Transboundary Agribusiness Development and

Management in the Greater Mekong Sub-region

Dr. Pornsri LaurujisawatMarch 24, 2010

Economic advisory office CP GroupEmail: Pornsril@yahoo.com

CONTENTS

1. The Important roles of agriculture2. The Challenge of Agricultural Business

Development and Management3. Criteria Analysis and Solutions 4. The Case Studies to explain the

solutions 5. Summary& Recommendation

PART- ONE

THE IMPORTANCE ROLE OF AGRICULTURE

First, The Agriculture sector provides sufficient food to feed everyone.

Agriculture Production (US$ billions) Agriculture

Sector 1993 1995 2000 2007 RATIO

Food 1,057 1,111 1,268 1,468 95.26 Non-food 59 60 60 73 4.74

Total world 1,116 1,171 1,328 1,541 100

THE IMPORTANCE ROLE OF AGRICULTURE

Second, Employmentabout 42.2% of the world workers are employed in the agricultural sector.

Agriculture labor force (2006)Region total labor force

(Millions person)Agricultural labor force

(Million person)percentage

Africa 415 226 54.4Asia 2,040 1,078 52.9

America 425 46 10.7Europe 368 26 7.0Oceania 17 3 19.4World 3,265 1,378 42.2

Third, Agriculture is “national security”. It is the very basis of the political and social stability of a nation, because the task of food distribution in each country is the government’s first priority.

(http://ezinearticles.com, 2010)

THE IMPORTANCE ROLE OF AGRICULTURE

Forth, Agriculture is core of the economy of most low income developing countries.

THE IMPORTANCE ROLE OF AGRICULTURE

Performance ratio (GDP-Composition by Sector), 2009No. Country Agriculture

GDP (%) Labor (%)1 Thailand 12.3 42.42 Myanmar 42.9 70.03 Vietnam 20.7 51.84 Cambodia 29 755 Lao 39.2 80

Total 19.7 41.86 China 10.9 39.5

World 6 37.5

Fifth, Agriculture is an Added Value Product, Develop Local Content Material & Growth of Nation

THE IMPORTANCE ROLE OF AGRICULTURE

Integrated concept & Vale Added in Supply Chain Primary Agricultural product (corn, soybean, rice, etc.)

Corn 0.28$/kg.

Secondary Agricultural product (animal feed plants, farms)

Animal feed 0.48$/kg

Intermediate Agricultural product (poultry, egg, pig, etc.)

Chicken fresh meats 1.27$/kg

Food & Restaurant Processed

Chicken further product 3.7$/kg

THE IMPORTANCE ROLE OF AGRICULTURE

Fifth, Agriculture is an Added Value Product, Develop Local Content Material & Growth of Nation

especially in developing countries which earns the most income dependent on the revenue from agriculture. The agriculture productions which add value is process productions for which most of the resources are almost 100% local content. This means the income will come back to the village in each country.

THE IMPORTANCE ROLE OF AGRICULTURE

Sixth, Agriculture give higher multiplier effect In a study of four African countries, Delgado and others (1998) estimated the income multipliers to be around 2.5, meaning that each additional dollar of income from agriculture generates about $2.50 of economic growth in the economy as a whole.

(Per Pinstrup-Andersen and Satoru Shimokawa, Japan, May 29-30, 2006)

THE IMPORTANCE ROLE OF AGRICULTURE

“The multiplier effects tend to be high when agricultural growth is driven by broad-based productivity increases in a rural economy dominated by small farms, as in much of Asia”

(Mellor 1976)

THE IMPORTANCE ROLE OF AGRICULTURE

Agriculture give higher multiplier effect

A number of empirical studies (e.g., Hazell and Röell 1983; Haggblade, Hammer and Hazell 1991; Delgado and others 1998; Fan, Hazell and Thorat 2000; and Fan, Zhang and Zhang 2002) conclude that the multiplier effects of agricultural growth is usually greater than two.

THE IMPORTANCE ROLE OF AGRICULTURE

Agriculture give higher multiplier effect

In agriculture, when productivity gains the multiplier effect will be faster. In addition, Gollin, Parente, and Rogerson (2002), using data for 62 developing countries during 1960-1990, find that agricultural growth, nonagricultural growth, and sectoral labor shifts explain 54 %, 17 %, and 29 % of the growth of GDP per worker, respectively.

THE IMPORTANCE ROLE OF AGRICULTURE

In Asia rice is more tradable than other kind of food, local price more easily reflected border prices.

