Results and discussion

5.3.1 Descriptive statistics of variables

Descriptive statistics for the variables used in the empirical analysis are presented in table 5.1, with their t-values. The t-value suggests that there are some differences between adopter and non-adopters with respect to farm and household characteristics.

Tea production was a main income source of household, accounting for about 62%.

Average tea yield was about 8.1 tons. The average tea farming experience of farmers was 22.3 years, showing that farmers have much involved in tea production.

Table 5. 1 Basic features of two tea production practices

Characteristics All

farms

VietGAP farms

Con¹⁾. Farms

Different t-value

Tea yield (kg/ha) 8151 8555 7922 634^** 2.2262 Total revenue (K.vnd²⁾/ha) 147826 172683 133762 38922^*** 5.3840 Total cost (K.vnd/ha) 60964 65467 58416 7052^*** 3.1855 Tea income (K.vnd/ha) 86863 107217 75346 31871^*** 4.5560 Tea price (K.vnd/kg) 20.37 20.802 20.126 0.675^** 2.5062 Chemical fertilizer (kg/ha) 2607 2494 2671 -177 -1.1421 Organic fertilizer (kg/ha) 2025 2557 1724 833^*** 3.8233 Pesticide (litre/ha) 175 157 185 -28^* -2.0963 Labor (work day/ha) 1088 1236 1004 232^*** 3.8239 Other cost (K.vnd/ha) 25567 24839 25978 -1138.7 -0.8610

Note: ^***, ^** and ^* denote significance at the 1%, 5% and 10%, respectively; ¹⁾Con. denotes conventional; ²⁾ K.vnd is monetary unit of Vietnam measured in thousand dong; 1USD ~ 21 K.vnd; Source: Author’s surveyed data in 2016 (n of VietGAP &

conventional farms are 116 and 210 respectively).

Most household head completed formal education at secondary and high school, accounting for 85% total households. A very small proportion of tea farmers received a higher level of education. The difference (diff.) between the groups is equal to the mean of VietGAP tea farmers less the mean of conventional tea farmers. In particular, there appears to be differences in tea yield, total revenue, tea income. Conversely, adopters also spent more total production cost and consumed more laboring days than non-adopter.

Thus, farmers following VietGAP principles generally achieved higher tea yield. This finding is consistent with works of Issac et al., (2011), but it is inconsistent with study of Calvin et al., (2004); Subervie and Vagneron (2012); Pongthong et al., (2015). They also got higher tea income than non-adopters. There are significant differences in household size, irrigation access, ratio of tea income, production training and machinery application.

Notably, higher levels of organic fertilizer usage and use of less pesticide by adopter indicates that some level of success for VietGAP tea production program has been achieved.

5.3.2 Econometric estimation

In econometric models, the multicollinearity of variables may result in a biased estimation. Thus, an index of variance inflation factors (VIF) was used to test for multicollinearity. The estimated mean VIF index is 1.91, suggesting that there is no multicollinearity in the model. The estimates of the logit model are presented in table 5.2.

Several variables are statistically significantly associated with adopting VietGAP tea production. Farmers with more farming experience are less likely to adopt conventional tea farms. This may be due to the fact that these household heads are often elder persons, and they are more afraid of risks and also have not enough labors to do farms following this practices.

Table 5. 2 Coefficient estimation for adoption of VietGAP tea production

Variables Coefficient Std. err z p>|z|

Gender -0.014 0.275 -0.05 0.958

Education

Junior level 0.201 0.551 0.37 0.715

Senior level 0.367 0.563 0.65 0.514

Higher level 0.750 0.697 1.08 0.282

Household size 0.329^** 0.165 2.00 0.045

Experience -0.048^** 0.018 -2.65 0.008

Farm size 1.683^** 0.783 2.15 0.031

Irrigation 0.613 0.408 1.50 0.134

Tea income ratio 2.029^** 0.855 2.37 0.018

Credit access 0.100 0.359 0.28 0.781

Extension 0.600^* 0.301 1.99 0.046

Machinery 0.995^** 0.367 2.71 0.007

_Constant -4.234^*** 0.883 -4.80 0.000

Note: ^***, ^** and ^* denote significance at the 1%, 5% and 10%, respectively Source: Author’s surveyed data in 2016 (n=326)

On the other hand, farmers with larger household size are more likely to convert from conventional to VietGAP tea farms. The positive and significant effects of family labor are similar to the finding reported by Abdulai et al. (2008). This can be explained by the relative labor-intensive nature of VietGAP tea production. Moreover, households having main income from tea production tend to adopt these principles for their tea farms. This implies that farmers who depend on tea income more heavily would have more incentive to pursuit their tea farms toward VietGAP standards. This may be because families would invest more labor time and pay more attention to tea farming. As a result, they may face less risk and expect higher income from the adoption. In addition, farmers adopting VietGAP principles were often participated in training course on tea production toward VietGAP standards, or contacted more frequently with extension staffs (This result is in line with the finding of Nolze et al. (2012). With better knowledge of this production practices would be a good basis for farmer’s conversion decision.

