Economic efficiency of organic vegetable production in kim long ward, hue city, thuathien hue province

Đại học Kinh tế Huế ACKNOWLEDGEMENT First of all, we would like to express the appreciation to our supervisorAssoc Prof Dr Bui Dung The Dr The already encouraged and directed us with his skillful guidance, innovative idea and stoic patience Without his help, we would never complete our research We would like to acknowledge the valuable input of Dr Nguyen QuangPhuc, who helped to shapethis research, resolve the most difficult modeling in this research ại Đ We are very thankful to the professors and lecturers of the Advanced Program, who have helped us and co-operated with us during the conducting time ho We give deep thanks to all of households in Kim Long Ward who are enthusiastic in supply us data and answer our questionnaire ̣c k Finally, we express to our family for their love and encouragement, we have received so much personal support from family and friends h in Hue, October 2017 ́ uê ́H tê i Đại học Kinh tế Huế TABLE OF CONTENTS PART I: INTRODUCTION .1 Rationale of this research Research objectives Research methods .2 3.1 Data collection 3.2 Analysis methods Research scope PART II: CONTENTS AND RESEARCH RESULTS Đ Chapter 1: OVERVIEW ABOUT RESEARCH PROBLEM ại 1.1 Theoretical analysis What is organic agriculture? ho 1.1.1 1.1.1.1 Motivation of growing organic agriculture ̣c k 1.1.1.2 Characteristics of organic agriculture 1.1.1.3 Basic criteria of organic agriculture in 1.1.1.4 Quality standards of organic production h 1.1.1.5 Why is organic vegetable necessary? 11 Definition of economic efficiency 12 1.1.3 Indicators reflect production results .13 ́H tê 1.1.2 Practical basis 15 1.2 ́ uê 1.2.1 Situation of organic agriculture model in the world 15 1.2.2 Situation of organic vegetables model in Vietnam .17 1.2.3 Situation of organic vegetables model in Hue city and Kim Long ward .19 Chapter 2: ECONOMIC EFFICIENCY OF ORGANIC VEGETABLES PRODUCTION IN KIM LONG WARD, HUE CITY, THUA THIEN HUE PROVINCE .20 2.1 Study site .20 2.1.1 Natural conditions 20 2.1.1.1 Geographical location 20 2.1.1.2 Topography 21 2.1.1.3 Climate 21 2.1.1.4 Hydrological 22 ii Đại học Kinh tế Huế 2.1.1.5 The resources 22 2.1.1.6 The situation of the environment 22 2.1.1.7 General assessment of natural features in Kim Long ward 22 2.1.2 Current situation of using land in Kim Long ward, Hue City 23 2.1.3 Economic and Social conditions 24 2.1.3.1 Economic growth and economic structure 24 2.1.3.2 Population and labor 24 2.1.3.3 The infrastructure 25 2.1.3.4 A general assessment of socio-economic features in Kim Long Ward 26 2.2 Organic vegetable producing situation in Kim Long Ward 26 Đ Characteristics of surveyed households 26 2.2.2 Technical process of organic vegetable production of surveyed households28 ại 2.2.1 ho 2.2.3 Economic efficiency of organic vegetable production of surveyed households 35 Distribution channel of market for organic vegetable model in Kim Long 40 2.2.5 SWOT analysis 43 in ̣c k 2.2.4 Ward h Chapter 3: ORIENTATION AND SOLUTIONS FOR ORGANIC VEGETABLES PRODUCTION IN KIM LONG WARD, HUE CITY, THUA THIEN HUE 46 tê 3.1 Orientation of organic vegetable production in Kim Long ward 46 ́ uê ́H 3.2 Some of solutions to improve the efficiency of organic vegetables production in Kim Long ward 46 3.2.1 Solutions about land 46 3.2.2 Solutions about infrastructure investment 47 3.2.3 Solutions about labor 48 3.2.4 Solutions about market 49 3.2.5 Solution about raising awareness about organic catering 50 PART 3: CONCLUSION AND RECOMMENDATION 52 Conclusion 52 Recommendation 52 2.1 Recommendation for local government 52 2.2 Recommendation for farmers 52 iii Đại học Kinh tế Huế QUESTIONNAIRE FOR FARMERS WHO PRODUCE ORGANIC VEGETABLE MODEL IN KIM LONG WARD – HUE CITY .54 REFERENCES 61 ại Đ h in ̣c k ho ́ uê ́H tê iv Đại học Kinh tế Huế LIST OF TABLE Table 1-1 : Square of organic agricultural of areas 16 Table 2-1 : Land using situation of Kim Long ward in 2015 23 Table 2-2 : The situation of population and labor of Kim Long ward over 2013-2015 25 Table 2-3 : Technical measures used in organic vegetable production 30 Table 2-4 :Pest and weed control methods 32 Đ Table 2-5 : Type of vegetables grown follow twelve months ại Table 2-6 : Labor and average hour farm working of Smallholder Farmers ho Table 2-7 : Expenditures of organic vegetable model 34 35 36 ̣c k Table 2-8 : Price of some types of seeds 37 in Table 2-9 :Gross output of organic vegetable