Luncheon talk 19 Nov 2015 by Spencer Leung, Go Organics Thailand

1. IS THE CURRENT ORGANIC INDUSTRY TRULY
ORGANICS AND SUSTAINABLE
Net Impact/Sasin (19 November)

2. What is definition of organic
agriculture?
“Organic Agriculture is a production system that sustains the
health of soils, ecosystems and people. It relies on ecological
processes, biodiversity and cycles adapted to local conditions,
rather than the use of inputs with adverse effects.
Organic Agriculture combines tradition, innovation and science
to benefit the share environment and promote fair relationships
and a good quality of life for all involved.”
IFOAM Defintion
http://www.ifoam.bio/en/organic-landmarks/definition-organic-agriculture

3. Global Market – Organic Food & Drinks
0
10
20
30
40
50
60
70
2000 2003 2006 2010 2011/12
Global Market - Organic Products
Billion US$
Growth continues: Global organic market
at 72 billion US Dollars with 43 million
hectares of organic agricultural land
worldwide – FiBl (Feb 2015)

4. Development of organic agricultural land
in the regions 1999-2011
4Source: FiBL-IFOAM-SÖL 1999- 2013

5. The ten countries with the largest numbers of
organic producers 2011
5Source: FiBL -IFOAM survey 2013, based on national data
sources and data from certfiers.

6. The countries with the largest domestic markets
for organic food 2011
6Source: FiBL-AMI- IFOAM 2013, based on national data sources

7. ORGANIC = big business

8. Now
Q1: Is the current organic industry truly
“organics”?

9. Supposedly
“Organic Agriculture …. to benefit the share
environment and promote fair relationships and
a good quality of life for all involved.”

10. Questions to ask
• How much is this market potential is
benefiting the smallholder farmers?
• How much is this healthy consumption
movement is benefiting low income group?

11. Is diversity in the landscape = organics?

12. Build in animal husbandry
into the crop production
system
OR: Animals on farm

13. What about the regulations?
• Global Organic
Regulations &
Certification Process
• Consumer protection
• Promoting “fair
relationship”?

14. Example: Exporting to China
Cost of Organic Certification
• 2 farms + 1 processing unit within 1 region
• 3 inspections - one inspector in one trip,
• the cost inspection for the 3 units (2 farms and one processor):
– US$5,000 (inspection and certification)+
– US$500 (sample test)+
– US$1,000 (airfare and accommodation)+
– Total = US$6,500 USD (per year)
• If produces can be sold to China on average, say, of 2 USD (approx. 72 THB) for
one kg,
• Then the cost for Chinese organic certification would equal approximate 3.3 tons
of produce.
• NOT including the Cost of Production….
• BUT: at 2014 farmgate market price for conventional Longan/Lamyai Northern
Thailand
– THB6.00 per kg...
– How much would buyer willing to pay for certified organic longan?
• Questions: will the market pay for such high premium? If so who can afford it?

15. Q2: Is it sustainable?
• What is meant by
sustainability?
• Framing of sustainable
development progress
according to the Circles
of Sustainability,
– used by the United Nations
• It depends…

