Research on the need of government for dragon fruit supply chain in binh thuan province in vietnam

MEIHO UNIVERSITY
Graduate Institute of Business and Management

MASTERS THESIS

Research on the Need of Government for
Dragon Fruit Supply Chain in Binh Thuan
Province in Vietnam

In partial fulfillment of the requirements for the degree of
Masters of Business Administration

Advisor: Dr. Ron Chuen Yeh
Co-advisor: Dr. Vo Phuoc Tan
Graduate Student: Tran Tam Phuc

December, 2010




ACKNOWLEDGEMENTS
At first, I would like to say thank you so much to the Board of Management of Ho Chi
Minh City University of Industry and the Board of Management of Meiho University,
Taiwan for giving me a chance to participate this EMBA program.
Specially thank to Prof. Dr. Ron Chuen Yeh, Chairman of Graduate Institute of
Business and Management of Meiho University (MU Taiwan) for valuable instructions and
advisory given me in completing this research.
Thank you so much to Dr. Nguyen Tai Phuc, Dr. Vo Phuoc Tan and other Professors
and Staff as well as Classmates at Postgraduate Studies Department of Ho Chi Minh City
University of Industry in Vietnam for valuable and meaningful supports given for me during

the time studying at HUI.
Many thanks to Professors, administrative Officers and Classmates of EMBA program
in Taiwan for supports and encouragement given me when I was in Taiwan.
Regards and Best Wishes!

I


Research on the Need of Government for Dragon
Fruit Supply Chain in Binh Thuan Province in
Vietnam
ABSTRACT
Dragon fruit (named in Vietnamese as Thanh Long) has been imported into Vietnam for
a long time. It has really become a type of goods that significantly affected the living of
people in Binh Thuan from 1990 until now. Binh Thuan was considered as a major place in
manufacturing of dragon fruit in Vietnam. Developing dragon has brought many direct
benefits for this agricultural area such as creating extra jobs for local workforce, improving
the effectiveness of land use, diversifying local products, etc.
The study was conducted to identify the necessity of state support for dragon planting
activities by farmers and dragon trading activities by traders in the supply chain of dragon
fruit in Binh Thuan. Two hundred questionnaires were sent to 100 farmers who specialized in
planting dragon and 100 small traders who specialized in dragon trading in Binh Thuan
province. Results of data analysis using SPSS showed that the state support of capital,
technology, quality assurance and product consumption was essential for the farmer; the state
support of capital, packaging and storage, business transactions and marketing was necessary
for traders.
Keywords: Dragon Fruit, Supply Chain, State Support, GAP, Binh Thuan Province, Vietnam

II

Research on the Need of Government for Dragon
Fruit Supply Chain in Binh Thuan Province in
Vietnam
Contents
ACKNOWLEDGEMENTS....................................................................................................... I
ABSTRACT..............................................................................................................................II
Contents .................................................................................................................................. III
Tables....................................................................................................................................... V
Figures..................................................................................................................................... VI
Chapter 1 Introduction .............................................................................................................. 1
1.1 Background and Motivation ................................................................................... 1
1.2 Research Purpose and Objectives ........................................................................... 2
1.3 Research Scope and Limitations............................................................................. 3
1.4 Definition of Terms................................................................................................. 3
Chapter 2 Literature Review..................................................................................................... 5
2.1 Overview of Binh Thuan Province ......................................................................... 5
2.2 Dragon Fruit in Binh Thuan Province .................................................................... 6
2.3 Supply Chain of Dragon Fruit in Binh Thuan Province ......................................... 8
2.3.1 Farmers. ................................................................................................... 9
2.3.2 Traders. .................................................................................................. 10
2.3.3 State management agencies. .................................................................. 13
Chapter 3 Research Methodology........................................................................................... 15
3.1 Research Process................................................................................................... 15
3.2 Survey Method...................................................................................................... 16
3.3 Research Instrument.............................................................................................. 16
3.4 Sampling Method.................................................................................................. 16
3.5 Data Collection ..................................................................................................... 16
3.6 Reliability and Validity......................................................................................... 16
3.7 Data Analysis ........................................................................................................ 16

