Solution for pangasius market development in the mekong delta

[Type here] MINISTRY OF EDUCATION AND TRAINING CANTHO UNIVERSITY NGUYEN VAN THUAN SOME SOLUTIONS FOR DEVELOPING THE MARKET OF PANGASIUS IN MEKONG DELTA A brief of the dissertation Major in Agricultural economics Supervisor Assco. Prof. VO THANH DANH, PhD 2015 [Type here] i TABLE OF CONTENTS CHAPTER 1. INTRODUCTION 1 1.1 RATIONAL 1 1.2 OBJECTIVE OF DISSERTATION 1 1.2.1. General purpose 1 1.2.2 Practical purpose 1 1.3 RESEARCH QUESTION 1 1.4 LIMITS OF DISSERTATION 1 1.4.1 The extent of the research 1 1.4.2. The locations of research 1 1.4.3 Objectives of the research 1 1.4.4 Subjects of the research 1 CHAPTER 2 LITERATURE REVIEW 2 CHAPTER 3 RESEARCH METHODOLOGY 2 3.1 RESEARCH DESIGN 2 3.2 DATA COLLECTION 4 3.2.1 Secondary data 4 3.2.2 PRIMARY DATA 4 3.3 DATA ANALYSIS 5 3.3.1 Descriptive statistics: 5 3.3.2 Discovery agent analysis method: 5 3.3.3 Confirmatory Factor Analysis- CFA 5 3.3.4.Recurrent analysis 5 CHAPTER 4 : RESULTS AND DISCUSSION 6 4.1 DESCRIPTION OF STUDY AREA 6 4.2 EVALUATION OF CURRENT PRODUCTION, PROCESS AND CONSUMTION OF PANGASIUS IN MK 7 4.2.1 Current production 7 4.2.2 Current process and consumption of catfish in MK 8 4.2.3 The difficulties of production, procee and consuming catfish 8 4.3 ANALYSIS OF PEPE’ MARKET STRUCTURE 8 4.3.1 Analysis of market structure (S) 8 4.3.2 Analysis of market Conduct 9 4.3.3 Analysis of the factors of Structure and Conduct to Performance9 4.4 ANALYSIS OF MARKET STRUCTURE OF PANGASIUS RAISERS 11 4.4.1 Analysis of market Structure (S) 11 4.4.2 Analysis of market Conduct (C) 12 [Type here] ii 4.4.3 Analysis of the affects on market structure, Conduct and its effects 13 4.4.4 Conclusion of analyzed results: 15 4.5 SOLUTIONS FOR DEVELOPMENT OF CATFISH 17 CHAPTER 5: CONCLUSION AND PROPOSAL 18 5.1 CONCLUSION 18 5.2 RECOMMENDATION 19 [Type here] 1 CHAPTER 1. INTRODUCTION 1.1 RATIONAL Pangasius industry is seen as one of the main aquacultural industry of the whole country in general, and of the Mekong Delta in particular because its export turn-over occupied 26% of total export turn-over of the whole aqualcultural industry [1]. Thus, pangasius raising has strongly grown for the recent many years. According to data from General Statistics Office of Vietnam (GSO), areas for pangasisus in 2013 came up 5,950 hectares, manifold in 2003 (2,700 hectares) [2]. EU and North America are the biggest pangasisus importing markets, two main import-catfish markets, nearly 50% of total quantity and 50% of export turn-over [3]. However, pangasisus industry has faced problems of capital, while prices of inputs have highly increased accompanied with more and more tariff and non-tariff barriers from importing countries. Although Pangasius Export Processing Enterprises (PEPEs) have given a lot of efforts in approaching many various importing countries, they seem not to be successful in facing trade barriers. Generally, the problems as mentioned above more or less made changes in market structure and conduct of pangasius industry, and thus in market performance. From the problems as mentioned above, the research on “Solutions for development of pangasius market in Mekong Delta” becomes very necessary aiming to urge this industry to develop stably and sustainably in the coming years. 1.2 OBJECTIVE OF DISSERTATION 1.2.1. General purpose Analyzing the activities of the catfish market and boosting it more effective in Mekong delta. 1.2.2 Practical purpose Following are the specific aims of this research: (1) Analyzing the current situation of the catfish production and consumption in Mekong delta (2) Analyzing the structure of the catfish market in Mekong delta (3) Identifying the influential factors affecting the effectiveness of the catfish markets. (4) Suggesting some solutions for upgrading the effectiveness of catfish 1.3 RESEARCH QUESTION 1. What are the advantages and disadvantages of the catfish production and consumption in Vietnam 2. What are the strategies for catfish competition market? 3. What are influential factors affecting to the market effectiveness? 1.4 LIMITS OF DISSERTATION 1.4.1 The extent of the research The research focuses on the Catfish export in Mekong delta (MK) in Vietnam due to its quantity for export is about 97%. Besides this research mainly focuses on the two imported markets, that is EU and North America with the total of more than 50%. 