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Institutional and Governance
Innovations in Food Safety
The Role of Private Sector in Thailand’s Food System
Kamphol Pantakua
Natthida Wiwatwicha
ReSAKSS-Asia October 30-31, 2019
Overview
 In Thailand, food safety directly relates
to modernization of FVCs, driven by the
private sector
 Protein value chains: Industrialization
 Vegetable and Fruit VCs: New patterns of
inter- and intra- sector management
• Increasing production sources that supply
both modern and traditional markets
Questions & Method
 What are the factors for successful food
safety in Thailand’s market-driven food
environment?
• The components of food safety ecosystem
• Government’s supportive role
 Method: historiography of FVC
development
 Literature review
 Field work interviews
Factors Governing Food Safety
 Consumer demand
• Growth of Modern Trade
• NGO’s
 Economy of scale
• Mechanization
• Increasing farm size
• Formations of groups
 Coordination and
Management
• Inter-intra sector
• Between functions
• Between independent
producers
 Government Support
– Private sector initiative
• Standards / Regulations
• Institutions / Partnerships
• Hardware
Brief Historical Development
 Early development
• NGO’s contribution
• Private Sector Contribution (Modernization)
 NGO’s contribution to food safety through various objectives
• Religion group: Buddhist temples/Monks
 Goal: self-sufficiency economy and health concerns
• Local NGO: Biothai
 Goal: Security and sovereignty
• Inter NGO: IFOAM
 Goal: Food quality and ecology
• Inter org: WTO & FAO
 WTO : agricultural commodity standards 1997
 Thailand joined WTO 1994 and restructured food safety related bodies in
2002
 FAO – Good Agricultural Practice
Key Events for Modernization
 1970’s – 1980’s Labor shortage results in transformation
[Farmers]
 1980’s Introduction of contract farming [Local and international
large agribusiness firms for plants and tomatoes]
 1997-8 Nitrofuran residue found in export product, triggering
widespread closed-farming system for chicken and shrimp
[Govt and Private Sector Cooperation]
 Air and water pollution conflict with the public (residents in
suburbia) triggered transformation of swine production
industry [Govt and Private Sector Cooperation]
 1998 Thai Government announced GAP - Good Agricultural
Practices (plant-based food); GMP – Good Manufacturing
Practices (meat)
• Only recently created regulation for certification in 2004
Private sector: Modernization
 Livestock and aquaculture:
• large firms and contract farming
• Industrialization
• Vertical integration
 Fruits and Vegetables: fragmented farmers
• Unlikely to undergo industrialization
• At present, still continued to be limited by small
volume of export and lack of industrial scale
production (more labor-intensive)
 Small independent producers, uncoordinated and
depends largely on suppliers
 Clear division of producer for export and domestic
Livestock VC
 Advanced facility and management of vertically integrated meat
production
Source: CPF
Vegetables VC
Source:kapook,khaosod2019
0
50
100
150
Billionsinter.$
Top20ofAgriculturalexport value2017
Overview of Thailand agricultural situation in food
safety: fruits and vegetables
0
10
20
30
Billionsinter.$
Top20ofFruitsandVegetablesexport value2017
Source:FAOSTAT.
12th
14th
The rate of pesticide use per area and per value in Thailand is not
high compared with other food producer countries.
0
5
10
15
20
1990 1995 2000 2005 2010 2015 2016
Kg./Ha
Totalpesticidesconsumptionperhectare
China, mainland France Germany
Italy Netherlands Spain
Thailand United States of America Viet Nam
Source:FAOSTAT.
0
1
1
2
2
3
3
4
4
1990 1995 2000 2005 2010 2015 2016
Kg./1000I$
pervalue ofagriculturalproduct
In the past, the rate of pesticide use of Thai farmers
tends to be sensitive on the product price.
0
0.5
1
1.5
2
2.5
0
20
40
60
80
100
120
1990 1995 2000 2005 2010 2015 2016
Total pesticides correlation with product value
Grains real price index Total pesticides: Thailand (Kg./1000 I$)
Source:FAOSTATandTheWorldBankCommodityPriceData.
