Agro-Industry in Thailand Noppol Leksawasdi, PhD 21 st May 2007 09.00-10.30 AM Faculty of Agro-Industry, CMU

Agro-Industry in ThailandNoppol Leksawasdi, PhD

21st May 200709.00-10.30 AM

Faculty of Agro-Industry, CMU

Synopsis

Introduction Disciplinary of Agro-Industry in Northern

Part of Thailand Available Learning & Training Programs Case Study of Agro-Industry Factories Conclusion

Introduction

Available agricultural raw materials Major exported agricultural products Agricultural products of significant values in

the Northern part of Thailand Problems of Agro-Industry in Thailand

Introduction

Available Agricultural Raw Materials*

Four regions of Thailand

Central, Northern, North Eastern, & Southern

Climate

Northern: cooler, good for temperate crops

North Eastern: rather dry

Central & Southern: high humidity

*Nualvatna, K. 2003. Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, 20-24 November 2000, pp. 169-170.

Available Agricultural Raw Materials

http://www.answers.com/topic/provinces-of-thailand

Introduction

Introduction


Area: 513,115 sq. km. (198,114 sq. mi.)* Population: 62.4 million* In 2004, 67.8% located in rural area#

90% of rural population relies on rice cultivation, field crops, fruit trees, perennial crop production#

Rice, Cassava, Sugar Cane, Soybean, Corn, Mango, Rambutan & Rubber Trees#

*Data based on 2006. http://bangkok.usembassy.gov/relation/bgnotes.htm # Thaiprasert, N. 2006. Rethinking the Role of Agriculture and Agro-Industry in the Economic Development of Thailand: Input-Output and CGE Analyses (PhD Dissertation). Nagoya University, Japan, p.56.

Introduction


41.5% of the area is farmland* 17.5% of the farmland is under irrigation* Both irrigated & non-irrigated farmland are

used to produce agricultural commodities for domestic consumption & export*

51% of farmland is rice fields, 24% field crops, 17% fruit trees & tree crops

8% other crops*


Introduction

GNIPC & %Occupation in Agriculture*


*Thaiprasert, N. 2006. Rethinking the Role of Agriculture and Agro-Industry in the Economic Development of Thailand: Input-Output and CGE Analyses (PhD Dissertation). Nagoya University, Japan, p.34.

CountryGNIPC

$USD (2000)1980 (%) 1998 (%)

Lao PDR 290 80 N/a

Thailand 2,000 71 51

Japan 35,620 10 5

World 5,170 51 N/a

GNIPC = Gross National Income Per Capita

Introduction

Trend of sectorial employment in Thailand*



70.8

68.4

64.0

52.0

48.8

10.3

12.1

14.0 19

.8

19.0

18.9 22

.0

22.0 28

.3 32.2

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1980 1985 1990 1995 2000

Year

% E

mp

loym

ent

AgricultureIndustryServices

Introduction

Major Exported Agricultural Products


Agricultural Export Comparison (TH, USA, World)*

1.64

0

0.35

0

1.52

0

0.64

0

1.21

0

0.84

0

0.00

2

0.05

8

0.04

0

7.95

0

6.46

0

0.47

0

3.88

0

8.02

0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Rice Cassava NaturalRubber

Sugar Fruits &Vegetables

Agricultural Export Comparison

Bil

lion

$U

SD

ThailandUSAWorld

Introduction


*Office of Agricultural Economics http://www.oae.go.th/oae_go_th/statIm_Ex.php

Values of Exported Agricultural Goods*

16.9

18.5

18.8

21.7

23.9

25.5

29.0

74.8

78.0

79.0 89

.9

133

120

105

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006

Year

Bil

lion

$U

SD

Agricultural Goods

All Goods

Introduction



Values of Exported Agricultural Products in 2006*

6.78

4.84

2.53

1.68

1.48

1.19

1.08

8.97

5.30

2.64

1.65

1.50

1.27

1.23

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Rubber Fishery Rice Wood Animals Fruits Paper

Product Group

Bil

lion

$U

SD

2005

2006

Introduction



Values of Exported Agricultural Products in 2006*

2.24

1.33

1.17

1.01

0.47

0.43

0.38

0.0

0.5

1.0

1.5

2.0

2.5

3.0

BlockRubber

Tuna Shrimps Meat Offals Condiments Cassava Raw Sugar

Individual Product

Bil

lion

$U

SD

Introduction



Values of Exported Fruits & Vegetables in 2006*

87.0

58.0

57.8

26.9

14.9

11.7

361

0

50

100

150

200

250

300

350

400

Pineapples(airtight)

Durians(fresh)

Corns(young)

Longans(fresh)

Asparagus(fresh)

Onions &Garlics

Mangoes(airtight)

Fruits & Vegetables

Mil

lion

$U

SD

IntroductionAgricultural products of significant values in the Northern part of Thailand

Economic crops of Thailand includesLongan, Orchids, Temperate Plant such as Beet Root, Rice, Tea, Herbs, Orange and Lychee*

*Chiang Mai Development Strategy (Thai Language) http://www.agro.cmu.ac.th/department/fe/elearning/Research2/ChiangMaiStrategy.pdf


Values of Exported Economic Crops in 2006*


18.9

11.6

2.395.488.37

112

0

20

40

60

80

100

120

140

Longan Lychee Orchid Oranges Tea Herbs

Economic Crops of Northern Thailand

Mil

lion

$U

SD


Agro-Industry is one solution to Thailand problems*


- Inequality exists between urban & rural areas in term of income, attention, promotion, investment because urban area grows at a much faster pace