1.4.2. The locations of research The five cities or provinces with large scale of catfish production in the Mekong Delta are: An Giang, Dong Thap, Cantho, Ben tre and Vinh Long. To the Ministry of Agriculture and Rural Development (MARD) the total area of catfish production is 5,477 hectares (5,018 hectares in MK); with the output of 930.690 tons (figure 14). The turn-over of the 5 locations is 859.303 tons (92% of the MK) (4). That is the reason why the research is focused on these 5 locations. (Index 1.1) 1.4.3 Objectives of the research Asian catfish market structure and its effective activities of catfish market in MK. 1.4.4 Subjects of the research The catfish aqua cultural households, processing and exporting businesses are the two subjects to be researched. [Type here] 2 CHAPTER 2 LITERATURE REVIEW The structure of SCP (Structure-Conduct-Performance) has been applied, it describes and indicates the changes in market structure to the change activities of market producers directing to the practical results such as the price, the product quality and its new product values. The changes in the Structure (S) possibly influence directly or indirectly to the Performance (P) through the Conduct (C). There is the mutual interaction among this structure of SCP that leads to different results. For example the research on the different activities of fishery businesses. Structure SCP has been applied in doing research in different fields such as: Gronhaug 1984 (5), Craene, 1995 (6), Jasjko 1999 (7), Egdell, 2000 (8), Delome, 2002 (9) and Cabral, 2003 (10) . Those researchers have mentioned about the market structure influencing to the market effectiveness such as the quantity, the scale of factors influenced to the quality of the products, the import and export barriers. Also the Performance factor influenced to the integrated mechanism of market and price policy involved in the process. The Conduct factor influenced to the increase or decrease of the product, the improved quality, the effects of improvement and investment, variety of products, prices and stable jobs to do. Many other domestic researchers applied the SCP structure. For examples: Luu tien Thuan, 2005(11); Nguyen phu Son, 2007 (12); Le xuan Sinh, 2007 (13); Vo thi Thanh Loc, 2009 (14) Nguyen tri Khiem, 2010 (15) Le nguyen Doan Khoi, 2011 (16); Le gia Nho& Nguyen phu Son, 2011(4); Le xuan Sinh ,2011 (17). With different researches applied with structure SPC, the relation of cause and effect can be found in market activities and its effects, and also the variables in market activities. There have been many difficulties and challenges in the process of catfish production and exports, such as the competition, commercial barriers, the unqualified breed, the instable out put prices, the dishonesty of some businesses, the risks of pollution in fish raising and processing, the limit of approaching new markets and business administration. Those above mentioned are all studied in this research. Through literature review, research methodology, the study structure are all related to fishery market in Vietnam, the researcher is applying the SCP structure to do this research with the following reasons: (1) SCP has been applying spread in Vietnam; (2) SCP is suitable to the catfish market in Vietnam at the moment (3) This structure is relatively simple, can be easily combined with other financial data analysis indicating the panorama of catfish in MK. So the methodology and other measures in doing this research will be introduced in the following chapter, chapter 3. CHAPTER 3 RESEARCH METHODOLOGY 3.1 RESEARCH DESIGN To achieve the aims in chapter 2, this research applies the design of Structure-Conduct- Performance (SCP). This design is based on the theory of Eleni (2009) displayed in figure 3.1. There are 9 factors and each of them will be measured by some indicators. The essential factors include: qualified product (P1) good price (P2), international competition (S1), fishery policy (S2), expenses (S3) advantage competition (S4) strategy competition (C1) quality assurance (C2) raw material policy (C3). Among of them the P1 and P2 reflect the Performance. The factors of S1-S4 and C1-C3 reflect the design of production branch and market Performance. The variables in each factor will be shown in Index 3.4 and 3.5 In this diagram, the factors are supposed to influence on the factor of market. Among of them, the international competition (S1) is expected to influence actively in direct or in indirect on the [Type here] 3 production (P1). The more international competition increase the more the fish raisers and businesses make higher qualified, various, added value products. The international competition can be seen through advertisements, price deduction and polishing its trade marks. Competition also directly influences to market performance ( C) such as the strategy of business of producers (C1) like upgrading products, technological process, fixing the price, improving the distribution network