Pesticide Residues
0
200
400
600
Number of pesticide residues notifications on fruits, vegetab
spicesinEUbyselectedcountries2010-2019
alert border rejection
information for attention information for follow-up
Source:RASFFandMarket sharebyTrademap
6.7% 10.4%
13.7%
4.9%
2.0% 2.0%
3.2% 0.6%
0.4%
1.4%
Market share
Bangkok found over MRL rate more than other region
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
0.0
1.0
2.0
3.0
4.0
5.0
%ofSampling
Chemicalscreentesting:Whole
Kingdom
Sampling Over MRL
Note:*First yearofpesticideresiduetest with4group[Organophosphate,Pyrethroid,Carbamate,Organochlorine]
OthertestingareBorax,Formaldehyde,SalicylicAcid,SodiumHydrosulfite,Salbutamol,Aflatoxins,pH
Source:FDA2019.
4.8 2.97 0 2.04
19.84
0
41.02
11.07
29.47
0
5
10
15
20
25
30
35
40
45
Bangkokarea:OverMRL(%ofsampling)
Consumer monitor program by NGO
 Increased sample size ->
Decreasing trend of over-MRL
 In GAP and Organic certified
found a high rate of over-MRL
 Modern trade products not safer
than traditional market
Source: Thai-PAN.
0%
10%
20%
30%
40%
50%
0
100
200
300
vegetables fruits vegetables fruits vegetables fruits
2016 2017 2019
Total
Over MRL Sampling Share of Over MRL
0%
20%
40%
60%
80%
0
5
10
15
20
GAP GMP Organic GAP GMP Organic
2017 2019
By standards type
Over MRL Sampling Share of Over MRL
0%
20%
40%
60%
80%
0
50
100
150
200
Modern
trade
Traditional Modern
trade
Traditional Modern
trade
Traditional
2016 2017 2019
By markets
Over MRL Sampling Share of Over MRL
Agricultural Technology Timeline
Source:Niponet al.2010,edit 2019.
1904
2019
Govt.
University
Private
New Development in Modern Food Value Chain
 Change in consumer
behavior
• Consumer expects
safety and traceability
 High pressure from NGO’s
 Modern trade needs to
stabilize standard and
quantity of supply
• Shortening of FVC
through direct contract
with farmers
53.8%
46.2%
Modernized
Value Chain
Institutions: Vegetables and Fruits
 Emerging practice: Export and domestic
Modern Trade institution engages
directly with groups of coordinated
farmers or independent farmers
• Farmers adapted by forming groups, co-
op’s, CE’s
• Modern Trade buyers work with third party
facilitators (governmental
agencies/universities) on site with farmers
Modernized Fresh Food Value Chain Model
 Engagement between a group of coordinated farmers (100+ independent
farmers) from the same area, and export/domestic modern trade
 Contract for multiple types of vegetables (example: contract is renewed every 3
months, 3 months in advanced)
• but not 100% of produced volume; farmers to establish trade relations with other local
suppliers or local traditional markets
 Better financing from agricultural bank for building a local packaging center
 An on-site manager (rep. from a modern trade brand) work with farmers’ group
leader on management, planning, quality control, logistic coordination, and
provide accurate market information
 An on-site packaging center
• Contamination Test 1. once on site (every lot) and 2. at the DC (sampling)
 Variations of management delegation and technology and knowledge provision
between the farmers, government agency, and modern traders
Incentives
 Modern trader perspective:
• Cheaper cost for better quality, safer
vegetable products
 Farmers perspective:
• pre-arranged/negotiated price, and
stable pre-arranged demand volume
(for advanced planning)
MFVC Institutions: Farmers Organizations
 Cooperatives
 SMCE (small/micro community
enterprise)
 Farmers Group
• Decreasing degree of oversight by
government agency
• Third party facilitator
(government/universities)
 For matching with markets and training
Farmers Organization
• Benefits of coordination
 For collective distribution of crop rotation and polyculture
o Simultaneously solves price conflict issue and suppresses pest cycles
o not exceed quantity demanded
o Regular meetings and social media (mobile messaging application)
• Benefits of group formation
 Legally recognized entity for doing business and better
financing from Bank of Agri. and Agri. Cooperatives (BAAC)
 Lowering cost (ie: buying/making fertilizers)
