There are seven strategies to upgrade the pineapple value chain contributed to
improve the VAT for pineapples which were proposed as follows: (i) Strategic for
increasing productivity and improving the product quality; (ii) Strategic for capacity
management, organizing cooperative activities; (iii) Strategic for restructuring of
distribution systems, market expansion; (iv) Strategic for diversification of products
made from pineapples; (v) Strategic for exploiting and enhancing productive resources
for farmers; (vi) Strategic for upgrading rural infrastructure; (vii) Strategic for
improving the market forecasting systems and diseases.
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is calculated based on the following formula:
Volume sales of the i
th
stakeholder
% distribution of stakeholder A to output the i
th
stakeholder = x 100%
Total volume inputs of stakeholder A
** The corresponding proportion of the value chain is the rate (%) of the pineapple flow that is consumed through the
stakeholders which is calculated based on the total proportion of pineapple input from previous stakeholders (except
households) which has a weight is a percentage of each product sold stakeholders.
For example:
% pineapple flow of traders sold to pineapple granary =
4.2.2. The key channels in the value chain of pineapple products
Overall, the pineapple value chain in Tien Giang is operated through many
market channels. However, there are 5 major market channels transporting the
volume of products which generated high value added for the whole chain. The
remaining channels were mainly intermediate channels or there was product flow
passing very little. In the fifth primary market channel, channel 1, channel 2 and
channel 3 had an important role, consumed large quantities of fresh pineapple
production in the domestic market. While, channel 4 and channel 5 created products
as processed pineapples and exports.
Channel 1 (households => long-distance traders => wholesalers in level 2 =>
retailers => domestic customers). Channel 1 consumed the most pineapple products
of whole chain. Most households sold pineapples to long – distance traders
(accounting for 71.44%). Then long - distance traders shipped pineapples to the
wholesale market in Ho Chi Minh City (Hoc Mon and Binh Dien market ...). There,
pineapples were distributed for wholesalers in level 2 who came from the districts of
HCMC or from the south eastern provinces by long distance traders (representing
0.28%
Quyet Thang (winning decision)
cooperation
Extension system
Department of rural development
Department of science and technology
Research institute of southern fruit
Credit institutions (Bank for social policies, Bank for agriculture and rural development
Investment and trade promotion center
Source: Survey data, 2014
Figure 4.1: Diagram of the pineapple value chain in Tien Giang
Input Collector Consuming Processing Trading
Labor market
(renting
labor)
Agricultural
supplies
dealer
Seeding
production
base
Househo
ld
10.95%
0.11%
71.44%
17.22%
0
.0
7
%
0
.0
3
%
Long-distance
trader
Loacal trader
Pineapple
granary
0.01%
13.14%
11.49%
46.88%
Business
10.87%
0.11%
Wholesa
ler in
level 1
9.02%
28.71%
1.85%
65.62%
5.67%
50.23%
Dosmestic
consumer
Retailer
Wholes
aler in
level 2
European,
Korean,
Japanese
consumers
100
11.027.27 x
Production
13
46.88%). Wholesalers in level 2 continued to distribute products to retailers at the
“satellite markets” around.
Channel 2 (households => long-distance traders => retailers => domestic
consumers). After harvesting, the pineapple volume of households was sold to long –
distance traders (accounting for 71.44%). Long distance traders not only sold to
wholesalers in level 2, they but also sold directly to retailers (mainly retailers in Ho Chi
Minh City). The amount of long distance traders sold directly to retailers accounted for
13.14% of the total of chain. The retailers would then distribute pineapples to
consumers (at the market, street vendors, and trolleys).
Channel 3 (households => pineapple granary => wholesalers in level 1 =>
wholesalers in level 2 => retailers => domestic customers). Through surveying,
approximately 10.95% of the pineapple output was sold to the pineapple granary.
These pineapple granary focused on some communes of Tan Phuoc district (Hung
Thanh, My Phuoc and Tan Lap 2). The pineapple granary could buy pineapples at the
farm or farmers could also take the pineapple to pineapple granary. The pineapple
granary was built near river or roads to facilitate for big means of transportation
(trucks, boats). Then pineapples were distributed to wholesalers in level 1 (representing
10.87%) to get price fluctuation. Wholesalers in level 1 had transports with large
capacity to buy pineapple pineapple granary. Then they sold pineapples to wholesalers
in level 2 (accounting for 9.02%) at their business place, wholesalers in level 2
continued to distribute to retailers.
Channel 4 (households => long-distance traders => businesses => exports).
Similar to channel 1 and channel 2, traders bought pineapples with high volumes from
farmers. However; there was a difference of product rank from channel 4. It meant that
after collecting the pineapple from farmers, traders classified pineapples into many
different kinds. If most of pineapples were type 1, traders would transport to wholesale
markets in Ho Chi Minh City, the products were type 2 and type 3 were moved to the
processing businesses for consumption (accounting for 11.49%). Sometimes, if
pineapple was low quality (small, ugly shape), long-distance traders would make a
bulk purchase pineapple without classifying.
Channel 5 (households => businesses => exports). Households not only sold
pineapple to pineapple granary and traders; they but also sold directly to processing
enterprises. Volume of pineapples were sold by households to processing enterprises
accounted for 17.22% the total output of the whole chain. When selling pineapples for
processing enterprises, farmers could sell the pineapple with many different levels (due
to businesses were not fussy fruit size). After the collecting, the enterprises would
process pineapple products (canned, frozen, solid) exported to different markets such
as the EU, South Korea, Japan and so on.
