Analysis of the Lychee Industry Competitiveness and Good Agricultural Practice (VietGAP) In Bac Giang province, Vietnam

24 April 2012
Le Thi Thanh Loan, Faculty of Economics and Rural Development, Hanoi University of Agriculture
Special Graduate Seminar

Lychee production in Vietnam can look forward to a good future if farmers continuously adopt Good Agricultural Practice (VietGAP). This was revealed by a study conducted by Hanoi Agricultural University Lecturer Ms. Le Thi Thanh Loan, which she presented during the SEARCA Graduate Seminar Series, on 24 April 2012.

Vietnam is one of the world’s top five lychee producing countries. Loan said that Bac Giang province is the main production area in Vietnam, with 32.6% of the lychee produce exported. However, the price of lychee remains very low and unstable. This problem could be attributed to lack of government support for lychee production, marketing, and export. As a result, she tried to analyze the lychee industry competitiveness and adoption of Good Agricultural Practice (VietGAP) in Bac Giang province, Vietnam.

Results showed that 56% of VietGAP farmers were applying eight or more of the prescribed practices; the rest were considered low adopters. The practices which were highly adopted by farmers were related to soil and water, harvesting, storage and transport, chemical application, waste management, and fertilizer application. Other practices such as choice of varieties, pruning, recording, complaint, and safety for workers had lower adopters. No farmer adopted the internal audit requirement.

Factors that significantly influenced the probability of high adoption of VietGAP were farm size, net profit, accessibility to VietGAP information, and membership in lychee farmers’ group. The estimated Resource Cost Ratios from the Policy Analysis Matrix (PAM) showed that Luc Ngan district where VietGAP was adopted had greater comparative and competitive advantages than Luc Nam district where no farmers adopted VietGAP. Lychee production with high adoption of VietGAP also had higher comparative and competitive advantages than that with low adoption of VietGAP. Results of the sensitivity analysis indicated that the world price of lychee, lychee yield, and official exchange rate have positive effect on the lychee industry competitiveness while the labor costs, input prices, and interest on capital have negative effect.

Loan recommended that for the VietGap program to sustain its success, Vietnam’s Ministry of Agriculture should continue improving the program including its input distribution, price stabilization, and insurance fund, aside from upgrading lychee production technology. The government needs to also make sure that the capital for lychee farmers becomes more accessible and that membership to farmer’s groups or organizations is encouraged. (Heidi Mendoza)