 Transmissions of knowledge and techniques (in-out)
o From group to group
 Better for interaction with other agencies
o Can register as a Farmers Group but adopt management and contracts
of a Cooperative
Modern FVC: Interactive Management
 Injection of Modern Trade representative into production site
• Allows farmers to coordinate with accurate information
 Market/Buyer demand - Risk assessment
 IPM: volume and type coordination
• Quality control
• Volume control
 Secondary market for excess product volume
 Injection of modern tools from modern marketing and
governmental agency
• Management, accounting
 Modern trade representative provides business management programs
• Food processing techniques and protocols compatible with
consumer’s preference
• Chemical residue test kit
Food Safety Government Policy
 Past: Top down Food Safety Policy
• GAP, GMP, Organic Certification
• Knowledge training
• Evaluation through NGO survey result
 Random sampling showed outdated and unsuccessful
 Present: Bottom up Food Safety Policy
• Focus on creating knowledge and business support network
partnership between group of farmers, traders, and other private
sector actors (sponsors)
• Facilitates food safety improvement driven by private sector and
NGO’s
 Such as providing facilities, chemical test kit, access to information,
opportunities for business matching
Food Safety Government Policy
 Present: Bottom Up Food Safety
Policy (continue)
• Assisting modern trade buyer to meet farmers
with food safety production and business
capacity
 vegetables: Khon Khaen, Ayuttaya, Suratthani,
Kampangpetch, Ratchaburi, Supanburi,
Chacheongsao
• Event-based platform for modern trade buyer
to meet small/individual farmers who are
interested in selling/informal contract with
modern trade
 fruits: Suratthani (Farmers: Suratthani, Ranong,
Chumpon, Pattalung)
Food Safety Ecosystem
Software
 NGO’s monitoring and programs
 Facilitation and Partnerships
 Training/knowledge (ie: IPM, safe
chemical use)
 Financing
 Institutional formations
 Contractual relationship
 Quality Control
 Logistics + Traceability
 Standards (GAP, GMP)
 Regulations and policy
 Consumer behavior
Hardware
 Farm facility (ie:
Closed-system, Open-
system)
 Processing facility
 Temp control
Transportation
 In-FVC and end of FVC
evaluation/testing tools
 Communication tools
Conclusion
 Recent modern food value chain development in Thailand is
driven by consumer awareness, NGO pressure, and multi-
sector shared-governance
• Decreasing intermediate supplier between source and markets for
better quality control and utility
• Inter-sector and intra-sector coordination, sharing of information,
technology, and shared-management
 The government’s supportive role ranges from issuing
standard certification, facilitation of farmers group formation
and connecting small holders to modernized marketing chains
• Move toward supporting random testing by the private sector/NGO
as means of Good Agricultural/Manufacturing Practice standard
enforcement
Implications
 Private sector’s impact on food safety is incentivized by direct benefit (profit)
• But the extension excludes low-value crops such as rice, maize, cassava
 Formal contract may not be necessary for a working relationship from complementary
incentive between farmer groups and modern traders
• But farmers group would still be at disadvantage from informal contract in some cases
 Increased food standard increases market opportunity
 In the case of formal contract, policy makers may investigate regulatory or contract innovation
 Going Forward
• How to create triggers for self-organized formations of coordinated farmers?
 Increase research and development and extension of virtually large-scale farming pilot projects
 Analysis of management and facilitation process
 Systematizing a flexible platform for facilitation to expand the modern food value chain
• The design or identification of food safety ‘regulator’ (ie: random testing) to be done by trusted parties
(ie: needs a market for testing, more samples, redundancy etc.)