4.2.3. The value added and net value added of stakeholders in the key channels of
the value chain
In the primary channels of pineapple product, each stakeholder would like to
generate VAT and regain different net VAT. Table 4.5 indicated the VAT and net VAT of
stakeholders in the major market channels of the pineapple value chain.
14
Table 4.5: The value added and net value added of stakeholders in the major of the
pineapple value chain
Unit: VND/kg
Items
Households Pineapple
granary
Traders Wholesalers
in level 1
Wholesalers
in level 2
Businesses Retailers
Channel 1: households => long - distance traders => wholesalers in level 2 => retailers => domestic customers
Selling price (1) 5,130.93 6,952.62 9,589.33 11,632.28
Intermediate cost (2) 630.97 5,130.93 6,952.62 9,589.33
Value added (3) 4,499.96 1,821.69 2,636.71 2,042.95
Additional cost
(4)
1,419.25 548.36 585.07 325.74
Net value added (5) 3,080.71 1,273.33 2,051.64 1,717.21
% net value added (6) 37.93 15.68 25.26 21.14
Channel 2: households => long-distance traders => retailers => domestic customers
Selling price (1) 5,130.93 6,677.70 9,238.80
Intermediate cost (2) 630.97 5,130.93 6,677.70
Value added (3) 4,499.96 1,546.77 2,561.10
Additional cost
(4)
1,419.25 548.36 665.74
Net value added (5) 3,080.71 998.41 1,895.36
% net value added (6) 51.56 16.71 31.72
Channels 3: households => pineapple granary => wholesalers in level 1 => wholesalers in level 2 => retailers => domestic
customers
Selling price (1) 5,306.87 6,040.17 6,945.76 9,589.33 11,632.28
Intermediate cost (2) 630.97 5,306.87 6,040.17 6,945.76 9,589.33
Value added (3) 4,675.90 733.30 905.59 2,643.57 2,042.95
Additional cost
(4)
1,419.25 359.56 464.14 685.07 325.74
Net value added (5) 3,256.65 373.74 441.45 1,958.50 1,717.21
% net value added (6) 42.03 4.82 5.70 25.28 22.16
Channel 4: households => long-distance traders => businesses => exports (customers) (*)
Selling price (1) 5,130.93 5,530.00 9,344.25
Intermediate cost (2) 630.97 5,130.93 7,676.69(**)
Value added (3) 4,499.96 399.07 1,667.56
Additional cost
(4)
1,419.25 267.02 1,325.83
Net value added (5) 3,080.71 132.05 341.73
% net value added (6) 86.67 3.72 9.61
Channel 5: households => businesses => exports (customers) (*)
Selling price (1) 5,050.00 9,344.25
Intermediate cost (2) 630.97 7,196.69(**)
Value added (3) 4,419.03 2,147.56
Additional cost
(4)
1,419.25 1,625.83
Net value added (5) 2,999.78 521.73
% net value added (6) 85.18 14.82
Source: Survey data, 2014 Note: (3) = (1) – (2); (5) = (3) – (4); (6) = (5)/𝛴𝑛𝑒𝑡𝑉𝐴𝑇
(*)Channel of low rank consumption was higher than others.
(**)IIncluding material cost (buying pricef) and additives to processed pineapple products
Households: Households were an actor playing production role which created
the first value added for the pineapple in the value chain. VAT due to households
produced in the market channel was quite high, ranging from 4,419.03 to 4,675.90
VND/kg. Channel 3 (sold to pineapple pineapple granary) was a channel which created
the highest VAT. This was the reason that farmers received the highest net VAT as
3,256.65 VND/kg. At channel 4 and channel 5, farmers created VAT and regained
lower net VAT than channels 1, 2, 3 because the pineapples of two channels which
mostly brought the low level were suitable for processing enterprises. When
considering the percentage of net VAT distribution in market channels, farmers were
always the stakeholder received the highest net VAT distribution, ranging from
34.35% to 86.67%.
15
Pineapple granary: was one of the intermediate stakeholders transporting the
quite volume of whole chain. In channel 3, this actor created value added as 733.3
VND/kg and received 373.74 VND/kg net VAT, while the distribution of net VAT of
pineapple granary was 4.82%. The reasons that net VAT and the percentage of net
VAT distribution of pineapple granary were quite low due to specific activities of the
pineapple pineapple granary which only especially transported the product to get
price fluctuation at the time of business.
Long-distance traders: this was a stakeholder which presented at most of
channels of value chain. Long-distance traders brought pineapples to many markets
and distributed them to next actors in the value chain. The range of VAT which traders
created in the channel as from 399.07 to 1821.69 VND/kg; corresponding to net VA,
traders regained from 132.05 to 1273.33 VND/ kg pineapples. If calculated per unit of
product, channel 1 was a channel that long distance traders created the highest value
added and got the most net VAT. Channel 4 was a channel which consumed the
pineapple kinds of low rank, so this also created the lowest value-added channel for
long-distance traders. The rate of net VAT distribution at channel 1 and channel 2 of
long-distance traders was about 16.0%. While at Channel 4, long-distance traders only
got net VAT distribution as 3.72%.
Wholesalers in level 1: A commercial actor played an important role in the
channel 3, wholesaler in level 1 collected pineapple from pineapple granary and
distributed them to the wholesalers in level 2. In this channel, wholesalers in level 1
generated VAT as 905.59VND/ kg and received about net VAT as 441.46 VND/ kg.
