Gross Domestic Product at Current Prices of Dak Nong Province

CHAPTER 2 RESEARCH METHODOLOGY

2.1 Characteristics of the research area

2.1.1 Natural, economic and social characteristics

Dak Nong is a province re-established in 2004. Geographical location Dak Nong is located in the southwest of the Central Highlands, the gateway between the Central Highlands provinces with Ho Chi Minh City and the Southeast provinces. Dak Nong has 8 district-level administrative units, including Gia Nghia town; 7 districts: Dak RLap, Tuy Duc, Dak Song, Dak GLong, Dak Min, Chu Jut, Krong No (Diagram 2.1); with 71 administrative units

Commune level government, including 5 wards, 5 towns and 61 communes.

By the end of 2011, the population

Source: Dak Nong Department of Science and Technology

Diagram 2.1 Administrative map of Dak Nong province

Dak Nong has 521,677 people; sparse population density: 80.1 people/km2 . Population in urban areas: 76,450 people, rate 14.7%; in rural areas: 445,227 people, rate 85.3% ( Dak Nong Statistical Office, 2012 ).

2.1.1.1 Natural characteristics

With its geographical location and typical terrain altitude of the Central Highlands, Dak Nong belongs to the tropical monsoon climate zone of the highlands, with two distinct dry and rainy seasons in the year, the rainy season coinciding with the warm summer.

Dak Nong has a natural area of 651,561 hectares. Red basalt soil resources

393,154 hectares, accounting for 60.34% of Dak Nong's natural land area. Red soil group

Basalt is widely distributed and concentrated in Dak Mil, Dak Song, Dak RLap districts, very suitable for growing perennial industrial crops such as coffee, rubber, pepper, and cashew ( Tran An Phong, 2004 ).

2.1.1.2 Economic characteristics

Agriculture is the sector that creates the largest GDP value for Dak Nong province. The GDP of this sector is always high, accounting for 56.8% - 61.4% of the province's GDP, ranking first when compared to the GDP of other economic sectors in Dak Nong. In addition, the GDP of the individual and household economic sectors of Dak Nong province always accounts for the highest proportion, from 77.1% to 79.7%. Therefore, it can be said that Dak Nong province's GDP has a great contribution from the agricultural sector and the individual and household economic sectors (Table 2.1).

Table 2.1 Gross domestic product at current prices of Dak Nong province

Agriculture Sector Individual Component

Year Gross output Gross output value			Proportion	Total value of output	Proportion
		product (tr.đ)	(%)	product (tr.đ)	(%)
2008	6,045,491	3,712,229	61.4	4,663,951	77.1
2009	6,747,538	3,831,688	56.8	5,269,367	78.1
2010	8,753,971	4,992,532	57.0	6,925,017	79.1
2011	12,633,482	7,209,734	57.1	10,064,024	79.7

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domestic (tr.đ)

Source: Dak Nong Statistical Office

2.1.1.3 Social characteristics

Due to the relatively high economic growth rate, the living standards of both urban and rural residents in Dak Nong have been increasingly improved. The income of both urban and rural residents has increased, but the average income per capita in rural areas has increased faster than in urban areas: Compared to 2004, the income of rural residents in 2008 increased 2.06 times, and that of urban areas increased 1.97 times ( Dak Nong Statistical Office, 2008 ). The above income situation reflects the trend of narrowing the gap in living standards between urban and rural residents in Dak Nong.

2.1.2 Characteristics of coffee production in Dak Nong province

2.1.2.1 Coffee area

Over the past years, under the impact of market prices, the area of perennial industrial crops in Dak Nong has increased. In the trend of increasing the area of perennial industrial crops, the area of coffee has increased the most (Table 2.2).

Table 2.2 Coffee area of Dak Nong province

	industry (ha)	Area (ha)	Rate (%)
2008	248,389	84,429	34.0
2009	272,625	84,664	31.1
2010	296,860	86,538	29.2
2011	306,749	91,081	29.7

Year Agricultural land area

Coffee production land

Source: Dak Nong Statistical Office

In 2011 compared to 2008, the coffee area increased by 6,652 hectares, an increase of 7.9%. During this period, the coffee area always accounted for 29.7% to 34.0% of the total agricultural land area in Dak Nong.