Chapter 4 Data Analysis and Result ....................................................................................... 18
III


4.1 Descriptive Analysis ............................................................................................. 18
4.2 One-sample t Test ................................................................................................. 19
4.2.1 Farmers. ................................................................................................. 19
4.2.2 Traders. .................................................................................................. 21
Chapter 5 Conclusion and Discussions................................................................................... 24
5.1 Conclusion ............................................................................................................ 24
5.2 Discussion ............................................................................................................. 24
Reference ................................................................................................................................ 27
Attachment 1 – English Questionnaire to Famers .................................................................. 33
Attachment 2 – English Questionnaire to Traders.................................................................. 36
Attachment 3 – Vietnamese Questionnaire to Famers............................................................ 39
Attachment 4 – Vietnamese Questionnaire to Traders ........................................................... 42

IV


Tables
Table 2-1 Cost and Price of Dragon Fruit Exported to Europe .............................................. 12
Table 3-1 Cronbach’s Alpha of the Investigated Questions for Farmers and Traders ........... 16
Table 4-1 Descriptive Statistics for Farmers .......................................................................... 18
Table 4-2 One-Sample t Test to State Capital Support for Farmers ....................................... 19
Table 4-3 One-Sample t Test to State technical support for farmers...................................... 20
Table 4-4 One-Sample t Test to State Quality Support for Farmers....................................... 20
Table 4-5 One-Sample t Test to State Consumption Support for Farmers ............................. 21
Table 4-6 One-Sample t Test to State Capital Support for Traders........................................ 21
Table 4-7 One-Sample t Test to State Packing and Labeling Support for Traders................. 22

Table 4-8 One-Sample t Test to State Business Transaction Support for Traders ................. 22
Table 4-9 One-Sample t Test to State Marketing Support for Traders................................... 23

V


Figures
Figure 2-1 Model of Supply Chain of Dragon Fruit in Binh Thuan Province.......................... 8
Figure 3-1 Research Process................................................................................................... 15

VI


Research on the Need of Government for
Dragon Fruit Supply Chain in Binh Thuan
Province in Vietnam
Chapter 1 Introduction
This chapter includes: (i) Background and Motivation, (ii) Research purpose and
objectives, (iii) Research scope and limitation; and (iv) Definition of terms.

1.1 Background and Motivation
Dragon fruit has rich nutrition with attractive color. Vietnam mainly exported dragon
fruit to Asian market in which Taiwan market consumed up to 50% of the total amount
exported. The amount of dragon fruits exported in 2006 three times greater than the one in
2004. However, the amount exported in recent years has been decreasing, especially to
European markets (from 80% to 40% in 2008). The cause identified was the extreme increase
of growing land areas (i.e., unplanned cultivation) without paying attention to quality
required by consumers as well as competitive prices. In years of 2007 and 2008, although the
percentage of amount exported increased, the export price relatively decreased and was not
stable due to the competition with other countries such as Thailand, Israel, Colombia, etc.,

their dragon fruit was varied and better in quality with competitive advantage of fees (e.g.,
transport fees).
Decision No. 518/QĐ-CTUBND (issued on April 3, 2005 by Chairman of Binh Thuan
province and referred to dragon fruit development from 2006 to 2010) and Document No.
705/UBND (issued on March 1, 2005 by the People's Committee of Binh Thuan province
and referred to implementing plan of 2005) mentioned one of main tasks of the Department
of Agriculture and Rural Development of Binh Thuan was to build a comprehensive proposal
for developing and improving the efficiency of dragon fruit. To Taiwan market, although the
large demand existed, the fruit had not been imported into the market due to the dragon fruit
ban issued on March 1, 2009 for the dragon fruit exported without heat treatment
(Congthuong, Apr 1, 2009).
1


