Economic efficiency of cage fish farming in Bo Trach district, Quang Binh province

JOURNAL OF SCIENCE, Hue University, Vol. 70, No 1 (2012) pp. 55-61<br /> <br /> ECONOMIC EFFICIENCY OF CAGE FISH FARMING IN BO TRACH<br /> DISTRICT, QUANG BINH PROVINCE<br /> Tran Van Hoa<br /> College of Economics, Hue University<br /> <br /> Abstract. Cage fish farming on rivers in Bo Trach district has become an important<br /> sector for farmers. Based on the results of a random survey on 120 households in 3<br /> selected communes (favorable conditions and unfavorable conditions) in Bo Trach<br /> district, this paper has found that cage fish farming brings high economic efficiency<br /> for farmers. Some determined input factors include the amount of technical training,<br /> experience, density of fish, feed costs, fish drugs. It is necessary to focus on<br /> planning the cage fish areas, opening a training class on technical and management<br /> skills for farmers, improving the capabilities of official funding access and<br /> marketing for inputs and outputs of cage fish farming in Bo Trach district.<br /> <br /> 1. Introduction<br /> Aquaculture in general and cage fish farming in particular plays an important<br /> role in transforming the economic structure of the local community, exploiting the<br /> potentials and advantages of the areas, creating employment opportunities, improving<br /> incomes, increasing the volume of services and commodities for consumption and<br /> facilitating commercial agriculture.<br /> Quang Binh is a Northern Central Coastal province where aquatic resources are<br /> abundant and species are diverse, particularly the species that have high economic and<br /> export value. In addition, the lake and river system is rather favorable for inland<br /> aquaculture.<br /> Bo Trach district is located in the middle of Quang Binh province where water<br /> surface area is sizable due to the high-density system of rivers and streams. These areas<br /> can be favorably used for cage fish farming. Exploiting the above potentials and<br /> advantages, some areas of cage fish farming have been spontaneously developed by<br /> households in recent years. However, due to poor planning and farming technique, cage<br /> fish farming has been facing many difficulties and low economic efficiency. Therefore,<br /> it is important to understand the existing farming system as well as the economic<br /> efficiency of the system.<br /> <br /> 55<br /> <br /> Economic efficiency of cage fish farming in…<br /> <br /> 56<br /> <br /> 2. Research methodology<br /> The study is conducted using a combination of different methods ranging from<br /> qualitative to quantitative analyses. To support these analyses, there are two sources of<br /> data.<br /> Secondary data are collected from yearly statistical books, previous studies, and<br /> sector reports. These pieces of information are used and synthesized to develop a<br /> research framework and identify trends in cage fish farming in the local economy.<br /> Primary data are collected from a survey on 120 households based on random<br /> sampling at three communes that are representative of favorable and unfavorable areas<br /> for cage fish farming in the district. Data are cleaned and analyzed by SPSS software<br /> version 16.0.<br /> 3. Research results<br /> 3.1. General existing situation of Bo Trach district cage fish farming<br /> In recent years, cage fish farming on rivers has had an important contribution to<br /> the local economy, with an annual output value of 8.381 million VND. The number of<br /> cage fish farming households has gradually increased and reached 530 households with<br /> 727 cages (annual growth rate increased from 1.6 to 2.7 %). In 120 surveying<br /> households, there are 594 people and 381 workers, equivalent to 4.95 people and 3.25<br /> workers per household. On average, each household has 1.24 cages with an area of<br /> 18,11 m2 and the farming area in favorable area is larger (table 1). Average production<br /> cost per household is 305.95 thousands VND/m3 for the whole region, but lower in Son<br /> Trach commune and higher in Lien Trach and Hung Trach communes. The study result<br /> shows that Son Trach has more favorable conditions with regards to water sources,<br /> transportation, and natural feeds compared to two other communes. In Lien Trach<br /> commune, natural feeds are scarce. Therefore, cassava and sweet potato leaves are<br /> usually used to replace seaweeds. In addition, the topography of rivers in Lien Trach<br /> and Hung Trach communes is worse than Son Trach commune so the average<br /> production cost per household in Son Trach is lower than Hung Trach and Lien Trach.