financing organic supply chain: the case of baac - 2012
TRANSCRIPT
FINANCING ORGANIC SUPPLY CHAINFINANCING ORGANIC SUPPLY CHAIN: THE CASE OF BAAC: THE CASE OF BAAC
by
Chamnong SiriwongyothaTeam Leader
Bank for Agriculture and Agricultural Cooperatives (BAAC)
Thailand25 September 2012
OUTLINEOUTLINE
1. Introduction and Current Situation2. Certification of Organic Products3. The role of The Royal Thai Government4. The Role of Bank for Agriculture and Agricultural
Cooperatives (BAAC) in financing Organic Supply ChainChain
5. Opportunities and Challenges
INTRODUCTIONINTRODUCTION
•• About ThailandAbout Thailand–– Situated in Southeast Asia, bordering Situated in Southeast Asia, bordering
Myanmar, Lao PDR, Cambodia and Myanmar, Lao PDR, Cambodia and MalaysiaMalaysia
–– Area : Area : 513513,,115 115 sq. km.sq. km.–– Area : Area : 513513,,115 115 sq. km.sq. km.–– Population : Population : 69 69 millionmillion–– Over Over 5050% of the country population % of the country population
engaged in agricultureengaged in agriculture–– A major rice exporterA major rice exporter
DEVELOPMENT OF ORGANIC AGRICULTURE IN DEVELOPMENT OF ORGANIC AGRICULTURE IN THAILANDTHAILAND
• The declaration of the 1st National Economic and
Social Development Plan in 1961 emphasizing
production for export.
• Increasing farmlands vs decreasing forest
• Practice of monoculture : Uses of agro-chemicals• Practice of monoculture : Uses of agro-chemicals
• Deteriorated natural resources and health
• Establishment of Alternative Agriculture Network
(AAN) in early 1980s
DEVELOPMENT OF ORGANIC DEVELOPMENT OF ORGANIC AGRICULTURE IN THAILANDAGRICULTURE IN THAILAND
• 2 main streams : Rural development oriented and
Business oriented
• First stream
– Farmers and NGOs
– Supporting farmers to adopt sustainable farming – Supporting farmers to adopt sustainable farming
practice
– Raising awareness on negative impacts of agro-
chemicals and undue dependency on external
market
– Promoting indigenous knowledge of sustainable
farming practice
•
2 2 STREAMS OF ORGANIC STREAMS OF ORGANIC AGRICULTUREAGRICULTURE
• Business Oriented : Entrepreneurs
– Large scale businessmen
– Overseas linkage
– Business opportunity
– Engaging local researchers and government to help – Engaging local researchers and government to help
them
– Foreign certification is used
Up and down experience due to international political
and economic condition
KEY CONTRIBUTORS OF ORGANIC AGRICULTUREKEY CONTRIBUTORS OF ORGANIC AGRICULTURE
• King Bhumibhol and the Royal Projects
• Santi Asoke, a Buddhist sect that practices and
transfer organic farming to farmers
• Dr. Han Kew Cho, president of Farmer Association,
Korea who was invited to transfer his knowledge on Korea who was invited to transfer his knowledge on
organic farming techniques.
• Chai Wiwat Agro -industry and Capital Rice Co. Ltd.
Started organic rice project in Chiang Rai and Phayao
• Man Sarmsri, a village headman and the leader of Na
so organic farming group in Yasothorn province who
dare to change to practice organic farming, creating
business opportunity for his group and local communities
CERTIFICATION OF ORGANIC CERTIFICATION OF ORGANIC PRODUCTSPRODUCTS
• Organic Agriculture Certification Thailand (ACT)
– A private non-profit foundation
– Offer IFOAM accreditation scheme
– Fee-based services
– Categories of certification– Categories of certification
• Farm certification
• Operator certification
• Project certification
• Wild product certification
• Aquaculture
• Livestock
• Eating establishment
THE ROLES OF GOVERNMENTTHE ROLES OF GOVERNMENT
• Regulatory framework
– National Office of Agriculture Commodity and Food
Standards (ACFS) established in 1995 to set up
regulatory framework compatible with the EU
system, launching its accreditation program in system, launching its accreditation program in
2004
– Organic Crop Institute, a public agency under
MOAC
– Thailand Institute of Technological and Scientific
Research (TISTR) under Export Promotion Department drafted organic crop standard in 1999
ORGANIC AGRICULTURE POLICYORGANIC AGRICULTURE POLICY
• Government declared and implemented organic
agriculture as national agenda in 2005
• The 5 year-programme aimed at supporting 4.25
million farmers (0.85 million in 2006) in using organic
inputs instead of agro-chemicalsinputs instead of agro-chemicals
• Reducing total export of agro-chemicals by 50%
• In 2004 Surin province set up a large scale organic
project which planNed to convert 16,000 farmer
households (with 37,000 ha) into organic jasmine rice
farming. Of which 2,735 households would apply for organic certification from ACT.
