1.3 Thailand´s agricultural sector and Agri Coops Overview

Assoc.Prof.Juthatip Patrawart

Director of Co-operative Academic Institute (CAI)

March 28, 2016 Nontri 1 Room, KU Home, Kasetsart University

Thailand´s agriculture sector, Agriculture Cooperatives and other Farmer Organizations situation and

perspectives on the AEC

ASEAN Learning Route on Agricultural Cooperatives : “Strengthening the Role of Agricultural Cooperatives to Address the Challenges and

Opportunities of the ASEAN Economic Community for the Benefit of the Smallholder Farmers”.

Current situation of socio-economics development in Thailand.

Roles of co-operatives, and related agencies for developing the agricultural sector in Thailand.

The new challengers: The Strategic direction for Thai agricultural cooperative .

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Outline of Presentation

• Thailand is considered a land of opportunities, with our strategic geographical location at the heart of ASEAN region, great network of connectivity, and a business-friendly atmosphere

• We are also an upper middle income economy and the 2nd largest economy in ASEAN



• Throughout the century, the agricultural cooperative development in Thailand has been developed continuously.

• The agricultural production is replaced by the manufacturing production. • Currently the production’s proportion of manufacturing sector is accounted approximately

90% of GDP, while the production’s proportion of agricultural sector is accounted only, 10% of GDP

• Thailand is rank one of the tenth in agricultural and food export to the world market

• Since 2004 the government has launched the “Thai kitchen to the world” policy with the aim to create a global presence for Thai Cuisine and food products and to support SMEs.

• Thailand is strength as the world’s 12th largest exporter of food products lies in food safety and food security.

• Recently, the uncertainly and fluctuation of world economy have effected to most sectors in Thai economy, particularly manufacturing sector.

• Thai government attempted to increase the importance of agricultural and service sector.


Potential 2020 Vision for Thailand Transformation from commodity supplier to branded, high value-added economy

Strategic Focus

" What Thailand should be known

for"

Strategic pillars

"How Thailand should operate"

Foundation

"What Thailand needs to have"

High quality & wide access to social services Sufficiency & sustainable resource management

High quality physical & technological infrastructure

Prudent fiscal & monetary policy

Open economy with high

social mobility

Culture of tech/

entrepreneur-ship&

excellence

Coordinated cluster

economy system

Knowledge & creativity

based communities

World-class work ethics

& governance

High value-added economy

World's food supplier Leader in creative products

Magnet for cultural & eco-tourism high-value added services

Regional logistics hub

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Transformation towards sustainable, higher value economy National agenda is key to drive transformation

Thailand Today

Commodity products OEM focus Basic infrastructure Basic use of rich cultural heritage in commercialization of products and services

Thailand 2020

Higher value-added products Branded products Higher-quality physical and technological infrastructure Cultural tourism and heritage-based product commercialization

• Add value

• Build brand

• Invest in infrastructure

• Leverage Thai heritage

Thailand’s vision (for 2015 and Beyond)

• Since the first cooperative of Thailand was establish in 1916 due to the government attempted to alleviate the debt problem of Thai farmers.

• According to the Cooperative Act B.E. 2542, there are 7 types of co-ops in Thailand.

Agricultural Co-ops.

Consumer Co-ops.

Services Co-ops.

Thrift and Credit Co-ops.

Credit Union Co-ops.

Fisheries Co-ops. Land and Settlement Co-ops.


• According to the Co-op. Act B.E. 2542, the minister of MOAC is a chairperson of NCDSC • NCDSC has responsibility to develop the policy and the national development plan. • CLT is the national apex org. of co-op. movement. • ACFT, FSCT, CULT are national co-ops. • The myriad org. supporting to the co-op. movement such as

- CPD, CAD, BAAC, CDF, CAI etc.

