“In line with Charoen Pokphand Food’s sustainable-sourcing policy and supplier-guiding principles launched at the end of 2014, the company constantly communicates with the critical or core suppliers of main raw materials such as fishmeal and maize, mostly local suppliers who are core business partners. We realise that a supply-chain traceability system is an effective tool to minimise social and environmental impacts,” Somchai said.

According to the three-year memorandum of understanding, both parties are committed to develop jointly an acceptable process whereby soybean meal can be traced back through the supply chain, from processing plants back to the soybean-growing areas.

They will develop acceptable standard measures and regulatory guidelines on labour and human-rights concerns that will apply to the entire supply chain and are compliant with the laws of the countries where both parties conduct their business.

In addition, they will develop a mutually acceptable system to issue documents certifying that none of the products sold to CP Group originate from deforested areas. Meanwhile, they will encourage farmers to increase productivity, reduce costs and implement environmentally responsible cultivation practices as well as comply with all relevant international standards.

Thailand is the first country in Asean with which AGP has formed a partnership. AGP is a leading agribusiness with primary operations as a major US soybean processor/refiner producing and marketing soybean meal, refined soybean oil, and biodiesel.

AGP is owned by 175 local and regional cooperatives comprising more than 250,000 farmer-producers across 13 US states.

Somchai said his company would expand its traceability system to the supply chains of other raw materials besides soybean meal.

On January 1, the company officially launched a corn traceability system, under which all suppliers of corn to CP now must register legal deeds and other documents through an online platform before any business transaction.

In 2014, the company launched a “Self-Sufficient Farmers and Sustainable Corn” pilot project in Pak Chong, Nakhon Ratchasima. Somchai said the project was successful, with a 60-per-cent increase in yields, 29-per-cent drop in production costs, and 40-per-cent decrease in carbon footprint.

The company is collaborating with the Agricultural Land Reform Office to expand the planting areas from the current 38,500 rai (6,160 hectares). It expects to bring in at least 15,480 additional small-scale farmers for a total production area of 225,000 rai by 2019.

This will soon become a reality, as the country’s leading retailer Big C Supercenter and the Royal Project have agreed to collaborate closer in consumer-led production.

Big C will share its consumer insight and its own prediction of fresh food sales with the Royal Project’s marketing arm for advanced planning for its member farmers.

“We want to make sure that our members can grow the right kinds and volumes of fruits and vegetables to suit the forecast demand.

“This means we can control the quality of products as well as offer reasonable prices for the farmers,” Metus Kijorgad, assistant director of marketing for Royal Projects, said last week.

The Royal Project’s marketing body has already been directly involved with 4,600 farmers who are members of 38 royal projects in the northern provinces of Chiang Mai, Chiang Rai, Lamphun and Mae Hong Son.

The Royal Project also helps research and develop agricultural products, particularly cold-climate vegetables and fruits such as Chinese cabbage, beetroot, lettuce, rocket, passion fruit and strawberries, plum and cab gooseberries for its members.

Under royal patronage, the Royal Project aims to raise the living standard of ethnic groups across the country by supporting them to produce the cold weather vegetables and fruits that local markets need to mostly buy from overseas.

Despite limited production capacity, the Royal Project now sets the standard for agricultural product prices against mass production from other local farmers.

Vitoon Sawatsigh, purchasing manager of the Royal Project at the Mae Hae centre, said some farmers in this area were trying to use a pricing strategy to attract either retailers or middlemen, but 4,600 farmers have teamed

up with the Royal Project, growing and supplying quality produce to the market at reasonable prices.

The products from the Royal Project are well accepted by local consumers as they are high in quality, low in chemicals and present a value-for-money proposition.

Vitoon said his member farmers have already set a new standard in prices and quality.

It seems to be challenging for other farmers or competitors to maintain prices as high as the project members’.

“When the price is almost the same, customers will look for fresh food quality and safety,” he said.

Metus’ team has conducted three quality-control inspections under good agricultural practices to ensure that fresh products are not contaminated throughout the production and distribution process.

At the Mae Hae agricultural research centre in Chiang Mai, Sirichai Saejiem, an agriculture promotion officer for the Royal Project, said that with improving quality and safety, demand from retailers including Big C keep expanding year by year.

The member farmers have already made about Bt60 million-Bt70 million in sales to the Royal Project. And the trend is still on the rise.

Warunee Kitjaroenpoonsin, corporate affairs director at Big C, said the company plans to support farmers, particularly members of Royal Projects, by increasing orders for produce 20 per cent to 100,000 tonnes this year, of which 1,700 tonnes will come from the Royal Project.

Big C would help farmers expand their channels to further reach end consumers by reserving areas at its hypermarkets and Market stores for their use as weekend markets.

With the support of the Interior Ministry, which will communicate with each local administrative office, local traders and farmers would use the markets to sell products at up to 30 booths at each store.

The project is set to be launched next month.