non-agricultural sector development of dcentralized rural development planning of khok charoen...

7/27/2019 Non-Agricultural Sector Development of Dcentralized Rural Development Planning of Khok Charoen District, Lopbu

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CHAPTER IV

NON-AGRICULTURAL SECTOR

Introduction

Lop Buri province is located in the upper part of the central region of Thailand, group 2,with the region also containing other provinces such as Sra Buri, Lop Buri, Singh Buriand Chainat. It is approximately 150 kilometers north of Bangkok, covering an area of6,641.859 km

2. The district under consideration in this study is Khok Charoen, in the

North of Lop Buri province. The area is connected to Nakhon Sawan province (Tak Fa

district and Ta Kle district), and Phetchaboon province (Sri Thep District). The non-agricultural sector consists of three major sub-sectors: industry, trade and commerce and

tourism. Table 4.1 below shows the economic structure of the Lop Buri province. Hereone can see that non-agriculture sector is a very important part to the provincial economy,

with industry and trade and commerce holding 36.88% and 14.11% of the provincial GPPrespectively. Tourism which is another area under consideration in this sector may be

part of Others showed in the same table. Similarly, table 4.2 shows the absolute valuesof the income generated, segregated into different sectors; again the percentage share of

each sector is shown.Table 4.1 General information of Lop Buri province.

Population (2005) 737,891 people

Area 6,641.859 sq. m.

Number of districts 11 districts

Gross Provincial Product (GPP) (2004) 66,504 million baht

Industry 36.88%

Trade and Commerce 14.11%

Agriculture 12.52%Transport 3.29%

Construction 3.14%

Others 30.16%

Average income per person (2547) 80 ,625 baht

Source: Provincial employment statistics (2004)

Contrasting the case in provincial level, the non-agricultural sector is not a primary sectorengaged by the people of Khok Charoen district like the agricultural sector.

Nevertheless, this sector has a role to play in the economic development of the district as

it can still be regarded as additional employment opportunities and income for the localpeople

Table 4.2 Breakdown of income generated by sector.Sector Monetary values (million baht) Share (% )

Industry 22,229 36.63Trade and Commerce 8,291 13.66

Government 7,571 12.47

Agriculture 7,433 12.25

Education 2,966 4.89

Construction 2,088 3.44

Transport 1,919 3.16

Real estate 1,685 2.78

Electricity and water supply 1,567 2.63

Banking 1,419 2.34

Hotel and restaurant 1,298 2.14

Health and social welfare 1,203 1.98

Community, social and private service 635 1.05

Fishery 212 0.35

Mining 113 0.19

Housemaid 33 0.05

Source: Provincial employment statistics ,2004


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To give a picture on the employment status within Lop Buri province, one can see fromFigure 4.1 that roughly equal shares of the population are employed in agriculture and

non-agriculture, at 46%. Non-agricultural, however, comprises of many economicactivities and the breakdown of this is shown in Figure 4.2.

Figure. 4.1 Employment status at provincial level. Source: Provincial Employment Statistics (2005)

Source: Provincial Employment Statistics (2005)

Figure: 4.2 Breakdown of employment by sub-sector in Lop Buri (in number of worker)

196,469

78,795

55,360

26,971

20,639

11,595

10,079

6,772

21180

0 50,000 100,000 150,000 200,000 250,000

Agriculture, hunting, and forestry

Factory production

Wholesale, retail, car and motorcycle repair, domestic product

Construction

Hotel and restaurant

Education

Government, army and other public services

Transport and cargo

Others

Source: Provincial Employment Statistics (2005)

Overview of non-agricultural sector in Khok Charoen district

Khok Charoen is one of the less prominent districts in the Lop Buri province whether interms of area, population, level of development or the income generate to the province. Itis well-evident that this is not the most appropriate area for the development of the non-

agricultural sector; this is noticeable in the vision of the district office to develop KhokCharoen as an organic agricultural source. Nevertheless, the non-agricultural sector has arole to play in the development of the district, as well as the improving the well-being ofits people.

Table 4.3 shows a comprehensive picture of non-agricultural sector in Khok Charoen

district. In terms of industry, there is little variety in terms of type of industry and thereare very few industrial developments within the area. Tambon Yang Rak has the highest

density per 10 km2

with 1.52. The levels of industrial development in Khok Charoen andKhok Samae San as measured by level of density are of similar scale at 1.24 and 1.42

Agriculture,

45.92%

Non-agriculture,

46.24%

Public sector,

6.50%

Others, 1.34%


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respectively. There is only one unit of industry in Nong Makha and none in WangThong; indicating obvious areas that can be improve.

Table 4.3 Comprehensive picture of Non-agricultural sector in Khok Charoen district

The number of OTOP projects in Khok Charoen is of fair level. However, these OTOPprojects are clustered in 3 sub-districts in Khok Charoen and Khok Samae San, with thedensity indicator showing 1.51 and 1.89 respectively. Yang Rak and Nong Makha have

little development in this area and again there is nothing in Wang Thong.

Looking at trade and commerce, the indicators shown here are based on number ofmarket, number of service and repair units, as well as number of whole and retail shops;

they are shown in terms of density per 1000 population. Here one can see that thepopulation in Yang Rak is most accessible to market places, with the market density of

0.51 per 1000 population. On the other hand, although Khok Charoen is one of the

largest sub-districts in terms of population, there exists only 2 market places; hence thedensity being the lowest at 0.27. Nong Makha performs the best in our service andrepairing unit indicator with 7.69 shops per 1000 population. This is closely followed by

Tambon Khok Charoen with 5.21 units per 1000 population. An area of concern is WangThong where no service providers are located at all. Lastly, the number of retail andwholesale shops are most readily available in Nong Makha where there are 13.68 shops

per 1000 population. Wang Thong also performs very well in this indicator with the shopdensity of 13.27. The sub-district which performs the worst here is Yang Rak. However,this may due to the fact that it has the largest number of population. According to theoverall picture generated from these indicators, one can give an initial conclusion thatKhok Samae San is the most developed in the non-agricultural sector, followed by Nong

Makha, Yang Rak, Khok Charoen and Wang Thong respectively. It should be mentionedthat this is only a brief screening process to give an idea of the overall situation of thenon-agricultural sector in Khok Charoen district.

In terms of tourism, it may not be too much of an exaggeration to say that this is almostunheard of in Khok Charoen district. There is no recorded number of visitors in the areaand there is no obvious existing tourist attraction.

Indicators/T ambon Khok Chareon Yang Rak Khok Samae San Wang T hong Nong Makha

Area (sq. km) 72.94 65.71 42.34 25.34 110.81

Population (person) 7296.00 7783.00 3231.00 2638.00 3509.00

Number of cottage industries per 10 sq. km 1.23 1.52 1.42 0.00 0.09

Number of OTOP

per 10 sq. km.

Number of market

per 1000 population 0.27 0.51 0.31 0.38 0.28

Number of service and repairing units

per 1000 population

Number of wholesale and retail

shops per 1000 population

7.695.21 0.26 1.24 0.00

9.87 8.87 10.83 13.27 13.68

0.271.51 0.15 1.89 0.00


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4.1 Industrial Sector

4.1.1 General information

The location of Lop Buri is suitable to the development of industry. Overall, Lop Buri

has good level of infrastructure development in terms of road network, communication,irrigation system and power supply. It is also close to Bangkok, being around 155 km

away. 70 per cent of the area is hilly and mountainous, commonly known for the richavailability of minerals and ores such as copper, limestone and pyrite. The other 30 per

cent of the lying in plain area are suitable for agricultural activities such as paddy,sugarcane, maize and cassava. According to the data from the Provincial Industrial

Office, there are in total 583 industries in Lop Buri in 2008. The majority of industrialdevelopment in Lop Buri is in the form of agro-processing, constituting 25 per cent of

provincial total. Other industries which are prominent in the province include: machineryand equipment (13%), food and drink (11%), non-metal (9%), transport (8%) and metal

(7%). The industries which have grown the most over the last few years are agro-processing, machinery and equipment, and metal.

