Case Studies on Value added of tropical fruits in Thailand

MAHA 2008

Case Studies on Value added of Case Studies on Value added of tropical fruits in Thailandtropical fruits in Thailand

Juejan Tangtermthong, Ph.D.Juejan Tangtermthong, Ph.D.

22

Definition of value chainDefinition of value chain

Business activities Business activities – DesignDesign– InputsInputs– MarketingMarketing– DistributionDistribution– FinanceFinance– Human resourcesHuman resources– After servicesAfter services

For Regional/Global value chain…

The activity and service across borders

33

Adding the valueAdding the value

BrandsBrands

ResourcesResources

TechnologiesTechnologies

Channels and distributionsChannels and distributions

ExpertiseExpertise

Etc.,Etc.,

44

Emerging of global value chainsEmerging of global value chains

DriversDrivers– Multilateral and regional free trade agreementsMultilateral and regional free trade agreements– Policy liberalizationPolicy liberalization– Technological innovationTechnological innovation– New management strategiesNew management strategies

ResultsResults– High competitionHigh competition– Smaller number of dominant lead firmSmaller number of dominant lead firm– Inadequate facilitation in developing countriesInadequate facilitation in developing countries

55

Challenges for SMEs in Developing Challenges for SMEs in Developing countriescountries

Lack of awareness, capacity and Lack of awareness, capacity and resources (capital, networks, skilled labor, resources (capital, networks, skilled labor, managerial expertise, infrastructure)managerial expertise, infrastructure)

High entry barriers (International High entry barriers (International standards, commitments)standards, commitments)

Unfavorable national business Unfavorable national business environmentenvironment

Lack of business development serviceLack of business development service

66

Intergovernmental organization's viewIntergovernmental organization's view

Agribusiness value chain is key role in poverty Agribusiness value chain is key role in poverty reductionreduction

(Food security/Job creation/Income (Food security/Job creation/Income generation)generation)

77

AFMAAFMA

Agricultural and Food Marketing Agricultural and Food Marketing Association for Asia and the PacificAssociation for Asia and the Pacific

Established 1983 by FAOEstablished 1983 by FAO

15 institution members from 9 countries15 institution members from 9 countriesPicture disclaimer of FAO Regional Office for Asia and The PacificPicture disclaimer of FAO Regional Office for Asia and The Pacific

88

AFMAAFMA

Stimulate technical exchanges and Stimulate technical exchanges and cooperation cooperation

Organizes workshop, seminar, Organizes workshop, seminar, study tour etc., study tour etc.,

Linking with governments, NGOsLinking with governments, NGOs

99

InformationInformation

From study tour between 21-26 May 2007From study tour between 21-26 May 2007

Both cases are in Chantaburi provinceBoth cases are in Chantaburi province

Cases of value added durian and Cases of value added durian and mangosteenmangosteen

Information of each cases are from Information of each cases are from interviewing producersinterviewing producers

1010

ChantaburiChantaburi

245 km from Bangkok245 km from Bangkok

172,000 farmer families172,000 farmer families

23.6 – 29.323.6 – 29.3°C°C

Rain nearly 3,000 mm/yearRain nearly 3,000 mm/year

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ChantaburiChantaburi

Total areaTotal area3,961,250 Rai 3,961,250 Rai (633,800 ha)(633,800 ha)

ForestForest 1,166,662 1,166,662 Rai (186,665 ha)Rai (186,665 ha)

FruitFruit 1,500,000 Rai 1,500,000 Rai (240,000 ha)(240,000 ha)

1212

Tropical fruits marketing in ThailandTropical fruits marketing in Thailand

Jul-Oct. 2004Jul-Oct. 2004

Fruit orchards

Grower groups

Local wholesale markets

Distributioncentre

Distributioncentre

Wholesalemarket

Exportfactory

Warehouse

Supermarkets

Discount stores

Retailers

Port

source: TDRI (2005)

1313

Traditional marketTraditional market

Can not control Can not control the pricethe price

Over supplyOver supply

Low priceLow price

1414

Value added products helpValue added products help

Estimate the future priceEstimate the future price

More markets for valued productsMore markets for valued products

Higher priceHigher price

1515

Price in Apr-Jun 07Price in Apr-Jun 07

Apr

May

Jun

AprMay

Jun

0

5

10

15

20

25

Price (Thai Baht)

Durian Mangosteen

Apr

May

Jun

Mixed grade Quality grade

Apr May

Apr

May

051015202530354045

Price (Thai Baht)

Durian Mangosteen

Apr

May

Jun

1616

Two value added casesTwo value added cases

Processing durianProcessing durian

Graded mangosteenGraded mangosteen

1717

Case 1:Durian processingCase 1:Durian processing

Frozen Frozen

Freeze dryFreeze dry

disclaimers of Sunshine International Co., Ltd. www.sunshine.co.th

1818

Whole frozen durianWhole frozen durian

Fresh durian

weigh

sorting

cleaning

freezing

-45℃, 8 hr

frozen

1919

Freeze dried durianFreeze dried durian

Frozen durian, -25℃

peeling

cutting

freeze drying

freeze dried


2020

Freeze dried durianFreeze dried durian

Easier for shipment (very light)Easier for shipment (very light)