16. Example: Sustainable Organic Agriculture Action
Network (SOAAN) Flower

17. However…

18. Who Owns Organics now…
Hain
Celestial
#83
ShariAnn's
M&M
Mars
#10
Mondelez
#19
(spinoff from
Kraft)
Coca-Cola
#11
General
Mills
#7
Cargill
#14
White-
Wave
#52
(spinoff of
Dean)
ConAgra
#12
Kellogg
#13
Walnut
Acres
Millina's
Finest
Frutti di
Bosco
Muir Glen
Celestial
Seasonings
Imagine/Rice
Dream/Soy
Dream
Little Bear
Arrowhead
Mills
Bearitos
Spectrum
Organics
Lightlife
The Organic
Cow of
Vermont
Breadshop
Alta Dena
Westbrae
Mountain
Sun
DeBole's
Earth's Best
Nile Spice
Health Valley
Westsoy
Cascadian
Farm
Garden of
Eatin'
Casbah
Horizon
Odwalla
Silk
Organic Industry
Structure:
Acquisitions & Alliances,
Top 100 Food Processors in
North America
October
2001
$181 M
July 1998, 13% Equity;
January 2004, 100% Equity, $216 M
Morningstar
Farms/Natural
Touch
November 1999
$307 M
Organic
Brand
Acquisitions
# Numbers refer to
rank in North American
food & beverage sales
according to
Food Processing,
August 2013
October
1997
$23.5 M
June
2003
October 2001
June 2001
September 1999
From Heinz
March 2000
$390 M December
2002
April 1999
$80 M
April 1998
$80 M
December 1998Back to
Nature
Boca
Foods
French
Meadow
Seeds of
Change
1997
July 2000;
September 2013,
sold to Brynwood
Partners
December
1999
March
1998
May 2002
$189 M
May 1999
April 1999
June
2000
September 2003
100% Equity;
August 2012
majority stake sold
to Brynwood
Partners
Kashi
August
2005
$33 M
February 2000
Food
Processors
#
Hershey
Foods
#20
Dagoba
October
2006
TofuTown
June 2007
From Dean
Naked
Juice
Pepsi
#1
November 2006
Green &
Black's
January 2010
Alexia
Foods
July 2007
Wholesome
& Hearty
Bear
Naked
November
2007
$122 M
July 2006
(discontinued
organic October
2013)
Nestle
#3
Tribe
Mediterranean
Foods
September 2008
$57M
via Israeli subsidiary
Osem Group
(50.1% Equity)
LaraBar
Honest
Tea
February 2014
February 2008
40% Equity
$43 M;
March 2011
100% Equity
June 2008
MaraNatha SunSpire
March
2008
Rich
Products
Corp.
#40
Post
Foods
#85
(spinoff from
Ralcorp)
Golden
Temple
Peace
Cereal
Willamette
Valley
Granola
Food Should
Taste GoodFebruary 2012
Campbell
Soup Co.
#29
Bolthouse
Farms
July 2012
$1.55 B
Phil Howard, Associate Professor
Michigan State University
Hillshire
Brands
#30
(formerly Sara
Lee)
Aidell's
Sausage
May 2011
$87 M
Sweet
Leaf Tea
May
2011
Stonyfield
Brown
Cow
J.M.
Smucker
#24
R.W.
Knudsen
Santa Cruz
Organic
Snyder's-
Lance
#65
Late July
BluePrint
November
2012
May
2013
Ella's
Kitchen
Happy
Family
May 2013
92% Equity
AB InBev
#5
Goose
Island
March 2011
$38.8 M
Ralcorp
(private label
organicfoods)
Bloomfield
Bakers
Lovin
Oven
March 2007
$140 M
November
2012
$6.8 B
Millstone
November 2008
1984 1989
December 2007
minority stake
February
2003
October 2001
40% Equity;
January 2004
85% Equity
May 2013
$158 M
May 2010
$71 M
Miller-
Coors
#16
Crispin
February
2012
Fox
Barrel
January
2010
Bimbo
Bakeries
#22
Olafson's
Baking Co.
February 2014
$1.7 B
July
2002
Perdue
Farms
#31
Coleman
Natural
May 2011
Hans
August 2003
August
2007
Draper
Valley Farms
Petaluma/
Rosie
January
2002
Tea Forte
January 2012
JAB/ D.E.
Master
Blenders
(formerly Sara
Lee)
Wolfgang
Puck
July
2008
Foster
Farms
#45
Humboldt
Creamery
August 2009
$19.5 M
CROPP
(Organic
Valley)
#91
Canada
Bread Co.
#67
TreeHouse
Foods
#46 Sturm
Foods
December 2009
$660 M
Naturally
Fresh
March 2012
$25 M
Hearthside
Foods
(cereal
division)
#92
Meyer Natural
Foods
December
2010
Diamond
Foods
#89
Kettle
February 2010
$615 M
J&JSnack
Foods
#94
Kim &
Scott's
June 2012
$7.9 M
John B.
Sanfilippo
& Son
Orchard
Valley
Harvest
May 2010
$29.5 M
June 2010; joint marketing
agreement
November 2009,
Stonyfield
brand licensed
to CROPP
for fluid milk
Danone
(Dannon)
#68
Dakota
Beef
Peet's
Coffee &
Tea
August 2012
$1 B
New
Morning
December 2012
Erewhon
Plum
Organics
May 2013
Earthbound
Farm
December 2013
$600 M
Enray
August 2013
PowerBar
Pria
February 2014
(from Nestle)
Golden
Boy
December 2013
Dakota
Growers
Pasta September
2013
Immaculate
Baking
January 2013
Green
Mountain
Coffee
February 2013
10% Equity
$1.25 B