4.1.2 Major institutions supporting industries and OTOPs

Table 4.4 Summary of supporting institutions of industries and OTOPs

Different IndustriesPollution control measures and support

Pollution Control Department8

Labour of different industries

Labour rights

Welfare

Provincial Labour and Welfare Office7

Occupational groups

Training

Non- formal Educat ion Office6

OTOPs, SMEs, other cottage industries

Policy support

Training

Project promotion (OTOPs)

Fund

Community Development Office5


Fund

VDF4

Different types of industries and

business organ izat ionsPolicy support

Promotion of Industries

Consultancy for business operation

Information for business

Mediator between government and private

sector

Chambers and Commerce Office3

Registered industriesConsultancy for funds (linked wit h different

banks)

Promotion for projects

Provincial Industry Office2

Registered industriesPolicy and consultancyBOI1

Organizations to get the supportType of supportMajor institutionsNo

Different IndustriesPollution control measures and support

Pollution Control Department8

Labour of different industries

Labour rights

Welfare

Provincial Labour and Welfare Office7

Occupational groups

Training

Non- formal Educat ion Office6


Policy support

Training

Project promotion (OTOPs)

Fund

Community Development Office5


Fund

VDF4

Different types of industries and

business organ izat ionsPolicy support

Promotion of Industries

Consultancy for business operation

Information for business

Mediator between government and private

sector

Chambers and Commerce Office3

Registered industriesConsultancy for funds (linked wit h different

banks)

Promotion for projects

Provincial Industry Office2

Registered industriesPolicy and consultancyBOI1

Organizations to get the supportType of supportMajor institutionsNo


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Board of Investment (BOI)

Lop Buri is located in Industrial Zone 3 in the Policies and Criteria for InvestmentPromotion established by the Thailands Board of Investment. With this, come amaximum number of economic incentives allocated to different geographic zones,

including:

- Exemption of import duty on machinery- Corporate income tax exemption for 8 years provided that a project with capital

investment of 10 million baht or more (excluding cost of land and workingcapital) obtains ISO 9000 or similar international standard certification within 2

years from its start-up-date, otherwise the corporate income tax exemption will bereduced by 1 year

- Exemption of import duty exemption on raw or essential materials used in themanufacturing of export products for 5 years.- Deduction from net profit of 25 percent of the project's infrastructure installation

or construction costs in addition to normal depreciation, and such deductions canbe made from the net profit of one or several years within 10 years form the dateof first revenue derived from the promoted activity

-Figure: 4.3 Industrial Development and Planning Zone of Thailand

Source: BOI ,2008

Provincial Industrial Office

The direction of regional development in Thailand follows a top-down approach,

stemming from the Office of the National Economic and Social Development Board(NESDB), then through national policies laid by ruling government before it comes down

to provincials strategies. For the period between the years 2009-2012, the overall planfor the provinces in the upper part of the central region group 2 has put emphasis onrestructuring the process of producing safe food. The Ministry of Industry has also laid


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policy on 1 Province 1 Agro-Industrial Product to be promoted in all of the 75provinces from the year 2007. In respond to this, the provincials strategy is to develop

Lop Buri as the largest agro-processing industry unit among the 4 associated provinceswithin this region.

The Industrial Office has three main responsibilities. First of all, it has a duty to monitor,

control, support and act according legislations on industry, mining, royalty, regulation ofminerals, industrial product standard and other related laws. Secondly, it should develop

and cooperate with development plan to support industrial development at provinciallevel, as well as to cooperate in the implementation and evaluation of the planned

strategy. Lastly, the PIO needs to cooperate or support the operation of other relevantorganizations.

Provincial Community Development (CD) Office

Concerning the industrial sector, the CD office is responsible for promotion and supportof community enterprise particularly in the form of OTOP projects. Otherresponsibilities include formulating community development plan, to develop potentialsof the local population through participatory approach with the view of achieving self-sufficiency etc.

Provincial Natural Resources and Environmental Office

The Natural Resource and Environment Office has two major functions. First, its role isto implement waste treatment and disposal system and enhancing waste disposal capacityof local administrative authorities for environmental protection. In addition, it has theresponsibility to promote the role of private sector in research and development forenergy conservation, environmental management, recycling of raw materials and cleantechnology. However, this has not been necessary in Khok Charoen district as the poorlevel of industrial development in the area has meant that the problem of pollution isminor.

Provincial Labour and Welfare Office

The objectives of the Labour and Welfare Office are laid down as follow:

- Promotion for the private sector to play a part in developing labour skills and

expertise in order to improve the quality and skills of the labour force,- Implementation of adequate social security measures.- Promotion in the creation of a labour relation system that will provide

opportunities for all sides concerned to participate in the resolution of labourproblem as well as to develop and protect labours in an efficient and just manner.

- Protection of Thai laborers living overseas from being exploited by employmentbrokers and employers.

- To stipulate appropriate measures for dealing with foreign labour, taking intoaccount the private sectors need for labour as well as the requirements of

maintaining order and internal security and the need to develop domestic labouras replacement in key areas.


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4.1.3 Current situation in Khok Charoen

According to the data provided by the Provincial Industrial Office, the total number ofindustries in the province of Lop Buri amounts to around 600 units. The distribution of

these industries among different districts within Lop Buri can be seen in table 4.4. Hereone can see that Khok Charoen district is the least developed with only 3 existing

industries in the area. This constitutes around 0.51% of provincial total. The sameconclusion can be reached when comparing industries in Khok Charoen to other districts

according to the amount of capital invested, number of workers and the productioncapacity (as measured in horsepower). From this, one can see that the combined capitalinvested in Khok Charoen district is valued at 1,170,000 baht out of the total of 8.1

billion baht for the whole of Lop Buri province (0.014%). In addition, there are only 3industrial workers registered in Khok Charoen out of the total 12,115 for Lop Buri(0.025%). Lastly, the combined horsepower for industries in Khok Charoen district is 48,

compare to 267,200 hp for Lop Buri (0.018%). It must be mentioned that this analysis ispurely based on the data given by the Provincial Industrial Office, whereby one mustremember that this is not necessarily a realistic practical data but rather the data used forthe purpose of registering the industry. Therefore, this may not be an unrealisticrepresentation of the industry situation within Khok Charoen. This is most noticeablewhen looking at the number of workers in which in Khok Charoen there are only 3

people.

To further elaborate on this, from our primary data collection from different TambonAdministrative Offices (TAOs) as well as an overview of the latest NRD2C in 2007, wehave found that there are in fact a minimum 26 industry units within Khok Charoen.

These units are all rice mills. In Thailand, based on the amount of invested capital,industries are divided into three categories: cottage, small and medium, and largeindustries. Industries with invested capital of less than one million baht are classified as

cottage industries, from one to one hundred million baht are small and medium industriesand more than one hundred million baht are large industries. Based on these criteria,

Khok Charoen district comprises of only one type of industry: cottage industry. Inaddition, from our field visit to the area, we have found that there is at least one extra

home-based industry in Khok Charoen in the form of cassava drying field. The capitalinvested here was 10 million baht and thus it can be classified as a small to medium

industry. It is also worth mentioning that there exists a large scale sugar factory in SriThep district of Petchaboon province which is very near to Khok Charoen and has a large

influence on the local population where the primary occupation is based in agriculture.Table 4.5 Industry situation in Lop Buri province

Source: Provincial Industrial Office (2008)

District Number of industries Percentage share

Muang 194 33%

Chai Badarn 96 16%

Pattana Nikom 82 14%

Khok Samrong 63 11%

Ban Mi 53 9%

Tha Wung 36 6%

Nong Muang 21 4%

Sra Boast 17 3%

Tha Luang 13 2%

Lum Sonthi 5 1%

Khok Chareon 3 1%


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Figure: 4.5 Distribution of cottage industries (rice mills)


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4.1.4 Rural Industry - OTOP

Khok Charoen district relies heavily on agricultural sector providing primary occupation.

However, local people have indigenous skills and other trained skills by localgovernment agencies which can be utilized in the non-agricultural sector to create more

employment and income. The target group is mostly females who are willing to take anadditional employment to support their work in the agricultural sector. Because of the

availability of raw materials and skilled labour, the Royal Thai Government (RTG)introduced a program called One Tambon One Product (OTOP).

OTOP program was adopted from the One Village One Product (OTOP) movement inOita Prefecture, Japan. The scheme has an objective of mobilizing local resources to

produce local products which can be sold both domestically and internationally. The

RTG used this program as a framework for OTOP and has been promoting localindustries through the manufacturing of attractive specialised products based on theabundant native culture, tradition and nature. The target administrative unit is as thename suggested, at Tambon or sub-district level. The specific objectives of OTOP arelaid out as follow:

To construct a comprehensive database system to accommodate necessaryinformation from every Tambon in Thailand

To promote local Thai products from every Tambon, and to facilitate the buy-and-sell procedure.

