Innovation and value adding required for economic survival

The coming of the ASEAN Economic Community (AEC) regional economic bloc at the end of 2015 means Thailand needs to start seriously considering focusing on value-added food products in order to cope according to an international expert.

Food Valley managing director Roger van Hoesel was speaking at a seminar hosted by the Industrial Promotion Department (IPD) and Chulalongkorn University and emphasized the fact that the AEC will lead to stiffer competition between the member nations and since Thailand can no longer compete in terms of low wages it needs to start emphasizing value-added food production.

Food Valley is a Netherland’s-based organization which presently consists of 21 research centres. Its Food Valley Society has more than 70 agro-food and food-related businesses under its umbrella, including such well-known names as Heinz and Kikkoman.

Mr van Hoesel suggested the coming AEC provided Thailand with an opportunity to innovate, starting with a need to produce more value-added food products to serve the upper end of the consumer market. These products would be able to compete with the cheaper products coming in from China and some of Thailand’s ASEAN neighbours.

He noted the value-added side of the market could include such elements as improved shelf life, better health benefits, developed packaging, and sustainability. Mr van Hoesel was quoted as saying, “I haven’t heard much about sustainability [in Thailand]. In the Netherlands if you don’t do anything to making carbon footprints lower, you’re out of the market in a few years. The market will demand it from you.”

That the southeast Asian region, and indeed much of Asia in general, is only gradually coming to the realization of the need to look at sustainability and the notion of the ‘carbon footprint’ means it may well be some years before these become genuine drivers that will help Thai farmers and food producers.

Nevertheless, the opportunity is there for Thailand to possibly steal a march on its neighbouring competitors in this area.

The chief executive of Nature Food, ManopKaewkoi, said the Thai rice market needed to focus on quality and value instead of just sales volume. Nature Food is involved in the growing of organic rice and KhunManop said, “Organic farming is not an alternative but the solution to the country’s crisis.”

Mr van Hoesel sounded an optimistic note when he stated Thailand’s food industry had inherent competitive advantages when it comes to overall quality and its ability to conduct useful long-term research and development.

At present the agro food sector is a minor player within the Thai economy but the IDP has set aside three provinces to launch its Food Valley initiatives: Chiang Mai for vegetables and processed fruits; NakhonRatchasima for meat; and PrachuapKhiri Khan for fisheries products, coconuts and pineapples.