THE ECONOMIC EFFICIENCY OF SHRIMP FARMING IN THUAN AN TOWN, PHU VANG DISTRICT, THUA THIEN HUE PROVINCE

HUE UNIVERSITY COLLEGE OF ECONOMICS THE ADVANCED PROGRAM UNDERGRADUATE THESIS THE ECONOMIC EFFICIENCY OF SHRIMP FARMING IN THUAN AN TOWN, PHU VANG DISTRICT, THUA THIEN HUE PROVINCE NGUYỄN ĐẶNG PHƯỚC TÀI Hue, June 2016 HUE UNIVERSITY COLLEGE OF ECONOMICS THE ADVANCED PROGRAM UNDERGRADUATE THESIS THE ECONOMIC EFFICIENCY OF SHRIMP FARMING IN THUAN AN TOWN, PHU VANG DISTRICT, THUA THIEN HUE PROVINCE Name of student: Nguyen Dang Phuoc Tai Name of supervisor: Assoc Prof, Dr Bui Dung The Class: K45 Agricultural Economics - Finance Academic year: 2011-2016 Hue, June 2016 ACKNOWLEDGEMENTS It is important to realize that without the help of all the organization and people I met with, I would not have been able to complete my first Bachelor’s thesis Hence, I am deeply grateful to many people for their help and support during the various stages of writing this thesis First and foremost, I would like to express my sincere appreciation to Assoc Prof, Dr Bui Dung The, my thesis supervisor, for his enthusiasm and encouragement at every stage of my thesis I could not have imagined having better adviser and mentor for my teacher Besides, I would like to thank all local staffs in Thuan An town, who helped me in collecting data process Likewise, my sincere thanks also go to all teacher in Agricultural Economics- Finance Department ABSTRACT The thesis is examining economic efficiency of shrimp farming in Thuan An town, Phu Vang district, Thua Thien Hue province The secondary data for estimating regression models on relationships between the input factors such as the density of breeds, the food cost, the labor cost, disease prevention, the age of household head, the education level of household, the acreage of household are acquired from 2016 Summary results collected from shrimp farmer review and survey in Thuan An town By the use regression model of Cobb Douglas function in combination with the statistics methods and use of the evaluation indicators of economic efficiency, the study shows the economic efficiency shrimp farming, economic efficiency compare with two main farming forms (high-tide pond and low-tide pond) Even though shrimp farming here is a key sector, it still meets difficulties because of subjective and objective factors such as: unfavorable weather, technical farming Besides, farmers are yet to use input factors appropriately CONTENTS LIST OF ABBREVIATIONS i LIST OF TABLES .ii PART I: INTRODUCTION 1.1 State of problem 1.2 Purpose of research 1.3 Scope and Delimitation 1.4 Research methodologies 1.4.1 Data collection method .2 1.4.2 Data analysis method: 1.4.5 Indicators reflecting economic efficiency of shrimp farming: .3 PART II: CONTENT OF RESEARCH Chapter 1: Overview of Research Issues .6 1.1 Theoretical literature review 1.1.1 The Concept of economic efficiency 1.1.2 Economic efficiency in Aquaculture and Shrimp farming: 1.1.3 Method of determining the economic efficiency 1.2 The role and characteristics of shrimp farming 1.2.1 The role of shrimp farming 1.2.2 The characteristics of shrimp farming 1.3 Practical basis 12 1.3.1 General shrimp farming situation in Viet Nam 2015 12 1.3.2 Shrimp farming situation in Thua Thien Hue 13 Chapter 15 Basic Situation in Thuan An Town 15 2.1 Characteristics of Nature 15 2.1.1 Geographical location 15 2.1.2 Topography, land 15 2.1.3 Weather& Climate 15 2.2 Socio-Economic Conditon 16 2.2.1 Labor and Population situation of the town 16 2.2.2 Using land situation in town 18 2.2.4 The result of shrimp farming in town .20 2.3 General assessment of the basic situation in Thuan An Town 21 2.3.1 Advantages .21 2.3.2 Disadvantages: 21 2.4 The result and efficiency of shrimp farming in Thuan An Town .22 2.4.1 General information of households surveyed 22 2.4.2 The investment of shrimp farming situation in households surveyed 24 2.4.3 Analyzing production cost of households in studied area 25 2.5 Results and economic efficiency of shrimp farming household surveyed 33 2.5.1 Farming area, yield and production of the households surveyed .33 2.5.2 The results and efficiency of shrimps farming of households surveyed in 2016 34 2.6 Analyzing factor affecting the efficiency of shrimp households surveyed 39 2.6.1 Dividing Group by the cost of food according to types of pond .39 2.6.2 Regression model 43 Chapter 45 ORIENTATION DEVELOPMENT AND SOLUTIONS 45 3.1 Orientation development 45 3.2 SOLUTIONS: 45 3.2.1 Solution to local government 45 PART III: CONCLUSION AND RECOMMENDATION 48 3.1 Conclusion 48 3.2 Recommendation .49 REFERENCES: 50 LIST OF ABBREVIATIONS TC Total Cost IC Intermediate Cost GO Gross Output VA Value Added MI Mixed Income Pr Profit VND Viet Nam dong Ha Hectare Mil million i LIST OF TABLES Table 1: Shrimp farming situation in Thua Thien Hue in years (2013-2015) 13 Table 2: Population and labor situation of Town in years (2014-2015) 17 Table 3: Using land situation (2015) 18 Table 4: Shrimp farming situation in Thuan An town in 2015, 2014 20 Table :General information of the household surveyed in 2016 .23 Table 6: Investment situation of household surveyed in 2016 24 Table 7: Intermediate cost of household surveyed devided by type of pond in 2016(average/ha) 27 Table 8: Production cost of households surveyed according to types of pond in 2016 (average/ha) 32 Table 9: Area, productivity, and yield in 2016 33 Table 10: The results and efficiency of shrimp farming