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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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In 2009, farmers independently performed irrigation at a cost of 2,461 thousand VND/ha. PT began in 2011 when Vinh Trach provided irrigation service and charged a service fee of 1,800 thousand VND/ha for non-members and discounted 5% for members. I compared irrigation cost/ha during PT and P0, and found that the Vinh Trach Cooperative saved 30.5% irrigation cost for members and 26.9% for non-members. The cooperative could provide irrigation services at a low service fee because it used an electric pump station, whereas individuals had used DARD in AG report in 2011, individual farmers had used diesel engines for pumping water 58

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cooperative also obtained a government subsidy for an irrigation system, and the government required that ACs charge a low service fee.

Picture 1: Irrigation use diesel engine by individual farmer in An Giang province Picture 2: Irrigation use electrical power by ACs in An Giang province

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reducing harvest costs. For the Phu Thanh AC farmers, the manual harvest cost was 4,890 thousand VND/ha in 2010 (P0).

Table 21: Harvest Cost/ha by Hand and by Combine Harvester

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cost decreased to 2,275 thousand VND/ha for members who used its harvester machine of cooperative. I found that the Phu Thanh Cooperative saved 53.5% of the P0 period’s manual harvest cost for members. For the Vinh Trach AC farmers, the manual harvest cost was 4,312 thousand VND/ha in 2010 (P0). When Vinh Trach provided combine harvest services to all members (PT) beginning in 2011, the 92% of the sampling’s farmers who were non-members continued to harvest manually because there was no other combine harvester in the Vinh Trach area at that time. I found that members saved 46.3% of their previous (P0) harvest cost during the PT period by using the cooperative service’s equipment. Non-members, who could not harvest mechanically, continued paying high harvest costs (Table 7, column GB). Thus, the Vinh Trach Cooperative reduced members’ component and

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Picture 3: Harvest rice by hand and by Combine harvest machine In other cases, ACs reduced components cost for both members and non-members. As Figure 20 depicts, our survey revealed that the percentages of members that used AC services are higher than those of non-members. Therefore, I assume that members used more AC business and activities than did non-members and benefitted more from production cost reduction than did non-members. Table 22 reports that members incurred production costs 2,794 thousand VND/ha (equivalent to 11,000 Yen) lower than those of non-members.

Members also obtain many components at prices lower than those for non-members. I found several reasons for members having lower component and production costs. Members have an average harvest cost that is 30.2% lower than that for non-members because 66.8% of members harvested rice using the AC’s combine harvester service compared to 22.8% of non-members who harvest mechanically, using the cooperative’s and other providers’ services.

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manual harvesting. Therefore, the AC combine harvester service reduced production costs for members. Further, members have an irrigation cost lower than that incurred by non-members because the AC discounts its irrigation service fee for members at an average of 9.6% of non-member fee.

Members obtained additional components at costs lower than those incurred by non-members because many national subsidy programs apply through the AC, which then provides prior those opportunities to members. For example, the government distributes special discount price tickets to ACs for buying high quality seed. National extension courses, other agricultural courses and the new model ‘1 Must Do and 5 Reductions’ 60 are organized by ACs.

Therefore, ACs have contributed to reducing total production costs by reducing Tran Minh Hai & Iwamoto Izumi, agricultural cooperatives provided combine harvester 59 service and charged 50.4% service fee compare with that of individual farmers’ manual harvest cost.

Model “1 Must Do and 5 Reductions”: 1 must use certified seed and 5 Reductions for 60

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In summary, ACs’ business and activities have contributed advantages and benefits to members and non-members. Result shows strong evidences that members use more ACs’ business and activities than non-members do. As the result, members group have gained higher benefits than that of non-members group.

4.4.3 Contribution of agricultural cooperatives in improving farming practices ACs have contributed to improving farming practices such as using a seeding machine, high quality seed, new technology, less fertilizer and pesticide, environment protection measures and water conservation. Cooperatives have also improved levels of farming practices for PT over those in P0; this has done for more members than for non-members.

Cooperatives change farmers’ habits by using the seeding machine. Figure 21 depicts that in 2007 (P0) 78.3% of farmers in An Giang province manually sowed compared the 11.2% of those who used a seeding machine.

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because the government wanted to encourage farmers to use them. In the same year, the government provided five free seeding machines and subsidized 50% of the cost for another five for each AC. The cooperatives also organized many landless farmer groups and provided them the seeding machine sowing service.





Members borrowed seeding machines from the AC and sowed their own fields or hired landless farmer groups through the ACs. Figure 21 depicts the result: The percentage of member (GA) using seeding machines to sow increased from 11.2% in 2007 to 58.1% in 2011, and 24.6% of non-members (GB) sowed using seeding machines in PT, whereas only 11.2% did so during P0. Seeding machine is not very expensive as the combine harvester machine, a seeding machine pulling by hand costs equally 600kg rice or 200 kg fertilizer61, many individual farmers can purchase seeding machine. Ratio farmer sowing seed by seeding machine naturally increase in An Giang from 2007 to 2010. However, ratio of member (GA) using seeding machines has increased faster than that of non-members (GB) because ACs in An Giang have encouraged members using seeding machine through government subsidies program and by organizing sowing services.

Our survey revealed that 72.6% of members applied the “1 Must Do, 5 Reductions - 1 phải 5 giảm”62 model, whereas only 32.8% of non-members did so.

This is because if members registered to apply the model, they obtained 30 kg of Average yield of rice in An Giang is 6,000 kg/ha/crop and farmers use average 500 kg 61 fertilizer/ha 62 “1 Must Do, 5 Reductions - 1 phải 5 giảm”: 1 must use certified seed and 5 Reductions for

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provide the necessary training and guidance upon applying the model. Therefore, ACs help members follow the model’s guidance and members derived greater advantages, as shown in the 2009 IRRI report63.