To bring internet and other information technology to villages. To encourage and promote tourism in Thailand to Tambon level and consequently

raising income of the local community. To encourage rural people to exchange information, ideas and improve

communication level across various Tambons.

In 2006, there are in 450 OTOP projects in the province of Lop Buri. The majority ofthese projects are located in Muang district, accounting for 24 per cent. This is followed

by Ban Mi, Tha Wung, Chai Badarn, Khok Samrong, Nong Muang with 14, 11, 10, 9 and8 per cent respectively. There are 24 OTOP projects currently in Khok Charoen district

accounting 5 per cent of total in Lop Buri. In terms of number of OTOP projects, KhokCharoen is ranked at 8 out of 11 districts in Lop Buri; this is illustrated in Figure: 4.6.

Figure: 4.6 Distribution of OTOPs among different districts. Source: Provincial CD office (2006)

108, 24%

65, 14%

33, 7%50, 11%39, 9%

36, 8%

43, 10%

16, 4%

24, 5%

19, 4%

17, 4%Muang

Ban Mi

Pattana Nicom

Tha Wung

Khok Samrong

Nong Muang

Chai Badarn

Sra Boast

Khok Chareon

Tha Luang

Lum Sonthi


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Comparing the statistics on the number of OTOP projects within Khok Charoen districtbetween the years 2005 and 2006, it is worrying to see the number has only increased by

one unit; this is 4.17 per cent increase. It must also be mentioned that, with the exceptionof Pattana Nicom whereby the number of OTOP has actually dropped by 21.21 per cent,

Khok Charoen district has seen the small percentage of growth in the amount of OTOPprojects. In this regards, Khok Charoen is rank 8 (2006) as compared to 6 in 2005.

Table 4.8 Change in number of OTOP projects in different districts between 2006-07Percentage

2006 2007 change

Muang 67 108 37.96%

Ban Mi 45 65 30.77%

Pattana Nicom 40 33 -21.21%

Tha Wung 23 50 54.00%

Khok Samrong 17 39 56.41%

Nong Muang 28 36 22.22%

Chai Badarn 35 43 18.60%Sra Boast 13 16 18.75%

Khok Chareon 23 24 4.17%

Tha Luang 13 19 31.58%

Lum Sonthi 11 17 35.29%

Total 315 450 30.00%

District

Number of OTOPS

Source: Provincial CD office ,2007

The degrading situation of OTOP projects in Khok Charoen can be emphasise whenanalyzing the amount income generated from these projects within the area. Over the

period of 3 years from 2005-2007, Khok Charoen has experienced a steady decline interms of the income generated from products; reducing from 15,726,039 baht in 2005 to

14,249,451 baht in 2007. In fact, Khok Charoen is one of only three districts in Lop Buri

which have experienced a decline in income generate from OTOPs. Overall, the incomegenerated from Khok Charoen in these products is quite low relative to other districts(rank at 7 out of 11). This is quite worrying considering the quality of the products inKhok Charoen. Looking at table 4.7, it should be raised that Khok Charoen is onlysecond to Ban Mi district in terms of the amount of OTOP with 5 stars success status,with 4 products being qualified. Similarly, in terms of products with 4 stars, KhokCharoen is rank at third place with only less number of quality products than Muang andBan Mi districts.


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Table 4.9 Comparison of income generated from OTOPs among different districtsPercentage change

2005 2006 2007 2006-2007

Muang 88,269,444 110,476,363 142,949,965 22.72%Ban Mi 242,917,542 294,608,560 161,463,200 -82.46%

Pattana Nicom 6,969,590 8,632,680 11,190,774 22.86%

Tha Wung 25,585,100 55,980,550 86,840,950 35.54%

Khok Samrong 18,393,857 21,645,008 28,871,661 25.03%

Nong Muang 26,894,845 31,809,323 34,376,500 7.47%

Chai Badarn 108,679,900 159,701,800 183,552,130 12.99%

Sra Boast 10,803,870 11,719,200 12,185,850 3.83%

Lum Sonthi 4,510,211 6,109,764 6,739,000 9.34%

Tha Luang 4,552,964 5,594,476 3,535,746 -58.23%

Khok Chareon 15,726,039 15,289,373 14,249,451 -7.30%

Total 553,303,362 721,567,097 685,955,227 -5.19%

District

Amount of income generated from OTOP projects (baht)

Source: Provincial CD office,2007

Table 4.10 Comparison of successful OTOPs (4 stars or more) in different districts ofLop Buri

Total

4 Star 5 Star

Muang 13 3 16

Ban Mi 11 8 19

Pattana Nicom 5 - 5

Tha Wung 3 - 3

Khok Samrong 4 - 4

Nong Muang 6 - 6

Chai Badarn 4 - 4

Sra Boast 2 - 2

Lum Sonthi 2 - 2

Tha Luang 1 - 1

Khok Chareon 6 4 10

Total 57 15 72

District

Success status

Source: Provincial CD office, 2007


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Table 4.11 List of OTOPs in Khok Charoen district

1 Khok Chareon 5 Mudmee clothing product Weaving group of Khok Chareon

2 7 Mudmee clothing product Social welfare housewives group

3 6 Weaving mudmee product Weaving group of Khok Chareon

4 4 Mudmee clothing product Thai cloth weaving network v.4 of Tambon Khok Chareon

5 9 Mudmee clothing product Thai cloth weaving network v.9 of Tambon Khok Chareon

6 4 Mudmee clothing product Thai cloth weaving network v. 4 of Tambon Khok Chareon

7 4 Mudmee clothing product OTOP artists' centre

8 6 Mudmee clothing product Indegenous Knowledge Development centre9 6 Mudmee clothing product Forward Vocational Leadger group

10 6 Processed clothings from mudmee Industry group

11 1 Domestic odour product Charcoal processing group

12 Khok Samae San 1 Mudmee cloth product Thai cloth weaving network v. 1 of Tambon Khok Samae San

13 3 Mudmee cloth product Thai cloth weaving network v. 3 of Tambon Khok Samae San



17 8 Broom making group Broom making group

18 3 Basketry Basketry group of Bang Muang

19 1 Wooden chair Private cooperative group Suan Pa of Lop Buri

20 Nong Makha 8 Thai dessert Agricultural house wives group of Tambon Nong Makha21 8 Mudmee clothing product Thai cloth weaving network v. 8 of Tambon Nong Makha

22 8 Mudmee clothing product Thai cloth weaving network v. 8 of Tambon Nong Makha

23 Yang Rak 2 Mudmee clothing pattern Thai cloth weaving network v. 12 of Tambon Yang Rak

TambonSl. No. Village no. Registered groupsOTOP's product

Source: Provincial CD office (2005).

* Note there is one extra OTOP product started by an individual in 2006 but data is not known.

Analysing the distribution of OTOPs among different sub-districts, one can see that these

projects are clustered in two Tambons, namely, Khok Charoen and Khok Samae San.

Tambon Khok Charoen has the highest number of OTOPs with 11 units, accounting for48 per cent of district total. This is closely followed by Tambon Khok Samae San with 8projects (35%). Nong Makha and Yang Rak have few OTOP projects with 14 and 4 per

cent respectively. It should also be mentioned that there are no OTOP project in TambonWang Thong.

Furthermore, there are only three categories of OTOP projects in Khok Charoen district.

It can be pointed out that the overwhelmed majority of these projects are in the form ofcloths and fabric (18 projects, 79%). This is unsurprising as the district is well known for

its weaving products. Domestic products such as basketry, broom production also hold asmall percentage of 17 per cent, with 4 projects in this sector. In food sector, only Thong


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Muan production in Nong Makha comes from Khok Charoen district. This accounts for4 per cent of the total. Again the majority of weaving projects are clustered in Khok

Charoen. Khok Samae San, however, is the most diverse in terms of different OTOPprojects in the area.

Figure: 4.7 Distribution of OTOPs by location/Tambon

11

8

3

1

00

2

4

6

8

10

12

Khok Chareon Khok Samae

San

Nong Makha Yang Rak Wang Thong

Tambon

NumberofOTOPgroups

Figure: 4.8 Distribution of OTOPs by function among Tambon

1

10

1

2

5

1

3

0

2

4

6

8

10

12

Khok Chareon Yang Rak Nong Makha Khok Samae

San

Wang Thong

Food

Cloths and fabric

Domestic product

Food, 1, 4%

Cloths and

fabric, 18, 79%

Domestic

product, 4, 17%


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Figure: 4.9 Distribution of OTOPs b y function among different areas within Khok Charoen district


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4.1.5 Comparison among Case Studies

During the reconnaissance survey and the sectoral field study, 7 different units of

industry were interviewed. This consists of 3 OTOP projects, 2 home-based factories, 1small occupational group enterprise and one large sugar factory in a nearby province.

