OPTIMAL INPUTS IN PANGASIUS FARMING IN THE MEKONG DELTA, VIETNAM

Abstract

Pangasius farming has developed rapidly and significantly contributed to the Vietnamese economy. However, a decline in the profit margin of the growing-out farms due to an increase in production costs has been frequently reported. In order to give better guidance to farmers in using input efficiently and avoiding waste in production costs, this study measures cost efficiency and estimates the optimal inputs of pangasius farming in the Mekong Delta, Vietnam using meta-frontier data envelopment analysis. The results show that pangasius farms were wasting inputs. There is scope to improve the cost efficiency of pangasius farms. Technical inefficiency is found to be an important cause of cost inefficiency. Moreover, the differences in the efficiency and the optimal level of inputs are substantially large between farms and groups. Pangasius farms getting technical advice are statistically more efficient than those not. However, farms signing contracts with buyers are less statistically efficient than those not. Farms impacted by climate change are also less efficient than those not but the differences between groups are not statistically significant. These results can be useful for the farmers, local authorities as well as extension services to improve the cost efficiency of the sector. The optimal level for each input should be targeted in providing technical advice. Information on rights and obligations in trading contracts should be inserted in extension services and training courses for farmers.