of production of surveyed households 38 h Table 2-10: Economic efficiency indicators of organic vegetable production ́H tê Table 2-11: Depreciation of fixed cost Table 2-12: SWOT of organic vegetable model in Kim Long ward 39 40 43 ́ uê v Đại học Kinh tế Huế LIST OF FIGURE Figure 1-1: Closed cycle of organic farm Figure 1-2: Organic vegetable production process Figure 2-1: The measures to improve plant health 33 Figure 2-2: Distribution channel of organic farms in Kim Long ward 41 ại Đ LIST OF IMAGE 20 h in ̣c k ho Image 2-1: Map of Kim Long ward ́ uê ́H tê vi Đại học Kinh tế Huế ABBREVIATIONS Action Center for the City Development ADDA The Danish Asian Agriculture Development Project Cap Capital CAD Canadian Dollar DANIDA The Danish Government FAO Đ Food and Agriculture Organization of the United Nations HDI Human Development Index ại ACCD International Organic Agriculture Organization ̣c k IFOAM Human Factors Integration ho HFI Intermediate Cost GMOs Genetically Modified Organisms GO Gross output GDP Gross domestic product GNP Gross National Product MARD Ministry of Agriculture and Rural Development MI Mixed Income NGOs Non-Government Organizations Pr Profit SWOT Strength, Weakness, Opportunity, Threat US The United State USDA The United State Development of Agriculture VA Value Added h in IC ́ uê ́H tê vii Đại học Kinh tế Huế VND Vietnam Dong TC Total cost ại Đ h in ̣c k ho ́ uê ́H tê viii Đại học Kinh tế Huế PART I: INTRODUCTION Rationale of this research Constructing green agriculture towards using organic methods, biological measures is friendly to environmental that were successfully applied in many countries It provides high efficiency in consumption, the export of agricultural products, branding of agriculture products favored by consumers Currently, the world has 130 agriculture countries are under organic farming methods with approximately 35.6 million hectares of area, revenue of organic products worldwide reached about 55 billion US dollars (FAO statistic, 2015) ại Đ Under the impact of urbanization progress to agricultural land, the level of environmental pollution increases due to using more fertilizers, pesticides, which affect the value of annual agricultural production in Vietnam Besides, misuse chemicals in agriculture production also impacts on human health In this situation, the development of clean agriculture, high-tech agriculture will be right direction for sustainable agricultural development ̣c k ho h in Due to this circumstance, Thua Thien Hue province always care about growing organic vegetables in a wide range.Two farmers in Kim Long ward was initial successful with small scale pioneers in application of organic vegetables growing model in ThuaThien Hue province Especially, after perceiving the prospects of organicmethod, local government in Kim Long Ward mobilize farmers to convert the cultivated cropping patterns to expand the area planted vegetables according to this method They expanded organic vegetable model with households include more over 3000 square meters of land ́ uê ́H tê From 2015 until now, Kim Long's farmers not only improve their income but also contribute to protect environment when they bring organic vegetables to consumers in Hue city With beginning 600 square meters of land, a farmer earned about 150,000 VND each day on average They also extensive farming on many types of vegetable such as basellaalba, salad, fennel, and sweet potato buds, depending on season There are some problemswhich researchers should solve obviouslysuch as what organic agriculture is The result of this case study provides information about organic vegetable production and its benefits The study also shows how organic vegetable in Kim Long Ward grow and develop from the beginning, and provides smallholder farmers with the necessary information on profitability of organic vegetable production system to facilitate making informed decision when converting to organic farming By determining the effect of social economic, farm and market characteristics on profitability of smallholder vegetable production system, the study Đại học Kinh tế Huế assists providing additional way of increasing profit margins in smallholder vegetable production systems and value chains Capability of expanding organic vegetable model to other wards in Hue is feasible Base on all above reasons weselect the topic:“Economic efficiency of organic vegetable production in Kim Long ward, Hue city, ThuaThien Hue province” to become our