Manure management and pollution levels of contract and non-contract livestock farming in Vietnam

Journal Pre-proof Manure management and pollution levels of contract and noncontract livestock farming in Vietnam

Le Thi Thu Huong, Yoshifumi Takahashi, Hisako Nomura, Cao Truong Son, Takeru Kusudo, Mitsuyasu Yabe PII:

S0048-9697(19)36196-0

DOI:

https://doi.org/10.1016/j.scitotenv.2019.136200

Reference:

STOTEN 136200

To appear in:

Science of the Total Environment

Received date:

5 September 2019

Revised date:

16 December 2019

Accepted date:

17 December 2019

Please cite this article as: L.T.T. Huong, Y. Takahashi, H. Nomura, et al., Manure management and pollution levels of contract and non-contract livestock farming in Vietnam, Science of the Total Environment (2019), https://doi.org/10.1016/ j.scitotenv.2019.136200

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© 2019 Published by Elsevier.

Journal Pre-proof

Manure management and pollution levels of contract and non-contract livestock farming in Vietnam

Le Thi Thu Huong1, Yoshifumi Takahashi2, Hisako Nomura3, Cao Truong Son4, Takeru Kusudo5, Mitsuyasu Yabe2

Laboratory of Environmental Economics, Graduated School of Bioresources and

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Bioenvironmental Sciences, Kyushu University, Japan

Faculty of Accounting and Business Management, Vietnam National University of

Laboratory of Environmental Economics, Department of Agricultural and Resource

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Agriculture, Vietnam

Center for Promotion of International Education and Research, Faculty of Agriculture,

Kyushu University, Japan

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Economics, Faculty of Agriculture, Kyushu University, Japan

Faculty of Environment, Vietnam National University of Agriculture, Vietnam

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Organization for WISE Program, Tokyo University of Agriculture and Technology, Japan

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Corresponding author: Mitsuyasu Yabe 〒819-0395. Room 859 - Building West 5 - 744 Motooka Nishi-ku - Fukuoka City - Japan Email: [email protected] ; Tel and Fax: +81 (0)92-802-4838

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Highlights  Due to close pigpen type, contract farming (CF) reduces the probability of manure separation.  Presence of biogas plants, garden, knowledge of composting affect the manure separation.  CF contributes to a reduction in pollutant concentrations in effluent.  Nutrient matters in effluent can be diminished by manure separation.

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 Organic matters can decrease by a combination of biogas plant and stabilization ponds.

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Journal Pre-proof ABSTRACT In analyzing contract farming of livestock production, many studies have focused on the economic aspect. This paper offers the environmental issue by investigating manure management and pollution levels of contract farming (CF) and non-contract farming (NCF) livestock producers in Vietnam. By surveying 270 pig farms and applying logit model, we found that commercial pigpen type of CF reduces the probability of manure separation, while larger garden area and knowledge of composting increase it. By analyzing the wastewater

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samples collected from 59 farms and employing nearest neighbor matching technique, this paper indicated that CF reduces the pollutants’ concentrations in effluents. Using OLS

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regression models, we found out that manure separation contributes to a reduction in nutrient

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matters, while biogas plant or combination of biogas plant and stabilization ponds help to diminish organic matters. The study results suggest that the government should regulate the

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minimum required land area for installation of the combined manure treatment plants (MTPs).

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Additionally, to recycle manure and improve nutrient matters in effluent, advanced technologies for separating solid manure are extremely necessary for CF producers.

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Furthermore, we recommend the government to build mechanisms to compel agribusiness

producers.

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firms engaging in their liability for the environmental side effects caused by their CF

Keywords: manure treatment; waste recycling; contract farming; pig production; manure treatment plant

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GRAPHICAL ABSTRACT

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Journal Pre-proof 1. Introduction With farming contracts, agribusiness firms play important role in the agricultural sector in developing countries. They are relatively efficient in introducing new production techniques, linking producers to the markets for lower input prices or/and higher product prices, leading to higher net incomes per unit of output in some Asian countries such as India, Thailand, Philippines and Vietnam (Costales & Catelo, 2008). In addition, contract farming is one institutional innovation that enables young people in some East African countries such as

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Burundi, Kenya, Rwanda and Uganda to mitigate financial and knowledge handicaps and have the opportunity to earn income in rural areas (Menezes et al., 2018). Together with their

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contributions, the agribusiness firms might also cause the pollution if they do not take into

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consideration about the environment in their management. To meet the increasing demand for pork, the patterns of pig production in Vietnam

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have gradually shifted from small-scale to large-scale i farms with an increase in the

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percentage of pigs produced by large-scale farms from 15% in 2008 to 30% in 2014 (Dinh, 2017). Nga et al. (2014) confirmed the advantages on marketability, credit accessibility, food

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safety of large-scale farms over the small-scale farms. Over last ten years, contract farming

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(CF) - a new type of the large scale farms - has been increasing in Vietnam, demonstrating the important role in the development and growth of livestock sector (i.e., reduce market risks for growers and quality risks for agribusiness firms) (Ogishi et al., 2003; Saenger et al., 2013). According to Costales et al. (2006) and Ogishi et al. (2003), CF is a formal agreement in which agribusiness firms provide inputs such as genetic materials and feed to growers and receive grown animals that are processed and sold to final buyers. In Vietnam, CF production is characterized by commercial pig housing systems that can confine a large number of pigs.

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According to Vietnam’s regulations on pig production, a large-scale farm is defined as a farm with at least 20 sows/batch and/or at least 100 farrow-to-finish pigs/batch; otherwise, it is defined as a small-scale farm (Dinh, 2017).