or increasing the expenses for advertisement and promotion. Competition also actively influences to the process of production ensuring the output products (C2). As the customers requirements of better, safer, more stable products, the quality assurance and environment protection must be focused. The competition influences to the choice of in-put raw material providers with its prestige and higher quality (C3). Figure 3.1 Design of Eleni theory, 2009 The State policies are closely related to the encouragement of infrastructure improvement to overcome the polluted water resources, modern production assembly line, standard quality products, encouraging the linkage between the raisers and businessmen in using healthy breeds. It is also supposed to influence to the 3 variables (C) mentioned above. The expenses of production and process in the Structure Conduct Performance International competition (S 1 ) Fishery strategy (S 2 ) Expenses (S 3 ) Advantagous competition (S 4 ) Strategy of business (C 1 ) Product assurance (C 2 ) Usage of input materials (C 3 ) Product effectiveness (P 1 ) Price effectiveness (P 2 ) [Type here] 4 structure (S3) also influence to the variables (C). The aqua cultural food, qualified breeders, epidemics, undergoing any change greatly affect on the output prices. Besides the short of the capital, the certification of qualified products of course effects to the raisers and businessmen (C). Finally, the advantages of competition (S4) such as the needs of catfish consumption in Vietnam, the barriers of custom and non- customs, the increase of business and negative competition is a great deal of matters to the producers and businessmen. The structure hereby is expected that the market activities of the raisers and businessmen (C) are effective to the prices (P2), the quality of the products (P1). All these variables are measured by Likert measurement. 3.2 DATA COLLECTION There are primary and secondary data stating clearly in 3.2.1 and 3.2.2 3.2.1 Secondary data Including the social-economical reports, the productive and consuming catfish, annual statistics, domestic and foreign official reports related to catfish, fishery, Governmental decision, Cercular…closely relate to market structure, activities of production and consumption and the effectiveness of factors in catfish production. 3.2.2 PRIMARY DATA 3.2.2.1 Identification of survey pattern Catfish raising households have been changed greatly, encountered difficulties so when carrying out the survey, the collected survey patterns came up to just 9 % of 3.033 households, about 262 households with the divergence of 6%. The collected data patterns counted on Slovin’s formula n = N/(1+Ne 2 ) = 3.033(/1+3.033x0,06 2 ) = 262 households 3.2.2.2. Sample collecting method Sample survey collected through multiple-step method. First step: Cluster Sampling: Allocated and listed out the villages and districts with large raising areas households. In each province the researcher selected one typical district with large raising areas. For example: In Dong Thap province, there are Lai Vung and Chau Thanh selected districts; In An Giang with Chau Phu and Phu Tan; In Cantho with On mon, Thot Not and Vinh Thanh; In Vinh Long with Mang Thich, Vung Liem; In Ben Tre with Chau Thanh, Cho Lach and Giong Trom. Among of 262 selected households, the researcher got 40 survey samples. Just a few of selected samples in Ben Tre province due to most of the raising households have contracted with companies in raising catfish. The survey samples are shown in Table 3.1. Step 2: After identifying the number of samples in each province, the following step is the at random data collection. The research used Rand Function with Excel software in showing the list of the household done in step 1 attached in Table 3.3 Table 3.1. Survey samples in 5 provinces Province Survey (%) An Giang 70 27 Bến Tre 14 05 Cần Thơ 64 24 Vĩnh Long 59 23 Đồng Tháp 55 21 Total 262 100 3.2.2.3. Data collection methodology * Interview of productive households [Type here] 5 Some Catfish raising households were selected at random using direct interview and available questionnaires * Interview of process and export businesses The process and export business were interviewed using the method of integrated chains sourced from the catfish raising households * Interview of different agents involved in the chain of catfish production and consumption This method learns much about the agents involved in the chain of production by using questionnaires. The interviewees were fish breed providers, aqua materials, food and medicines, fishery administrative officials at the local, traders, and aqua experts. 