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«DEVELOPMENT STRATEGY OF THE AGRICULTURAL COOPERATIVES IN THE MEKONG DELTA, VIETNAM: SIGNIFICATION OF DIVERSIFICATION INTO BUSUNESS AND ACTITITIES ...»

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3.4.5 Research result from the case study in An Giang province As I said in research methodology, I could not find enough quantitative data demonstration that farmers gain social advantages and economic advantages from cooperative’s activities through the secondary data. Therefore, the case study in An Giang Province shows more evidences that members and non-members gain social-economic advantages through cooperative’s activities.

Agricultural cooperative in An Giang usually do some activities as services based on real need of farmers as irrigation, combine harvester, high quality seed provision, credit for members and other services. Farmers use services from cooperative and pay service fee as customers. Cooperatives give services to both members and non-member and cooperative’s service fee usually cheaper than that from self-farmers Table 13: Difference profit/ha between Member and Non-member of AC in An Giang

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From the viewpoint of economics effects, the result shows that members of agricultural cooperatives have higher benefits and advantages than non-members.

In table 13, members have 20.4% higher profits/ha than non-members because members have 11.4% cheaper cost of production and 1.7% higher revenue than that of non-members. The survey also shows that the items of input cost for members are cheaper than non-members. For example, members 5.5% less for irrigation cost because cooperative usually discounts 5% for members, 2.8% for fertilizer cost, 6.3% for pesticide cost because cooperative provides many farm training courses to members and members usually use high quality seed, apply new technology for saving fertilizer, pesticide and 7.2% for seed cost because members can buy cheap seed at the cooperative than non-members. Members sell 2.3% higher price than non-members because members usually use high quality seed from cooperative and members have better farming experiences.

In addition, most of farmers in the survey agree that the cost of services from agricultural cooperative is cheaper than that of service from the other companies. Figure 17 shows that 76.0% of respondents totally agree and agree that the cost of services from agricultural cooperatives is cheaper than that from the other companies.

93 % 50 45 40 31 30

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Figure 17: Idea about AC' Service Fee Is Cheaper than AC' Competitors Table 14 shows that farmers save a lot cost when he or she uses services from cooperative compare with that from self-farmer. Besides that, most of farmers agree that agricultural cooperatives help famers improve product quality (79.0% agree) and contribute to reducing production cost, thus increasing profits for farmers (70.0% agree) as shown in Figure 18 Table 14: Service fee by agricultural cooperatives and by Farmers

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From the viewpoints of social effect, I can observe many positive social effects agricultural cooperatives contribute to society from the case study in An Giang.

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% 0 20 40 60 80 100

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Figure 18: Idea about Positive Effects of AC According to Figure 18, a total of 76.0% of respondents total agree and agree that agricultural cooperatives create jobs for community. Also, 72.0% total agree and agree that agricultural cooperatives help reduce and prevent natural disaster, irrigation service from agricultural cooperatives protect 31,000 out of 110,000 ha rice farmland in the province from flood and drought; and 86.0% total agree and agree that agricultural cooperatives help develop rural areas such as building dike systems, small roads and bridges.

3.5 Summary and Discussion The result of this chapter situation of agricultural cooperatives in the Mekong Delta. They have increased rapidly in number, membership, staff and laborers, share capital and revenue from 2000 to 2010. However, agricultural cooperatives in the Mekong Delta have also had some problems and faced several challenges, such as simple services, low educational level of board management

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spite of this, agricultural cooperatives in the Mekong Delta have had positive economic contribution and social effects and have produced other advantages. The case study in An Giang Province gave evidences of the social and economic effects, advantages and contribution from agricultural cooperatives to local farmers and their communities.

In addition, I should improve and change some macro policies and legal framework regarding cooperatives and agricultural cooperatives. The State government should organize the national campaigns for introducing and advertising agricultural cooperatives in Vietnam.

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FARMING PRACTICES IN AN GIANG PROVINCE, THE MEKONG DELTA.

4.1 Introduction As I stated in research methodology and in chapter III, the secondary data from all Mekong Delta provinces show that ACs have contributed to develop economics, society and farming through their business and activities. But reports did not give figures, numbers and evidences for measuring these contributions of ACs. For example, Kien Giang Cooperative Alliance issues the most detail annually report among those reports from survey. But the report states that “ACs have played an importance role in agriculture and rural development in the province, many ACs have increased their contributions to reducing production cost, applying new farming technology and being rural development”. Hence, I could not find enough quantitative figure and numbers contributions of ACs and kind of contribution of ACs.





I assume that the more diversify business and activities offer by ACs, the more AC' benefits contribute to members and non-members. In addition, the more AC's services use by members and non-members, the more advantages received by members and non-members.

Therefore, I did another survey in An Giang province for measuring contributions of ACs in An Giang province as a case study to support evidences my writing in previous chapters and next chapters.

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- Find out popular business and activities of AC in An Giang province

- Identify AC contributions to farming practices in An Giang province,

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- Analyze reasons for different AC contributions between members and non-members and different farming practices before and after farmers

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- Suggest actions for improving AC contributions to farming practices and methods for improving the AC in An Giang province, Mekong Delta,

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4.3 Research Methodology I selected An Giang province for conducting field survey because An Giang is one of the provinces in the Mekong Delta has been well known for the largest output of rice production and diversify quality agricultural cooperatives.

Agriculture is main in economic structure and rice is main agricultural product as same as other provinces in the Mekong Delta.