(Per Pinstrup-Andersen and Satoru Shimokawa, Japan, May 29-30, 2006)

THE IMPORTANCE ROLE OF AGRICULTURE

• Cheaper& Better food• Economic Growth• Income distribution

THE IMPORTANCE ROLE OF AGRICULTURE

Agriculture development provides a crucial foundation for economic growth in both agricultural and non agricultural sectors.

It is empirically shown that poor people tend to benefit more from economic growth originating in agricultural sectors than from that originating in industrial or service sectors.

(Ravallion and Datt 1996; Ravallion and Chen 2004; and Timmer 2002, 2005)

THE IMPORTANCE ROLE OF AGRICULTURE

In addition, Ravallion and Datt (1996), using data for India over 1951-1990, show that rural growth through agricultural development reduces poverty not only in rural areas but also in urban areas and hence has a significant and positive effect on national poverty reduction.

(Per Pinstrup-Andersen and Satoru Shimokawa, Japan, May 29-30, 2006)

THE IMPORTANCE ROLE OF AGRICULTURE

Seventh, agriculture is an alternative source of energy such as bio fuel from crop and bio-mass.

Chicken products

THE IMPORTANCE ROLE OF AGRICULTURE

Finally, Agricultural development is poverty reduction and nation growth: Agricultural development is essential for economic growth, rural development, and poverty alleviation in low-income developing countries.

(Per Pinstrup-Andersen and Satoru Shimokawa, Japan, May 29-30, 2006)

THE IMPORTANCE ROLE OF AGRICULTURE

“Chickens feed the family; families build the village; villages & cities from the country. Agricultural products are a nation’s wealth; they are like the oil in the ground, and are the energy source to sustain mankind. Industry develops because agriculture develops.”

Dhanin Chearavanont, Chairman, Charoen Pokphand Group (CP)

THE IMPORTANCE ROLE OF AGRICULTURE

Do you ever heard aboutCharoen Pokphand Group (CP) group?

CP GROUP

GAME ONE

• Game 1: After the presentation of the important role of Agriculture

• Divide the participants into five groups: • 1. Is there any important role for agriculture

that was not referred to in my presentation? • Please explain your thoughts on this in detail

and refer to a case study which you have experienced.

• What benefits will be gotten for those who participate in "improving the role of agriculture?

• Who will get these benefits?

PART TWO

The Challenge of Agricultural Business Development and Management

In order to meet the objectives of the seminar, this will focus on analyzing the four challenges as follows:

1.Production in Agricultural Section is not efficiency2.Inefficient Production in the Agricultural Section causes

poverty3.The next 5,10 years challenges for the agri-food sector

worldwide 4.Questions for sustainable agriculture in the Mekong

region5.Weak of Marketing expansion.

1. Production in Agricultural Section is not efficiency.

The Challenge of Agricultural Business Development and Management

SEE PAGE PERFORMANCE RATIO (GDP COMPARISON)

The Challenge of Agricultural Business Development and Management

The agricultural sector in the Mekong region has the lowest percent of GDP value, compared to other sectors, such as industry and service. On the other hand, the agricultural sector absorbs the highest labor employment. This reflects the low efficiency of the agriculture sector. The input (Labor force) is more than output (GDP Value or low income).

The Challenge of Agricultural Business Development and Management

The Challenge of Agricultural Business Development and Management

The reason why trend of labor force is decrease

1.Low Income2.Hard working3.New Technology substitute to

labor forces

The Challenge of Agricultural Business Development and Management

The labor force in this region is about 50 % of the total population and that means some of them are in child or elder age.

Example: In Thailand the structure of Thai people has changed to expand and include the elder group. This has increased compared to previous periods. To development and manage business well, concerns should focus on the demographic change factor too.

The Challenge of Agricultural Business Development and Management

2. Inefficiency Production in Agricultural Section causes poverty

The Challenge of Agricultural Business Development and Management

In regard to the World Food and Agricultural Statistics (2009), there are a lot of people in this region who are still poor, as compared to people in developed countries.

