EXECUTIVE SUMMARY. 1. Analysis of Sustainable Agro-industry Development Outline

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1 EXECUTIVE SUMMARY Agro-industry is an industrial sector playing an important role to the economic system of Thailand; it adds values to farm products and acts as great industrial platform of manpower and source of income of people in rural communities. According to our recent compilation of industrial conditions we found that the agro-industry is facing serious productivity problems relating to quality and quantity of raw materials, including the preparedness constraints of agro-industrial entrepreneurs and the trend of external changes directly affecting the production sources of raw farming materials as well as manufacturing structures. Owing to international free trade trend, especially the launch of ASEAN Economic Community (AEC), border trades and interstate investments will certainly increase. This relates to branches of agro-industry, for instances, linkage of internal cropping bases, investments of Thai agro-industrial entrepreneurs in neighboring countries etc. To take the advantageous opportunity in production resources and cropping locations, Thailand should change its role from a low cost manufacturer to a technology transferor to its neighboring countries. Therefore, it is necessary to prepare the Master Plan on Sustainable Agro-Industry Development in order to clearly outline the national agro-industrial development policy. This study can be taken as guideline for zoning of principal economic crops, such as paddy, sugarcane, oil palm, and cassava, based on regional productivity factor (in terms of supply) and the future balance of agricultural product requirements (in terms of demand). It can be proposed as crop zoning linkage scheme and that of Thai agro-industrial entrepreneurs investments in neighboring countries in order to maintain food and energy security as well as earning from future export. Furthermore, its outcome can be applied as a direction, vision, strategy and guideline of all dimensions of agro-industry, both in general and particular views of target industries, to drive agro-industry through participation of all sectors, which can be realistically performed through pilot projects of main products, such as oil palm, para rubber and cassava. This will cope with the changing agricultural and industrial sectors and respond to the government policy in time. 1. Analysis of Sustainable Agro-industry Development Outline Five strategic scopes of the study on sustainable agro-industry development were taken into consideration: 1.1 Zoning for Production Resources Allocation, Sustainable Land Utilization, Advantages of Production Resources and Farmlands in Neighboring Countries The study on zoning for production resources allocation, sustainable land utilization, advantages of production resources and farmlands in neighboring countries signifies seven types of produces: paddy, sugarcane, oil palm, cassava, para rubber, chicken and shrimp, based on basic information of production and agricultural economics of the aforesaid produces, including the analysis of future demand and supply. The outcomes of study can be applied to allocation of production resources and domestic farmlands management for the balance of agricultural production in the future, including the analyses of outlines and patterns of agricultural product management, farmland linkage, and investment in neighboring countries aimed at food and energy security as well as earning from future export. The significant outcomes can be summarized as follows: 1

2 1.1.1 Determination of production resources allocation and domestic farm lands aimed at the balance of agricultural production in future Paddy fields management. Paddy fields should be reduced in order to solve the oversupply problem, especially low production paddy fields in northern, northeastern and the central regions of the country. Limitation of para rubber plantation expansion so as to prevent oversupply in the future. Expansion of cassava plantation by inducing rice farmers in upper northern region and the upper and lower northeastern region to grow cassava in lieu of paddy so as to increase cassava produces sufficiently to energy demand. Expansion of mill sugarcane plantation areas by inducing rice farmers in lower northern region to grow mill sugarcane in lieu of paddy so as to increase sugarcane produces correspondingly to the productivities of sugarcane mills. Expansion of oil palm plantation areas by inducing rice farmers in the central region to grow oil palms in lieu of paddy, sufficiently to domestic food and energy demands Outlines and patterns of agricultural produce and crop zoning linkage management, and investment in neighboring countries Product Paddy Cassava Sugarcane Para rubber Oil palm Shrimp Short-term scheme (five years: from 2014 to 2018) 1. Industrial processing promotion 2. Export market expansion 3. Limitation of plantation areas 4. Investment in neighboring countries for cropping, primary processing and import of produces 5. Import of produces for processing and export 6. Investment in neighboring countries for processing and export of produces Intermediate-term scheme (five years: from 2019 to 2023) 1. Industrial processing promotion 2. Export market expansion 3. Limitation of plantation areas 4. Investment in neighboring countries for cropping, primary processing and import of produces 5. Import of produces for processing and export 6. Investment in neighboring countries for processing and export of produces 2

