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UNIVERSITI PUTRA MALAYSIA AN ECONOMIC ANALYSIS OF THE COCKLE CULTURE INDUSTRY IN THAILAND KULAPA KWANMING FEP 11 ECONOMIC lialysis or TBE COCKLE CULTURE INDUSTRY IN THAILAND by Kulapa Kwanaing Thesis Submitted in Partial Fulfilment of the Requirements for the Degree of Kaster of Science in the Faculty of Economics and Management Universiti Pertanian Malaysia July 1991 ACDOVLEDGDDTS I wish to express my heartfelt gratitude to Dr. Roslan A. Ghaf far, my major supervisor, for his time, patience, comments, and guidance throughout the completion of the study. My sincere appreciation is also extended to Dr. Nik Mus tapha Raj a Abdullah, my co-supervisor, and Dr. Zainal Abidin Mohamed, member of my advisory committee, for their constant support and time spent for the advice and valuable criticism. My special thanks also go to IDRC (International Development Research Center) in providing the financial support; Mr. Tongchai Ngasong, Mr. Pongpat Boonchuwong and Mrs. Amporn Lawapong of the Department of Fisheries, Thailand, in providing advises and assistances which without them my study would not have been possible. I am grateful to all teachers who participated in this study. I am also grateful to my family and friends for their helpful suggestions and encouragement. ii 'l'oli OF COH'l'ERTS ACKNOWLEDGEMENTS LIST OF TABLES LIST OF FIGURES Pages ii vii x ABSTRACT , xi ABSTRAK xiii CHAPTER I INTRODUCTION 1 General Background 1 The Cockle Culture Industry in Thailand: An Overview 6 Cockle Culture Background 6 Cultivation of Cockle 7 Production 13 Marketing and Distribution 15 Export and Import 20 Barriers of Entry into the Cockle Culture Industry Problem Statement 22 Objectives of the study 26 Hypotheses 27 Significance of the Study 28 iii II REVIEW OF LITERATURE 29 Introduction The Economic of Cockle Culture 29 Cost and Returns of Cockle Culture 29 Marketing of Cockle 34 Cost Function and The Analysis of Economic Efficiency III METHODOLOGY Introduction 54 Cost and Return Analysis 54 Theoretical Concept 54 Cost and Return of Cockle Culture 60 Theory of Cost Cost of Production The Statistical Cost Function Approach The Empirical Hodel Sampling and Data Collection IV SOCIO-ECONOMIC PROFILE OF COCKLE FARMERS AND THEIR CULTURAL PRACTICES Introduction Characteristics of Cockle Farmers Farm Characteristics Family Labour Sources of Fund iv Cockle Cultural Practices 83 Market Outlets 8'1 v COSTS AND RETURNS ANALYSIS Introduction Initial Investment and Capital Use in Cockle Culture Operation. 92 Initial Investment 92 Capital Use in Cockle Culture Operation 95 Cost Structure 97 Profitability 106 Gross Revenue 106 Cash Flow 109 Net Income 110 Operation Profit 111 Net Profit 112 Factor Return 114 Role of Economic Indicator 115 Yield or Value of Output per Unit of Major Input Amount and Cost of Input per Unit of Output 116 VI STATISTICAL COST ANALYSIS 118 Introduction Estimation Results of the Cost Function 118 v VII SUMMARY CONCLUSIONS AND POLICY IMPLICATION 124 Summary and Conclusion Policy Implication BIBLIOGRAPHY APPENDICES 133 A B Sample Selection Detection of Heteroscedasticity VITA vi LIST or TABLES Table Page 1 Quantity and Value of Fisheries Production of Thailand by Species Group in Number of Farm and Area of Mollusc Culture by Species, Mollusc Production in Thailand, Balance of Imports and Exports of Molluscs, Number of Farm and Area of Blood Cockle Culture by Province, Cockle Production in Thailand, Number of Farms, Area and Production by Province, Marketing Margins for Cockle per kilogramme of Each Level of Trader, Average Marketing Margins for Cockles, Quantity and Value of Imports and Exports of Cockle in Food Chemical Composition Cost and Return per Rai of Mollusc Culture, Concentration Ratio of the Cockle Traders by Types of Traders, Average Quantity and Value of Cockle Bought per Trader, Classified by Type of Trader and Region, The Actual Sample Size 75 vii 16 Age, Experience, Training, and Education of