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Journal Pre-proof By 2018, Vietnam had 3,010 pig CF producers, accounting for 30.8% of total large-scale farms and 15.2% of total pig population (Quynh, 2018). Previous studies have paid much attention on economic aspect of CF such as comparing profit of contract farming (CF) and non-contract farming (NCF) livestock producers (Delgado et al., 2008), and analyzing the factors affecting participation in CF (Costales et al., 2008) but few studies have mentioned the environmental impacts of CF that are indispensable in the development of agricultural sustainability. Also, in Vietnam, the

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positive impacts of CF on economic aspects have been demonstrated (Costales et al., 2008; Dinh, 2017; Nga et al., 2014; Saenger et al., 2013), but the assessment on the environmental

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impacts of CF has not been done. The assessment is extremely important because CF is

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engaged in the complicated relationships among CF farmers, agribusiness firms, local government and community. Delgado et al. (2008) and Ogishi et al. (2003) indicated that in

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United States and Brazil, only CF farmers who actually raise livestock are directly liable for

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the pollution caused by animal waste, while agribusiness firms are not responsible for the waste. Whereas, due to the low financial resource of the CF farmers and weak enforcement

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by government, even the farmers are failure in complying with environmental regulations,

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they are not likely to be fined. In other words, CF is a method for transferring liability of the environmental pollution from agribusiness firms to CF farmers. Regarding environmental impact of farm size, some studies indicated that large-scale farms benefit to environment protection (Ren et al., 2019; Todde et al., 2018), while the others argued the negative impacts of increasing farm size (Delgado et al., 2008). Because the environmental impacts are controversy among studies, we are interested in examining the environmental impact of CF in Vietnam. Because CF producers in Vietnam have more economic advantages than NCF producers (Costales et al., 2008; Dinh, 2017; Nga et al., 2014), they might be willing to invest in manure treatment plants (MTPs); therefore, we hypothesize that CF can improve

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Journal Pre-proof pollution levels. This analysis provides important policy recommendations to adapt the trend of intensification in livestock production in Vietnam. In Vietnam, livestock CF is the largest scale of intensive farming; consequently, each CF farm emits tons of manure every day. Although the waste is a valuable source of nutrients for crop production, without proper treatment practices, it is a large source of pollution. In fact, it is estimated that around 40% of the waste is dumped into canals or rivers (Dinh, 2017), causing soil, water and air pollution. To improve sustainable livestock production, the waste

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must be recycled and treated properly (Petersen et al., 2007; Sommer et al., 2013). Delgado et al. (2008) described manure disposal methods of pig growers at small, medium and large

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scales in Philippines and indicated that large-scale farms often use manure for economic

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ways such as cultivation, biogas or sale, while small-scale farms disposal the manure for noneconomic uses such as throwing in canal, laying on ground or putting in septic, tank or

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lagoon. Møller et al. (2000), Burton (2007), Hjorth et al. (2010), Gebrezgabher et al. (2015)

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and Sefeedpari et al. (2019) argued solid-liquid separation being the important factor of manure disposal or utilization. However, the analysis on determinants of manure separation

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in developing countries has been paid less attention by current studies. In the trend of

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intensification in livestock farming, we are interested in examining the impact of CF on manure separation and utilization because it significantly contributes to the development of circular economy, especially in the context of overusing chemical fertilizers in cultivation. Because CF in Vietnam is a large scale farming system, it might share the similar manure disposal practices with the large scale farming in other developing countries such as Philippines where majority of large scale farms utilize manure in economic uses (Delgado et al., 2008). Therefore, we hypothesize that livestock CF in Vietnam increases manure separation and utilization.

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Journal Pre-proof Numerous studies have investigated the manure treatment practices in Vietnam and proposed solutions for only small-scale or integrated crop and livestock farms (Hai et al., 2016; Huong et al., 2014; Nhan et al., 2006; Roubík et al., 2016; Roubík et al., 2018; Thien Thu et al., 2012; Q. D. Vu et al., 2012; T. K. V. Vu et al., 2007), but have not mentioned about the solutions to intensive farming systems such as CF. Although various manure treatment methods have been adopted by livestock farms such as fermentation in biogas digesters, compost, vermicompost, slurry lagoons, stabilization ponds (Doan et al., 2015;

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Nhan et al., 2006; Thien Thu et al., 2012), the farms have treated the manure inappropriately due to lack of knowledge on handling manure, financial constraints and weak enforcement by

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the government (Thien Thu et al., 2012). Hence, investigation of the determinants of

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pollution levels would suggest solutions to enhance the manure management of the farms. To fill the aforementioned research gaps, this paper sets the following objectives.

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First, it describes the production characteristics of CF and NCF livestock growers in Vietnam.

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Second, it analyzes manure management of CF and NCF pig producers and examines the influence of CF on manure separation – an important stage of manure recycling and treatment.

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Third, it assesses the impacts of CF and other factors on pollution levels in order to propose

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solutions to improve the pollution levels. With the diversified farming systems in Vietnam, this paper contributes to environmental policies for adapting to the changes in structure of livestock production. As Vietnam and other developing countries in Asia face similar economic and environmental problems, this paper provides the governments of these countries with valuable information on the current situation, common problems, and potential solutions for sustainable livestock production. The remainder of this paper is structured as follows. Section 2 presents the study site, data collection and analysis. In section 3, we analyze the production characteristics of CF and NCF producers. We also describe manure management practices of CF and NCF producers.

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Journal Pre-proof In addition, we investigate the impact of CF and other determinants on manure separation and pollution levels in this section. We discuss the results in section 4. Section 5 summarizes the conclusions and recommendations. 2. Methods and Data 2.1. The study site Over the past few years, livestock production in Vietnam has gradually moved from densely to less populated areas, forming new livestock production clusters in the process.

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These dynamics can be observed in areas around big cities (e.g., Hanoi and Ho Chi Minh) (Dinh, 2017). Therefore, from June to August 2018, we conducted a survey in Hanoi, which

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produces the largest number of pigs with 1,635.9 thousand pig heads, accounting for 5.8% of

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the pig population the country (GSO, 2017). Hanoi can be considered representative of Vietnamese pig production because it includes all types of producers (i.e., CF and NCF).

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According to the statistics of the Hanoi Veterinary Department, by May 2018, there were

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about 205 CF producers out of 101,813 pig owners, producing about 20% of the total pig population in the area. Another important reason for choosing Hanoi is that the MTPs of the

2.2.1. Sampling

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2.2. Data collection

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producers are diversified.

Pigs are mainly raised in 16 rural districts of Hanoi. Before the survey, we carried out in-depth interviews with officials at the Department of Agriculture and Rural Development of Hanoi about the locations of CF and NCF producers in this area. In addition, we discussed all the MTP types used by the producers in this area. Combining this information, we identified six districts that satisfied our criteria. We carried out the survey in the following districts: Ba Vi, Phuc Tho, Thach That, Dan Phuong, Chuong My, and Thanh Oai (Fig.1). These districts are well-developed in pig production in Hanoi and feature both CF and NCF

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Journal Pre-proof producers and include all MTP types. Local veterinary groups provided us with lists of all pig producers in the selected districts. For each district, we coded the producers and wrote each code on a slip of paper, which was then put in a box. From the box, we randomly took 45 slips for each district. In total, we surveyed 270 producers whose codes were written on the slips randomly taken from the boxes. If a certain farmer refuses to provide information,

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we will randomly select another farmer instead.

