CASE STUDY Response by a company in THAILAND
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
CASE STUDY Challenges and Response (1) Challenge • In late 1990 s, 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
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
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
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 US$3/day
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
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
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
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 Reuse Worker Health and Safety and Welfare Environmental Enhancement Complaint Form Internal Audits
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