Vertical integration of tea markets in Vietnam
2011
Nguyen Viet Dang, Hanoi, Univ. of Agriculture, (Vietnam). Dept. of Agricultural Economics | Lantican, F.A., Philippines Univ. Los Baños, College, Laguna (Philippines). Dept. of Agricultural Economics
Tea is one of the strategic agricultural export commodities in Vietnam. This crop is highly concentrated in the north and part of the Central Highlands in the southern region of the country. The major players in the tea industry include tea farmers. processors, exporters and retailers. Using time-series data on prices in the different levels/stages of the tea marketing channels, vertical integration of the tea markets was analyzed. For black tea channels, price pressure on the tea growers was a result of uncoordinated pattern among tea processors and inefficient coordination mechanism among tea growers. For green tea channels, the retailers played an important role in price formation and in channeling price information, while the tea processors did not play a central role in price transmission in the tea markets. Furthermore, the export price of tea to Russia was highly integrated with the world tea commodity price index,(TCPI), while those to Taiwan and Poland were not, implying that the export prices in the latter markets were not fully integrated with the world price. In order to enhance the integration of the tea markets, it is recommended to establish a tea auction center, improve the tea trade in the domestic markets, and enhance the market power of the tea growers and processors.
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