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Fig.1. Maps of the study site

2.2.2. Questionnaires for the field survey The randomly selected farms were initially surveyed using questionnaires, which included open-ended, closed-ended, semi-open, evaluation, and multiple-choice questions, with three main categories, namely, socioeconomic characteristics of the farm, pig production, and MTPs. The questionnaires were subject to pilot testing and were subsequently adjusted for appropriateness before final distribution. The testing questionnaires included nine NCF and one CF producers. 2.2.3. Wastewater analysis in laboratory

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Journal Pre-proof After surveying 270 farms using questionnaires, we obtained data from 46 CF and 224 NCF producers. At first, we planned to visit all 46 CF producers again to collect the samples. We faced substantial difficulties in gathering the samples because the producers believed that the results of wastewater analysis would be sent to the local authorities and that they could be penalized. To convince them, before conducting the survey, we showed them the statement issued by the local authorities, which stated the purposes of the study and that the respondents’ participation was voluntary and anonymous. In addition, several

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neighboring CF producers shared the same MTPs, so we could not differentiate between the wastewater from the farms. Therefore, we did not collect wastewater from these farms.

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Further, in some instances, we could not collect wastewater from the farms that had their

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MTPs’ end-pipes illegally constructed beneath the public water bodies because the pollutants’ concentration was diluted. Therefore, the CF producers available for collecting wastewater

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samples were reduced to 29. The distribution of MTP 1, 2 and 3 at the available CF producers

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are 27%, 52% and 21%, respectively, which are no significant difference with the distribution of the MTPs of all 46 CF producers at 26%, 50% and 20%, respectively, with chi-square

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goodness of fit test being 0.96. In addition, there are no statistically significant differences in

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other important variables such as number of pigs, land area for treatment and MTPs’ construction cost of between total 46 CF and 29 CF producers available for collecting wastewater samples. Therefore, the 29 CF producers can be representative of all CF producers in study site. Corresponding to these 29 CF producers, we randomly chose 30 NCF producers for collecting the samples, with the process of random selection being similar to the previous stage. In total, we collected wastewater samples from 59 farms including 29 CF and 30 NCF producers. These samples covered all MTP types in the area. Although the number of

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Journal Pre-proof samples was modest, it was acceptable as compared to previous studies in Vietnam (Ho et al., 2016; Huong et al., 2014). We collected the wastewater samples from the end pipes of MTPs, before they were discharged into public water bodies. Since farmers clean pigpens twice a day (i.e., in the morning and afternoon), the samples for each farm were collected in the morning or afternoon. We recorded profile of each sample with information on weather, temperature, location, quantity of pigs and their weight at the time of sampling. For each sample, we filled

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a 500-ml bottle with the wastewater. The samples were collected, coded, and immediately stored in boxes with ice. Afterwards, these boxes were transported, stored at 5 degrees

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Celsius, and analyzed at the laboratories of the Faculty of Environment, Vietnam National

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University of Agriculture. Following the “National Technical Regulation on the Effluent of Livestock” (MONRE, 2016), we analyzed five parameters in the wastewater samples, namely,

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TSS, COD, BOD5, TN, and TP. The BOD5, COD, and TSS values were determined by the

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dilution and seeding method (ISO, 1989)ii, the dichromate method (Cr6+) (American Public Health Association (APHA), 1992) iii , and the filtration through glass-fiber filters method

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(ISO, 1997)iv, respectively. The concentrations of TN and TP were analyzed according to the

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Kjeldahl method (SMEWW4500.Norg.A.B.C) and the APHA Method 4500-P (American Public Health Association, 1992), respectively. The analysis was conducted twice, with the relative deviation of the duplicate values being usually less than 5%. 2.3. Data analysis Before the analysis, the data were rechecked to ensure accuracy. If information was inconsistent, the interviewer contacted the farm and surveyed the farmer again. In addition, if reliable data could not be obtained, they were omitted from the data analysis. Then, the ii

ISO (1989). Water quality–Determination of biochemical oxygen demand after 5 days (BOD5)–Dilution and seeding method. iii American Public Health Association (1992). Standard method for examination of water and waste water. 18th edition, Washington D.C. iv ISO (1997). Water quality–Determination of suspended solids by filtration through glass-fibre filters method

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Journal Pre-proof information from the questionnaires and wastewater analysis were input into computer and analyzed using the statistical software package STATA 14. As aforementioned, in order to assess the impact of CF on manure management and environment, we tests two important hypotheses as follows: Hypothesis 1: CF increases the probability of manure separation of livestock farms Hypothesis 2: CF reduces the pollution levels of the farms. 2.3.1. Logistic regression

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In analyzing determinants of manure separation (whether or not separate manure), the logistic regression model is widely applied because the dependent variable is dichotomous

𝑝𝑖 = 𝛽𝑋𝑖 1 − 𝑝𝑖

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𝑙𝑛

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(Long & Freese, 2006). Logit model can be written as follows.

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Where 𝑝𝑖 is the probability that i-th farm separate manure; 𝛽 is vector of parameters to estimate; 𝑋𝑖 is vector of independent variables including CF, age, gender, education level

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of farm head, number of family labors, location of farm, garden area, pond area, presence of

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biogas plant and knowledge of composting (Gebrezgabher et al., 2015; Roubík et al., 2018; Ström et al., 2018; Thien Thu et al., 2012; T. K. V. Vu et al., 2007). Summary of the

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variables used in logit model are presented in Table A1 of the appendix. 2.3.2. Linear regression

In order to examine factors affecting concentration (expressed in mg/l) of pollutants in effluent, which are continuous variables, we applied linear regression models (Wooldridge, 2016). The form of the linear regression models are expressed as follows. 𝑌 = 𝛼 + 𝛾𝑋 + 𝜀 Where 𝑌 are concentrations of TSS, COD, BOD, TN, TP in effluent; 𝛼 is the intercept; 𝛾 is vectors of parameters; 𝜀 is error term; 𝑋 is vectors of independent variables including CF, types of MTP, manure separation, treatment area per pig head and ratio of

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Journal Pre-proof excrete to water use discharged into MTPs (Hjorth et al., 2010; Park & Craggs, 2007; Roubík et al., 2018; Thien Thu et al., 2012; Tilley, 2014; Van Duy & Vu Dinh, 2010). Summary of the independent variable are displayed in Table A2 of the appendix. 2.3.3. Nearest neighbor matching (NNM) This paper aims to estimate the causal effects of CF on pollution levels (concentrations of TSS, COD, BOD, TN and TP in effluent). We are interested in how CF affects the pollution levels; hence, we desire to estimate the average treatment effect on the

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treated (ATET). To capture the ‘true’ effect of CF, we need to compare the pollution levels of CF with the levels that would have resulted by CF becoming NCF. However, we cannot

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observe the levels; hence, we face the problem of missing information on the counterfactual.