The situation of production and consumption in Binh Thuan dragon fruit could be
summarized as follows: (i) a majority of farmers who produced dragon fruit were small
individuals. Although some cooperatives had been formed, however, they did business
inefficiently (ii) it was not easy to have advanced technology transferred, especially to carry
out production according to the VietGAP; (iii) there was no link between farmers and dragon
exporters; (iv) the purchasing of dragon primarily occurred right at gardens by private traders.
Producers, therefore, were usually dependent on private traders. It could be said that the
production and consumption of dragon fruit, at present, was completely spontaneous and not
being organized. Producers and traders were not aware of the responsibility for the trade
mark of their product yet.
1.2 Research Purpose and Objectives
The current situation of state management, production and consumption of dragon fruit
in Binh Thuan mentioning above theorized that state support to production and consumption
of dragon fruit in Binh Thuan was necessary. Therefore, the study aimed to examine the
necessity of state support for planting and trading dragon fruit in Binh Thuan province.
There were two research objectives:

1. Identify the necessity of state support for the farmers planting dragon fruit;
2. Identify the necessity of state support for traders trading dragon fruit.
There were eight associated research questions developed:
1. Do the farmers need state capital support?
2. Do the farmers need state technical support?
3. Do the farmers need state quality assurance support?
4. Do the farmers need state product consumption support?
5. Do the traders need state capital support?
6. Do the traders need state packing and labeling support?
7. Do the traders need state business transaction support?
8. Do the traders need state marketing support?

2


1.3 Research Scope and Limitations
Participating in the supply chain of dragon fruit were stakeholders such as farmers,
cooperatives, small traders, wholesalers and retailers, exporters, and end-used consumers.
Due to the limitation of time and finance, the study focused on examining the necessity of
state support for planting dragon fruit to farmers and for trading dragon fruit to traders in the
two districts of province where dragon fruit mostly planted. They were Ham Thuan Nam
district and Ham Thuan Bac district.
1.4 Definition of Terms
Dragon fruit
Dragon fruit trees (Hylocerut undatus) belongs to the cactus family (Cactaceae),
originally come from Central and South America. Dragon fruit was planted in the appropriate
domain of dry land. Climatic conditions and land in Binh Thuan was very suitable for
planting dragon fruit. They were quickly harvested (one year after beginning planting). The
average amount harvested was from 20 to 30 tons per hectare (Axis Research, 2006).
Supply chain

A supply chain is a system of organizations, people, technology, activities, information
and resources related to moving a product or service from supplier to customer. The
operation of the supply chain conversion of natural resources, raw materials and components
into finished products delivered to the end customer. Supply chain associated with the value
chain (Wikipedia, 2009).
GAP (Good Agricultural Practices)
As defined by FAO, 2003 GAP was "manufacturing process (of a specific unit) to
ensure environmental, economic and social sustainability of the units, the product must make
good and safe". The rules, standards, regulation of GAP were set out in recent years by the
production units, non-governmental organizations and government to establish a
technological process for producing good food specific production facilities.

3


Binh Thuan province
Binh Thuan was a coastal province in South Central, located in the Southeast Economic
Region, a close relationship and influenced strongly the impact of key economic localities
south. With total natural area of 7830 square kilometers and a population of 1,165,599 people,
population density of 149 people per square kilometer, distributed in the province including 8
districts (including 5 mountain districts and 1 island district), 1 town and 1 city with 126
units of communes, wards and towns (Statistical Yearbook of Binh Thuan, 2006).

4


Chapter 2 Literature Review
Chapter 2 includes: (i) Overview of Binh Thuan Province; (ii) Dragon Fruit in Binh
Thuan province; (iii) Supply Chain of Dragon Fruit in Binh Thuan province.