in average per of households surveyed in 2016 35 Table 11 Comparing the results and efficiency shrimp farming average/ha of household surveyed in 2016 37 Table 12 : Dividing groups by the food cost according to high-tide ponds 42 Table 13 : Dividing groups by the food cost according to low-tide ponds 42 Table 14 : Factors affecting Shrimp farming productivity 43 Table 15: Investment level according to material unit .51 Table 16: Factor affecting shrimp farming productivity 51 ii PART I: INTRODUCTION 1.1 State of problem Thua Thien Hue is a central coastal province which has great potential for aquaculture development; with the advantage of Tam Giang - Cau Hai that is longer than 70km, 22.000ha area, rich in flora and fauna, and the largest coastal lagoon system in Southeast Asia This is where the ideal conditions are blessed for the development of aquaculture, especially commercial shrimp farming Tam Giang-Cau Hai spreads over districts of Phong Dien, Quang Dien, Huong Tra, Phu Vang and Phu Loc Thuan An Town, Phu Vang district, Thua Thien Hue Province is located along the Tam Giang Lagoon Aquaculture, especially, shrimp farming has started long time ago but only really developed since 2002 and has become a key economic sector in the locality helping create jobs and raise incomes for people simultaneous improve of socio-economic foundation Nonetheless, Aquaculture here still has shortcomings Most of shrimp farming here most are spontaneous, low production levels, and are not synchronized Movement of shrimp farming is mainly based on experience which shows little interest in technical issues, then not bring high economic efficiency for farmers Besides, the ponds, over the years, are not focused on rehabilitation treatment making the disease occurs continuously, affecting farming results On the other hand, in recent years, the disease situation and the pollution of water sources are increasingly more serious that affect the productivity and efficiency of shrimp Stemming from that fact, I chose the theme "Economic efficiency of shrimp farming in Thuan An Town, Phu Vang district, Thua Thien Hue province” as the subject of my thesis 1.2 Purpose of research Reviewing theoretical and practical basis about economic efficiency in general, and shrimp farming in particular Assessing the status of production, results and efficiency of shrimp farming Identifying the factors that affect the results and efficiency of shrimp farming in the studied area Proposing solutions mainly to improve economic efficiency in Shrimp farming in Thuan An town 1.3 Scope and Delimitation Research area: Thuan An Town, Phu Vang District, Thua Thien Hue Province Time of studying: Economic efficiency of shrimp farming in Thuan An town in the period of time from January to April in 2016 1.4 Research methodologies 1.4.1 Data collection method Secondary data: based on data belonging to Statistical agency (department of Agriculture and Rural development in Phu Vang district), Department of Aquaculture, data from the statistical yearbook in district 2015 Also the thesis used relevant book, internet Primary data: Primary data was collected from interview shrimp farmers with questionnaire According to report, there are 140 households in 11 villages in Thuan An town who farm shrimp By sampling method, i randomly selected households applying high-tide pond farming and households applying low-tide pond in every villages (nearly 24% of every villages) In which, I also selected typical shrimp farming households in villages according to recommendation of local staff There are 58 households selected in total 1.4.2 Data analysis method: 1.4.2.1 Descriptive statistical method: Based on the primary data and secondary data collected, using descriptive statistical method to synthesize data, then analyze and assess indicators by time Furthermore, Thesis also used economic accounting methods to analyze, compare results and indicators of economic efficiency of local and shrimp farming households surveyed Therefore, the transition from low-tide pond farming to high-tide pond farming with intensive or semi intensive farming should be a priority of locality 2.5.2.3 Efficiency in terms of Society and Environment The development of shrimp farming in recent years has created many jobs for many households along the lagoon area of Thuan Town This job brings high-income for farmers Thanks to higher interest earned that many households were enriched from shrimp farming, they could buy houses and necessary means to serve the needs of life Shrimp farming is one of the main economic activities of the district, so that annual operating revenues generated substantially by shrimp farming contributes significantly to the economic development and society Along with the development of shrimp farming, which has led to the development of some jobs, other services such as providing breeds service, food services, fuel, and especially shrimp farming not only solves employment for family labor but also create jobs for other workers around Because when dredging, repair pond or harvesting, households must hire more workers In addition, the shrimp has opened new directions for shifting the economic structure in rural area, eliminating the rice monoculture, creating more jobs for the workers At the same time aquaculture will limit the fishing in the lagoon which always cause environmental pollution of the lagoon However, the development of shrimp farming district on the lagoon system in