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In a randomized experimental design, ATET is the difference between the mean values of pollution levels of CF and NCF. However, in our sample, due to voluntarily participation in

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survey, CF and NCF is non-random but self-selected, and thus we cannot follow this

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approach. We need to account for self-selection bias in our analysis. Matching is an appropriate method to reduce the selection bias and construct a plausible counterfactual from

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the NCF based on the observed characteristics (Stuart, 2010). Among several matching

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techniques widely used (Stuart, 2010), we choose nearest neighbor matching (NNM). NNM imputes the missing potential outcome for each subject by using an average of the outcomes of similar subjects that receive the other treatment level. Similarity between subjects is based on a weighted function of the covariates for each observation. ATET is computed by taking the average of the difference between the observed and imputed potential outcomes for each subject. NNM is nonparametric in that no explicit functional form for either the outcome model or the treatment model is specified. The Mahalanobis distance is used, in which the weights are based on the inverse of the covariates’ variance–covariance matrix (Abadie et al.,

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Journal Pre-proof 2004). Because our sample size is modest, we choose the number of matches per observation is 4. Treatment variable is CF status that is defined as a farm contracts to agribusiness firm for receiving input materials and supplying slaughter pigs. Regarding choosing variables to construct weighted function, researchers have suggested that these variables should be the determinants of both the treatment (CF) and the dependent outcomes (concentrations of TSS, COD, BOD, TN, TP) (A. Smith & E. Todd, 2005). Therefore, the independent variables used

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in the weighted function include types of MTP, manure separation, daily water use (lit/pig head), ratio of excrete to water use discharged into MTPs, unit treatment area (m2/pig head),

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pig income, knowledge of manure handling and age of MTPs (Costales et al., 2008;

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Gebrezgabher et al., 2015; Hjorth et al., 2010; Park & Craggs, 2007; Thien Thu et al., 2012; Tilley, 2014; Van Duy & Vu Dinh, 2010). The treatment, dependent and independent

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variables were summarized in Table A2 of the appendix.

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3. Results

3.1. Descriptive characteristics of pig farms

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3.1.1. Socioeconomic characteristics

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There are various patterns of CF in Vietnam (Costales et al., 2006); however, in this study, we focus on the CF as a formal agreement on supplying inputs and outputs between pig producers and agribusiness firms. According to this agreement, CF producers provide their land, pig housing, labor, water and electricity in exchange for free inputs such as piglets, feed, medicines, vaccines, and technical support from the firms. The firms collect slaughter pigs from the farms and grant them an allowance that is calculated by the total live weight of the slaughter pigs multiplied by the price predetermined in the contracts, regardless of the market price. Contrary to CF producers, NCF producers must sell their products at the market price; thus, their income from pig production is considerably fluctuated by market demand.

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Journal Pre-proof CF producers have lower average age and experience than NCF producers because CF started about only ten years ago in Vietnam’s livestock sector, while traditional farming existed for a long time (Table 1). However, educational level and knowledge of manure treatment of CF producers is higher than that of NCF producers. We asked farm heads to list the technologies of manure treatment available in Vietnam. There were six technologies being listed (i.e., biogas plant, compost, vermicompost, bio-bedding, separator machine, and constructed wetland system), in which the first two are the most common with the farm heads.

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In addition, there are large differences in total land area between CF and NCF producers. On average, the total land area of the CF producers is about three times that of the NCF

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producers. According to the Vietnamese government policy on promoting large-scale farms

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since 2014, CF producers must be located in the fields that are far from residential zones and have large land area for installation of MTPs. Whereas, due to lack of capital, most NCF

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producers are still in residential zones. As a result, CF producers have more land for waste

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treatment than NCF do.

The average number of pigs raised by CF producers (1,208 heads) is much higher

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than that of NCF producers (69 heads). Most CF producers rear farrow-to-finish pigs, with

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the number of pigs confined in a standard CF pigpen being about 500 heads. Piglets provided by the agribusiness firms are transported to the farms, with the average weight of the piglet being about 7 kg, whereas the weight of a slaughter pig is about 100 kg. It takes about 5.5 months to finish the circle from a piglet to a slaughter pig. At the end of the circle, the slaughter pigs are collected and transported to the firms. The firms pay for the farms the allowance that calculated by the total liveweight of the slaughter pigs multiplying the wage per one kilogram. The CF producers reported to us that they earn a wage from US $0.11 to US $0.15 per kg, depending on the quality of pigpen, productivity, and feed conversion ratio (FCR) which is estimated by feed intake divided by weight gain. We estimate the income

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Journal Pre-proof from pig rearing for CF producers as the total received allowance subtracting depreciation, labor, and water and electricity costs. The income of CF producers is more stable and higher than that of NCF producers because NCF pig production is significantly affected by the market. Contrary to CF producers who are engaged in monoculture farming that produces only pigs, NCF producers also do off-farm jobs. Therefore, the average annual off-farm income of NCF producers is higher than that of CF producers. However, there is no significant difference in other income sources between CF and NCF producers.

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With a huge volume of manure emitted, CF producers invest a large capital in the construction of MTPs; however, their MTPs construction costs per pig are much lower than

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that of NCF producers. Nevertheless, there is no statistically significant difference in

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maintenance costs between them.