2.1 Overview of Binh Thuan Province
Binh Thuan was a coastal province in south central region and located in the Southeast
economic region. Therefore, it had a close relationship and was strongly influenced by the
Southern key economic zone. Its natural area totally was 7,830 square kilometer with a
population of 1,165,599 and the population density was 149 people per square kilometer.
The province included eight districts, one town and a city with 126 units of communes,
wards and towns. Binh Thuan province was 200 kilometer far from Ho Chi Minh City, 250
kilometer far from Nha Trang city. The national highway 1A and the Thong Nhat national
railway ran through the province. In addition, the national highway 28 connected Phan Thiet
city of the province with the Southern highlands and the national highway 55 connected
Vung Tau city (the center of oil and gas services and tourism in Vietnam). These geological
characters together with the attraction of major political, economic and cultural cities such as
Ho Chi Minh City, Vung Tau city, Da Lat city and Nha Trang city had created favorable
conditions for Binh Thuan. It would be a good opportunity for the province to diversify its
economic output. And, dragon fruit was one of such output.
Binh Thuan was located in the tropical climate zone with much sunshine and wind,
without winter. There were two seasons. The rainy season was from May to October; sunny
season was from November to April. The average temperature was 26 oC. The average
humidity was 78-85 percent in a year. The average rainfall was 800 - 2000mm per year.
Such climate characters, generally speaking, affected the industry and residential life.
However, it had become a favorable opportunity for the development of a variety of
industrial trees with high economic value such as the dragon fruit. Binh Thuan province was
relatively flat with many alluvial plains that suitable for the development of agricultural
crops and industrial trees such as dragon fruit. The land areas that was capable for
agricultural production was about 680,087 hectare in which the land for planting dragon fruit
5


was about 7,000 hectare (2.48%). A plan of expanding the areas for planting dragon fruit had
been made by the province.

Generally speaking, due to owning a rich category of land, Binh Thuan province could
develop the biodiversity with types of plants such as forest trees, long-term industrial crops,
fruit trees and other short-term industrial crops. Therefore, dragon fruit was considered as a
suitable type of plant for the land. Dragon fruit was also considered as having higher
economic feature than other type of plants because it could be alive in nutritious-poor lands.
What required for dragon fruit were only enough water supply and a good drainage. The
advantages of Binh Thuan province for dragon fruit development were the high number of
sunny days per year, high humidity, and average humidity, much different between day and
night temperatures that were much favorable for industrial trees such as dragon fruit.
2.2 Dragon Fruit in Binh Thuan Province
Dragon fruit was suitable for planting in tropical dry climate regions. The suitable
temperatures were from 50 Celsius to 55 Celsius. It was also appropriate for planting in areas
with strong light. Dragon fruit was imported into Vietnam 100 years ago by French. In the
past, dragon fruit was planted and supplied for the King and aristocratic families only (Lo,
2001). From 1990, dragon fruit had a quick development and become one type of industrial
trees that had high economic value. Binh Thuan was the province where the area for planting
dragon fruit was largest in Vietnam. In the province, the areas for planting dragon fruit
mainly located in the two districts Ham Thuan Nam and Ham Thuan Bac that nearly
accounted for 90 percent of the total output of the province.
From 1996, the areas for planting dragon fruit in Binh Thuan continuously expanded.
The tree has gradually become the key industrial tree in some regions of the province that
brought higher revenue for local production and business. Profit from production and
business of dragon fruit helped the province to reduce poverty, enriched farmers and
increased revenue for local government budget. By recognizing the comparative advantage of
planting and trading dragon fruit, the local government of Binh Thuan province, in recently,
paid more attention to the research and transfer of science and technology in order to
promote the production and consumption dragon.

