Commerce Ministry determined to boost growth of Thai organic products dector

Economy September 29, 2014 01:00

By PETCHANET PRATRUANGKRAI
THE N

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With organic products currently accounting for only 1 per cent of the Thai food market, the Commerce Ministry and producers plan to promote the growth of the industry and increase its market share, following rising awareness about healthcare, the environment and a sustainable agricultural-production system.

The ministry and private businesses believe Thailand has high potential to become a centre of organic farming and trading within Asean, but to achieve such a goal requires more policy support, and awareness on the part of farmers as well as consumers to pay more attention to organic products.

Malee Choklumlerd, inspector-general at the ministry and chair of its organic-promotion project, said the organic-product industry represented a sustainable means of agricultural production, and one which would not only promote good health for consumers, but also benefit farmers and help solve the problem of falling crop prices.

"People [globally and in the Thai market] now want healthier lives, and a better environment. Thai producers should shift to producing organic products to serve rising demand in the market. Organic growing will help increase farmers’ health and returns, as those concerned about organic products have more purchasing power," she said.

She stressed that Thailand could become a hub of organic farming and trading if the right policies were in place to support the industry. The sufficiency-economy philosophy of His Majesty the King is also relevant to the organic-farming production system, which should be promoted for sustainable growth, she added.

The ministry has set a target to promote Thailand as the Asean hub of organic farming and trading by 2020, with exports expected to increase by 10 per cent annually in the intervening years.

Every year from now, the ministry plans to promote at least three new organic products on the market, said Malee.

As part of the plan to encourage more producers, the ministry will seek policy support from the government to provide tariff privileges for organic farmers and traders.

It also plans to set up an organic fund to provide financial support to farmers, as well as help reduce the cost of overseas certification for farmers by encouraging them to group together in order to reduce inspection costs.

This last point is important as each country has its own organic certification system, and it is quite costly for Thai farmers to get separate certificates for each market, she said.

According to the Commerce Ministry and a survey by organic traders, trading in organic products only accounts for 1 per cent of total domestic food trading, with the organic-foods sector currently dominated by rice and vegetables.

Exports of organic products were worth only Bt3.1 billion last year, but the ministry now anticipates stronger annual growth of about 10 per cent a year.

Malee said that as no agency currently had directly responsible for organic trading and promotion, the ministry would be the centre of support for the sector’s growth.

The ministry also plans to hire an education or market-survey institute to study organic-product trading domestically and overseas, so that it can launch a strategy to promote the growth of the industry.

Malee added that organic products were not only about foods such as rice, fruit and vegetables, tea, coffee, coconut and milk, but also non-food items such as clothes, spa products, and items used in hotels and restaurants.

To promote market growth, the ministry will also support an education-awareness project to encourage more consumers to realise the benefits of healthy foods and support organic farm production, said the official.

As of 2012, the global value of organic-products trading was US$63.8 billion (Bt2 trillion). The United States was the largest market for organic trading with a value of $22.59 billion, followed by Germany ($7.04 billion), France ($4 billion), Canada ($2.13 billion), and the United Kingdom ($1.95 billion).

Plantation area on the rise

Last year, Thailand had a combined plantation area for organic growing of 314,000 rai (50,000 hectares), some 13.9 per cent higher than the previous year’s level.

Most of this – 200,000 rai – was for rice growing, followed by other farm crops at 68,000 rai, and vegetables and fruits at 10,000 rai.

Pruitti Kerdchoochuen, managing director of Dairy Home, the only solely organic milk producer in Thailand, said the company currently had just 1 per cent of the dairy market.

However, he plans to expand capacity in the near future to serve rising demand for organic milk produced by Thai farmers.

"With emerging concern over healthcare and fair treatment for farmers and animals, people with high purchasing power are increasing demand for organic products. Dairy products are among the mostly sought-after organic products by Thais," he said.

Dairy Home can produce about 5 tonnes of organic milk a day, with its milk sourced from about 10 dairy farmers under contract-farming arrangements.

In organic dairy production, 10 rai of land is needed for just 10-15 cows, while in the mass-production system, about 100 cows can graze on the same area.

However, mass production entails higher logistics costs as more grass and other feedmeal needs to be brought in for the cows, whereas for organic production, the animals can find their own food in the grazing area, said Pruitti.

The total value of the dairy sector in Thailand is about Bt20 billion a year, with organic milk currently accounting for just Bt200 million.

The MD said he would like other dairy producers and local farmers to be more aware of sustainable dairy farming, so that animals, farmers and consumers can live together in a good environment – and all enjoy better health.

Producers should also be able to enjoy sustainable business growth in an era of trade liberalisation, he said, adding that if they competed in mass production, Thai farmers would however find it difficult to survive due to rising production costs.

Sho Oga, president of both Harmony Life International and Harmony Life Organic Farm, said that with more than 15 years’ experience in growing organic vegetables in the foothills of Khao Yai mountain in Nakhon Ratchasima, he had found that the current supply of organic vegetables and fruits was inadequate to serve the domestic and export markets.

Thais now generally have greater awareness and concern about healthcare, and Thai farmers should adopt organic production so that they can enjoy better lives, without having to worry about market prices, he said.

"Organic products have their own value. Normally, the price of organic produce will be between one-and-a-half and two-times higher than traditional products. Thai farmers will not only be safe from chemical substances used to increase their productions, but will also enjoy stable prices, a good environment, and have higher bargaining power because of increased demand," said Oga.

With 70 rai of land devoted to organic growing, Harmony Life International has about 70 kinds of vegetables, fruits and herbs planted at its farm.

Oga said he would like to encourage and help train farmers to shift to organic production, as greater market opportunities awaited Thai farmers.

So far, it is mainly the markets of the US, Japan, the European Union, the Middle East, and even China and Asean – with their emerging economic growth and rising number of consumers with high purchasing power – that have turned to organic-product consumption, he added.