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The Contract Farming As a Determinant Promoting Tea Production and Marketing at Farm Household in Vietnam: a Case Study in Phu Tho Province

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The Contract Farming As a Determinant Promoting Tea Production and Marketing at Farm Household in Vietnam: a Case Study in Phu Tho Province The contract farming as a determinant promoting tea production and marketing at farm household in Vietnam: a case study in Phu Tho province LE Thi Kim Oanh COMMUNAUTÉ FRANÇAISE DE BELGIQUE UNIVERSITÉ DE LIÈGE – GEMBLOUX AGRO-BIO TECH THE CONTRACT FARMING AS A DETERMINANT PROMOTING TEA PRODUCTION AND MARKETING AT FARM HOUSEHOLD IN VIETNAM: A CASE STUDY IN PHU THO PROVINCE LE Thi Kim Oanh Dissertation originale présentée en vue de l’obtention du grade de docteur en sciences agronomiques et ingénierie biologique Promoteur : Prof. Philippe Lebailly Copromoteur : Prof. Tran Huu Cuong (Université d’agronomie Hanoi) 2018 © LE Thi Kim Oanh 7 mai 2018 Résumé Le Thi Kim Oanh (2018). L'agriculture contractuelle comme facteur déterminant promouvant la production et la commercialisation du thé au sein des ménages paysans au Vietnam: une étude de cas dans la province de Phu Tho, au Vietnam. (Thèse de doctorat) Gembloux, Belgique, Université de Liège, Gembloux Agro-Bio Tech, 238 p., 43 tabl., 44 fig. Résumé Le thé contribue considérablement aux exportations annuelles du Vietnam, aide à créer des emplois et augmente le revenu des agriculteurs. Cependant, les cultivateurs de thé doivent faire face à de nombreuses difficultés et sont très vulnérables en raison de leurs terres de culture du thé modestes et dispersées, de la mauvaise gestion de l’exploitation, du faible contrôle des maladies et de l’instabilité du marché. De nombreuses études ont prouvé que l'agriculture contractuelle offrait de nombreuses opportunités aux agriculteurs, telles que l'accès aux crédits et aux intrants, ainsi que l'accès à un marché fiable. Néanmoins, jusqu'à présent, il n'y a toujours pas de recherche approfondie sur les avantages de l'agriculture contractuelle pour la production de thé dans la province de Phu Tho. Cette thèse vise donc à analyser l'efficacité de l'agriculture contractuelle dans la production de thé à Phu Tho et à déterminer si celle-ci améliore les revenus des agriculteurs. L'étude a été menée dans trois groupes différents d'agriculteurs: sous contrat complet, sous contrat partiel, sans contrat. Les résultats ont montré que: 1) Plus les agriculteurs sous contrat complet produisaient, plus leurs revenus étaient élevés, même si leur prix de vente était inférieur à celui des autres groupes; 2) Le prix de vente du thé chez les agriculteurs sous contrat complet était le plus bas, tandis que celui des agriculteurs sans contrat était le plus élevé; 3) La superficie moyenne de terre à cultiver du modèle de contrat complet était la plus élevée parmi les trois groupes étudiés et c’est l’usine de transformation qui possédait cette terre, tandis que les agriculteurs sous contrat partiel et sans contrat étaient propriétaires de leurs terres. Dans le premier modèle, les terres ont été fournies aux agriculteurs sous des conditions spéciales auxquelles les agriculteurs des deux autres modèles se trouvaient incapables d’engager; 4) Le rendement de la plantation de thé des agriculteurs sous contrat complet était le plus élevé grâce à la haute qualité des intrants; 5) Les agriculteurs sous contrat étaient, en générale, satisfaits des intrants de production et des activités de commercialisation du thé; 6) L'agriculture contractuelle a aidé à promouvoir la chaîne de valeur du thé noir dans la province de Phu Tho. Néanmoins, les agriculteurs sous contrat devaient encore faire face à divers inconvénients tels que les prix bas, les exigences de qualité et les relations d’obligation avec des entreprises. En outre, il y avait divers facteurs affectant l'agriculture contractuelle du thé dans la province de Phu Tho. Sur la base des résultats ci-dessus, il y a quelques recommandations importantes comme suit: premièrement, les termes du contrat devraient être améliorés; deuxièmement, le rôle des gouvernements locaux devrait être renforcé; troisièmement, le gouvernement devrait mettre en œuvre différentes mesures pour promouvoir l'agriculture contractuelle de thé; quatrièmement, le succès du modèle d'agriculture contractuelle complète devrait également être encouragé plus The contract farming as a determinant promoting tea production and marketing at farm household in Vietnam: a case study in Phu Tho province largement; finalement, le modèle d'agriculture semi-contractuelle devrait être amélioré et promu. Mots clés : Agriculture contractuelle, agriculteurs, thé noir, Phu Tho province, Vietnam ii Abstract Le Thi Kim Oanh (2018). The contract farming as a determinant promoting tea production and marketing at farm household in Vietnam: a case study in Phu Tho province, Vietnam. (PhD Thesis) Gembloux, Belgium, University