The purpose of these case studies is to gain an insight as to how the different industriesare operate and the successfulness of such operations in order to identify the problems as

well as establishing the potentials within this sub-sector. The analysis on sugar canefactory will be based on the influence that this factory has on the population of KhokCharoen. This analysis will consequently be used as a basis for project proposal to beconsidered for implementation by the district.

Case Studies of OTOPs

The three OTOP groups used as case studies are all community- based OTOP groups. Acommunity-based OTOP group refers to a group of local people who are partaking in asmall local group enterprise by utilizing their common interests and skills in particulartypes of products. Generally speaking, these groups are form to provide opportunities togain additional income from their primary occupation in agricultural sector which may beturbulent due to a number of factors such as draught, low price of agricultural products.The OTOP groups get support from a number of public organizations such as BAAC,

Community Development Office, Royal Thailand Government, and TambonAdministration Office to setup projects. Additional capital has to be raise from group

members by selling enterprises shares and the income earned is distributed to eachmember according to the number of share purchase.

These OTOP groups under consideration areweaving group in Tambon Khok Charoen,

weaving group in Tambon Khok Samae San, and Thai dessert (Thong Muan) productionin Tambon Nong Makha.

Thai Hand Weaving Group, Tambon Khok Charoen

Like a large proportion of people in the district, people in village number 4 of TambonKhok Charoen are originally from the Northeastern part of Thailand, where the

indigenous skills in weaving and traditional mudmee clothing are renowned. The groupwas formed in 1995 and became active during the period of 1996-1998 whereby draught

caused heavy loss of agricultural products. This led to a revival of weaving skills to beused as a supplementary source of income to the local people.

A number of organizations have helped the group by providing financial support as well

as providing ranges of technical and skill trainings. The relevant organizations involvedinclude District office, Community Development office, Thammasart University,

Provincial Trade and Commerce Office. In addition, the main player who organized thisactivity is Mr Winai Patchim, a local school teacher. He has contributed tremendoussupport to the group by, for example, providing new patterns, teaching additional


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weaving skills as well as setting up a community learning centre to teach school childrenon batik painting.

The groups major products are silk based items such as hand woven cloths with

indigenous designs and various patterns mudmee products. There are also cotton baseditems available such as cotton mudmee, artificial mudmee, plained color and Pakaoma.

Besides, they also produce other products like note pad holder, glass holder as well as anumber of other domestic products. The hand woven products of the group have received

5 stars award recognition and the products are said to be of the highest quality products inLop Buri Province.

As to weaving products, the group can make 125 clothing items per month of the size 4by 0.9 meter (3.6 m

2). On average 5 hours per day is spent on weaving. Total cost of

production is 45,000 Baht which recovers all costs including raw materials, transportation

and marketing. Rough estimate on the cost of production is 360 baht per item. The saleprice is 850 Baht per item but price may fluctuate depending on different pattern and rawmaterial. From this, total income can be estimated at 106,250 Baht per month and theaverage income from weaving activities per person is 2,450 Baht per month.

The group sells their weaving products to district and external markets such as othernearby provinces and Bangkok. The ratio of quantity they sell in district and in externalmarket is around 10 and 90 per cent respectively. Three years ago, middle man suppliedraw materials and bought products produced by the groups. Now the group purchases theraw materials by themselves and either directly sells their products to the wholesale

buyers or occasionally join government and private-run exhibitions.

The main problem of this OTOP group is they are lack of market information,entrepreneurial skills and market linkages. This causes limited access to markets and low

sales volume. Besides, they have low production because they do not have adequatecapital to run their business. In addition, most adult villagers do not participate in

weaving activities and they go to find job in Bangkok. This group needs market orientedorganization structure to promote market and network building because they do not have

anyone to take role and responsibilities in marketing channel.

In summary, weaving has high potential for generating supplementary source of incometo local population. Stronger marketing networks for hand woven products should be

explored. However, further market networks must be explored and variation of patternsand designs of silk and cotton-based mudmee should be enhanced to capture wider

audiences. If this is successfully implemented, weaving activities can be seen as a long-term occupation for the local people as the skills can be pass on to youth and children to

become next generation hand weaving entrepreneurs.


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Thai hand weaving group, Tambon Khok Samae San

The weaving group in village number 5 of Tambon Khok Samae San was established in1994 with an initial investment of 430,000 Baht. The majority of the funding wasprovided by the Khok Samae San Tambon Administration Office (TAO) with 400,000

baht and the other 30,000 baht was given in the form of weaving equipment by localMember of Parliament, Mr. Chaowat Sudlapa. The CD office also lend support in terms

of trainings, providing new patterns and colors, as well as organizing and managing thegroup.

Initially, Ms. Kamnun Somsin took responsibility in leading the group and actively

promoting the weaving products to the outside markets. Her influence extended beyondKhok Samae San to other weaving groups in initiating new patterns as well as purchasing

the products from them to be sold to outsiders. There were 30 members in this weavinggroup during Ms. Somsins time in leadership. However, there are only 10 members atpresent since she passed away.

The products from this weaving group are similar to those produce by the group in KhokCharoen. It has also received 5 stars award for their quality of their product. However,since there are only few members now, the group can only produce around 2 items per

day. This means the income generated from this is quite low with an average incomefrom group member being around 2000 per month for each member. This has dropped

significantly from the period led by Ms. Somsin whereby each member received around4000-4500 baht per month.

At present, this weaving group acquire raw materials from middlemen come and the end

products are also purchased by the same people. Thus there is no other market channel.The feeling we get from the group is that since there is no leadership role, the group lacksorganization and management skills. Consequently they seem to have become more of alabour force for these middlemen rather than group entrepreneur themselves.

Figure: 4.10 Marketing channels for weaving products. Source: Interview of weaving groups ,2008


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Thong Muan production, Tambon Nong Makha

Thong Muan production is in village number 8 of Tambon Nong Makha. This is aproject initiated in 1999 by the Food Processing Cooperative; it is called Ruam JaiSamakhee Thongmuan (Souls Unity Thongmuan). At the beginning phrase, the group

had 20 members. The rationale behind the project is that farmers who live in this villagedepend largely on agricultural production as the main economic activities. After the

cropping and harvest season, farmers are free from work and most of them migrate toBangkok in search for employment. Therefore, the head of the group discussed together

with the agriculture officers to get additional income for local people after the harvestseason and solution was to use Thong Muan production. This was seen appropriate as

raw materials such as cassava, coconuts can be found locally.

In the procedure of setting up the group, first of all, Agriculture Extension Officerstrained the group members on the production process: design, taste, and packaging. Allof them contributed 50 Baht each to contribute to purchasing equipments. The moneycollected admittedly was not enough and thus the loan was made from the BAAC in anamount of 50,000 Baht without collateral, but group guarantee.

In 2004, the group was separated from Ruom Jai Samakkhee group and they registered as

the Group Enterprise where 11 members were included. Nowadays, the group has 25members. There are 5 to 7 permanent workers and they work in daily rotation. Full-time

workers can earn 4,000 to 5,000 Baht per month while part-time workers earn 3,000 Bahtper month.

The raw materials needed are coconut, sesame (both can be obtained within Tambon),

rice powder, cassava powder and sugar are purchased from provincial market. OnlyThong Muan can be considered as an OTOP product but the group also produces anotherThai dessert called Khrong Khraeng. Overall, the group can produce around 700 to 800small packs of both Thong Muan and Khrong Khraeng combined. One big pack consistsof 6 small packs; the big pack can be sold to retailers at 24 baht per pack. The retailerscan then sell the product at 25 baht per pack. The main market of the groups is within the

province and neighboring provinces. The products are sold within Tambon KhokCharoen and Nong Makha in Lop Buri province, and also to Srithep district andVangphikoon district in Phetchaboon province, as well as to Nongphai district in

Nakhonsavan province. The group has a plan to export their products to other countries,but the product quality is not yet accredited officially due to poor productionenvironment.