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Journal Pre-proof Table 1: Socioeconomic characteristics of pig farms NCF producer CF producer t-value a (N=224) (N=46) Age of farm head year 50.9 46.6 3.0*** (10.3) (8.3) Experience in pig production year 20.5 7.8 8.2*** (11.0) (9.1) Education year 8.0 9.5 2.4*** (3.2) (3.6) Knowledge of manure treatment item 1.8 3.3 6.6*** (1.0) (1.3) 2 Total land of farm including breeding m 3,188.5 10,802.2 3.7*** and crop land areas (9,782.8) (13,149.5) 2 Land for installation of MTPs m 118.3 1,003.3 5.4*** (1,271.5) (936.5) Total number of pigs head 69.6 1,208.9 12.6*** (136.4) (605.6) Construction cost of MTPs per pig $ 25.4 8.1 7.5*** (31.4) (6.0) Annual maintenance cost of MTPs per $ 0.006 0.004 NS pig (0.016) (0.011) Annual crop income $ 638.3 385.3 NS (3,079.1) (1,211.9) Annual livestock income excluding pig $ 985.3 3,117.5 NS production (4,179.8) (12,501.9) Annual off-farm income $ 2,568.9 1,250.0 2.4*** (5,709.5) (2,636.2) Annual pig production income $ 452.8 15,243.9 7.6*** (2,278.2) (13,040.5) a : t-values of two sample t-tests with unequal variances were conducted. *** p<0.01; ** p<0.05; * p<0.1. NS means not significant. Standard deviations are in parentheses. In 2018, average exchange rate is 1 US$ = 22,000 VND.

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3.1.2. Liability of agribusiness firms and CF growers on pollution caused by their production Out of 205 CF producers in Hanoi, there are 137 producers contracting with CP group of Thailand, accounting for 66% of CF farms, so we focus on analyzing the liability of environmental pollution of the CP group and its CF producers. The CP group has internalized potential negative environmental externalities into their contracts with pig growers. These 18

Journal Pre-proof contracts stated that the environmental pollution expenses of the producers are supported by the firm at the rate of US $ 0.0068/kg of collected slaughter pigs. Total amount of expenses are included in the allowance that the producers receive at the end of the breeding circler. In fact, this expenses are small as compared to the construction and maintenance costs of MTPs that paid by the producers. This fact once again confirms the findings of Delgado et al. (2008) and Ogishi et al. (2003) on the reduction of agribusiness firms’ liability of pollution resulting from livestock production. Although there are economies of scale in manure

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treatment, the firm does not want to create its own livestock farms because this costs a substantial capital and requires huge land area. Besides, if it fails to comply the

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environmental regulations of the Vietnamese government, it would be fined. Whereas, the

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producers with the limited resources and their liability because of the law’s economic affordability constraint, so they are almost not to be punished. Therefore, by the CF, the firm

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not only aims at economic benefits but also transfers the liability on environmental pollution

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to producers.

Although CF producers receive the environmental pollution expense from the firm,

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they almost do not use it for improving their MTPs, but consider it as their income. Hence,

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their average maintenance costs of MTPs showed in Table 1 are not higher than that of NCF producers. Actually, the firm recognized well this problem, but it does not want to intervene the producers’ activities. In other words, the firm and the producers take advantage of the shortcomings of the current government regulations to reduce burdens on environmental expenses. 3.2. Manure management 3.2.1. Separation and utilization of manure Manure management of pig producers are summarized in Figure 2. Although collecting raw manure or separating solid matter from slurry offer advantages such as

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Journal Pre-proof facilitating the use of solid manure in crop production, improving homogeneity of the liquid phase with less sedimentation, reducing the required storage capacity, and being a useful pre-

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treatment for biological processing (IAEA, 2008), few pig farms apply this process.

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Fig.2 Manure treatment practices

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In the study site, only 21% of pig farms collect solid manure to use it for crops, sell it to cultivators, and fish feed. In other developing countries such as Myanmar and Thailand,

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solid manure is also used to make compost (Kashyap, 2017; Kuyama, 2017; Lin, 2017). In

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China, the collected manure could be discharged into rivers or non-arable land, applied to farmland as organic fertilizer, stored to produce biogas, or sold to industrial plants to produce fertilizers or as aquatic fodder (Zheng et al., 2013). In the study site, nearly 80% of the farms did not separate manure from slurry, which prevents farmers from using the manure for crops and obstructs MTPs, with the volume of the slurry loaded into MTPs without separation of solid manure being larger than that with the separation. If the capacity of the MTPs are insufficient, the wastewater with high contamination flows freely into the environment. The percentage of NCF producers collecting solid manure is 25%, whereas it is only 2% for CF producers.

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Journal Pre-proof To understand the factors affecting manure separation, we use logistic regression model (Table 2). Although we expected that CF increases the probability of manure separation and utilization, the result showed the opposite. CF pigpen type is an important determinant of manure separation. Two types of pigpen are observed in Vietnam, namely, the close and open types. Close pigpen are usually designed and introduced to CF producers by agribusiness firms, and consist of the artificial ventilators and cooling pads for controlling temperature, humidity, and wind speed. Inside the close pigpens for farrow-to-finish pigs,

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puddles are constructed for pigs to excrete and cool. The puddles are always filled with water and drained once or twice a day to push slurry into MTPs. The presence of puddles helps

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farmers save time in washing the floor. However, it is impossible to collect solid manure

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because the manure is mixed with water in the puddles, consequently, it is diluted. Regarding this pigpen type, there is a CF producer separating solid manure. In this farm, a separator

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machine works to segregate the slurry into dry matter and wastewater. The dry matter is

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packed and sold, whereas the wastewater is maintained to be treated in a biogas digester. This producer invested US $ 9,000 in the separator machine. The investment would be recovered

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by selling the dry matter within two years. Although this model offers a solution for

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utilization of manure in intensive farms, very few producers apply it because of the high investment costs of the machinery and the ancillary facilities. Contrary to close pigpen, open type is typically designed and constructed by NCF producers, and surrounded by walls on three sides, with fans and hoses being used for cooling pigs. With respect to this type, nearly 20% of the farms collect manure. In fact, farmers could scrape manure off the floors before washing the piggeries, but they use water hoses to remove the manure, with the mixture being pushed into MTPs such as biogas plants. With the popularity of biogas plants in recent years, farmers use almost all the manure for feeding biogas digesters (Roubík et al., 2018), thus reducing probability of manure

