Example of an Intervention: The Thai Palm Oil Sub Sector

1. Example of an Intervention:The Thai Palm Oil Sub Sector Thai-German Programme for Enterprise Competitiveness GTZ

2. 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 intervention Scaling up the intervention Some basic lessons from applying M4P GTZ

3. Oil Palm Trees

4. Oil Palm Crushing Mill

5. Fresh Oil Palm Fruit Bunches Loose Fruit

6. Steam Processing the Fruit

7. 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

8. 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

9. Where does T-G PEC focus its interventions? GTZ page 9

10. SUPPORTING FUNCTIONS RULES Soil and leaf analysis testing services in the palm oil value chain Soil and leaf analysis - interconnected service market Skills development Information Product development Advocacy Analysis service Basic R & D Grow Process Value chain Regulations Informal rules & norms Standards Laws Springfield Centre | Making markets work

11. Competitiveness Issues and Focus GTZ

12. Projects and Interventions: GTZ

13. Intervention Example: Soil and Leaf Analysis Service GTZ

14. Leaf Analysis and Nutrient Recommendation Service The key to farm productivity Relatively Low FFB Yield Climate Improper Use of Fertilizer Quality of Planting Material Leaf Analysis and Nutrient Recommendation Service Farm Management Training Service Higher Potential Outreach Higher Impact GTZ

15. Choosing the right leaf

16. Constraints to the service Opportunities for 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

17. Harvesting Oil Palm GTZ

18. Intervention Impact Logic GTZ

19. Structuring the Intervention Social Marketing (GTZ) Direct Communication (Partner) Training for Farmers (Partner) The core service is delivered by the partner Usage of the Service & Recommendation Demand Creation Delivering Accurate Recommendation (Partner) Capacity Building Capability Assessment & Recommendation (GTZ) Additional Investment and Implementation (Partner) GTZ

20. A Rehabilitated Lab at a Palm Oil Mill

21. Lab Operator GTZ

22. Typical Generic Fertilizer GTZ

23. Contributions (Euro) In addition the initial investment costs to set up the lab were Euro140,000 page 23

24. From initial intervention focus to wide change Initial focus here ... ... eventually to have impact here Market not working Market working better Initial interventions Overall market vision Multi-faceted actions to promote system change Period of intervention Springfield Centre | Making markets work

25. Soil and Leaf Analysis Service (Phase 1) 268 Farmers Analysis Fees Crushing Mill “A” Lab Service Info GTZ

26. Soil and Leaf Analysis Service (Phase 2) 40 Farmers 268 Farmers Analysis Analysis Fees Info Crushing Mill “A” Crushing Mill “B” Lab Service Info Fees GTZ

27. Soil and Leaf Analysis Service (Phase 3) 40 Farmers 268 Farmers 410 Farmers Analysis Analysis Analysis Fees Info Info Crushing Mill “A” Crushing Mill “B” Crushing Mill “C” Lab Service Lab Service Info Fees Fees GTZ

28. Soil and Leaf Analysis Service (Phase 4) 40 Farmers 268 Farmers 410 Farmers 50 Farmers 50 Farmers Analysis Analysis Analysis Analysis Analysis Fees Info Info Crushing Mill “A” Crushing Mill “B” Crushing Mill “C” Lab Service Lab Service Info Fees Fees GTZ

29. Recent Progress on scaling up: • 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 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

30. Conclusions: (key applications of M4P) A focus on the lower end of the VC Looked at their market transactions Identified priority transactions Examined how to restructure them Worked with transaction partners to identify their short and long term interests GTZ

31. Conclusions: (key applications of M4P) • Repackaged interests in a sustainable way • Used a market system approach for scaling up • Facilitation tools used: • Understanding impact logic • Demand side surveys • Social marketing • Making deals with leads firms • Understanding transactions • Anaysing incentives GTZ

32. Thank You GTZ