The group has experienced problems in production largely due to inflating price of rawmaterials and transportation cost. According to the head of the group, the cost of

production and transportation has doubled in comparison to the initial period. Inaddition, the group has a plan to build a new processing house in order to increase

production volume and improve working environment and quality, pending on a loanapproval from TAO and Happiness and Green Society project. Other problems includedifficulties in production process in terms of skills involved in mixing ingredients and


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Table 4.12 Comparison among OTOPs

Source: a combination of local and

provincial market

Sales:

- Within district- Phetchaboon province

- Nakhonsavan Province

Source: provided by middlemen

Sales:

- Middlemen

Source: Provincial market

Sales:

- 10% are sold to district

- 90% are sold to external market(other provinces and Bangkok)

Market network

All year round

Max. production: 700 to 800 small

packets per day

Average income:

- 24000 baht per month per group

- 4000-5000 baht per month per

member (full-time)

- 3000 baht per month per member

(part-time)

All year round, depends on order.

Max. production:

60 items per month

Average income:



(previously members can earn 4000-

5000 Baht per month)


Max. production:

125 items per month

Average income:

- 61,250 baht per month for group

- 2450 baht per month per

member

Outputs of

production

Income

-25 members

(5 to 7 permanent workers, the rest used

this as supplementary income

generation)

30 members down to 10

members (supplementary income

generation)

25 members (supplementary

income generation)

No. of

Members/Labour

BAAC (50000 baht)- Tambon administration office

(400,000)

- Local politician (weaving

materials worth 30,000 baht)

The Royal Thailand Government

(capital)

Sources of Capital

50,000 Baht430,000 BahtN/AInvested Capital

Thai dessert (Thong Muan)

production Tambon NongMakha

2004

Weaving group

Tambon Khok Samae San

1996

Weaving group

Tambon Khok Chareon

1995

Criteria for

Comparison of

OTOPs

Source: a combination of local and

provincial market

Sales:

- Within district- Phetchaboon province

- Nakhonsavan Province

Source: provided by middlemen

Sales:

- Middlemen

Source: Provincial market

Sales:

- 10% are sold to district

- 90% are sold to external market(other provinces and Bangkok)

Market network

All year round

Max. production: 700 to 800 small

packets per day

Average income:


- 4000-5000 baht per month per

member (full-time)


(part-time)


Max. production:

60 items per month

Average income:



(previously members can earn 4000-

5000 Baht per month)


Max. production:

125 items per month

Average income:

- 61,250 baht per month for group

- 2450 baht per month per

member

Outputs of

production

Income

-25 members

(5 to 7 permanent workers, the rest used

this as supplementary income

generation)

30 members down to 10

members (supplementary income

generation)

25 members (supplementary

income generation)

No. of

Members/Labour

BAAC (50000 baht)- Tambon administration office

(400,000)

- Local politician (weaving

materials worth 30,000 baht)

The Royal Thailand Government

(capital)

Sources of Capital

50,000 Baht430,000 BahtN/AInvested Capital

Thai dessert (Thong Muan)

production Tambon NongMakha

2004

Weaving group


1996

Weaving group

Tambon Khok Chareon

1995

Criteria for

Comparison of

OTOPs

Expand the volume of production

depend on market need

Expand market to other districts,

provinces and neighboring

countries

Can be accredited by Food and

Medical Agency for exporting as

assigned by OTOP

Poor production environment

(problem with quality certification)

Good quality

Skills can be pass to younger

generation

Purchasing of raw materials

through other sources

Good quality


generation

Community learning and OTOP

centre can be develop

Promotion of cultural tourism

For Potentials

Production

-high input and transportation cost

Capital

-waiting for loan from TAO

Human Resource

-only 5 % of trainees can succeed

in rolling product nicely

Quality accreditation

-Low quality to export to

neighboring country

Market problem

-Lack of market linkage

No Leadership Role

- Group becoming more of a

labour force for middlemen

rather than entrepreneur

Access to finance

-lack of funding

Reduction in income

Market problem

-lack of market information

-lack of skills for market

linkages

Access to finance

-lack of capital

Human Resources

- low involvement of adults

villagers

Skills and Technology

-low of entrepreneurs skill-limited products d iversification

Organization and Management

-lack of market-oriented

organization structure

Problems

46 points (2005)5 Star (2006)5 Star (2006)Success (status)

Expand the volume of production

depend on market need

Expand market to other districts,

provinces and neighboring

countries

Can be accredited by Food and

Medical Agency for exporting as

assigned by OTOP

Poor production environment

(problem with quality certification)

Good quality


generation

Purchasing of raw materials

through other sources

Good quality


generation

Community learning and OTOP

centre can be develop

Promotion of cultural tourism

For Potentials

Production

-high input and transportation cost

Capital

-waiting for loan from TAO

Human Resource

-only 5 % of trainees can succeed

in rolling product nicely

Quality accreditation

-Low quality to export to

neighboring country

Market problem

-Lack of market linkage

No Leadership Role

- Group becoming more of a

labour force for middlemen

rather than entrepreneur

Access to finance

-lack of funding

Reduction in income

Market problem

-lack of market information

-lack of skills for market

linkages

Access to finance

-lack of capital

Human Resources

- low involvement of adults

villagers

Skills and Technology

-low of entrepreneurs skill-limited products d iversification

Organization and Management

-lack of market-oriented

organization structure

Problems

46 points (2005)5 Star (2006)5 Star (2006)Success (status)


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Analysis on OTOP projects: Overall, one can see that all OTOP projects required

external source of funding. All groups are experiencing financial problem to someextent. In the cases of weaving groups, this may be due to poor management skills and

lack of entrepreneurship. These OTOP projects are mainly used as channels for acquiringadditional income from the primary occupation in agriculture. Only Thong Muan

production has some members working full-time. Weaving products in Khok Charoenare renowned for their high quality (5 stars) but they cannot generate a significant level of

income for members. The main problem here is lack of marketing channels. Theweaving group in Khok Samae San, for example, relies on middlemen in both obtaining

raw materials and selling their products. On the other hand, although Thong Muanproduction is of lower quality, it can generate greater income due to more proactivemarketing strategies. In the two weaving groups, although the quality of products is ofsimilar levels, the marketing channels in both cases are very different. One may interpret

this as lack of cooperation among different weaving groups. With cooperation, differentgroups can learn from each other experiences as well as being able to achieve greatermarket power through bulk buying of raw materials as for example. The loss leadershiprole of weaving group in Khok Samae San also contributed to a rapid decline of the

business operation.

Analysis of small occupational group enterprise

Basketry group Wang Thong

This is a project initiated by Wang Thong TAO in 2006, where all nine villages in theTambon are involved. It can be categorized as a cottage industry, but it is not an OTOP

product. Currently, there are around 30 members, all of which are females and they usedthis as an opportunity to earn additional income to their primary employment in theagricultural sector. In fact, there are very few full-time workers in the group.

The supporting institutions involved include Community Development office and Non-formal Education office. TAO and Community development office provide financialsupport whereas non-formal education office provides classes for making basketry.These classes normally go on for 15 days, after which the participants are capable of

producing the baskets (although experience is needed to make the products sellable).

Basketry products here are handmade in all processes. The raw materials used are hempand either bamboo or simple metal structure; all of which can be purchased from the

provincial markets. Nowadays, metal structures are preferred to bamboos as the baskets

made from them can demand higher monetary value. In one month, around 5-6 basketscan be produced per person, assuming that the partaker works around 7-8 hours per day.

Each day, normally around 15-20 people turn up. For one basket, the cost of rawmaterials is 170 baht if metal structure is used and 150 baht if bamboo is used (100 baht

of hemp is used for one basket), but the basket can be sold at 350 baht a piece.


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Influence of nearby large scale industry on the population in Khok Charoen

Thai Rung Reung sugar factory

This factory is one of the seven sugar factories owned by the Thai Rung Reung group.The company was originally established in 1958 but this particular factory started in

1996. Although this factory is not based in Lop Buri province, the district of Sri Thepwhere this factory is located is actually nearer to Khok Charoen district (17 km) thanthose in Lop Buri itself.

From the criteria mentioned in the introduction, this factory can be regarded as a largescale factory i.e. more than 100 million baht was invested here. The exact detail on the

capital invested is confidential. Total factory area is 1800 rais; this consists officebuilding, machinery building, technicians building and cargo building. There is also anexperimental field of 100 rais which is used for testing different breeds of sugar cane, soiland chemical.

