KONSANGFARM CO-FARMING SPACE
“MARKETING AND STRATEGIC PLANNING”
BY
MS. RISSARA WINITCHAIYANAN
AN INDEPENDENT STUDY SUBMITTED IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR
THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION
(GLOBAL ENTREPRENEURSHIP) INTERNATIONAL MASTER IN
BUSINESS ADMINISTRATION
FACULTY OF COMMERCE AND ACCOUNTANCY
THAMMASAT UNIVERSITY
ACADEMIC YEAR 2015
COPYRIGHT OF THAMMASAT UNIVERSITY
KONSANGFARM CO-FARMING SPACE
“MARKETING AND STRATEGIC PLANNING”
BY
MS. RISSARA WINITCHAIYANAN
AN INDEPENDENT STUDY SUBMITTED IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR
THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION
(GLOBAL ENTREPRENEURSHIP) INTERNATIONAL MASTER
IN BUSINESS ADMINISTRATION
FACULTY OF COMMERCE AND ACCOUNTANCY
THAMMASAT UNIVERSITY
ACADEMIC YEAR 2015
COPYRIGHT OF THAMMASAT UNIVERSITY
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Independent Study Title KONSANGFARM CO-FARMING SPACE
“MARKETING AND STRATEGIC PLANNING”
Author Ms. Rissara Winitchaiyanan
Degree Master of Business Administration
(Global Entrepreneurship)
Major Field/Faculty/University International Master in Business Administration
Faculty of Commerce and Accountancy
Thammasat University
Independent Study Advisor James Edward Rubesch, Ph.D.
Academic Years 2015
ABSTRACT
“Konsangfarm Co-Farming” is a service operation providing land plot for
rent to start-up farmers and hobby farmers to learn gardening and farming, to grow
their own food and experience farming lifestyle. The service process will start after
tenants rent our land plots, then we conduct tutorial and workshop of urban farming
under Good Agricultural Practices (GAP) with bundled services to take care of the
farm for our tenants during weekdays until harvesting period.
Our purpose is to promote the urban green movement in Thailand by
helping the community to has access to local fresh harvest through self-growing food
from our co-farming space. Then, we also offer to buy the surplus products from our
tenants and supply to urban people through retailers and restaurants. Another benefit
we create to society and become our additional revenue is the outdoor activities such
as farm tour in our co-farming space and neighborhood area.
Keywords: Urban farming, Co-farming space, Organic, Farming, Training,
Land plots, Rent
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ACKNOWLEDGEMENTS
I would like to express my deepest gratitude to my advisor, Dr. James
Edward Rubesch, for his care, advice, academic and life lesson, for teaching and
inspiring me to explore the “Unknown”, fear the “Known” but never fear to fail, in
order to become the change maker.
Furthermore, I would like to thank all my teachers at IMBA, my advisors
and mentors of “Konsangfarm Co-Farming Space” project. Without their valuable
advice and support, my team and I could not make it, especially Ms. Juthamas
Saisuwan of Khaomakok Farm, our first partner who accepted our idea and help
turning it into reality and Ajarn Phatphong Boonlert and his team from Nature
Farming and Environment Co., Ltd who teach us about agricultural practice and
provide us all possible farming resources and network.
Special thanks to my co-founders, Ms. Siriphat Thovara and Ms. Sakraan
Sitcharangsie, who are always besides me to share the joy and the pain, friendship and
great memory. If learning is a journey, I am very happy that we are in the same ship.
I can‟t ask for better companion. Also thanks to Mr. Gilles Poncin for first word of
encouragement about this project and the positive energy.
To my parents, my sisters, brother and my best friends, I am greatly
indebted to their love, understanding and for always being there for me to give
endless support in every way which accounts for everything I have achieved in life
and study.
Ms. Rissara Winitchaiyanan
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TABLE OF CONTENTS
Page
ABSTRACT (1)
ACKNOWLEDGEMENTS (2)
LIST OF TABLES (8)
LIST OF FIGURES (9)
CHAPTER 1 ORGANIZATION 1
1.1 Background 1
1.1.1 Problem 1
1.1.2 Our Inspiration 1
1.1.3 Our Solution 1
1.2 Mission and vision 2
1.2.1 Mission 2
1.2.2 Vision 2
1.3 Current Status 3
1.4 Organization of KONSANGFARM 4
1.4.1 Operation Department 4
1.4.2 Marketing and Strategic planning Department 4
1.4.3 Sales and Finance Department 4
CHAPTER 2 MARKETING AND STRATEGIC PLANNING 5
2.1 Market and Industry Analysis of organic farming 5
2.1.1 Problem of organic farming 5
2.1.1.1 Requirement for becoming organic farming 5
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2.1.1.2 Lacking of know-how and understanding 6
(1) For Grower 6
(2) For Consumers 6
2.1.1.3 High logistic cost from importing organic food or
Sourcing fresh food from upcountry 7
2.1.1.4 Effect and danger of using chemical pesticide and
Fertilizer 7
2.1.1.5 Aging Farmer 9
2.1.2 Market size and Growth 10
2.1.3 Market Trends 10
2.1.3.1 Global 10
2.1.3.2 Asia Pacific 12
2.1.3.3 Thailand 12
2.1.4 Target Market 13
2.1.4.1 Health concern consumers 13
2.1.4.2 Restaurant, café, bistro 13
2.1.4.3 Retailers (small fruit and vegetable shops, local markets) 13
2.1.4.4 Farmer wannabe/ Hobby farmer/ Outdoor activities seeker 14
2.1.4.5 Educational institutes 14
2.1.5 Industry Structure 14
2.1.6 Opportunity 14
2.1.6.1 Factors 15
2.1.6.2 Action 15
2.2 Marketing channel 15
2.2.1 Offline Marketing 15
2.2.1.1 Farmer market booth 16
2.2.1.2 Farming workshop and farm tour 16
2.2.1.3 Free advertisement in press 16
2.2.1.4 Free advertisement through seminar and meet-up event 16
2.2.2 Online Marketing 16
2.3 Competitors 17
2.3.1 Rivalry among current competitors 17
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2.3.2 Threat of substitute products or services 17
2.3.2.1 Community garden and rooftop garden 17
2.3.2.2 Incubator program 17
2.3.2.3 Agricultural land reform office 18
2.3.3 Threat of New Entrants 18
2.3.4 Competitor analysis 18
2.3.4.1 Preventing the farm owner to become our competitor 20
2.2.4.2 Attracting new customer new customers 20
2.2.4.3 Maintaining repeated customers 20
2.4 Promotion 20
2.4.1 Reward motivation 20
2.4.2 Sense of ownership and achievement 21
2.4.3 Discount Method 21
2.5 Strategic partners 21
2.5.1 Knowledge partners 22
2.5.2 Supply partners 22
2.5.3 B2B partners 22
2.5.3.1 Custom made products 22
2.5.3.2 International organic market 23
2.6 Strategy for scaling up business 23
2.6.1 Expand co-farming spaces in Bangkok and suburb 23
2.6.2 Transforming organic farmers 23
2.6.3 Konsangfarm village 23
2.6.4 Land management consulting 24
CHAPTER 3 SALES STRATEGY 25
3.1 Pricing Strategy 25
3.1.1 Co-farming Membership 25
3.1.1.1 Individual Membership 25
3.1.1.2 B2B Membership 25
3.1.2 Farm tour package for activities 31
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3.1.3 Co-farming for rice program 32
3.2 Sales Strategy 34
3.2.1 Method to boost sales 34
3.2.1.1 Co-farming Membership 34
3.2.1.2 Farm tour package for activities 36
3.2.1.3 Co-farming for rice program 36
3.2.2 Sales channel 37
3.2.2.1 Offline Channel 37
(1) MRT Rama 9 37
(2) At Groove Farmer‟s Market at Central World 38
3.2.2.2 Online Channel 38
CHAPTER 4 OPERATING STRATEGY 40
4.1 Introduction 40
4.2 Konsangfarm services 40
4.2.1 Co-farming space 40
4.2.1.1 Plot size 41
4.2.1.2 Duration 41
4.2.1.3 Payment method 41
4.2.1.4 Location of co-farming space 43
4.2.2 Co-farming space for rice 43
4.2.2.1 Plot size 43
4.2.2.2 Duration 44
4.2.2.3 Payment method 44
4.2.3 Farm trips & related workshops 45
CHAPTER 5 FINANCIAL PLAN 46
5.1 Income Statement 46
5.2 Cash Flows 48
5.3 Balance Sheet 48
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5.4 The financial ratio and summary 50
CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS 52
6.1 Conclusions 52
6.2 Recommendations 53
REFERENCES 54
BIOGRAPHY 55
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LIST OF TABLES
Tables Page
2.1 Comparison of Farm learning center and Co-farming space 19
3.1 Forecast expense of 100 m2 co-farming space in 2016 27
3.2 The detail of predicted expense by each quarter 30
3.3 Expenditure per farm trip 32
3.4 Expense and profit per rai and for the investors 33
3.5 Revenue model of transforming rice farmer program 34
3.6 Average needed production per week at Wat Suwan school 35
3.7 The example of needed area of plot 36
5.1 Projected net operating income after taxes (5 years) 47
5.2 Projected free cash flow (5 years) 48
5.3 Balance sheet 49
5.4 Operating income to sales (5 years) 50
5.5 Gross profit margin (5 years) 51
5.6 Net profit margin (5 years) 51
5.7 Net present value 51
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LIST OF FIGURES
Figures Page
2.1 Quantity and value of importing pesticide in year 2010-2014 9
2.2 U.S. organic food sales by category 11
2.3 The world organic products market value 11
2.4 Estimated world market for organic products 2006 14
3.1 Booth “Metro Mall Summer” at MRT Rama 9 37
3.2 Booth at Groove Farmer‟s Market at Central World 38
3.3 Process of online sales channels 39
4.1 Allotment size at Konsangfarm co-farming space in Saraburi 41
4.2 Konsangfarm‟s payment process for co-farming space 42
4.3 Konsangfarm‟s payment process for co-farming space for rice 45
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CHAPTER 1
ORGANIZATION
1.1 Background
It all started from our own problem. The reason we join IMBA because
we want to become entrepreneur and leave the office work. Then we found that so
many people have the same thought, especially those who came from upcountry.