of Liège, Gembloux Agro-Bio Tech, 238 p., 43 tabl., 44 fig. Abstract Tea contributes substantially to Vietnam’s annual exports, helps creating job opportunities and raises farmer’s income. However, tea farmers face many difficulties and are highly vulnerable due to their scattered tea areas, poor farm management, weak disease control, and unstable market. Numerous studies proved that contract farming brings many opportunities for farmers such as access to credit and inputs, together with access to a reliable market. Nevertheless, until now, there has not been any thorough research on the benefits of contract farmers on tea production in in Phu Tho province. This thesis, therefore, aims to analyze efficiency of tea contract farming in Phu Tho and identify if contract farming improves farmers’ income. The study conducted in three different groups of full, semi and non-contract farmers. The results show that: 1) The more full contract farmers produce, the higher income they get, even though their selling price might be lower than the other groups; 2) Tea price of full contract farmers was the lowest, while that of non- contract farmers was the highest; 3) Average land area of full contract model was the highest in the three studied groups and owned by the processing plant whereas semi and non-contract farmers are self-ownership. Land was provided to full contract farmers with special conditions that semi and non-contract model found it is likely unable for them to engage; 4) Full contract farmers’ tea yield was the highest in three farmer groups thanks to the high quality of input materials; 5) Contract farmers were generally satisfied with tea production inputs and tea marketing activities; 6) Contract farming helped promoting black tea value chain in Phu Tho province. Nevertheless, contract farmers still face various disadvantages such as low prices, requirements for high-quality, and obliged relationship with the companies. In addition, it appears various factors affecting tea contract farming in Phu Tho province. Based on the above findings, there are some important recommendations as follows: firstly, the terms in the contract should be improved; secondly, the role of local governments should be enhanced; thirdly, the government should implement different measures to promote tea contract farming; fourthly, the success of full contract farming model should also be promoted more widely; and fifthly, semi contract farming model should be improved and promoted. Key words: Contract farming, farmers, black tea, Phu Tho province, Vietnam Acknowledgments I would like to express my deepest gratitude for the active support from many different people and institutes. First of all, I kindly cherish most my thesis promoter, Prof. Philippe Lebailly for his intellectual guidance, encouragement and special support at all possible stages. I am especially grateful to him for his inspirational discussions on this thesis. I learned a lot about research methods in social and rural development from him. I also thank Prof. Tran Huu Cuong, the co-promotor of this thesis, for his scientific and scholarly contributions as well as encouragement since I first wrote the PhD thesis proposal. He helped me to put the first bricks in the building up the PhD research. He monitored all the processes of my PhD research both in Belgium and Vietnam. I would like to offer a big thank to Prof.Vu Dinh Ton whose guidance helped me in all the time of research and writing of this thesis. During the study period in Belgium, I also received valuable supports from various individuals and organizations. I would like to thank Prof. Thomas Dogot and Prof. Philippe Burny for giving me a lot of useful advice and consultation. My thesis can not be completed without the help of local authorities and farmers in Dich Qua and Minh Tien communes in the two districts Thanh Son and Doan Hung of Phu Tho province. They were so kind in giving me their time and patiently answering my survey questionnaires. I would like to thank all members of the Department for Economics and Rural Development for their administrative support, particularly Nadine Stoffelen, Anne Pompier, and Christine Fadeur who thoroughly did the process of finalizing all administrative materials. I would also like to thank Dr. Ho Thi Minh Hop who also worked at the department and I am gratefully indebted to her for her very valuable comments on this thesis. My sincere thanks also go to my friends and colleagues in the Department of Business Management for encouraging and allowing me to participate and complete this thesis. I am especially grateful to my colleagues, Dr. Nguyen Quoc Chinh, Mr. Nguyen Hai Nui, Mr. Dong Dao Dung, and Assoc.Prof.Dr. Bui Thi Nga for contributing one way or another to my doctoral thesis by collecting data as well as sharing work in the office. Last but not least, I was blessed with love, patience, inspiration and encouragement
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