Thailand country study

Wyn Ellis – Novia Consulting Group

28 March 2012

Structure of presentation

1. Subsectors covered by the study

2. Key trends

3. Private sector response

4. Current interventions / lessons learned

5. Donor strategies

6. Conclusions

Value chains studied

1. Rice

2. Chickens

3. Horticulture

4. Cassava

5. Rubber

6. Sugarcane

(All strategically important either as domestic staples or as exports)

Key trends

1. Commodity-based support policies

2. Restructured supply chains driven by expansion of

modern trade retailers (domestic / overseas)

3. Contract farming based on private safety / quality

standards

4. Emerging interest in organic / GI / Fair Trade markets

5

Private sector responses in agriculture

Main sources of investment• Domestic agribusiness conglomerates • International retailers• Institutional investors (e.g. IFC)

Recent changes in value chains• Food increasingly channelled via formal sector retail outlets• Growing concentration at all levels• Shortening / rationalization of supply chains • Shift to higher value products• Private sector standards for food quality and safety• ‘Professionalization’ of farming / increasing farm size • Contract farming

Current interventions- summary

Source:

Macro-level interventions to improve enabling environment

Intervention Main lessons

• Commodity-based support policies

• Rice pledging scheme

• Need integrated policy-making based on economic rationale

• Current policies adversely impact export competitiveness

• Distributional impacts of policies favour business, hurt farmers, increase inequity

• Distortion of cropping systems

Direct financial assistance to business

• BOI incentives (tax exemptions and holidays for overseas food industries)

• BAAC credit scheme for farmers

• IFC US$70 million financing package for Saha Farms group to expand poultry operation

• Agribusiness, not farmers, are the prime beneficiaries

• Large farmers dominate among beneficiaries

• Need for investors in contract farming operations to focus on equity for small farmers

Market development

• OTOP scheme aimed to help SMEs

• Food safety standards initiatives

• Mkt development should be demand-driven and requires closer linkages with real markets

• Strengthen control systems / surveillance / traceability to strengthen international credibility

Dialogue & partnership with business

• TCC/FTI are govt’s de facto dialogue partners

• Broader, genuine consultation processes needed

Donor strategies

Policy dialogue • Structural adjustment programmes• Policy reform to enhance coherence and tackle rural inequity• Re-examine land and water policy • Reform public sector research programmes

Market development• Facilitate market access, credit for smallholders• Incentivize private sector engagement with smallholder producers• Minimize market distortions and perverse incentives affecting the poor• Implementation of safety, quality and ethical standards• Institutional reform- support producer groups

Financial assistance to businesses• Social venture capital to boost grassroots initiatives supporting smallholders• Specific assistance to strengthen competitive position of small farmers• Finance for income diversification

Dialogue /partnerships• Strengthen stakeholder consultation processes• Encourage private sector partnerships to promote technological innovation / upgrading among smallholders

Conclusions & challenges

• Agribusiness continues to flourish, though agricultural competitiveness is declining

• Policy environment distorts markets, promotes inequity

• Restructured supply chains marginalize small producers, impact rural economy

• International donor community has a role at both policy and grassroots levels in addressing inequity, market linkages and access to knowledge, technology and finance for smallholders

Policy, institutional reform and

governance - key to long term

competitiveness

Isvilanonda (2012)