Summary of doctoral thesis in economics tea value chain of nghe an province

VIETNAM ACADEMY OF SOCIAL SCIENCES THE INSTITUTE OF SOCIAL SCIENCES NGUYEN CONG BIEN TEA VALUE CHAIN OF NGHE AN PROVINCE Major: Development Economics ID: 31 01 05 SUMMARY OF DOCTORAL THESIS IN ECONOMICS Hanoi - 2020 The paper is completed at: VIETNAM ACADEMY OF SOCIAL SCIENCES Supervisor: Assoc.Prof Dr Nguyen Dinh Long Assoc.Prof Dr Tran Dinh Thao Reviewer 1: Prof Dr Do Duc Binh Reviewer 2: Assoc.Prof Dr Ngo Quang Minh Reviewer 3: Assoc.Prof Dr Nguyen Huu Dat The thesis is defensed before the Doctoral guidance committee, organised at Vietnam Academy of Social Science At …… , … … 2020 The thesis can be found at: National Library Vietnam Academy of Social Sciences Library INTRODUCTION Necessity of the research topic Tea is an economic industry developed in rural midland and mountainous areas of Vietnam and creating a large number of jobs for the agricultural labor force Therefore, tea products have been identified as one of the main export products of the country and should be strategicly developed as country„s commodity for export, earning foreign currency Nghe An is a province that plays an important role in economic and trade exchanges between the North and the South of Vietnam and with other countries in the region, especially Southeast Asian countries such as Laos and Thailand and China Nghe An is also one of the three key tea-producing regions of Vietnam Tea products from Nghe An have also been approaching closer to domestic and foreign markets [17] In recent years, Nghe An has invested in the field of hi-tech agricultural development in the western region, which focuses on the implementation of projects on raw material production areas associated with agricultural processing and consumption markets for tea trees in particular and agriculture in general However, Nghe An tea is just the material for major tea manufacturers in the world and has not really created its own brand Tea products consumed are mainly in the form of raw materials or semifinished products, including exported tea (green tea, black tea), mainly in bags of 30 kg and 50 kg, after which the importer processes refined and packaged with their branded consumption Therefore, the economic value of the tea industry has not really achieved as per the strategic goals, reducing the economic efficiency of the advantage industry, reducing efficiency in use resources of the province in particular and of the economy in general According to the roadmap for the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), there will be many opportunities for the Vietnamese economy in general and the Nghe An tea industry in particular, especially opportunities to attract investment and boost exports to the world's major economies With these opportunities, Nghe An tea industry will also face many challenges such as: fierce competition in both domestic and foreign markets, requiring agriculture as well as tea industrym to be close linkage, forming a value chain with large scale, good quality, and low cost in order to compete in the world market With the above reasons, thesis on "Tea value chains of Nghe An province" was selected and studied with the aim of suggestion overall and focus solutions for developing tea value chain which helps Nghe An province improve the value of tea products, take advantage of the province's competitive advantages Aims of research Setting up scientific and practical bases for the solutions to development tea value chain of Nghe An province, which helps Nghe An province with improving the value of tea products, achieving the province's competitive advantages Object and scope of research * Research subjects The research objects of the thesis are the contents related to value chain and development of tea value chain of Nghe An province * Research scope + Scope of content: The thesis studies issues related to value chains and development of tea value chain of a province; + Scope of space: Datas for the research of the thesis are collected in Nghe An province; + Scope of time: Secondary datas for the research of the topic is collected in the period 2015 - 2019 Primary datas are collected in 2019 The suggested solutions are applied in the period of 2020-2025 period Research Methodology The thesis uses a number of research methods, including: (1) Qualitative method: Used to overview researches related to the topic of the thesis, thereby determining the research orientation of the thesis (2) Quantitative research method: Used to analyze the current state of tea value chain of Nghe An province in the period 2015 - 2019 and draw conclusions about the results achieved, limitations and causes of drought processing in the development of tea value chain of the province (3) The expert method: is used to identify the causes of the limitations in determining tea value chain of Nghe An province and propose solutions to develop tea value chain of the province (4) Comparative method: is used to propose solutions to the development of tea value chain of the province (5) Forecast method: is used to report the possibility of tea production development, changes in tea supply and consumption markets on the basis of natural, socio-economic conditions of Nghe An province and the current status of value chain development in Nghe An tea New scientific contributions of the thesis - In theory: The thesis has summarized the studies on the value chain of the agricultural sector in general, tea value chain of particular, then researching and completing the theoretical basis of tea value chain The thesis selects and approaches the concept of the value chain according to the production process which includes inputs preparation, organizational activities and uses of resources in production to create value for the tea industry Therefore, solutions to develop tea value chain of Nghe An province will be approached on the direction of policy and institutions and will affect both production, processing and trade on tea retail, in that they will focus on the important and decisive stages to the efficiency of value chain development of tea industry in order to increase the economic value of the industry and promote the economic development of the province - In practice: On the basis of analyzing and assessing the current situation of the development of tea value chain