Co-operative Movement Structure

Current Situation of Co-op. Movement • 7,043 Co-ops. • 11,470,013 Individual Members (18% total pop.) • Agri. Co-ops. : Non Agri. Co-ops. (54% : 46%)


Type of Business 2011 2012 2013 Saving and deposit 1,900.62 2,106.61 2,344.37 Credit 2,886.22 3,200.90 3,856.37 Purchasing 1,663.34 1,892.54 2,221.00 Marketing 3,460.48 3,773.91 3,393.34 Other services 15.41 17.10 17.69 Total Business Volume 9,926.08 10,991.06 11,832.77 Growth Rate (percentage) 25.32 10.73 7.66

Business Performance of cooperative in agricultural sector during 2009-2013 (Unit: $Million dollars)

Source: Cooperative Auditing Department, 2016

• The main business of Agri. Co-ops. are

- Savings & deposit, Credit, Purchasing, Marketing

• Total asset in Agri. Co-op. $ 6,059 million • Credit Business $ 15,602 million • Saving & Deposit $ 14,507 million • Purchasing $ 13,894 million

New Strategic Framework for Evolutionary Development Process of SEE (2013-2015)

The new research theme during this period will be “The New Strategic Framework for the Evolutionary Development Process of SEE (2013-2016)”. It is a development process that expects a building-up of social, intellectual and human capital over time. To build up financially viable grass-roots business organizations is only part of the total picture. To reach the goal of happy society, other parts of the framework are as important to make the business organizations successful.

New Challengers:

• The upgrading all pasts of the co-op. system with the key mechanism.

Functional Upgrading, Process Upgrading, Product Upgrading

The new challengers: The Strategic direction for Thai agricultural cooperative.

The Moral Rice Value Network

The Moral Rice Value Network is a business model of multi-partnership that includes business enterprises throughout the supply chain of organic Hommali Rice. All participating farmers in the project vowed to observe a set of moral codes i.e. abstinence from alcohol drinking, smoking and gambling. These farmers create a brand, “Moral Rice,” which is meant to induce trust in their customers that the product is genuine organic Hommali Rice. Eventually, the new brand has successfully helped farmers overcome the falling prices of rice. Altogether, there are 119 moral rice farmers, who are members of the Dhama Ruamjai Group in Yasothon Province. The group has its own motto, “Strong Moral Codes, high working skills and good knowledge,” to guide their farming activities in the supply chain system, which makes it unique.

The Strategic Framework of the Moral Rice Value Network.

The Fruit Value Network

The Fruit Value Network is a model of the Kitchakut Agricultural Co-operatives Ltd. in Chanthaburi province. It adopted the VN&F platform in search of a solution to the highly volatile fruit markets, the challenges faced by the co-operative members. The strategic framework for creating the Fruit Value Network and its economic and social implications for the communities

The Strategic Framework of the Fruit Value Network.

The Sampran Value Business Group

The Sampran Value Business Group is another innovative value network business model. It is located at the Rose Garden Hotel, Sampran district, Nakorn Pratom province. The business group was founded by the owner of Rose Garden Hotel. The CAI provided the group with technical support in applying the principles of self-help and mutual help to overcome pollution from chemical-based farming in the neighborhood. The model promoted farmers' understanding and awareness of the benefits of organic farming that could contribute to their better living conditions and economic success.

In this project, the “Sukjai Market” (Happy Market) was set up as a weekend market, where orchard farmers in the surrounding communities could bring their organic products to sell free of charges. The production of organic products was under close supervision of the CAI and the Rose Garden Hotel. Participating farmers did not only earn more than 1 million baht a month from selling their organic products, but they also learned about the principles of marketing, food safety as well as Good Agricultural Practice (GAP). Hence, the Sukjai Market has become the living learning center for everyone in the community

The Strategic Framework for the Sampran Value Business Group.

Organization Structure of Thai Co-op. Hommali Rice Value Network

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Thai Co-operative Hommali Rice Valued Network

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Government & Nonprofit

1.3 Thailand´s agricultural sector and Agri Coops Overview