• Safety Sample Testing in institutional buyers
 Hospitals: recently regulated (public hospitals)
 Schools: none
Thank you for your kind attention
kamphol@tdri.or.th
natthida@tdri.or.th

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Institutional and Governance Innovation in Thailand’s Food System: The Role of the Private Sector in Food Safety

  • 1. Institutional and Governance Innovations in Food Safety The Role of Private Sector in Thailand’s Food System Kamphol Pantakua Natthida Wiwatwicha ReSAKSS-Asia October 30-31, 2019
  • 2. Overview  In Thailand, food safety directly relates to modernization of FVCs, driven by the private sector  Protein value chains: Industrialization  Vegetable and Fruit VCs: New patterns of inter- and intra- sector management • Increasing production sources that supply both modern and traditional markets
  • 3. Questions & Method  What are the factors for successful food safety in Thailand’s market-driven food environment? • The components of food safety ecosystem • Government’s supportive role  Method: historiography of FVC development  Literature review  Field work interviews
  • 4. Factors Governing Food Safety  Consumer demand • Growth of Modern Trade • NGO’s  Economy of scale • Mechanization • Increasing farm size • Formations of groups  Coordination and Management • Inter-intra sector • Between functions • Between independent producers  Government Support – Private sector initiative • Standards / Regulations • Institutions / Partnerships • Hardware
  • 5. Brief Historical Development  Early development • NGO’s contribution • Private Sector Contribution (Modernization)  NGO’s contribution to food safety through various objectives • Religion group: Buddhist temples/Monks  Goal: self-sufficiency economy and health concerns • Local NGO: Biothai  Goal: Security and sovereignty • Inter NGO: IFOAM  Goal: Food quality and ecology • Inter org: WTO & FAO  WTO : agricultural commodity standards 1997  Thailand joined WTO 1994 and restructured food safety related bodies in 2002  FAO – Good Agricultural Practice
  • 6. Key Events for Modernization  1970’s – 1980’s Labor shortage results in transformation [Farmers]  1980’s Introduction of contract farming [Local and international large agribusiness firms for plants and tomatoes]  1997-8 Nitrofuran residue found in export product, triggering widespread closed-farming system for chicken and shrimp [Govt and Private Sector Cooperation]  Air and water pollution conflict with the public (residents in suburbia) triggered transformation of swine production industry [Govt and Private Sector Cooperation]  1998 Thai Government announced GAP - Good Agricultural Practices (plant-based food); GMP – Good Manufacturing Practices (meat) • Only recently created regulation for certification in 2004
  • 7. Private sector: Modernization  Livestock and aquaculture: • large firms and contract farming • Industrialization • Vertical integration  Fruits and Vegetables: fragmented farmers • Unlikely to undergo industrialization • At present, still continued to be limited by small volume of export and lack of industrial scale production (more labor-intensive)  Small independent producers, uncoordinated and depends largely on suppliers  Clear division of producer for export and domestic
  • 8. Livestock VC  Advanced facility and management of vertically integrated meat production Source: CPF
  • 10. 0 50 100 150 Billionsinter.$ Top20ofAgriculturalexport value2017 Overview of Thailand agricultural situation in food safety: fruits and vegetables 0 10 20 30 Billionsinter.$ Top20ofFruitsandVegetablesexport value2017 Source:FAOSTAT. 12th 14th
  • 11. The rate of pesticide use per area and per value in Thailand is not high compared with other food producer countries. 0 5 10 15 20 1990 1995 2000 2005 2010 2015 2016 Kg./Ha Totalpesticidesconsumptionperhectare China, mainland France Germany Italy Netherlands Spain Thailand United States of America Viet Nam Source:FAOSTAT. 0 1 1 2 2 3 3 4 4 1990 1995 2000 2005 2010 2015 2016 Kg./1000I$ pervalue ofagriculturalproduct
  • 12. In the past, the rate of pesticide use of Thai farmers tends to be sensitive on the product price. 0 0.5 1 1.5 2 2.5 0 20 40 60 80 100 120 1990 1995 2000 2005 2010 2015 2016 Total pesticides correlation with product value Grains real price index Total pesticides: Thailand (Kg./1000 I$) Source:FAOSTATandTheWorldBankCommodityPriceData.
