A private sector case study from Thailand

1
CASE STUDY
Response by a company in THAILAND
2
CASE STUDY
KAMPHAENG SAEN COMMERCIAL CO., LTD.

• Established in 1993 as a packing house in Central
  Thailand, selling produce through exporter
• Upgraded in 1999/2000
• Ships green asparagus, baby corn, and a range of
  other tropical fruits and vegetables by air to
  the UK, the Netherlands, France and Japan
• Specialized in packed vegetables and fruits,
  including ready - to - eat
  packages direct sale to high-end retailers
• Recently also sale to same retailers in Thailand
• Most products sold under own brand name KC FRESH

3
CASE STUDY
Challenges and Response (1)

• Challenge
• In late 1990s, with the emergency of BRC and
  EUROGAP, buyers in UK voiced that upgrading
  standards would become necessary
• Response proactive and offensive strategy
• Acquired land for establishing Good Agricultural
  Practice (GAP)
• Upgraded all facilities, introduced HACCP, ISO
  9001
• Extensive training of staff

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CASE STUDY
Challenges and Response (2)

• Response (continued)
• Shortened supply chain and started direct export
• BRC accredited in 2003
• After EUROPGAP was established, expansion of
  sales through contract farming
• Sales increased from US 3.3 million in 1999 to
  US 8.5 million in 2003
• Expect 2004 US 11.5 million

5
CASE STUDY
System of Contract Farming

• Supplier organizes farmers in groups, provides
  technology (GAP), provides input in kind, ensures
  compliance
• All input use is registered daily
• Farmers group has a small collection place,
  organizes collection, initial sorting, grading
  and coding
• Rules of compliance strict with self-control by
  farmers groups and supervision by supplier (
  Internal Audit)
• End of 2003, 900 small farmers involved in
  contracts
• Loyalty farmers assured by 25 higher price than
  local market price

6
CASE STUDY
Some characteristics of Asparagus production

• Labor intensive crop, attractive for
• families with many family workers
• 0.2 ha per family worker
• Income per family US 5,000-10,000
  for 0.2-0.4 ha
• Compares to US3/day

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CASE STUDY
Own production base and contract farming

• Cost of production on own production base 30
  higher than in contract farming
• Yet a stable 35 of sales comes from own
  production base 65 from contract farming
• Importance own production base
• basic security for meeting contracts
• room for experimentation, benchmark information
  and demonstration

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CASE STUDY
Some factors for commercial success

• Daily or twice daily shipment by air to provide
  fresh product from farm to shop within 48 hours
  to Asia and 60 hours to Europe
• Regular shipment allows for low negotiated
  freight rates
• Relatively weak points in supply chain are
• Timely issuance of phyto certificates at export
• Non-privatized cold chains at airport
• Other companies experimented with somewhat
  different models, that also proved successful
• After private sector proved success of contract
  farming model government became interested in
  supporting its expansion through a training
  program

9
CASE STUDY
WESTERN CLUSTER GAP

• All small farmers under Western Cluster GAP
  will be accredited
• to the EUROGAP standard
• Either by direct accreditation
• PMO (Producer marketing organization)
• Certification by a national scheme benchmarked
  to EUROGAP

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CASE STUDY
The EUREPGAP policy covers the following issues

• Traceability
• Record Keeping
• Varieties and Rootstocks
• Site History and Management
• Soil and Substrate Management
• Fertilizer use
• Irrigation
• Crop Protection

• Harvesting
• Post harvest Treatments
• Waste and Pollution Management, Recycling and
  Re-use
• Worker Health and Safety and Welfare
• Environmental Enhancement
• Complaint Form
• Internal Audits