of Nghe An province, the thesis has clarified the achieved results, limitations and factors affecting the development of tea value chain, thereby proposing a solutions to develop tea value chain, include: (1) Solutions to improve the efficiency of resource use; (2) Solutions for in-chain link development; (3) Solutions on economic policy; (4) Solutions to create a business environment for businesses The proposed solutions ensure the scientific, synchronous, focus on the impact of tea production, processing and trade, thus contributing to the development of tea‟s value chain, increasing economic value of tea industry and promote the economic development of Nghe An province The structure of the thesis Apart from the introduction, conclusion, and references, the thesis is structured into chapters Chapter 1: Overview of researches related to the thesis topic Chapter 2: Theoretical and practical basis for tea value chain Chapter 3: Current status of tea value chain of Nghe An province Chapter 4: Solutions to develop tea value chain of Nghe An province CHAPTER 1: OVERVIEW OF RESEARCHES RELATED TO THE THESIS TOPIC 1.1 Overview of researches on the value chain of the agricultural sector 1.1.1 Overview of researches on the value chain of the agricultural sector from the point of view of Filière According to this method, the concept of value chain mainly focuses on the problems of the relationship of production output and services, summarized in the flow diagram of goods and the transition relationship diagram through chain participants [63] The concept of the value chain is understood relatively similar to the concept of the supply chain The studies of the authors' show that: value chain approaches on filière‟s point of view does not emphasize the importance of linkages to gain value and advantages to compete in the global market The studes only focused on the value chain of a certain industry in a certain area and includes factors such as logicstic, supply, value added creation, distribution and market linkage… Studies have not shown how to analyze and orient the production and business organization of each actor in the chain to be able to propose solutions to improve the endogenous value of each actor in the chain 1.1.2 Overview of agricultural value chain studies from the perspective of approaching competitive advantage The value chain approach to competitive advantage is developed by Michael Porter, with the view that the value chain is considered as a factor to create and maintain an organization's sustainable competitive advantage in business in the 21st century [53] According to Michael Porter, value chain is the sequence of activities of a company operating in a particular industry that gives the product more value-added than the total value added of activities combined Under this approach, a clear distinction should be made between the main activities, which directly contribute to the added value of the production of goods and the supporting activities that have an indirect effect on the final value of the product Applying the approach of M Porter, author Nguyen Van Bo, Dao The Anh (2013) in the research "Solutions to increase value added in the value chain of agricultural products in Vietnam" [2] has given basic solutions to improve value chain include: solutions to the application of technology in breeding, fertilizing, converting farming systems, crop structure, and technologies in agricultural processing and preservation; market solutions; solutions to building and developing national brands; business support solutions; solutions to support the building of farmer organizations and industry associations Romero, C and Rehman, T (2003) in the study with the topic "Multiple criteria analysis for agricultural decisions" [56] and Jongen, W.M.F (2000) in the study with the topic “Food supply chains: from productivity toward quality” [45] analyzed the value chain of the agricultural sector according to the production process and proposed solutions to increase the added value of firms participating in the supply chain in that industry Thus, the value chain approach from the point of view of M Porter will help enterprises analyze the strong and weak stages in the production process, and at the same time, propose solutions to increase the value created from stage and development of service and auxiliary activities to help the final product have higher value or even higher than the total value brought from all stages in the production process However, this approach cannot be applied to a region or a country with the aim of using resources effectively and developing sustainably for a manufacturing industry which the value chain has many stages and links To this aim, a combination of different methods is required in order to have the most complete and objective assessment of the value chain of the agricultural sector, as a basis for proposing solutions for developing the value chain of our country's agriculture sector today 1.1.3 Overview of research on the value chain of the agricultural sector from the point of view of global value The authors Gereffi and Korzeniewicz (1994) introduced the concept of the global commodity chain, which is "a centralized network that unites organizations around a commodity, uniting manufacturing organizations, enterprises, and countries in the world economy "[47], accordingly, each specific stage in the value chain is considered as a chain and they are linked together to form networks The analysis of the global value chains shows that the production process includes many different stages, which are not only the normal material transformation process, but also include other stages of creating value added, requiring the participant to qualifications such as research and development, marketing and branding… These are stages that create high added value, high barriers to entry, help businesses avoid competition from outside and ensure a sustainable increase in revenue The value chain approach under this point of view is the value-added chain of a series of activities aimed at bringing a product from idea to the end consumer There are also some reseachers approaching the value chain concept according to the globalization method, such as Raphael Kaplinsky, Gereffí, Kozeniewicz In 1994, in "Comodity Chain and Global Capitalism", Gereffi Korzeniewicz introduced