Sample Farmers by Farm Size, Occupation and Type of Enterprise of Sample Farm Size, Family Size and Time Devoted of Sample Farmers by Farm Size, Debt of Sample Farmers by Farm Size, Cultural Practices Employed Sample Farmers by Farm Size Selling of Product of Sample Farmers by Farm Size, Market Outlets by Area, Initial Cost of Cockle Culture by Farm Size Initial Cost of Cockle Culture by Location Curent Capital Cost and Debt per Farm of Cockle Culture Variable, Fixed and Total Cost per Rai per Year of Cockle Culture by Farm Size, Variable, Fixed and Total Cost per Farm of Cockle Culture by Farm Size Variable, Fixed and Total Cost per Rai per Year of Cockle Culture by Area, Yield, Revenue, Cost and Returns per Year of Cockle Culture by Farm Size, Yield, Revenue, Cost and Returns per Year of of Cockle Culture by Location, Yield, Revenue, Cost and Returns per Farm of Cockle Culture by Farm Size, Yield, Revenue, Cost and Returns per Farm of Cockle Culture by Location, LAC Function Results 120 viii 34 Number of Cockle Farm by Stratum 35 Sample Size The data on culture duration (Xl' month), experience (X2' year) and seed requirement (X3' kg) after omitting the central observation to illustrate the Goldfeld-Quandt test ix LIST OF FIGURES Figure Page 1 Map Showing 23 Costal Provinces of Thailand 10 2 Farmer Propelling Mud Ski for Harvesting or Distributing Cockle Wire Sieve for Sorting Young Cockles 4 Clam Dredge for Harvesting Cockles 5 Marketing Channel of Cockle, Technical Efficiency and Price Efficiency 7 Per Unit Cost Curves of a Firm The Long-run Average Cost Curve, Three Alternative Plant Sizes The Long-run Average Cost Curve, Infinite Alternative Plant Sizes Economies and Diseconomies of Size 67 Long-run Average Cost Curve 121 Long-run Average Cost Curve by Location 123 x Abstract of the thesis presented to the Senate of Universiti Pertanian Malaysia in partial fulfilment of the requirements for the degree of Master of Science. All ICO.OIlIC llillysis OF TBE COCKLE CULTURE IlIDUSTltY II TBAILllID by Kulapa Kwanming July 1991 Supervisor Faculty Roslan A. Ghaffar, Ph.D. Economics and Management This study provides a com parison of the economic performance and the socio-economic profile of cockle farmers of different farm sizes and locations in Thailand. The areas selected for the study are the northern and southern part of the Gulf of Thailand and the Andaman Sea region. Three different farm sizes, small (1-10 rai), medium (11-50 rai) and large (over 50 rai) farms are studied. Analysis of the socio-economic profile of the cockle farmers reveals that most farmers are 30 to 50 years old, and operate their farms as a family enterprise with their own fund. Majority of them have had only primary education, but they have very long experiences in cockle culture. xi Cost and return analysis indicate that cockle culture is a prof itable vocation with the small farms being the most profitable. In terms of location, farms in the northern part of the Gulf of Thailand are the most profitable. The rate of return to investment of the larger farm is higher than the smaller ones. Estimation ot the cost function reveals that cost economies is at farm production level of 625 mt. But the average cockle output of the sample farm is 312 mt, or only 50 percent of the optimum output. Based on the findings, it is found that to increase cockle production from the small and medium size farms is possible since all of them are at present not yet operated at the minimum efficient scale of production. The production per unit area could be increased by reducing the mortality rate and utilizing more seed in cultivation. To ensure the constant supply of low cost of cockle seed to farmers, the Government would need to enforce all necessary administrative measures to conserve the natural seed bed and to negotiate with neighbouring countries such as Malaysia for additional supply of seeds to farmers. xii Abstrak tesis yang dikemukakan kepada Senat Universiti Pertanian Malaysia sabagai