6

A majority of dragon fruit produced for export. Domestic consumption only accounted
for from 10 percent to 20 percent. Market for exporting dragon fruit rapidly expanded in
recent years. China and Hong Kong were the two main oversea markets of export dragon
fruit and was the gate to the international market. With the advantages of having the largest
export market and good quality, dragon fruit had become the key fruit in exporting
Vietnamese fruit and had more important position than other fruits. In Vietnam, the area of
planting dragon fruit accounted for only 1% of total areas of planting fruits of the country but
it accounted for up to 9 percent of the total exporting fruit. It was also considered as one of
40 key agricultural products exported by Vietnam at present and in the future by the Ministry
of Industry and Trade.
Most of dragon fruit were exported at borders. Its business needs to be paid much
attention because the product always needs to be fresh. The fluctuation of market price
caused difficulty for gardeners and exporters. A great amount of dragon fruit was exported
but the revenue gathered, in contrast, was small. Becoming a member of World Trade
Organization was an opportunity but also a challenge for Vietnamese fruit, viewed from the
aspect of product quality and food hygiene and safety, etc., According to the Department of
Trade and Tourism of Binh Thuan province, dragon fruit was exported to 12 countries and
territories with an average increase of 30 percent per year in recently. In 2006, Binh Thuan
exported about 25,500 tons of dragon fruit with a total value of 13.5 million USD. The
countries imported a large number of dragon fruit were Hong Kong, Taiwan, Thailand and
Singapore. To European market, the Netherlands was the country that imported the largest
number of dragon fruit.
According to the Ministry of Industry and Trade and the Department of Industry and
Trade of Binh Thuan, the exported amount of dragon fruit in the first 6 months of 2007 was
29,600 tons which were worth US$15.5 million. There were 20 different oversea markets.
However, the exported amount of dragon fruit was declining due to improper harvest and
storage techniques as well as poor standards of hygiene. As a result, many shipments of
dragon fruits were stopped at seaports or border gates because of poor quality of the product
(Ministry of Industry and Trade). In the past, many shipments of dragon fruits towards Japan

were thrown away due to the issue concerning fruit flies. In February 2007, the export
turnover of dragon fruit to the European market was worth US$ 400,000. The export turnover

7


to Japan was worth less than US$ 4,000. One of the corresponding causes was that dragon
fruit of Vietnam was considered as having low reputation brands and not full enough meeting
of EUREPGAP standards (standards of Good Agricultural Practices of Europe) or
ASIANGAP (standards of Good Agricultural Practices of Asia) yet. In addition, there were a
large amount of dragon was being traded on market under commercial brand names of
importers.
The cultivated area for planting dragon fruit in Vietnam was expected to expand up to
17,000 hectares in 2010. In order to enhance the competitiveness in the market, Vietnam
should develop effective business strategies concerning farming techniques, safety, quality
and, especially, the technical treatment involving storage. The issue of using overweight-dose
of agrochemicals was still a big problem that considerably affected the export quantity of
dragon fruit. Many European countries, and recently, even the China, have warned the
possibility of issuing a ban for Vietnamese exported dragon fruit if the problem would not be
resolved completely (Ministry of Industry and Trade, 2007).
2.3 Supply Chain of Dragon Fruit in Binh Thuan Province

Figure 2-1 Model of Supply Chain of Dragon Fruit in Binh Thuan Province
(Source: Axis Research)

