Agro-Industry in Thailand Noppol Leksawasdi, PhD 21 st May 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 Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp

Available Agricultural Raw Materials Introduction

Available Agricultural Raw Materials 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 # Thaiprasert, N 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 Available Agricultural Raw Materials 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* * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp

Introduction GNIPC & %Occupation in Agriculture* Available Agricultural Raw Materials * Thaiprasert, N 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. Country GNIPC $USD (2000) 1980 (%)1998 (%) Lao PDR29080N/a Thailand2, Japan35, World5,17051N/a GNIPC = Gross National Income Per Capita

Introduction Trend of sectorial employment in Thailand* Available Agricultural Raw Materials * Thaiprasert, N 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.35.

Introduction Major Exported Agricultural Products * Thaiprasert, N 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.64. Agricultural Export Comparison (TH, USA, World)*

Introduction Major Exported Agricultural Products * Office of Agricultural Economics Values of Exported Agricultural Goods*

Introduction Major Exported Agricultural Products * Office of Agricultural Economics Values of Exported Agricultural Products in 2006*

Introduction Major Exported Agricultural Products * Office of Agricultural Economics Values of Exported Agricultural Products in 2006*

Introduction Major Exported Agricultural Products * Office of Agricultural Economics Values of Exported Fruits & Vegetables in 2006*

Introduction Agricultural products of significant values in the Northern part of Thailand Economic crops of Thailand includes Longan, Orchids, Temperate Plant such as Beet Root, Rice, Tea, Herbs, Orange and Lychee* * Chiang Mai Development Strategy (Thai Language)

Introduction Agricultural products of significant values in the Northern part of Thailand Values of Exported Economic Crops in 2006* * Office of Agricultural Economics

Introduction Agricultural products of significant values in the Northern part of Thailand Agro-Industry is one solution to Thailand problems* * Thaiprasert, N 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. -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

Introduction Agricultural products of significant values in the Northern part of Thailand Agro-Industry is one solution to Thailand problems* * Thaiprasert, N 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. -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)

Introduction Agricultural products of significant values in the Northern part of Thailand Agro-Industry is one solution to Thailand problems * GDP = consumption + investment + (government spending) + (exports − imports)consumptioninvestmentgovernment spendingexports imports

Introduction Agricultural products of significant values in the Northern part of Thailand Agro-Industry is one solution to Thailand problems* * Thaiprasert, N 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.  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 * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp 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 Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp 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 Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp 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 Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp 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 Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp # 23/04/07 Agricultural Marketing Problems 1.Small-scale production

Introduction Problems of Agro-Industry in Thailand * # 23/04/07, Agricultural Marketing Problems 1.Small-scale production

Introduction Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp Agricultural Marketing Problems 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 Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp Agricultural Marketing Problems 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 Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp Agricultural Marketing Problems 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 Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp Agricultural Marketing Problems 5.Lack of marketing facilities & infrastructure  Central wholesale markets located far away  Not enough market facilities such as storage space, drying floor, dryers, weighting scales  Inadequate availability of packaging materials, equipment, cold storage, transportation

Introduction Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp Agricultural Marketing Problems 6.Lack of an efficient marketing info. system  Farmers lack of timely & accurate market information covering production, daily prices, & market demand  Such info. is necessary for negotiating prices & planning shipments of produce

Introduction Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp Agricultural Marketing Problems 7.Export quality standards  Quality standard sets by importing countries agricultural products differ from country to country  Difficult to manage the quality of such products

Introduction Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp Agricultural Marketing Problems 8.Competition in international markets  Severe international competition & import specific trade barriers  Domestic prices of major Thai crops depend on the export volume

Introduction Problems of Agro-Industry in Thailand * * Nualvatna, K Development of Agribusiness Enterprises: COUNTRY PAPER: Thailand. Report of the APO Seminar on Development of Agribusiness Enterprises. Indonesia, November 2000, pp Agricultural Marketing Problems 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,  BRC: British Retail Consortium  QWL: Quality of Work Life [ISO for workers]

Introduction Problems of Agro-Industry in Thailand Attempts in standardization of products

Introduction Problems of Agro-Industry in Thailand Attempts in standardization of products

Disciplinary of Agro-Industry Faculty of Agro-Industry, CMU

Available Training & Learning Programs Faculty of Agro-Industry, CMU Workshops Local #1#1, #2, #3#2#3 International #1, #2#1#2 On site consultant GHP, GMP, HACCP, ISO QWL Consultation

Chiang Mai, Lampang & Uttaradit 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