The Challenge of Agricultural Business Development and Management

Population below poverty lineNo. Country Total Population

(million persons) Poverty Population

(million persons) Poverty Population

(%) 1 Thailand 66.0 6.3 9.62 Malaysia 25.7 1.3 5.13 Vietnam 88.6 10.9 12.34 Cambodia 14.5 5.1 35.05 Lao 6.8 1.8 26.06 Burma 48.1 15.7 32.77 Brunei 0.4 N/A N/A8 Philippines 98.0 32.2 32.99 Singapore 4.7 N/A N/A

10 Indonesia 240.3 42.8 17.811 Timor-Leste 1.3 0.6 42.012 China 1338.6 37.5 2.8

World 5,430.0 1,770.0 32.6

The Challenge of Agricultural Business Development and Management

The Challenge of Agricultural Business Development and Management

3. What happen in the next 5-10 years challenges for the agri-food sector worldwide?

• Only demand driven businesses will survive, therefore business is required to find out the real demand of consumers and adapt to the constant market changes.

The Challenge of Agricultural Business Development and Management

Regarding to Dunne, A. J. (2001):

The Challenge of Agricultural Business Development and Management

• Integrating the growing environmental and social issues of a changing agribusiness sector with prevailing economic imperatives.

Regarding to Dunne, A. J. (2001):

The Challenge of Agricultural Business Development and Management

• Creating innovative solutions to address the growing challenges.

Regarding to Dunne, A. J. (2001):

4. How to sustain the agriculture in the Mekong region?

The Challenge of Agricultural Business Development and Management

The challenge is to find out “How to develop and manage the agriculture”, which has many questions to study, such as;

The Challenge of Agricultural Business Development and Management

• GMS member countries will still have to deal with a wider range of challenges to sustain and increase the productivity of traditional commodities.

The Challenge of Agricultural Business Development and Management

The Challenge of Agricultural Business Development and Management

• Transforming family farms into competitive agribusinesses through technological and institutional innovations, participating in production and export of high-value products, non-traditional crops, and value-added commodities.

The Challenge of Agricultural Business Development and Management

• The landless poor, smallholder farmers and Small and Medium Enterprises (SMEs) should be strongly integrated to participate in the sub-regional value-chains on selected priority crops for food and bio fuel. Therefore it is indispensable to provide intervention in the form of training to policy makers and practitioners.

The Challenge of Agricultural Business Development and Management

• Promote agribusiness development and management as a mean to eradicate poverty in rural areas, as well as forging greater interdependence of cross-border trade ties between GMS countries.

The Challenge of Agricultural Business Development and Management

The analysis to develop and Manage the agricultural business.

GAME TWO

• Group the new group ( by nation) for five persons per group

• Game 2: The challenge of improving agricultural efficiency.

The Challenge of Agricultural Business Development and Management

SWOT

The Challenge of Agricultural Business Development and Management

BCG Matrix

The Challenge of Agricultural Business Development and Management

FIVE FORCE MODEL

The Challenge of Agricultural Business Development and Management

DIAMONDMODEL

2. Following "growth model" in business theory, such as · SWOT ( Strange/ Weakness/ Opportunity/ Threat) · BCG Model · Five Force Model · Diamond Model Select only one model to explain Ø What is the challenge of agriculture competitiveness in your country? Ø What is the challenge Ø What model will the group use to explain the case study? Ø Explain the competitiveness in your case study Ø What management strategy will you use to implement agriculture growth? Ø How to increase your competitiveness over a longer period of time?

PART THREE

Criteria Analysis and Solutions

Following to the questions as referred to in part 2, this will focus on analyzing the adoption of the five main solutions as follows;

Criteria Analysis and Solutions

1. Value chain Management

is ways to enable businesses to increase productivity and add value. Value-chain approaches are a vehicle for linking small businesses to markets, and thus are essential for improving rural farmers’ economies and reducing poverty

(Martin Webber, 2009).

Criteria Analysis and Solutions

2. Cooperation within the related persons

Because food and agricultural systems are long value chain, there are a lot of parties taking responsibilities and getting benefits in this sector, as well as along with rising per capita incomes, technological advances, trade liberalization and urbanization; the role of cooperation within the related persons is playing an ever more important role in socio-economic development.

Criteria Analysis and Solutions

3. Human Resource Development or Capacity Building

• Merge small primary agricultural cooperatives into larger. • Larger one can support the smaller.• For economically viable and efficient.

(Daman Prakash, 2010)

Criteria Analysis and Solutions

4. Infrastructure and logistics

Productivity for increase in agriculture depends on good rural infrastructure and well functioning transportation to domestic markets.