8


2.3.1 Farmers.
The average area of dragon fruit production for each farmer household in Ham Thuan

Bac was about 0.5 hectares; in Ham Thuan Nam was 0.75 hectares per. Doing business in
producing as individual was the major form of the production. A fairly large number of
farmer households owned area from 10 to 20 hectares; while a smaller number of farmer
households owned the area from 50 to 100 hectares. The majority of farmers focused on
production only, not the sales that relatively relied on traders who purchased right in the
garden. Some farmer households owned big farms that may have both production and
purchasing for exports (Southern Fruit Research Institute). The province had 8,262 hectares
of dragon fruit, in which the harvested area was 5,281 hectares, with 10,000 farmer
households working on 0.5 hectares in average. The total output in 2006 was 120,000 tons,
with an average of 22.7 tons per hectare (Farmers’ Union of Binh Thuan province).
The average area of production was 0.67 hectare; the average output was 39 tons per
hectare, that worth 121,036 million VND per hectare; the average profit was 71,201 million
VND per hectare. To be profitable, the farmers had to charge 49,958 million VND for every
hectare, consequently, the average profit rate was 142.52%. Thus, it seems very clearly that
in Binh Thuan, in future, there is certainly not any plant that could replace dragon fruit trees
for about 30 years (Research Center of Binh Thuan dragon fruit). There was a growing area
of dragon fruit in Binh Thuan made mostly by individual farmers. Many of them had good
technical understanding of dragon fruit yielded high economically efficient output with more
creativity. However, no farmer household dealt business to commercial companies directly;
the primary trades were done via traders or mediators. This made disadvantage for farmers.
Consequently, the farmers often got fewer beneficiaries than actual value of their product
produced.
The farmers growing dragon fruit usually encountered some difficulties in the process of
cultivation and consumption such as: Great costs for head support, especially for small
farmers; Investment in electrical transformers for power system against grid for season; Price
remained high without special support. Almost farming techniques were mostly applied
based on their own experience of producing; There was a fair lack of cultivating knowledge;
Bank of Agriculture & Rural Development did not have a policy or fund supporting
investment and development, especially a favorable mechanism (loans, lending norms and

9


procedures) to create conditions for farmers to access loans easier; The expansion of
electricity grid networks for cultivation both in remote areas with limited support of
electricity price; New knowledge concerning cultivation techniques and seed were not widely
delivered to people via organizing seminars, leaflets, films, etc., by the local officers of the
province; No model and correct safety regulations existed; No sense of high compliance with
regulations to ensure stable quality and uniform; Lack of knowledge shared among farmers;
Product quality was not unified in the same garden or among the farmers; Product
diversification had mainly taken by the plant in the province, at the same source; Most
products did not meet the standard of exporting and most did not meet the safety regulations
for food safety for producers and the environment.
Farmers had to rely on traders heavily because they did not have sufficient information
of as well as lacked trading experience. Some farmers actively want to look for market for
their own products; however, they lacked many of the facilities, especially post-harvest
technology. Because of trading without having based on formal contracts, the farmers often
have to bear some unfair dealing in business. The farmers also had little opportunities to
approach official projects concerning standard good practice in agriculture such as the GAP
project which help farmers improve their production methods to meet the requirements GAP
regulation.
2.3.2 Traders.
Consumption of dragon fruit operated under the control of small and medium sales
vendors with business transactions taken right in the gardens. This force significantly
contributes to product movement in supply chain, while they do not pay much attention on
preliminarily classification as well as applying post-harvest technology. Some small sellers
buy the whole garden area and then use drugs to make fruit have quick growth and to
increase output. This is actually harmful to consumers, farmers, garden dragon and the
environment, although their current businesses still play an important role in the distribution
of dragon fruit in supply chain. This kind of business would affect quality brand name and

reputation of Binh Thuan dragon fruit in future. According to statistics of the province, there
are six big enterprises specializing in business of exporting dragon fruit besides other 40
small ones run business in the same field. The exported output in 2006 was 22,248 tons

10


which worth of US$ 13.6 million. The key markets settled were Hong Kong, Taiwan,
Singapore, Thailand, Malaysia, China, and recently, Germany, the Netherlands.
Traders play an important position in the value chain of Binh Thuan dragon fruit. The
traders themselves also met many difficulties such as: (1) Capital: they need capital for
equipment, however, it was not easy and comfortable to approach loans; (2) Transactions:
Not all relationship between farmers and traders were stable for a long duration of time. Only
a few traders retained good trade relations with farmers from year to year. There was no
organization or local wholesalers responsible for exchanging market information or
facilitating business dealings between the traders and farmers; (3) Post-harvest technology: A
few traders had effective facilities as well as professional knowledge of post-harvest
technology; (4) Label: there was lack of awareness of the importance of labels and trade
brands; (5) Export Promotion and Brand building: the current export promotion activities was
not matched with the actual outcome of dragon fruit produced; (6) Export price: the export
price continuously decreased although such a price of Vietnamese dragon fruit was still
higher than other foreign competitors due to the high cost of transfer; (7) the Agricultural
Bank neither offered priority policies nor facilitate traders and businesses to approach loans
more conveniently; (8) The was no promotion of business transactions in the market for both
farmers and traders; (9) Likely farmers, the traders have not obtained support and training on
professional techniques as well as good agricultural practice guidance concerned process
after harvest; (10) the export promotion program for dragon fruit was not officially
recognized and implemented as the key export promotion program of the nation.