ACs increased the percentage of members using certified seed because certified seed has high insect and disease resistance and low fertilizer demand and produces a high quality product, which is easier to sell at a higher price64.

Figure 22 depicts the results that members (GA) used 54.8% normal seed, 40.3% certified seed and 4.8% registered seed in 200965 (P0). By contrast, in 2011 (PT), members (GA) used 12.9% normal seed, 66.1% certified seed and 21% registered seed. When I compared PT and P0, I found that members (GA) used less normal seed and more high quality seed, including certified and registered seed, in the PT period.

The study of IRRI in 2009 reported that the yield of farmers who applied “1 must Do, 5 63 Reductions” was 0.2 to 0.4 tonne per hectare higher than other farmers, whose yield was average 5.3 tonnes per hectare. Farmers’ profit increased by US$208 equivalent to 15,600 Yen/ha, if farmers applied the model “1 Must Do, 5 Reductions”.

Thanh, a good quality seed needs a high care technique and do not have very high yield but 64 a good quality seed benefits to farmers because high quality seed has high insect and disease resistance and low fertilizer demand and produces high quality product, which is easier to sell at a higher price.

DARD, An Giang in 2009, Famer in An Giang province used 54.8% normal seed, which 65

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Figure 22: Seed Level Used by Members Group at P0(2009) & PT There is a correlation between using high quality seed and seeding machine.

Farmers use high quality seed including certified seed and registered seed, they have to use seeding machine for sowing because high quality seed is high price.

Therefore, if ACs encourage more farmers use high quality seed, the percentage of farmers us seeding machine increase.

ACs improve farmers’ farming skills through organizing agricultural training courses. Figure 23 demonstrates members attended an agricultural training course more than non-members did.

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Figure 23: Times Attending Agricultural Training Courses/Year Thus, members learned more than non-members about using fertilizers, pesticides and farming tools and improving living conditions. The higher member attendance was for several reasons. Members were aware of the benefit of training courses and state government policy. Vietnam’s government encourages more farmers to enrol in ACs. Thus, the government provides extension programs, farmer training and agricultural training and subsidizes projects for farmers through AC organizations. In addition, members receive priority seating in government programs.

I assume that if members attend agricultural training courses, they reduce their fertilizer and pesticide cost. Table 24 reports our correlation test between the independent variable - fertilizer and pesticide cost - and the dependent variable - attending training (dummy variable: member attend = 1, member does not attend = 0). The statistical result reveals that only pesticide cost reduction significantly correlates with attending training at the 10% level, whereas

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I found reasons for fertilizer not significantly correlating with training.

First, the fertilizer market has not been monopolized by state-owned companies since 2011, but instead has competition among state-owned, private and foreign investment companies. Many foreigner fertilizer companies produce ‘special fertilizer packed with application guide’ for rice and guide farmers in how to use the fertilizer. Farmers easily follow these instructions and have many choices among fertilizers. Second, in contrast, pesticide products rapidly change because many insects and diseases develop resistance to pesticides; therefore, farmers need updated information for pesticide use, which the courses provide.

I also found reasons for non-members less attended on agricultural training course than that of members. Government wants to encourage more farmers’ enrolment into ACs and many national agricultural programs such as extension programs, rural development, and farmers’ life improvement have applied through ACs. Therefore, members have more chances attending in these programs. In addition, national extension program used to give cash or gifts for

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to farmers for attending extension programs, because many farmers came to extension training because of cash and gifts. As the result, many farmers, who are not self-awareness benefits of agricultural training courses, they do not attend on these training courses.

In short, ACs increased profit, total revenue and the effectiveness of farming practices, and reduced total production cost per hectare of rice.

Cooperatives also offered more services to members than to non-members. Hence, ACs’ improvement of farming practices is more effective for members than non-members.

4.4.4 Reasons for the low proportion of farmers’ enrolment in agricultural cooperatives To date, many South Vietnam farmers have been afraid of the term “agricultural cooperative-Hợp tác xã” because the government used to expand the “old agricultural cooperative”66 from North to South during 1975-1986. At that moment, the government collected the land, capital assets and property of individual farmers in the South and added it to the local AC, and then equally distributed the profits to each farmer. As the result, the old AC in Vietnam largely collapsed and could not conduct activities.

The field survey in An Giang shows that large number of old farmers have Period 1959 -1996[3], the cooperatives (old cooperative) were formed of collective assets, 66

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period 1975-1986. The period 1975-1986, farmland size in An Giang is larger than other regions in Vietnam, many old farmers had over ten hectare of farmland and hundreds of buffalos and cows, and they had to work hard for investing these properties. However, their land, buffalos and cows were collected into ACs and they received nothing after 1986.

Furthermore, the ACs model has not been attractive to farmers. In An Giang province, 24.7% of farmers had enrolled in ACs in 2010. The percentage of farmer enrolment in ACs in An Giang province is higher than the 21.9% in the Mekong Delta but lower than the nationwide rate of 28.1%. This percentage of farmers in ACs is far lower than that of JAs in Japan, in which almost 100% of Japanese farmer have enrolled.

Figure 25 presents the reasons for which farmers join in ACs: they recognize the benefits and advantages (27.3%), cooperative members and the local government have campaigned for an AC (18.6%), the AC has been a good place for gaining and sharing farming practices (17.4%), ACs provide a cheap service price (14.9%), farmers’ farmland in cooperative service area (9.9%) and other reasons.

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