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Journal Pre-proof separation and utilization. Farms owning higher garden area and knowledge of composting would use manure for crops; consequently increasing the probability of manure separation. Because farms located in the fields that are far from residential zones and have larger land for integrating crops and livestock production, they prefer using separated manure for cultivation. Table 2: Factors influencing manure separation

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Variables Coef. Std. Err. a *** Contract farming -5.77 1.36 a *** Presence of biogas plant -2.29 0.47 a ** Knowledge on composting 0.79 0.40 a *** Farm is located in the field 2.41 0.46 2 ** Garden area (1000m ) 0.20 0.10 2 Pond area (1000m ) -0.09 0.07 a Farm head is male -0.31 0.45 Age of farm head (year) 0.02 0.02 Education level of farm head (year) 0.10 0.07 * Number of family labor (person) -0.49 0.28 Constant -1.75 1.35 Pseudo R2 = 0.35; Log likelihood = -90.84. *** p<0.01; ** p<0.05; * p<0.1 a : dummy variables

z-value -4.26 -4.90 1.97 5.20 2.00 -1.38 -0.68 1.25 1.40 -1.76 -1.30

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3.2.2. Manure treatment plants (MTPs)

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Slurry is discharged into one of three MTPs. In MTP 1, the raw slurry is released into

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lagoons or cesspits, then discharged into public water ways when exceeding the storage. The lagoons are shallow at 1.5 to 2.5 m in the depth and have much larger surface areas. The surface area allows atmospheric oxygen to dissolve and sunlight radiation to penetrate the water for photosynthetic activity. In the lagoons, anaerobic processes take place at the bottom zone, whereas aerobic processes occur at the surface zone. In the cesspits, there are only anaerobic processes because the surface area is very small and covered. The main functions of the lagoons and cesspits are to remove BOD and settle the undigested material and nondegradable solids as bottom sludge. With the large surface area, the lagoons could remove total nitrogen. However, either lagoons or cesspits allow biogas to escape to the atmosphere, causing the increase in greenhouse gas (GHG) (Park & Craggs, 2007). In MTP 2, the slurry is 22

Journal Pre-proof pushed into biogas plants, with liquid digestate from the plants being stored in tanks or directly discharged into public water ways. Anaerobic processes occur inside the biogas digesters. Biogas is produced, collected, and utilized for some end-uses such as cooking or heating. Biogas plants help to remove most of the BOD and COD and small amounts of nitrogen (Van Duy & Vu Dinh, 2010). In MTP 3, the slurry is pushed into biogas plants, with liquid digestate from the biogas plants flowing to stabilization ponds and being finally discharged into the environment. This MTP combines anaerobic and aerobic processes,

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which helps to remove organic (BOD and COD) and nutrient matters (nitrogen and phosphorus) (Tilley, 2014).

MTP 1 MTP 2 MTP 3 (N=18) (N=200) (N=11) a b Number of pig head 1,204.7 191.2 947.8a (1,011.0) (361.1) (478.4) 2 a b Land occupation m 2,033.9 116.9 1,151.8a (4,419.8) (334.5) (574.4) a b Construction cost $ 4,058.0 1,833.8 11,747.90c (3,242.6) (3,240.5) (9,206.6) a b Annual maintenance cost $ 0.0 9.1 83.6c (29.5) (153.9) Pairwise comparison of means with unequal variances were conducted. In each row, the different superscripts represent statistically significant difference in the pair. Standard deviations are in parentheses.

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Unit

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Table 3: Summary of manure treatment plants

The distribution of non-treatment, MTP 1, 2, 3 of NCF producers are 18.3%, 2.7%, 78.1% and 0.9%, respectively, while they are 0%, 26.1%, 54.3% and 19.6% for CF producers. CF producers preferred installing MTP 1 and 3 since they raised a large number of pigs, have higher capital resources and are located in the fields where have large land available for installing slurry lagoons or stabilization ponds, while NCF producers preferred installing MTP 2 because biogas plants are installed underground and do not occupy large land. The average land area of MTP 2 is only 116 m2, while it is 1,151 m2 for MTP 3 and 2,033 m2 for

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Journal Pre-proof MTP1 (Table 3). The construction costs of MTP 3 are highest, followed by MTP 2 and MTP 1. Annual maintenance costs of MTP 3 are also highest because biogas digesters of this type that are made from plastic material, can be easily pierced, thus needing minor repairs regularly. Besides the aforementioned reasons for choosing MTPs of pig farms, environmental policies also take into account. In fact, an important reason for CF producers choosing the types of MTP is period of farm establishment. According to the different period of time,

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agribusiness firms make increasingly strict requirements for waste treatment in the farms. The CF farms installing MTP 1 are those established during the early stage of CF when

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environmental regulations were lax, while MTP 2 and MTP 3 are chosen by CF farms formed

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in middle and later stages, respectively. Now CP group requires newly established CF farms to have enough land area to build MTP 3. For NCF farms, they are encouraged to build small

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biogas digesters with US $ 200 support for each by the Vietnamese government.

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Pig farms in Vietnam show the similarity in manure management with other developing countries in Asia. In Sri Lanka, small-scale farms also deal with slurry by a

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simple treatment method using a soakage pit, while medium and large scale farms apply

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advanced treatment methods such as biogas plants (Fernando, 2017). In Thailand, pig farmers install stabilization ponds, anaerobic filter tank systems and biogas plant (Kashyap, 2017). 3.2.3. Pollution levels of pig farms Results of nearest neighbor matching shown in Table 4 indicate that CF reduces pollution levels. For average treatment effect on the treated (ATETs), CF reduce the concentration of TSS, BOD, TN, TP by 1278 mg/l, 285 mg/l, 695 mg/l and 104 mg/l, respectively. The impact of CF on pollution levels can be explained as follows. First, before contracting to agribusiness firms, CF producers must meet some firms’ requirements, such as the proper design of the pigpen, being far away from the residential zones, and having

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Journal Pre-proof appropriate MTPs to diminish the pollution. Second, with large numbers of pigs producing tons of manure every day, CF producers faces the opposition from people living around the farms and inspection of local government, so CF farmers are concerned about environmental pollution treatment. Whereas, NCF farms with small number of pigs believe that the daily amount of manure is insignificant, so they do not concern about pollution treatment. Third, because CF growers can earn more stable and higher income from pig raising than NCF

Table 4: Impact of CF on pollution levels Concentration (mg/l)

CF

NCF

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growers do, they are more willing to invest in sufficient MTPs.

