30
JAN 2017
FOOD FOCUSTHAILAND
SURF THE
AEC
the report publishedonlinebut our export itemsdonot necessarilymatch
with thoseof theUS. Hence, theThai government wouldhave to conduct
similar additional studies for agricultural products specifically toThailand
such as durians.
The lackof such informationmaynot be theproblem for themedium-
sizeand large companies that aremembersof certain tradeassociations
suchas theThai FoodProcessorsAssociationand theThai FrozenFoods
Association, the Thai Chamber of Commerce (TCC) and the Federation
of Thai Industries (FTI).
These businesses tend to have casual in-depth information that can
be shared among members. However, they have difficulties connecting
andcommunicatingwith theupstreamagricultural cooperativesor farmers
supplying the rawmaterials for their factories.
As a result, Thailand’s food export faces the threat of being rejected
by importingcountriesdue to thenon-compliancewithSPSandnon-SPS
standards as well as traceability. At the same time, the lack of market
information implies that Thai farmers areunable toadapt to the changing
product specificationdemandedbymanufacturers and retailers.
The limitations above have been long known by the food business
sector and even the public agencies. According to a researcher of the
Food Institute (theMinistry of Industry), thedata collectedby theMinistry
ofAgricultureand theMinistryofCommerce, especially thepricedataand
theconsumerbehaviordidnotmeet thedemandof the Institute toconduct
themarket intelligence. The Institutemay have to conduct their owndata
collection survey which generates unnecessary additional costs for the
government as awhole.
It is the time that the government’s data management for the food
industry development must be reorganized. The “data focal point” is
needed to govern the data sharing and shape the government’s data
management direction.
The data focal point should be a government data committeemainly
comprising of three ministries which are the Ministry of Agriculture, the
Ministryof Industryand theMinistryofCommerce.Eachministryshouldbe
represented its “think tank” in theareaof the food industry,namely,theOffice
ofAgriculturalEconomics, theNational Food Institute, and theTPSO.The
three think tanks shouldwork together to reshape their existingdatabase
regarding theproductprices in the foreignmarkets, theconsumerbehavior
and tastes, the substituteproducts aswell as themarket trends analysis.
The committee should also consist of the private sector organization
suchas theTCC, theFTI and theThaiNational Shippers’Council (TNSC)
as an advisory member. The private sector organization can help the
governmentensure that thedataand informationcollectedmeet theactual
needs of the users meaning the food businesses and the agricultural
cooperatives. It is important that we treat farmers as “businessmen” by
providing themwith “information” required tomakewell-informeddecisions
rather than perpetual financial support.
The food industry has always beenoneof themost important business sectors for
the Thai economy. This is because it is “home grown” rather than “imported”. Its
long domestic value chain from farms to the food processing industry and then on
to the food transportationandexport businessmeans that a largepart of the value
of gross exports accrued to theThai economy.
Startingpointandchallengesofbecoming
theTradingNation
forfood industry
In the past decade or so, agriculture, the upstream industry that
supplies the critical rawmaterials to the country’s foodbusinesses, still
accounts foronly roughly8-10percentofThailand’sGDP. However,over
30 percent of Thai workerswork in the industries related to agriculture
suchas foodprocessing,meaning that a thirdofThaiworkers’ livelihood
depends on the stateof theagricultural sector.
Consequently, every government in the past has put the food
industry as oneof thepriority industries. TheThai Kitchenof theWorld
in2004andThailandFoodValley in2012are thewell-knownexamples.
There isnoexception for thecurrent governmentwhichannounces that
Thailandwill be the “TradingNation” in the food industry. Butwhat does
that reallymean?
TDRI’s recent research for thenewlyestablishedTradingPolicyand
Strategy Office (TPSO) of the Ministry of Commerce finds that there
are keydrivers forThailand toachieve thegoal of becominga “Trading
Nation” in the food industry.
First, it has to strengthen the “business alliances” within the value
chainof foodproduction.This isbecause the industry iscurrently facing
increasingchallengeswith regard to themultitudeofstandards imposed
by various importing countries be it the traceability requirement of the
exported food products from “farm to fork”, or the rising importance
of non-SPS (Sanitary and Phytosanitary) standards such as those
governinghuman rights andenvironment.Without proper coordination
and cooperation among suppliers along the supply chain, it would be
extremely difficult tomeet thementioned standards and requirements.
Second, if theThai foodsectorwere togo trulyglobal, local suppliers
have to develop and enhance the connectivity and adaptability to the
global market.
However,according toTDRI’sstudy, themajorobstaclespreventing
Thailand fromdeveloping the twocritical driversare the lackofaccurate
data and information and the obstructed information flow between the
entrepreneurs in the value chain.
In the upstream agricultural sector, most farms in Thailand are
extremelysmallas theaveragesizeofa ricefield in thecentral regionwas
roughly16 raisper household.While thereare currentlyapproximately
3,600 agricultural cooperatives, of whichmore than half are too small
to provide much needed price and market demand and supply trend
information. Most Thai agricultural cooperatives are preoccupied with
providing credits to farmers.
The same challenge also occurs for the food processors in the
midstreamand theexporters in thedownstream.Thesmallerbusinesses
often lack in-depth informationondemandand supply trends in foreign
markets that would facilitate well-informed business decisions with
regards to the timing, thescaleand thechoiceof alternativeagricultural
products that wouldgeneratebest returns.
For example, theUSDepartment ofAgricultureprovidesamonthly
outlookofdomesticandglobal supplyanddemandofmajorUSproducts
suchas livestockandpoultryaswell asassesses the impact on theUS
economy. Of course, Thai farmers and policymakers can free ride on