the concept of Global commodity chain and considered as a step forward because this is the first time the value chain access on a global scale The author Nguyen Ke Tuan (2003), when researching on the development of agricultural export production in Vietnam [25], gave development solutions, which emphasized the role of processing industry development and this is considered as the basic way to increase the added value of Vietnamese agricultural products and recommend to limit the export of raw products, contributing to stabilizing agricultural production Hoang Hai Anh (2005) in the study "Vietnam agricultural products and the way to build brands" [1] discussed the current situation of Vietnam's agricultural products with the comments: up to 90% of agricultural products force of Vietnam, has been present in more than 80 countries around the world Authors Nguyen Huu Tam (2016), Tran Cong Thang (2015), Ngo Thi Phuong Lien (2019) in their research also agree that: the use of production resources is not reasonable in the transfer Science and technology, and other productive factors such as infrastructure, services, education and training are also limited Thus, with the studies on global value chains, analyzes are performed relatively sufficiently and diversely for the agricultural sector or for a specific agricultural commodity However, on the analytical objective mainly towards the development of the activities of the actors participating in the value chain and combining the views of M Porter, the authors analyze the factors influence the value of actors in the value chain and propose solutions to increase the added value of enterprises in the chain A few studies have mentioned the solutions of the government or provincial government agencies that can intervene in the chain to contribute to the development of the global value chains and propose solutions to the development of value chain in the industry Agriculture Although the proposed solutions have contributed to promoting the development of the value chain, they are still fragmented and not linked to form an overall and effective development strategy of agricultural value chain 1.2 Overview of researches on tea value chain 1.2.1 Overview of researches on tea value chain approached by Filière method A typical example of this approach is Sheikh Mohammed Rafiul Huquem (2014), with the research on tea value chain of developing countries and related issues, he suggested solutions in the economic and business conditions of developed countries The author Ngo Thi Huong Giang (2010) in a study with the topic "Supply chain of Thai Nguyen tea - shortcomings and recommendations" analyzed the tea supply chain in Thai Nguyen province, pointed out shortcomings and suggested solutions to enhance the value of tea products in Thai Nguyen province through promoting the role of associations, the People's Committee of Thai Nguyen Province in participating in tea value chain, thereby contributing to enhancing the value of tea Thai Nguyen tea products [70] Up to now, using of the chain method in tea value chain analysis has not met the requirements of developing the tea industry in Vietnam in particular and in the world in general With the economic integration process between countries, it is required that the analysis of tea value chain is not merely the stages in the supply chain in a region or locality but towards value chain analysis must be associated with international specialization of tea products 1.2.2 Overview of researches on tea value chain approaching the method of competitive advantage From the point of view of competitive advantage, author Ariyawardana (2003) conducted research on tea producers in Sri Lanka, examining the competitive advantages that are related to the productivity of tea growers [30] The study has shown that the factors that belong to the governance of tea growers affect the productivity of tea cultivation and the value of tea products, thereby proposing solutions on governance to increase added value for tea growers in Sri Lanka The report of Agrrifood consulting international (2013) shows that Vietnam's tea value chain has two main channels, the first one is tea growers (farmers) and export tea processing enterprises Martin Odoch (2008) suggested a number of solutions to improve the quality of tea leaves in the Republic of Uganda to supply commercial value chain, which confirmed the role of tea producing intermediaries, emphasizing the strategy Marketing of the business [71] Charles Kirimi Mbui (2016) studied the effects of strategic governance on increasing added value for tea exports in Kenya [34] Research by Tsalwa S Grace and Theuri Fridah (2016) on factors affecting tea value in tea value chain in Kenya, including: demand and type of market, government policy, strategic decision, labor skills [59] 1.2.3 Overview of researches on tea value chain according to the global value method Currently, the researches on the global value chains for tea products are done quite a lot by the authors for many purposes In general, the authors agree that tea value chain usually has stages: (1) tea growing (production): often involves farmers growing tea by themselves or for tea production and processing enterprises Each different actor in the tea planting stage will have different behaviors when participating in tea value chain; (2) tea processing: usually involves households or businesses making the transition from fresh tea to commercial teas serving market needs; (3) tea trade (domestic wholesale, retail or export): mainly related to the operation of a commercial enterprise or a household which self-sourcing and satisfying tea demand 1.3 Research orientation of the thesis - Clarify the concept and description of tea value chain, which is approached from a global value chains and perspective combined with Michael Porter's perspective of competitive advantage; - Identify and quantitatively evaluate the factors affecting the development of tea value chain, in which emphasizing the role of factors such as economic policy and creating a business environment for businesses; - Proposing solutions for economic policies and creating a business environment for enterprises to develop tea value chain of Nghe An province, thereby contributing to efficient use of resources 2.1.3 Factors affecting tea value chain 2.1.3.1 Subjective