memenuhi sebahagian daripada keperluan bagi penganugerahan ijazah Kaster Sains. U1L1S1S IIDUSTR1 PDTEUUlJf DIWlG D1 TBA1LUD Oleh Kulapa Kwanming Julai 1991 Penyelia Fakulti Roslan A. Ghaffar, Ph.D. Ekonomi dan Pengurusan Kajian ini adalah perbandingan prestasi dan latar belakang sosioekonomi penternak kerang bagi saiz ladang dan kawasan yang berbeza di Thailand. Kawas n yang dipilih untuk kajian adalah kawasan Teluk Utara, Teluk Selatan dan kawasan laut Andaman. Tiga saiz ladang yang dikaji adalah keeil, 1-10 rai, sederhana, rai, dan besar, lebih dari 50 rai. Analisis sosioekonomi penternak menunjukkan kebanyakan mereka berumur antara 30 hingga 50 tahun dan mengusahakan ternakan secara keluarga dengan sumber kewangan sendiri. Walaupun kebanyakan mereka mempunyai pelajaran rendah mereka juga mempunyai pengalaman yang banyak di dalam penternakan kerang. xiii Analisis kos dan pulangan menunjukkan penternakan kerang adalah menguntungkan dengan Iadang dari saiz kecil mendapat keuntungan terbesar. Dari segi Iokasi, Iadang di Teluk Utara Thailand mendapat keuntungan tertinggi. Kadar pulangan pelaburan adalah sangat tinggi bagi Iadang saiz besar. Anggaran fungsi kos menunjukkan ekonomi bidangan berlaku sehingga saiz output mencapai 625 mt. Di dalam operasi sebenar purata output kerang dari ladang kajian adalah 312 mt. Ini bermakna hanya 50 peratus dari output optima dihasilkan. Berdasarkan temuan kajian ini penternak kecil dan sederhana masih boleh menambah keluaran mereka kerana semua ladang-ladang kedl dan sederhana tidak mencapai pengeluaran bidangan yang minimum. Kaj ian ini juga menyatakan pengeluaran kerang setiap unit kawa a n boleh ditingkatkan melalui pengurangan kadar mort ali ti dan menambah benih kerang. Untuk mempastikan pembekalan benih kerang murah yang berterusan pihak k rajaan perlulah menguatkuasakan semua tindakan pentadbiran untuk mengekalkan tapak benih asal dan berbincang dengan negara jiran seperti Malaysia untuk mendapatkan benih tambahan. xiv CHAPTER I IRTRODUCTIOH General Background Mollusc (shellfish) 1 is an aquatic animal which is of economic importance to the fisheries sector of Thailand. In 1986, mollusc production accounted for 6.5% of the total annual fishery production, contributed about 2% of the total value of fishery production (Table 1). Although its quantity and value are relatively low in relation to the total fisheries output, it remains a suitable economic activity for the small-scale fishermen. Mollusc production requires low initial capital investment and the culture method is simple and traditional which farmers could take it as a part-time job to earn an additional family income. Mollusc has shown a good export potentials, hence, it could be another major foreign exchange earner (Rientrirat, 1984). There are three major species of mollusc cultured in Thailand namely, cockle (Anadara granosa); oyster (Crassostres commercialis and C.lugubris); and green mussel (Perna viridis). 1 The major mollusc species in Southeast Asia namelyi carpet shell or short necked clam or baby clam (Paphia undulata)i cockle (Anadara granosa)i green mussel (Perna viridis) ; horse mussel (Hodiolus senhausenii); oyster (Crassostrea commercialis). 1 2 Table 1 Quantity and Value of Fisheries Production of Thailand by Species group in 1986 ============================================================== Item Quantity (tons) Value (1,000 Baht) a Total 2,539,961 22,888,000 Sub-total: Karine Fisheries 2,352,204 18, 883, 111 Fishes 1,198,930 8,947,152 Shrimps 141,174 5,188, 804 Crabs 35, ,455 Squid & Cuttle Fish 134, 915 3,344,469 Hollus s 164, , 008 Others E 77, ,229 Sub-total: Freshwater Fisheries 181,763 4,004,900 Fishes 175, 266 N.A. c Shrimp 8,499 N.A. Others 3,998 N.A. ============================================================== a One US$ = 26 Baht in , and 25 Baht in 1989 b Include jelly fishes, turtle eggs, seaweeds and sea cucumber c N.A. = Not available d Include frog and turtles Source: Department of Fisheries, Bangkok, Thailand. In 