No need for cool storageNo need for cool storage

Processing through out the yearProcessing through out the year

Durian 100 kg

Freezed dried 10 kg

Flesh 30 kg


2121

BuyingBuying

Upto 1000 tonnes/yearUpto 1000 tonnes/year

Buying durian from Chantaburi and SouthBuying durian from Chantaburi and South

Buying from brokersBuying from brokers


2222

Value addedValue added

11stst grade 18 Baht/kg grade 18 Baht/kg

22ndnd grade 15 Baht/kg grade 15 Baht/kg

Freeze dried 12-18 Freeze dried 12-18 Baht/kgBaht/kg

(Freeze dried selling at (Freeze dried selling at 1,500 Bt/kg)1,500 Bt/kg)


2323

Leading timeLeading time

Harvest in the morningHarvest in the morning

Leave to ripen 5-8 hrLeave to ripen 5-8 hr

Chantaburi: less than 6 hr Chantaburi: less than 6 hr

from farm to factoryfrom farm to factory

South: 18-24 hr South: 18-24 hr

from farm to factoryfrom farm to factory


2424

Case 2: Certified mangosteenCase 2: Certified mangosteen

Mangosteen grower group Mangosteen grower group (Ban Nonglaman Quality (Ban Nonglaman Quality Fruit Development Group)Fruit Development Group)

Thamai district, Thamai district, Chantaburi provinceChantaburi province

4 GLOBALGAP certified 4 GLOBALGAP certified orchardsorchards

20 other members20 other members

2525

Case 2: Certified mangosteenCase 2: Certified mangosteen

Gained certificate since Gained certificate since 20062006

The group was The group was introduced by District introduced by District Extension OfficeExtension Office

Started production of Started production of rambutan and Longong rambutan and Longong in 2007in 2007

2626

Packing housePacking house

Grading and pack at one farmGrading and pack at one farm

Facilities are shelter, walk-in refrigerator, Facilities are shelter, walk-in refrigerator, basketbasket

2727

ProductionProduction

collecting

grading

Prepackaging

(8 kg white basket)

storing

delivered

2828

Mangosteen suppliedMangosteen supplied

In 2006: 200-300 KgIn 2006: 200-300 KgIn 2007: 70 tonnesIn 2007: 70 tonnes

30 to traditional market30 to traditional market 8-12 Bt/kg8-12 Bt/kg

30 to River Kwai Inter. (to EU)30 to River Kwai Inter. (to EU) 15, 30 Bt/kg15, 30 Bt/kg

5 to Sunshine International5 to Sunshine International 15, 20, 27 Bt/kg15, 20, 27 Bt/kg 3 to Randy (to China)3 to Randy (to China) 20, 25, 30 Bt/kg20, 25, 30 Bt/kg

2 to CP (to Japan, Australia)2 to CP (to Japan, Australia) 27, 37, 47 Bt/kg27, 37, 47 Bt/kg

2929

PaymentPayment

Credit 15 days after harvest Credit 15 days after harvest (CP and River Kwai)(CP and River Kwai)

Randy pay on arrival to Randy pay on arrival to factoryfactory

Sunshine pay next daySunshine pay next day

3030

ProblemsProblems

Price competition with Price competition with nearby marketnearby market

Long term credit, need Long term credit, need cash to buy from other cash to buy from other growersgrowers

No market for lower gradeNo market for lower grade

3131

Conclusions and commentsConclusions and comments

Value added chain reduces fluctuation of the Value added chain reduces fluctuation of the pricepriceThere are more markets for both top and bottom There are more markets for both top and bottom of value added tropical fruit products.of value added tropical fruit products.It is hard for farmer to go out of the farm and It is hard for farmer to go out of the farm and seek for market and to get information of what seek for market and to get information of what customer need. customer need.

For all these, they need only some helps to get For all these, they need only some helps to get start!!!start!!!

3232

AcknowledgementsAcknowledgements

Chantaburi Agricultural Extension Office, ChantaburiChantaburi Agricultural Extension Office, Chantaburi

(Mr. Piya Pokket, Chief (in 2007) and Miss Charuwan (Mr. Piya Pokket, Chief (in 2007) and Miss Charuwan Thongbai, Extension officer)Thongbai, Extension officer)

Sunshine International Co., Ltd., ChantaburiSunshine International Co., Ltd., Chantaburi

(Mr. Sonthaya Bamrungcheep, production manager)(Mr. Sonthaya Bamrungcheep, production manager)

Ban Nonglaman fruit quality development group, Ban Nonglaman fruit quality development group, ChantaburiChantaburi

(Mr. Varin Somboon, group leader)(Mr. Varin Somboon, group leader)

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Thank youThank youfor attentionfor attention

Picture disclaimer of FAO Regional Office for Asia and The PacificPicture disclaimer of FAO Regional Office for Asia and The Pacific

AFMA SecretariatAFMA Secretariat

39 Maliwan Mansion

Phra Atit Road

Bangkok 10200

Thailand

www.afmaasia.org

[email protected]

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Case Studies on Value added of tropical fruits in Thailand