3.3 DATA ANALYSIS 3.3.1 Descriptive statistics: Descriptive statistics applied in research to reach the aims 1 and 2 to describe the productive and consuming catfish research locations; to describe the data used in the structure, the situations of production, consumption, business, income of different agents involved in the catfish raising in MK. Descriptive statistics generalize the measurements, data description, tables of frequency analysis, development index, The Mean, The Max and STD Deviation. 3.3.2 Discovery agent analysis method: SERVPERF measurement SERVPERF measurement is the derivation of SERVQUAL introduced by Cronin & Taylor (1992) identifying the quality of service by measuring perception service instead of using measurement of SERVQUAL. They assumed that the quality of service reflected by perception quality without expected quality as well as the estimation of the 5 values. Paying attention that the source of SERVQUAL, the other elements and the surveyed variables of SERVPERF like SERVQUAL. This measurement is named Perception Model. - Reliability of Cronbach’s alpha Assuring the reliability excludes incorrect variables then goes on the analysis of different factors. Assuring reliability of variables related to the market structure, performance and market effectiveness of the raisers and business as in the Appendix 3.1 and 3.2, based on the coefficient of Cronbach’s alpha of variables measurement. The coefficient of variables lower-achieving 0, 3 will be excluded. To the researcher, a good measurement is in the range of 0, 7-0,8. To Nulnally and Bernstein (1994) an accepted measurement is much more or equal to 00, 6. - Exploratory Factor Analysis- EFA This method is applied to identify the category of structure evaluation, the performance and market effectiveness of the two agents: the raisers and the process and export businesses. Exploratory Factor Analysis belongs to multi variables analyzed and technically independent, it means there are no dependent and independent variables but it has a kind of interrelationships between the two. EFA used to reduce survey variables K turns to be more significant F ( F<k). The deduction bases on the linear relation of different factors and survey variables 3.3.3 Confirmatory Factor Analysis- CFA Confirmatory Factor Analysis applied to assure measured variables representatives for good constructs. The CFA is the following step of EFA. CFA is applied to reconfirm mono and poly variables converging and distinguished values of the measure to evaluate effective market of productive households and process and export businesses in MK. 3.3.4.Recurrent analysis The application of recurrent analysis to reach the aim 4 including 3 steps. Step 1: Recur renting all variables of Structure market (from S1 to S4) has an indirect impact on Conduct (P1 and P2) and all [Type here] 6 variables of Performance market (C5 to C7) has the impact on the variables of P1 and P2. The equation of Recurrent applied in this step (applied OLS) P h = a 0 + Sb i i i ∑ = 4 1 + Cc j j j ∑ = 3 1 + e (1) a. b i (i= 1,2,3,4) and c j (j=1,2,3) is bêta cofefficient and e is error b. P is the indicator of effectiveness of market performance c. S i is the variables of market structure thứ i d. C j : is the variables of market conduct thứ j e. h = 1,2 (1: the effect of variety of products; 2 the effect of price ) The followings are the Recurrent coefficient based on Equation 1 Step 2: Some of the variables connected in Equation 1 could be not statistically significant . Through the improvement of structure, the connection will be excluded and then turn into a form of new Recurrent Equation. The following Equation shows direct impact on dependent and independent variables. Step 3: To replace the result of coefficient (2) into coefficient (1) there will be final result C m = d 0 + S f i i i ∑ = 4 1 + C g j j j ∑ = 3 1 + e (m≠j) (2) - m = 1,2,3 and j = 1,2,3; C m và C j : Variables of market Performance thứ m - S i : Variables of market Structure thứ i - f i và g j is beta coefficient of indepent variables and e is error CHAPTER 4 : RESULTS AND DISCUSSION 4.1 DESCRIPTION OF STUDY AREA The natural conditions in Mekong delta ( MK) create favorable conditions to develop catfish. Geographically speaking, there are many extended areas with deposites of silt, islets along the bank of Hau and Tien rivers and in river branches so the water irrigation is a great advantage: Heavy soil, silt are water absorbed with low acidity in soil. Besides the water exchange is favorable thanks to the daily tides. Waterlogging is not a matter in rainy season, neither the shortage of water in the dry. The quality of water is good with the acidity below 0,4 %. The suitable areas for fish raising include