20. Global Successful Stories
• Royal Project (Thailand)
• Mae-Fah-Luang Foundation (Thailand)
• Hansalim (S. Korea)
– http://eng.hansalim.or.kr
• Sekem (Egypt)
– http://www.sekem.com
• Wayanad Social Service Society (India)
– http://www.wsssindia.com

21. OA offers the world its strategies to
address global challenges
• Food security
• Rural Poverty
• Climate change
mitigation/adaptatio
n
• Biodiversity
conservation
• Sustainable natural
resources (water,
soil)
• Peace

22. “We must ensure that sustainable agricultural
livelihoods, rural employment creation, and nutritious
food production are integrated into development
policy, programs, and partnerships in order to support
smallholder farmers…
…Through innovation and collaborative efforts, we can
develop effective relationships along the value chain to
create opportunities to lift people out of poverty.”
Source: The Chicago Council of Global Affairs

24. Make Living and Peace Sustainable
www.goorganics.org

25. Thank you

26. Make Living and Peace Sustainable
www.goorganics.org

27. Backup Slides

28. About myself
• Born and raised in Hong Kong
• MBA from University of Hong Kong
• Moved to Thailand in 2009
• Started Adams Organic in Thailand in 2009
• Rotary Peace Fellow from the Rotary Peace Program Chulalongkorn University 2013
• Rotary Peace Action Group Committee Member
• IFOAM Organic Leadership Fellow 2013
• Founder of Go Organics Co Ltd.
• Involved with developing farmers and farming communities
• Current focus is learning and building a financial sustainable social enterprise
• Build peace by promoting organic farming and sustainable economic development

29. About Go Organics
• Global initiative in promoting
sustainable living and peace
• Go Organics Co Ltd (Thailand)
– a startup company registered in Thailand
– Aims to be a social enterprise company
supporting sustainable community
development and peace by promoting
sustainable farming in Thailand.
– Follow us at
SMNwww.facebook.com/goorganics.thail
and
Make Living and
Peace Sustainable

30. Rotary International
Rotary Peace Study
Rotary Peace Fellows
• International non-profit humanity
organization
• Rotarians are 1.2 million neighbors,
friends, and community leaders who
come together to create positive,
lasting change in our communities
and around the world.
• Six areas of focus:
• Prevention and Resiolution of
conflicts and the promotion of
peace
• Prevention and Treatment of
Disease
• Water Cleanliness
• Mother and Child’s Health
• Basic Education and Literacy
• Economic and community
development
• Six Rotary Peace Centers fully funded
by Rotary International
• Currently close to 1,000 Rotary Peace
Fellows worldwide

31. • The International Federation
of Organic Agriculture
Movements.
• The global umbrella body for
organic agriculture stakeholders,
with over 750 members
worldwide.
• IFOAM’s mission is to lead, unite
and assist the organic movement
in its full diversity.
• Our Goal is the worldwide
adoption of ecologically, socially
and economically sound systems
that are based on the principles of
Organic Agriculture.
• The full diversity of Organic
Agriculture includes both
certified and non-certified
organic agriculture.

32. Value Chain Approach

33. Market

34. Value Chain: Cost and control at every Link
Production
Processing &
Packaging
Transport &
Distribution
Wholesaling
Retailing

35. Solution: Direct Marketing
Farmers Wholesaler Retailer End Customers

36. Main Drivers for Conflict
• Inequality
• Human Rights abuse
• Fight for national
resources
• Education and earning
opportunities
• Social exclusion
• Poverty