The three of us and many people wish to go back to our hometown, but first question
to our mind was “what should we do when we return”.
Lots of people own land in upcountry already, but many of them don‟t
know what to do with it and after we keep exploring on farming and food topic, we
summarize the problem we found as follows:
1.1.1 Problem
(1) Startup farmers and urban people who want to grow their own
food need mentoring/ training.
(2) Aging Farmers worldwide
(3) Thailand„s agriculture spent too much money on chemical
fertilizer and pesticide”
(4) Health and well-being conscious people wish to have clean and
safe food, but they could rarely know where their food come from, whether it is real
pesticide free or no formalin contamination
1.1.2 Our Inspiration
Our visit to Pie Ranch farm where farm training with apprenticeship
was provided and Edible Urban Farming who run the planting service at home for SF
Bay area i.e. co-working spaces and allotment garden in Europe.
1.1.3 Our solution
We combine the concepts of a co-working space, allotment garden
and incubation program for startup farmer to create this unique venture by doing as
follow:
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(1) We provide land plot for rent to new start-up farmer and
hobby farmer to learn gardening and farming, to grow their own foods and experience
farm life.
(2) We offer tutorial and workshop of farming under Good
Agricultural Practices (GAP) and preparation for Organic Farming
(3) We service to take care of the farm for our tenants during
week day.
(4) We help the community by sourcing local fresh harvest, buy
the surplus product from people who rent our land plot and supply to urban people.
(5) We create outdoor activities to urban people such as farm
tour, a new way of gift giving - planting together instead of just buying bouquet of
flowers.
1.2 Mission and Vision
1.2.1 Mission
Our mission is to help urban people learn to do farming, create the
farming lifestyle opportunity for them and build sustainable food security for
community through farm training and farm activities.
1.2.2 Vision
1.2.2.1 We provide co-farming space for rent to urban people to grow
their own food.
1.2.2.2 We help urban people learn to do farming and create the
farming lifestyle opportunity for them.
1.2.2.3 We want to be a part of global urban green movement through
sharing farm resources and knowledge.
1.2.2.4 We want to encourage existing farmer to change farm practice
and become organic farm by bringing in knowledge and connect to urban customers.
1.2.2.5 In 2019 we can arrange farm trips for 360 visitors, provide
250 co-farming spaces for individual customers for each location at Khaomakok and
BKK, provide 200 co-farming plots for B2B customer and can transform 100 rai of
chemical rice field into organic rice field with total revenue of 39 million Baht.
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1.3 Current Status
Since we launched our first co-farming space at Khaomakok farm in
Saraburi in April 2015, we had customers rent 10% of whole space. Meanwhile we
organized farm trip and planting activities as well as organic fertilizer making
workshop in order to provide farm knowledge to our customer and make our name
recognized.
The first harvest in our co-farming space was done by the customers, but
later the customer didn‟t have time to pick up vegetables, so we provide service by
handling with surplus product such as donate to temple or pick up for them.
However due to draught problem and insect, vegetable dies, so now we stop accepting
new tenant and refund service fee to some new tenants and will open he co-farming
space again in winter.
Regarding land plot at Bann Ploy restaurant, Rama 2, we change it to new
location at Ratchapruek road, but we are holding on the project, as we submitted the
first application for Dreamaker Crowd Funding for seed investment in this Bangkok
co-farming space, but according to committee comment, we should improve the
reward for investor. For this matter, we are still working on it.
Lastly for the past 3 months, we are continuing our marketing to reach
more potential customers in many channels. Our interview with people in urban
farming community and direct talk to customers at farmer market and during
workshops, lead us to many valuable information to understand more about customer
behaviors, so we can adjust our current business model and operation practice to meet
customer lifestyle and preference. We also create more awareness about our project
by giving interview to press as free advertisement and joining social activities.
Another way to help us improve business model and solve our problem is
to engage in meet-up with people from different industry but same interest in modern
farming to share idea and discuss what we could do to create sustain able future of
Thai agriculture.
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1.4 Organization of KONSANGFARM
1.4.1 Operation Department
Overall management of operation are from seeking land, partners,
suppliers, customers, stakeholder engagement, logistics management and setting
criteria for sourcing partners and suppliers. Furthermore, we are concern about
knowledge management i.e. Planting strategy, and quality control standard to make
sure that we are going on the right track. The last one is create and design activities
for customers.
1.4.2 Marketing and Strategic Planning Department
Setting value proposition of business, analysis the trend of industry
and plan the direction how to make the business grow in align with our value, mission
and vision, interact with all stakeholders, especially the customers and all strategic
partners. Also, boosting sales and raise brand awareness and seeking marketing and
advertising channel.
1.4.3 Sales and Finance Department
Sales and Finance department responses for overall financial control
of business, calculate cost, set price and handle accounting
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CHAPTER 2
MARKETING AND STRATEGIC PLANNING
2.1 Market and Industry Analysis of organic farming
2.1.1 Problem of organic farming
Despite the rising trend of organic products consuming, the organic
products producer hasn‟t grown in alignment. There are difficulties which need to be
considered in becoming organic farmer. Though it is not too hard to achieve, but it
require time and lots of expertise, practice and strictly compliance to follow to get
organic certified approval from trusting organization. The first barrier of becoming
organic is the lacking of know-how for organic farming, especially for urban people
and existing old farmers, high logistic cost from importing organic food or sourcing
fresh food from upcountry. Also, the effect and danger of using chemical pesticide
and fertilizer which made increasing in disease and agricultural operation cost.
Furthermore, the aging farmer issue is going to be the major obstacle for food
industry in the future.
2.1.1.1 Requirement for becoming organic farming
Before organic farmer can apply for any organic certification,
they must change the farming system into organic system for at least 1-3 years,
depend on standard of the institution they apply to. Being certified as organic is often
a very useful distinction that helps to differentiate an organic farmer‟s products from
the conventional competition. Markets that recognize this and will pay a premium for
organics are often not readily available, especially to remote small farmers. From our
direct interviews with Thai farmers, many said it is impossible to getting good harvest
without using pesticide. Many of them don‟t know what the practice for becoming
organic farmers is and don‟t interest unless they hear that organic products can
generate more revenue. Thus, from our website survey, most organic farming course
provided by government or educational institute are mostly in Bangkok and central
region only.
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2.1.1.2 Lacking of know-how and understanding
(1) For Grower
Thai organic agriculture is at the beginning of the take-off
stage. The development so far is largely in the hand of farmers and private sector
while government supports are developing but still lacking behind. Its development
has capitalized on the country‟s strengths by focusing on organic rice and vegetable
production. The majority of organic producers are family farms organized under
grower group program or organic projects. Several producer groups produce organic
rice, most of which is the jasmine rice. Most of the rice is exported mainly to
European markets and small quantity is sold domestically. Vegetables are the second
most important organic crops. They are fresh vegetables and baby corn. Majority of
fresh vegetables is sold in Thailand while baby corns are all exported. An estimate of
192,219 Rai of farmland is presently now under certified organic management. This
represented around 0.15 % of the total farmlands.
(2) For Consumers
Thai organic products still limit to rice and some vegetable
only, no variety of choice for customer to choose. Organic Products has very high
price, therefore target customer only focus on high income customers only. Since
there is no government institute to certify organic products, only independent
certification organization, the first and only one in Thailand, which is Organic
Agriculture Certification Thailand (ACT), established in 1995 by the Alternative
Agriculture Network (AAN), NGOs, academic, consumer organization, media, and
green shop network. Consumers cannot trust whether the products they choose is real
organic products, hence they cannot differentiate the organic products and normal
agricultural products.
Data by Department of Health, Thailand shows that food sold
at markets in several provinces found much of it was contaminated with formalin. In
some cases as many as 59 % of collected samples were found to contain the chemical.
The contaminated foods included shrimp, squid and vegetables. Separate tests by the
Food and Drug Administration found that 20 % of meat sampled at hot-pot shops was
contaminated with a substance often used to preserve human Corpses before
cremation or burial. (The Nation, 2014, para 2)
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2.1.1.3 High logistic cost from importing organic food or
Sourcing fresh food from upcountry
A study of the United States Census Bureau, affirms that by
2050, 80% of the world population will live in the cities or urban landscapes. If,
therefore, the current cultivation practice will remain the same, there will be an
increased need for new land to be used as cultivation to ensure the survival of the
world's population. However, today more than 80% of the land is already in use for
agriculture. The solutions, we need a new way of farming, producing high quality
food, safer and with a positive impact on the environment.
Urban Farming approach in co-farming space can answer this
challenge as it gives us following benefit:
(1) High yield, improved quality of food, but at a lower cost.