THE ROLES OF BANK FOR AGRICULTURE AND THE ROLES OF BANK FOR AGRICULTURE AND AGRICULTURAL COOPERATIVES (AGRICULTURAL COOPERATIVES (BAACBAAC))
• BAAC, a state owned bank under the Ministry of
Finance, was established in 1966.
• Providing financial services directly and indirectly to
farmers through its extensive branch network
• Total loan outstanding USD 24.25 billion (as of march • Total loan outstanding USD 24.25 billion (as of march
2012)
• Total deposits USD 27.25 billion
• Number of clients 6.7 million households
• Number of branches 1,082
BAACBAAC
Established in 1966 as a state enterprise under MOF
Mandate : to provide financial assistance to farmers
As of 31 March 2012,
In FY 2011 $ 14 billion of loan disbursement,
3.4 % for non farm loansAs of 31 March 2012, 1,082 branches and 979 field units, loan outstanding $ 24.25 billion
In addition to its role in Roles in agricultural financing, BAAC plays active roles in enhancing quality and productivity, marketing support, capacity building of farmers and strengthening rural community
96.6% for farm loans
THE ROLE IN ENHANCING QUALITY AND THE ROLE IN ENHANCING QUALITY AND PRODUCTIVITYPRODUCTIVITY
• BAAC-KU product development project
• Fluid manure project in collaboration withDepartment
of Livestock Development
• 1 Rai 100,000 Baht in collaboration with Chamber of Commerce University
MARKETING SUPPORTMARKETING SUPPORT
• To ensure good quality and reasonable prices of farm inputs and fair market crop prices for farmers
• Support the establishment and management of AMCs
• In 2008, 75 AMCs across the nation supplied farm input worth $ 600 million and marketed farm product worth $ 300 million
• BAAC runs 2 farm central markets to facilitate marketing farm produce of its clients
Step Step 3 3 creating community business network creating community business network
THE ROLE IN COMMUNITY DEVELOPMENTTHE ROLE IN COMMUNITY DEVELOPMENT
•• Sufficiency Economy Philosophy has been applied as a Sufficiency Economy Philosophy has been applied as a guideline for farmers to improve their quality of lifeguideline for farmers to improve their quality of life
Step Step 2 2 collecting and collecting and analysinganalysing data, formulating data, formulating community plan, conducting joint business venturecommunity plan, conducting joint business venture
Step Step 1 1 cutting down household expenses, building saving habit, cutting down household expenses, building saving habit, abandoning sinful habits abandoning sinful habits
THE ROLE IN FINANCING ORGANIC SUPPLY THE ROLE IN FINANCING ORGANIC SUPPLY CHAIN CHAIN
• In 2003, BAAC established Farmer Field School for
farmers to learn and practice organic rice farming
• Sufficiency Economy Learning Centres were set up in
order to spearhead in shifting farmers’ paradigm and
educate them how to practice organic farming by educate them how to practice organic farming by
maximizing the use of locally natural inputs instead of
relying those from external sources.
• BAAC supported the establishment of Organic Agriculture Federation in 2005
Financing Organic Supply Chain
Technical services
Financial Services
DOAE/NGOs
Farmers BAAC
BAAC's SELCs
DOCP/DOCA
AMCs/Agri-Coops
BAAC
DOIS/DOA/MOH
Processors
CBs
DOEP
Wholesalers/Exporters
EXIM Bank
CBs
DOI
Retailers/Super stores
CBs/GSB
Consumers
Community Rice Center
Hom Mali Aromatic Rice Grain
RICE WAY OF RICE WAY OF TALUNGTALUNG LEKLEK COMMUNITYCOMMUNITYA MODEL OF SELFA MODEL OF SELF--SUFFICIENT VILLAGESUFFICIENT VILLAGE
Middle StreamCommunity Council as a Center
Down StreamConsumers
Knowledge
Organic Rice � 40,000/T.Brown rice � 50,000/T.
Germinated brown rice Wholesale
� Local Wisdom� Culture� Technology
Value Creation
Finance
Wholesale/Retail
Up streamFarmer Producers
Marketing
Community Rice Seed Center
Community Rice CenterBrown riceGerminated brown riceGABA rice
GrainTotal Production200 Tonnes @ � 14,000 /T.
Hom Mali Aromatic Rice GrainTotal Production50 Tonnes @ � 18,000 /T.
AMCs
Germinated brown rice � 70,000/T.
Rice Seeds
� 22,000/T.
Retail
Retail
17th RiceSeed Center
Wholesale
Wholesale
200 T.
50 T.
50 T.
Retail
Thai GABA Rice
OPPORTUNITIES AND CHALLENGESOPPORTUNITIES AND CHALLENGES
• Opportunities
– Growing demand on safe food
– Rising agro-chemicals’ prices
– Threat of poor health affected by contaminated food
– Better cooperation among concerned agencies such – Better cooperation among concerned agencies such
as FAO, IFOAM, RACAs etc.
• Challenges
– Farmers and consumers’ awareness
– Government intervention
– Infrastructure
– Certification
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