factors: experience in tea production and trading activities of agents, technology, techniques, capital sources of agents and qualifications of actors 2.1.3.2 Objective factors: institutional environment, consumer adoption with tea brands, business scale and development level of supporting industries 2.2 Model of factors affecting the development of tea value chain The dependent variable in the model is the ability to increase the value of tea products (GT), which is evaluated through four sub-criteria: (1) The ability to increase the selling price of tea products to consumers; (2) The ability to increase revenue and profit of enterprises; (3) The ability to satisfy the tastes of the end consumer; (4) The ability to respond to customer needs directly The independent variables include: (1) The responsiveness of the input factor's quality (KN); (2) Effectiveness of economic policy (CS); (3) Level of linkage between actors (LK); (4) Degree of advantage from the business environment (MT) Relationships between variables can be described through a linear regression model as follows: GT = β0 + β1.KN + β2.CS + β3.LK + β4.MT (2.1) 2.3 Experience in developing tea value chain of some countries in the world and in Vietnam 2.3.1 Experience in developing tea value chain of some countries around the world 2.3.2 Experience in developing tea value chain of some provinces in the country 2.3.3 Lessons for the value chain development of Nghe An tea a Enhance participation of actors of value chain b Develop quality standards, tea production processes to meet the requirements of export markets c Strengthen the role of government policies CHAPTER 3: THE CURRENT SITUATION OF TEA VALUE CHAIN DEVELOPMENT OF NGHE AN PROVINCE 3.1 An overview of Nghe An province 3.1.1 Socio-economic conditions of the Province 10 Nghe An province is located in the center of the North Central region, the North of Thanh Hoa province, the South borders Ha Tinh province, the West borders the Lao People's Democratic Republic Nghe An plays an important role in socio-economic exchanges between North and South, constructing and developing marine economy, external economy and expanding international cooperation In 2019, Nghe An has a population of 3,157,100 people, the gross domestic product (GRDP) of the province in 2019 reached 115,676 billion VND, the average gross domestic product per capita reached 36.64 million VND, the growth rate GRDP reached 8.77% 3.1.2 Results of tea production and trading in Nghe An province Table 1: Tea production and business results of Nghe An province in the period 2015 - 2019 No Norm Planting area, Harvest area, Production, tons Productivity, ton/ha Continuous growth rate, % Planting area Harvest area Production 2015 7940 7000 84000 12 2016 9440 7500 89000 12 Year 2017 9470 8000 104000 13 2018 10200 8400 117000 13 2019 10700 10000 130000 13 100 100 100 118.89 107.14 105.95 100.32 106.67 116.85 107.71 105.00 112.50 104.90 119.05 111.11 Source: Nghe An Department of Agriculture The tea harvest area of the whole province in 2019 is 10,000 with an average growth rate of 9.33%/year Tea productivity of the province in the period 2015 - 2019 did not change much, reaching 120-230 quintals/ha Tea yield of Nghe An is higher than the national average (the whole country in 2019 is 125.9 quintals/ha) and compared to other tea growing provinces in the country, Nghe An tea yield is only lower than provinces - Lam Dong and Thai Nguyen province 3.2 Situation of tea value chain in Nghe An province 3.2.1 Description of tea value chain in Nghe An province a Planting and taking care of tea In the period 2015 - 2019, tea is grown mainly in the area of districts Thanh Chuong and Anh Son The average output growth rate in the period 2015 - 2019 is 11.53% /year The district with the largest tea production in the two districts with the largest tea area in the province also has the largest 11 proportion, reaching 62.1% and 23.5% of the province's tea output, respectively in Thanh Chuong and Anh Son districts In order to improve tea productivity and output, the province has invested in research and application of new varieties with high yield, suitable to the natural conditions of the province In 2014, the People's Committee of Nghe An province issued Decision No 87/2014/QD-UBND on support for tea production as follows: Support 1,500 VND/gourd of Tuyet Shan tea varieties, density of 3,300 pots/ha; Supporting tea varieties LDP1, LDP2, high quality tea at 400 VND/pot, density 1,600 plants/ha; Support for costs of planting and land preparation for LDP1, LDP2 tea, high quality tea, Tuyet Shan tea with the rate of 5,000,000 VND/ha for districts of Con Cuong, Ky Son, Tuong Duong, resettlement area for Ban hydropower Draw in Thanh Chuong district and 2,000,000 VND for the remaining districts b Tea processing The whole province currently has 86 processing facilities with a total design capacity of 871 tons of tea buds/day, with the need for processing raw materials of 120,000 tons/year (the processing time is expected to be 230 days/year) In which, processing of enterprises with technological and equipment capabilities accounts for 328 tons of fresh buds/day In these enterprises, machinery and equipment are relatively synchronous, a number of processing lines with modern technology, the quality of products produced is accepted by domestic and international markets In Nghe An province there are tea processing establishments with large design capacity, organized in the form of limieted company and using modern industrial processing lines In addition, there are small processing establishments, Youth Volunteer Team and Youth Volunteer Team 10, involved in processing green tea with a design capacity of ton of fresh buds/day Participating in green tea processing activities also have 75 small and medium-sized processing establishments, mainly organized as business households with an average design capacity of tons of fresh buds per day Total capacity according to the current design of the Company is 262 tons of fresh tea buds/day, with an expected processing time of 230 days/year, the annual capacity of the company will be 60,260 tons of fresh tea buds/year With this processing capacity, the Company is able to supply to the market 12,000 tons of dry tea/year with CTC tea product structure accounting for 45%; green tea accounts for 55% 12 Data