Correspondingly, the proportion of net VAt distribution of wholesalers in level 1
received at the channel as 5.7%.
Wholesalers in level 2: as agent’s next long-distance traders and wholesalers in
level 1 and wholesalers in level 2 were also a significant role in distribution activities
towards pineapples to the domestic markets. At channel 1 and channel 3, wholesalers
in level 2 generated VAT respectively 2,636.71 VND/kg and 2,643.57VND/kg and
regained net VAT as 2,051.64VND/kg and 1,958.50 VND/kg. When considering the
percentage of net VAT distribution in market channels, wholesalers in level 2 was an
actor which received high net VAT distribution (after farmers producing pineapples),
equivalent to 25.0%.
Processing enterprises: At channel 4 and channel 5, the enterprises were actors
contributing to increase the additional value for the pineapples through processing
operations and exports. At Channel 4, the value added created by businesses calculated
per unit’s products as 1,667.56 VND/kg and received net VAT as 341.73 VND/ kg, the
percentage of net VAT distribution of business in this channel was 9.61%. While at
channel 5, businesses generated VAT as 2,147.56 / kg and received about net VAT as
521.73 VND/kg and the proportion of net VAT distribution of business received
14.82%. Thus, collecting pineapples from farmers helped businesses create the value
added and get the net VAT better.
Retailers: In the domestic market, retailers were actors that could bring fresh
pineapples to consumers. In the market channels, VAT created ranges from 2,042.95 to
2,561.10 VND/kg and received net VAT respectively from 1,717.21 to 1,895.36
VND/kg pineapples. In particular, channel 2 was a channel that retailers generated the
16
highest added value and get the most net VAT. Correspondingly, the proportion of net
VAT distribution also was the highest with a value of 31.72%. This suggested that, if
reduced commercial intermediaries, retailers would increase profitability and improve
the rate of profit distribution.
4.2.4. The net value added and allocation of the net value added of the poor and
non-poor in the key channels
In each market channel of the pineapple value chain, the poor and non-poor
households received net VAT and the percentage of net VAT distribution were very
different. The difference of net VAT and the rate of allocation between 2 groups were
shown in Table 4.6 below.
Table 4.6: Net value added and Net value added distribution of the poor and non-poor
in the pineapple value chain
Unit: VND/kg
The key
market
channels
Poor households Non-poor households
VAT
(VND)
Net
VAT(VND)
The proportion of
distribution (%)
VAT
(VND)
Net
VAT(VND)
The proportion of
distribution (%)
Channel 1 4,233.75 2,582.36 32.04 4,732.49 3,490.96 40.87
Channel 2 4,233.75 2,582.36 29.70 4,732.49 3,490.96 38.04
Channel 3 4,170.89 2,519.50 32.37 4,832.29 3,590.76 43.34
Channel 4 4,300.40 2,649.01 80.73 4,689.88 3,448.35 84.05
Channel 5 4,219.38 2,567.99 79.06 4,609.03 3,367.50 89.26
Source: Survey data, 2014
In channel 1 and channel 2, the poor received 2,582.36 VND/ kg when they sold
pineapples for long-distance traders. Although net VAT of poor households received as
the same as for selling long-distance traders in channel 1 and channel 2 , the percentage
of net VAT distribution that poor households received was different from the market
channel 1 (32.04%) market and channel 2 (29.7%). Net VAT of poor households in the
channel 3 when sold to pineapple granary as 2,519.5 VND/ kg, this value was lower
than the channel 1 and channel 2, but the percentage of net VAT distribution of the
channel was higher than both channel 1 and channel 2, the ratio was 32.37%. In market
channels 4 and 5 (channel of export market), poor households received VAT equivalent
to channel 1, 2 and 3, however, the percentage of net VAT distribution was received
which was highest (from 79.06 % to 80.73%). Thus, the the Net VAT of channel export
market improved, the poor would receive as much net VAT distribution. Compared net
VAT and he rate of net VAT distribution between the non-was always higher than than
the poor. The difference of net VAT between non-poor was higher than the poor around
1,000 VND/ kg and net VAT distribution rate equivalent to 10% in almost all market
channels. The main reason to make up the difference in VAT and net VAT in pineapple
production activities between the poor and non-poor households due to: (i) Input: Due
to limited financial human conditions so the poor selected the poor quality inputs as
well as farming followed the habitual which didn’t focus on the scientific mode of
production. It led to cause waste of inputs and lead to low productivity. (ii) Outputs:
Conditions for farming position were less favorable compared to non-poor households,
the ability to negotiate lower decision, so the poor have sold products without high
price. The cause has made the poor create added value and get net VAT always
regained lower than the non-poor.
17
4.2.5. The value added and the value added allocation of actors in the pineapple
product value chain
Table 4.7 showed that farmer was the actor that created the highest value added
with 4,515.67 VND/kg, corresponding to 30.78% of the whole chain. Thanks to the
activities of classification, wholesalers in level 2 is the second actor which is the
highest value added generated in the value chain, with 2,641.70 VND/kg,
corresponding to 18.01% of the total value added of the chain. Local traders created
the lowest VAT which was 503.90 VND/kg accounting for only 3.43% of the value
added of the chain. With the intermediate costs in the whole chain was higher VAT
generated by actors showed that collection, trading and processing of the chain was
not really effective, these agents can not raise VAT by measures expanding between
input costs and output prices, especially in processing.
