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Economic Analysis of Sustainable Coffee Production in Vietnam

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Economic Analysis of Sustainable Coffee Production in Vietnam Economic Analysis of Sustainable Coffee Production in Vietnam Thong Quoc Ho Submitted in fulfilment of the requirements for the degree of Doctor of Philosophy School of Economics and Finance Faculty of Business Queensland University of Technology Principal supervisor: Dr Viet-Ngu (Vincent) Hoang Associate supervisor: Prof. Clevo Wilson 2018 Statement of original authorship The work contained in this thesis has not been previously submitted to meet requirements for an award at this or any other higher education institution. To the best of my knowledge and belief, the thesis contains no material previously published or written by another person except where due reference is made. Signature: QUT verified signature Date: June 2018 ______________________________________________________________________________________ Economic Analysis of Sustainable Coffee Production in Vietnam i Keywords Coffee, cost, data envelopment analysis (DEA), efficiency, environment, farming, irrigation water, material balance principles (MBP), meta-frontier, meta-technology ratio (MTR), nutrient, stochastic frontier analysis (SFA), Vietnam. _______________________________________________________________________________________ Economic Analysis of Sustainable Coffee Production in Vietnam ii Abstract Vietnam is the second largest coffee producer in the world. The little literature reports that coffee farming in Vietnam has been increasingly economically and environmentally unsustainable. More specially, few studies documented that the consumption of chemical fertilisers and irrigation in Vietnam coffee farms are much greater than the average levels in other major coffee producing countries. Environmental regulations in Vietnam appear to be not sufficient while voluntary participations in sustainability certification programs become increasing popular. However, there is little empirical research that examines both economic and environmental performance of coffee farms in Vietnam. This thesis aims to enhance the understanding of the economic and environmental sustainability of Vietnam’s coffee farming sector. The author has conducted surveys to collect data from 1,063 farms. Apart from coffee industry background and socio-economic profile of coffee farmers participated in the main survey, this thesis includes four empirical studies that assess a variety of the economic and environmental performance of the Vietnam’s coffee farming sector using the collected data. The first study investigates the productive efficiency of different farming systems, using a multiple output input stochastic distance function. The major findings show that combination of coffee and other industrial crops deliver the highest efficiency levels. The second study examines eco-efficiency and its variation across sustainability certified and non-certified farms. The empirical results of the second study indicate great potential improvement in the eco-efficiency level across coffee farms. Results also show that although certified farms are likely to perform better than non- ______________________________________________________________________________________ Economic Analysis of Sustainable Coffee Production in Vietnam iii certified counterparts, the difference between these two groups appears to converge overtime. The third study provides an examination of potential trade-off between cost and nutrient efficiency. An elaborative material balance principles (MBP) based efficiency is proposed to decompose the production technology set into four distinct groups of sampled farms. Each group of farms should pursue differing strategies to improve cost and environmental performance. The findings also suggest that not all farms necessarily are faced trade-offs between cost and nutrient efficiency. Certified farms are generally more environmentally and cost-efficient than non-certified ones and this difference disappears overtime. The last study focuses on irrigation water efficiency using a sub-vector DEA meta-frontier technique. The findings suggest a significant potential to improve water efficiency and, advanced technologies are likely to have a much larger impact on the irrigation water efficiency than voluntary participation in sustainability certification schemes. Policy implications drawn from these studies are discussed in the thesis. _______________________________________________________________________________________ Economic Analysis of Sustainable Coffee Production in Vietnam iv Table of Contents Statement of original authorship ............................................................................................................................i Keywords ............................................................................................................................................................. ii Abstract ............................................................................................................................................................... iii Table of Contents .................................................................................................................................................. v List of tables .......................................................................................................................................................... x List of figures .......................................................................................................................................................xi List of appendices ................................................................................................................................................xi List of abbriviations ........................................................................................................................................... xii List of publications and presentations ............................................................................................................... xiii Acknowledgements ............................................................................................................................................ xiv Introduction ........................................................................................................................ 1 1.1 Background ................................................................................................................................................. 1 1.2 Research problems: unsustainable coffee production in Vietnam .............................................................. 3 1.3 Research questions ..................................................................................................................................... 6 1.4 Specific research objectives ...................................................................................................................... 11 1.5 Methodologies .......................................................................................................................................... 11 1.6 Contributions ............................................................................................................................................ 12 1.7 Thesis outline ............................................................................................................................................ 15 Industry background ........................................................................................................ 20 2.1 Introduction .............................................................................................................................................. 20 2.2 Coffee production in Vietnam .................................................................................................................. 20 2.2.1 Overview of coffee production in Vietnam .............................................................................................. 20 2.2.2 Primary Vietnamese coffee farming characteristics ................................................................................. 21 2.3 Sustainability certification programs in Vietnam ..................................................................................... 22 2.4 Policy context ........................................................................................................................................... 24 2.5 Overview of studies on coffee production ................................................................................................ 26 ______________________________________________________________________________________ Economic Analysis of Sustainable Coffee Production in Vietnam v Study design ..................................................................................................................... 29 3.1 Introduction .............................................................................................................................................. 29 3.2 Hypothesis and overall objective ............................................................................................................. 29 3.3 Research aims .......................................................................................................................................... 30 3.4 Study site, data and ethics ........................................................................................................................ 31 3.4.1 Study site .................................................................................................................................................
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