on commercial tea production and tea production value of Nghe Anh Province in the period 2015 - 2019 are shown in Table 3.4 Table Production and value of tea products in the period of 2015 - 2019 Norms 2015 Tea production, 16.8 thousand tons Gross output, billion 3326.4 VND Continuous index % Tea production 100 Production value 100 2016 Year 2017 2018 2019 Avarag e 17.8 20.8 23.4 26.0 20.96 3933.8 4950.4 6201 9308 5543.92 105.95 118.26 116.85 125.84 112.50 125.26 111.11 150.10 111.54 129.34 Source: Nghe An Department of Agriculture The data in Table 3.4 shows that: commercial tea output and production value up to the tea processing period of the province tend to increase steadily in the period 2015 - 2019 Average growth rate of commercial tea output products reached 11.54%/year while the average growth rate of production value reached 29.34% in the period 2015 - 2019 shows that besides expanding the area, increasing tea processing capacity, tea processing department in the province also improves the quality of products, increases the volume of tea for export The results show that tea production value tends to increase significantly higher than the growth rate of tea production c Tea trade Tea production and export value of Nghe An province in the period 2015 2019 are listed in Table 3.5 Table Tea export volume and value of Nghe An province period 2015 - 2019 Norms Export volume (103 tons) Export value (103 USD) Ratio of Export volume/Production volume,% Continuous index % Export volume 2015 2016 Year 2017 Avarage 2018 5.37 5.95 6.38 6605.1 8627.5 10176.1 31.96 33.43 30.67 29.15 28.35 30.43 100 110.80 107.23 106.90 108.06 108.24 13 6.82 2019 7.37 11150.7 12713.3 6.38 9854.5 Export value 100 130.62 117.95 109.58 114.01 117.79 Source: Nghe An Department of Agriculture The data in Table 3.5 shows that the annual tea exported output of Nghe An province is from 6.38 thousand tons, accounting for 28.35% - 33.43% of the total tea production of the province Tea export output depends on market demand In 2015, the province's tea export output reached 5.25 thousand tons with the export revenue reaching 5.2626 million USD; In 2019, the export tea output will reach 7.37 thousand tons, the revenue from tea export will reach the export turnover of 13.45 million USD 3.1.2 The current status of stages in the value chain Tea value chain of Nghe An province is very simple, the actors participating are not much, the added value when passing through the actors is not large The biggest contributor to the value chain is the processing agent, which is also the one that benefits the most from tea value chain Table Some value indicators of the stages in tea value chain Stages Yields, thousand tons Average cost, MillionVND/ton Average revenues, MillionVND/ton Average profit, MillionVND/ton Value added, MillionVND/ton Rate of value added, % Planing 122.78 Processing 26 Wholesale 17.87 retail 26 2.94 183.84 279.19 276.96 23.36 245.12 308.5 325.84 8.64 61.28 29.31 48.88 116.78 35.84 128.34 39.39 63.38 19.45 17.34 5.32 Source: Nghe An Department of Agriculture The data in Table 3.6 shows that, in 2019, the tea output of Nghe An is 26 thousand tons, consumed through channels: wholesale and retail with the respective proportions of 68.73% and 31.27% of the total consumption of the province In Nghe An province, the major contributor to the value chain is the planting and processing of tea The stage of tea planting accounts for 35.84% of the value of tea products with the main ingredients being the salary of workers and initial investment for tea plants The processing stage accounts for 39.39% of the added value with the main part of the value being depreciation of fixed assets due to investment in the processing line, expenses related to product research and development 14 3.3 Analysis of factors affecting the development of tea value chain in Nghe An province 3.3.1 Level of fulfillment requirements for input factors The factors responding relatively well to the quality of inputs such as seeds, fertilizers to tea growing agents and raw tea to tea processing agents with scores of 3.85/5 It shows that one of the factors contributing to enhancing tea value chain is the awareness of the role of input factors The scientific and technical responsiveness was also assessed well with an average score of 3.78/5 3.68 Degree of meeting the requirements… 3.55 The level of meeting the requirements… The level of meeting the business… 3.37 3.78 Level of meeting requirements for tea… 3.85 The degree of meeting the quality… 3.00 3.20 3.40 3.60 3.80 4.00 Source: Analysis results of survey data according to SPSS 20.0 Figture 3.1 Level of fulfillment requirements for input factors 3.3.2 Effectiveness of provincial policies All respondents highly appreciated the science and reasonableness of agricultural development policies in particular and economic development policies of the province in general with a rating of 3.53/5 The degree of advantage of the policy to… 3.24 Effectiveness in implementing economic… 3.19 3.20 Stability of economic policy The support for businesses from the… 3.41 Information about tea industry… 3.43 Scientific and rational level of tea… 3.00 3.53 3.10 3.20 3.30 3.40 3.50 3.60 Source: Analysis results of survey data according to SPSS 20.0 Figure 3.8 Effectiveness of the policies In the period 2015 - 2019, the province is implementing the following policies on tea plants: 15 + Support 80% of the settlement value for the key irrigation works, canals, concrete For tea growing households, when investing in small watering works, anti-drought irrigation for tea is supported 40% of the price of machines and equipment + For tea growers who are workers in agricultural companies, they will be able to borrow money on deferred payment to buy seeds, fertilizer materials, and irrigation against drought + Support 1,500 VND/gourd of Tuyet Shan tea variety, density of 3,300 pots/ha; Supporting tea varieties LDP1, LDP2, high quality tea at 400 VND /pot, density 1,600 plants/ha; Supporting costs of planting and land preparation for LDP1, LDP2 tea, high quality tea, Tuyet Shan tea with the rate of 5,000,000 VND/ha for districts of Con Cuong, Ky Son, Tuong Duong, resettlement area for Ban hydropower Draw in Thanh Chuong district and 2,000,000 VND for the remaining districts + Master plan on development of industrial tea plants