(Per Pinstrup-Andersen and Satoru Shimokawa (2006)

Criteria Analysis and Solutions

5. Marketing support

“A Marketing is the process by which companies advertise products or services topotential customers. It is an integrated process through which companies create value forcustomers and build strong customer relationships in order to capture value from customersin return”

(Kotler, Philip, et al, 2008)

PART FOUR

CASE STUDIES

1. CHICKEN

2. MAIZE

CASE STUDIES - CHICKEN

Chicken

• Consumed in all religious • Produced in all areas in the world, especially in the Mekong Region.

Chicken

• Chicken is grown with this regional culture; in this area people raise chicken around their house. • Developed from natural agriculture to industry agriculture.

CASE STUDIES - CHICKEN

CASE STUDIES - CHICKEN

Chicken

• The cycle of raising chickens is very fast developing, using only 30 to 38 days. • Chicken industry has impacts on the development of the economy of many agricultural countries.

CASE STUDIES - CHICKEN

CHICKEN INDUSTRY STATISTIC• Production• Export• Import• Consumption• Consumption per capita

CHICKEN INDUSTRY STATISTIC

• ProductionIn 2010, world production will

increase to 74 million tons. The 5 biggest producer of the world is USA, China, Brazil, EU and Mexico which produce 16, 13, 11, 9 and 3 million tons, respectively.

CASE STUDIES - CHICKEN

Chicken Production in Selected Countries (thousand ton)No. Country 2006 2007 2008 2009 2010(f) Growth rate

2010/2009 (%)Ratio

1 USA 15,930 16,225 16,561 15,980 16,222 1.51 22.032 China 10,350 11,291 11,840 12,100 12,500 3.31 16.983 Brazil 9,355 10,305 11,033 10,980 11,420 4.01 15.514 EU*27 7,740 8,320 8,535 8,620 8,650 0.35 11.755 Mexico 2,592 2,683 2,775 2,860 2,786 -2.59 3.786 Thailand 1,069 1,107 1,158 1,120 1,132 1.07 1.547 Brunei 16 18 18 20 22 10.00 0.038 Cambodia 17 18 19 20 20 0.00 0.039 Indonesia 1,260 1,296 1,358 1,447 1,542 6.57 2.09

10 Laos 16 16 17 18 19 5.56 0.0311 Malaysia 922 931 931 956 982 2.72 1.3312 Myanmar 650 726 726 794 867 9.19 1.1813 Philippines 658 662 741 775 810 4.52 1.1014 Singapore 76 83 83 86 89 3.49 0.1215 Vietnam 344 359 359 360 360 0.00 0.49

Other 13267 14283 15268 15500 16199 4.51 22.00Total 64,262 68,323 71,422 71,636 73,620 2.77 100

CASE STUDIES - CHICKEN

CHICKEN INDUSTRY STATISTIC

• Export The total exports in 2010 will rise

to 8 million tons. Brazil, with the 40% share of exports, will be the largest chicken exporter. In the Mekong region, there will be two countries as exporters; China with 3.5% and Thailand with 5% of total exports in the world.

CASE STUDIES - CHICKEN

Chicken Export in selected Countries (thousand ton)No. Country 2006 2007 2008 2009 2010(f) Growth rate

2010/2009 (%)Ratio

1 Brazil 2,502 2,922 3,242 3,150 3,345 6.19 40.212 USA 2,361 2,678 3,157 2,997 2,858 -4.64 34.363 EU-27 690 635 743 720 720 0 8.664 Thailand 261 296 383 385 420 9.09 5.055 China 322 358 275 283 290 2.47 3.496 Indonesia 0.025 0.082 0 0 0 0 07 Malaysia 0.186 0.691 1.504386 1.875 2.408 28.43 0.038 Philippines 0.648 3.523 10.24627 12.604 15.08 19.64 0.189 Singapore 13.751 14.499 16.35858 18.456 20.822 12.82 0.25

10 Vietnam 0 0.024 0 0 0 0 0Other 407 477 590 615 647 5.14 7.77Total 6,558 7,385 8,418 8,183 8,318 1.65 100

CASE STUDIES - CHICKEN

CHICKEN INDUSTRY STATISTIC

• ImportIn the last 5 years (2005-2009)

the world import have trend to increase 6.07% per year. In 2010, the world import will increase to 8 million tons which Russia is the largest importer then China is 10% and 4.75% respectively.