Producing the food locally and selling it directly to the people of that area cut the
transportation cost and packaging. Co-farming space will combine and selling in the
same place, so consumer can enjoy fresh and high quality at any time.
(2) Cut logistics transportation costs and reduces fuel
Consumption and carbon emission.
(3) Create additional income for existing farmers.
2.1.1.4 Effect and Danger of using chemical Pesticide and
Fertilizer
Thailand is a country of agriculture. Majority of Thai people
have been doing agriculture for their living. The different between now and then is
that, in the past, there did not have any technology support farming, they all grew by
nature. However, the technology came in today which aimed to develop productivity
in food industry. Also from the government regulation support which encourage
farmers to have more productivity. Farming technologies will be applied in every
process and continued using for a long time. We always think that the technologies
would benefit for all. In contrast, we never think about the toxic that comes along
with the technologies.
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We see the basic problem is pesticide, using pesticide gives
both benefits and drawbacks for overall production. Furthermore, consumers do not
know whether that food contaminated by pesticide or not as it has no taste and no
color. The benefit of pesticide usage is mainly for farming. It is the most effective and
fastest way to reduce any insects in farm. The farmers can use it anytime, which help
to get more productivity and lead to higher revenue. It also encourages other villagers
in rural areas to see more values of doing agriculture. Moreover it helps to protect
people and animals from any diseases caused by insects. Recent research and
development technology give producers or developers positive feedback in investing
and producing pesticide with higher quality.
In contrast, there are many effects from pesticide which
caused people from all over the world and Thailand is one of major countries who
affects this kind of problem because Thailand is the leading global country in
agricultural industry. According to statistics recorded in 2011, Thailand ranked 48th
in world agricultural area, but recorded high level of import pesticide as 5th of the
world. According to Ministry of Public Health in Thailand data in 2013, Thailand has
high increasing trend of import pesticide during 1997 - 2010. We imported over
120,000 mt of pesticide which divided to pesticide 74% and insecticide 14% and
others 12%. Thailand also recorded high value of import pesticide over than 18,000
million baht which double than developed countries. Then, RASFF (Rapid Alert
System for Food) from EU detected and found contaminated food from Thailand‟s
vegetable 55 times as recorded the highest number from all over the world in 2010 -
2011.This problem called New Third World‟s disease. Moreover, they found that
during 2003 - 2012 there are 17,340 people who affected from the poison of pesticide,
at the rate 1,734 people per year or sick rate is at 2.35:100,000 people. Main people
who got affect are workers, farmers and some children as keep it not proper area. Not
only acute toxic but pesticide will affect people‟s health in longer run as well such as
cancer. Hence the best way is reduce using of pesticide and find other options
instead.
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There are 2 main effects from pesticide in food;
(1) The effect directly to health as there are 3 ways that poison
enters to body by skin, lung, and mouth so they have to strict and follow the
instruction of usage. The effect to health is divided into two steps which are acute
toxic and chronic toxic.
(2) The effect to environment. It does not directly effect to
pesticide area only but also spread and remain to area around the farm as well.
Chemical from using pesticide will contaminate in soil, water supply, and air. High
operation cost for using chemical fertilizer and pesticide. It becomes burden on
operation cost for farmers: less profit, higher debt, health problem from regularly
touching pesticide/ hazardous chemical.
In 2013, the usage of Chemical and pesticide in Thailand
Agriculture is at 134,377 Ton and cost 19,357 million baht, as shown in Figure 2.1.
(Office of Agricultural economic, 2013)
Figure 2.1 Quantity and value of importing pesticide in year 2010-2014
2.1.1.5 Aging Farmer
Average age of Thai farmer is 55 years old, developed country
including Africa is around 60 years old. This urges the need for new generation of
farmers who will sustain the food security for the future. In many countries, both
government and non-profit organization sectors try to initiate or launch program of
farming incubator, start to farm program in order to create new generation of farmers.
In Thailand, there are a few program initiated by Bank of Agriculture and Agricultural
Co-operative and The golden jubilee museum of agriculture office.
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2.1.2 Market size and Growth
Facts and Figures of organic products market in Thailand
Certified agricultural land: Approx. 217,375 rai (0.21% of total agricultural land)
Organic farming number: 7,405
Key certified products: Organic rice, crops, fresh fruit and vegetable. Processed
food such as coconut milk, coconut oil, rice noodle,
vinegar and seasoning sauce, organic coffee and tea
2012 export figure: $135.44 million dollars (0.23% market share)
(2011 : $130 million)
Expected growth: 10%
Consumption ratio: 50% export – 50% domestic consumption
Key export market: Europe and USA
2.1.3 Market Trends
Higher demand of healthy food and greater food safety
2.1.3.1 Global
Demand for organic food is growing so fast that consumer
demand is outstripping some domestic supplies. In USA alone organic sales account
for over 4% of total U.S. food sales, according to recent industry statistics. Organic
price premiums continue to remain high in many markets as the demand for organic
products expands. U.S. sales of organic products were an estimated $28.4 billion in
2012 over 4 % of total food sales and will reach an estimated $35 billion in 2014,
according to the Nutrition Business Journal, as shown in Figure 2.2.
The world organic products market has seen sustained
growth over the past decade and has reached an estimated total value of US$53 billion
in 2010 as shown in Figure 2.3 (FAO, 2009)
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Figure 2.2 U.S. organic food sales by category
Figure 2.3 The world organic products market value
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2.1.3.2 Asia Pacific
The demand for organic food in Asia has been growing at 15
to 20 % every year over the last decade (FiBL and IFOAM, 2009). Consumers in Asia
and the Pacific are increasingly worried about the safety of their food. Major concerns
have appeared because of recurrent food crises involving pesticide residues on fresh
produce, food contamination by chemicals in dairy and seafood products, and
unregulated use of additives in processed foods. As a result, organic food is perceived
as safer by consumers because it is chemical-free or at least guarantees lower levels of
chemical residues than products from conventional farming. According to FAO‟s
estimate, compiled from EBIS data, organic food sales represent only 0.17 % of the
US$1 trillion food retail sales in Asia and the Pacific in 2006.
The organic agricultural products consumed in Asia are of
2 types:
(1) Local products such as rice, fresh produce, sugar, aromatic
herbs and medicinal plants;
(2) Imported products such as counter-seasonal fresh produce,
baby food, breakfast cereals, beverages and dairy products.
The Asian market is characterized by this import of large
amounts of processed organic products. The major retail markets for organic foods are
Australia, New Zealand, Japan, Singapore, Taiwan Province of China, Hong Kong
and the Republic of Korea. These are relatively more industrialized countries from the
region. However, a growing minority of urban consumers in emerging Asian
countries is starting to develop in countries like the Philippines, Thailand, India,
China and Malaysia.
2.1.3.3 Thailand
Reliable sources of data on organic produce are hard to find.
There are various standards or systems of certification for organically produce and
other safe produce (with no organic certification). This made it impossible to
categorically differentiate between the two markets. Despite such limitation, Green
Net and Earth Net Foundation estimates the total market for certified organic
produces in 2009 at US$ 135.44 million, around half of which is sold domestically
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and the other half is exported. Currently, there are 3 channels where such products are
sold, i.e. supermarket chain, specialized shops, and direct marketing (either farmer
market or membership)
2.1.4 Target Market
The potential target groups can be classified as follows:
2.1.4.1 Health concern consumers
As stated in problem issues, Thai Consumers cannot know
where their food come from and most cannot tell different of organic product, if they
want to ensure the safety of their food, they can use our co-farming space for self-
growing or service growing. This group includes the consumers of organic foods
market field too as there are only a small variety of organic products, they can receive
product which is not available in the market from our co-farming, just like made to
order fresh ingredient.
2.1.4.2 Restaurants, Café, bistros
We target restaurants, cafe, bistro which locates in business
and residential area. These restaurants require supply of fresh vegetables on daily or
weekly basic for food preparation, so co-farming space would play an added value to
create attractiveness to restaurant customers about the transparency of source of fresh
ingredients. Furthermore as we provide custom made choice of vegetable growing and
care taking services, the restaurants, cafe, bistro which require rare ingredient for their
unique menus could well use our services.
2.1.4.3 Retailers (small fruit and vegetable shops, local markets)
These retails shops are in sense of “just around the corner”
shops in residential area or real estate compound. They usually buy products from
wholesale market and must add up profit cost to their products which lead to higher
price than supermarket sometimes. The opportunity we provide to these small retail
vegetable shops is to offer them fresh high quality products in competitive prices and
value added to the products regarding transparency of source of food to attract more
customers.
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2.1.4.4 Farmer wannabe/Hobby farmer/ Outdoor activities seeker
Trend of urban people is more toward to lead a healthy
lifestyle and seek alternative activities, such as being weekend farmer, or those who
want to leave Job in the city and become farmer, but want to test first if they like the
lifestyle of farmers, co-farming space offer the opportunity for this group to test being
farmer in real life.
2.1.4.5 Educational institutes
This refers to kindergarten, primary and secondary schools
located in Bangkok and suburb. Co-farming space can arrange farm tour for students
and provide service of setting up vegetable bed for them should they require. Another
service is to provide vegetable from our co-farming space for school lunch. In
Bangkok alone, in 2013 we have 438 public schools and 306,286 students.