ATTa CF vs. NCF

2,106.4 3,203.3 -1,278.4 (1,652.4) (3,440.4) 898.4 1,094.4 BOD -285.3 (590.3) (522.7) 1,272.4 1,447.2 COD -377.8 (869.8) (741.1) 400.8 819.0 TN -695.5 (339.7) (620.9) 80.3 150.1 TP -104.5 (95.7) (102.3) *** p<0.01; ** p<0.05; * p<0.1. Standard deviations are in parentheses. a : estimate average treatment effect on the treated

-1.71* -2.04** -1.63 -4.10*** -3.49***

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TSS

z-value

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We also analyze the other factors influencing pollution levels, which are shown in Table 5. Again, the BOD, TN and TP models confirm the effect of CF on improve pollution levels. Besides, concentrations of BOD and COD are affected by types of MTP, in which biogas plant and combination of biogas plant and bio-pond reduce the concentrations. With regard to the discussion on the aforementioned uses of MTPs, MTP 2 and 3 that include biogas plants, are good at reducing organic matter as BOD and COD. Moreover, COD concentration reduces for an increase in each meter of land area for waste treatment. The reason is that MTPs in Vietnam use biological processes to treat manure, which take substantial amounts of time and occupy large land areas. In addition, farmers used

25

Journal Pre-proof substantial amount of water for cleaning the pigpens and flushing the slurry into MTPs (Thien Thu et al., 2012), which caused overload and low retention time, thus lessen the pollutant removal efficiency (Q. D. Vu et al., 2012). Hence, increasing in land for treatment supports to biological processes, increases the retention time and results in reducing organic matter in effluent. Regarding nutrient matter as TN and TP, manure separation helps to reduce the concentration of the pollutants. Since solid manure contains high concentrations of TN and

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TP, removing the solid manure could reduce their concentrations in the effluent. This finding is consistent with previous studies (Burton, 2007; Gebrezgabher et al., 2015; Kashyap, 2017;

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Nokyoo, 2016; Sommer et al., 2013). Therefore, collecting/separating solid manure as a

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pretreatment stage and treating the remaining liquid matter in MTP 2 or MTP 3 are recommended for manure treatment in Vietnam. For TSS model, due to F statistic being 0.3,

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it is not reliable, so we need further studies to analyze the determinants of TSS concentration.

Variables a

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Table 5: Determinants of pollution levels

TSS -1,124.4

BOD -338.2**

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CF MTP 1 (base) MTP 2 -941.1 -695.8*** MTP 3 -1,817.2 -815.6*** a Manure separation -508.2 -118.0 Treatment land (m2/pig) -607.2 -120.2 Ratio of excrete to water use -5,835.5 -1,442.7 Constant 4,867.1*** 1,930.6*** R2 0.13 0.29 Prob > F 0.3026 0.0049 Mean of VIF = 1.39 a : dummy variables. *** p<0.01; ** p<0.05; * p<0.1

COD -348.1

TN -460.3***

TP -70.9**

-966.2*** -1160.9*** -159.2 -236.2* -1,452.3 2,627.3*** 0.29 0.0050

162.3 -178.8 -556.2*** -12.9 -1,449.8 902.7*** 0.33 0.0012

38.6 0.06 -80.8** -13.5 -194.0 153.5*** 0.24 0.0215

4. Discussions 4.1. Livestock waste management This paper for the first time analyzes the manure management of CF and NCF pig producers in Vietnam. Our findings contribute to the knowledge on manure management in

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Journal Pre-proof both small and large scale, and commercial and traditional farming system in Vietnam. Previous studies of Roubík et al. (2018), Thien Thu et al. (2012), and Q. D. Vu et al. (2012) researched on only traditional farms with open pigpens and described conventional manure management practices and indicated that manure utilization is affected by whether a farm has a biogas plant, but our results show that the pigpen types play an important role in manure use, especially for CF producers. In present, pigpen designs have changed to confine a large number of pigs with better hygiene conditions because of the intensification trend in pig

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production. This change resulted in the differences in manure management, especially in close pigpens of farrow-to-finish pigs.

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Although biogas plants have been promoted widely in developing countries like

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Vietnam, the installation of only biogas plants could not properly reduce the pollution levels, because digestate of biogas plants contained high E. coli concentrations, causing human and

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animal health hazards (Huong et al., 2014). It was mainly discharged into the environment

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due to the lack of methods for transporting it to the fields (Roubík et al., 2018; Thien Thu et al., 2012; Q. D. Vu et al., 2012; T. K. V. Vu et al., 2015). Our results indicate that the

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combination of biogas plant and bio-pond offers higher effect on reducing BOD and COD

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than only biogas plants or slurry lagoons do. In present, new technologies for livestock manure treatment have been piloted in some farms, but have not succeeded. Biology mattress, a new technology developed by researchers at the Vietnam National University of Agriculture, used sawdust as the main material to bed the floors of pigpens (Lapar, 2014), was tested in some pig farms, but the farmers did not continue using it because it increased the temperature of pigpen, causing disease of pigs (Thien Thu et al., 2012). In addition, the hybrid constructed wetland technology was piloted in few large-scale farms, demonstrated the capability for removing organic and nutrient materials (Nguyen et al., 2018). Although this technology has many advantages, it induces high costs of construction, so it is still in

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Journal Pre-proof pilot projects. In developed countries such as Netherland, the conventional manure management method is inhouse liquid manure storage while the innovative method is V-belt system that segregates fattening pig urine and feces (De Vries et al., 2013). In Brazil, there are four manure management systems as open slurry tanks, bio-digestor with flare, biodigestor for energy purposes and composting (Cherubini et al., 2015). Manure management in Vietnam shares the same faces with that of Cambodia in which pig manure was most commonly dumped in the environment because of scarcity of agriculture land and lack of

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carts for transportation of manure (Ström et al., 2018). Large-scale pig farms in China have different manure management practices from that in Vietnam. For examples, many of the

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Chinese pig farms use slatted floor, cleaning pigpens once a day, separate for urine and feces,

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and use industrial biogas and oxidation ponds to treat wastewater (Wei et al., 2016). 4.2. Pollution levels

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Our wastewater analysis reveals that all surveyed farms could not meet the effluent