science research report ại Đ Research objectives General objectives: Assessing economic efficiency and expandability of organic vegetables model at Kim Long Ward The study had the following specific objectives: Codifying theoretical basis on organic vegetable production and economic efficiency From this basis, having more overall viewpoint about situation of model organic vegetables in Kim Long Figuring out the process of planting the organic vegetables such as the production, and expenditure cost, analysis the characteristic and situation of growing organic vegetables in Kim Long ward Offerring some recommendations to enhance the efficiency of organic vegetable in Kim Long ward and expand this model other wards of Hue city Research methods 3.1 Data collection Secondary data: is collected from books, magazines, professional journals, the state policy is concerned, the scientific studies have been published, these reports about economic effectiveness of organic vegetable production in local and over the world; data is collected from ACCD, information are collected from the beginning of converting conventional vegetable into organic vegetable Primary data: The questionnaire is designed to conduct the survey of smallholder farmers, who growing organic vegetable in Kim Long ward, Hue city From the results of interviewing farmers, this research gathers information about area under cultivation, process of growing organic vegetable, how to convert the model, type of vegetable according to the season 3.2 Analysis methods h in ̣c k ho ́ uê ́H tê Analyzing economic- social issues as well as used the inputs of organic vegetable grow, the results and the efficiency productivity of households over the years Researchers docase study by describing detail farm households situation and clarifying their activities And then analyzing efficiency of households by answering these questions such as what inputs are, how output price changes, what cost of products is, what happen to famers or other factors such as weathers, seasons,…(what Đại học Kinh tế Huế - Buying the needed installations and machinery for vegetable growing, constructing greenhouses, constructing and renovating buildings, establishment of irrigation systems - Construction and renovation of buildings needed for storage and conservation of vegetable production and purchase of equipment - Improving technological possibilities (appliances and machinery needed for crop production; storage, dryers and buildings) - Purchase of equipment (for processing, sorting, packaging, storing etc.), construction and renovation of warehouses and production halls - Developing the organic products and their technologies and extension of the assortment of processed organic products Đ 3.2.3 Solutions about labor ại ̣c k ho In terms of training, the Agricultural University will soon open a course in organic agriculture to form a specialized training in organic agriculture in the future.With domestic funding and through State projects, research institutes and universities choose to send students for master / doctoral training in this field abroad h in Labor costs for organic farmers can be up to 30 percent higher Because the weed control must be managed by hand rather than with chemicals, organic farmers face higher worker's compensation, tax, and salary costs than conventional farmers They also tend to put in more hours, which limits their potential to earn off-farm supplemental income Sixty percent of organic farmers list farming as their primary occupation, compared to 45 percent of all farmers This translates to higher prices and makes it harder for organic farmers to compete with imports from countries with lower labor costs ́ uê ́H tê => More cash assistance for local and organic farmers, along with subsidies or tax cuts for hiring employees, would help defray labor expenses Mutual Support: Farmers should have formed support networks to help each other and to communicate with their consumers They should actively promote locally grown organic agriculture—not just on their own behalf, but on behalf of their fellow farmers as well These efforts have helped create consumers that stand by them during toughtimes Organic farmers have tended to bond together more than their conventional neighbors Organic farmers should use group sharing and learning from others’ experiences in an “old fashion neighboring” spirit, where farmers share labor, machinery, ideas, and information 48 Đại học Kinh tế Huế 3.2.4 