2.1.5 Industry Structure
Industrialized markets remain dominant when evaluating the
relative sizes of organic production and organic consumption in Asia and the Pacific,
one can only conclude that there is an imbalance: Asia and the Pacific generally
produce much more organic products than their consumers eat. In fact, it is estimated
that 90 percent of Asian organic produce is exported (Organic Monitor website).
Figure 2.4 shows that North America and Europe remain the major markets for
organic produce with 97 % of all organic retail sales in 2007. Thailand urban citizen is
certainly to follow the global trend of well-being living and pay more attention to
selecting safety and healthy food.
Figure 2.4 Estimated world market for organic products 2006
15
2.1.6 Opportunity
Co-Farming space can solve the problem of healthy concerned
consumers and sustain food security under these factors:
2.1.6.1 Factors
(1) Increasing demand of healthy food. There is more concern
on quality and less focus on price and rising trend of well-being and smart eating
behavior.
(2) The rising global movement for creating green society and
promoting urban farming
(3) The concern of lacking future agricultural workforce which
leads to farming career incubation and promotion programs worldwide
2.1.6.2 Action
(1) We provide more farming area for urban citizen to learn and
grow safe food.
(2) We support this movement by providing urban farming
training and urban land access to people. .
(3) We offer a chance to experience real life farming to farmer
wannabe to create good attitude toward farming career. Hence we help existing
farmers create additional revenue from renting their land or workforce for care taking
in the co-farming space and bring in new know-how from several experts to the
existing farms when we give tutorial to our tenant. With this way, the existing
farmers/ landowner can learn the organic farming together with us and see value in
changing the farm management system into organic farming.
2.2 Marketing channel
2.2.1 Offline Marketing
As co farming space is a new concept for urban farming, the first
priority we focus is to identify and make people understand what co-farming space is.
Then we create offline marketing channel through these platform:
16
2.2.1.1 Farmer market booth
This is our direct marketing and selling channel for building
brand awareness about our business. Interaction with targeted customers helps us
develop communication method to help people understand about us more and also
become guideline to improve our business and services to meet customer requirement
and lead to business opportunity.
2.2.1.2 Farming workshop and Farm tour
This activity helps us in two ways. First to generate additional
revenue and secondly it is our marketing strategy to attract potential customers to see
the real co-farming space, receive motivation and inspiration of getting farm
experience and fasten the decision of becoming customer.
2.2.1.3 Free advertisement in press
By giving interview to magazines about our business, it
becomes free advertisement and more people know about us and contact us.
2.2.1.4 Free advertisement through seminar and meet-up event
We join seminar and meet -up events as a participant and as a
speaker. This is very effective way to meet potential customer and expand our urban
farming network. They turn to be our mentors, customer and help spread news about
us through words of mouth.
2.2.2 Online Marketing
Our online marketing channel is based in social media which are
facebook and instagram. Customers and people who interest in co-farming space can
contact us directly and spread the news about our activities.
From the number of comment and view, we can also collect data of
what to be improved, adjust or keep in the business. The main online platform is
facebook. The other platform is instagram and website.
By using facebook as main online marketing, we receive other
benefit as it connects us to other pages among farming community easily such as
social entrepreneur club, urban farmer page.
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2.3 Competitor
We identity our competitors base on five force model principal as follows:
2.3.1 Rivalry among Current Competitors
As our co-farming space is the first initiative concept of its kind in
Thailand, currently there is no competitor to compare with our business.
2.3.2 Threat of Substitute Products or Services
Around Thailand, especially Bangkok and superb, there are urban
farming initiative program which was run mostly by government organization or
institute and are non-profit organization. They could be considered as substitute as
followings:
2.3.2.1 Community garden and rooftop garden
Main purpose is to be a learning center for farming by
providing free or very low fee short tutorial farming courses for public such as Lak Si
Registration office offer free rooftop gardening arrangement course, Siam Green Sky
by Chula University offer planting workshop and urban farm learning center. Since
it‟s free and do not require long term commitment, people could make decision to join
their course easier, if they only look for planting class.
2.3.2.2 Incubator program
From our survey, farming incubator in Thailand are all
operated by government offices. The well-known one run is “Farmer‟s Heir” Program
which runs by Bank for Agriculture and Agricultural Co-Operative. People who wish
to become farmer, but do not have knowledge in farming can apply to join the
program. They will receive farming education and mentoring through 9 months
program.
The other program called “Konglakuentin” literally mean
“dare to return home, is incubator program for farming as a career. The main purpose
is to encourage people to return to their hometown and become self-reliance through
sustainable farming career. This program takes 5 months and was supported by
Government offices such as Royal Army.
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2.3.2.3 Agricultural Land Reform office
The program is the same, but after completing the farming course, the participants
who become farmer will get 2 Rai of land plot from the government to continue their
career.
2.3.3 Threat of New Entrants
In August 2015, we have found 1 startup project via Internet
search, who do similar thing with us and call their business as co-farming space. The
name of company is “Virtual Farm Asia”
The core operation apart from having customer renting the plot,
they install technology at co-farming space such as cctv, mobile phone application,
soil and water censor and online payment. Customer can monitor their farm through
cctv via their mobile phone app. If they find out from the system that plants need
watering or special fertilizer, they can order through application.
For surplus product management, they use bidding system to set
the price of vegetable prior harvesting, and 3rd party who is not the land tenant cam
bid that vegetable and made payment online. For logistic, they will use warehouse in
Samutprakarn as distribution center to deliver ordered vegetable to B2B or individual
customer in Bangkok.
Despite using technology, they still employ farmer to help farming
and taking care of crop in the co-working space, but they do not provide workshop
and class for farm training. Apparently everything they do right now is having the
idea, but they haven‟t begun to test in real field with real customer. Their strong point
is to have technology as a gimmick for co-farming space attraction, but they are
lacking of real life experience. We have talked with them and turn them to our
partner, not competitor. There is opportunity in partnering by sharing their technology
and our farm expertise. This will be our ideal sharing resource and knowledge as in
our vision.
2.3.4 Competitor Analysis
We position our value differently from existing farming incubator
program and the farm learning center. In order to solve the problem of our target
customers who seek farming experience opportunity while being able to keep their
current job and lifestyle, we do not require full time commitment in learning or full
19
time involvement in planting. Due to the innovative and unique business characteristic
of Konsangfarm, our core value and differentiation is hereby our competitive
advantage.
To compare with other incubator and farm learning center, we
identify our differentiation and core value as follows:
Table 2.1 Comparison of Farm learning center and Co-farming space
Farm learning center/ Incubator Co-Farming space
Aim for creating professional farmers
through actual practice and farm
mentoring
Aim for encourage urban people to grow
their own food as outdoor activities and
create opportunity for people who interest
in becoming farmer, to experience
farming lifestyle without them quitting
their current job
Long term course, monthly Short term course, daily/ hourly
Long term commitment and involvement
in every step
No require for long term, can participate
at time and activity the customer prefer
Require obligation and examination No obligation and examination.
Continue consultation is given
Course is on working day Course is on weekend to suit the lifestyle
and free time of customers
This differentiation attract different target group. While the target
group of government institute is aiming for professional farmer, our target group has
more variety to serve various purposes: outdoor activities, hobby, gaining farm
experience, receiving healthy food from own work. The customer type could be from
kids, parent to elder.
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In our current model which we co-work with the existing farmer, we
create the strategy plan for these issues:
2.3.4.1 Preventing the farm owner to become our competitor
We maintain bargaining power with farm owner by signing
contract and emphasize our value which the farm owner don‟t have such as our
network, our locations for customer to relocate/ choose and our one stop service of
farming solution for customers and bundle service such as discount from our partner
restaurants and hotels.
2.3.4.2 Attracting new customers
Through our marketing and sale strategy
2.3.4.3 Maintaining repeated customers
For hourly or daily planting class, we might lost opportunity
when compare to government class as it is free of charge, in order to add value and
create motivation for customers, we provide additional activities and focus on
building good memory and impressive experience to customers, so not that they wish
to come back for other class, but also wish to rent the co-farming space to share the
same good experience with friends and family. Furthermore we are one stop service
for customer to start farm experience from planting to harvesting including giving
advice. The concept of one stop service is our value to keep customer turning to us
come to us instead of going to land owner directly or to other farm learning center.
2.4 Promotion
As a booster to motivate customer to engage in farm activity and extend
the rental period and introduce our service to friends, we use following strategy:
2.4.1 Reward motivation
Even we provide care taking service, we still encourage customer to
involve in farm activities as much as possible by rewarding customers who participate
frequently such as farm visit, vegetable harvesting, by offering discount at our partner
restaurants, resorts, B2B customers, other farming workshop by our network
organization and free farm tour in our other co-farming spaces.
21
2.4.2 Sense of ownership and achievement
From our survey and interview with many urban farm projects
around Bangkok, we found out that urban people who has concern on healthy food
and have farm interest won‟t be hesitate to join the farming activity or anything
related to green living . They have good intention, but to keep them participate in
consistency is another matter. People love it at the beginning, but after a while, they
will choose other activity over farming and go back to convenience lifestyle of
purchasing fresh food from supermarket. This is the problem that most community
garden or rooftop garden initiative project failed. People lose interest in working in
the garden and choose other leisure activities. This is all about the consumer
behaviors.