<br /> Table 1. Some main indexes of cage fish farming households in Bo Trach district<br /> <br /> Index<br /> 1. Number of hhs<br /> 2. Number of people<br /> People per hh<br /> 3. Number of workers<br /> <br /> Unit<br /> <br /> Son<br /> Trach<br /> <br /> Lien Trach<br /> Hung Trach<br /> <br /> Total/average<br /> <br /> hh<br /> <br /> 84<br /> <br /> 36<br /> <br /> 120<br /> <br /> person<br /> <br /> 412<br /> <br /> 182<br /> <br /> 594<br /> <br /> persons/hh<br /> <br /> 4.90<br /> <br /> 5.06<br /> <br /> 4.95<br /> <br /> worker<br /> <br /> 230<br /> <br /> 151<br /> <br /> 381<br /> <br /> TRAN VAN HOA<br /> <br /> Workers per hh<br /> <br /> 57<br /> <br /> workers/hh<br /> <br /> 2.84<br /> <br /> 4.19<br /> <br /> 3.25<br /> <br /> m2/hh<br /> <br /> 18.66<br /> <br /> 16.84<br /> <br /> 18.11<br /> <br /> 5. Number of cages<br /> <br /> cage<br /> <br /> 1.44<br /> <br /> 1.36<br /> <br /> 1.42<br /> <br /> 6. Production cost<br /> <br /> 1000VND/m3<br /> <br /> 303.65<br /> <br /> 311.32<br /> <br /> 305.95<br /> <br /> kg/m3<br /> <br /> 22.28<br /> <br /> 23.72<br /> <br /> 18.93<br /> <br /> 4. Area of water surface<br /> <br /> 7. Yield<br /> <br /> (Source: Result of survey 2010).<br /> <br /> 3.2. Production and efficiency of cage fish farming at Bo Trach district<br /> The result of the survey in 2010 shows that each cage fish farming cubic meter<br /> has 454.34 thousand VND of gross output; 305.41 thousand VND of mixed income and<br /> 148.39 thousand VND of net profit. With the existing scale of production, output per<br /> households is on average 576 kg, but 639 kg per household in Son Trach and 428 kg per<br /> household in Lien Trach and Hung Trach communes (table 2). The result of analysis<br /> also shows that:<br /> - Gross output–cost ratio is 3.47 for the whole region. It means that one unit of<br /> production cost creates 3.47 units of gross output but this ratio is 3.72 for Son Trach<br /> commune, higher than that of Lien Trach and Hung Trach, which is 2.78.<br /> Table 2. Production and efficiency of cage fish farming at Bo Trach district<br /> <br /> Unit<br /> <br /> Average<br /> <br /> Son Trach<br /> <br /> Lien Trach<br /> Hung Trach<br /> <br /> GO<br /> <br /> 1000VND/m3<br /> <br /> 454.34<br /> <br /> 476.49<br /> <br /> 402.64<br /> <br /> MI<br /> <br /> 1000VND/m3<br /> <br /> 305.41<br /> <br /> 328.14<br /> <br /> 252.35<br /> <br /> LN<br /> <br /> 1000VND/m3<br /> <br /> 148.39<br /> <br /> 172.85<br /> <br /> 91.32<br /> <br /> GO/C<br /> <br /> times<br /> <br /> 3.47<br /> <br /> 3.72<br /> <br /> 2.87<br /> <br /> MI/C<br /> <br /> times<br /> <br /> 2.47<br /> <br /> 2.72<br /> <br /> 1.87<br /> <br /> LN/C<br /> <br /> times<br /> <br /> 1.26<br /> <br /> 1.49<br /> <br /> 0.72<br /> <br /> Index<br /> <br /> (Source: Result of survey 2010).<br /> <br /> Mixed income–cost ratio is 2.47 for whole region. This means that one unit of<br /> production cost creates 2.47 units of mixed income. Profit–cost ratio reaches 1.26 for<br /> the whole region but this ratio is 1.49 for Son Trach commune, higher than that of Lien<br /> Trach and Hung Trach communes.<br /> In short, output value and efficiency of cage fish farming in households are<br /> rather high but they can be improved to reach the potential yield of 60 - 70 kg/m3.