An Giang, Dong Thap, Cantho, Vinh Long provinces. Those locations are mainly silt soil, lying along large river with good-quality water and favorable water drainage and the level of over-flooded water is just about 0,5 – 2 m . So the intensive aqua culture concetration in those areas (Tien Giang, Ben Tre, Tra Vinh, Soc trang and Hau Giang) are potentially developed. MK with relatively favorable socio-economical conditions can develop greatly the catfish raising. With abundent labor forces, increasing aqua product quality, applying modern production techniques …the expansion of scale production in those areas is advangeous. The trend of shifting from agriculture to fishery also shows the potiential of fishery development in MK. Although the infra structure ( power and transportation ) has been improved recently, the much more needs for production are still existing. [Type here] 7 4.2 EVALUATION OF CURRENT PRODUCTION, PROCESS AND CONSUMTION OF PANGASIUS IN MK 4.2.1 Current production The areas of catfish raising in MK has reduced from 6.012 hectare in 2008 to 5.477 hectare in 2013, about 3,4 % per year. In 2008 , “boom” development, the areas of raising catfish was 6.012 hectares and then gradually reduced to 4.951 hectares in 2011. In 2012 due to export market recovery, high purchases of raw materials from the raisers made a great deal of raising hectares up to 5.469 . At the end of 2013 the area was 5.477 hectares. Among it 5.000 hectares were in 5 provinces : An Giang, Dong Thap, Cantho, Vinh long and Ben tre ( appendix 1.1 ) Up to the year of 2012, there were 3 kinds of catfish production: household / farm with 1.748,4 hectares ( 48 % ); business with 1.761,6 hec ( 49.1 % ); cooperative with 77,3 hec ( 2,2 %) ( Results of survey of NTTS in 2012). In 2013, household / farm reduced to36,2%; Cooperative with 4,1% and business increase 59,7 % ( Provincial Department of Agriculture and Rural Development in 2013 ) ( except Kien Giang and Soc trang). It is found that catfish production needs capital and whenever the prices change unfavorably, the household and cooperative could not maintain the stable production and they turned to be wage-earners for businessmen or investors. Though the gradually reduction of aqua cultivation areas, the production quantity has increased with slow tempo, just around 0,4 % per year. The highest productivity of catfish raising areas is about 300-400 ton/hec in islet areas in river. Far off the river area the productivity is about 150-200 ton/hec. The average size of catfish is about 0,7- 1,2 kg / fish for the first harvest, and 0,8 – 1,1kg / fish for the second harvest. Turn-over catfish raised in 2013 was over 1 million tons, among of it Dong Thap 33%, An Giang 21% Ben Tre 14%, Cantho 13 % and Vinh Long 9% These 5 provinces reached 90% catfish as raw materials of MK. Through the survey of 262 households in research areas of those 5 provinces it is found that their ages and experiences suitable to the development in now-aday competative situations. The percentage of wage-earners is still high. Generally speaking, the labor force, productive areas and capital are still limited so the aqua culture is just small and unplanned scale. The catfish production is a complicated process .Different raising housholds breed fish in water in different time, as well as the time of crop harvest. The big businesses produce fish in large scale but they could not find potiential customers so they have to alternately breed fish in water in different raising ponds. At the moment, in the MK the fish breed providers are still limited in number and in quality. The fish raiser hardly find healthy fish breeders. The households use fish breed size of different levels ( smallest less than 0,5 cm, biggest one is 4 cm) leading to the great expenses of different levels ( 90 millions ). The average capital investment is about 450 millions/ ha. The percentage of undergoing a loss is high ( 24%); in some cases come up to 90%. Most of households use process aqua food about 79%. The others use home-made food or either of the two. The price of home-made aqua food is about ¾ of the process one ( 8.500 VND/kg compared to 11.710 VND/ kg ) By the survey it is known that the home-made aqua food mainly are rice bran, dried seafish, soya and potatoe powders. Nowaday the trend of cosumption in the world focuses on the clean and sustainable material resources. It means the catfish products to be process by the standard to ensure the safety and sustainability of products. However, on site of survey there was just 19,8 % of production households applied one or more than one standards requested. VietGap standard has been applied the most, the other standards are BMP, GlobalGap, ASC and BAP. [...]