Agri-business Growing

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BANGKOK POST:

AGRIBUSINESS FARMING AND FOOD STANDARDS

River Kwai to run organic farms in Laos

Focus on regional organic-food role

PHUSADEE ARUNMAS

River Kwai International Food Industry, the country's leading sweet corn and vegetable exporter, has expanded its organic farming into Laos as part of its ambitious plan to become the regional supplier of organic agricultural products in the region. ''This is just the first step of our group to become the regional supplier of organic fruits and vegetables,'' said Soonthorn Sritawee, chief operating officer of River Kwai International. ''We are ready to expand more in other neighbouring countries to help produce steady supplies to our group.''

The group will invest at least 20 million baht to support organic farming on 800 rai in Paksong, about 50 kilometres east of Pakse and 100 kilometres from the Thai border at Chong Mek in Ubon Ratchathani, said Mr Soonthorn.

The investment, he said, was also part of the group's one-billion-baht investment plan in a health resort and spa of the group in Laos. Output is expected to start next year.

Mr Soonthorn said the group chose Paksong mainly for the area's fertile soil and favourable conditions for the crop mainly for temperate fruits and vegetables and coffee.

River Kwai is expected to take about 70% in the venture, with the remaining 30% to be held by local unnamed investors. In Thailand, the company has developed organic farming for more than 10 years. Its organic farms currently cover more than 600 rai of its own farms in several provinces including Kanchanaburi, Chiang Rai and Chiang Mai. The company has also entered contract farming with farmers covering about 800 rai.

An additional 1,000 rai of farm areas are in the process of certification.

The organic farming business last year earned the company about 100 million baht, 95% of which came from exports to 10 markets including the EU, Japan, Singapore, and the United States.

The group expects its organic farming business will grow about 20% this year to 120-130 million baht driven by strong demand for organic products both in the country and the world market.

Mr Soonthorn said, however, that the group was expected to remain under the pressure from the baht's appreciation. Last year, the company's sales dropped by more than 200 million baht because of the baht's strength.

The group's total revenue was reported at about US$45 million in 2006. The 2007 figure was not available.

Chemical-free crops have become increasingly popular in the past decade among consumers who are concerned about healthy eating and the effects of chemicals on foods and the environment. Studies have shown that these consumers are willing to pay 30-40% more for organic foods than for ordinary produce.

World market demand for organic produce has been rising by 20% a year, especially in rich countries in Europe, North America and Japan. The major organic product exporters are Argentina, Mexico, Brazil, India and China.

The Agriculture Ministry has recently announced to increase organic farm acreage by at least 40% to 200,000 rai over the next two years to tap into higher demand in world markets.

Organic plantations currently cover 140,963 rai, of which 80% are for rice, vegetables, fruit, and herbs.