The primary data collected among five out of 11 districts in An Giang province. Table 15 reports the name of each AC, their quality ratings55 as of 2011, The Circular No.1/2006 on ranking cooperative. The cooperative is ranked by the 4 levels of 55 the scale consist of excellent, good, average and weak agricultural cooperative. There are six criterions in the scale consist of (i) the level of democracy and the participation of members on the development and implementation of cooperative’s regulation; (ii) the level of completion of the production and service targets; (iii) the level of services to members; (iv) the level of reliability of the members on cooperatives; (v)the level of welfare from cooperatives for 98 their number of business and activities (hereinafter services) and their services. I designed to conduct survey at eight ACs including two excellent ACs, two good ACs, two average ACs and two weak ACs. However, there is only one excellent AC in An Giang province according to the Circular No. 1/2006. Therefore, I survey at 7 ACs in An Giang province as shown in Table 15.

Table 15: Surveyed Agricultural Cooperative, Rating and Services Rank of AC No. of Irriga Agr. Market Harv Good Land Fertilizer, Credi Othe # Name of AC (2011) services tion training info est seed prep pesticide t rs

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I selected 123 rice farmers by random sampling and surveyed using a questionnaire in seven ACs in An Giang (Table 15). Sixty-two of those interviewed were members of ACs, which I called Group A (GA), and the other sixty one were non-members, called Group B (GB). Non-members had farmland in the same area as members and used some of the same AC services used by members.

P0 denotes the period before GA and GB began receiving AC services and PT indicates the period after GA and GB began receiving AC services. I measured the AC’s contributions to farming practices by comparing PT and P0 services. The

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measured those cooperative contribution indicators by comparing the difference between GA and GB. This method cannot exactly measure the contributions of only the AC to farming practices; however, a relatively accurate contribution amount and trend can be measured because ACs provide many priority services to members and discount their service fees for members.

Secondary datas were collected from the reports of the Department of Agriculture and Rural Development (DARD) in An Giang province, the An Giang Cooperative Alliance and our previous studies.

4.4 Results 4.4.1 Descriptive statistics of research results Table 16 reports the gap in farming characteristics, such as age, farming experience, educational level, and farm size, between members and non-members.

Table 16: Descriptive Statistics Characteristics of GA (Member) & GB (Non-member)

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As Table 16 reported, most ACs in the survey provides services to members and few provide services to both members and non-members. Figure 19 depicts

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Figure 19: Member & Non-member Percent using AC services The survey revealed that ACs charged members a discounted service price for using the irrigation service and gave other priority services to members. For example, the AC discounted the irrigation service fee by 5 - 15% for members compared with that of non-members. As a priority service, the cooperative provided high quality seed to members at a price lower than that provided by a private seed company. Most members and non-members need cooperative services such as combine harvesters, credit and pesticide. However, the AC provides insufficient services than that needed by members and non-members because it

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4.4.2 Agricultural cooperative contributions to farming practices An AC contributes to an increase in profit/ha. Table 17 reports that members have a 20.4% higher profit/ha than that of non-members. This result

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profit/ha, R = total revenue/ha and PC = total production cost/ha 56. Thus, if farmers want to increase P, they must increase R and reduce PC. In raw numbers, members earn 3,503 thousand VND, equivalent to 14,000 Yen, from the 20.4% profit/ha, which is higher than that of non-members. This is because members have higher revenue/ha and lower production cost/ha than non-members (Table 17).

Table 17: Profit/ha of Rice between Member (GA) & Non-member (GB)57 Production cost includes land preparation, irrigation, seed, fertilizer, pesticide, labor rent, 56 farm tool, land rent and family cost.

57 Net profit/ha rice of GA and GB is lower than that of national office statistic reports

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ACs contribute to increased revenue/ha. Farmers’ total revenue/ha increased because ACs contributed to the increase of selling price/kg of rice. Table 18 reports that members earned 709 thousand VND revenue/ha higher than did non-members, because members sold their rice at a 5% higher selling price than did non-members.

Table 18: Differences in Yield, Selling Price & Revenue between GA&GB

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Table 19 shows the statistical analysis by regression analysis demonstrates a high coefficient between revenue/ha and yield/ha and revenue/ha and price sold/kg, significant at the 1% level (Table 19). The correlation between revenue and price sold/kg is stronger than that between revenue/ha and yield/ha. This result reveals that although members have yield/ha lower than that of non-members, members earn revenue/ha higher that of non-members.

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product prior to members and certain non-members. Cooperatives provide high quality seed, hold many agricultural training courses, market members’ products to rice export companies, provide market information to members and certain non-members, and perform other services. As a result, members’ selling price is higher than that of non-members due to the use of high quality seed, more marketing information and higher opportunities to sell their products directly to rice export companies. These factors enable members to earn revenue/ higher ha than that of non-members.

ACs contributed to reducing production cost by reducing component cost because they provide service costs lower than those provided to individual farmers.

Table 20: Irrigation Cost by Individual Farmers and by ACs Services

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thousand VND/h58 for irrigation cost in 2010 (P0). In 2011 (PT), ACs provided irrigation service cost lower than that provided to individual farmers.

Cooperatives charged a service fee of 1,608 thousand VND/ha for non-members and 1,453 thousand VND for members, an average 9.6% discount. I compared irrigation costs during PT and P0, and found that members saved 42.2% and non-members saved 36.1% on irrigation costs by using the AC service. The Vinh Trach AC in Table 20 also contributed to reducing irrigation cost. P0 was the period in which the Vinh Trach Cooperative did not provide an irrigation service.



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