3 Product Paddy Cassava Sugarcane Para rubber Oil palm Shrimp Long-term scheme (five years: from 2019 to 2023) 1. Industrial processing promotion 2. Export market expansion 3. Limitation of plantation areas 4. Investment in neighboring countries for cropping, primary processing and import of produces 5. Import of produces for processing and export 6. Investment in neighboring countries for processing and export of produces 1.2 Competitive Capability Enhancement and Value Addition to Develop New Products The analysis of current competition potential of agricultural industry indicated that the export values of Thai agricultural industry have increased since Their average growth rate from 1997 to 2012 was 12%. As for agro-industrial products, it was found that para rubber and para rubber products were exported at the greatest value of agro-industrial groups. The rising export pointed out that the potential in the production of agro-industrial products is likely to increase. With the advantages of Thailand s topography that is suitable for agriculture, the agricultural sector provides major raw materials to the agro-industry, Consequently, Thai agro-industry has high advantages of raw materials. For food and non food industries, the competition potential was taken into consideration based on the Revealed Comparative Advantage index (RCA) and BCG Matrix with respect to the market growth rate and relative market share. In addition, the added value of products was analyzed so that the target agro-industrial products can be selected to be a pilot project to develop them, while biological industries will be analyzed by using a diamond model. Following the analysis by using the above mentioned tool, key agro-industrial products can be selected to be developed by categorizing them according to development approach into two groups products that have to seek new markets and those that have to be developed. The first group includes sugarcane, chicken and oil palm. The second group consists of rice, cassava, shrimp and para rubber. Both groups of food, non-food and bio-chemical products have been developed throughout the supply chain in accordance with topography, production technology, worthiness and supporting factors. To develop Thai agro-industrial products to compete with the global market, it is necessary to increase market shares in the world market based on the advantages in terms of production and marketing. The competition of Thai agro-industrial commodities should focus on the development of science and technology so that values can be added to meet the domestic and international demand that tends to require higher quality of products. The direction of competition and value addition to products are summarized as follows: 1) Developing technology to be competitive Technology together with its access has to be developed to make the manufacturing process switch from using agricultural raw materials to more technology and reorganize the structure to be production of bio-industry that adds more value to Thai products. Besides, technology and wisdom emphasizing particular competency of each country should be prioritized to develop the industry by integrating new knowledge and local wisdom to meet the changing demand in the future. 3

4 2) Supporting clusters and strengthening entrepreneurs By pushing the enhancement of production efficiency among entrepreneur networks and supporting community enterprises in potential commodities and stimulating the competition to upgrade the potential of each enterprise as well as linking to the international competition. 3) Developing throughout the supply chain by means of value addition Domestic supply chain should be created to be a new manufacturing model stressing on the production of a joint and international manufacturing base in terms of production and services. The production in each country can add value to goods and services based on the management to find raw material sources or production sources of low prices but high efficiency. 4) Creating Thai image on Thai products By adding value suitable for Thai products and their consumers, eg environmentally friendly, Thai identity presented on brand names or packaging and good quality standard, etc. 5) Supporting professional management The production that relies on production capacity was switched to the one that gives priority to expertise together with management of risk factors that affect production through planning and adjustment in line with risks and changes. 6) Creating and approaching to new markets to approach target groups established by the merging of countries. This will affect the economic and social restructuring of each country, including new countries. To reach the market, it requires rapidness, image in the market and channels to distribute goods. The objective is to build a base of industrial competition for further growth. To develop agro-industrial products under the changing situation in the era of globalization and mood consumption model, the producers must adapt to manufacture products to meet the consumers requirement in the dimension of quality, value and worthiness. The first priority is to enhance the competiveness of Thai industries by applying science and technology, innovation, wisdom and knowledge to add value to products so that Thai agro-industries are competitive based on the balance of raw materials, manufacturing process, standardization and marketing leading to sustainable development of Thai agro-industries. 1.3 Standard Enhancement: Quality and Safety Development In order to develop the quality and safety and upgrade the standard of Thai products, Thailand usually signified the certification of standard products manufactured and distributed in the market. Comparing with standard products worldwide, it was found that Thailand had more standard products but most of them were not internationally acceptable. Although the specifications of the National Bureau of Agricultural Commodity and Food Standards (ACFS) signify the standardization of manufacturing processing but it aims at domestic standards rather than the international ones (good quality and fair price). As for the potential for the standardization of entrepreneurs, the entrepreneurs only follow the requirements to meet the market demand but they do not realize the production of good quality and safe products or upgrade the standard to add their value. Thus, we would like to propose the following ideas: The manufacturing standardization shall be seriously implemented in order to enhance Thai food industrial standards by providing the necessity of standardization, including basic standards, systematic standards and international standards to entrepreneurs. The government has to strictly control them and impose a penalty for violators to stimulate and create responsibility of entrepreneurs for consumers, community and environment rather than make more profit from manufacturing standard products. 4

