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
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