CASE STUDIES - CHICKEN

CASE STUDIES - CHICKENChicken Import in Selected Countries (thousand ton)

No. Country 2006 2007 2008 2009 2010(f) Growth rate 2010/2009 (%)

Ratio

1 Russia 1,189 1,222 1,159 855 820 -4.09 10.812 Japan 716 696 737 700 680 -2.86 8.973 EU-27 605 673 712 710 710 0 9.364 Saudi Arabia 423 470 490 500 530 6.00 6.995 China 343 482 399 370 360 -2.70 4.756 Brunei 0 0 0 0 0 24.10 0.017 Cambodia 0 0 0 0 0 172.27 08 Indonesia 3 5 5 6 7 14.24 0.099 Laos 0 0 0 0 0 0 0

10 Malaysia 16 33 38 41 52 29.35 0.6911 Myanmar 0 0 0 0 0 0 012 Philippines 35 52 60 75 94 24.85 1.2313 Singapore 87 103 110 117 125 6.78 1.6514 Thailand 0 0 0 0 0 0 015 Vietnam 160 275 250 270 30 -88.72 0.40

Other 2,815 3,098 3,843 3,929 4,176 6.29 55.05total 6,393 7,109 7,804 7,573 7,585 0.16 100

CHICKEN INDUSTRY STATISTIC

• Consumption

CASE STUDIES - CHICKEN

CASE STUDIES - CHICKEN

Chicken Consumption in Selected CountriesNo. Country 2006 2007 2008 2009 2010(f) Growth Rate (%)

2010/2009Ratio

1 USA 13,671 13,581 13,427 13,058 13,402 2.63 18.882 China 10,371 11,415 11,954 12,220 12,606 3.16 17.763 EU-27 7,655 8,358 8,504 8,610 8,640 0.35 12.174 Brazil 6,853 7,384 7,565 7,757 7955 2.55 11.215 Mexico 3,016 3,067 3,188 3,295 3355 1.82 4.736 Thailand 810 811 775 735 712 -3.13 1.007 Brunei 16 19 19 20 22 10.00 0.038 Cambodia 17 18 19 20 20 0.00 0.039 Indonesia 1,263 1,300 1,364 1,453 1,549 6.61 2.18

10 Laos 16 16 17 18 19 5.56 0.0311 Malaysia 938 963 967 995 1,033 3.82 1.4612 Myanmar 650 727 726 794 867 9.19 1.2213 Philippines 692 710 790 837 889 6.21 1.2514 Singapore 149 172 177 184 193 4.89 0.2715 Vietnam 504 634 609 630 390 -38.10 0.55

Other 14,851 16,281 17,894 18,360 19,323 5.25 27.23Total 61,472 65,456 67,995 68,986 70,975 2.88 100

CASE STUDIES - CHICKEN

CHICKEN INDUSTRY STATISTIC

• Consumption per capita

Chicken Consumption per capita (Kg/yr/person)Country 2006 2007 2008 2009 2010(f)

USA 45.40 46.10 45.10 45.10 44.60China 7.70 7.90 8.70 9.60 10.50EU 15.20 14.20 15.50 15.90 16.10Brazil 35.00 35.80 38.10 38.50 39.00Mexico 27.00 28.10 28.10 29.00 29.60Brunei 41.22 49.82 50.72 54.37 60.92Cambodia 1.17 1.26 1.36 1.45 1.48Indonesia 5.26 5.47 5.81 6.27 6.77Laos 2.34 2.40 2.61 2.83 3.06Malaysia 36.48 38.10 38.94 40.78 43.10Myanmar 13.50 15.22 15.32 16.90 18.61Philippines 7.06 7.39 8.39 9.07 9.83Singapore 31.99 37.33 38.88 40.96 43.61Thailand 12.27 12.37 11.90 11.36 11.08Vietnam 5.69 7.24 7.04 7.37 4.62

CASE STUDIES - CHICKEN

CASE STUDIES - CHICKEN

CHICKEN INDUSTRY IN MEKONG REGIONChicken Industry of ASEAN 2008 (ton)

Country Production Export Import Consumption Consumption per capita

(kgs/yr)

Consumption per Production

Brunei 18,270 0 260 18,530 48.59 1.01Cambodia 19,000 0 3 19,003 1.33 1.00china 11,054,320 275,000 450,000 11,229,320 8.44 1.02Indonesia 1,358,390 0 5,400 1,363,790 5.74 1.00Laos 17,200 0 7 17,207 2.58 1.00Malaysia 931,000 1,504 37,900 967,396 38.28 1.04Myanmar 726,497 0 0 726,497 15.21 1.00Philippines 740,660 10,246 60,075 790,489 8.23 1.07Singapore 83,074 16,359 110,441 177,156 38.44 2.13Thailand 1,158,000 383,000 0 775,000 11.82 0.67Viet Nam 358,800 0 250,000 608,800 6.95 1.70

Regarding the table above, countries in Mekong region except China and Thai have some quantity to export. Other countries produce chicken for consume in their country. And some countries such as China and Vietnam production are not enough to consume, so they need to import from foreign countries.