1987, the cockle culture dominated in term of cultivated area while oyster culture on number of farms (Table 2). Table 3 shows culture production accounted for approxim tely 16% of the total mollusc production. The contribution of the cultivated species to the total annual production differ from species to species; i. e. cockles contribute 82%; oyster contribute 59%; green mussels contribute 51% and horse mussels contribute only 5%. Table 2 lumber of Far. and Area of Kollusc Culture by Species, ======== == = =-- == ==- -=====================================-=-- =========== = == = ============================================= Species Faras Area Faras Area Farms Area Farms Area Farms Area Farms Area Farms Area Farms Area (rai) (rai) (rai) (rai) (rai) (rai) (rai) (rai) Total 2,223 19,180 2,207 15,555 2,455 16,512 2,562 19,290 2,530 18,284 2,494 21,454 2,372 20,069 2,354 20,707 Blood cockle 52 7, , , , , , , ,409 Green mussel 238 5, ,768 2, , , , , ,067 Oysters 1,666 5,299 1,704 5,894 1,864 6,331 1,895 6,653 1,841 6,173 1,875 6,053 1,817 6,218 1,859 6,424 Horse mussel Pearl shell ============================================================================================================================= One rai = 0.16 hectare Source: Depart.eDt of Fisheries, Bangkok, Thailand w Table 3 }follus'c unit = mt ================================================================================================================== Species CAPTURE Blood cockles 5,517 14,492 4,916 9,480 4,048 7,552 3,665 2,170 Green mussels 31,386 a 36,746 a 49,419 24,414 36,009 35,113 20,647 22,834 Oysters ,127 1, ,725 8S9 1,049 Horse mussels 5,636 17,224 32,381 12,582 12,673 7,584 8,134 14,877 Short - necked clams 35,131 62,220 38,859 31,813 50,507 83, , ,230 Others 2,848 4,970 5,579 5,581 4,290 5,665 10,911 9,415 Total 81, , ,281 85, , , , ,575 CULTURE Blood cockles 12,149 8,862 3,720 7,095 12,512 12,375 6,928 9,609 Green mussels H.A. H.A. 16,090 18,716 26,217 25,906 11,095 23,949 Oysters 5,315 7,590 3,544 3,461 4,851 3, ,483 Horse mussels 3,429 1, , Totel 20,893 b 17,790 b 23,892 29,841 45,188 42,158 18,875 35,859 GRAND TOTAL 102, , , , , , , ,434 ================================================================================================================== a include capture and culture b green mussels can not availlable N.A. = not available Source: Department of Fisheries, Bangkok, Thailand 5 The mollusc fishery in Thailand is fairly well established both in the capture and culture sectors. It is, however, the present production connot meet the domestic demand for consumption. So, it has to import. The annual production of mollusc had shown a steady increase with an average annual growth of over 14% from 1980 to 1987 (Table 3). Table 4 shows the balance of import and export of mollusc that the balances have been net gained since 1983, valued 74 million baht 1, 269 million baht and 194 million baht in 1983, 1985 and 1986 respectively. The government through the ' Fisheries Department has been well aware of the necessity to develop cockle culture. During the past 11 years, 23 major research have been conducted. Research has resulted in the improvements of seed stock in suitable beds and the transplantation to create the natural beds. Hatchery techinque is still on the development process due to the high cost of seed production. The government has also supported the small scale fishermen in coastal villages through extension services. The training courses on cockle culture for the farmers and government officials are also,conducted baht = US$ 1 2 Details on various government activities pert aining to aquaculture are reported in Brohmanonda (1985), Thailand (1985 and 1987), and Thanomkiat (1986). 