UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - THE NETIIEQLANDS PQOJEcr FOQ M.A IN DEVELOPMENT ECONOMICS DETERMINE THE FACTORS THAT HAVE SIGNIFICANT AFFECTS ON CHOOSING CLEAN VEGETABLES OF CONSUMERS IN HO CHI MINH CITY BY BQ GIAO C<., , NGUYEN VAN DU TRUONG fJH K!~m ·: ,_ .~1 MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY JULY 2007 UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - Tim NEMRLANDS PROJECT FOR M.A ON DEVELOPMENT ECONOMICS DETERMINE THE FACTORS THAT HAVE SIGNIFICANT AFFECTS ON CHOOSING CLEAN VEGETABLES OF CONSUMERS IN HO CHI MINH CITY BY NGUYEN VAN DU THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE OF MASTER OF ARTS IN DEVELOPMENT ECONOMICS Supervisor: Dr.NGUYEN NGOC HOA HO CHI MINH CITY JULY 2007 11 CERTIFICATION "I certify that the substance of this dissertation has not already been submitted for any degree and is not currently submitted for any other degree. I certify that to the best of my knowledge and help received in preparing this dissertation and all sources used, have been acknowledged in this dissertation." Signature Nguyen Van Du Date: 30th July 2007 111 ACKNOWLEDGEMENTS I would like to thank more than those respectable name that I will mention following. Without them, I can not get knowledge as today and this thesis may not even have existed. First, I would like to express my special thanks to all organizations and member those found this programme.
All lectures and staff of the project help me having useful lessons, interesting seminars and new information. Next, I wish to express sincere appreciation to my academic supervisor Dr. Nguyen Ngoc Hoa for his helpful guidance and assistance during the writing of this thesis. I also deeply thank to Dr.
Nguyen Trong Hoai, Dr. Le Cong Tru, Dr. Nguyen Hoang Bao, Mr.Vu for their valuable suggestion and ideals about earlier draft of this thesis. Following, I send my thanks to Libran, Ms.Chi, who helps help me in finding necessary document and reference books.
Thank to Board of Managers of Co-Op Mark supermarket channel helping me in survey consumers. Thank to Mr.Dung, agriculture chief, Agricultural and Rural Development Office of Ho Chi Minh City who provides data for this thesis. Many thanks go to my classmate, who shared with me joys and hardness during the time I study in this program. My thanks send to my family, my parents, my wife who help me in supporting time, money and belief.
Share my joyful with my daughter who helps me understood the meaning of happiness and life. lV Topic title: Determine the factors that have significant affects on choosing clean vegetables of consumers in Ho Chi Minh City. ABSTRACTS According to International Labor Organization, yearly in the world, there are around 40000 in 2000000 who got vegetables poisoning were killed and the loss in economic is so big1. Vegetables poisoning is one of the big problems in many countries because it does not only give direct effect but also give the indirect effect to health and economy in future.
Using vegetables that have contaminants at levels well above maximum residue limits, including pesticides, nitrate and heavy metals can get some kind of disease; even it is the reasons of some kinds of cancer in future 2. However, in Ho Chi Minh City (HCMC) and other provinces in Vietnam, the percentage of clean vegetables are used is limited. So, in this thesis, I hope to answer the questions that which factors affecting the choice of clean vegetables of consumers in HCMC. In addition, I hopefully give out some recommends to farmers, producers, and retailers in order to raise clean vegetables demand.
For the benefit of using clean vegetables, my thesis aim to build process that contributes to the successful propaganda of using clean vegetables. My theses may become reference document to run clean vegetable programme of the government or the other organizations. 1 Nguyen Sa- vnexpress. 2 Dr Iran Thi Ngoc Son- rice Mekong delta home v TABLE OF CONTAINS CHAPTER I: INTRODUCTION 1.1 The food poisoning picture in recently years .2 The product, harvesting and distribution ofvegetables .3 Clean vegetables demand .4 The role of government and consciousness of citizens .3 Research questions and hypothesis .5 Scope and limitation of research .6 Structure ofthe study.
8 CHAPTER 2: THEORETICAL FRAMEWORKS 2.1 Supply and demand curve .1 Supply and demand concepts .2 Elas~icity of supply and demand ·········································:··························· 13 2.2 Theory of consumer's choice .2 The effict ofprice .3 The effict ofincome .3 Markets with Asymmetric Information .1 Asymmetric Information and adverse selection .4 The value of information .5 The principal- agent problem .1 The rule of distribution channels to the development of market .2 The structure of distribution channel .6 Suggested research model. 32 CHAPTER 3: AN OVERVIEW OF CLEAN VEGETABLES IN HCM CITY 3.1 The characteristic of HCM city .2 An overview of vegetable production in HCM city .3 The policies of HCM city government about clean vegetable .4 Distribution and management vegetable in circulation. 43 CHAPTER4: ECONOMETRIC ANALYSIS AND RESULTS 4.4 Result of estimations .2 Result of regression .3 Comment on results. 57 CHAPTER V: CONCLUSION AND POLICY RECOMMENDATIONS 5.1 Conclusion basing on result regression .2 Compare the result with hypotheses .1 The consumer policy recommendations .2 The policy recommendations .1 Policy recommendations for producers .2 Policy recommendation for distributors .3 Policy recommendation for government and manage .3 Limited of thesis and suggestion for further studies.