In order to prevent this from happening to our business, we have to
build strong motivation to change customer behavior and keep consistency of farm
interest. Even they could visit co-farming space whenever they like, but to keep them
coming back willingly, the best way is to build the sense of ownership, engagement
and achievement. We encourage our customer to put their labour in co-farming space
as much as possible, to see the vegetable and rice grow from their hand, to talk to
local people and taste local food from farm neighbour/owner through farm tour, farm
event; harvesting, milling, co-design of packaging and routine farm visit. Once they
have good memory and feel achievement in what they do, this will lead to a bond in
that land and keep them coming back.
2.4.3 Discount method
For Customer who rent co-farming space in longer period than 3
months, we will charge lower price.
2.5 Strategic partner
As we scale up and expand the co-farming in number of location, size of
lands and number of customer, certainly the volume of harvesting products increase.
A part of our service is providing selling channel for our customers.
Through strategic partner, we build network through the company/
organization, who are well established and have their name remarkable in the market.
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When we partner with them, our name is known in the market too. We
benefit from services and support they provide and receive free advertisement at the
same time. Currently our strategic partners are clusters in 3 groups:
2.5.1 Knowledge partners
This is the institute/ organization we co-work with to give farming
tutorial and know how to us and customers. They teach us of farming technique, while
we recommend customers to them or bring in other network partner, or use their space
for running farming activities. This group is farmer markets, farming schools/
institute, hub of social entrepreneur.
2.5.2 Supply partners
This is included our land owner who rent their land plot to us and
suppliers of farming material and equipment. Even we conduct business together, but
apart from mutual benefit, what they give us is the reference and connection to local
people in the area we work. Their introduction for us to local people is very
important. Without good relationship and reference, we could not find future farm
owner who wish to offer their land for co-farming space. For us, the key to success in
stakeholder engagement is to build trust among all stakeholders. One good success
story will be a good lead to attract more and more followers, both farmer partner and
customers.
2.5.3 B2B partners
We see prosperous opportunity. Instead of penetrating modern trade
for selling customer‟s products, we focus on B2B partners in 2 aspects:
2.5.3.1 Custom made products
We target the restaurants who need custom made organic
vegetable and rice for their business or the rare vegetable which is rare to find in Thai
market. The benefit is that we don‟t have to worry about selling surplus product as the
restaurant will take it all.
One more target group is institute customer such as school,
organization who rent our co-farming space for their student/ employee to have
farming activity for education and team building purpose and at the same time receive
23
fresh organic vegetables as extra reward. The same model also apply for hospitalities
business who need us to set up co-farming space and farm trip in their location to
create good reputation for source of food selection.
2.5.3.2 International organic market
We will partner with specific companies and organic rice
selling platform such as „folkrice‟ who will act as coordinator and sales representative
in selling and exporting rice to international market. They receive management fee in
return, while we can get guarantee of sale channel. Furthermore we don‟t have to
compete with local organic farmers.
Other international channel for co-farming products is to
expand our model to the country where people wish to use our model. Now we got
contact from entrepreneur in Cambodia under the condition that we demonstrate
successful business in Thailand first. We see it as opportunity in international
knowledge exchange and have local partner in foreign market for expanding sale
channel of our customer‟s products.
2.6 Strategy for scaling up the business
2.6.1 Expand co-farming spaces in Bangkok and suburb
We plan to expand area to 16 rai for vegetable co-farming spaces
and 100 rai for rice co-farming spaces.
2.6.2 Transforming organic farmers
Since we expand co-farming space to rice which could be rented in
bigger space and produce more surplus crop, the profit from selling surplus rice would
be attractive to our co-farming space members and land owners, moreover we can
expand partners network through trading rice such as “Folkrice” which is online rice
trading platform. We can partners with other trade platform domestic and global and
eventually we could trade by ourselves in the future.
2.6.3 Konsangfarm Village
We have partnered with land development project at Ratchapreuek
Road in Bangkok. The land owner wishes to develop empty land into urban green
community complex with restaurants, café, organic. Konsangafrm Village will locate
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in this urban green community to demonstrate and foster idea of urban farming in
daily life by providing land plot as co-farming space for rent and offer farming
tutorial and supply fresh vegetables to restaurants in this green complex.
2.6.4 Land management consulting
After we have promoted our project at farmer markets, travel fairs
and at social hub, we found that many people own land, but do not know what to do
with that land. We see it as opportunity to solve the landowner problem by giving
consultation service of how to make best use of empty land. We can set the farm
system for them. This will help to increase farming area and reduce land tax to
landowner.
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CHAPTER 3
SALES STRATEGY
3.1 Pricing Strategy
3.1.1. Co-farming Membership
3.1.1.1 Individual Membership
Due to the fact that the money we spend on direct material,
hiring farmer and fuel is 2,600 Baht per three month per 3x3 m2 plot so we set the
price at 3,500 Baht per three month per 3x3 m2 to cover all of expense in the activity.
In order to attract customer, we use some psychological pricing at 39 Baht per day
instead of 3,500 Baht per 3 months because we want to penetrate in the market and
get high volume of sales by offer low price pricing which are less than the amount of
money urban people spend on their coffee per day. 3,500 Baht per 3 months is not
more than two times they spend on buying vegetable for 3 months. Surveys conducted
by Chanita Panmanee (2010) have shown that more than 45% of people spend 1,001-
3,000 Baht per month buying fresh vegetables. We launched our advertisement on
facebook, newspaper and booth and found that people have a good feedback at this
price. Furthermore, we will provide delivery service for the individual customers to
pick up the surplus product but we will charge for additional logistics cost.
3.1.1.2 B2B Membership
We found business opportunities with B2B customers since
they consume products with high volume of demand. In the near future, we will scale
our business with special pricing for B2B customers by finding location of co-farming
space in the nearest location of our customer‟s place to reduce logistics cost.
One opportunity is selling co-farming space with
international restaurant who have to import expensive ingredients from foreign
countries. For example, since we published our story in Bangkok Post, the customer
who own Mexican restaurant contacted us for using co-farming space. However, he
found renting cost is too expensive if he wants many rai of land to grow special chili
for serving in his restaurant so he contacts the land owner directly. Although we lost
26
this customer at this time, we can learn from the case study about the acceptable
agreement between lessee and the Khaomakok Farm landowner. From the contract,
period for the agreement would be annual basis for renting 100 m2 land. The monthly
payment is 5,000 Baht for planting, weed/soil maintenance, watering and harvesting
per month and 10,000 Baht for renting. Farm owner can provide weed and organic
fertilizer but the 5,000 Baht per month exclude expense of weed and organic fertilizer.
The lessee would be responsibility for any constructions for the area such as the tent
for plant‟s nursery, watering system, electricity. If the lessee wants farm owner to
send their products in Bangkok, the logistics cost will be about 4,000 Baht per round
which the car service company usually offers at this rate. Hence, we could use this
pricing case study as a reference and use cost markup strategy to set the price.
Another one opportunity is creating sales in school which we
plan to do in 2016 onwards. In 2016, we will set the price at 15,000 Baht per 100 m2
plot including expenditures and profit. The average expense per 100 m2 is 4,898 Baht
and we mark up from cost to be 15,000 Baht. The forecast expenses in 2016 and detail
of predicted expense by each quarter are shown in table 3.1 and 3.2 respectively.
27
Table 3.1 Forecast expense of 100 m2 co-farming space in 2016
Expense
Assumption Source of
Data Baht/place Baht/100m
2/
Quarter
Equipment and
Tools
Fuel
2.17 Assumed to be
counted together
with the existing
farm's fuel expense
which cost
139Baht/rai/year
Existing farm
in
Nakornpathom
Equipment
leases
- No leasing
Rentals
- No Rental
Tools
- covered by existing
farm/ land owner
Tractors
- covered by existing
farm/ land owner
Hoop House
- covered by existing
farm/ land owner
Truck
- covered by existing
farm/ land owner
Water System
3,333.33
Quotation
from
Khaomakok
Farm
Electricity
3.24 Assumed to be
counted together
with the existing
farm's electricity
expense which cost
207 Baht/rai/year
Existing farm
in
Nakornpathom
28
Table 3.1 The forecast expense of 100 m2 co-farming space in 2016 (Cont.)
Expense
Assumption Source of
Data Baht/place Baht/100m
2/
Quarter
Seed& Soil Materials
Fertilizers 62.50 100 kg/rai ,
10 Baht/kg
Quotation from Natural Farming Co., Ltd
Seed & sprout 800.00 Assumed to use 1 seed in 250 cm
2,
0.2 Baht/seed
Existing green market
Human Resources& Personnel
Manager salaries
Vary Vary
Worker salaries 18,000.00 Agreement with worker and farm owner,
6,000 Baht/ month/ person,1 workers/ place
Existing farm in Nakornpathom
Specialist 24,000.00 2000 Baht/Consulting time/ place, once a week for 52 weeks
Quotation from Natural Farming Co., Ltd.
Administrative Payroll
-
Sales and distribution
-
Delivery 21,600.00 Delivered by van 1,800 Baht/time,
once a week for 52 weeks
Fuel, travel & vehicles
8,400.00 Fuel cost/ 2 round/ week
29
Table 3.1 The forecast expense of 100 m2 co-farming space in 2016 (Cont.)
Expense
Assumption Source of
Data Baht/place Baht/100m2/
Quarter
Packaging
materials
9.11 Assumed to be
counted together
with the existing
farm's packaging
materials expense
which cost 583.33
Baht/rai /year
Existing farm
in
Nakornpathom
Marketing
and
Advertising
-
Free trial
sample
- No free trial sample
from 2017-2019
Booth setting
- Free advertisement
booth setting
Online
marketing
4,375.00 35,000 Baht/year.
