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 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

CASE STUDY

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

Challenges and Response (2)

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 Re-use

• Worker Health and Safety and Welfare

• Environmental Enhancement• Complaint Form• Internal Audits