1. FINANCING ORGANIC SUPPLY CHAINFINANCING ORGANIC SUPPLY CHAIN
: THE CASE OF BAAC: THE CASE OF BAAC
by
Chamnong Siriwongyotha
Team Leader
Bank for Agriculture and Agricultural
Cooperatives (BAAC)
Thailand
25 September 2012

2. OUTLINEOUTLINE
1. Introduction and Current Situation
2. Certification of Organic Products
3. The role of The Royal Thai Government
4. The Role of Bank for Agriculture and Agricultural
Cooperatives (BAAC) in financing Organic Supply
ChainChain
5. Opportunities and Challenges

3. INTRODUCTIONINTRODUCTION
•• About ThailandAbout Thailand
–– Situated in Southeast Asia, borderingSituated in Southeast Asia, bordering
Myanmar, Lao PDR, Cambodia andMyanmar, Lao PDR, Cambodia and
MalaysiaMalaysia
–– Area :Area : 513513,,115115 sq. km.sq. km.–– Area :Area : 513513,,115115 sq. km.sq. km.
–– Population :Population : 6969 millionmillion
–– OverOver 5050% of the country population% of the country population
engaged in agricultureengaged in agriculture
–– A major rice exporterA major rice exporter

6. DEVELOPMENT OF ORGANIC AGRICULTURE INDEVELOPMENT OF ORGANIC AGRICULTURE IN
THAILANDTHAILAND
• The declaration of the 1st National Economic and
Social Development Plan in 1961 emphasizing
production for export.
• Increasing farmlands vs decreasing forest
• Practice of monoculture : Uses of agro-chemicals• Practice of monoculture : Uses of agro-chemicals
• Deteriorated natural resources and health
• Establishment of Alternative Agriculture Network
(AAN) in early 1980s

7. DEVELOPMENT OF ORGANICDEVELOPMENT OF ORGANIC
AGRICULTURE IN THAILANDAGRICULTURE IN THAILAND
• 2 main streams : Rural development oriented and
Business oriented
• First stream
– Farmers and NGOs
– Supporting farmers to adopt sustainable farming– Supporting farmers to adopt sustainable farming
practice
– Raising awareness on negative impacts of agro-
chemicals and undue dependency on external
market
– Promoting indigenous knowledge of sustainable
farming practice
•

8. 22 STREAMS OF ORGANICSTREAMS OF ORGANIC
AGRICULTUREAGRICULTURE
• Business Oriented : Entrepreneurs
– Large scale businessmen
– Overseas linkage
– Business opportunity
– Engaging local researchers and government to help– Engaging local researchers and government to help
them
– Foreign certification is used
Up and down experience due to international political
and economic condition

9. KEY CONTRIBUTORS OF ORGANIC AGRICULTUREKEY CONTRIBUTORS OF ORGANIC AGRICULTURE
• King Bhumibhol and the Royal Projects
• Santi Asoke, a Buddhist sect that practices and
transfer organic farming to farmers
• Dr. Han Kew Cho, president of Farmer Association,
Korea who was invited to transfer his knowledge onKorea who was invited to transfer his knowledge on
organic farming techniques.
• Chai Wiwat Agro -industry and Capital Rice Co. Ltd.
Started organic rice project in Chiang Rai and Phayao
• Man Sarmsri, a village headman and the leader of Na
so organic farming group in Yasothorn province who
dare to change to practice organic farming, creating
business opportunity for his group and local
communities

10. CERTIFICATION OF ORGANICCERTIFICATION OF ORGANIC
PRODUCTSPRODUCTS
• Organic Agriculture Certification Thailand (ACT)
– A private non-profit foundation
– Offer IFOAM accreditation scheme
– Fee-based services
– Categories of certification– Categories of certification
• Farm certification
• Operator certification
• Project certification
• Wild product certification
• Aquaculture
• Livestock
• Eating establishment

11. THE ROLES OF GOVERNMENTTHE ROLES OF GOVERNMENT
• Regulatory framework
– National Office of Agriculture Commodity and Food
Standards (ACFS) established in 1995 to set up
regulatory framework compatible with the EU
system, launching its accreditation program insystem, launching its accreditation program in
2004
– Organic Crop Institute, a public agency under
MOAC
– Thailand Institute of Technological and Scientific
Research (TISTR) under Export Promotion
Department drafted organic crop standard in 1999

12. ORGANIC AGRICULTURE POLICYORGANIC AGRICULTURE POLICY
• Government declared and implemented organic
agriculture as national agenda in 2005
• The 5 year-programme aimed at supporting 4.25
million farmers (0.85 million in 2006) in using organic
inputs instead of agro-chemicalsinputs instead of agro-chemicals
• Reducing total export of agro-chemicals by 50%
• In 2004 Surin province set up a large scale organic
project which planNed to convert 16,000 farmer
households (with 37,000 ha) into organic jasmine rice
farming. Of which 2,735 households would apply for
organic certification from ACT.