Solutions about market - Farmer should have a marketing strategy Manage risk by diversifying marketing plans Organic vegetable farmers should market their crops through more than a channel Community supported agriculture arrangements, farmers’ markets, small-scale markets, and wholesale markets Some farmers add value with a food processing enterprise The crop diversity involved in meeting organic rotation requirements also provides marketing advantages Economic losses suffered from early season crop failure may be compensated for with economic gains from late seasoncrops ại Đ - Farmers participate in community supported agriculture by selling shares or subscriptions to nearby consumers The consumer shares in the risks associated with production, receiving more or less of particular products as weather patterns vary through the season Community supported agriculture build supportive relationships that increase consumer trust, leading to loyalty during hard times ̣c k ho - Farmers in several of the focus groups had formed cooperatives as a way to manage market risks Corporations are a way for farmers to control marketing Cooperatives had allowed them to raise capital for marketing expenses, such as the slotting fees needed to gain shelf space, and to gain marketing leverage h in - Organic farmers mentioned that they manage risk by diversifying their marketing plans Organic vegetable and fruit farmers, in particular, said that they market their crops through more than one channel They mentioned community supported agriculture arrangements, farmers’ markets, small-scale markets, and wholesale markets Some farmers add value with a food processing enterprise The crop diversity involved in meeting organic rotation requirements also provides marketing advantages Several organic farmers pointed out that economic losses suffered from early season crop failure may be compensated for with economic gains from late season crops ́ uê ́H tê - Community supported agriculture build supportive relationships that increase consumer trust, leading to loyalty during hard times, “relationships, instead of insurance.” - Another draws on a “subsidy of goodwill” from the community Farmers in several of the focus groups had formed cooperatives as a way to manage market risks Cooperatives had allowed them to raise capital for marketing expenses, such as the slotting fees needed to gain shelf space, and to gain marketing leverage - Local Governments can also promote organic foods by allocating space in open markets and in trade fairs Integrating organics into public procurement (e.g for schools and hospitals) stimulates market demand and improves public information and consumer exposure 49 Đại học Kinh tế Huế - Government can also play a strong role regarding consumer education by drawing attention to the health and environmental benefits of organic products To this end, organic agriculture can be introduced to the mandatory curriculums in schools and universities in agricultural regions 3.2.5 Solution about raising awareness about organic catering - Introducing principles of organic farming, organic product labeling and requirements of organic catering to different target groups - Organizing, advising, training and communication for caterers Organic Farming - Advising caterers about how to start and develop organic catering ại Đ - Compiling manuals on the use of organic food for different target groups among catering enterprises ho - Publishing organic food cookbooks and compiling recommended customized organic food menus for child care institutions - Organic food workshops for caterers, also with a foreign lecturer ̣c k - Introducing organic food success stories in - Serving organic food during public events h ́H tê - Stimulation of awareness about supplying products processed at home or in community kitchens into catering enterprises - Developing the entry of organic food into catering enterprises ́ uê - Applying the program "Organic food in child care institutions" - Compiling a guiding document in order to raise organic food to a privilege position in public sector procurements - Presentation of the possibilities of offering organic products to the school fruit and vegetables and school milk support applicants - Organizing of the competition "The best organic caterer" (different categories for kindergartens, schools, restaurants) - Raising the awareness of consumers about organic farming - Organizing campaigns aimed at informing about organic food - Informing the public about organic food in cooperation with the media 50 Đại học Kinh tế Huế - Publishing materials on organic farming for different target groups - Introducing organic farming to different target groups, for example heads of child care institutions, teachers, children, parents, medical staff, health professionals and social workers ại Đ h in ̣c k ho ́ uê ́H tê 51 Đại học Kinh tế Huế PART 3: CONCLUSION AND RECOMMENDATION Conclusion Organic vegetable in Kim Long ward is a new model in Hue city The trend of development organic vegetable is still not strong even though concept of organic agriculture was not strange in the world or even in Viet Nam ại Đ In 2014, Tran Huu Hung and Truong DinhTu were two pioneers farmer in Kim Long took part in organic vegetable model under supporting by ACCD In the very first period, farmers got a lot of serious problems about cultivation and actual cost Then they harvested the first season on December 2015 After that, households in Kim Long decided to convert their land into growing organic vegetable Around two years for converting activities, farmers in Kim Long have higher income to improve their living standard Besides, they felt satisfy in their qualify situation currently Recommendation Recommendation for local government h tê 2.1 in ̣c k ho By using economic efficiency indexes like GO, IC, MI, VA and SWOT method, we could make a conclusion that farmers in Kim Long get better income than in past In contrast, there are too many difficulties which farmers have to face not only internal factors like organic vegetable process, but also external factors effect on their motivation as government policy of on their revenue as marketing strategy and information market ́ uê ́H It can be said that organic farming is no longer a technical issue but a policy issue The government and other ministries involved in organic agriculture, such as the Ministry of Agriculture and Rural Development, the Ministry of Science and Technology and the Ministry of Health, should soon issue specific and feasible policies to support organic agriculture development These policies should focus on complete the system of standards, production standards, processing, quality certification, inspection and supervision related to organic agriculture Provincial Committee should help businesses build brand, market development and product promotion, have budget or grant program for universities and organizations to help farmer better transition to organic The administration could help more farmers successfully transition to organic by refunding the research program and expanding the transition grant program 2.2 Recommendation for farmers Organic farming also needs inputs Therefore, the production and business enterprises involved in organic fertilizers, biologically, microorganisms and 52 Đại học Kinh tế Huế biological plant protection products also need to be supported in production Of course, there should be links between organic agricultural enterprises and enterprises producing and trading in fertilizers and pesticides ại Đ Organize the research on the system of policies, standards, certification of quality and trade of organic agricultural products of countries to draw lessons for Vietnam in planning and development strategy Comprehensively, assessing the economic, organizational, management and commercial aspects of organic agricultural products produced by enterprises in order to find out the difficulties and obstacles to propose suitable solutions for agricultural development and organic business in the future Agricultural University should open a course in organic agriculture to form a specialized training in organic agriculture in the future Establishing a list of Master students' subjects of applied research on organic farming, research training Establishing a list of Doctorate students' subjects of base and applied research on organic farming, research training Promotion of cooperation between producers, processors and research and applied establishments, improvement of laboratory base Extension of the subject of organic farming into higher education institutions', vocational institutions' and general education schools’ study programs and subject syllabus Extension of the educational resources of general education schools with topics of organic farming and organic food To develop study programs of organic farming (including organic producing, processing and catering) for vocational and higher education