- In term of labour allocation, industry sectors do not provide sufficient jobs as evident from the trend of sectorial employment

- Manufacturing industrial sectors are unproductive due to high dependency on imported materials




- Agro-Industry has a potential to tackle these problems by adding values to agricultural products

- It also serves as a bridge connecting agriculture sector with modern sectors

- Once fully developed, more equality should be achieved, employment transformation should be smoothened while maintaining high GDP growth rate (as of 2005, Thailand’s GDP was at 169b USD)


Agro-Industry is one solution to Thailand problems

*http://en.wikipedia.org/wiki/Image:Gdp_nominal_and_ppp_2005_world_map_single_colour.png

GDP = consumption + investment + (government spending) + (exports − imports)




Promote Agro-Industry in rural area to

- Minimize primary agriculture

- Improve wage of farmers

- Prevent excessive migration to urban area

- Establish input depot of agricultural products

Agro-Industry is a bridge connecting transformation of Thailand from agricultural to industrialized country

Introduction

Problems of Agro-Industry in Thailand*


Processing Problems

- Unreliable supply of raw materials

- Variation in raw materials quantity & quality

- Some small & medium scale factories used obsolete or used production machinery

low productivity

poor quality of finished products

Introduction



Processing Problems

Attempts of solving the problems:

- Direct purchasing during the harvest period

- Contractual arrangements with farmers and through middleman

- Producing raw materials on their own plantations

Introduction



Farmers’ Problems

- Unaccustomed to fixed schedule of cultivation

planting times, irrigation, chemical application

- Use improper techniques for handling of harvested produce

no cleaning, grading, sorting, precooling

rapid deterioration of raw material quality

Introduction



Agricultural Marketing Problems

1. Small-scale production

Majority of farmers is producing small scale

Little or no bargaining power

Overproduction why?

Variation of farm gate prices why?

Introduction



#http://11news1.com/daily/ViewNews.aspx?NewsID=9500000045940 23/04/07



Introduction


#http://11news1.com/daily/ViewNews.aspx?NewsID=9500000045940 23/04/07, http://www.timwu.org/durian.JPGhttp://www.greentales.com/files/durian.jpg, http://www.rirdc.gov.au/rirdc-online/july06-rambutan.jpg



Introduction




2. Lack of quality produce & irregular supplies

Highly developed esp. in fruit processing

But difficult to operate at full capacity

Low quality of raw materials

Irregular supplies

Exports are affected

Introduction




3. Poor harvest & post-harvest management

Short shelf life

Major losses of agricultural products

Farmers pay little attention to these problems

Merchants neglect proper post-harvest handling practices

Introduction




4. Poor packaging

Poor levels of know-how

Lack of standard requirements for packing

Crop damage is resulted during post-harvest handling & transportation

Major problems with fruits & vegetables

Introduction




5. Lack of marketing facilities & infrastructure

Central wholesale markets located far away

Not enough market facilities such as storagespace, drying floor, dryers, weighting

scales

Inadequate availability of packaging materials, equipment, cold storage, transportation

Introduction




6. Lack of an efficient marketing info. system

Farmers lack of timely & accurate marketinformation covering production,

daily prices, & market demand

Such info. is necessary for negotiating prices & planning shipments of produce

Introduction




7. Export quality standards

Quality standard sets by importing countries agricultural products differ from country to country

Difficult to manage the quality of suchproducts

Introduction




8. Competition in international markets

Severe international competition & import specific trade barriers

Domestic prices of major Thai crops dependon the export volume

Introduction




9. Lack of airfreight space and high costs

Major constraints facing Thai exports,especially in the case of

horticultural produce

Introduction

Problems of Agro-Industry in Thailand

Attempts in standardization of products

GHP: Good Hygiene Practice

GMP: Good Manufacturing Practice [FDA, Codex]

HACCP: Hazard Analysis & Critical Control Point

ISO (Greek Isos = equal): International Organization for Standardization

9000, 9001, 14000, 14001, 18001, 22000

BRC: British Retail Consortium

QWL: Quality of Work Life [ISO for workers]

Introduction



Introduction



Disciplinary of Agro-Industry


Available Training & Learning Programs


WorkshopsLocal

#1, #2, #3International

#1, #2On site consultant

GHP, GMP, HACCP, ISOQWL Consultation

http://www.thaiboxing.com/images/thailand-political-map.gif

Chiang Mai, Lampang & UttaraditCase Studies:

Case Studies:

Small Scale Factory

Kao Tan Factory, San Sai, Chiang Mai Medium Scale Factory

Taweepan Kao Tan Factory, Lampang

Noodle Factory, Uttaradit

Animal Feed Factory, Uttaradit Large Scale Factory

Thai Identity Sugar Factory, Uttaradit

Agro-Industry Factories

Conclusion

Majority of Thai is still in the agricultural sector Inequality between urban & rural areas, inability

of industrial sectors to provide sufficient number of employments and their high dependency to imported materials; all contributed to Thailand problems as suggested by Thaiprasert (2006)

Agro-Industry is one part of the solution to these problems by bridging the widening gap between agricultural and industrial sectors

Conclusion

However, Agro-Industry does face problems of its own such as low quality and unreliable raw materials, lack of understanding by the farmers to postharvest practices

Other problems

Overproduction of agricultural products

Standardization of processing practices

Q & A

Documents

Agro-Industry in Thailand Noppol Leksawasdi, PhD 21 st May 2007 09.00-10.30 AM Faculty of Agro-Industry, CMU