Economic linkages between enterprises and farm households in the production of long - Term industrial crops in dak lak province

Viewpoints and orientations for development of economic

linkages between enterprises and farm households in the production

of perennial industrial crops in Dak Lak province

a. Viewpoints on developing economic linkages between enterprises

and farmer households in the production of perennial industrial crops

a) Economic linkage between enterprises and farmer households is a

prerequisite to ensure production of perennial industrial crops in Dak Lak

province towards efficiency and sustainability. Joining the association

will help farmers overcome their weaknesses that are difficult for

themselves to solve.

b) The process of implementing economic linkages between

enterprises and farmers must ensure the rights and responsibilities of

stakeholders, associated with efficient and sustainable production and

consumption of agricultural products. There are no economic subjects

participating in the association, but themselves do not benefit from the

linkage process

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ince. - The method of data collection: Interviewing with state management officials, enterprises, farmers, intermediaries related to the economic linkages between enterprises and ffarmer households in the production of perennial industrial crops in Dak Lak directly. 6 4.2.2. Analytical method - Methods of synthesis and analysis of data: + Methods of synthesis and analysis used to: 1) synthesize research related to the topic published in chapter 1; 2) synthesize some basic theoretical and theoretical bases, practical experiences in chapter 2; 3) synthesizing and analyzing the current situation in chapter 3; 4) Synthesize scientific and practical bases from chapters 2 and 3 to propose solutions in chapter 4. + Methods of data synthesis: Based on data collected from available documents, questionnaires and in-depth interviews, this method is used to synthesize the necessary indicators for the construction. report. The software used is Microsoft Office. + Methods of data analysis: Including descriptive statistics and comparative statistics.  Descriptive statistical method: Basic on the indicators, information synthesized from the secondary data and the primary data, this method is used to: 1) Describe a part of the content of assessing the status of the economic linkages between enterprises and households in the production of perennial industrial crops in Dak Lak province in Chapter 3; 2) Describe a part of the contents of the factors affecting the economic linkages between enterprises and farmer households in the production of perennial industrial crops in Dak Lak province in chapter 3 ...  Comparative statistical method: Basic on indicators and aggregated information from the secondary and primary data, the comparative statistical method is used to reflect the difference in the status of economic linkage between Enterprise and farm households among perennial industrial crops, between different forms and models of economic linkages in Chapter 3. 5. Expected research results to be achieved The expected research results to be achieved include: - Based on the systematization of the theoretical and practical basis of the economic linkages between enterprises and farmers in the production of perennial industrial crops, the author builds an analytical framework of the thesis. 7 - By analyzing and assessing the current economic linkages between enterprises and farmer households in the production of perennial industrial crops in Dak Lak province in the period of 2014-2018, the author points out the successes, shortcomings and causes. Multiply, creating the basis for the scientific and practical basis for proposing solutions, mechanisms, and policies. - Analyze the factors affecting the economic linkages between enterprises and farmers in the production of perennial industrial crops in Dak Lak to create a basis for more concretization of proposed solutions, mechanisms and policies which have scientific and practical basis. - Perspectives, orientations and proposed solutions to promote the development of economic linkages between enterprises and farmer households in the production of perennial industrial crops in Dak Lak province by 2030 have scientific bases and real values. The research results of the thesis are valid for reference in research, planning and policy implementation for state management agencies, local governments, research and training organizations related to the research topic. 6. Thesis structure In addition to the introduction, conclusion, list of references, appendices, the structure of the thesis includes the following main parts: Chapter 1. Overview of researches related to the thesis topic Chapter 2. Theoretical and practical basis for the economic linkage between enterprises and farmers in the production of perennial industrial crops Chapter 3. Current situations of economic linkages between enterprises and farmer households in the production of perennial industrial crops in Dak Lak province Chapter 4. Viewpoints, orientations and solutions to promote economic linkages between enterprises and farmers in the production of perennial industrial crops in Dak Lak province 8 CHAPTER 1. OVERVIEW OF RESEARCHES RELATED TO THE THESIS TOPIC Economic linkages between enterprises and farmer households have a long history of development, so there are many views, research results related to this issue have been proposed and implemented. In terms of theory and practice, related studies have mentioned many aspects of the technical cooperation between enterprises and farmers. From the issue of State management of linking activities, commitments in linking, the role of linking activities, factors affecting linking activities, to solutions to improve linking activities. Besides, we can see that theories and research results related to economic linkages between enterprises and farmer households are highly appreciated, widely acknowledged and used in many studies: 1). There are 4 models of economic linkages between enterprises and farmers: nuclear farm model, centralized model, intermediate model, informal model; 2). The association will have commitments: contract