in Nghe An province to 2020; Planning for processing agricultural and forestry products mainly in the province of Nghe An up to 2020 has set out specific targets on planning material tea areas associated with processing factories This is an important document in the effective use of the land fund, step by step expanding the acreage, improving productivity, product quality, and sustainable tea development 3.3.3 The degree of association between the actors The factor that is appreciated when establishing linkages among actors is awareness of the importance of contracting between actors and the stability in economic relations with partners This will contribute to creating stability and safety in the business process of actors Responsibilities of enterprises in… 3.57 Diversity of business partners in… 3.50 Significance in signing economic… 3.64 Stable level of economic relations of… 3.57 Stable level of economic relationship… 3.40 3.61 3.45 3.50 3.55 3.60 3.65 Source: Analysis results of survey data according to SPSS 20.0 Figure 3.9 The degree of linkage between actors in the value chain 16 The number of tea processors increased rapidly but not associated with the raw material areas Family processors are willing to buy raw materials of any quality that makes people not want to try to produce with better quality products, the quality of products is decreasing, farmers' incomes go down, competitiveness in the international market is low In tea value chain, the chain of links between private enterprises and farmers is quite effective, the quality of processed tea is guaranteed and the quantity consumed is relatively stable However, the link between private enterprises and farm households in this value chain is still quite lax When the season is right, a private enterprise can force the price, but when there is a shortage of goods, the farmer sells other places with higher prices The interests of enterprises in this chain are not always parallel to farmers, even, sometimes the opposite does not create a high motivation to stimulate development 3.3.4 The efficiency level of the business environment Survey results show that the factors highly appreciate the favorable role of information systems related to the development of tea value chain of Nghe An province The development of science and technology is also facilitating the development of tea value chain However, the opinions are that, in the past time, businesses have not received favorable conditions from policies, associations or financial institutions In addition, the roles of associations in providing information to support actors and in developing links between actors in the value chain has not been well implemented, somewhat limiting the possibility of developing tea value chain of Nghe An province All actors in the chain are in need of loans, especially tea processing households Through the survey, it shows that the average capital of tea growing households is not much, on average from 40-50 million VND/household The capital source is mainly household equity About 49.3% of households get loans from banks The number of households who have borrowed money is not much, because now most tea gardens have come into operation, so the need for capital investment is not much 17 3.51 The level of competition in the tea market Advantages of information related systems 3.48 Scientific and technical development 3.56 3.19 Support for businesses from associations 3.27 Support for businesses from financial institutions Development of tea logistic system locally and nationwide 3.22 3.00 3.10 3.20 3.30 3.40 3.50 3.60 Source: Analysis results of survey data according to SPSS 20.0 Figure 3.10 The efficiency level of the business environment For households, the loan conditions is more difficult than the procedure In Bank for Social Policies, the household must be a poor household and must have a guarantee organization or unions to borrow capital Normally, banks will approve loans for households with fast repayment time and effective business plans Therefore, many households find it difficult to get loans to invest in tea production and business because they cannot meet the conditions 3.3.5 Impacts of factors to development of tea value chain in Nghe An province Table 3.7 Results of multiple regression analysis Coefficientsa Model Unstandardized Standardized Coefficients Coefficients B Std Error Beta (Constant) 633 196 KN 314 033 460 CS 229 033 342 LK 083 030 125 MT 203 032 287 a Dependent Variable: G.T t 3.238 9.432 7.004 2.762 6.347 Sig .001 000 000 003 000 Source: Analysis results of survey data according to SPSS 20.0 From the analysis results, the multiple regression function is determined as follows: GT = 0,46*KN + 0,342CS + 0,125LK + 0,287MT According to the values of regression coefficients received, variables ability to satisfy quality of input factors (KN), efficiency level of economic 18 policy (CS), degree of linkage between actors (LK) and the degree of advantage from the business environment (MT) are positively related to the ability to increase the value of tea products in Nghe An province On the other hand, the variable of ability to meet the quality of the inputs has the strongest impact on the ability to increase the value of tea products, if the ability to meet the quality of the input factors increases by point, it will contribute to the value of tea products increased by 0.46 points The variable efficiency of economic policy also has the second largest influence on the ability to improve tea value chain in Nghe An province The variable degree of linkage among factors that have weak influences on the province's ability to increase tea value chain, however, from an overall and long-term perspective, is one of the most important and effective factors contributing high tea value chain of the province 3.4 Achievements, limitations and reasons for the development of tea value chain in Nghe An province 3.4.1 The achievements + Planning with new varieties and applying scientific and technical advances Raw tea products of Nghe An not use plant protection agents, so tea bud products are relatively clean + Infrastructure for production is increasingly upgraded to meet tea production requirements; Tea growers are equipped with knowledge and thinking about production development investment towards commodity production in the market mechanism