  • 13. Pesticide Residues 0 200 400 600 Number of pesticide residues notifications on fruits, vegetab spicesinEUbyselectedcountries2010-2019 alert border rejection information for attention information for follow-up Source:RASFFandMarket sharebyTrademap 6.7% 10.4% 13.7% 4.9% 2.0% 2.0% 3.2% 0.6% 0.4% 1.4% Market share
  • 14. Bangkok found over MRL rate more than other region 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 0.0 1.0 2.0 3.0 4.0 5.0 %ofSampling Chemicalscreentesting:Whole Kingdom Sampling Over MRL Note:*First yearofpesticideresiduetest with4group[Organophosphate,Pyrethroid,Carbamate,Organochlorine] OthertestingareBorax,Formaldehyde,SalicylicAcid,SodiumHydrosulfite,Salbutamol,Aflatoxins,pH Source:FDA2019. 4.8 2.97 0 2.04 19.84 0 41.02 11.07 29.47 0 5 10 15 20 25 30 35 40 45 Bangkokarea:OverMRL(%ofsampling)
  • 15. Consumer monitor program by NGO  Increased sample size -> Decreasing trend of over-MRL  In GAP and Organic certified found a high rate of over-MRL  Modern trade products not safer than traditional market Source: Thai-PAN. 0% 10% 20% 30% 40% 50% 0 100 200 300 vegetables fruits vegetables fruits vegetables fruits 2016 2017 2019 Total Over MRL Sampling Share of Over MRL 0% 20% 40% 60% 80% 0 5 10 15 20 GAP GMP Organic GAP GMP Organic 2017 2019 By standards type Over MRL Sampling Share of Over MRL 0% 20% 40% 60% 80% 0 50 100 150 200 Modern trade Traditional Modern trade Traditional Modern trade Traditional 2016 2017 2019 By markets Over MRL Sampling Share of Over MRL
  • 16. Agricultural Technology Timeline Source:Niponet al.2010,edit 2019. 1904 2019 Govt. University Private
  • 17. New Development in Modern Food Value Chain  Change in consumer behavior • Consumer expects safety and traceability  High pressure from NGO’s  Modern trade needs to stabilize standard and quantity of supply • Shortening of FVC through direct contract with farmers 53.8% 46.2%
  • 19. Institutions: Vegetables and Fruits  Emerging practice: Export and domestic Modern Trade institution engages directly with groups of coordinated farmers or independent farmers • Farmers adapted by forming groups, co- op’s, CE’s • Modern Trade buyers work with third party facilitators (governmental agencies/universities) on site with farmers
  • 20. Modernized Fresh Food Value Chain Model  Engagement between a group of coordinated farmers (100+ independent farmers) from the same area, and export/domestic modern trade  Contract for multiple types of vegetables (example: contract is renewed every 3 months, 3 months in advanced) • but not 100% of produced volume; farmers to establish trade relations with other local suppliers or local traditional markets  Better financing from agricultural bank for building a local packaging center  An on-site manager (rep. from a modern trade brand) work with farmers’ group leader on management, planning, quality control, logistic coordination, and provide accurate market information  An on-site packaging center • Contamination Test 1. once on site (every lot) and 2. at the DC (sampling)  Variations of management delegation and technology and knowledge provision between the farmers, government agency, and modern traders
  • 21. Incentives  Modern trader perspective: • Cheaper cost for better quality, safer vegetable products  Farmers perspective: • pre-arranged/negotiated price, and stable pre-arranged demand volume (for advanced planning)
  • 22. MFVC Institutions: Farmers Organizations  Cooperatives  SMCE (small/micro community enterprise)  Farmers Group • Decreasing degree of oversight by government agency • Third party facilitator (government/universities)  For matching with markets and training
  • 23. Farmers Organization • Benefits of coordination  For collective distribution of crop rotation and polyculture o Simultaneously solves price conflict issue and suppresses pest cycles o not exceed quantity demanded o Regular meetings and social media (mobile messaging application) • Benefits of group formation  Legally recognized entity for doing business and better financing from Bank of Agri. and Agri. Cooperatives (BAAC)  Lowering cost (ie: buying/making fertilizers)  Transmissions of knowledge and techniques (in-out) o From group to group  Better for interaction with other agencies o Can register as a Farmers Group but adopt management and contracts of a Cooperative