term, buyer's quality standards, farmers 'production quota, and request for the farmers' farming practices, delivery organization, how to determine prices, credit reform, insurance; 3). Linkage activities will create many positive impacts for farmers and enterprises participating in the association; 4). Factors affect linkages: farm household characteristics, business characteristics, agricultural characteristics, choice of association, state factors... The dissertation points inherited from related researches: Inheriting the classification of economic linkages between enterprises and farmer households, the content of organizing the association, how to evaluate the efficiency of economic linkages, the content factors affecting economic linkages of published researches to build and synthesize the contents of the thesis such as: Scale, form and model of economic linkages between enterprises and farmers in the production of perennial industrial crops; To organize the implementation of economic linkages between enterprises and farmer households in the production of perennial industrial crops; Efficiency and indicators reflect the efficiency of economic linkages between enterprises and farmers in the production of perennial industrial crops; Factors affecting economic linkages between enterprises and farmer households in the production of perennial 9 industrial crops; International and domestic experiences on economic linkages between enterprises and farmers in the production of perennial industrial crops and lessons learned from Dak Lak province. - Research gap of topic: + Economic linkages between enterprises and farmer households in the production of perennial industrial crops has not classified basic on 7 forms of Decree 98/2018 / ND-CP yet. + It is not clear which influencing factors are the conditions for forming the linkages, which factors affect the implementation of the one. + The research topic "Economic linkages between enterprises and farmers in the production of perennial industrial crops in Dak Lak province" is a new topic, which has not been done in the past. 10 CHAPTER 2. THEORETICAL AND PRACTICAL BASIS FOR THE ECONOMIC LINKAGE BETWEEN ENTERPRISES AND FARMER HOUSEHOLDS IN THE PRODUCTION OF PERENNIAL INDUSTRIAL CROPS 2.1. Concept and characteristic of economic linkages between enterprises and farmer households in the production of perennial industrial crops a. Concept The concept of perennial industrial crops: According to the Ministry of Agriculture and Rural Development (2016), perennial industrial tree is defined as a one-time crop that grows and gives the harvest for many years, materials for industrial production or must be processed to be used such as rubber, cocoa, coffee, tea, cashew, and pepper. The concept of economic linkages: Economic linkages are the process of creating and coordinating the implementation of commitments between two or more economic entities in order to achieve the economic goals of stakeholders, basic on voluntary principles, equality and within the legal framework. The concept of economic linkages between enterprises and farmer households in the production of perennial industrial crops: economic linkages between enterprises and farmers in the production of perennial industrial crops are a combination of activities or with support (materials, techniques, machinery ...) in the production and consumption of perennial industrial crops between enterprises and farmers, in some cases with additional intermediaries, in order to achieve economic goals of all parties involved in the association on the basis of the principles of voluntary, equality, mutual benefit and compling with the law. b. Characteristic Characteristics of the economic linkages between enterprises and farmer households in the production of perennial industrial crops include: 11 Economic linkages in the production of perennial industrial crops include vertical linkages (linkages between subjects in different production stages), horizontal linkages (linkages between subjects in the same production stage), and mixed bonding. Among the three types of economic linkages above, the economic linkage between enterprises and farmers in the production of perennial industrial crops is the first, vertical link. Economic linkages between enterprises and farmer households in the production of perennial industrial crops are inconsistent with the term "written agricultural contracts". Economic linkages between firms and farmers in the production of perennial industrial crops can be done in the form of written contracts or not been. Economic linkages between enterprises and farmers emphasize the coordination, ways to compensate for the shortage of resources and the mutual support between enterprises and farmer households for mutual development... Financial resources, ability farmers' access to the market and production techniques are still in short supply, thanks to linkage with enterprises, farmers can have capital solutions to serve their production, business, and consumption. Enterprises can support farmers in market access and training, technology transfer, and improved production processes for farmers. Enterprises need raw materials are high quality agricultural products to ensure production and supply of processed agricultural products in accordance with the market standards of consumption and export, thanks to linkage with farmers, they can get the desired raw materials. 2.2. Content of research on economic linkages between enterprises and farm households in the production of perennial industrial crops a. Scale, form and model of economic linkage between enterprises and farm households in the production of perennial industrial crops Scale of economic linkages between enterprises and farmer households in the production of perennial industrial crops. 