortage of irrigation water (DARD 2017) which in Lam Dong province is further aggravated by poor water management Free or wild flooding which is inefficient is the usual method of distributing irrigation water in the province’s coffee- growing areas Only a few areas utilize more efficient systems of irrigation, such as furrow irrigation, that would conserve water (DARD 2017) The coffee beans are harvested during the dry season, from November to March In Lam Dong province, these are sun dried in patios and hulled locally while the green beans are sold to local traders and exporters Three districts (Di Linh, Lam Ha, and Bao Lam) were selected for this study because of the vast tracts of land devoted to Robusta coffee production, as well as total production Together they comprise approximately 71.51% of coffee area in Lam Dong province (GSO 2013) The 6,530 planted to coffee in this area is suffering from severe water shortages that may partly be attributed to weak management of water resources Lam Dong province has suffered from drought since 2010, with the majority of the coffee area (78%) using surface water (water from lakes and ponds) and the rest utilizing groundwater (JICA 2018) In 2015, the VnSAT project with funding from the World Bank in the amount of VND 197 billion (USD 8.5 million) was implemented in eight districts of Lam Dong The objective was to save water for coffee production through the use of sensors and smart irrigation technology 83 The project aimed to support 14,700 households in applying advanced technology to 16,000 of coffee within the province However, until 201 that 78.8% of the change in the Robusta coffee output was explained by the changes in the quantity of irrigation water, labor, capital and farm size (Table 2) Table OLS regression results for coffee production function, Lam Dong province, Vietnam, 2017 Independent Variable Coefficient Std Err T-value P-value Log constant 4.581* 0.690 6.63 0.059 Log capital 0.072*** 0.038 1.90 0.005 Log labor 0.175*** 0.062 2.84 0.001 Log water 0.163*** 0.047 3.50 0.000 Log farm size 0.536*** 0.063 8.56 0.000 R- square 0.792 Adjusted R-square 0.788 F (4, 189) 180.24 Prob > F 0.0000 Root MSE 0.2928 Note: ***, ** and * are significant at 1%, 5% and 10% probability level, respectively NS is not significant at 10% probability level Our findings show that a 1% increase in irrigation water results in a 0.163% increase in coffee output (Shammout et al 2018; Tesfave et al 2013) Similarly, an equivalent increase in capital, labor and farm size increases coffee output by 0.072%, 0.175% and 0.536%, respectively This means that coffee output is most responsive to the size of farm, and least responsive to amount of capital The low output response to water and capital might suggest that water use in the study area is below productive potential The sum of all production elasticities of inputs (regression coefficients) in the Cobb-Douglas production model is 0.946 As this figure is less than 1, it indicates a situation of variable return to scale or decreasing return to scale This implies a less than proportionate increase in output of coffee, given a certain level of input This variable return to scale suggests that investments in new technologies would be a better alternative for increasing productivity, rather than increasing the quantity of inputs applied Results from the OLS econometric model could not prove whether resources were efficiently utilized or not The results only reveal the functional relationship between the factors of production and output, with the assumption that all respondent farms were fully efficient (Coelli 1988), which is not true in all cases It is therefore necessary to complement these results with a technical efficiency analysis Likewise, given the water shortage for coffee production in Lam Dong province and the effect on coffee productivity, as shown by the regression analysis in this section, it is also necessary to analyse irrigation water use efficiency using DEA analysis The next section presents results for irrigation water use efficiency 3.3 The DEA results - TE and IWUE scores The overall TE and IWUE scores, given CRS and VRS in the sample and the two groups of Kinh and indigenous farmers, are summarized in Tables and 5, respectively The TE scores for all coffee farmer respondents ranged from 30% to 100% with an average of 72% for the VRS DEA model while for the CRS DEA model, the TE scores ranged from 21% to 100% with an average of 66% These results revealed that inputs for coffee production were not being efficiently utilized The current level of coffee output could still be attained even if the amount of inputs used is reduced by 28% and 34% based on the VRS and CRS, respectively The difference between the VRS and CRS measurements indicates that coffee farmers are not operating efficiently The scale efficiency of 0.92 indicates that by operating at an optimal scale, the amount of inputs used of Robusta coffee farms in the study area could be reduced by as much as 8.0% Table also provides a comparison of TE between Kinh and indigenous farmer groups Results show that indigenous farmers produce more efficiently than Kinh farmers, under both VRS and CRS in the DEA model (81% vs 76% in VRS, and 75% vs 67% in CRS) The results seem somewhat surprising given that Kinh farmers are more educated, better trained and have better access to market information than indigenous farmers This result however is consistent with the findings of (Tran 2007) on the efficiency of coffee farming in Vietnam’s Central Highlands The reason is that farmers of Kinh origin, most of whom migrated from northern Vietnam in the 1980s, have less experience in coffee cultivation (18.9 vs 20.7 years), smaller farm sizes (2.2 vs 2.3 ha) and fewer family labor (66 vs 78 mandays/ha) than indigenous farmers Note that family labor is expected to be more efficient than hired labor due to the moral hazard problem Table Frequency distribution of Technical Efficiency of Robusta coffee production by group in Lam Dong, Vietnam, 2017 Efficiency TE (%) VRS Kinh group CRS Indigenous group All Kinh group Indigenous group All Summary Statistics Mean 0.76 0.81 0.72 0.67 0.75 0.66 Minimum 0.31 0.30 0.24 0.21 0.29 0.21 Maximum 1.00 1.00 1.00 1.00 1.00 1.00 Std Dev 0.18 0.19 0.19 0.18 0.19 0.18 Efficiency Interval 100 23 (17) 17 (31) 21 (11) (6) (16) 16 (8) 90-100 14 (10) (16) 24 (12) (6) (11.5) 10 (5) 80-90 27 (19) (7) 24 (12) 15 (11) 11 (20) 17 (9) 70-80 16 (12) (15) 31 (16) 20 (14) (11.5) 31 (15) 60-70 28 (20) (16) 32 (16) 34 (25) (16) 40 (21) 50-60 23 (16) (11) 44 (23) 35 (25) (16) 48 (25) 40-50 (3) (2) 11 (6) 11 (8) (7) 21 (11) 30-40 (3) (0) (3) (4) (0) (4)