We will promote
two places.
Existing
online
marketing
company
30
Table 3.2 The detail of predicted expense by each quarter
2016
Q1 Q2 Q3 Q4 Total
Equipment and Tools
Fuel 22 22 109 109 260
Equipment leases - - - - -
Rentals - - - - -
Tools - - - - -
Tractors - - - - -
Hoop House - - - - -
Truck - - - - -
Water System 33,333 - 133,333 - 166,667
Electricity 32 32 162 162 389
Total equipment 33,387 54 133,604 271 167,316
Seed & Soil Materials
Fertilizers 625 625 3,125 3,125 7,500
Seed/ seedings 720 720 3,600 3,600 8,640
Total Materials 1,345 1,345 6,725 6,725 16,140
Human Resources &
Personnel
Manager salaries 225,000 225,000 225,000 225,000 900,000
Workers salaries 18,000 18,000 18,000 18,000 72,000
Specialist 24,000 24,000 24,000 24,000 96,000
Administrative Payroll - - - - -
Total Human Resources &
Personnel 267,000 267,000 267,000 267,000 1,068,000
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Table 3.2 The detail of predicted expense by each quarter (Cont.)
2016
Q1 Q2 Q3 Q4 Total
Sales and distribution -
Delivery 21,600 21,600 21,600 21,600 86,400
Fuel, travel& vehicles 2,800 2,800 2,800 2,800 11,200
Packaging materials 91 91 456 456 1,094
Total Sales and distribution 24,491 24,491 24,856 24,856 98,694
Marketing and Advertising
-
Free trial sample - - - - -
Booth setting - - - - -
Online marketing 17,500 - - - 17,500
Total Marketing and
advertising cost 17,500 - - - 17,500
Total
Expense 1,367,650
Avg,
Expense 11,397
3.1.2 Farm tour package for activities
We will set the farm trip price at 800 Baht per time as it is a
quotation from Khaomakok farm, our partner, did on several trip arrangements. This
price does not include travel cost and lunch because it is a responsible of tourist.
Table 3.3 demonstrates expenditure per farm trip. It shows that we have only fix cost
which is 3,000 Baht per farm trip. We don‟t have other costs such management fee
and labor cost because they are counted together with other our business activities‟
expense.
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Tables 3.3 Expenditure per farm trip
Expense per farm trip Baht Remark
Transportation fee to Farm -
Covered when taking care co-farming
space once a week
Advisor fee -
Covered when taking care co-farming
space once a week
Chef Fee (incl. cooking teaching) 2,000 Quotation From Konsangfarm
Farm visit (Cleaning, Electricity,
Utility, Plant arrangement) 1,000
Quotation From Konsangfarm
Total FC 3,000
3.1.3 Co-farming for rice program
After launching co-farming space and selling products, we found
what consumer wants are the true transparency of process from growing to harvest
and source of food with good quality, nutrition, healing products and also the
sympathy, they feel good to know that they are supporting farmers. Then, we launch
new business to support customer self-produced and unique products with story and
value of all that by providing transforming rice farmer program by co-working with
existing farmer who wishes to transform to grow organic rice and let investors invest
money to grow rice. The investors will get money from rice selling and their own rice
to consume. This model is in Sao Hai, Saraburi. To set up the appropriate pricing, we
surveyed the expense per rai for investors and what they will get from this project as
shown in table 3.4 our revenue model revenue of transforming rice farmer program is
shown in the table 3.5. At the end of this September is the time for harvesting and
ready to launch product in the market. We assume that there are 2,000 kg of rice the
farmer can produce in 4 rai of rice field. The investors will get 500 kg (25% of total
products) to consume. 200 kg organic rice will be sold to the pre-order customers at
100 Baht per kg. The rest 500 kg will be sold via Folkrice, the domestic and
international rice trader at 100 Baht per kg. The logistics cost is a responsibility of
suppliers.
33
Table 3.4 Expense and profit per rai and for the investors
Expense Baht/rai/ 4months
Expense paid for farmer
rice seed 450
Fertilizer 1,500
Sowing 500
Watering 100
Farmer labour 7,450
Total expense they pay for farmer 10,000
Expense paid for Konsangfarm
Farm investor‟s Admission fee 1,250
Commission fee 3,750
Marketing fee for product selling 7,500
Expense paid for Konsangfarm 12,500
Rice drying 150
Rice milling 600
Packaging 4,500
Expense for packaging process 5,250
Total expense 27,750
The investor will get
Own rice 21,000
Revenue from selling rice 9,750
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Table 3.5 Revenue model of transforming rice farmer program
Items Price (Baht) Payer
1.Farm investor‟s Admission fee 5,000/ 4 rai Farm investor
2.Commission fee 7-15% of sales turn* Farm investor
3. Marketing fee for product selling 20% Farm investor
*Since it is hard to predict the output so this below table shown the step of
commission charge per 1 rai.
Output (kilogram)/ rai Commission charge
0-300 7%
301-400 8%
401-500 10%
501-600 15%
3.2 Sales Strategy
3.2.1 Method to boost sales
3.2.1.1 Co-farming Membership
This activity will be our main source of income. Currently,
we offer the minimum 3 months membership for individual customers because people
will make a decision easier with short term contract than they did with year by year
contract. Individual co-farming space members will not get only products and
experience of farming but also get free 3 farm trips per plot per person.
35
In the future we will expand our business through school
customers because they have higher demand of consuming vegetables than individual
customers.
According to acceptable co-farming space price of B2B
customer, we surveyed the existing school expenditures on vegetables. The vegetables
we offer the customer are the common vegetables they usually buy it in high volume
for cooking. Table 3.6 shows the average expense on vegetables from interviewing
with Teacher Orawan from Wat Suwan School in Bangkok. Two thousands five
hundred and fifty Baht is the school expense per week. Since the harvesting time is
every 30 days so in 3 months we can provide them 3 times vegetables delivery. How
many area they need is depend on how many production they want per week. To
simplify this model, we will use the Wat Suwan case as an example to explain in
Table 3.7. In addition, not only individual members but also B2B customers will get
special privilege to create an incentive to buy. If the customer buys one plot of 100
m2, they will get 1 free coupon for farm trips. In each event, 20 visitors will be
allowed to join it.
Table 3.6 Average needed production per week per 800 people on selected vegetable
at Wat Suwan school
Plant Avg. needed
production
(kg/week)
Avg. price/kg.
(Baht/kg.)
Expense(Baht/week)
Chinese Cabbage 25 12 300
White Cabbage 25 30 750
Long Eggplant 25 30 750
Cucumber 25 20 500
Chinese Morning
Glory
25 10 250
Total 2,550
36
Table 3.7 The example of needed area of plot
Plant Avg. needed
production
(kg/week)
Predicted Production
(kg/100m2)
Needed
Plots
Chinese
Cabbage 25 33 0.75
White Cabbage 25 17 1.5
Long Eggplant 25 17 1.5
Cucumber 25 28 0.9
Chinese
Morning Glory 25 33 0.75
Total 6
3.2.1.2 Farm tour package for activities
Farm tour includes many activities within co-farming space
such as having training from specialist, planting by yourself. We can also create
cooking events by asking chefs to pick up vegetables from our garden and teach
cooking and charge for lunch set and tuition fee. We have the sales strategy to offer
tour package for school to create high demand volume. In addition, as we offer free
farm trip coupon for the co-farming space members, it can create more incentive to
use this promotion and buy additional farm trip ticket for other students and staffs.
3.2.1.3 Co-farming for rice program
We will launch online pre-ordering for domestic and
international trading. We want to find market for selling products in advance prior
harvesting to make sure we will not lose opportunity as we did with the restaurant and
unsecure volume vegetable situation. Currently, we receive pre-ordered from friend
and family at 200 kg and still in negotiation process with rice traders.
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3.2.2 Sales channel
3.2.2.1 Offline Channel
We provided the offline channel we contact customers by
booth setting at MRT Rama 9
(1) At MRT Rama 9
As shown in Figure 3.1 on 26th -28th March 2015 we set up
the booth in the event “Metro Mall Summer Trip under supporting of Khaomakok
farm and Saraburi tourism. This event was free for us to register. We introduced and
sold half-day farm visit package including planting and milking the cow and co-
farming space for rent.
Figure 3.1 Booth “Metro Mall Summer Trip” at MRT Rama 9
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(2) At Groove Farmer‟s Market at Central World
As shown in figure 3.2 on 4-5, 18-19 July 2015 we set up the
booth to Introduce co-farming space and selling organic product from our partners.
Figure 3.2 Booth at Groove Farmer‟s Market at Central World
3.2.2.2 Online Channel
KSF had created our facebook fan page as a name
“Konsangfarm Co-Farming Space”. We use it to advertise ourselves through social
network. We also use this facebook inbox chat as a sales channel. According to the
initial stage of business, we do not invest money on making own website.
Nevertheless, we plan to create and launch our website and mobile phone application
in order to contact customer, give information and create online payment system.
When we launch our website, we will generate leads by letting website visitors to
register with their name, telephone number and email address to get free discounted
voucher. This method does not only create awareness of being our members but also
accelerate sales because we will let the customer to use this coupon with our service
and products within limited time at our monthly booth or online ordering. The figure
3.3 shows the process how we get the leads‟ information, contact customer and make
sales.