... of the reason is there is no linkage of the process and export businesses in the aspect of consumption and of marketing though in Vietnam with the presence of VASEP The first proposal is “Enhancing and consolidating the linkage among the process and export business “via the assistance of VASEP in forecasting market and commercial promotion With this linkage there would be more perfect market This makes... influence the creating cleaner products/value adding/ market demand meeting Problems of selecting providers of input material (food, breeders, and drug) influence product price Understanding the origin of input material (qualified input material) influence the quality assurance Understanding the origin of input material (qualified input material) influence the creating cleaner products/value adding/ market. .. the shares of the businesses To sum up, to develop the catfish production in MK, there should be 3 main solutions as followed: 1) More strongly enhancing and consolidating the linkage among of the process and export businesses 2) Establishing the linkage among of the raisers with the form of economic cooperative organizations in each and among of locals 3) Realizing the linkage among of businesses and... shows the change of recognition of market orientation in doing business affects actively on business in investing expenses for environment protection, waste water treatment, enhancing the quality assurance to ensure the quality of output products Figure 4.3.3 shows the active interaction of the change of recognition of market orientation in doing business affects actively on business in investing expenses... raising households affect nothing to the price improvement It is true that in reality the process and export business depend on the decision of foreign buyers about all prices So the raising households passively decide the selling prices It is hard for them to have better prices even with their efforts and investment the same as the analysis of the process and export business In this research, the. .. check of the qualified products does not affect directly to the market Performance, just indirectly to the business recognition and environment protection As the other businesses, the raising households with their great efforts do not affect on the prices, market performance due to the prices are completely dependent on the buyers, import businesses 5.2 RECOMMENDATION In order to work out the 3 solutions... 4.3.10 shows the changes in market Structure as well as in Performance affect nothing to the prices of catfish sale That is really true to the situations of catfish consumption of process and export businesses in Vietnam The prices completely depend on the buyers In the survey, the businessmen believed that was the lack of the linkage of business Added to this, the role and market approaching of VASEP... (breeders, food) Cost of approving/ approving again products according to higher standards in cleanliness influence general aquacultural policies Cost of approving/ approving again products according to higher standards in cleanliness influence quality assurance Cost of approving/ approving again products according to higher standards in cleanliness influence the use of qualified input material (breeders,... business recognition, environment protection, selection of prestige raw material providers, enhancing the check of the quality and hygienic production The market Structure consisting of State policies encouraging the qualified products, business linkage, environment protection affect market Performance via the market Conduct of raising households as well The surprising thing is that the enhancing the. .. very weak and limit in finding better market The effort of product advertisement is still passive, leading to hardly finding new output products So the results of these analyses are really true in reality Although State has given out many policies for encouragement, the effects are still limit, especially a good price deserved for their efforts in doing business with new critical thinking and with high . consumption in Mekong delta (2) Analyzing the structure of the catfish market in Mekong delta (3) Identifying the influential factors affecting the effectiveness of the catfish markets. (4) Suggesting. in market structure and conduct of pangasius industry, and thus in market performance. From the problems as mentioned above, the research on “Solutions for development of pangasius market in. the Performance factor influenced to the integrated mechanism of market and price policy involved in the process. The Conduct factor influenced to the increase or decrease of the product, the improved