11

Table 2-1 Cost and Price of Dragon Fruit Exported to Europe
Components in the supply chain

Price
Cost
Percentage of total
(VND/kg) (VND/kg) product value
4.500
3.644
3,75%
1.563
1.30
375
0.31
1.025
0.85

Farmers
Fertilizer,
Labor
Water, water pumping systems; electricity
network, electricity; storage etc.
Bank interest
Management fee
Risk fee
Added value
856
Trader

6850
Buying price
Cultivation
Internal transportation
Washing, sorting, processing, labels,
packaging, loading and unloading charges
Wash, plastic bags, nylon cord
Container
Cooling (money power, the preservation)
Management fee
Bank interest, risk fee, other cost
Added value
500
Export business
9536
Buying price from traders
Transportation
Packaging
Loading and unloading, packaging,
sterilization, declarer
Management fee
Bank interest
Added value
1500
International transportation
4611
Added value
1611
Import Business
120000

CIF and transportation fee
Other cost
Added value oversea
25853
(Source : Southern Institute of tree fruit, 2006).

12

72
75
534
0.715
6350
4500
80
100
200
250
850
170
50
150
0.42%
8036
6850
200
302
154
250
280

1.25%
3000
1.34%
94147
14147
80000
21.54%

0.06
0.06
0.45
5.71%
3.75
0.07
0.08
0.17
0.21
0.71
0.14
0.04
0.13
7.95%
5.71
0.17
0.25
0.13
0.21
0.23
3.84%
78.46%

11.79
66.67


Table 2-1 shows that Vietnamese farmers obtain only 3.75% value of the products, the
Vietnamese traders get 5.71%, the export enterprises 7.95%, and the distributors in Europe
receive 78.46%. This is due to the small-scale method of agricultural production as well as
the low capability of promoting commercial transactions and negotiating for contracts (Alain,
2007).
2.3.3 State management agencies.
State agencies concerning supply chain of dragon fruit were: (1) the Provincial People’s
Committee; (2) the Department of Agriculture & Rural Development; (3) the Office of Plants
Protection; (4) the Binh Thuan Department of Science and Industry; (5) the Binh Thuan
Department of Commerce & Tourism; and (6) the Binh Thuan Association of Dragon fruit.
Provincial People’s Committee has issued guidance for the Agriculture & Rural
Development Dept, Science & Industry Dept., Tourism & Commerce Dept. to execute their
state managerial functions in establishing plans to participate fairs and expo’s, to advertise
products and build trademark for dragon fruits of Binh Thuan. In addition, the People’s
Committee of the province has issued decision to adjust earth surface plan in order to
develop dragon fruit trees of Binh Thuan for the period of 2005-2010, and to support
enterprises to enlarge their working facilities.
Department of Agriculture & Rural Development is under the supervision of the
Provincial People’s Committee. This Department is the office that establishes plans for the
cultivation of dragon fruits in the province, manages agricultural services from selecting
species, farming techniques, applicable steps in farming process… and organizes training
courses through the support of Farming Encouragement Centers, directs the Farming
Encouragement Centers to establish demonstration models of technological advances,
farming systems, and orders the Plants Protection Office to observe and train farmers the
rules for protecting plants and human consequently. In addition, this Department should have
technical specialists to care for and “cure diseases” for plants as requested by farmers.

