In the Chanthaburi province of Thailand, tourists feast on durians, a yellow fruit infamous for its intoxicating smell. The region is a tropical fruit powerhouse and attracts visitors to its annual durian festival.
But in recent years, Thai fruit farmers and exporters face pricing pressure on their produce from strong foreign competition. Innovative startups like Eden Agritech are hailed as the solution to revive Thailand’s agricultural fortunes.
The overarching government policy, “Thailand 4.0”, aims to restructure the economy into a knowledge-based one with inclusive growth. It’s a pressing need when 40 percent of its population is involved in agriculture.
Thailand also wants to develop their economy beyond services and agriculture. More industries earmarked for development include government and education, health, fintech, travel, and property.
Startups hold the key to inclusive growth
“Chinese people like to eat durian and pomelo. About six years ago, many Chinese people started to come to Thailand and deal fruit at low prices,” said Bhumpharn “Top” Arunthammakul, CFO of Thai #startup Eden Agritech.
The influx of foreign dealers has resulted in government policies to ensure that they play by the rules.
For instance, while they can export fruit, they are not allowed to sell them locally – a sore point for local fruit dealers whose livelihoods depend on tourism and exports.
“Low income is one of the biggest problems of Thai agriculture industry,” said Norapat “Job” Phaonimmongkol, CEO of Eden Agritech.
Eden Agritech wants to help Thai fruit farmers and exporters reduce transport waste and earn more money. About 15 to 20 percent of fruits are discarded during transportation annually according to Job.
The startup has developed a solution that is sprayed onto fresh-cut fruits like durians, pomelos, jackfruits, and mangoes to extend their shelf life by up to 15 days.
Fresh-cut fruits sell for about 75 percent more, according to Job.
Job and Top started this project about two years ago when they were students at the Sasin Graduate Institute of Business Administration of Chulalongkorn University. They competed in many challenges, including the New Venture Championship in Oregon, US, where they achieved second place.
After receiving positive feedback from judges and potential customers, they decided to take the leap of faith and commercialize the idea.
“Agritech and foodtech startups provide solutions for a new generation of agricultural entrepreneurs and farmers to transform Thailand into an agro-service economy,” said Dr. Pun-Arj Chairatana, executive director of the National Innovation Agency (NIA) of Thailand.
He cites an example of a startup providing unmanned aerial vehicles (UAV) for small farms and urban farms for groceries.
Straight out of MIT, back to Bangkok
Many agritech startups in Thailand have been started in the past two years, said Sompoat “Meng” Chansomboom, director of business innovation and DTAC Accelerate at a panel discussion during Startup Thailand.
Meng knows an up-and-coming young Thai entrepreneur called Aukrit Unahalekhaka, a recent graduate from the Massachusetts Institute of Technology who cofounded Ricult. The mobile microfinance startup has launched in Pakistan with 100,000 farmers on board. In Thailand, it has access to 250,000 farmers, according to Meng.
Aukrit grew up in a family of farmers and witnessed their problems firsthand. Luckily, his family could afford to send him to school. He received a fellowship from MIT to finish his studies in engineering and management.
“Other small farmers are not as fortunate. Most don’t even finish high school,” he said. His co-founder from Pakistan shares the same purpose: to use tech to help farmers escape a cycle of debt.
“We use satellite imagery to look into the farmland and tell farmers when to water their field, irrigate, or harvest. This improves farm productivity,” said Aukrit. Increasing farm yield improves the farmer’s income.
The startup’s pilot test with 50 Thai corn farmers covering about 1,000 acres has resulted in an increase in profitability of 50 percent on average.
“50 percent means a lot – farmers can send their kids to school, and afford healthcare and better nutrition,” said Aukrit.
“We need this kind of people [like Aukrit] back in Thailand to bring all this knowledge from MIT folks,” Meng said at Startup Thailand.
Land of smiles – and startup spaces
One of the government’s moves to become Thailand 4.0 is the innovation districts initiative supported by the Ministry of Science and Technology. The massive memorandum of understanding, which helps high potential areas to become special economic zones, was signed by public, private, and educational institutions totaling 27 agencies and spanning 11 regions across Thailand.
The initiative will connect cities to create an innovation corridor from Bangkok to the Eastern seaboard.
The eastern innovation districts are expected to generate US$500 million in the next five years.
For instance, Yothee is home to many hospitals and beds, making it prime land for health tech innovations. In fact, it was the first area slated for transformation in 2015.
On top of creating new startups, Thailand wants them to scale up in Asia.
Agritech can be one starting point. “The problem of farmers in developing countries are almost exactly the same as Thailand. That’s why Ricult’s solution is scalable across Asia. Our next aim is China,” said Aukrit.
Eden Agritech is currently receiving funding from NIA as they scale up and work with durian, pomelo, jackfruit, and mango dealers. One of their projects in the pipeline is collaborating with local farmers and setting up fruit processing factories.
Thailand is the land of smiles. Soon, it may become the land of produce, innovation, and inclusive growth.
This is part of the coverage of Startup Thailand 2017 Scale up Asia, an international event for startups taking place on July 6 – 9, 2017 in Bangkok.