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Figure 3.3 Process of online sales channels
40
CHAPTER 4
OPERATING STRATEGY
4.1 Introduction
Currently, there are three services operates by Konsangfarm which are
co-farming space, co-farming space for rice and farm trip & related workshops.
Konsangfarm provides only pesticide-free agricultural method to do farming since we
do not allow any chemical contamination in our spaces. We link urban people with
farming experience by let tenants or investors choose their own space and their
preferred vegetables, rice so they can visit at co-farming space anytime they want
during rental period.
4.2 Konsangfarm services
4.2.1 Co-farming space
Co-farming space is one of service which Konsangfarm offers
farming space and taking care service for health concerned urban people who do not
have their own space but would like to grow their own pesticide-free food. Customer
will enjoy farm experience as this is customized service by letting customer mix and
match their preferred vegetables under advisor‟s consultation for their selected
allotment size. Customer has to decide size of farming space which is subject to
customer‟s consumption and need.
In harvesting process, customers have to pick their vegetables up at
the farm and/ or sell their own food at local market price in case they cannot consume
by themselves and/or they can choose for donation option to donate for the needed
which located around the farm.
Konsangfarm sets back-to-back contract for all terms and
conditions between Konsangfarm with landowner and Konsangfarm with tenants in
order to avoid risk in initial stage.as followed.
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4.2.1.1 Plot size
A tenant needs to rent selected plot at the minimum
requirement of 3x3 m2 which is considered 1 plot. A tenant is able to choose number
of plots and need to make payment before going to soil preparation process. As show
in figure 4.1, in one plot or within 3x3 m2, we divide into 25 mini-plots with the
dimension of 60x60 cm2
each. This means tenant is able to select 25 different type of
plant to grow in one big plot (3x3 m2) at the same time.
Figure 4.1 Allotment size at Konsangfarm co-farming space in Saraburi
Remark: means minimum rental space which is 1 plot with dimension of 3x3 m2.
A tenant needs to rent at least 1 plot for minimum period 90 days.
In the future, we plan to set bigger plot, 10x10 m2, in order
to increase productivity to serve business-to-business customers at Ratchapruek,
Bangkok. Then, customer is able to choose size of the plot to match with their need.
4.2.1.2 Duration
A Tenant needs to rent space at least 90 days since the plant
needs time to grow. Some of them have longer lead time e.g. 60-70 days, so
Konsangfarm needs to make sure that tenant is able to harvest their crop within 90
day. This will lead to consultation service during plant selection process as our
complementary.
4.2.1.3 Payment method
Konsangfarm asks tenants to pay full amount of rent fee 10
days prior the soil preparation process. Rental fee per plot is all-in-one charge which
42
included all related activities during 90 days of planting. Full payment is deemed earn
on co-farming space service discount and non-returnable whether vegetable grows or
not. But we will extend the deadline of rental and grow other types of sprout for
tenants.
Rental calculation is number of plot buying plus rental fee
per plot. For example, 1 plot x rental fee Baht 3,500 per plot = Baht 3,500. Since we
need to make sure that tenants are going rent our space till end period of planting and
in order to avoid the cancellation so we need tenants to pay 100 % up front. As shown
in figure 4.2, the payment has to be made 10 working days prior the first date of soil
preparation as we need buffer time to coordinate with landowner and related parties to
prepare the space, soil, fertilizer and so on. Once the payment has been made, then
tenants can select their preferred vegetables under advisor‟s consultation.
Konsangfarm will remit the full amount of money to
landowner on planting day which is 7 days after soil preparation day. All cost will
include all related activity at the farm till end of harvesting period.
Figure 4.2 Konsangfarm‟s payment process for co-farming space.
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4.2.1.4 Location of co-farming space
Konsangfarm co-farming space limited to set co-farming
space within 1.5 hour-drive from Bangkok only to meet urban people‟s need.
Konsangfarm‟s current co-farming space is at Khaomakok
farm, Muak-lek District, Saraburi province, with 1.5 hour drive from Bangkok, as the
only one prompt offer space but we plan to set another co-farming space within
Bangkok in order to attract more urban people.
The second offered co-farming space is the space within
Bangkok with 4 rai at Ratchapruk road. Konsangfarm got support this space from Ms.
Pasinee who would like to develop sustainable community in the heart of Ratchapruk
road with total area 30 rai
4.2.2 Co-farming space for rice
The aim of this project is to scalable from small size of land plot,
3x3 m2, into bigger size of land plot in term of rai and we try to limit type of
vegetable to be single type in order to control and manage our operation process
during summer period.
In this project, there is cooperation and engagement of all
stakeholders. We link rice agricultural specialist, who is local people and can easily
communicate, educate know-how, method to grow, tips and trick for pesticide-free
rice farming, with rice farmer. Furthermore, investor comes to very important role
since investor is the one who drives project to move on. Investor is the one who
would like to see transparency of food and would like support local farmer by heart.
The rental terms and conditions are shown as followed
4.2.2.1 Plot size
Minimum rental space is 2 rai but we will encourage investor
to support more. Currently, investor rents total 4 rai of our total current supply. As of
August 2015, total capacity to serve investor is 4 rai but we are in negotiation process
to find more space to be at 10 rai in total by end of this year. Another 6 rai are in our
pipeline to operate since landowner would like to wait and see actual output of current
project which will finish in September 2015.
44
According to Konsangfarm‟s action plan from 2015 to 2019,
we will increase co-farming space to be at 100 rai in 2019 in order to transform
conventional farming into natural way.
4.2.2.2 Duration
An investor needs to rent space from start to end of rice crop
or around 120 days or 4 months. For example, if investor grows riceberry, it will take
4 months from sowing to harvest.
4.2.2.3 Payment method
By this agreement, investor agreed to divide full amount of
payment into 4 times to match with life cycle of rice which takes 120 days. By
following this method, investor will make payment in every 30 days.
The payment plan will take the following form as figure 4.3.
The first payment is 1/4 of total amount of money which will be made immediately
once signed contract agreement on the first date. Konsangfarm needs this fund in
advance for soil cultivation and operation management. The second payment, the
third payment and the forth payment will be made in every 30 days respectively after
the first date of agreement.
Hence, investors will remit money 4 times as in figure 4.3
The first date remittance is on the first date of mutually agreement was made, then the
30th date, the 60th date, and the 90th date. These payments include all other charges
that may apply. Once process the payment, investor will inform Konsangfarm and
Konsangfarm will track the payment and confirm back before process the payment to
landowner.
After Konsangfarm received the first payment money from
investors, Konsangfarm will make payment to rice farmers within 10 days in line with
cooperation and discussion about the cultivation and production plan. The second
payment, the third payment, and the forth payment will be made every 30 days after
the first time payment. This means rice farmers always receive money within 10 days
after the payment from investor will be made. Konsangfarm will check and confirm
with rice farmer every time of remittance process.
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Figure 4.3 Konsangfarm‟s payment process for co-farming space for rice
4.2.3 Farm trips & related workshops
There are additional workshops for group of urban people who
would like to enjoy the nature which can be tailor-made by request and have to set at
least 7 days prior the first date of workshop in line with minimum 20 attendants per
workshop to make Konsangfarm profitable.
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CHAPTER 5
FINANCIAL PLAN
5.1 Income Statement
This table 5.1 demonstrates our projected annual revenue which starts at
nearly 390 thousand Baht in 2015 and rise significantly to approximately 39 million
Baht in 2019. It show we have a strong growth when we scale our business, while
total annual cost is forecasted to increase gradually from 400 thousand Baht in the
first year to 6.4 million Baht as a result of economy of scale. After deduction on the
expense we will lose 13,700 Baht at the end of 2015; however we forecast we will
have profit after tax at 26 million Baht in the next four years.
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Table 5.1 Projected net operating income after taxes (5 years)
Cash Balance, Beginning
2015 2016 2017 2018 2019
Add receipts
Membership fee 150,500 2,675,000 7,991,800 17,400,400 31,956,600
Farm trip 64,000 600,000 900,000 1,310,400 2,808,000
Co-farming space for rice 175,000 525,000 1,378,500 2,807,250 4,344,200
Total cash available 389,500 3,800,000 10,270,300 21,518,050 39,108,800
Less disbursements
Direct Materials
Fuel 0 280 706 1,313 1,869
Rentals 64,500 150,000 420,000 750,000 1,350,000
Water System 12,900 205,667 199,000 404,333 618,333
Electricity 0 38 38 171 171
Fertilizers 12,900 6,738 6,738 12,294 12,294
Seed/sprouts 8,600 4,850 8,850 15,794 9,794
Direct Labor
Workers salaries 12,900 102,000 156,000 222,000 342,000
Specialists 0 96,000 96,000 96,000 96,000
Chef fee 8,000 60,000 72,000 72,000 144,000
Gross Profit 269,700 3,174,428 9,310,969 19,944,145 36,534,339
Selling general and
administrative expense
Administrative 1,350,000 3,600,000 5,400,000 9,000,000 18,000,000
Selling 8,400 109,894 111,534 125,104 127,109
Marketing and advertising 1,000 35,000 35,000 35,000 35,000
Utilities 4,000 30,000 36,000 36,000 72,000
Total disbursements 1,483,200 4,400,466 6,541,865 10,770,009 20,808,570
Excess(deficiency) of cash
available over disbursement -1,093,700 -600,466 3,728,435 10,748,041 18,300,230
Revenue 389,500 3,800,000 10,270,300 21,518,050 39,108,800
Profit before tax -1,093,700 -600,466 3,728,435 10,748,041 18,300,230
Tax 0 0 650,687 2,054,608 3,565,046
NOPAT -1,093,700 -600,466 3,077,748 8,693,433 14,735,184
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5.2 Cash Flows
Since we offer service only and we don‟t plan to invest in any fixed asset
in the next five years because we plan to partner with the farm owner. Table 5.2
shows the projected free cash flow.