13. THE ROLES OF BANK FOR AGRICULTURE ANDTHE ROLES OF BANK FOR AGRICULTURE AND
AGRICULTURAL COOPERATIVES (AGRICULTURAL COOPERATIVES (BAACBAAC))
• BAAC, a state owned bank under the Ministry of
Finance, was established in 1966.
• Providing financial services directly and indirectly to
farmers through its extensive branch network
• Total loan outstanding USD 24.25 billion (as of march• Total loan outstanding USD 24.25 billion (as of march
2012)
• Total deposits USD 27.25 billion
• Number of clients 6.7 million households
• Number of branches 1,082

14. BAACBAAC
Established in 1966 as a
state enterprise under MOF
Mandate : to provide financial
assistance to farmers
As of 31 March 2012,
In FY 2011 $ 14 billion
of loan disbursement,
3.4 % for non farm loans
As of 31 March 2012,
1,082 branches and
979 field units,
loan outstanding $ 24.25
billion
In addition to its role in Roles in agricultural financing, BAAC
plays active roles in enhancing quality and productivity,
marketing support, capacity building of farmers and
strengthening rural community
96.6% for farm loans

15. THE ROLE IN ENHANCING QUALITY ANDTHE ROLE IN ENHANCING QUALITY AND
PRODUCTIVITYPRODUCTIVITY
• BAAC-KU product development project
• Fluid manure project in collaboration withDepartment
of Livestock Development
• 1 Rai 100,000 Baht in collaboration with Chamber of
Commerce University

16. MARKETING SUPPORTMARKETING SUPPORT
• To ensure good quality and reasonable
prices of farm inputs and fair market crop
prices for farmers
• Support the establishment
and management of AMCs
• In 2008, 75 AMCs across the nation supplied
farm input worth $ 600 million and marketed
farm product worth $ 300 million
• BAAC runs 2 farm central markets to
facilitate marketing farm produce of its
clients

17. StepStep 33
creating community business networkcreating community business network
THE ROLE IN COMMUNITY DEVELOPMENTTHE ROLE IN COMMUNITY DEVELOPMENT
•• Sufficiency Economy Philosophy has been applied as aSufficiency Economy Philosophy has been applied as a
guideline for farmers to improve their quality of lifeguideline for farmers to improve their quality of life
StepStep 22
collecting andcollecting and analysinganalysing data, formulatingdata, formulating
community plan, conducting joint business venturecommunity plan, conducting joint business venture
StepStep 11
cutting down household expenses, building saving habit,cutting down household expenses, building saving habit,
abandoning sinful habitsabandoning sinful habits

18. THE ROLE IN FINANCING ORGANIC SUPPLYTHE ROLE IN FINANCING ORGANIC SUPPLY
CHAINCHAIN
• In 2003, BAAC established Farmer Field School for
farmers to learn and practice organic rice farming
• Sufficiency Economy Learning Centres were set up in
order to spearhead in shifting farmers’ paradigm and
educate them how to practice organic farming byeducate them how to practice organic farming by
maximizing the use of locally natural inputs instead of
relying those from external sources.
• BAAC supported the establishment of Organic
Agriculture Federation in 2005

19. Financing Organic Supply Chain
Technical services Financial Services
DOAE/NGOs Farmers BAAC
BAAC's SELCs
DOCP/DOCA AMCs/Agri-Coops BAAC
DOIS/DOA/MOH Processors CBs
DOEP Wholesalers/Exporters EXIM Bank
CBs
DOI Retailers/Super stores CBs/GSB
Consumers

20. Community Rice Center
Hom Mali Aromatic Rice
Grain
RICE WAY OFRICE WAY OF TALUNGTALUNG LEKLEK COMMUNITYCOMMUNITY
A MODEL OF SELFA MODEL OF SELF--SUFFICIENT VILLAGESUFFICIENT VILLAGE
Middle Stream
Community Council as a Center
Down Stream
Consumers
Knowledge
Organic Rice 40,000/T.
Brown rice 50,000/T.
Germinated brown riceWholesale
Local Wisdom
Culture
Technology
Value
Creation
Finance
Wholesale/Retail
Up stream
Farmer Producers
Marketing
Community Rice
Seed Center
Community Rice Center
Brown rice
Germinated brown rice
GABA rice
Grain
Total Production
200 Tonnes @ 14,000 /T.
Hom Mali Aromatic Rice
Grain
Total Production
50 Tonnes @ 18,000 /T.
AMCs
Germinated brown rice
70,000/T.
Rice Seeds
22,000/T.
Retail
Retail
17th Rice
Seed Center
Wholesale
Wholesale
200 T.
50 T.
50 T.
Retail

21. Thai GABA Rice

22. OPPORTUNITIES AND CHALLENGESOPPORTUNITIES AND CHALLENGES
• Opportunities
– Growing demand on safe food
– Rising agro-chemicals’ prices
– Threat of poor health affected by contaminated food
– Better cooperation among concerned agencies such– Better cooperation among concerned agencies such
as FAO, IFOAM, RACAs etc.
• Challenges
– Farmers and consumers’ awareness
– Government intervention
– Infrastructure
– Certification

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