5 To produce products with quality and safety standard, the government and related agencies always signified it as a key factor to create product value, especially food products. The standard enhancement is, however, limited within the groups of potential exporters. It is aimed at the certified standard to serve the foreign market as determined by importers, for customer requirement, while the government agencies that are the main supporter cannot enforce all certified standards. As a result, the domestic consumption consists of poor quality and unsafe products, although the standards are clearly defined because the enforcement and application is still inefficient. To develop the quality and safety standard, the following ideas were proposed: 1) Pushing forward Thai products aiming at generally accepted standards. Thai standards must be established to produce products of good quality, safety and standards to be accepted. In particular, after the launch of the AEC, products of poorer quality may be imported without control. Therefore, Thai standards should be determined to be internationally accepted at least at the beginning and recognized by entrepreneurs. 2) Consumers shall be induced to use only standard products. If the consumers have more concern about quality products, an origin of raw materials and the safety in the manufacturing process, the producers have to develop themselves to respond to the consumers requirement. Consumers in Thailand should realize of danger from lower standardized products and benefits from standardized products that upgrade the quality of life of Thai people. 3) Selling points on the quality and the safety of Thai foods should be highlighted. The consumers shall also be encouraged to realize the safety of consuming products of good quality. The clear selling points for Thai food products should therefore be proposed by focusing on quality and safety. 4) Traceability system shall be implemented in industries with readiness to ensure that the products are safe without contamination. The agencies concerned must be strict in using good quality of raw materials. In addition, the traceability system should be used to create the consumer s confidence and up-to-date standards shall be applied in order to cope with market requirements such as organic agricultural promotion. As agricultural products are main raw materials for agro-industry, quality raw materials are basic requirements for agro-industry. In conclusion, the potential of international standard for agro-industry of Thailand still depends on the potential of each entrepreneur. The direction of development has to relate with the trend of consumer s demand that has more concern with quality, safety and standard. Government and related organizations should support this by improving the potential to entrepreneurs and adjust the laws and the regulations to apply with the practical term. They have to support them to recognize the importance of products of good quality and safety which can expand the domestic demand and enhance the quality of life in the country. Finally, Thailand has to establish the Thai standard to be internationally accepted and be applied to bring about benefits to the producers, domestic and international consumers, workers, environment and economic development under the production of good quality and sustainability. 5

6 1.4 Preparation of Environment and Strengthening of Basic Factors Environmental potentials and strength of basic factors comprise five components: 1) Efficiency and Productivity Enhancement. To enhance the efficiency and productivity of Thai agro-industry, the overview of productivity as well as labor productivity index were taken into consideration and we found that Thai agro-industry could continuously avail higher productivity labor. This indicates that Thai agro-industry has potential to cope with the context of commercial competition. 2) Intellectual Infrastructure. Intellectual infrastructure of Thailand has been developed slowly although it has government agencies directly concerned with science & technology as well as institutes of human resources development, but its speed of development still goes behind its Asian competitive countries despite a sign of betterment in development, based on higher ranking of infrastructure provided. 3) Investment Promotion Measure. The investment promotion measure in terms of motive of investors was the main factor that arouses them. However, the mission on Thai entrepreneurs overseas investment carried out by the Board of Investment of Thailand (BOI) remains unclear to their confidence. Thus, the new strategy of investment promotion shall be contributed by all involving sectors on environment and infrastructure. This will generate the development and deplete all hindrances against agro-industrial development. 4) Logistics Service. Logistics cost per Thailand GDP continually and gradually declined in comparison with those of its Asian neighboring countries. In order to make the logistics service as sustainable part of contribution to production efficiency and cost reduction, the necessity of technology, infrastructure and service chain developments shall be participated by government and private sectors. 5) Laws, Regulations and Measures. Being a member of the ASEAN Economic Community (AEC) will cause positive and negative effects to Thailand in response to the measures of the agreement. Thus, government and private sectors should simultaneously adapt themselves, offensively and defensively, to cope with the imminent changes by means of the enhancement of production efficiency and labor productivity. ASEAN market shall be viewed as a huge supply source of raw materials and finished products. In this regard, the government, as the principal supporter should amend the laws and the regulations to be up-to-date and deplete all obstacles to investors. According to our study, we would like to propose the following ideas: (1) Signification of human resources development. Because human resources are a valuable property that should be efficiently managed. Thus, the government and private sectors should develop their resources in the roles of producers and supporters to create knowledge and be able to work together for sustainable development. (2) Improvement of production efficiency in order to cope with the competition under fast change situations. Government and private sectors have to integrate and work together with the same goal for manufacturing development, including labor, technology and increasing the productivity to respond to the worldwide market demand. (3) Amendment of laws and regulations that hinder the manufacture and the investment of industrial sector corresponding to current situation and business interaction, based on mutual social responsibility. (4) Preparedness of public utility and logistics system. The government has to cooperate with the private sector not only in domestic development but also in the overseas investment. 6