71 Vlll LIST OF TABLES Table 3.1: Statistic sheet about vegetables in HCM since 2002 to 2006 .2: The vegetable area developing plan from 2005 to 2010 .3 Method name and time for testing vegetables quality .1: Summary of chosen variables and expected signs .2: Customer point of view about price of clean vegetables .3: Distinguishing able of customers about clean vegetables .4: Believed of consumers in brand name .5: Clean vegetable distribution process .6: Parking and information requirement ofvegetables .7: Estimated probability changed of variables. 55 lX LIST OF FIGURES AND PICTURE Figure 2.1: Supply and demand .2: New Equilibrium following shifts in Supply and Demand .3: An Indifference Curve .5: Effect of change in price on the budget line .6: Effect of change in income on the budget line .7: Maximizing consumer satisfactions .8: The popular consumers' good distribution channels .1: Farmer sense is low in using chemical.2: Farmer maintain pesticide in wrong way .1 : Logit an probit cumulative distributions. 46 X ABBREVIATIONS HCM: Ho Chi Minh IPM: Integrated Pest Management GAP: Good Agricultural Practice KN: Knowledge INC: Income BN: Brand name DIS: Distribution FAO: Food and Agriculture Organization WHO: World Health Organization USD: United State Dollar (American Currency) VND: VietNam Dong (Vietnamese Currency) Xl CHAPTER I INTRODUCTION The first chapter is used to introduce and to give the main summary of this thesis. First of all, I will give out the existences of safe food, general speaking, and clean vegetables privacy in section 1.
Safe food becomes serious problems when the number of food poisoning is increasing and for vegetables, the insecticide residuum in vegetables is still in high level. Under economist and management views, there are many reasons that lead to this situation such as production processing, distribution processing and the role of management organization. From the fact of safe food, many consumers must change their favourite food because of safe reason. Even some consumers choose foreign food in our agricultural economic.
The reason why I choose this thesis is due to the problem statement and especially the antilog when the producers say superabundance while the consumers say deficiency.2-Research objects include both general objective and specific objective. The main objective of this study is to identify the factors that have significant effects on chosen clean vegetables of consumers and thus affecting demand of the whole market. Basing on the finding result and combining with the main objective, I also supply the relevant information to producers, distrib~tors, managers or some organizations.3-Research question and hypothesis, I will give out the questions and hypothesis that come form my observations and relative theories. Those questions and hypothesis will help me determine how the factors affect on choosing clean vegetables.
Next, I would test to illustrate whether the hypotheses are right or wrong? I also mention methodology in section 1.4 where I discuss model specification, the variables, data and the method that are used to test the hypothesis. The last section, 1.5 is structure of the study where I will describe the structure of this thesis. I provide you with the chapter title and the summary of the information of those chapters. Problem statement In this part, I will give out the food poisoning picture in recently years including food poisoning, the processing of procedure, business and reactive of customers.
I also mention on the clean vegetables demand curve, the roles of government and reactions of consumers.1 The food poisoning picture in recently years Food poisoning becomes serious and frequent to the health of citizens. Many organizations have given out warning and the laws are issued in order to control poisoned food. However, in recently years, the number of poisoned food increases yearly. According to annual statistics of HCM committee, during 2004, there were 18 cases and 1803 people were poisoned.
In 2005, the number of poisoning case increased by 27 cases and 1771 people were poisoned in which four people died (HCM General Statistic Office, 2006). There are many kinds of food poisoning such as foodstuff poisoning, drink poisoning, vegetables poisoning, etc. , but in this thesis I just mention the reasons that concern vegetables. The vegetables poisoning is difficult to control because vegetables is a kind of food that is used every day.
We knew that vegetables are major component of Vietnamese diets. Moreover, with its characteristic, vegetables wou"ld be quickly distributed and used. So we suffer the serious result in case vegetables are sold on market but still contain unhealthful elements. It is difficult for consumers to distinguish the quality ofvegetables, especially the chemical residuum that is used to kill insects or to maintain after harvest.
That is the reason why some articles said that consumers must change or give up the vegetables they like because of safe reason. This is the reason that leads to the Vietnamese meals which are becoming unbalances (Lam Vu, 2006).2 The product, harvesting and distribution ofvegetables The production processing, collection and retail contain many problems. Firstly, production that is small, manual and lack of synchrony leads to low productivity and more pestilent insect. With the limited size of their plots, usually less than 500m2 , 2 vegetables growers use large quantities of fertilizer and pesticide in the expectation of high yields (MOUSTIER, 2000).
When the consciousness of farmers is low and the production processing is not controlled, the vegetables quality is sold on the market would have problems. Using pesticides is an example, the custom of Vietnamese farmers in using chemicals to kill pestilent insect and use in common jobs are reasons that lead to low quality product. According to Trade Deputy Minister Phan The Rue in 2006, chemicals and additives that cost 1.2 million USD are imported and used to produce and to maintain food, vegetables, etc .net 26/7/2006, True Ngon, the Vnexpress reporter, describes that: the number of the farmers who go to pump insecticide is as crowded and cheerful as go to the fair everyday. They open the packs of chemicals, throw the packs to the drainage naturally, then pump chemicals over the vegetables until the fields become as dark as the thin dew and the smell of insecticide makes your eye and your throat become pungent.
He also pointed out that there were some kinds of insecticides that are banned to use as "Thasodant", but the farmers still use widely.