CASE STUDIES - CHICKEN

INTEGRATED POULTRY BUSINESS

CASE STUDIES - MAIZE

MAIZE

• Can grow in all countries in the Mekong region and ASEAN. • Important material to produce feeds. • The chicken feed compound of maize, is a carbohydrate source (62%). • Material to produce energy bio fuel.

MAIZE STATISTIC• Production• Export• Import• Price

CASE STUDIES - MAIZE

MAIZE STATISTIC

• Production The production in 2004 – 2009

have trend to increase from 715,000 MT to 791,000 MT (3.33% increase). The largest producer is USA that produce 300,000 MT in year 2008/12 (2.12% increase). The other large producer is Brazil, China, South Africa, Ukraine and Nigeria.

CASE STUDIES - MAIZE

World Maize ProductionNo. Country 2004 2005 2006 2007

1 USA 299,914 282,311 267,501 331,1752 China 130,434 139,498 151,731 152,4193 Brazil 41,788 35,113 42,662 52,1124 Mexico 21,670 19,339 21,893 23,5135 Argentina 14,951 20,483 14,446 21,7556 India 14,172 14,710 15,097 18,9557 France 16,372 13,688 12,775 14,3578 Indonesia 11,225 12,524 11,609 13,2889 Canada 8,837 9,332 8,990 11,649

10 Italy 11,368 10,428 9,671 9,809Other 158,481 156,489 149,936 139,080Total 729,212,203 713,913,914 706,311,210 78,112,128

CASE STUDIES - MAIZE

CASE STUDIES - MAIZE

MAIZE STATISTIC

• ExportImport and Export have trend to

increase from 76 Million Tons in 2004 to 81 Million Tons in 2009 (increase 2.98%). USA is the largest export in the world which increases significant 1.73%.

World import maize (thousand ton)Rank Country 2005 2006 2007

1 Japan 16,656 16,883 16,6282 Korea, Republic of 8,533 8,670 8,5793 Mexico 5,744 7,610 7,9554 Spain 4,272 4,206 6,6755 China 4,984 5,143 4,5306 Egypt 5,095 3,769 4,4747 Netherlands 2,224 2,397 3,4488 Iran, Islamic Republic of 2,241 2,110 3,4099 Colombia 2,465 3,244 3,323

10 Malaysia 2,571 3,286 2,658

CASE STUDIES - MAIZE

IMPORT

EXPORT

CASE STUDIES - MAIZE

World Maize Export (thousand ton)Rank Country 2005 2006 2007

1 United States of America 45,369 57,884 57,0142 Argentina 14,643 10,400 14,9903 Brazil 1,070 3,938 10,9334 Hungary 1,813 2,342 4,9765 China 8,611 3,070 4,9176 France 7,377 6,015 4,7497 India 420 637 2,7288 Paraguay 480 1,895 2,1099 Ukraine 2,796 1,682 809

10 Germany 879 888 712

CASE STUDIES - MAIZE

MAIZE STATISTIC

• Price The cost of secondary USA maize in

Chicago market have trend to increase from 83 dollars per ton in 2004 to 168 dollars per ton in 2009 (increase 24%). Because of oil prices increased in the global market.

MAIZE STATISTIC

• PriceMany countries turn to produce

Biomass (Ethanol and Biodiesel). USA increased to produce maize for ethanol 31% while the consumption to produce the feed grain also abundantly.

CASE STUDIES - MAIZE

Sell Price at Bangkok export to F.O.B Chicago

yearPrice Wholesell in Bangkok Export Chicago

(Baht/Kg.) Feed grain (Baht/kg.) Silo (Baht/kg.)