7 In conclusion, all sectors of Thailand have a major role in the environment for agro-industry development even in the supporting role, such as human resources, knowledge, good quality consumers, production factors, laws and regulations or obstacles to development (weakpoints on infrastructure, technology, laws or politics). Thus, the economic development depends on their environmental and strong fundamentals. The major development approach has to be integrated in all factors to be able to support each other and make the direction for sustainable development. Finally, the competitiveness of Thai agro-industry will develop under the strong and sustainable circumstance and factors. 1.5 Sustainable Industrial Development 1) Environmental impact mitigation plans consist of : (1) Plans to promote the generation of electricity from biogas, wastewater and compostable waste - Electricity generation from biogas and wastewater, eg wastewater from palm oil, tapioca starch, seafood, canned food and beverage industries, etc. - Electricity generation from biodegradable waste or agricultural residues from food industries, eg, pineapple shells, other fruit shells, organic waste from seafood industries, etc. (2) Plans to promote the production of biomass fuel left in the manufacturing process, eg briquette fuel from waste, such as palm bunch or waste from the wastewater treatment process. Biomass residues can produce briquette fuel as an alternative fuel in kilns. 2) Plans to promote the mechanism supporting and serving sustainable industry development Sustainable agro-industry development includes the promoting and supporting measures to upgrade environmental management and increase income or make use of waste. (1) Measure to support the purchase of electricity from agro-industrial entrepreneurs, who have convenient and one stop service approval procedures. (2) Measure to support adder for generating electricity from renewable energy for very small power producers projects (VSPP). The supporting measure should be formulated to take at least years. In addition, adders have to be increased in accordance with technical and economic factors, eg the use of highly efficient technology in the form of cogeneration and the cost of biomass that varies in line with the marketing mechanism and inflation rate. (3) Measure to support the project under the greenhouse gas reduction process. The approach will be determined by UNFCCC using the mechanism under the management of Thailand Greenhouse Gas Management Organization (Public Organization) (4) Measure to promote and conserve energy in all manufacturing steps in the manufacturing chain, including energy conservation measures in the designated buildings for medium and large scale factories with an area of more than 2,000 m 2 that should be promoted to cover all fields of agro-industry. (5) Measure to do a research and development of renewable energy production from agro-industry waste that uses fuel from waste in the manufacturing process, eg, biomass and wastewater. (6) Measure to provide training to enhance the potential of personnel of industrial clusters food, non-food and biological industries by focusing on transfer of knowledge, technology and expertise in the preservation of quality of environment, energy conservation and renewable energy production. 7

8 2. Environmental Analysis to Determine the Agro-industry Development Strategy Determination of guidelines for agro-industrial development is an assessment applying the data gained from the study on various parameters: reviews of information, policies, plans/strategies, measures and factors relating to agro-industrial development. Structural and potential analyses of agro-industry by means of the supply chain, value chain study of farm produces, and the analysis of sustainable agro-industry development of the aforesaid five dimensions to establish the master plan have the following details: 2.1 Analysis of the Integrated Agro-industry Development Guideline 1) Green industry (Sustainable complex). It is the manufacture that relies on environment and society i.e. the manufacturing process should be performed in respect of environment and cleanliness. At present, these issues have vastly been taken into consideration, especially waste treatment and recycling-wastewater treatment and carbon dioxide emission. This is a kind of green growth industry preparedness to cope with the environmental change. 2) Cluster (Supply chain management) means establishment of cooperation in terms of collaborative network in each group of industry aimed at amending regulations that hinder the agro-industry development as well as the congregation of specific expertise development of the entrepreneurs in order to mutually enhance their production efficiency and arouse the competition to equally upgrade their standards of manufacturers for further international competition. The issues to be taken into account and the systematic process are: Entrepreneurs. The entrepreneurs of all branches (raw material producers, processors and marketing service providers) throughout the process should be interconnected. Farm-oriented raw materials. Farm-oriented raw materials are main factors of the industrial sector. This should be managed steadily without any variation due to seasonal change. Marketing. Marketing and management development should be performed simultaneously and together with the production in order to meet the requirements of the consumers. Product standards. To respond to the consumers requirements of product quality, the farm-oriented raw materials and manufacturing processes of agro-industrial goods should be standardized. 8