  • 24. Modern FVC: Interactive Management  Injection of Modern Trade representative into production site • Allows farmers to coordinate with accurate information  Market/Buyer demand - Risk assessment  IPM: volume and type coordination • Quality control • Volume control  Secondary market for excess product volume  Injection of modern tools from modern marketing and governmental agency • Management, accounting  Modern trade representative provides business management programs • Food processing techniques and protocols compatible with consumer’s preference • Chemical residue test kit
  • 25. Food Safety Government Policy  Past: Top down Food Safety Policy • GAP, GMP, Organic Certification • Knowledge training • Evaluation through NGO survey result  Random sampling showed outdated and unsuccessful  Present: Bottom up Food Safety Policy • Focus on creating knowledge and business support network partnership between group of farmers, traders, and other private sector actors (sponsors) • Facilitates food safety improvement driven by private sector and NGO’s  Such as providing facilities, chemical test kit, access to information, opportunities for business matching
  • 26. Food Safety Government Policy  Present: Bottom Up Food Safety Policy (continue) • Assisting modern trade buyer to meet farmers with food safety production and business capacity  vegetables: Khon Khaen, Ayuttaya, Suratthani, Kampangpetch, Ratchaburi, Supanburi, Chacheongsao • Event-based platform for modern trade buyer to meet small/individual farmers who are interested in selling/informal contract with modern trade  fruits: Suratthani (Farmers: Suratthani, Ranong, Chumpon, Pattalung)
  • 27. Food Safety Ecosystem Software  NGO’s monitoring and programs  Facilitation and Partnerships  Training/knowledge (ie: IPM, safe chemical use)  Financing  Institutional formations  Contractual relationship  Quality Control  Logistics + Traceability  Standards (GAP, GMP)  Regulations and policy  Consumer behavior Hardware  Farm facility (ie: Closed-system, Open- system)  Processing facility  Temp control Transportation  In-FVC and end of FVC evaluation/testing tools  Communication tools
  • 28. Conclusion  Recent modern food value chain development in Thailand is driven by consumer awareness, NGO pressure, and multi- sector shared-governance • Decreasing intermediate supplier between source and markets for better quality control and utility • Inter-sector and intra-sector coordination, sharing of information, technology, and shared-management  The government’s supportive role ranges from issuing standard certification, facilitation of farmers group formation and connecting small holders to modernized marketing chains • Move toward supporting random testing by the private sector/NGO as means of Good Agricultural/Manufacturing Practice standard enforcement
  • 29. Implications  Private sector’s impact on food safety is incentivized by direct benefit (profit) • But the extension excludes low-value crops such as rice, maize, cassava  Formal contract may not be necessary for a working relationship from complementary incentive between farmer groups and modern traders • But farmers group would still be at disadvantage from informal contract in some cases  Increased food standard increases market opportunity  In the case of formal contract, policy makers may investigate regulatory or contract innovation  Going Forward • How to create triggers for self-organized formations of coordinated farmers?  Increase research and development and extension of virtually large-scale farming pilot projects  Analysis of management and facilitation process  Systematizing a flexible platform for facilitation to expand the modern food value chain • The design or identification of food safety ‘regulator’ (ie: random testing) to be done by trusted parties (ie: needs a market for testing, more samples, redundancy etc.) • Safety Sample Testing in institutional buyers  Hospitals: recently regulated (public hospitals)  Schools: none
  • 30. Thank you for your kind attention kamphol@tdri.or.th natthida@tdri.or.th