ECONOMIC ANALYSIS OF PRODUCTION AND MARKETING OF HIGH QUALITY RICE IN CUULONG DELTA OF VIETNAM
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Date
2009-02
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UNIVERSITY OF AGRICULTURAL SCIENCES GKVK, BENGALURU
Abstract
Vietnam is one of the original centers of rice cultivation. High quality rice (HQR)
varieties have been released for cultivation in Vietnam, but local rice (LR) varieties are
still popular. Vietnam has been the world’s second largest rice exporter since the mid-
1990s, but rice farmers are still poor due to low rice prices. In this context, the present
study on the economics of production and marketing of HQR was conducted in Cuulong
delta, the major rice of bowl of Vietnam. The area under high quality rice (HQR) is
expanding (2.28% per annum), but the yield growth is marginal (1.72%). The cultivation
of HQR was found more profitable (net return of 8564 thousand vnd/ha) compared to LR
(5807 thousand vnd/ha). The output differential between HQR and LR, estimated using
Cobb-Douglas production function, in Winter-Spring, Spring-Summer and Summer-
Autumn seasons was 16.42, 17.60 and 13.50 per cent, respectively. The price spread
analysis showed that the producers received 43.26, 43.26 and 48.70 per cent of the
consumer’s price in the three marketing channels, respectively. The unreasonably high
margins of the market intermediaries can be addressed by the government through
establishment of wholesale markets together with storage, warehousing and large scale
procurement in each province along with reducing the high rate of taxes and fees for the
traders. The price of HQR is forecasted to be 16,467 vnd per kg in July 2009, which will
reduce to 15,869 vnd per kg in August 2009 but will increase to 16,350 vnd per kg in
December 2009 when the harvest season is completed. The results of the ARIMA model
clearly indicated higher price fluctuations of HQR. However, the price is forecasted to
increase over time. Hence, there is a need to revitalize the extension activities about HQR
cultivation to make the farmers to take advantage of the situation.
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