through training models + Form a tea value chain with the linkage between farmers and businesses In particular, the value chain linking tea growers with private enterprises is the most effective, increasing people's income and creating quality export products 3.4.2 Limitations - About tea value chain of Nghe An Tea value chain of Nghe An is very simple, the factors participating are not much, the added value when passing through the actors is not large The biggest player in the value chain is the processing agent, which is also the one that benefits the most from tea value chain - Tea production: Tea production is based on household scale, fragmented area, uneven product, poor quality, difficulty in consumption; The tea 19 plantation land fund is under fierce competition with other crops such as orange, rubber, grass for dairy farming, passion fruit trees, - About tea processing The organization of tea production and production management in Nghe An is still inadequate; the imbalance between the processing industry and the production of raw materials has led to a struggle to buy raw materials among the processors, thus destabilizing the market The mini-processors not have raw material areas, when the market is favorable, they compete to buy raw materials, push the purchasing prices up, when the market is difficult, they not participate in purchasing, leading to excess tea materials Locally makes it difficult for tea producers and tea processing establishments to invest in raw material areas - Regarding tea consumption: Mini processing facilitiesdo not ensure food hygiene and safety conditions, not meet the prescribed standards and regulations, so processed products are of low quality This leads to the risk of affecting and decreasing the brand of Nghe An tea products in the market 3.4.3 The cause of the limitations in developing tea value chain * The ability to meet the quality of the inputs: improper collection of tea affects the quality of raw materials; small-scale tea production leads to insufficient resources, capacity and motivation to invest and apply technology advances in production; The mechanization and automation into production are very difficult, production is mainly based on experience, so labor productivity is low and it is difficult to improve product quality; Unsafe tea production is mainly due to residues of harmful active substances from pesticides for tea plants; * The effectiveness of the policies: The organization of tea production and management in Nghe An still has many shortcomings The most prominent problem is the rapid increase in the number of tea processing facilities, not attached to the raw material areas, causing imbalance between production and processing, and breaking cooperation and association relationships between raw material production, processing and consumption has been established for a long time; On the other hand, family processors are willing to buy raw materials with any quality that makes people not want to try to produce with better quality products, so the quality of products is decreasing, farmers' income as well as competitiveness in international markets decline,; Management of tea 20 material areas is not appropriate with processing facilities The investment for processing facilities in rampantly, did not follow the planning or tea material areas, thus tea materials much less than the actual processing demand, resulting no raw materials for processing * The linkage between actors in the value chain: The linkage between actors in the chain is not sustainable, most actors are mainly through oral agreements and telephone transactions Legal association contracts are only available to the State Tea Enterprise The purchase of tea materials is mainly through agreement without legal documents Therefore, processing facilities not directly control the quantity, quality and food safety of tea farmers with small, fragmented production scale, low investment in intensive farming, and lack of skills; low quality and uncontrolled products for food hygiene and safety * The business environment: the support for businesses from associations also has certain limitations, especially in creating markets, building and developing tea brands, promoting distribution channels as well as performing an intermediary role to strengthen the connection between actors in value chain; The support for enterprises from financial institutions to facilitate capital and technology for actors in value chain to develop tea value chain in the province is also assessed as having many limitations CHAPTER 4: SOLUTIONS FOR DEVELOPING TEA VALUE CHAIN OF NGHE AN PROVINCE 4.1 International and domestic context and development orientations for Vietnam's tea industry 4.1.1 International context a The trend of integration, regionalization and globalization of the world economy The trend of economic regionalization and globalization has promoted the activities of countries towards international economic integration To that trend, Vietnam has actively innovated and integrated deeper and deeper into the world economy for many recent years b Difficulties in world market because of Covid-19 translation The Covid-19 pandemic has affected tea production and consumption globally Vietnam's tea industry is also significantly affected by some major markets such as Taiwan, China and Russia almost freezing, other markets 21 unable to sign new contracts, while contracts have been signed in the past be asked to offer deep discounts, delay delivery times, or cancel contracts making Vietnam's tea export activities difficult, especially in the first quarter of 2020 In the first quarter of 2020, tea export output, export tea value and tea selling price tended to decrease of 2.5%, 19% and 7.6% respectively compared to first quarter of 2019 4.1.2 Domestic background According to the Vietnam Tea Association, in 2015, the area, productivity, output and export of the entire tea industry will be significantly reduced, one of the reasons coming from the difficulties of the market and farmers down; The domestic market's requirements on tea quality also tend to increase, the diversity in the demand for tea types, quality and designs of the domestic market also opens up new opportunities for Tea production and processing enterprises diversify products, expand distribution channels and increase product