Table 4.7: The value added and distribution of the value added of actors in the
pineapple value chain
Unit: VND/kg
Items
Households Local
traders
Pineapple
granary
Long-
distance
traders
Businesses Wholesalers
in level 1
Wholsalers
in level 2
Retailers
Selling price
(1)
5,146.64 5,653.90 6,040.17 6,548.82 9,344.25 6,945.76 9,589.33 11,032.28
Intermediate cost
(2)
630.97 5,150.00 5,306.45 5,085.27 7,388.69 6,040.17 6,947.63 9,082.24
Value added
(3)
4,515.67 503.90 733.72 1,463.54 1,955.56 905.59 2,641.70 1,950.04
% value added
(4)
30.78 3.43 5.00 9.98 13.33 6.1 18.01 13.29
Prepaid cost
(5)
1,419.25 343.74 359.56 548.36 1,475.83 464.14 635.07 365.74
% prepare cost
(6)
25.29 6.13 6.41 9.77 26.30 8.27 11.32 6.52
Net value added
(7)
3,096.42 160.16 374.16 915.18 479.73 441.45 2,006.63 1,584.30
% net value added
(8)
34.18 1.77 4.13 10.10 5.30 4.87 22.15 17.49
Total costs
(9)
2,050.22 5,493.74 5,666.01 5,633.63 8,864.52 6,504.31 7,582.70 9,447.98
Profits/costs
(10)
1.51 0.03 0.07 0.16 0.05 0.07 0.26 0.17
Source: Survey data, 2014 Note: (3) = (1) – (2); (4) = (3)/𝛴𝐺𝑇𝐺𝑇; (6) =(5)/𝛴𝐶𝑃𝑇𝑇; (7) = (3) – (5);
(8) =(7)/𝛴𝐺𝑇𝐺𝑇𝑇; (9) = (2) + (5); (10) = (7)/(9)
In other aspects, the net VAT was generated in the whole chain and net VAT
of each actor gained corresponding with production efficiency/business of each actor.
Farmers and wholesalers in level 2 were actors got net VAT and there were high
production efficiency/business in the chain. Total net VAT of chain was 9,058.03
VND/kg, which the net VAT of households contributing as 3,096.42 VND,
accounting for 34.18%. Overall, net VAT of actors got positive. The research results
also showed that the actor had high net VAT; output of production/business was low.
Therefore; when assessing investment performance, we need to consider two criteria
was: capital cycle and actual volume of pineapple. This issue will be discussed at the
contents 4.2.6.
4.2.6. Compare investment performance among the actors who involved in the
value chain
The results of the analysis (the 4.8) showed that, farmers are actors which had
profit margin/highest costs, including non-poor households had profit margin/higher
cost nearly 2 times the poor. With 1 VND investment costs, poor households
generated 1.12 VND profit, while non-poor households generated 1.9 VND. In
commercial actors, wholesaler in level 2 was an actor which had profit
margin/highest cost. However, in order to assess the exact the efficiency of
investment in business/production of each actor, it needed to consider yielding / year
and pineapple production volume / transaction in the year of each agent. According to
18
the calculation results (Table 4.8), although farmers were actors that created profit
margins / highest cost but recorded only once in the first year of capital. While other
actors have some capital cycle times greater than households. Moreover, with the
huge volume of transactions, the commercial actors were subjected to effective
operation than farmers many times.
Table 4.8: investment efficiency of actors involved in the pineapple value chain
Objects
Profit
margin
Number of capital
cycle/year
(1)
Volume
(ton/year)
Rate of
return/year
(2)
Poor households 1.12 1 12.18 1.12
Non-poor households 1.90 1 30.39 1.90
Long-distance traders 0.16 60 2,177.55 9.60
Local traders 0.03 75 1,404.12 2.25
Pineapple granary 0.07 92 2,606.99 6.44
Businesses 0.05 4 17,807.16 0.20
Wholesalers in level 1 0.07 84 2,180.42 5.88
Wholesalers in level 2 0.26 60 113.67 15.60
Retailers 0.17 60 43.56 10.20
Source: Survey data, 2014
(1) number of capital cycle/year = number of operating days in he year /number of days capital cycle
(2) rate of return/year = profit margin * number of capital cycle/year
4.2.7. Compare the pineapple value added of the poor and non – poor in the value
chain
The testing results on the VAT difference between the poor and non-poor
households showed that the difference had statistical significance of VAT and net
VAT. The VAT of Pineapple product was created larger other by non-poor about 500
VND/kg and net VAT of non-poor households received which was higher than poor
households about 1,000 VND/kg. Indeed, a production resource of poor households
was limited. Lack of financial advantages makes the poor lose negotiating power
when buying inputs. Buying agricultural materials with paying at different times
making use of price inputs rise. Lower selling prices with higher production costs, it
was the cause to the added value created on the low product and net VAT rregained
to be lower.