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standards of the Vietnamese government. According to the “National Technical Regulation on the Effluent of Livestock” (MONRE, 2016), standard concentrations of TSS, COD, BOD,

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and TN in livestock effluent are 150 mg/l, 300 mg/l, 100 mg/l, and 150 mg/l, respectively,

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with farms not being allowed to discharge the effluent with higher concentrations. Some parameters in Vietnam's effluent standards are even higher than those of more developed countries in Asia. For example, BOD and COD standards in China are set at 150 mg/l and 400 mg/l (Sun & Feixiang, 2017); COD standard in Thailand is 400 mg/l for small and medium scale farms and 300 mg/l for large scale farm (Kashyap, 2017). Although the Vietnamese farms invested a large capital in MTPs, the concentrations of their effluent were much higher than the standards, raising a concern about the technical issues. In addition to the technological issue, the compliance of the farm with the regulations was the most important factor. Because environmental agencies in Vietnam have not been

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Journal Pre-proof able to enforce the regulations strictly, farms illegally discharge polluted wastewater to the environment. Although almost all the farms install MTPs, the main purpose of farms for the installation was not to treat the waste, but to deal with the inspection of environmental agencies. The environmental agencies can check the appearance of MTPs, but they could not examine the efficiency of the MTPs. Consequently, these farms did not maintain their MTPs regularly, causing a very low pollutant removal efficiency. Although there are many environmental projects that provide financial support to farmers for installation of biogas

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plants (Thien Thu et al., 2012), after many years of operation and inappropriate maintenance, the biogas plants cannot handle waste effectively. This suggests the necessity of providing

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more technical supports for operation and maintenance of the biogas plants.

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This paper indicated that CF reduces pollutant concentrations in effluents of livestock farms in Vietnam. This result is consistent with the study of Wei et al. (2016) that pointed out

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that nitrogen and phosphorus use efficiency were positively related to the increasing in farm

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size. However, in cultivation sector, several studies argued the negative impacts of CF on the environment. Sethi (2013) and UNDP (2015) pointed out that cultivation CF induces the

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overusing of inorganic fertilizers, pesticides, chemical application and ground water that

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causing pollution in soil, water and air in India and Laos. Because the cultivators emit nonpoint source pollution, these studies have not mentioned about the liability of agribusiness firms and CF farmers on the pollution. This paper confirms the low liability of agribusiness firms on animal waste produced by their CF producers, which are analyzed in the United States and Brazil (Delgado et al., 2008; Ogishi et al., 2003). In fact, the Vietnamese agribusiness firms assign their staffs daily visiting CF farms to supervise farms’ activities and provide technical supports to the farms; so they can help to mitigate the environmental pollution caused by the CF farms. In addition, Ogishi et al. (2003) proposed a liability hierarchy which all parties involved in the CF livestock production systems, including

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Journal Pre-proof producers and agribusiness firms, share the cost of environmental damage accordingly. Delgado et al. (2008) also suggested a solution that in Brazil, agribusiness firms include the provisions related to the adequate handling of animal waste in the contracts that all the CF producers have to go through an environmental authorization process led by the firms. 4.3. Limitations Although this paper provides useful information to fill the research gaps in the environmental issues facing CF livestock production, it has some limitations. Due to the

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aforementioned difficulties in collecting wastewater samples, selecting producers who provide the samples might not be fully randomized, which could bias results more or less. We

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have made every effort to overcome this bias with econometric techniques. In addition,

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because of sample size was modest, the estimates from TSS regression model are not good. Therefore, further studies should attempt to expand the randomized sample size to get better

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results.

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5. Conclusions and policy recommendations The majority of studies have focused on the economic impact of contract farming

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(CF) but paid less attention on the environmental impact. This paper analyzes the influences

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of CF on manure management and pollution levels of livestock farms in Vietnam. The study results pointed out that the pigpen type of CF reduces the probability of manure separation, preventing manure utilization. This result emphasizes the need for technical support to separate manure for recycling animal waste. It presents novel knowledge regarding livestock waste management in Vietnam in the context of intensification in livestock production. By analyzing wastewater samples collected from pig farms, this paper indicated that CF contributes to reduction in pollution levels of livestock effluent. Meanwhile, the pig income of CF growers are significantly higher than that of CF. With these findings, this paper confirms the importance of environmental and economic aspects for supporting the

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Journal Pre-proof development of CF in Vietnam. However, the government should change the management mechanisms to compel agribusiness firms to increase their responsibility in dealing with environmental pollution at CF farms. This study showed that manure separation can reduce the concentration of nutrient matters (TN and TP), while combination of biogas plant and bio-pond contribute greatly to lessen the organic matters (COD and BOD) in effluent. However, this combination requires a large land area; therefore, it is only suitable for the farms owning sizable land. The finding

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suggests that the government should regulate the minimum required land area for installation of adequate manure treatment plants in livestock farms.

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Acknowledgement

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This work was supported by JSPS KAKENHI, Grant Number: JP 18H03968.

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Journal Pre-proof Appendix Table A1. Summary of variables in logistic regression

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Mean/cases 57 46 211 154 103 1.31 1.38 194 50.22 8.33 1.71

SD

Min

Max

6.21 4.57

0 0

90.0 47.6

10.17 3.33 0.68

24 0 0

82 18 4

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Dependent Independent

Variables Manure separation Contract farming Presence of biogas plant Knowledge on composting Farm’s location is field Garden area (1000 m2) Pond area (1000m2) Farm head is male Age of farm head (year) Education level of farm head (year) Number of family labor

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Table A2. Summary of variables in nearest neighbor matching and OLS regression models Variables

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TSS (mg/l) BOD (mg/l) COD (mg/l) TN (mg/l) TP (mg/l) MTP 1 MTP 2 MTP 3 Manure separation Daily water use (lit/pig) Ratio of excrete to water use Land area for manure treatment (m2/pig) Pig income (US $) Knowledge of manure treatment technologies Contract farming

Mean/cases 2,664.15 998.10 1,361.32 613.45 115.83 9 43 7 10 105.05 0.03 2.77 2,972.85 2.09 29

SD 2,746.32 560.91 804.79 541.28 104.41

Min 500 142 205 109 8

Max 12,640 2,430 3,845 2,111 360

76.71 0.02 25.98 7,986.77 1.26

15.90 0.003 0 0 1

375 0.22 370.5 56,569.09 6

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