value; The demand for tea products in the domestic market in the first half of 2020 also tends to decrease and the way of tea business and trade should also be changed to suit the circumstances and ensure business efficiency 4.1.3 Forecast consumption of tea market in the world and in the country a Forecast of world market demand In the period 2015 - 2019, Vietnam mainly exported tea to three main markets: Pakistan, Taiwan and Russia Pakistan is the largest tea import market of Vietnam The main type of tea exported to Pakistan is black tea, which is also the main type of tea exported to Vietnam with about 80% of the total export volume b Forecasts the domestic market demand In March 2020, tea prices in the domestic market tend to decrease It is forecasted that in the coming time, although the selling price of fish tea tends to decrease, it will gradually stabilize and domestic tea products still have a large consumption market because of the demand for drinks, beauty, medicine The population of our country still tends to increase and not all localities are suitable for growing tea, but supply over demand can still happen, especially due to the influence of the world tea market 4.2 The perspective of developing a sustainable tea value chain 22 4.2.1 Tea value chain development always follows market demand Tea value chain development must be done on the basis of capturing and exploiting the needs, tastes and tastes and the trend of consuming tea products of domestic and foreign markets Understanding this issue is crucial in formulating policies and investment directions for production management, selecting new varieties, and organizing support services to develop production area planning tea 4.2.2 Develop tea value chain in combination with environmental protection and efficient exploitation of local resources Developing tea value chain to ensure the most appropriate use of the province's land fund, on the one hand, continuously and increasingly intensive farming, on the other hand to expand new planting areas, combining with intercropping short-term trees green manure, shade trees At the same time, it is necessary to combat erosion and improve land use efficiency Developing tea value chain must simultaneously contribute to creating jobs, improving the quality of life of tea producers, solving well social problems, creating a strong driving force for production development and environment 4.3 Solutions to develop tea value chain of Nghe An province 4.3.1 Solutions to improve the responsiveness of the input quality a Solutions in tea production Solutions on tea varieties; Solutions for tea planting and care techniques; Solutions for irrigation of tea plants; Solution for harvesting technology Applying the process of growing tea in the direction of Viet Gap, preventing pests and diseases promptly with drugs permitted to be used on tea plants, ensuring the isolation time to have safe, qualified products which could meet the require of tea export and consumption b Solutions on tea processing To rationally shift the product structure towards deep processing, fine processing, improving the quality and proportion of high added value, diversifying processed products to meet the increasing demand of the consummers 4.3.2 Solutions of policy Strengthen the control of the provincial tea industry planning and strengthen support for farmers to access market information 3.4.3 Solutions for strengthening the linkage of actors 23 For sellers of inputs for production: Actively sign contracts to provide inputs for tea growers, create conditions for tea growers with deferred payment, transportation of materials to place of production without having to go through retail agents For tea growers : it is needed to set up tea-growing cooperatives that will organize cooperation among cooperative members in tea production Tt is also needed to associate beetwen cooperatives and processing -consuming enterprises Tea growers need to update information on tea prices, tea product quality, market requirements on tea products to actively change their production process to meet market demand For industrial processing facilities: through the supply of seeds and agricultural materials and agricultural extension services, processing facilities ensure the consumption of products for farmers and cooperatives as well as guide farmers to follow the VietGAP process 3.4.4 Solutions for creating a business environment Creating capital conditions for actors; Increasing science and technology transfer and high technology; Trade promotion and Building distribution channels for tea products CONCLUDE In order to achieve the efficiency of resource using for tea production and consumption, there have been many studies related to tea value chain and development of local and national tea value chain The studies mainly focus on the sustainable development of the tea industry, tea value chain and the development of domestic tea value chain and global tea value chain However, the researches on tea value chain and the development of tea value chain in Nghe An province has not been adequately paid attention to with a system of synchronous solutions which regard to production factors, policies of the State and the province, establishing a favorable business environment for the agents to develop production and business… Therefore, the topic: "Tea value chain of Nghe An province" has been selected for research with the aim of analyzing tea value chain, the factors affecting the development of tea value chain in Nghe An province, thereby proposing a solution system solutions for development of tea value chain in Nghe An province which can help to improve of the efficiency of resource using and promote of economic development of the province 24 ... country, Nghe An tea yield is only lower than provinces - Lam Dong and Thai Nguyen province 3.2 Situation of tea value chain in Nghe An province 3.2.1 Description of tea value chain in Nghe An province. .. SITUATION OF TEA VALUE CHAIN DEVELOPMENT OF NGHE AN PROVINCE 3.1 An overview of Nghe An province 3.1.1 Socio-economic conditions of the Province 10 Nghe An province is located in the center of the... aim of analyzing tea value chain, the factors affecting the development of tea value chain in Nghe An province, thereby proposing a solution system solutions for development of tea value chain in