Table 5.2 Projected Free Cash Flow (5 years)
2015 2016 2017 2018 2019
Free cash flow model (1,093,700) (600,466) 3,728,435 10,748,041 18,300,230
EBIT (Operating
profit) 0 0 650,687 2,054,608 3,565,046
Taxes on EBIT (1,093,700) (600,466) 3,077,748 8,693,433 14,735,184
NOPAT 0 0 0 0 0
Add Depreciation 0 0 0 0 0
+/- Change in net
working capital 0 0 0 0 0
Investment in fixed
asset (1,093,700) (600,466) 3,077,748 8,693,433 14,735,184
Free cash flow (1,093,700) (600,466) 3,728,435 10,748,041 18,300,230
5.3 Balance Sheet
As shown in table 5.3 we are service provider so we no need to keep
inventory and we have partnerships with landowners so we do not have own fixed
asset such as plant or equipments. There are also no account receivables since we do
not provide trade credit for customer and customer have to pay us at full payment in
advance before planting in co-farming space and reserving the farm tour. We also
have no account payable because we will pay our suppliers at the day after we get
money from customers. Konsangfarm concerned a lot about retained earnings in the
first five years since we have no plan to increase cash flow by increasing both short
term and long term debt.
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Table 5.3 Balance sheet
Balance sheet 2015 2016 2017 2018 2019
Assets
Current assets
Cash (1,093,700) (1,694,166) 1,383,582 10,077,014 24,812,198
Accounts receivable 0 0 0 0 0
Inventories 0 0 0 0 0
Total current assets (1,093,700) (1,694,166) 1,383,582 10,077,014 24,812,198
Non-current assets
Net PP&E 0 0 0 0 0
Total assets (1,093,700) (1,694,166) 1,383,582 10,077,014 24,812,198
Liabilities
Current liabilities
Accounts payable 0 0 0 0 0
Total current liabilities 0 0 0 0 0
Non-current liabilities
Total long-term debt 0 0 0 0 0
Balance sheet 2015 2016 2017 2018 2019
Equity
Common stock 0 0 0 0 0
Retained earnings (1,093,700) (1,694,166) 1,383,582 10,077,014 24,812,198
Total equity (1,093,700) (1,694,166) 1,383,582 10,077,014 24,812,198
Total Liab.& Equity (1,093,700) (1,694,166) 1,383,582 10,077,014 24,812,198
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5.4 The financial ratio and summary
Since Konsangfarm‟s policy that earnings are retained for future growth.
Short term and long term debt are not required. Therefore, current ratio, quick ratio
and operating cash flows to current debts ratio will not able to calculate since we do
not have any debts. Account receivable ratios will not available due to we would not
give any credit sales to our customers. As well as inventory turnover, we have no
need inventory since we provide service after we get money from customers.
From the table 5.4, in 2016, we will scale our business by provide one
other co-farming space in Bangkok to increase sales for B2B customers. We forecast
that our operating income to sales are likely to increase from -280.80% to 46.79%
from 2015 to 2019.
Table 5.4 Operating income to sales (5 years)
2015 2016 2017 2018 2019
EBIT -1,093,700 -600,466 3,728,435 10,748,041 18,300,230
Sales 389,500 3,800,000 10,270,300 21,518,050 39,108,800
Operating Income to Sales -280.80% -15.80% 36.30% 49.95% 46.79%
Gross profit margin is about 69% in 2015 and will increase to 93% and
net profit margin will grow from -280.8% to 38% due to economies of scale as shown
in table 5.5 and table 5.6.
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Table 5.5 Gross profit margin (5 years)
(Baht) 2015 2016 2017 2018 2019
Sales 389,500 3,800,000 10,270,300 21,518,050 39,108,800
Cost of Goods Sold 119,800 625,572 959,331 1,573,905 2,574,461
Gross Profit 269,700 3,174,428 9,310,969 19,944,145 36,534,339
Gross Profit Margin 69.24% 83.54% 90.66% 92.69% 93.42%
Table 5.6 Net profit margin (5 years)
2015 2016 2017 2018 2019
Net income -1,093,700 -600,466 3,077,748 8,693,433 14,735,184
Sales 389,500 3,800,000 10,270,300 21,518,050 39,108,800
Net profit margin -280.80% -15.80% 29.97% 40.40% 37.68%
With the discount rate at 10%, our project‟s NPV will be
$15,908,953 as show in table 5.7.
Table 5.7 Net present value
2015 2016 2017 2018 2019
Cash Inflow -1,093,700 -600,466 3,077,748 8,693,433 14,735,184
Cash Outflow 0 0 0 0 0
Net Cash flow -1,093,700 -600,466 3,077,748 8,693,433 14,735,184
Our financial prediction is concerned on sales growth, sales volume,
economies of scales and cash flow that can cover all expenses without any debt.
Profitability ratios show that we have strong firm‟s operations in liquidity and asset
management.
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CHAPTER 6
CONCLUSIONS AND RECOMMENDATIONS
6.1 Conclusions
Konsangfarm co-farming space is the new innovative farming model in
Thailand. Once we published our model into the market, we get positive feedback
from potential customers which could be our tenants. Most of them would like to be a
new farmers, but do not know how to start. Some of them already own land plot, but
did not do anything yet. Also, many landowners would like to get our support by
advising and consultation in order to develop the particular plot to be pesticide free
agricultural space. Even the existing farmers and experts in agricultural field need us
to act as bridge to link with the demand sector.
Through our marketing activities such as joining fair event, free
advertisement in press and joining social activities, we achieve another goal which is
bridging people create good impacts and sharing economy system by bringing in
people from all kind of background, but share similar interest in green living and
farming to share idea together, to know each other and build sustainable green
movement community including urban farming and large production farming
together. By joining hand, we build sharing economy system, we raise more
knowledge, resources, create sharing economy community which attract people
around us to take interest and have more concern in agricultural issue and green
movement activity.
The more people become more educated, the more they wish to take care
of themselves and well-being, plus they wish to give back to people who have less.
We see this as opportunity as well.
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6.2 Recommendations
In order to scale up our co-farming space in the further process, the
products from our partners and transformer farmers can be sold in other channel
where people value the story behind and effort behind products. This will lead to fair
trade in both local and global market, which will certainly encourage farmers to
transform to organic farming as they could see the benefit of generating more income
and improve their health by no more using chemical pesticide.
There is another point we wish to keep in mind and develop it to become
our habit is to keep learning and improving through idea sharing and exploring.
We are very fortunate to live in the era of globalization where we could access
information from all over the world in an instant. There is wide territory in existing
agricultural model, idea and knowledge for us to be explores and generate know how
what could be done in Thailand. And vice versa, we hope that if the idea we have to
sustain the food system and encourage new generation farmers s work in Thailand,
it could be apply to other people in the rest of the world too.
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REFERENCES
Electronic Media
1. Office of Agricultural Economic, Ministry of Agriculture and Cooperatives.
(2015, April). Quantity and value of importing pesticide in year 2010-2014. Retrieved
from http://www.oae.go.th/ewt_news.php?nid=146
2. The Nation. (2015, March 13). Keep the corpse-preserver out of our food.
Retrieved from http://www.nationmultimedia.com/opinion/Keep-the-corpse-
preserver-out-of-our-food-30229062.html
3. USDA ERS. (2015). Organic Agriculture: Organic Market Overview
Retrieved from http://www.ers.usda.gov/topics/natural-resources-
environment/organic-agriculture/organic-market-overview.aspx.
4. Jo Cadilhon. (2009). Food and Agriculture Organization of the United Nations
(FAO) ‟s Global demand of organic food, 2015. Retrieved from
http://www.fao.org/docs/eims/upload/261001/Cadilhon%202009%20China%20BioFa
ch%20presentation.pdf.
5. Thai Organic Trade Association (2011, September 29). Overview of Organic
Agriculture in Thailand 2015. Retrieved from:
http://www.thaiorganictrade.com/en/article/442.
6. Marika Mazzi Boém, G. Laquidara PhD , (2015). Initial study for an urban
agriculture installation, modeled on the "Vertical Farm" typology, surrounded by
horizontal not extensive agricultural lands. Retrieved from:
https://www.academia.edu/4605652/Initial_study_for_an_urban_agriculture_installati
on_modeled_on_the_Vertical_Farm_typology_surrounded_by_horizontal_not_extens
ive_agricultural_lands
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BIOGRAPHY
Name Miss Rissara Winitchaiyanan
Date of Birth October 6, 1980
Educational Attainment
Academic Year 2001: Bachelor‟s Degree of Arts,
Majoring in German,
Faculty of Commerce and Accountancy,
Thammasat University, Thailand
Work Position Administration Manager
Siam Takashimaya (Thailand) Co., Ltd.
Work Experiences 2015 – 2011: Asst. Manager, General Affairs,
Topre (Thailand) Co., Ltd.
2010 – 2011: Senior Coordinator, Government
Affairs, Chevron Thailand E&P Ltd.
2008 – 2002: Consular section officer,
Diplomatic mission of Germany, Ireland and
Thailand