9 3) Research and development. Research and development is a main factor of agro-industrial product development in the context of to the global change. The manufacturers should respond to more various requirements and the important issues to be taken into consideration in order to determine the development outlines are: Integrated and realistic support to research and development of products Promotion of patent registration and utilization Development of research & development toward commercial utilization 4) Mood consumption (Food Industry). The main purpose is to respond to the consumers needs for quality goods of various supplies and with updated safety standards. The value should be added to the products with the stories or specific characteristics of the products that reflect identity and suitable quality. Moreover, the standard systems should be developed offensively to meet or arouse customers requirements. 5) Innovation (Non-food and Biochemical Industries). The entrepreneurs should support innovation and advanced technology obtained from research and development in order to launch new products with added value rather than just a kind of quality food product. 6) Investment. According to the development of innovation and value addition to farm produces in our study, knowledge and manufacturing technologies invested by the private sector should be supported by the government sector i.e. government policies and measures announced by the government should be clear-cut in order to motivate the investors. In addition, related issues should be taken into consideration, such as acceptance of market, sufficiency, and quality of farm-oriented raw materials, appropriateness of related regulations and standards, nationally and internationally, and economic benefits that may be acquired in the long run. 2.2 Success Factor Analysis of Sustainable Agro-industry Development Significant factors/issues that contribute to the success of agro-industry development can be summarized as follows: 1) Joint cooperation by and between the government and private sectors 2) Integrated performances within the same group of industry and cross with different groups of industry ranging from the leading ones to the last ones 3) Conscious mind of collaboration is an essence in agro-industry development. 4) Continuity of performance under the agro-industry development master plan 5) Promotion of good governance in performance of both government and private sectors 6) Availability of suitable devices for monitoring and assessment 2.3 Sustainable Agro-industry Development Strategy The overview of agro-industry development determination is to bring about sustainable and balanced growth so as to drive the Thai economy with respect to the said agro-industry development strategy and framework: 1) Agro-industrial entrepreneur development toward regional competition. This emphasizes business networking or team dynamic of industrial groups ranging from the upstream, midstream and downstream manufactures. 2) Factors supporting agro-industrial business. Supports should be provided to agro-industrial entrepreneurs so that they can keep on running their business smoothly and/or build up their strength compatible with environment and basic needs: infrastructure, public utility system, intellectual infrastructure, investment promotion measures, laws, regulations and measures relating to intellectual patent protection. 9

10 3) Creative agro-industry promotion and development. The purpose is to apply the knowledge, wisdom, and connection with cultural foundations so as to increase the value of supply chain through improvement of quality of capital, labor and products. 4) Organization efficiency development. The purpose is to develop the performances and procedures of involving agencies, including government and private personnel, and re-establishment of up-to-date database to support the implementation outlines of sustainable agro-industry development. 3. Master Plan on Sustainable Agro-industry Development The proposal for this master plan is to signify the participation of all sectors, by which we got the ideas from in-depth interviews, questionnaire answers of entrepreneurs, and brainstorming of focus group discussions on development outlines for realistic practices. The establishment of this agro-industry development master plan specifies strategies, plans and tactics that can be performed effectively with timeframes of 5, 10 and 20 years and with the vision Thailand is the regional hub of agro-industrial manufacture and trades in respect of valued product standards, sustainable social and environmental friendly safety. The objectives of development are: 1) To develop and push up Thailand to become the leader and the regional hub of agro-industrial production within ten years. 2) To develop the image of standard and safe goods under the brand name, of Thai Products for regional and international acceptances within 10 to 15 years. 3) To develop Thai agro-industry toward the target of Zero Waste and Green Industry within 20 years. The establishment of the master plan on sustainable agro-industry development is composed of the master plan on agro-industry development, the master plan on food and non-food industry development, and the master plan on biological industry development. The overviews of strategies and plans/projects of particular industry development can be summarized as follows: 3.1 Holistic Agro-industry Development Strategy Strategy on resources management and regional production base linkage The analysis on area-based production potential and future demand of farm produces points out that some significant farm produces will be scarce in the future: cassava, oil palm, and para rubber. On the contrary, there will be an oversupply of rice and sugar. This strategy is therefore determined for the main purpose to manage and use the limited domestic resources and link the use of additional resources from neighboring countries to cover the demand of existing products. The said strategies also include the marketing opportunity for new products in the supply chain expanding in the future. The strategies and schemes are determined as follows: 1) Strategy on adjustment of domestic area-based farm produces. The purpose is to balance the production correspondingly to the changing situations. The schemes are: (1) Zoning in accordance with land potential (2) Schemes for production of goods in supply chain were set according to market potential. 10