institutions h in ̣c k ho ́ uê ́H tê 53 Đại học Kinh tế Huế Code of questionnaire: QUESTIONNAIRE FOR FARMERS WHO PRODUCE ORGANIC VEGETABLE MODEL IN KIM LONG WARD – HUE CITY Address of household: A: PRIVATE INFORMATION Name of householder: Đ Gender: Male  Female Age: Qualifications of respondent: ại  Illiterate ho  Secondary school  Primary school  High school  University/College ̣c k How many members are there in your family? How many members who can get earning? h in ́ uê ́H tê What is the total area of all the land used for producing organic vegetable model purpose? Đại học Kinh tế Huế B THE ORGANIC VEGETABLE PRODUCTION Please provide information about loans you received in recent year for producing organic vegetable model purpose Source Year Purpose Total money received Average monthly interest rate (%) Maturity of loan (months) ại Đ 1.Bank 2.Non-Bank Credit Organization 3.Relatives/Friends Full Funded from organization Other informal sources How you know about organic vegetable model? From who, where? Why you want to start organic vegetable model? h in ̣c k ho ́H tê ́ uê Please provide what are advantages and disadvantages in organic vegetable production 9.1 Disadvantages  Poor soil  Manpower deficit  Higher price  Others (please write them all) Capital shortage 9.2 Advantages Đại học Kinh tế Huế 10 Do you have any change in your life when decide to start organic vegetable model? How you think about your family‘s revenue?  Better than  the same  Less than Please share more about this change 11 Have you ever attended any formal or informal training class?  Yes  No 12 If you answer is yes, how many training class did you take part in? times ại Đ 13 How many hours on day you spend on caring organic vegetable? 1/ Morning: 2/ Afternoon: ̣c k ho 14 What are technical measures used in organic vegetable production? Please tick (X) if you use Please tick (X) if you have Norm Warm water treatment of seeds h Physical treatments on seed in Chemical seed treatment Soil treatments before planting Use of chemical fertilizers Use of organic fertilizers Manure is a fertilizer derived from animal Manure is a fertilizer derived from plant ́ uê Soil treatments without chemical preparations ́H tê Other treatments Đại học Kinh tế Huế 15 Do you catch crop monthly on your land or remain them the same? Do you grow different type of crops in the same field?  Yes  No If yes please tick (X) in following table Jan Feb Mar April May June July Aug Sep Oct Nov Dec Lagenari Vugaris Tomato Eggplant Zucchini Ipomoeaq aquatica Folium Sauropi Mustard Green Ipomoea botatas ́ uê Amaranthus ́H Momordica Charantia Vegetable Sponge tê Basella Alba h Chinese Pea in Okra ̣c k Squash ho Lettuce ại French Bean Đ Cucumber Đại học Kinh tế Huế 16 Why you have to catch crop monthly? Please give some reasons 1/ 2/ 3/ 4/ How much you earn a month from organic vegetable production? ại Đ 17 Please estimate Cost of materials, equipments for production (like knives, shovels, and machinery) VND 18 Please fill in values in the following table about your vegetable business No Content Value Initial cost Well Water pump Electricity system Water pipe Building manure house Intermediate cost Variety Pesticide Labor cost Housing farm Rent labor Other costs Total cost h in ̣c k ho ́ uê ́H tê C THE ORGANIC MARKET 19 Which places can you sell organic vegetable? Please write it down Đại học Kinh tế Huế 20 Does the local government support the organic sector as well as market? 21 How much you sell output products? (thousand VND/kg) Price/kg (thousand VND/kg) Type of vegetable Lagenari vugaris ại Đ Cucum-ber ho Ipomoea botatas Basella alba Ipomoea aquatical Eggplant Okra Monor-dica 10 French bean 11 Citronella 12 Winter melon 13 Pumpkin 14 Basil 15 Salad 16 Glebiorus coronaria Amaran-thus h in ̣c k ́ uê ́H tê Đại học Kinh tế Huế Your comments about the effectiveness of organic vegetables: THANK YOU FOR SUPPORTING! ại Đ h in ̣c k ho ́ uê ́H tê Đại học Kinh tế Huế REFERENCES Amarat S., Monica O.H, Danielle T and Lisa H 2016 Organic and Conventional Produce in the U.S.: Examining Safety and Quality, Economic Values, and Consumer Attitudes Horticulturae 2016, 2, Duong ThiHuyen 2012 Danhgiaanhhuongcuamohinh san xuatnongnghiephuu co den moitruongdattaixaThanhXuan, huyenSoc Son, Ha Noi Environmental Science Master thesis, University of Natural Sciences Faidon, M., Fotini, A., and Antonis, Z Organic Food: Buying More Safety or Just Peace of Mind? 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