(Baht/Ton) (Baht/Ton)

2005 4.59 5.3 5.06 5,531 3,3512006 4.78 5.68 5.16 5,984 3,3032007 5.45 7.01 6.53 7,311 4,6742008 6.89 8.41 7.96 8,695 5,9422009 7.05 8.18 6.61 8,314 5,837

growth rate 13.02 13.43 10.16 12.62 18.5Source: OAE

CASE STUDIES - MAIZE

The suggestion for develop the agriculture in this region have interested information following to:

CASE STUDIES

1. The consumption per capita in Mekong region have lower rate when compare with the developed countries such as EU and USA is 16.1 and 44.6 kg/person/year, respectively. While the consumption of Cambodia and Laos just 1.33 and 2.57 kg/person/year, respectively. Therefore, if have the promotion when have large production from the Economy of Scale theory will reduce the cost. So, people can consume food for protein and have more nutrition. Then people in each country will have the good health.

CASE STUDIES

2. In Mekong region have some countries import from the foreign countries. If have the good promotion in this region such as AFTA that have structure show below will increase in consumption in the region.

CASE STUDIES

Tax reduction for Export and Import of Thailand. With Thai partnership in ASEAN and ASEAN-ChinaHS 100590 160232

Goods Maize(Corn) Chicken & Capon Meat &Meat Offal

Prep Or Pressed E

ASEAN Thai 0 0 Malaysia 0 0 Indonesia 0 0 Philippines 0,5 0 Singapore 0 0 Brunei 0 0 Cambodia * 5 5

Laos* 0 5 Myanmar* 0 5 Viet Nam* 0 30 (5 in 2013)

China TRQ Quota 1 Out of Quota 65

CASE STUDIES

Integrated concept & Vale Added in Supply Chain Primary Agricultural product (corn, soybean, rice, etc.)

Corn 0.28$/kg.

Secondary Agricultural product (animal feed plants, farms)

Animal feed 0.48$/kg

Intermediate Agricultural product (poultry, egg, pig, etc.)

Chicken fresh meats 1.27$/kg

Food & Restaurant Processed

Chicken further product 3.7$/kg

IMPLEMENTING SOLUTIONSBoiler Value Chain

IMPLEMENTING SOLUTIONS

Good governance for sustainable of value chain in agricultural Business

The process of agriculture production, most have waste, such as animal waste and water pollution. Therefore, to make business successful and sustainability, farmers and producers need to be concerned about environment.

However, with recent innovation and technology that can reuse/recycle waste, the production in agriculture can make for high efficiency and have activities to reduce costs.

IMPLEMENTING SOLUTIONS

Cooperation within the related persons

Because food and agricultural systems are long value chain, there are a lot of parties taking responsibilities and getting benefits in this sector, as well as along with rising per capita incomes, technological advances, trade liberalization and urbanization; the role of cooperation within the related persons is playing an ever more important role in socio-economic development.

Contract Farming: Collaboration Working to increase production & Agriculture Development

IMPLEMENTING SOLUTIONS

Is Contract Farming an answer? Case study of:

• Indonesia• Philippines• India

IMPLEMENTING SOLUTIONS

In Indonesia, Argonomists in Indonesia noted that soybeans grown at research stations produced yields more than twice those archieved by small-scale farmers.

(Roling, N, in Beets, W., 1990:256)

IMPLEMENTING SOLUTIONS

Contract Farming

IMPLEMENTING SOLUTIONS

Contract FarmingIn Philippines, in just 10 years the pig production grew an estimated 9

million heads in 1996 to nearly14 million heads in 2004. There is evidence showed that the figures changed because of the commercial farm and sub contract farm system. The structural in pig production changed. As before about 77 percent of total pigs inventories were still held in “backyard”. Over 1997–2004, there were “backyard” pig farms about by 60 percent (BAS, 2005). The figure of “backyard” was less because companies operated farms through contract production schemes (Costales et al. 2007). Large commercial companies are integrating breeding, high-quality internal feed formulation, farm-to-finish operations, and HACCP-compatible slaughtering and processing of branded products. The success of production expanding leaded increase local consumption, i.e. consumption pork per capita in the Philippines rose from 11kg in 1990 to 18 kg by 2003. Moreover, in the last decade, meat imports supplemented was reduced. Real average incomes per capita increased at an annual growth rate of 1.3 percent, from $4,028 in 2000 to 4,241 in 2004 (world bank 2006b)

IMPLEMENTING SOLUTIONS

Contract Farming

In India, production yields and farmers’ income increased as a result of the use of hybrid seeds and the availability.

