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Agricultural Sector and the Prevailing Supply Chain in Thailand

Agricultural Sector and the Prevailing Supply Chain in Thailand. A Brief Background. Agricultural Sector. It is comprised of small-farm holders. They are caught in poverty circle and have to live at a subsistence level. They are totally exposed to all farming risks.

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Agricultural Sector and the Prevailing Supply Chain in Thailand

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  1. Agricultural Sector and the Prevailing Supply Chain in Thailand A Brief Background

  2. Agricultural Sector • It is comprised of small-farm holders. • They are caught in poverty circle and have to live at a subsistence level. • They are totally exposed to all farming risks. • As small-farm holders they have to try to protect their crops by all means. • In most cases, they are slowly dragged into a powerful downward spiral and eventually loss their farms.

  3. Constraints Facing by Small-farm Holders • No direct access to markets, a logistical constraint. They have to depend on services of middlemen. • Lack of market information. • Limit access to farming technology. • Limit access to funding. • No resources to improve their farms. • No reserve funds to start anew in cases of severe crop damage or total loss.

  4. Market Mechanism at Wholesales Level • It is a spot market where market mechanism works against small-farm holders. • Prices fluctuate greatly and frequently. • The market characteristic forces middlemen to buy at low price at farms. • Net works of “Regular suppliers” which provide daily supply to wholesalers limit small-farm holders’ market access.

  5. Prevailing Supply Chain • It is a very inefficient multi tiers chain. Products from farm change hand many times before they finally reach end users. • Poor logistics and handling compromise quality and food safety and createhuge wastage. • Losses in the chain are pushed back to growers by lowering down the buying price at farm. • Consumers have to pay dearly for poor quality products. • Growers and consumers are losers and no one gains.

  6. PREVAILING SUPPLY CHAIN farms District/provincial wholesales market Major wholesalers markets in cities District/provincial wholesales market Pack house/food factory/exporter Pack house/food factory/exporter Pack house/food factory/exporter Retailer Retailer Retailer Importer / wholesaler Importer / wholesaler Consumer Importer / wholesaler Consumer Consumer Retailer Retailer Retailer Consumer Consumer Consumer

  7. Value Losses Wastages are given at 10%,20%,30% and 40% million Baht

  8. Contract Farming Model and Supply Chain of Swift Company

  9. Mission Statement Key missions: • Swift Company will supply only premium quality produce with highest standard of food safety. • Every stakeholder in the value chain must fairly benefit from the company’s operation.

  10. Contract Farming Model • The model has been designed to remove the constraints facing by small-farm holders. • Growers are organized into groups after risk assessment of farm plots. • All trainings are provided free of any charge. • Farm production planning are laid out by the groups and the company. • Collection stations are set up at each groups. • All operation is above board. Payments on time. • Relationship is basing on partnership approach.

  11. Contract Farming ModelFair Pricing and Financial Support • Floor price is guaranteed before planting. A fair pricing under long enough term contract. • It is basing on farming cost, retail price in the targeted markets,Swift’s operating cost and a given rate of return to growers. • Any cost saving in farming is automatically passed to growers. • Interest free long term loans are provided to the group, a collective responsibility approach. • In cases of total or severe losses from factors beyond their control, grants are provided for new cropping.

  12. FARM OPERATION • Organizing groups of growers in selected areas to grow and supply premium fresh produces to Swift’s pack-houses. • Risk assessments are carried out on all major factors from history of land use to soil and water condition and to any possibility of cross contamination. • Three types of farming practices by members are: • Conventional farming under Global GAP; • Agro-chemical free farming; • Organic farming.

  13. Certification on Farming Practice

  14. FARM AUDITING • Swift’s zone-agronomists conduct regular internal auditing of members’ farms. • Independent internal auditing is carried out by other agronomists from head office. • They are trained and certified on HACCP system and Global GAP auditing. • Yearly certification on Global GAP and organic farming practices are carried out by licensed CB

  15. COLLECTION AND GRADING • Collection stations of the company are set right in the growing areas. • Weighing and grading are transparently carried out at the stations. • Labeling of plot-codes and growers’ names is part of the company’s traceability system. • Post harvest control can be carried out right after harvesting from farms.