12 Form of economic linkage between enterprises and farmers in the production of perennial industrial crops. Economic linkage model between enterprises and farm households in the production of perennial industrial crops. b. The role and position of stakeholders in the economic linkage between enterprises and farmer households in the production of perennial industrial crops Subjects and their role when participating in economic linkages between enterprises and farmers in the production of perennial industrial crops. The position of subjects in the economic linkages between enterprises and farm households in the production of perennial industrial crops. c. Motivation of subjects when participating in economic linkage between enterprises and farmers in the production of perennial industrial crops Motivation of enterprises. Motivation of farmer households. d. Implement economic linkages between enterprises and farmers in the production of perennial industrial crops Selecting the region to linkage. Propaganda and persuasion. Selecting linkage partner. Building committed content. Implementing committed content. Handling of risks (handling new arising). In addition, in the process of implementing the linkage, it is necessary to define the benefit sharing mechanism of the enterprise - farmer and consider the sustainability of the linkage. e. Efficiency and indicators reflect the efficiency of economic linkages between enterprises and farmers in the production of perennial industrial crops. 2.3. Factors affecting economic linkages between enterprises and farmer households in perennial industrial crop production a. Objective factors 13 Mechanisms and policies of the State (at central level). Management role of local government. Market and market development level. The role of intermediaries (banks, industry associations, cooperatives and cooperative groups, purchasing agents). Some other objective factors: + Scientific - technological development. + Infrastructure system. + Customs. + Scale and level of agricultural production and local agricultural advantages. b. Subjective factors The need of linkages, awareness and capacity for implementation: + The linkage’s need of enterprise. + The enterprise's knowledge and ability to perform the linkages. The need for association, awareness and capacity to implement the linkages of households: + The need for linkages of farmers. + Awareness and capacity’s farm households to implement the linkages. Other subjective factors: + Quality contract terms. + Adhering to commitments. 2.4. Experienced lessons from international and domestic experiences on economic linkages between enterprises and farmer households in the production of perennial industrial crops Direct linkage with processing factories will help farmers not have to share benefits with intermediaries (traders), thereby contributing to improving income. In addition, thanks to the direct linkages with the processing factory, farmers will reduce their dependence on the trader’s system during the consumption of agricultural products (Quang Tri). Economic linkages between enterprises and farm households differ among types of agricultural production. Same conditions, but economic linkages will not be the same between different crops and animals (United States). 14 The application of sustainable production processes, thereby increasing productivity, quality and selling prices of agricultural products is an important factor in the success of economic linkages between enterprises and farmers (Binh Phuoc). The establishment of farmer organizations and industry associations will help strengthen the position and bargaining power of farmers in the process of economic linkages with enterprises, which is an important factor to ensure the benefits of farmers (Thailand). The development of transport infrastructure, the formation and growth of retail groups, and the expansion of the size of farms and processing plants will create a driving force for economic linkages between enterprises and farming households, especially contractual association (United States). The volatility of agricultural prices is a major challenge in the process of creating and implementing economic linkages between enterprises and farmers (Son La, USA). Appropriate support policies of state agencies are an important factor contributing to the development of the linkages. Building a truly powerful regulator, building the suitable linked strategy, building an equitable benefit distribution mechanism, regulating the production area or participating in monitoring the linkage process will contribute to improving the efficiency and sustainability of the linkages. On the contrary, the unreasonable effects of government agencies will inhibit the development of this activity (Thailand). Full understanding of information regarding the linking process; Keeping trust and strictly following commitments are important factors to ensure the success of the association (Son La, Binh Phuoc). 15 2.5. Analytical framework of the thesis 16 CHAPTER 3. CURRENT SITUATION OF ECONOMIC LINKAGES BETWEEN ENTERPRISES AND FARMER HOUSEHOLDS IN THE PRODUCTION OF PERENNIAL INDUSTRIAL CROPS IN DAK LAK PROVINCE 3.1. Natural, socio-economic conditions and current status of production of perennial industrial crops in Dak Lak province a. Naturals condition Dak Lak province is located in the Central Highlands region with many advantages in terms of land, climate, and water resources to develop perennial industrial crops with high economic value such as rubber, coffee, pepper, cashew .. The biggest challenge posed by the natural conditions to the production of perennial industrial crops in Dak Lak province is that the dry season here is often long and this can lead to a shortage of water for supply to plants in the dry season, negatively affecting the growth and development of plants. b. Social and economic conditions Compared with some other provinces in the Central Highlands region, the infrastructure system of Dak Lak is also relatively developed, but also weak compared to many other provinces and cities in the country. The transportation system in Dak Lak province includes roads, waterways, and airways. The electricity system is increasingly strengthened in both quantity and quality, ensuring stable power supply for production and daily life. Dak Lak's post and telecommunications system has developed strongly and widely throughout the province. The province has also formed many commercial centers for buying, selling and exchanging agricultural and forestry products from the province to districts, communes, and wards. Dak Lak is one of the provinces with quite developed irrigation systems in the Central Highlands. Dak Lak province's population is about 1,833,698 people with 48 ethnic groups and the labor force/total population ratio is about 60%. Dak Lak is one of the provinces with many customs and diverse cultures. 