The factory has 27000 rais of support area within 50 km radius of the factory. Thesupport area means that the farmers in the area are contractually obliged to sell their

products to the factory every year. The going rate is that for 10 rais of farmland, thefarmers will have to provide 100 tons of sugar cane to the factory per year. 3000 farmers

are part of this program; it is not known how many of these farmers are from KhokCharoen. The factory gives assistance to the farmers in the support area, in terms of

financial credit/loan. If it is to a new farmer (i.e. no machines, experience etc.), thefarmer needs around 5500-6000 baht/rai, here the factory will help around 4000 baht/rai.If it is for existing farmer, the factory will help around 2000 baht/rai. The condition isthat the money has to be paid back by the end of the next harvesting period. The goinginterest rate for loan is 7 per cent per annum

During the harvest period, the factory purchases around 25000 tons of sugar cane per day.This is 1300 trucks per day, each truck bringing 22-25 tons. Broadly speaking, around 10types of sugar cane breed are brought to the factory. However, 95 per cent of sugar caneis of K84-200 breed. This is a genetically-modified breed (invented Agriculture ResearchCentre) and its main advantages are high weight, sweet and most importantly it is droughtresistant. This is an important factor as 97-98 per cent of the surrounding area has noirrigation system. The government sets the price of sugar cane, based on the sweetnesslevel indicator, commercial cane sugar aka CCS. The going price is 600 baht for 10CCS, which roughly constitutes a ton of sugar cane. The sweeter the sugar cane (i.e. thehigher the CCS level), the higher is the price. One extra CCS level gives an extra 36 bahtto the farmer (or around 10% of the governments set price). In general, the CCS level ofsugar cane prior to mid-January is around 10.5. As the crops are more matured, the CCS

level will consequently rise. The majority of sugar cane the factory received has the CCSlevel of around 12.5. The highest CCS level the factory has seen is 16 (very rare). The

CCS level of each sugar cane stock received at the factory is determined by staffs fromthe Ministry of Industry.


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The majority of the workers are from local and nearby surrounding areas, especially the

full-time workers. A quarter of part-time workers are migrated from the Northeasternareas in Thailand. There are 350 full-time workers and 650 part-time workers. The part-

time workers are only employed during the harvest period between December to April.The full-time workers receive a salary on a monthly basis. There are 3 salary brackets

within the setup.

The technician assistants receive less than 10000 baht/month. The technician and foremen get between 10000-30000 baht/month. The management staffs receive more than 30000 baht/month

The temporary workers get 157 baht/day for 8 hours of work (the average in KhokCharoen is less than 150 baht per day). However, they can also get an OT (overtime)

pay, working an additional 4 hours for 117.75 baht. This is a 4 hours work for the wageof 6 hours at normal rate. Processes

Analysis: this factory has a large influence on Khok Charoen even though it does notlocate within the Lop Buri province. The reason for this is that the factory is actuallynearer to the district than some other sugar factories within Lop Buri. This is particularlyimportant as sugar cane is one of the main agricultural products that come from KhokCharoen. The factory has great power over the sugar cane farmers in that the farmers arecontractually obliged to sell their products as well as being tied to the loan given to thefactory. Some people from Khok Charoen are also employed by the factory, either on afull-time or part-time basis. It is unlikely that industries of such scale can be set up in

Khok Charoen as it requires large capital of investment, significant improvement in thelevel of infrastructure, availability of raw materials as well as the fact that it may not beeconomically feasible to compete with existing industries. For example, as mentioned,

during harvest season the factory uses 25000 tons of sugar cane per day in theirproduction. The total volume in Khok Charoen in the year 2005 is only 375733 tons.

4.1.6 Summary on problems and potentials of the industrial sector in Khok Charoen

The main strength of Khok Charoen lies in the rural industry, or more specifically in the

form of weaving production. The majority of the population is migrated fromNortheastern area of Thailand, in which they bring with them indigenous knowledge andartist expertise in weaving production. Currently, there are at least 400 people

participating in weaving activities showing there are enough skilled workers to expandthe capacity of production. The quality of weaving products here is of very high quality

and many of these products have been given OTOP status. In addition, 10 weavingproducts have been given 4 or 5 stars (max. 5) for their quality; this is significant as there

are only 72 products in Lop Buri which have been given this status. It should also bementioned that Lop Buri lies in zone 3 in the criteria established by the Thai Board of

Investment (BOI). With this, comes a maximum benefits in terms of import duty and tax


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exemption and thus an industrial unit set up in Khok Charoen will gain an economicadvantage over those set up in other geo-economical zones. Current national and

provincial strategic aim has also emphasized on the development of agro-processingindustry. This can be interpreted as strength of Khok Charoen as the majority of the

population is already employed in the agricultural sector and the district has seen highyield in products such as paddy, sugar cane, and cassava. The agricultural input can thus

be used as input materials to facilitate agro-processing industries.

However, there are many weaknesses in the industrial sector. Despite the quality ofweaving products in Khok Charoen, there are limited market channels and opportunities

to sell the products, hence the low recognition of Khok Charoen brand of weavingproducts. From the study, it was clear that members of these weaving groups lackentrepreneurship skills and consequently they rely on middlemen coming to purchasetheir products. To make problem worse, some groups even rely on the same middlemen

to provide them with raw materials necessary for production. Thus despite the quality oftheir products, their income from this has actually been decreasing. To illustrate this, theincome generated from OTOP products in Khok Charoen district has decreased byaround 7% between the years 2006-2007. This weakness can also be used to describe thesituation of other groups such as handicraft. Through interview of staffs from district andTambon office, we have also found that there is limited collaboration among variousoccupational groups performing similar activities. Thus there is no process for the groupsto learn from the mistakes that other have already experienced in their businessoperations. In addition, it should be raised that there is an inadequate level ofinfrastructure to set up a large scale industrial unit in Khok Charoen. From field visit to alarge sugar factory in nearby province (Sri Thep, Petchabun), we have found such scale

of industry requires a lot of water and electricity in their production and maintenanceprocess. It is also dependant on a large road network for transportation of their products;this is however not sufficient in Khok Charoen.

Table 4.13 List of main problems in the industrial sector

Problems Causes

1. Shortage of

capital for

investment.

Lack of collateral for loan due to no land title. Lack of skills in managing financial resources. Low level of

entrepreneurship among the population.

Supporting funds are not sufficient for distributions to allgroups.

2. Lack ofmarket channels

Exploitation by local middlemen whether in terms of supply ofraw materials or purchase of end products.

Limited market network and information. Since many groups are small in terms of number of members (=

less production), they do not enjoy economy of scale and haslittle market power.

3. Decreasing

level of income

generated

Lack of market channels Increasing price of raw materials and transportation cost. Low recognition of Khok Charoen brand of weaving products.


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OTOPs

4. Limited

collaboration

among various

weaving groups

Although the majority of the people in Khok Charoen aremigrated from the Northern-eastern part of Thailand, they areoriginated from different provinces. Thus interaction betweenvarious groups is limited.

Loss of strong community/group leaders.No organized location for interaction to take place.

5. Low

recognition of

Khok Charoen

brand of

weaving

products.

Lack of market channels. For weaving products, there is a strong competition from nearby

district such as Ban Mi where the capacity of production is muchhigher. There is also fierce competition from other provinces inthe North-eastern region of Thailand.

Table 4.14 List of potentials of industrial sector in Khok Charoen

Factors Descriptions

1. Policy Industrial zone; maximum benefits.National and regional promotion on agro-processing industry. Adequate vocational training programs.

2. Access to raw

materials

The primary occupation in the area is in agriculture. Themain products include sugarcane, cassava, paddy, corn. Thereare also many beef cattle in the area, thus consideration onlocal slaughter house may reap considerable financial reward.

Information from the Provincial Industrial Office has also

shown that some minerals such as pyrite are available in thearea; this can be seen as another potential for industrialdevelopment.

3. Location The location of Khok Charoen is on the fringe of Lop Buri inthe North. Thus Khok Charoen has access to nearby

provinces such as Nakhon Sawan and Petchaboon, as a sourceof raw materials and as market outlets. Lop Buri, itself, is notso far away from Bangkok (only 155 km).

There is not much competition in the area at all levels ofindustry.

4. Skills and

labour

Total working population in the area amounts to around

11,000 people. Since the majority of the population engagedin the agricultural sector, which is seasonal, they will be ableavailable to accept another form of employment opportunities.