recent years has also caused some negative impacts on natural resources and the environment It is due to irrational use of natural resources of land, water and living organisms and at the same time the pollutant made lagoon system over the years heavily contaminated, affecting effectiveness and efficiency of aquaculture in lagoon On the other hand, the district's shrimp farming mainly spontaneous, drainage systems, canals has not been complete, planning and investment has not been suitable So the handling of water resources are still inadequate, and famers often waste water directly to the lagoon, sewage carrying disease leads to pollute the lagoon 38 Thereby, beside the positives, aquaculture also brings the negative aspects of society and environment So, the environment which is not contaminated is the key factor to bring high efficiency in long term 2.6 Analyzing factor affecting the efficiency of shrimp households surveyed 2.6.1 Dividing Group by the cost of food according to types of pond To see the effect as well as a number of factors affecting the economic efficiency of shrimp, I conducted dividing groups by the food cost according to hightide pond and low-tide pond Firstly, as for high-tide pond, based on data surveyed data, I divided into groups, including Group 1: households with an investment of less 25 million VND food cost; group 2: households with an investment of from 25 million VND to less than 40 million VND food cost; groups: households with an investment of 40 million VND to less than 55 million VND food cost and Group 4: households with an investment cost of higher 55 million VND food cost Results of divided groups are reflected in Table 12 The table shows households often invested the food cost of group ranging from 40 to less than 55 million, which has the highest rate with 18 households; accounted for 54.55%, this is because this food cost was quite affordable to the ability of local people Group with investment of over 55 million dong, this high cost was suitable for those whose a large area of shrimp farming and a great deal of shrimps ,among the 33 households surveyed, households invested for this costs, accounting for 18.18 % We also see, from group to group 4, along with the increase in the cost of food, the shrimp productivity also increased With the investment of food cost below 25 million/ha, the yield of shrimp reached 556.67 kg/ha, while with the investment food cost over 55 million, the shrimp productivity reached about 993.33 kg/ha This shows, food had a great influence on the growth and development of shrimp When shrimp productivity increased, indicators of gross output, value added, mixed income, and profit also increased Specifically, with the level of investment in group 1, the total gross output reached 70.48 million VND/ha and gradually increased to group , which 39 reached 129.93 million VND/ha Likewise, the value added in group only reached 34.15 million VND/ha, but group reached 59.18 million VND/ha Similarly, with the investment in food cost in group 1, the profit reached 10.15 million VND which was the lowest; with the investment in food cost in group the profit reached 35.27 million VND Indicators which reflect production efficiency GO/IC, VA/IC, MI/TC, Pr/TC also increased from group to group Secondly, as for low-tide ponds, I divided into groups, including Group 1: households with an investment of less 20 million VND food cost; group 2: households with an investment of from 20 million VND to less than 25 million VND food cost; groups: households with an investment of 25 million VND to less than 30 million VND food cost and Group 4: households with an investment cost of higher 30 million VND food cost Results of divided groups are reflected in Table 13 The table shows households often invested the food cost of group ranging from 20 to less than 25 million, which has the highest rate with 11 households; accounted for 44%, this is because the production scale in low-tide pond is small, so this food cost is suitable Group and with investment of from 25 to more 30 million dong, this high cost was suitable for those whose a large area of shrimp farming and a great deal of shrimps ,among the 25 households surveyed, 10 households invested for this costs, accounting for 40% Like high-tide ponds, we also see, from group to group 4, along with the increase in the cost of food, the shrimp productivity also increased With the investment of food cost below 20 million/ha, the yield of shrimp reached 400 kg/ha, while with the investment food cost over 30 million, the shrimp productivity reached about 521.67 kg/ha This shows, food had a great influence on the growth and development of shrimp When shrimp productivity increased, indicators of gross output, value added, mixed income, and profit also increased Indicators which reflect production efficiency GO/IC, VA/IC, MI/TC, Pr/TC also increased from group to group Therefore, the food had a huge impact on the results and effectiveness of shrimp farming, increasing investment in food made results and effectiveness also increase Hence, investing food is very important and shrimp farmers need special 40 attention on this during farming The problem which is required for the local shrimp farmers is to strongly invest and increase the suitable amount of food for shrimps to obtain more effective results 41 Table 12 : Dividing groups by the food cost according to high-tide ponds The cost of Household food (million Average/ha