11 2) Strategy on enhancement of production efficiency and farm produce quality. The purpose is to solve short supply and non-standard quality of raw materials for agro-industry according to the following schemes: (1) Irrigation development to enhance cropping potential (2) Promotion to apply appropriate agricultural technology (3) Promotion to adopt seeds and breeds with pedigrees 3) Strategy on linkage of regional production bases of farm produces and agro-industry. In the future, once the demand of raw materials increases over the limit of available domestic resources, it is necessary to reduce some constraints of domestic resources in regard of overall production efficiency in the supply chain. The schemes are: (1) Importing farm produces which are raw materials from neighboring countries (2) Inducing the entrepreneurs to invest in raw material production in neighboring countries (3) Inducing the entrepreneurs to remove their production bases to neighboring countries Strategy on enhancement of competitive capability The main purpose of this strategy is to enhance the competitive potential of products in the supply chain of agro-industry, aimed at food and rubber industries. The schemes are: 1) Expansion of new customer bases in both regional and world markets. The purpose is to deplete the weakness of dependence on few suppliers of agro-industrial products, which is the cause of loss in bargaining power-a bad effect of competition in the market. The solution is to urgently expand the trade bases or make friends with allies for free trade cooperation and investment in the region. The schemes are: (1) Utilization of AEC regional free trade (2) Expansion of agro-industrial products to other regions 2) Product image development. The purpose is to maintain the regular customers loyalty in the products and, in the meantime, create confidence to new customers. To cope with competition in regional markets, it is necessary to redevelop the product image from time to time for customers appreciation in quality and safety of the products. The schemes are: (1) The entrepreneurs should produce only the standardized goods. (2) Product standardization should be seriously and continually implemented. (3) Inducing the entrepreneurs to affix Carbon Label on their products. (4) Applying the marketing strategy to supplement product images via Thai branding development. 3) Enhancement of production efficiency in the supply chain. The purpose is to solve the problem of too many factories in both food and non-food industries. Most production does not reach the full capacity of the machines-overall production efficiency is low. Furthermore, high efficiency production technology requires lot of investment. As most of entrepreneurs are small and medium enterprises (SMEs), they need to modify their technologies to cope with their competitors. The production efficiency in supply chain is therefore necessary. The schemes are: (1) Promotion to adopt only the technology matching with the production. (2) Clusters and networks of domestic and regional entrepreneurs should be promoted. 11

12 (3) Expertise management should be promoted in order to enhance the productivity of the supply chain. (4) Market management of upstream goods should be efficiently developed Strategy on safety quality development and standard enhancement The main objective of this strategy is to determine the location of goods and products in the supply chain of agro-industry in order to reduce trade impediment and sustain the agro-industry aimed at all products to be standardized and internationally accepted. 1) Pushing up all Thai products to be standardized and regional/internationally accepted. The schemes are: (1) Traceability system in agro-industrial manufacturing process should be developed and seriously implemented (2) Standardization, inspection procedures, and quality control should be upgraded. (3) Standardization should be seriously enforced. 2) Entrepreneurs shall be aroused to develop their production standards. The purpose is to emphasize the SMEs according to following schemes: (1) Only the ACFS certified entrepreneurs will be promoted. (2) Inducing the consumers to realize the safety of ACFS certified products Strategy on environment improvement and strengthening of basic factors The main purpose is to develop the basic factors so that they would be beneficial to agro-industry development aimed at utmost competitive capability, and sustainability of the industry with the supply chain. The schemes are: 1) Development of technology and innovation corresponding to the entrepreneurs requirements. The purpose is to let the entrepreneurs, especially the SMEs, in the supply chain have the chance to apply appropriate technology at their affordable cost. The schemes are: (1) Coordination and cooperation in research and development by and between government and private sectors (2) Development of human resources management (3) Support for the performance of research agencies and their personnel (4) Promotion and support for the application of innovation/advanced technology to manufacturing process 2) Amendment of laws and regulations that impede the development. The purpose is to enable the laws and regulations to benefit commercial competition and correspond to economic, social, trade, and domestic or international investment contexts. The schemes are: (1) Laws relating to international business should be amended in line with the AEC agreement. (2) International trade regulations should be trained to agro-industrial entrepreneurs. (3) Laws and regulations that impede trading should be amended. 3) Preparedness for public utility and logistics. The purpose is to reduce the entrepreneurs costs in the supply chain that severely affect the competition capability and the agro-industry development. The schemes are: (1) Development of land transportation system connecting to that of neighboring countries. 12

13 (2) All modes of domestic transportation should be efficiently developed for alternatives. (3) Infrastructures necessary for entrepreneurs investments should be urgently developed Strategy on sustainable agro-industry development The main purpose is to develop the agro-industry so that it is sustainable and acceptable by the society without any environmental impact. The schemes are: 1) Promotion of the manufacturing process of the supply chain to green industry system. This would reduce the loss in all manufacturing procedures. Also, the application of zero waste technology in the supply chain would save the production cost and, in the meantime, enhance the industry competitiveness. The schemes are: (1) Waste disposed from the manufacturing process for electricity generation should be promoted. (2) Factory that generates biofuel from its biomass residuals should be promoted. (3) Research and development of efficient technology applied in the manufacturing process should be promoted. 2) Promotion and support of the environmentally-friendly manufacturing. This is to promote the research and development of clean technology as well as biotechnology to build an innovation of biological products such as bioplastics. This includes the promotion of biological products/goods usage as well. The schemes are: (1) Promotion of research and development on clean technology and biotechnology (2) Promotion of biological product/good usage 3.2 Strategy on Agro-industry Development (by Industry Group) Establishment of particular industry development strategies comprises food industry development; non-food industry development; and biological industry development. The overall strategies/schemes for each branch of industry can be summarized as follows: 13