The average income per day in non-agricultural activity issurveyed to be around 150 baht or less, in general for the

whole district. At least 590 people are recorded as having taken a form of

vocational training. The population possesses indigenous knowledge and skills in

weaving production. They also possess unique design andpattern of fabric.


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Quality weaving products are renowned in Khok Charoen.Many OTOP products here are given 4 and 5 stars award for

their quality.

5. Adequate

infrastructure for

small and

medium scale

industry

Accessible road networks. Access to electricity. Adequate water supply.

4.2 Trade and Commerce

4.2.1 General Information and Current Situation on Trade and Commerce

There are 102 enterprises and partnerships with the registered investment of 154,240,000baht in the province of Lop Buri. It classified into 28 enterprises with registeredinvestment of 30,900,000 baht, and 74 partnerships with the registered investment of

123,340,000 baht. The province has 18 permanent markets, 6 located in Mueang LopBuri, 2 in Ban Mi, 2 in Chai Badan, 2 in Khok Samrong, 2 in Nong Muang, and Tha

Luang, Ta Wung, Phattana Nikhom and Sa Bot each has one.

There is no any permanent market in Khok Charoen district, the only weekly and mobilemarkets operating in the district. In the district, there are 9 places of weekly market

located in different Tambon and operating different date and time. These markets sellcloths, grocery, house ware, electricity ware, meat, vegetable and fruit. The district has

mobile market system, traders upload there goods to pick up truck and travel aroundvillage by village. The mobile market sell cooked food and fruit, they travel mostlyduring the meal time especially lunch time. Retail shops in Khok Charoen district consistof private shop and community shops, these shops sell grocery and soft drink. Totally,there are 373 private shops in Khok Charoen. Those shops are requested to pay tax todistrict tax office. There are two types of tax named sign tax and housing tax

Although, in the district has no permanent market. However, local traders have marketlinkage with Srithep market, Phetchaboon province far away from the Khok Charoenmore than 15 km, Nong Muang market, Lop Buri province far from his home more than30 km, and many markets in Lop Buri district the capital city of Lop Buri province.

There are two types of market in Khok Charoen district, namely weekly market andmobile market. These markets are the main source of providing goods and service. Thereare many kinds of commodities sold in the market including food, clothes, fruits,vegetables, animal meat, grocery, electricity ware etc. The markets serve the people in

their own Tambon and also other surrounding Tambon. Some kinds of the commoditiesare taken from outside Tambon, namely from Bangkok, and also neighboring province.

Khok Charoen district has no any industry to produce goods for local consumption and

export to outside, the only non-agriculture products from the district flow out is only


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weaving and handicraft products. The common products in the district sold out areagricultural product such as sugarcane, cassava and vegetables. Livestock is one main

source of outflow such as cattle which is very common in the district.

4.2.2 Markets and Shops in the District

a. Market

Weekly Markets

Weekly markets operate in different place and time found in the district. Total number ofweekly market in Khok Charoen is 10 places. These markets existed in all Tambon,serving people living around four to five villages providing some basic goods for dailyhome consumption. Some places operate more than one time a week for example inTambon YangRak at village number 4 and 9 operate two times a week and Tambon NongMakha at village number 8 operates 3 times a week (Table 4.15).

Table 4.15 Distribution time and place of weekly market in Khok Charoen district.

No. TambonLocation

(Moo)Schedule (time operated)

Moo 2 Sunday evening (3-8pm) [one time/week]

1 Khok CharoenMoo 4,5

Monday evening (3-8pm), Thursday evening

(3NA8pm) [two times/week]

Moo 2 Sunday evening (3-8pm) [one time/week]

Moo 4 Wednesday and Saturday Morning (6-9am) [twotimes/week]

Moo9Tuesday and Thursday evening (3-8am) [two

times/week]

2 YangRak

Moo 10 Saturday evening (3-8pm) [one time/week]

3 KhokSamaesan Moo 4 Tuesday evening (3-8pm) [one time/week]

4 WangThong Moo1,2 Friday evening (3-8pm) [one time/week]

5 NongMakha Moo 8Sunday morning (6-9am), Tuesday and Thursdayevening (3-8pm) [three time/week]

Source: Interview with TAOs


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Mobile Markets

This is a dynamic kind of market for rural villagers; it provides a very convenience

service to rural people with food, fruit and other different kind of commodities for basicneeds. In Khok Charoen district, mobile market performed as direct sale, traders bring

those kinds of goods to serve people at their home. The advantage of mobile market is tofacilitate the rural people to access to the necessary goods and commodity especially foodand fruit. This type of market reduces the cost of transportation of the villagers andvillagers also can save their time on traveling to other shops or markets. However, due tothe increasing of fuel price, the cost of transportation of traders has increased and itreducing the profit of traders. Hence, traders have to increase the price of goods whichleads villagers need to pay more and more on price of those basic goods. One of thevillagers complained that every item has increase the price at least 10% compares to lastcouple years.

b. Shops

Community Shops

The community shop is an activity of cooperative base shop, establish by the savinggroup with the help of district community development office. Villagers participate

through their contribution as saving capital formation and involved in management to runthe shop. The shop has a good economic implication on the rural people in term of their

saving and good service in order to get benefit through saving mobilization on non-farmactivity. The shop function as local needs support for local people who have less capacityto travel to buy things for their family at far away market. The community shop also

helps local people who to buy goods in credit in the case that members have not enoughcash in hand, then he or she can pay back later. The shop sells beverage, food, houseware, and grocery and some shops sell some items of motorcycle and car spare part, oiland fuel.

Case study: Community shop of Ban Mai Si Ou Bon, Tambon Nong Makha, Khok

Charoen district

- Year establish: 1991- Location: Ban Mai Si Ou Bon, NongMakha- Main goods: groceries, beverage, some spare part of motorcycle, oil


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and fuel- Member: 25 (1991), 95 (2008)- Committee member: 7 people, village head man as the chair person- Working time: 6 am to 9pm- Contract seller: one person- Seller salary: 32% of annual net profit- Source of fund: SML and share (total 950,000 baht)- Share price: 10 baht/share- Dividend/member: 1 baht/share (10 baht gain 1 baht)- Duration: One year a time of dividend provided- Infrastructure: District Community Development Office provided- Goods purchasing: Through middlemen (Whole seller bring for the shop)

and, staff went out to buy from whole seller shops inKhok Charoen town

- Management: Executive Committee of the shop

Private Shops

Khok Charoen district has several types of shop regarding to the tax office, shops wereclassified into many types according to their functions. The largest number is convenientor grocery shops then flow by car and motorbike repair shops and gasoline pump. Theseshops are owned by private, functioned as household business to provide service forvillagers and people living around. According to the data from Tambon tax revenue list,in each Tambon has different types and number of shops. The highest number of groceryshop is in Tambon Khok Charoen, and then follows by Tambon Nong Makha, the least

number of grocery shop is in Tambon Wang Thong (Table 4.17). Number of grocery

shop shows the rate of household business activity in that particular Tambon.

According to Table 4.16, Tambon Khok Charoen has the largest number of shops which

account for 29.49 per cent, when we take to population ratio (total population divided bytotal shops) Khok Charoen has the least ratio. Tambon Wang Thong has the least

percentage of shop but the second least ratio. It means Wang Thong has less populationeven the number of shop is less, but people can also have more chance to access to the

shops. However, the variety of shop (goods and service) is not good as Khok Charoenand other Tambon. We cannot assume the shop type due to the data on shop given is not

classified in to different type of shops dealing with different goods and services.Table 4.16 Distribution of total shop by Tambon

No. Tambon Population Total number of shops Percentage of shopin each Tambon

1 Khok Charoen 7,296 110 30

2 YangRak 7,783 71 22

3 KhokSamaesan 3,231 39 12

4 WangThong 2,638 35 11

5 NongMakha 3,509 75 23

Total 24,457 330 100.00

Source: TAO office, 2007


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Table 4.17 Distribution of Shops by Tambon