According to the assessment of experts from the Department of Agriculture and Rural Development (DARD) of Dak Nong province and based on research results on climate, soil and water resources conditions ( Tran An Phong, 2004 ), Dak Nong can be temporarily divided into two ecological zones associated with coffee growing conditions:

(1) Ecological areas suitable for coffee development : Dak Min district, Dak Song district and Dak RLap district;

(2) Ecological areas relatively suitable for coffee development : Gia Nghia town, Krong No district, Dak GLong district, Chu Jut district and Tuy Duc district.

2.1.2.2 Coffee production value

Table 2.3 shows that the value of coffee production in Dak Nong has a high position in the value of agricultural production in Dak Nong province . The proportion of coffee production value compared to Dak Nong's agricultural sector in the period 2008 - 2011 was always high, from 45.1% to 53.7%.

Table 2.3 Coffee production value of Dak Nong province

	career	Production value (million VND)	Rate (%)
2008	9,096,077	4,884,196	53.7
2009	9,377,920	4,681,761	49.9
2010	9,659,763	4,479,326	46.4
2011	14,365,899	6,485,654	45.1

Year

Agricultural production value

Coffee industry

Source: Dak Nong Statistical Office

2.1.2.3 Coffee production households

In Dak Nong, the total number of coffee producing households is 74,789 households. Compared to the total number of production and business households in rural areas (100,064 households), coffee producing households account for 74.7% ( Dak Nong Statistical Office, 2012 ). This content shows that coffee producing households are the main labor force creating agricultural products in Dak Nong province.

Statistics on the scale of coffee cultivation area of households in Dak Nong are as follows: (1) Small-scale coffee production households with less than 3 hectares have 69,489 households; accounting for 92.9%; (2) Large-scale coffee production households with 3 hectares or more have

5,300 households; proportion of 7.1% compared to the total number of coffee producing households ( Dak Nong Statistical Office 2012 ). The basis for this classification is due to the correlation between the scale of the production unit and the method of coffee production, the production efficiency of coffee producing households with an area of less than 3 hectares and from 3 hectares or more, there is a difference in practice ( B. Rodriguez P. and M. Vasquez M. , 2004 ).

2.2 Approach

2.2.1 Household approach

In the credit relationship with the bank, the coffee producing household is the subject that the bank provides additional production capital and necessary resources to ensure effective coffee production. Therefore, based on the household approach, the Participatory Rural Assessment method

PRA ) was used in the study to assess fully and comprehensively with the participation of coffee producing households. Implementing the household approach, we conducted a basic survey directly to coffee producing households, determining the demand for bank credit loans, loan conditions that meet the bank's lending policy and the use of bank loans.

2.2.2 Open credit market approach

In a broad sense, an open market is a market with no restrictions on competition, buyers and sellers are free to participate. Approaching the open credit market is approaching the credit capital market under competitive conditions between commercial banks. The purpose of this approach is to understand the competitive situation in the capital market, mainly the application of lending interest rates to coffee producers by commercial banks in Dak Nong . Accessing and understanding the open credit market is mainly based on information sources reported by the State Bank of Dak Nong province, official information sources of commercial banks in the area and through surveys of coffee producers.

2.2.3 Eco-regional approach

Agro-ecological zones are the territorial division of agricultural production areas based on differences in climate, soil, water resources and other natural conditions. Agro-ecological zoning creates the basis for the optimal use of agricultural resources, fully exploiting the potential of each region. Bank credit capital for coffee production households, if invested in ecological zones with suitable conditions for coffee tree growth, will lead to guaranteed credit quality.

2.2.4 Institutional economic approach

Institutions, in general, are the rules and regulations that create a legal framework for all activities in society. Institutions have a guiding effect on human interactions so that when doing anything, each person will know how to do those things.

Institutional economics, specifically expressed in the credit relationship between banks and coffee producers, is the credit contract, the mortgage contract to secure the loan, and the lending regulations, lending regulations and other related regulations.