14 1. Enhancing the Industrial Potential for International Economics Connectivity Strategy Tactics Important Plans/Projects in Each Industry Group Food Non-Food Biochemical Preparing the Industry for the Free Trade and Investment Agreement Zoning Enhancing Industrial Potential In International Business Rebrand Thai Food Products in International Market Encourage and Facilitate The Investment in Foreign Countries Create Knowledge and In-depth and Easily Attainable Trade and Investment Database Creating the cooperation Between Domestic and International Industries Equip Entrepreneurs with Knowledge and Innovation Encourage the Entrepreneurs to Create Regional Supply Chain Connectivity Equip Entrepreneurs with Knowledge and Innovation 2. Enhancing the Industrial Competitiveness Enhancement Strategy Tactics Important Plans/Projects in Each Industry Group Food Non-Food BB Biochemical Enhance Productivity and Potential of Entrepreneur throughout the Supply Chain Encourage the Entrepreneurs to Adapt The Success Business Model Encourage and Promote the Entrepreneurs to Realize the Importance and Adapt the Business Potential Assessment Encourage the Formation Of Alliance, Cooperation and Network Development Encourage the Formulation of Strategies to Develop Food Business Network Food Industry Develop the Potential of Cluster Development Agent (CDA) Encourage the Formulation of Strategies to Develop Ethanol Business Network in Ethanol and Biodiesel Industry Develop the Products that Match the Market s Need by Using Technology, Innovation, Knowledge and Culture Encourage the High Value Unique Products by Applying Knowledge, Technology and Innovation that Suits Market and the World 14 Encourage the Knowledge Gathering about Intellectual Property

15 2. Enhancing the Industrial Competitiveness Enhancement Strategy (Cont d) Tactics Important Plans/Projects in Each Industry Group Food Non-Food BB Biochemical Upgrade the Product Quality to the Global Standard Encourage the Potential Food Product to meet Global Standard Promote, Develop and Upgrade the Production Process to Meet the Standards, especially those that have Legal Mandatory Create Opportunities and Increase Marketing Channel for Industrial Products Encourage the Development of Branding, Brand Awareness and Loyalty, and Other Supporting Means Encourage the Use of In-depth Marketing Database Create and Develop Entrepreneur s Potential in Industrial Supply Chain Create Entrepreneur Incentives and Consciousness 3. Supporting the Environmental Factors to be Beneficial to Industry Business Strategy Tactics Important Plans/Projects in Each Industry Group Food Non-Food Biochemical Enhance the Industrial Organization and Officers by Upgrading Knowledge and Skill Create the Understanding about Problems and Needs of Private Sectors and Development Policy Among Executing Officers Promote the Role of Industry Development and Promotion Officers Create the Understanding about Problems and Needs of Private Sectors and Development Policy Among Executing Officers Develop Database and Knowledge for Investment Planning and Industrial Development Enhance the Database Management Effectiveness Connect and Integrate the Feasible Data Collaboration between Public and Private Agencies Review, Adjust and Push Forward the Law, Tax Regulation and Privileges to Facilitate Business Push Forward the Review, Adjustment and Promulgation of the Law and Related Regulations in Accordance with the Situation Encourage the Entrepreneurs to Act According to Law, Regulations and Procedures Push Forward the Review, Adjustment and Promulgation of the Law and Related Regulations in Accordance with the Situation 15

16 4. Encouraging the Industrial Growth in Accordance With Area Potential Strategy Tactics Important Plans/Projects in Each Industry Group Food Non-Food Biochemical Encourage the Food SMEs Development based on Economics, Social and Cultural Bases Encourage the Collection of Community/Product History and Local Knowledge Through Community Participation Encourage the Knowledge Sharing about Local Wisdom, Community Success Case and Social Responsibility Encourage the Food Industry to Properly Manage the Resource and Environment Within Designated Area Create the Awareness of Importance with Neighboring Countries Cooperation Encourage the Creation of Cooperating Network and Good Relations with Neighboring Countries Facilitate the Public and Private Cooperation and Strengthen the Food Local Industry Development Network Promote the Efficient and Effective Uses of Local Resources Create the Economic, Social, Cultural and Resource Knowledge 4. Pilot Projects Plans/schemes derived from development strategy determination are taken as guidelines in setting particular development schemes, aimed at the linkage of thorough production from upstream, midstream to downstream. To accomplish the sustainable development of agro-industry, it is necessary to set up a pilot project in order to drive each industrial cluster forward. The pilot projects are composed of three projects for three industrial clusters: palm oil; para rubber; and cassava. The details are as follows: 4.1 Palm Oil Industry Pilot Projects Establishment of a Community-Level Palm Oil Extracting Mill Project 1) Rationale Palm oil extracting mills have not been expanded sufficiently to attain the increasing produces and plantations over the country. Three benefits can be attained: cost reduction in delivery of produces to factories; more income available due to value added to farm produces; and income in terms of profit gained from the mill s transactions. 2) Objectives To support the establishment of a community-level palm oil extracting mill in order to serve increasing palm oil productivity in the project area in the future. To support a group of farmers in the project area to jointly invest in their community palm oil extracting mill and to earn more income in the long run. 16

