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Programme for Enterprise Competitiveness
Example of an Intervention:
The Thai Palm Oil Sub Sector
Thai-German Programme for Enterprise Competitiveness
GTZ page 1
Programme for Enterprise Competitiveness
Outline of Presentation
An Intro to the Palm Oil Sector in Thailand The GTZ’s Focus in this sector Within this focus, one intervention The intervention impact logic The structure of the intervention Sharing the cost of the interventionScaling up the intervention Some basic lessons from applying M4P
GTZ page 2
Programme for Enterprise Competitiveness
Oil Palm Trees
Programme for Enterprise Competitiveness
Oil Palm Crushing Mill
Programme for Enterprise Competitiveness
Loose Fruit
Fresh Oil Palm Fruit Bunches
Programme for Enterprise Competitiveness
Steam Processing the Fruit
Programme for Enterprise Competitiveness
Relevance of the Sector
Palm oil is the most competitive vegetable oil with a high growth potential
2nd most important cash crop in the southern part of Thailand More than 67,000 households involved in the plantation level The most important oil crop for Thailand in terms of domestic
consumption and self sufficiency All cultivation is on land already in agricultural use, so no cutting of
forests or destruction of animal habitats The ecological impact of the biomass (CO2 emissions) is minimal
as biomass is converted into methane and sold to grid
GTZ page 7
Programme for Enterprise Competitiveness
Basic Sector Information
In terms of global exports Malaysia accounts for 57% , Indonesia for 36% and Thailand for 17%.
Thai production costs are 12% higher in Thailand than Malaysia due to differences in plantation and crushing mill productivity.
Primary production is based mainly on 67.000 smallholders who generate 85% of the raw materials.
There are 50 crushing mills, located close to the electricity “grid”
GTZ page 8
Programme for Enterprise Competitiveness
page 9page 9GTZ
Where does T-G PEC focus its interventions?
Springfield Centre | Making markets workSpringfield Centre | Making markets work
SUPPORTING FUNCTIONS
RULES
LawsIn
form
al ru
les
&
norm
s
Standards
Regulations
Information
Bas
ic R
&
D
Soil and leaf analysis testing services in the palm oil value chain
Value chain
Advocacy
Skills developmen
tProduct
development
Analysis service
Grow Process
Soil and leaf analysis
- interconnected service market
Programme for Enterprise Competitiveness
Competitiveness Issues and Focus
GTZ page 11
Programme for Enterprise Competitiveness
Projects and Interventions:
GTZ page 12
Programme for Enterprise Competitiveness
Intervention Example:
Soil and Leaf Analysis Service
GTZ page 13
Programme for Enterprise Competitiveness
Leaf Analysis and Nutrient Recommendation Service
GTZ page 14
Relatively Low FFB Yield
Quality of Planting Material
ClimateImproper Use of Fertilizer
Farm Management Training Service
Leaf Analysis and Nutrient Recommendation Service
Higher Potential Outreach Higher Impact
The key to farm productivity
Programme for Enterprise Competitiveness
Choosing the right leaf
Programme for Enterprise Competitiveness
Constraints to the service Very low awareness and understanding of leaf analysis and nutrient
recommendations service and its benefit s (15-25% yield increase) which will result in a 26% increase in net income .
The service is not widely available and there is no commercial laboratory in the area.
Services from public laboratories are not widely available and the lead time is too long. They have no incentive to provide it on a commercial basis.
There is a crushing mill in the area that has already invested in the laboratory and willing to offer this service to their regular suppliers. However, the accuracy of the laboratory is not up to an acceptable standard.
