Effect of financial and environmental variables on the production efficiency of white leg shrimp farms in Khan Hoa province, Vietnam

Abstract

Since 1997, development of white leg shrimp farming in Vietnam has attracted considerable attention due to its high export potential. Therefore, it is now necessary to assess the annual efficiency performance of white leg shrimp farms in order to improve Vietnam’s aquaculture policy. This paper based on a character sample of 61 white leg shrimp farmers in Khanh Hoa province, representing about 13.2% of such farmers in Khanh Hoa, Vietnam. Using an output-oriented VRS Data Envelopment Analysis, the standard efficiency was measured and then regressed to the farmer characteristics and production environment to identify the determinants of technical efficiency for those farms. The empirical results suggest that socio-economic factors such as education and experience are positively related and experience more significance than education, to the efficiency of white leg shrimp farmers. Some environmental factors, such as more distance from a channel, imply worse results for efficiency in white leg shrimp production. Financial factors, such as the proportion of total costs relative to total income, the proportion of variable costs relative to fixed costs, sales margin and return on asset have a positive effect on efficiency of the farmers. In addition, comparing the technical efficiency results of planned farms and unplanned farms, groups near to the channel and far from the channel, farmers who have a water keeping pond and those who do not have a water keeping pond, it was seen that the unplanned, far from the channel, and non-water keeping pond farms were less efficient than their counterparts. Therefore, this study suggests that there is a strong incentive for planned aquaculture. As it was seen that water sufficiency is necessary for efficient farming, additionally, it is better for a farm to be near the channel. If, however, it is far from the channel, a water keeping pond without culture is recommended. Moreover, having more experience in a cultured system was also suggested as a way to have the desired increase in productivity. Finally, further study about congestion problems, which have not been dealt with in this study, is recommended.