2.3 Analytical framework

BANK CREDIT SOLUTIONS FOR COFFEE PRODUCTION HOUSEHOLDS

Research content

Loan demand

Current status of solutions

Loan demand

Whole area Each household

Influencing factors

Capital raising

Self-funding Borrowing

From the bank Staff capacity Lending policy Access and disbursement Planning capacity

Capital raising

Loan policy

Object

Condition

Collateral Loan Amount Interest Rate

Duration

Lending method

From coffee producing households

Household capacity Collateral Join the association

Access and disbursement

Network

Loan form

Providing public services

Agricultural Extension Irrigation

Plant protection

Field security

Debt management, capital recovery

Debt management, loan collection, loan risk handling, risk handling Debt management

Loan Recovery Risk Management

Evaluate results and effectiveness

Results, efficiency

Bank

Coffee production household

From the Policy of Interest Rate Management to Coffee Development

Support rural areas and farmers

PERFECTING CREDIT SOLUTIONS FOR COFFEE PRODUCTION HOUSEHOLDS

Public Service Policy

Interest rate management Coffee development Rural and farmer support

Agricultural Extension Small Irrigation Plant Protection

Field security

Bank

Needs assessment Capital mobilization Qualification improvement Lending policy Access and disbursement Planning qualification

Coffee production household

Enhance Collateral Capacity Join the Association

Figure 2.2 Research framework for credit solutions for coffee producing households

2.4 Information Collection

2.4.1 Collect secondary information

The secondary information collection situation is described in Table 2.4.

Table 2.4 Secondary Information Collection

Information collected Source of collection

1. Theoretical basis

- Bank credit

- Loan demand, capital mobilization,

- Lending policy, access and disbursement, debt management, loan recovery and risk handling

2. Influencing factors

- From the bank

- From coffee producing households

- From providing public services

- From state policy

3. Practical basis

- Credit solutions in the world

- Lending policy of domestic commercial banks

4. Characteristics of Dak Nong area, coffee production and coffee producing households

5. Current status of credit solutions

- Loan demand, capital mobilization

- Lending policy, access and disbursement, debt management, loan recovery and risk handling

- Factors affecting reality

- Results and effectiveness

Source: Thesis author

2.4.2 Primary information collection

2.4.2.1 Select research site

- Documents and textbooks on currency, credit and banking

- Lending regulations of the State Bank and Regulations

lending regulations of NHNo & PTNT

- Documents and textbooks on currency, credit and banking

- Lending regulations and lending rules

- State policy documents

- Official websites of banks and organizations

- Documents on monetary, credit and banking activities

Documents, results of thematic investigations, topics

research paper, statistical yearbook

- Report of Dak Nong Bank for Agriculture and Rural Development

- IPCAS data

- Data from the State Bank, commercial banks and other departments

- State policy documents

Agricultural and rural policies, credit policies, and bank lending policies affect all subjects borrowing bank credit, which are coffee producing households. Based on the above content, the research point of the thesis applies the comprehensive survey method , including all districts and towns according to ecological regions. The purpose of the study divided by ecological regions is to analyze the

Implement credit solutions, especially planning and managing credit plans in line with local practical situations.

Of the 71 communes and wards in the 8 districts and towns mentioned above, we only selected 64 communes and wards, excluding 7 communes with very little coffee area, in remote areas, with an underdeveloped market economy. Therefore, the rate of research points in the area, calculated by district and town units, is 100%, calculated by commune and ward units is 90.1%.

2.4.2.2 Research subjects and sample size

a. Coffee production household

The sampling survey method was used to collect information on coffee producing households. According to the Determining Simple Size For Research Activities list by Robert V. Krejcie and Daryle W. Morgan (1970), if the research population is 1,000,000 units, the sample size must be at least 384. Thus, with the number of 427 coffee producing households surveyed, it meets the research requirements of the thesis. The coffee producing household survey grouping is as follows:

(1) Investigation based on loan demand: Based on the method of the 2011 Rural, Agricultural and Fishery Census (25,000 samples for 75,000 areas), the sample size for the investigation of coffee producing households that have not borrowed capital is 3 households for each commune and ward (Appendix 3). With 64 communes and wards in the study area, the number of samples needed for investigation is 192; however, during the data cleaning process, we had to exclude 7 investigated samples because they did not meet statistical significance. If we exclude 5% of the capacity error, the 185 samples of coffee producing households that have not borrowed capital have met the research requirements of the thesis.

For coffee producing households that have borrowed capital from banks (Appendix 5), the survey sample size was determined equally for each administrative area of 30 households in the district and town, which is 240 survey samples, in reality only 238 samples were met. Together with 4 survey samples to supplement in-depth research on net cash flow and determine real interest rates, the total number of survey samples for coffee producing households that have borrowed capital is 242 samples. Included in the total number of general survey samples on production households

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