Table 4.9: Compare the pineapple value added of poor households and non-poor
households
Indicators Unit Poor
households
Non-poor
households
The level of
significance
testing
Levene
*
The level of
significance
testing t
*
Selling price VND/kg 4,894.97 5,339.32 0.001 0.000
Intermediate cost VND /kg 672.12 599.47 0.251 0.068
Value added VND /kg 4,222.85 4,739.85 0.040 0.000
Prepaid cost VND /kg 1,651.39 1,241.53 0.365 0.000
Net value added VND /kg 2,571.46 3,498.32 0.073 0.000
Source: Survey data, 2014
*Note: The test results with confidence level 95%, corresponding to the level of significance α=5%
19
4.3. IMPACTS OF THE VALUE ADDDED AND THE VALUE ADDED
ALLOCATION OF PINEAPPLE PRODUCT TO HOUSEHOLD’S INCOME
In order to understand the extent of the impact of VAT and net VAT of the
pineapple product of 2 groups of poor and non-poor households, the results of the
sensitivity analysis showed that VAT and net VAT, while increasing the VAT or net
VAT by 1%, 5%, 10% or 20%, their income/1000m2 and income/non-poor
households were higher the poor. However, there is no discernible effect of the rise in
VAT and net VAT that it would make farmers greatly improved. For poor
households, the numbers are more increase significantly to more difficult life, more
needy. Therefore, solutions to enhance VAT product of pineapples was very
important for improving the income of poor households.
Table 4:11: The impact of the value added, net value added of pineapple product to
income of poor and non-poor households Unit: VND
Poor
households
Value added/kg Go up 1% Go up 5% Go up 10% Go up 15% Go up 20%
Income /1000m
2
72,531 362,652 725,304 1,087,955 1,450,607
Income /household 658,842 3,294,211 6,588,421 9,882,632 13,176,842
Net value added/kg Go up 1% Go up 5% Go up 10% Go up 15% Go up 20%
Income /1000m
2
44,167 220,833 441,666 662,499 883,332
Income /household 401,195 2,005,974 4,011,948 6,017,922 8,023,897
Non- poor
households
Value added/kg Go up 1% Go up 5% Go up 10% Go up 15% Go up 20%
Income /1000m
2
94,590 472,948 945,897 1,418,845 1,891,793
Income /household 1,895,577 9,477,884 18,955,768 28.433,651 37,911,535
Net value added/kg Go up 1% Go up 5% Go up 10% Go up 15% Go up 20%
Income /1000m
2
69,813 349,067 698,133 1,047,199 1,396,266
Income /household 1,399,058 6,995,292 13,990,584 20,985,877 27,981,169
Source: Survey data, 2014
Table 4:12: The impact of the distribution of value added and net value added
towards pineapple products to income of poor and non-poor households Unit: VND
Poor
households
%value added Go up 1% Go up 5% Go up 10% Go up 15% Go up 20%
Income /1000m
2
112,884 564,418 1,128,837 1,693,255 2,257,674
Income /household 1,059,363 5,296,813 10,593,626 15,890,439 21,187,252
% net value added Go up 1% Go up 5% Go up 10% Go up 15% Go up 20%
Income /1000m
2
126,379 631,893 1,263,785 1,895,678 2,527,570
Income /household 1,186,006 5,930,028 11,860,056 17,790.084 23,720,111
Non-poor
households
%value added Go up 1% Go up 5% Go up 10% Go up 15% Go up 20%
Income /1000m
2
161,568 807,842 1,615,684 2,423,526 3,231,368
Income /household 3,242,450 16,212,252 32,424,504 48,636,757 64,849,009
% net value added Go up 1% Go up 5% Go up 10% Go up 15% Go up 20%
Income /1000m
2
159,577 797,885 1,595,770 2,393,655 3,191,540
Income /household 3,202,486 16,012,431 32,024,863 48,037,294 64,049,725
Source: Survey data, 2014
In each market channel in the pineapple value chain, farmers would like to
receive a different the rate of VAT and the net VAT distributions. The influence of
VAT and net VAT distributions to household income, particularly for poor
households was very important. According to research results, poor households
were getting higher VAT and net VAT by pineapple yield. Besides, selling price of
non-poor household was higher than the poor. Therefore, when income increased
when the proportion of VAT and net VAT distributions improved of non-poor
households were large difference compared to the poor. However, the issue of
concern was that if the poor were distributed VAT and net VAT which were higher,
20
it would be significantly increased. From there, the ability to escape poverty will
exist more.
4.4. SOLUTIONS FOR ENHANCING THE PINEAPPLE VALUE ADDED IN
CONTRIBUTING TO IMPROVE INCOME FOR THE POOR HOUSEHOLD
4.4.1. Solutions for advancing the pineapple value added in contributing to
improve income for the poor household
Solutions to enhance the value added contributing to improve income for poor
households in Tien Giang who have been planting pineapples were proposed based
on the scientific basis which was collected from result of situation analysis and PRA
session, the solutions are as follows:
Table 4:13: Base solution proposals and solutions to enhance the value added
products contributed to improve income for poor households
N0 Scientific basis Proposed solution
1 The quality of pineapple seeds is significant
concern because of unknown origin,
affecting the yield and fruit quality
Improving the pineapple seed,
improving the seed quality,
ensuring the same of quality as
well as size of goods
2 The waste in the use of inputs, thus
reducing the value added, reducing the
profitability of pineapple growing
households
Changing the appropriate of
farming practices, adjusting the
input element to enhance the
added value of products
3 Access to market information is limited,
affecting the market efficiency of poor
pineapple plantation.
Improving the access to market
information, access to support
programs developed pineapple
industry
4 There is limitation in access to technique
progress approach, level of approach affects
to the production efficiency of the poor
Improving the access to technical
advances, changing the thinking
of production, using of advanced
production model
5 The positive impact of equity capital
(financial human capabilities) of the poor to
productive efficiency, affecting th added
value and net value added of the poor.