GTZ page 16
Opportunities for the service
Programme for Enterprise Competitiveness
Harvesting Oil Palm
GTZ page 17
Programme for Enterprise Competitiveness
Intervention Impact Logic
GTZ page 18
Programme for Enterprise Competitiveness
Structuring the Intervention
GTZ page 19
Social Marketing(GTZ)
Direct Communication(Partner)
Training for Farmers(Partner)
Capability Assessment & Recommendation (GTZ)
Additional Investment and Implementation (Partner)
Delivering Accurate Recommendation
(Partner)
Capacity Building
Usage of the Service & RecommendationDemand Creation
The core service is delivered by the
partner
Programme for Enterprise Competitiveness
A Rehabilitated Lab at a Palm Oil Mill
Programme for Enterprise Competitiveness
Lab Operator
GTZ page 21
Programme for Enterprise Competitiveness
Typical Generic Fertilizer
GTZ page 22
Programme for Enterprise Competitiveness
Contributions (Euro)
GTZ Partner
1. Additional Investment in Equipment - 10,000
2. Laboratory Capability Improvement 4,000 10,000
3. Communication Program (demand stimulation) 24,000 8,000
4. Training of Farmers 600 12,000
5. Analysis and Recommendation Work - 12,000
Total Intervention Costs 28,600 52,000
% Contribution 35.5 % 65.5 %
page 23
In addition the initial investment costs to set up the lab were Euro140,000
From initial intervention focus to wide change
Market not working Market working better
Period of intervention
Multi-faceted actions to promote system change
Initial interventions
Overall market vision
Springfield Centre | Making markets workSpringfield Centre | Making markets work
Initial focus here ...
... eventually to have impact here
Programme for Enterprise Competitiveness
Soil and Leaf Analysis Service (Phase 1)
GTZ page 25
268 Farmers
Crushing Mill “A”
Crushing Mill “A” Lab ServiceLab Service
Analysis
Fees
Info
Programme for Enterprise Competitiveness
Soil and Leaf Analysis Service (Phase 2)
GTZ page 26
268 Farmers
Crushing Mill “A”
Crushing Mill “A” Lab ServiceLab Service Crushing Mill
“B” Crushing Mill
“B”
40 Farmers
Analysis Analysis
Fees
FeesInfo
Info
Programme for Enterprise Competitiveness
Soil and Leaf Analysis Service (Phase 3)
GTZ page 27
268 Farmers
Crushing Mill “A”
Crushing Mill “A” Lab ServiceLab Service Crushing Mill
“B” Crushing Mill
“B” Crushing Mill
“C” Crushing Mill
“C” Lab ServiceLab Service
40 Farmers 410 Farmers
Analysis Analysis Analysis
Fees
Fees FeesInfo
Info Info
Programme for Enterprise Competitiveness
Soil and Leaf Analysis Service (Phase 4)
GTZ page 28
268 Farmers
Crushing Mill “A”
Crushing Mill “A” Lab ServiceLab Service Crushing Mill
“B” Crushing Mill
“B” Crushing Mill
“C” Crushing Mill
“C” Lab ServiceLab Service
40 Farmers 410 Farmers
50 Farmers 50 Farmers
Analysis Analysis Analysis Analysis Analysis
Fees
Fees FeesInfo
Info Info
Programme for Enterprise Competitiveness
Recent Progress on scaling up:
The original partner continues to expand the service in the same area without project evolvement
A copy cat mill has set up another service in another part of the country using the same lab technicians to develop the service
GTZ page 29
4 other crushing mills in different areas are interested to participate. Three of them have come to visit the Lab
The Government is talking about establishing a lab in Krabi
Key Results: Almost 900 small farmers are accessing the service This results in yield increases of about 20% Which leads to a net income increase of 26% for farmers The service is sustainable and is expanding
Programme for Enterprise Competitiveness
Conclusions: (key applications of M4P)
1. A focus on the lower end of the VC
2. Looked at their market transactions
3. Identified priority transactions
4. Examined how to restructure them
5. Worked with transaction partners to identify their short and long term interests
GTZ page 30
Programme for Enterprise Competitiveness
Conclusions: (key applications of M4P)
6. Repackaged interests in a sustainable way
7. Used a market system approach for scaling up
8. Facilitation tools used:– Understanding impact logic
– Demand side surveys
– Social marketing
– Making deals with leads firms
– Understanding transactions
– Anaysing incentives
GTZ page 31
Programme for Enterprise Competitiveness
Thank You
GTZ page 32
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