<br /> <br /> Economic efficiency of cage fish farming in…<br /> <br /> 58<br /> <br /> 3.3. Influence of input factors on cage fish farming yield<br /> To analyze the impact of input factors on the yield of cage fish farming activity,<br /> the Cobb – Douglas production function is used to evaluate. The Cobb – Douglas<br /> production function model has the following form:<br /> Y = A.X1a1.X2a2.X3a3.X4a4.X5a5.ea6.D + ε<br /> In Logarit form:<br /> LnY = LnA +a1.LnX1 + a2.LnX2 + a3.LnX3 + a4.LnX4 + a5.LnX5 + a6.D + ε<br /> In which:<br /> Y - Yield (kg/m3)<br /> X1 - density(fishes/m3)<br /> X2 - Farming experience (year)<br /> X3 -Disease protection cost (1.000đ/m3)<br /> X4 - Industrial feed cost (1.000đ/m3)<br /> X5 - times to attend techical trainning (times)<br /> D - region dummy variable: D = 1: favorable area - Son Trach commune; D = 0<br /> unfavorable area -Hung Trach and Lien Trach<br /> ε: random error<br /> ai (i = 1÷ 6) regression coefficients.<br /> Estimated result shows that the model is at 1% level of significance with F value<br /> of 49,4. In addition, R2 is 0.724. These values show that the model has the capacity to<br /> explain not only the yield of cage fish farming yield but also that the ability is rather<br /> high (72.4%). The rest is explained by other factors outside the model (table 3).<br /> Table 3. Estimated result of factors influencing cage fish farming yield<br /> <br /> Variables<br /> <br /> Coefficients<br /> <br /> SE<br /> <br /> 1. Constant<br /> <br /> 1,1820*<br /> <br /> 0,1466<br /> <br /> 2. LnX1 (density)<br /> <br /> 0,2401*<br /> <br /> 0,0377<br /> <br /> 3. LnX2 (Farming experience)<br /> <br /> 0,1652*<br /> <br /> 0,0386<br /> <br /> 4. LnX3 (Disease protection cost)<br /> <br /> 0,1333*<br /> <br /> 0,0249<br /> <br /> 5. LnX4 (Industrial feed cost)<br /> <br /> 0,0788*<br /> <br /> 0,0285<br /> <br /> 6. LnX5 (times of attending techical<br /> trainning)<br /> <br /> 0,2918*<br /> <br /> 0,0840<br /> <br /> TRAN VAN HOA<br /> <br /> 59<br /> <br /> 7. D (region variable)<br /> <br /> 0,1637*<br /> <br /> R2<br /> <br /> 0,7240<br /> <br /> Number of observation n<br /> <br /> 0,0479<br /> <br /> 120<br /> 49,40*<br /> <br /> F<br /> (Source: Result of survey 2010).<br /> Note: * significant level 1%<br /> <br /> All the estimated coefficients in the model are at 1% level of significance. This<br /> shows that every factor has the capacity to explain the yield of cage fish farming in<br /> households. In addition, all the factors examined in this survey have a positive impact<br /> on the yield because all the estimated coefficients are positive.<br /> There is significant difference between the yield of the two areas surveyed.<br /> Favorable area has higher yield than unfavorable areas (yield is 1.18 times higher).<br /> In order to clarify the role of different factors, marginal yields and values of each<br /> input factors have been analyzed and investigated. The result is presented in table 4.<br /> Table 4. Marginal yield and values of input factors<br /> <br /> Xi<br /> <br /> Marginal yield<br /> (kg)<br /> <br /> Marginal value<br /> (1000VND)<br /> <br /> 1. Density<br /> <br /> 31.42<br /> <br /> 0.17<br /> <br /> 7.78<br /> <br /> 2. Farming experience<br /> <br /> 8.78<br /> <br /> 0.42<br /> <br /> 19.15<br /> <br /> 3. Protection disease cost<br /> <br /> 2.42<br /> <br /> 1.23<br /> <br /> 56.06<br /> <br /> 1,126.65<br /> <br /> 0.00<br /> <br /> 0.07<br /> <br /> 1.50<br /> <br /> 4.34<br /> <br /> 198.06<br /> <br /> Input factors<br /> <br /> 4. Industrial feed cost<br /> 5. Times of training<br /> <br /> (Source: Result of survey 2010).<br /> <br /> The data from table 4 show that the average marginal value of attending<br /> technical workshop is the highest (198.060 thousand VND), followed by investment in<br /> protection disease cost and farming experience. However, these figures cannot tell<br /> anything about which input we should prioritize to invest because it depends on the cost<br /> of one unit on that input. Therefore, which input should be selected to increase and<br /> invest will be considered based on the relation between marginal value and price/cost of<br /> each input. The input will be selected to increase when the marginal value is higher than<br /> the price of input and conversely. In addition, the input with the highest ratio of<br /> marginal value to price will be selected first. In market mechanism, this ratio will vary<br /> <br />