Establishing the credit
cooperation, enhancing its
financial support for poor
households growing pineapples
6 The link between the actors in the value
chain remains limited; the output market of
the poor is unstable, affecting the
development of pineapple industry.
Building and implementing the
model of links 4 to stabilize the
output market for households
growing pineapples.
Source: Proposed by author
Solutions to enhance the pinapple value addded to improve household income
for poor households were interpreted in detail as follows:
First, improving the pineapple seed, improving the seed quality, ensuring the
same of quality as well as size of goods: Quality of seeds has a directly influence on
the productivity and quality of pineapple. If there was no provider quality seed, poor
households should actively improve pineapple seed following activities: First, the
poor should not cultivate pineapple with life cycle too long, time saving stem
pineapple should not last more than 3 years. Second, poor households should actively
reach out to the grassroots agricultural extension to gain information and assistance
21
process of the projects supported by the the local. Third, the poor need to actively
create quality seed under the right guidance and technical processes like incubators.
Second, changing the appropriate of farming practices, adjusting the input
elements to enhance the added value of products: In short term, when the
production resources has not been improved, immediate solution for thouseholds who
grow pineapple to save costs and increased profits as reduction of input quantity. The
adjustment parameter was presented in the table below:
Table 4:14: Proposed Adjusted input factors of the poor
Import of inputs Actual using Waste Adjustable inputs (%)
Seeds (tree/1000 m
2
)
2,847.56 83.60 -2.94
fertilizers (kg/1000 m
2
) 87.80 14.00 -15.95
pesticides (litre/1000 m
2
)
78.43 32.64 -41.62
Stone gase (kg/1000 m
2
) 0.57 0.14 -24.56
Fuel (litre/1000 m
2
) 2.65 0.68 -25.66
Reting labor (day/1000 m
2
) 2.00 0.18 -9.00
Family labor (day/1000 m
2
) 12.32 1.71 -13.88
Source: DEA result analysis from survey datat, 2014.
Besides, the poor need focus on the quality of the raw material inputs such as
fertilizers, pesticides and so on. That was a decrease quantity, but it had to choose the
quality of agricultural materials and conduct a distribution to be reasonable which it
can ensure the quality of pineapple.
Third, enhancing the access to market information, access to support programs
developed pineapple commodity: Accessing to market directly affects the market
efficiency of pineapple growing households, the poor need to conduct the following
contents to improve access to markets: First, organizing of joint production under
crosslinking. If enhanced cross-linking in the form of cooperative groups, the poor will
be to share experiences, information and market support policies. Second, poor
households should actively participate in mass organizations to collect information, the
local policy. Third, actively participate in the training program, to actively capture
market information through seminars.
Four, improving the access to technical advances, changing the thinking of
production, using of advanced production model: In the long term, in order to
improve production efficiency, the poor should focus on improving farming techniques
pineapple. Research results showed that households accessed to the technical progress
that made the difference in productivity and better profitability pineapple plantation.
Local extension systems often organized technical training courses on growing
pineapples, however due to the poorer households must spend time to earn extra
income wage so they had few opportunities to participate. On the other hand, poor
households often focused on the immediate benefits, just join the training courses
which were encouraged to participate by materials. Therefore, at the individual level,
the poor should take the time to accumulate more knowledge production and learn
from the experiences of farmer’s good application of the technical process. To the local
government, in the organization of training should focus on the elements of time,
simultaneously assigning staff with enthusiasm, dedicated to helping the poor.
Moreover, the training should be deployed directly in the field of poor households, so
that they can receive an active and easier to implement.
22
Fifth, establishing the credit cooperation, enhancing financial support for poor
households growing pineapples: To help poor households improve financial
advantages as well as its position in the process of buying the inputs in production,
particularly agricultural supplies, “credit cooperatives” was the solution that it should be
considered and encouraged by local government. Capital should be combined from two
sources: support from the state budget through programs of poverty reduction or non-
governmental organizations and funds raised from individuals with idle capital. Credit
cooperative groups would like to give poor farmers to borrow money to buy inputs at
lower interest rates. Credit cooperative groups should be organized, transparented and
prior supported for poor households to plant pineapple.
Sixth, Building and implementing the model of links 4 to stabilize the output market
for households growing pineapples: In model 4 houses, local authorities kept acting as
coordinator, hold operations support, devised appropriate policy and resolved to the
disputes arising in the implementation process as a leadership, while enabling other
members to join a model in the most effective manner. The role of scientists is
researching new varieties of high yield, fewer pests, and good growth. Transferring
production process which was high quality of pineapples products for poor farmers as
well as regularly trained how to organize management of the field, manage cooperative
groups. Processing enterprises kept an important role in enhancing the value of
products through processing and exporting. Besides, the processing enterprises
performed contract-guaranteed outlet for poor households. Poor households growing
pineapple was the most important factor in the production model. For the production of
poor households were well run, the elements of capital, technology, market must be
guaranteed. In this model, special attention to the role of “conductor” of cooperatives
in connection 4 houses, cooperatives should demonstrate bridging role between
households and markets through the promotion of trade, bridging between scientists
and farmers through seminars of technique transfers, a bridge between the state and
households in financial assistance, seeding supports and deployed technique progress
to pineapple production, the bridge between farmers and enterprises to promote the
activities of buying the products.