17 c. Current status of production of perennial industrial crops in Dak Lak province The area of perennial industrial crops in Dak Lak province in 2018 is 324,859 ha. Although the production of perennial industrial crops is only a small subsector in the agricultural sector, in Dak Lak province, the production of perennial industrial crops plays a very important role in the province's agricultural sector. The production of perennial industrial crops accounts for 51.38% of the total agricultural land area of the province, as well as contributes nearly 50% to the total production value of the field. Perennial industrial crops in Dak Lak province include coffee, rubber, pepper and cashew, of which coffee is the most commonly grown crop. Area of perennial industrial crops in Dak Lak province is relatively stable and productivity tends to increase slightly over the years. 3.2. Current status of economic linkages between enterprises and farmer households in the production of perennial industrial crops in Dak Lak province a. Scale, form and model of economic linkage between enterprises and farm households in the production of perennial industrial crops in Dak Lak province Economic linkages between enterprises and farmers are a relatively common activity in the production of perennial industrial crops in Dak Lak province. The area of coffee, pepper, cashew and rubber with economic linkages is 224,925 hectares, accounting for 74.59% of the total area of coffee, pepper, cashew and rubber in the province. In the period 2014-2018, the size of the combined area of perennial industrial trees in Dak Lak tends to expand over time, but this expansion is not large, only 2.2% per year. Economic linkage in the production of perennial industrial crops is a fairly common activity, however, the association done in the form of written contracts is still quite low. Economic linkages with text contracts in the production of perennial industrial crops in Dak Lak only accounts for 10.61% of the total economic linkages. According to Decree 98/2018/ND-CP dated July 5, 2018, of the Government on policies to encourage the development of cooperation 18 and association in the production and consumption of agricultural products, economic linkages between enterprises and farmer households in agricultural production have 7 forms. In the 7 above forms, economic linkages between enterprises and farmers in the production of perennial industrial crops in Dak Lak appears in four forms: Form 1. Supply - Production - Harvest - Processing - Consume; Form 2: Supply - Consumption; Form 4: Supply - Production - Harvest - Consume; Form 5: Production - Harvesting - Processing - Consumption. In which, the second form of linking is the most popular form of linkages, accounting for 80.65% of the total area with linkages. Eaton et al (2001) said that economic linkages between enterprises and farmer households are made four models: centralized model, nuclear farm model, intermediary model and informal model. And the economic linkage between enterprises and farmers in the production of perennial industrial crops in Dak Lak province appears all four models, of which the informal model is the most popular one. b. The role and position of stakeholders in the economic linkage between enterprises and farmer households in the production of perennial industrial crops in Dak Lak province Economic subjects in economic linkage to the production of perennial industrial crops in Dak Lak province include as follows: enterprises, farmers and cooperatives - cooperative groups. Every participating in the association all have their own roles in the process of the association. Enterprises will play the role of selling agricultural products, transferring science and technology, supplying, lending, supporting materials. While, farmers will play a key role in implementing agricultural production and supplying agricultural products to enterprises. In the economic linkage between enterprises and farm households for the production of perennial industrial crops in Dak Lak, enterprises are subject to a better position than farmers. In this association relationship, enterprises are often the ones deciding to let the content of the linkage process, farmers only participate and follow the proposals that the enterprises makes. 19 c. Motivation of subjects when participating in economic linkages between enterprises and farmer households in the production of perennial industrial crops in Dak Lak province For enterprises, the main motivation for them to join the association is to have quality raw materials, consistent with their input standards and ensure the stability of raw materials; Expand the consumer market for agricultural materials; Building and developing brands or implementing government policies. For farmers, the main motivation for them to join the linkage is to consume agricultural products stably and sell farm produce at a higher price to increase their income; Having land for production; Having the opportunity to access investment capital from enterprises or have the opportunity to access advanced technical and industrial processes. d. Organize the implementation of economic linkages between enterprises and farmer households in the production of perennial industrial crops in Dak Lak province The process of implementing economic linkages between enterprises and farmers in the production of perennial industrial crops in Dak Lak has many remarkable points, but there are also some shortcomings. In the process of organizing and implementing the association, enterprises have paid attention to the selection of associated areas; focus on propaganda, persuasion and selection of associate partners. Commitment content of many cases linkages reasonably and strickly. The majority of entities participating in the association have complied and properly implemented the initial agreed commitments. This has made many cases that the association is successful and is maintained in the following production seasons. In addition to the positive points, the process of organizing the imple

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