Table 5. 3 Test of matching quality

Variables Mean

% bias p-value VietGAP farm CON Farm

Gender 0.612 0.586 5.3 0.689

Education

Junior level 0.414 0.431 -3.5 0.791

Senior level 0.439 0.405 7.1 0.597

Higher level 0.095 0.103 -3.3 0.827

Household size 3.060 2.870 20.6 0.908

Experience 21.36 21.24 1.4 0.914

Farm size 0.387 0.417 -18.0 0.261

Irrigation 0.862 0.887 -6.1 0.553

Tea income ratio 0.668 0.661 3.7 0.778

Credit access 0.172 0.146 7.1 0.592

Extension 0.767 0.750 3.8 0.760

Machinery 0.801 0.810 -1.9 0.869

Source: Author’s surveyed data in 2016 (n of VietGAP & conventional farms are 116 and 210 respectively)

The use of machinery in farm activities also has a positive impact on adopting VietGAP standards. While tea land area has no significant impact on VietGAP adoption, closer tea farming system to home has positively affected the conversion. Formal education of farmers did not promote the conversion because the knowledge acquired by farmers in school is very basic and not relevant to the technical knowledge of crop production. This result is contrary to the finding of Marc et al. (2012). Other variables, such as gender and credit access are not strongly associated with the choice of production method. After matching, taking the test of matching quality indicates that there are not systematical and significant difference of covariates (see table 5.3). Moreover, all values of Pseudo R² reduced after matching. And all LR chi² values also are not significant after matching (table 5.4). Thus, it reassures that balance condition is fairly met. Or matching is successful in the case (Sianesi, 2004).

Table 5. 4 Balance condition Matching

method

Pseudo R² LR chi² (p-value)

Before After Before After

NNM 0.1488 0.019 62.50^***(0.000) 6.13 (0.909)

Radius 0.1488 0.009 62.50^***(0.000) 2.69 (0.997) Kernel 0.1488 0.005 62.50^***(0.000) 1.63 (1.000)

Note: number in parentheses are t-value; ^***, ^** and ^* are denoted to 1%, 5% and 10% significant level

After implementing the propensity score matching technique to correct the selection bias, the estimated result of treatment effect was reported in table 5.5. All matching methods provide positive and highly significant values of ATT. The result is in line with study of Islam et al., (2012). The study also reports the estimation of average treatment effect (ATE) and average treatment effect on the untreated (ATU). Of which the ATE is the average effect, at the population level, of moving an entire population from conventional tea farm to VietGAP tea farms. And ATU measures the impact that the program would have had on those who did not participate in VietGAP tea program.

Table 5. 5 Estimation of treatment effects (ATT)

Matching algorithm Outcomes ATT ATU ATE

NNM

Total revenue 47320^*** (4.48) 33311 38373 Total cost 15082^*** (5.27) 6486 9592 Tea income 32238^*** (3.37) 26825 28781

RM

Total revenue 35340^*** (3.87) 25866 29457 Total cost 10737^*** (3.81) 6227 7937 Tea income 24602^*** (2.85) 19638 21520

KM

Total revenue 26485^*** (3.15) 35362 32159 Total cost 8228^*** (3.15) 7417 7710 Tea income 18257^*** (2.28) 27944 24449

Note: ^*** and ^** denote significance at the 1% and 5%, respectively; number in parentheses are t-value; 1 USD ~ 21 th.vnd (Vietnam monetary unit). ATT: Average treatment effect on the treated; ATU: Average treatment effect on the Untreated;

ATE: Average treatment effects; Source: Author’s estimation in 2016.

The results reveal the economic benefits achieved by farmers adopting VietGAP standards for their tea farms compared to those practicing conventional tea production.

This tea production program provides economic benefits to farmers in the form of higher tea yield, tea income because they enable tea growers to better promote their efforts in the realm of tea quality and safety. The tea product approved by VietGAP also benefits consumers who are reassured in terms of the way tea products are produced.