1. Programme for Enterprise Competitiveness Example of an Intervention: The Thai Palm Oil Sub Sector Thai-German Programme for Enterprise Competitiveness GTZpage 1

2. Programme for Enterprise Competitiveness Outline of Presentation  An Intro to the Palm Oil Sector in Thailand  The GTZ’s Focus in this sector  Within this focus, one intervention  The intervention impact logic  The structure of the intervention  Sharing the cost of the intervention  Scaling up the intervention  Some basic lessons from applying M4P GTZpage 2

3. Programme for Enterprise Competitiveness Oil Palm Trees

4. Programme for Enterprise Competitiveness Oil Palm Crushing Mill

5. Programme for Enterprise Competitiveness Loose Fruit Fresh Oil Palm Fruit Bunches

6. Programme for Enterprise Competitiveness Steam Processing the Fruit

7. Programme for Enterprise Competitiveness Relevance of the Sector  Palm oil is the most competitive vegetable oil with a high growth potential  2 nd most important cash crop in the southern part of Thailand  More than 67,000 households involved in the plantation level  The most important oil crop for Thailand in terms of domestic consumption and self sufficiency  All cultivation is on land already in agricultural use, so no cutting of forests or destruction of animal habitats  The ecological impact of the biomass (CO2 emissions) is minimal as biomass is converted into methane and sold to grid GTZpage 7

8. Programme for Enterprise Competitiveness Basic Sector Information  In terms of global exports Malaysia accounts for 57%, Indonesia for 36% and Thailand for 17%.  Thai production costs are 12% higher in Thailand than Malaysia due to differences in plantation and crushing mill productivity.  Primary production is based mainly on 67.000 smallholders who generate 85% of the raw materials.  There are 50 crushing mills, located close to the electricity “grid” GTZpage 8

9. Programme for Enterprise Competitiveness page 9 GTZ Where does T-G PEC focus its interventions?

10. Springfield Centre | Making markets work SUPPORTING FUNCTIONS RULES Laws Informal rules & norms Standards Regulations Information Basic R & D Soil and leaf analysis testing services in the palm oil value chain Value chain Advocac y Skills developmen t Product developmen t Analysis service GrowProcess Soil and leaf analysis - interconnected service market

11. Programme for Enterprise Competitiveness Competitiveness Issues and Focus GTZpage 11

12. Programme for Enterprise Competitiveness Projects and Interventions: GTZpage 12

13. Programme for Enterprise Competitiveness Intervention Example: Soil and Leaf Analysis Service GTZpage 13

14. Programme for Enterprise Competitiveness Leaf Analysis and Nutrient Recommendation Service GTZpage 14 Relatively Low FFB Yield Quality of Planting Material Climate Improper Use of Fertilizer Farm Management Training Service Leaf Analysis and Nutrient Recommendation Service Higher Potential OutreachHigher Impact The key to farm productivity

15. Programme for Enterprise Competitiveness Choosing the right leaf

16. Programme for Enterprise Competitiveness Constraints to the service  Very low awareness and understanding of leaf analysis and nutrient recommendations service and its benefit s (15-25% yield increase) which will result in a 26% increase in net income.  The service is not widely available and there is no commercial laboratory in the area.  Services from public laboratories are not widely available and the lead time is too long. They have no incentive to provide it on a commercial basis.  There is a crushing mill in the area that has already invested in the laboratory and willing to offer this service to their regular suppliers. However, the accuracy of the laboratory is not up to an acceptable standard. GTZpage 16 Opportunities for the service

17. Programme for Enterprise Competitiveness Harvesting Oil Palm GTZpage 17

18. Programme for Enterprise Competitiveness Intervention Impact Logic GTZpage 18

19. Programme for Enterprise Competitiveness Structuring the Intervention GTZpage 19 Social Marketing (GTZ) Direct Communication (Partner) Training for Farmers (Partner) Capability Assessment & Recommendation (GTZ) Additional Investment and Implementation (Partner) Delivering Accurate Recommendation (Partner) Capacity Building Usage of the Service & Recommendation Demand Creation The core service is delivered by the partner

20. Programme for Enterprise Competitiveness A Rehabilitated Lab at a Palm Oil Mill

21. Programme for Enterprise Competitiveness Lab Operator GTZpage 21

22. Programme for Enterprise Competitiveness Typical Generic Fertilizer GTZpage 22

23. Programme for Enterprise Competitiveness Contributions (Euro) GTZPartner 1. Additional Investment in Equipment-10,000 2. Laboratory Capability Improvement4,00010,000 3. Communication Program (demand stimulation) 24,0008,000 4. Training of Farmers60012,000 5. Analysis and Recommendation Work-12,000 Total Intervention Costs28,60052,000 % Contribution35.5 %65.5 % page 23 In addition the initial investment costs to set up the lab were Euro140,000

24. From initial intervention focus to wide change Market not workingMarket working better Period of intervention Multi-faceted actions to promote system change Initial interventions Overall market vision Springfield Centre | Making markets work Initial focus here...... eventually to have impact here

25. Programme for Enterprise Competitiveness Soil and Leaf Analysis Service (Phase 1) GTZ page 25 268 Farmers Crushing Mill “A” Lab Service Analysis Fees Info

26. Programme for Enterprise Competitiveness Soil and Leaf Analysis Service (Phase 2) GTZ page 26 268 Farmers Crushing Mill “A” Lab Service Crushing Mill “B” 40 Farmers Analysis Fees Info

27. Programme for Enterprise Competitiveness Soil and Leaf Analysis Service (Phase 3) GTZ page 27 268 Farmers Crushing Mill “A” Lab Service Crushing Mill “B” Crushing Mill “C” Lab Service 40 Farmers 410 Farmers Analysis Fees Info

28. Programme for Enterprise Competitiveness Soil and Leaf Analysis Service (Phase 4) GTZ page 28 268 Farmers Crushing Mill “A” Lab Service Crushing Mill “B” Crushing Mill “C” Lab Service 40 Farmers 410 Farmers 50 Farmers Analysis Fees Info

29. Programme for Enterprise Competitiveness Recent Progress on scaling up:  The original partner continues to expand the service in the same area without project evolvement  A copy cat mill has set up another service in another part of the country using the same lab technicians to develop the service GTZpage 29  4 other crushing mills in different areas are interested to participate. Three of them have come to visit the Lab  The Government is talking about establishing a lab in Krabi Key Results:  Almost 900 small farmers are accessing the service  This results in yield increases of about 20%  Which leads to a net income increase of 26% for farmers  The service is sustainable and is expanding

30. Programme for Enterprise Competitiveness Conclusions: (key applications of M4P) 1.A focus on the lower end of the VC 2.Looked at their market transactions 3.Identified priority transactions 4.Examined how to restructure them 5.Worked with transaction partners to identify their short and long term interests GTZpage 30

31. Programme for Enterprise Competitiveness Conclusions: (key applications of M4P) 6.Repackaged interests in a sustainable way 7.Used a market system approach for scaling up 8.Facilitation tools used: –Understanding impact logic –Demand side surveys –Social marketing –Making deals with leads firms –Understanding transactions –Anaysing incentives GTZpage 31

32. Programme for Enterprise Competitiveness Thank You GTZpage 32