Office of Plants Protection is in charge of the duty of foreseeing possible diseases that
may harm dragon fruits; training farmers know how to protect harvest from insects, or
assisting them how to use insecticides for best result but safe for human health.

13


Binh Thuan Department of Science and Industry To study new farming technology
and transfer to the Agriculture Department.
Binh Thuan Department of Commerce & Tourism is a professional office of Binh
Thuan People’s Committee that does the management functions of all commercial and tourist
activities including import and export, trading in local markets. This department coordinates
with the Center of Support Services of Binh Thuan to organize training courses for the
members of Binh Thuan Dragon fruit Association and those farmers planting dragon fruits to
know how to do the cultivation and trading of dragon fruit for export, in an effort to update
knowledge of applicable technologies for better economic result in the cultivation and
exportation of dragon fruits.
Binh Thuan Association of Dragon fruit has been established to support the
development of dragon fruit in the region. But it did not bring result as expected. Just only
several members participate in the association activity. Until now it has not fully developed
its functions. Farmers have not known the benefits and income they can have from this
organization and the participation is not effective.
Comments
Binh Thuan dragon fruit producers are mainly individuals without forms of cooperative
groups set up. Some cooperatives have just established, however, the initial operation were
less effective. The real experience showed that it was difficult to transfer technical progress
and is not easy to make the production process follow VIETGAP. There is no link between
farmers and dragon-exported enterprises. As a result, there is existence of unfair competition,
lack of responsibility to consumers. The origin of the product will never be transparent. With
production and sales formed as mentioned above, it would be hard for technical advanced

transferring in production; the efficiency of business operation is low; and the producers bear
more risk. Purchasing procedure mostly occurs right in the gardens or fields. Therefore,
farmer’s benefit totally depends on kindness of traders. Producers generally much relies on
expected floating market prices that are often not stable and more risk. It can be said that is a
production base completely spontaneous and lack of organizational management. Producers
and traders are not aware of and responsibility for brand name and trademarks of dragon fruit.

14


Chapter 3 Research Methodology
Chapter 3 includes: (1) Research Process; (2) Survey Method; (3) Research Instrument;
(4) Sampling Method; (5) Data Collection; (6) Reliability and Validity; and (7) Data
Analysis.

3.1 Research Process
1. Identify problem
2. Identify motivation
3. Identify research objectives
4. Identify research model
Expert
Consult

5. Develop questions for interview and survey
6. Revise questions
6. Conduct survey

6. Collect data
8. Analyze data
12. Make conclusion

Figure 3-1 Research Process

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3.2 Survey Method
The survey with self-administrative questionnaires was conducted.
3.3 Research Instrument
There were two questionnaires developed to gather data concerning opinion of necessity
of state supports for the two research subjects: a group of farmers who professionally planted
dragon fruit and traders who professionally traded dragon fruit.
3.4 Sampling Method
The study applied the convenience sampling method.
3.5 Data Collection
After 2 weeks, all the 200 questionnaires were collected.
3.6 Reliability and Validity
The reliability of questionnaires was examined by Cronbach’s Anpha with the 5-level
Liket scale. Table 3-1 presents the result of examining Cronbach’s Anpha of questionnaire
for farmers and questionnaires for traders.
Table 3-1 Cronbach’s Alpha of the Investigated Questions for Farmers and Traders
Farmers - Cronbach's Alpha
Capital
.643
Technique
.663
Quality
.662
Consumption
.619

Traders - Cronbach's Alpha
Capital
.708
Packing and Labeling
.623
Business Transaction
.615
Marketing
.603

3.7 Data Analysis
Based on the eight research questions, there were eight hypotheses formed:
Hypothesis 1: State capital support is necessary for farmers.
Hypothesis 2: State technical support is necessary for farmers.
Hypothesis 3: State quality assurance support is necessary for farmers.

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