Source: Proposed of author
Figure 4.2: Model 4 links unsuring the output market
The state
Processing enterprises
RESEARCHER
PINEAPPLE GROWERS
Lacked of capital, information, seeding
and science-technology,
Cooperatives and group of cooperatives
Managed and arbitrated
Planned material zones
Encouraged to perform good contract by
some policies
Opened services
Gave the market information
Had support policies
Provided funding
Gave research projects
Technology transfer (New varieties, production
processes, organizational management, inforation)
Provided credit and agricultural materials
Supported experts and management
Businessed products
Information
Sponsor
23
4.4.2. Strategics for upgrading the pineapple value chain contributing to enhance
the pineapple value added
From research results combined with recognition from the PRA session, the
bottleneck of the product value chain from production to consuming synthesized
following criteria:
Source: Synthesized the research results by author, 2014
Figure 4.3: The bottleneck in the pineapple value chain
The bottlenecks of the pineapple value chain in Tien Giang were evident that
they were apparently showed in analysis of the weaknesses and challenges of the
value chain. In addition, the strengths and opportunities were also analyzed,
evaluated to establish the basis for the formation of strategic upgrading the value
chain which brought practical characteristics. Through SWOT analysis matrix, the
strategies to upgrade the value chain contributed to increase VAT for pineapples for
was recommended as follows:
First, strategics to increase productivity and improve quality
Pineapple growers in Tien Giang mainly used substandard varieties which were
unknown origin and used many cycle lives. Therefore, there were uneven fruit quality
and substandard. To improve quality, increase productivity, farmers should use quality
varieties with acknowledgment of source. To do this, the research units: Tien Giang
Fruit Research Institute, Center of Agricultural Research in Tien Giang province that
strongly need to “take part” in improving more quality seed pineapple. After acquiring
quality varieties, the authorities should facilitate the farmers who can have access to
seedlings easily and quickly, ensuring that farmers have been wishing, they would like
to pineapple quality. Besides, the need for technical guidance to farmers clearly, so
they would like to know the appropriate farming techniques and the correct procedure.
Particularly for households are going to provide seedlings really which they want to
stick with pineapples, they can ask the relevant authorities to certificate or accreditate
for seedlings. Doing this can help farmers access quality seedlings and effective in
terms of both productivity and quality pineapples.
Second, strategics for capacity management, organizing cooperative activities
Currently, at the raw material pineapples, there is only Quyet Thang
cooperative which is provider that provides the agricultural service, the cooperative
do not consumed output products for the households, the management and operation
of cooperatives is not effective. Therefore, need to restructure, reorganize
cooperatives and enhance cooperative role for pineapple growers. This issue is
given to requirements for local authorities to choose leader which is capable
professionals, strategic thinking and confidentials for cooperatives and dedication to
community interests. Cooperative board of directors should actively improve
Input Production Processing Trading Consuming
- The poor quality of
varieties, be degraded;
- The high labor cost;
- The impoverished
land
- The poor farming techniques;
- Restriction on the resources;
- Restricted access to market
information;
- The high loss proportion
- The backward
processing technology;
- Less diversified
products;
- The unstable market
- The high loss ratio;
- The heterogeneous
classification of grade;
- The bad link level
24
leadership capacity and market access through the training classes, short-term
training, actively enlist assistance from the agricultural sector and effectively
mobilize resources from public. Its greatest wish of households is to have stable
output markets. Thus, cooperatives are looking for stable output by signing long-
term contracts with wholesale markets or supermarkets and processing companies.
Simultaneously, Quyet Thang cooperative was equipped processing house, packing
which cooperatives should take advantage of the capacity of processing house to
raise the VAT for the pineapple. Farmers look for the effect is brought from the
cooperative will actively participate in the activities of the cooperatives more, make
more dynamic cooperatives.
Third, strategics for restructuring of distribution systems, market expansion
To the effective distribution system, a restructuring should be conducted.
Rearranging the activities of actors as well as reduce some intermediate actors was
ineffective. Also, to expand the market, the actors in the value chain need to focus on
discovering Southeastern and Central markets. For export market, regardless of the
market in Japan, Korea, Taiwan, Russia, EU with processed pineapple products and
fruit pineapple with Japan, South Korea, Taiwan. Investment Trade-Tourism Promotion
Center - Trade in Tien Giang province and Tien Giang JSC Vegetables are keeping the
central role in market expansion strategies. Besides strategic export products
traditionally processed pineapple, they need to research way to the preservation of
fresh pineapple technology ensure standards for difficult demanding markets like Japan
and South Korea. In addition, it should promote the distribution system of fruit
pineapple and processed pineapple in modern retailer channels, especially
supermarkets and fresh fruit shop. Currently, processed pineapples have not been
known by many domestic consumers, so it lead to need to have a strategic distribution
extensively processed products to contribute to improve the pineapple Tan Lap brand at
in the domestic market.
Fourth, strategics for diversification of products made from pineapples
There were no many products that made from pineapple in the domestic market.
The value added of processed products brings high value, so it should be more focused.
Therefore need a strategy for the development of processed products or diversification
products from pineapple. First, the processing enterprises should study measures to
ensure the supply of raw material to the enterprise in the form of consumption,
followed diversifying the products made from pineapple, such like candy pineapple,
pineapple cakes, pineapple wine and so on. In parallel, the design of packaging and
protect just related to the environment and leave good impression to customers while
ensuring low cost is issues that need to be focused on business leaders. Besides,
processing enterprises should collaborate with research institutions to improve the
quality of processed products, lower product costs, take advantage of by-products to
improve investment efficiency.