Shops

No Tambon Groceryshops

Gasolinepump

Car andmotorbikerepair

PharmacyAgricultureinputs

Constructionmaterial

Others*Total

1 Khok Charoen 72 4 12 5 4 4 9 110

2 YangRak 69 2 NA NA NA NA NA 71

3 KhokSamaesan 35 4 NA NA NA NA NA 39

4 WangThong 35 NA NA NA NA NA NA 35

5 NongMakha 48 3 10 1 1 NA 12 75

Total 259 13 22 6 5 4 21 330

*Hair salon, knitting shop, restaurant and game shop


Table 4.18 Ratio of Population under the Service of Shops in Tambon

KhokCharoen

YangRak Khok Samaesan WangThong NongMakha TotalTypes of shops

Shops Ratio Shops Ratio Shops Ratio Shops Ratio Shops Ratio Shops Ratio

Grocery shops 72 101 69 113 35 92 35 75 48 73 259 94

Gasoline pump 4 1,824 2 3,892 4 808 NA NA 3 1,170 13 1,881

Car and motorbikerepair

12 608 NA NA NA NA NA NA 10 351 22 1,112

Pharmacy 5 1,459 NA NA NA NA NA NA 1 3,509 6 4,076

Agriculture inputs 4 1,824 NA NA NA NA NA NA 1 3,509 5 4,891

Constructionmaterial

4 1,824 NA NA NA NA NA NA NA NA 4 6,114

Others* 9 811 NA NA NA NA NA NA 12 292 21 1,165

Total 110 66 71 110 39 83 35 75 75 47 330 74



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Figure: 4.15 Density of Population to Private Shops Map


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Figure: 4.16 Distribution of Weekly Market Map

Tambon Nong Makha

Tambon Wang Thong

Tambon Yang Rak


Tambon Khok Charoen

2

3

0

1

2

3

Places Frequency

conducted4

6

0

2

4

6

8

Places Frequency

conducted

1

3

0

1

2

3

Places Frequency

conducted

1 1

0

1

2

3

Places Frequency

conducted

1 1

0

1

2

3

Places Frequency

conducted


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Figure: 4.17 Market Linkage


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Market Linkage and Network Analysis

The Figure 4.15, 4.16 and 4.17 provide as very clear explanation on shops and markets

density in Khok Charoen district. In the district has no any permanent market, whiledistrict nearby named Srithep has a big permanent market; traders in Khok Charoen have

to travel to buy goods from Srithep to sell in the district. There are 10 weekly markets inthe district; the weekly markets as well as shops are not well distributed fairly in thedistrict. Thus, some Tambon are less number of shops and weekly market to serve their

population, while others have much more market and shops density comparing to thepopulation size. Hence, it means that not very people in every Tambon can access and gettheir need from their local market. They have to spend some time to travel for goods

purchasing for their daily need. Regarding to this situation, the population who live at theplace has less service, they are disadvantage in term of access to variety of service as wellas price of common basic goods comparing to the neighboring area. We also can see thatthe largest numbers of shops and other services are agglomerated in Tambon KhokCharoen. Hence, maybe in Tambon Khok Charoen is the most advantage Tambon in thedistrict.

Neighboring districts are the sources of daily goods that traders from Kho Charoendistrict usually go to buy goods to sell in Khok Charoen. Regarding to the map there arefour neighboring districts which has road connection with Khok Charoen named Srithepdistrict far from Khok Charoen around 25 km, Nong Muang 30 km, Sabot 20 km andChai Badan 45 km. In the case that traders want to buy in big volume they have to go to

Lop Buri city where far away from Khok Charoen around 80 km.

Since, the road access is very important for trade and commerce. According to the map,transport node is quite in good situation. Thus, better the road connection provides more

choice for local traders dealing trading with neighboring markets, and also brings outlocal products to outside markets.

4.2.3 Marketing Channel of Products

Marketing channel were classified in two parts namely inflow channel and outflow

channel. The inflow channel to present the goods those are being brought from outside tothe Khok Charoen district which classified into four main components related to non-

agriculture sectors namely cloths, grocery, house ware and electricity ware. The outflowchannel present the goods and products which the district and produce and send out tosell in other market outside the district. The goods and products which are being

produced in the district and sending to market outside are weaving product, basketryproduct, Thong Muan (Thai sweet role) and agro-processing product such cassava and

sugarcane. The flow of these goods and products were drawn base on the interview withTambon administrative offices, shop owners and traders in the various weekly markets.

The whole seller, cloth shop owners and cloth traders buy clothes from Bangkok (BoBe

market). First channel, some of them group together around 5 to 6 people, then hire a


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truck to go to Bangkok to buy cloths. These people are from Srithep district, Phetchaboonprovince, who come to sell cloth in the weekly market in Khok Charoen district. Second

channel, retailers or shop owner in Khok Charoen district go to buy for Srithep market,Srithep district, Phetchaboon province where far away around 25 km, and go to Lop Buri

city (Big C) to buy cloths especially at the time of discount price campaign. Thirdchannel, middlemen who have truck bring the cloths to sell to the shop owner in the

district (Table 4.19).

Mostly, groceries are brought from Srithep market in Srithep district Phetchaboonprovince. Many private shop owners go to buy grocery goods from this particular market.

This market centre considered as service center of this region two or three districtssurrounding name Srithep, Khok Charoen, Chai Badan and Wichien Buri. Another place,grocery is brought from Lop Buri city by whole sellers; they brought these kinds of

products to sell for private shops, which serve people living around.

There are some source markets of the goods inflow to Khok Charoen district such asBobe market, Talat Thai, Phitsanulok market and others, locating in different locationsuch as Bangkok, Pathumthani, Phetchaboon province etc. It is also noticed that differentkind of commodities and goods are from different markets. The commodities and goodsinflow to the district include food products (fruits, vegetable and food), consumer

products (cloths, electricity ware) and raw materials for agro-processing. Since, thedistance of the source market is located far from the district; the cost of transportation ofthe commodities is one of concerns in terms of the profit for the traders.Table 4.19 Markets, Location and Time Spent of Inflow Products

Foods Products

Market Major products Location DistancePhitsanulok Fruit (orange)

Phitsanulok provine2 hours and30 minutes

Talat Thai Fruit (grave fruit)Pathumthani province

2 hours and30 minutes

Srithep market Dry food and instantfood

PhetChaboon province25 minutes

Consumer Products

Bobe market Cloths 3 hours

Big C supermarket Cloths, Cosmetics,

Toys, and electricityware

1 hours

Srithep market Kitchen items,electricity ware

25 minutes

Raw material for AgroNAprocessing

Nakhon Sawan Cassava Nakhon Sawanprovince

15 minutes

PhetChaboon Cassava PhetChaboon province 30 minutesSource: Market survey, Khok Charoen district, February 2008

Figure: 4.18 Marketing Chanel of cloths


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Whole seller in

Sitheb Market,

Sitheb District, Phet

Chaboon

Big C and Whole

Seller in Lop Buri,

Province

Weekly market in

Khok Charoen

Marketing Chanel of House Ware

Factories/Companies

Private Retailer

shop in Khok

Charoen

Consumersin

KhokCharoen

Middlemen

Source: Interview with TAO and shop owner

Figure: 4.21 Marketing Chanel of Electric ware Products

Whole seller in

Sithep Market,

Sithep District, Phet

Chaboon

Middlemen

Weekly market in

Khok Charoen

Marketing Chanel of Electricity Items (TV, fan, rice cooking pot)

Factories/Companies Export to

International

Market

Private Retailer

shop in Khok

Charoen

Consumersin

KhokCharoen

Source: Interview with TAO

Table 4.20 Markets, Location and Time Spent of Outflow Products


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Foods Products

Destinations Major products Location Distance

Talat Thai Vegetable Pathumthaniprovince

2 hours and 30minutes

Lop Buri Cattle

Phetchaboon ThongMuan (Sweetroll)

Phetchaboonprovince

25 minutes

Nakhonsavanh ThongMuan (Sweetroll)

Nakhonsavanhprovince

15 minutes

Consumer Products

Lop Buri Weaving products Province 1 hours

Agro-processing

Ayuthaya province Nakhonsavanh

provinceSing Buri Sing Buri province

Sara Buri

Cassava

Sara Buri province

Srithep Sugarcane Phetchaboonprovince

70 minutes

Source: Market survey, Khok Charoen district, February 2008

In Khok Charoen district, there are various local agricultural and non-agriculturalproducts. Those products include food products, consumer products, and agro-processingproducts. There are also OTOP products of Tambon, namely weaving products, ThongMuan product. The weaving products are sold to several markets in Bangkok, Lop Buri

province. And the markets of Thong Muan products are in neighboring provinces. So, ingeneral, the products of the district have been sold to different markets, which are locatedin different destinations (Table

non-agricultural sector development of dcentralized rural development planning of khok charoen...

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