6 Table 4 Balance of Imports and Exports of Molluscs, =============================================================== Net Imports Exports Imports/Exports Year Quantity Value Quantity Value Value (mt) (1000 baht) (mt) (1000 baht) (1000 baht) , H.A. H.A. N.A. H.A. H.A =============================================================== One US$ = 26 baht in , and 25 baht in 1989 H.A. = Hot available Source: Department of Fisheries, Bangkok, Thailand Tbe Cockle Culture Industry in Thailand : An Overview Cockle Culture Background It is believed that cockle culture in Thailand have been started about 100 years ago in Phetchaburi province, the northern part of the Gulf of Thailand. During that period, the size of the farm was about 5 to 10 rai l (Tookwinas, 1983). The seed was collected from the wild within the vicinity of the culture bed. Such practices had been continued until l One rai = 0.16 hectare 7 1972, when the cockle beds were no longer suitable for cockle production due to the pollution. Cockle production decreased and subsequently could not met the domestic demand. Thus, in 1973 cockle seed was imported from Malaysia to cultivate in Satul province, along the coast of the Andaman sea. The culture beds were expanded up to 900 rai per farm for commercial operations and using the same culture method as in Malaysia (Tookwinas, 1983). As the cockle culture could make a vary high return of about 5 to 10 times (Tookwinas, 1983), cockle farming then spread rapidly throughout the southern part of the Gulf of Thailand and the Andaman Sea coast such as Trang, Ranong, Nakhon 5i Thammarat and Sur at Thani province. However, the major problem still persisted within the commercial farms. This related to the gradual deterioration of culture beds after 5-6 years in operation that the growth rate would finally decreases while the mortality rate would increased. Tookwinas (1983) reported that this problem was caused by the hardening of the bottom surface which resulted from the deposition of small size cockle left over after continuous harvesting practices. Cultivation of Cockle During 1981 to 1987, cockle culture area fluctuated from year to year. Table 5 shows that culture area increased from 6,173 rai in 1981 to the maximun of 11, 944 rai in 1985 then fluctuated around 10, 000 rai thereafter. These CUltivated areas Table. 5 Juaber of Far. and Area of Blood Cockle Culture by Province, =-::: == = =- ---========--=============--=-- --==================================== Province Faras Area Farms Area Farms Area Farms Area Farms Area Farms Area Farms Area (rai) (rai) (rai) (rai) (rai) {rail (rai) Total 132 6, , , , , ,409 Samut Song (bra Phetchaburi JJ ,579 Surat Thui , , , , ,725 Nakhon 5i Thaaaarat atun , , ,432 Trang Ranong Phangnga , , Phuket ,031 Krabi Pattani ==========-=========================================================================================================== One rai = 0.16 hectare 49 Source: Department of Fisheries, Bangkok, Thailand co 9 were established both along the Gulf of Thailand and the Andaman Sea. The average size of farm was rai, while the largest size was 2,425 rai and the smallest size was one rai. Cockle cui ture along the northern part of the Gulf of Thailand, Samut Song Kharm and Phetchaburi province were small scale operation with average farm size of rai. The southern part of the Gulf of Thailand from Chumphon to Narathiwat province (Figure 1) and on the Andaman Sea coast, the cockle culture were mostly commercial operation with the average farm size of rai for the southern part of the Gulf of Thailand and rai for the Andaman Sea coast, respectively (Thailand, 1987). In small scale farm operation, farmers surround the grow-out area with bamboo strips, 50 cm in height, to indicate the farm boundary and to retain the cockles within the cultivated ares. Commercial farms are constructed differently from the others. Fences are made of mangrove stakes. These stakes are also served as points for observing density of small cockle in the farm and also as a mark point during harvesting. Farmers build a watch-house in the production area and hired a full-time guard to watch the poaching and other fishing activities such as trawling and push netting that would intrud
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