Fifth, strategics for exploiting and enhancing productive resources for farmers
With strengths in the production of pineapple growers: the pioneering farmers
and confidential with pineapple production processes achieve GAP standards, models
packed pineapple processing house gain standards VietGAP in the materials,
Strategies need to take advantage of this advantage to face the challenges of the
market, especially the fierce competition of the countries in the region. Raise the
level of production, the application of advanced manufacturing processes to produce
25
suitable quality products for export to penetrate difficult markets is a very important
job at the present. To do that, this strategy must focus on exploiting the available
resources of the household, such as proper use of family labor force, combining
efficiency between manufacturing experience and advanced production techniques
progress (GAPstandards), using performance packed pineapple processing house.
Sixth, strategics for upgrading rural infrastructure
In order to facilitate for collecting activities towards pineapples are well
happened and reduce “transit fees” to people, help farmers to access the market
easily, this lead to upgrade rural infrastructure which is very necessary. For the
infrastructure has deteriorated which need to upgrade, maintenance such as
repairing to roads, bridges and dredging canal. Regularly check water transportation
system to promptly detect possible damage and repair plans. Local authorities
should encourage public-private partnership schemes (PPP) in the development
program of rural infrastructure is crucial in order to enlist the resources of all the
actors involved in the value chain as well as the uplifting test, monitor, protect rural
infrastructure for the people.
Seventh, strategics for improving the market forecasting systems and diseases
Aiming to support farmers catch quick information to plan in order to produce
timely, it should enhance market forecasts activity. Currently, the market research has
not been adequate attention, enhance the market research will help farmers to avoid
market risks. Besides, farmers are clearly not aware of the situation of pest insects, so
the need to guide farmers to identify pests, pest and how to avoid them. Tien Giang is
the largest raw materials in the country, therefore the agricultural sector should
coordinate with concerned agencies to implement programs in the mass media market
of fruits, particularly pineapples, or the Statistical research on the evolution of market
prices in the country, as well as the situation of a pest to farmers who could cope with
the risks in the best way.
CHAPTER 5: CONCLUSIONS
Through the research results, the dissertation has solved these objectives, the key
conclusions according to each specific objectives as follows:
- The waste of poor households in using of input materials was huge from that
leading to resource allocation efficiency and cost efficiency of poor households was
quite low. However, the ability to increase the efficiency of scale of poor households
who have been growing pineapples was still high.
- There are 5 market channels in the pineapple value chain in Tien Giang. The
pineapples were primarily sold for long-distance traders by households in these
channels. Products pineapple fruit from the households through actors and to
consumers accounted for 71.29% of total pineapple productivity that were harvested by
households. Most of the actors involved in the value chain were positive in investment
efficiency.
- Households are actors that generated the highest value added in the pineapple
value chain, followed by wholesalers in level 2 and business/enterprises. Depending on
market channels that there was difference among actors in the distribution of net value
added. However, in most of the major market channels, households planted pineapples
26
who were received the distribution of high net value added in chain, then wholesalers
in level 2 and retailers respectively.
- In all the criteria of price, value added, net VAT, the rate of VAT and net VAT
distributions in the chain and non-poor households are not shown better efficiency so
than poorer households.
- Value added and net value added were generated from the pineapple that strongly
impacted to the income change of households who have been planting pineapples. The
proportion of value-added and net value-added distributions positively impacted to
income of households growing pineapples in Tien Giang Province. In particular, the
influence of the proportion of value-added and net value added distributions to the non-
poor households were more the poor.
- There are seven strategies to upgrade the pineapple value chain contributed to
improve the VAT for pineapples which were proposed as follows: (i) Strategic for
increasing productivity and improving the product quality; (ii) Strategic for capacity
management, organizing cooperative activities; (iii) Strategic for restructuring of
distribution systems, market expansion; (iv) Strategic for diversification of products
made from pineapples; (v) Strategic for exploiting and enhancing productive resources
for farmers; (vi) Strategic for upgrading rural infrastructure; (vii) Strategic for
improving the market forecasting systems and diseases.
- There are six measures which were proposed to enhance VAT of pineapple
products that contributed to improve the income of poor farmers as follows: (i)
Improving the pineapple varieties, improving the seed quality and ensuring the same of
quality as well as size of goods; (ii) Changing the appropriate of farming practices,
adjusting the input element to enhance the added value of products; (iii) Improving the
access to market information, access to support programs developed pineapple
industry; (iv) Improving the access to technical advances, changing the thinking of
production, using of advanced production model; (v) Establishing the credit
cooperation, enhancing its financial support for poor households growing pineapples;
(vi) Building and implementing the model of links 4 to stabilize the output market for
households growing pineapples.
LIST OF PAPERS RELATED TO THESIS
1. Nguyen Quoc Nghi & Mai Van Nam, 2014. Market accessibility of pineapple
growing households in Tan Phuoc district, Tien Giang province. Journal of
Science, Can Tho University, No 35d, page 24-33.
2. Nguyen Quoc Nghi & Mai Van Nam, 2015. Productive efficiency of pineapple
growing households in Tan Phuoc district, Tien Giang province. Journal of
Science, Can Tho University, No 36d, page 1-9.
3. Nguyen Quoc Nghi, 2015. Evaluate to economic efficiency of poor household in
pineapple cultivation in Tan Phuoc district, Tien Giang province: Approach to
profit function estimation of stochastic friontier analysis. Journal of Agriculture
and Rural Development, No 6 (2015), page 16-22.
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