IMPLEMENTING SOLUTIONS

Contract Farming

MarketExportDistribution

Foreign Market

Domestic Market

Government Sector

Financial Sector

CompanyKnowledge

management

Financial Support loan to

build farm

FarmerDuckChicken eggBroilerPig

Return loan Regulation

Example case of Contract Farming:

Nong Wah agriculture village

Human Resource Development or Capacity Building

IMPLEMENTING SOLUTIONS

Agriculture products are the product that has the long process of value chain, from primary production until industry production. So, it will have many related persons, such as the small farmer and the large industry source. While all process need the production system to check the sources of material and quality of production, before it reaches the consumer. (Traceability from farm to table)

Human Resource Development or Capacity Building

IMPLEMENTING SOLUTIONS

So, the related persons need “collaboration” to control the quality, food safety and share technology for the best of benefits to all sectors, include the consumers.

The best form of development capacity building of agricultural is contract farming, with collaboration between

• Farmer, business and distributor• co-operative• government and private sector• International organization

The infrastructure and logistic

IMPLEMENTING SOLUTIONS

“Roads, electricity, supplies, telecommunications, and other infrastructure services are limited in all rural areas, although they are of key importance to stimulate agricultural investment and growth”

(Food and Agriculture Organization of the United Nations (FAO) 1996, chapter 10, p.15)

The infrastructure Promote Agricultural Development

SEE PAGE The infrastructure Promote Agricultural Development

The infrastructure and logistic

IMPLEMENTING SOLUTIONS

At the same time, agricultural growth induces a much larger demand effect on irrigation than on roads. This may be because irrigation is sector-specific infrastructure and thus, its demand is more directly influenced by agricultural growth (Fan and Zhang 2004). Fan, Hazell, and Thorat (2000) also find that public investment in rural roads has a large positive impact on agricultural productivity growth in India.

The infrastructure Promote Agricultural Development

The infrastructure and logistic

IMPLEMENTING SOLUTIONS

Agricultural Input and Output Markets and Links to infrastructure

Logistics in the Mekong region have connections to all other regions, such as those which have transportations connections like this. is the important factor to developing the marketing and distribution of the product to consumers, which also includes the exchange of production between countries for the collaboration with experts in each region.

East West Economic Corridor: EWEC (R9) Mawlamyine – Myawadi (Myanmar) – Maesot –

Phitsanulok – Konkaen – Kalasin – Mukdahan(Thai) – Savannakhet – Dansavanh(Laos) – Lao Bao - Huê - Dong ha – Danang(Vietnam)

North South Economic Corridor: NSEC

•R3E routeKunming – Yuxi - Yuanchang – Mohei – Simao –

Meng Yang – Bohan(China) – Boten – Huay Xai(Laos) – Chiang khong – Chiangrai – Tak – Bangkok(Thailand)

•R3W routeChiang Tung – Tachilek(Myanmar) – Mai sai –

Chiangrai – Tak – Bangkok(Thailand)•R5 route

Kunming - Mile – Yinso – Kiyuan – Mengsi - Hekhou (China) – Lao Cai – Hanoi – Hai phong(Vietnam)

Southern Economic Corridor: SEC•R1 routeBangkok – Kabinburi – Sa kaeo –

Aranyaprathet(Thai) or Bangkok – laemchabang – Panomsarakam - Kabinburi – Sa kaeo – Aranyaprathet(Thai) – Poipet – Srisopon – Persat - Phnom Pen - Neak luang – Bawet(Cambodia) – Moc Bai - Ho Chi Minh City – Vung tao(Vietnam)

•R10 routeBangkok – Trat – Hat Lek(Thailand) – Sam yan –

Koh Kong – Salaumble – Kampot – lok(Cambodia) – Ha tien – Ca mau – Nam Can(Vietnam)

Other Economic Corridor

•Kunming - Chuchong – Dali – Baoshan – Ruili(China) – Muse – Lashio(Myanmar)

•Vientiane – Banlao – Thakak – Seno – Pakse(Laos) - Stung treng – Kratie - Phnom Pen - Srihanuvile

•Natoei-Oudomxai-Pakmong-Louangphabang –Vientiane-Tanalang (Laos) -Nong Khai –Udon Thani-Khon Kaen-Bangkok (Thai)

•Vientiane – Bolikhamxai (Laos)- Ha Tinh (Vietnam)

•Champasak (Laos)- Ubon Ratchathani (Thai

MARKETING SUPPORT

GAME THREE

• Game 3: • Divide group by area of interest: rice/

livestock/ vegetable/ fishery/ plantation- Five persons in one group

• 3. What strategy or solution will you select to develop the management in your business area?

• Why did you select this strategy? • How to use this strategy to implement and

develop agriculture in your area? • What are the results that you can expect

after implementing this strategy?