17 To help them reduce the transport cost to another oil palm extracting mill in the project area. 3) Goal A group of farmers in the project area will be able to establish its community-level palm oil extracting mill in order to attain the increasing oil palm produces in each project area. 4) Target Areas New palm oil plantation areas located in the northeast and the upper central regions 5) Guidelines Three guidelines are specified for implementation: (1) Support provided to oil palm farmers for their cluster in all forms: community enterprise cooperative or any other juristic person for their readiness in investment and management of their community palm oil extracting mill. (2) Information and knowledge transfer about investment and management. (3) Transfer of palm oil extraction technology and quality control of standard palm oil products to farmer groups in the project area. (4) Coordination between the group of farmers and other concerned government and private agencies such as the Ministry of Commerce, the Ministry of Agriculture and Cooperatives, the Association of Palm Oil Extracting Mills of Thailand etc Efficiency Enhancement for a Palm Oil Extracting Mill Project 1) Rationale The existing palm oil extracting mills, especially in the original plantation areas, which have low productivity i.e. cannot fully utilize the raw materials and affect the environment. Four benefits will be attained: reduction of palm oil production cost; gaining additional income from full benefit of raw materials; increase product variety such as bioenergy production obtained from wastewater and mitigation of environmental impacts. 2) Objective To support the manufacturing process development and enhance the technology of the palm oil extracting mill leading to overhead cost reduction; increase in income due to full benefit of raw materials; increase in product variety; and mitigation of environmental impacts. 3) Goal To support a palm oil extracting mill in the project area for its higher production efficiency in both quality and quantity as well as various produces; and environmental impact mitigation. 4) Target Areas Original palm oil plantations located in the south and the east. 5) Guidelines Two guidelines are specified for implementation: (1) Transfer of knowledge and technology on palm oil extraction; transfer of technology on bioenergy production, quality control of standard palm oil products; and transfer of management knowledge to palm oil extraction entrepreneurs in the project areas. (2) Coordination with other government and private agencies concerned such as the Ministry of Energy, the Ministry of Natural Resources and Environment, financial institutions, educational institutions, the Association of Palm Oil Extracting Mills of Thailand etc. 17

18 4.2 Para Rubber and Rubber Products Industry Pilot Projects Promoting and Supporting the Clusters for Investment in a Potential Processing Mill of Downstream Products 1) Rationale There is no expansion of downstream rubber product processing mills to serve the increasing productivity in the cultivated areas and the increasing productivity per rai Three benefits will be attained: transport cost reduction; increase of income due to value added to the produces; and income from the profit. 2) Objectives To support the clusters of para rubber farmers to build their own rubber product processing mill and related consequent businesses in order to enhance their management capability of raw materials and knowledge exchange within their business groups and among those related to rubber industry and rubber products. To support the investment in a potential processing mill of downstream products: latex, medical rubber gloves etc. To strengthen and sustain economy of people involving with rubber industry and rubber products by creating a network among upstream, midstream and downstream farm product manufacturers. 3) Goal To form a cluster/cooperative/association of entrepreneurs relating to rubber industry and rubber products increased in the project area. This includes the increase of investment in potential rubber processing industry to attain the latex to increase in the future. 4) Target Areas The provinces/provincial groups that have a total para rubber plantation area of more than 500,000 rai in the upper northeast. This region is selected because there are lots of para rubber plantations. 5) Guidelines Three guidelines are specified for implementation: (1) Knowledge transfer and utilization of the cluster in the supply chain of rubber industry and related rubber products. (2) Strategy development of thorough rubber industry and related rubber products; coordination between the farmer groups and other government and private agencies concerned such as the Ministry of Commerce, the Ministry of Agriculture and Cooperatives, rubber processing mills, and para rubber farmers association/cooperative etc. (3) Knowledge development for business potential of the entrepreneurs relating to the supply chain of rubber industry and rubber products. (4) Support the investment to build a potential downstream rubber processing mill. 6) A case study in Bueng Kan Province There are altogether 750,000 rai of para rubber plantations and 52,900 farmers in Bueng Kan. Out of the said plantations, 390,000 rai are ready to produce latex at 296 kg/rai/year. According to the records of the Department of Industrial Works in 2012, there were only eight rubber industry-related mills and most of them are of latex processing (latex purchased from groups of farmers or community enterprises/cooperatives in the area). Latex is processed and transformed into rubber crepes, rubber tubes, STR 20, mixed rubber with latex concentration of 60%, skim blocks, skim crepe, and mixed rubber while the consequent industries are: one rubberwood processing mill and eight wooden furniture factories not so much rubberwood processed as raw materials for the time being. 18