  16. Contract Grower Groups Chiengmai Chiangrai Nan LoeiLoey Phisanulok Ubon-Rajthani Phetchabun Kanchanaburi Suphanburi Nakhonpathom Chachengsao Sakaew Rayong Chanthaburi Prachuapkhirikhan Trat Chumporn Surathani Nakhonsrithammarat

  17. LOCATION OF PACK HOUSES • Kampangsaen (Central) • Petchaboon (Lower North-Northeast) • Chiangmai (North) • Panas-Nikom (East)

  18. PACK-HOUSE & PROCESSING • They are purposed built pack-houses with GMP certification. • Different types of facilities are designed to accommodate different processing. • Processing of fresh produce is under the HACCP and BRC Higher Level systems. • Processing of organic and conventional produce is separated.

  19. Processing Certification

  20. SWIFT ‘S SUPPLY CHAIN PACK HOUSE 1 PACK HOUSE 2 IMPORTERS RETAILERS CONSUMERS. GROWERS PACK HOUSE 3 • DIRECT SUPPLY FROM FARMS TO PACK HOUSES. • MINIMIZING WASTE, LIM APPROCHING ZERO PACK HOUSE 4

  21. COMMUNITY DEVELOPMENT • The operation of the company generates direct income of over Baht 300 millions to farm communities per year. • Pricing policy reduces risk to our growers to the minimum. Our guaranteed price is much higher than the market price. • Financial support and transfer of technology from the company help in improving yields and incomes of our growers. • The company has actively participated in development programmes with local community, temples, schools. • The Ministry of Agriculture selected Swift Co., Ltd. as an outstanding company in supporting and developing farm communities.

  22. ENVIRONMENT • Swift acquires supply only from members’ farms and cooperatives. The farming practices of the company ensure that environment and ecology are protected. • Price incentive, interest free loans, and other financial supports are provided in assisting growers to change to Global GAP and ORGANIC farming practices. • Pilot farms have been set up in different areas with Agricultural University and with the Ministry of Agriculture to promote organic and GAP farming.

  23. ETHICAL TRADING • The company has develop a “Win-Win” policy that all parties, fromgrowers to workers to consumers and to the company, have their fair sharesfrom the operation • Under age worker or “child labour” is not allowed in our company. • Free medication, social security, are provided to all workers. The company goes beyond what is required by law to provide better welfare to all workers such as longer period with full pay on maternity leave. • On over time, one and a half time normal wage is paid on normal working day. On holiday two times is paid • Free vacation and free transportation to and from work are provided • Interest free loans are provided for employees who are in need • All growers get guarantee prices for their produces on long term contracts. Interest free loans are provided to improve their farms. • Scholarship are provided to poor children in school. • All workers, growers, and other suppliers are paid exactly on time

  24. CORPORATE SOCIAL RESPONSIBILITY (CSR) Swift was invited as a speaker in “CSR Symposium” organized by Network for Sustainability Communication (NSC) and Global EnvironmentalForum (GEF) in Tokyo, Japan in July 2005. The company was honored as the only speaker on its “CSR Initiative” to delegates of Council for Better Corporate Citizenship (CBCC) in Bangkok in September 2005. The company was invited to be a resource speaker in Tokyo, Japan on “Enhancing Corporate Social Responsibility (CSR) in Asia” by ADBI in October 2007. Swift received CSR and SR certification from Thai Government in 2009; after the certification system was introduced in Thailand in 2008 and early 2009.

  25. Ethical Trading Certification

  26. Social Responsibility Awards

  27. THANK YOUSwift Co., Ltd.exotic@thaifreshproduce.comwww.thaifreshproduce.com

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