Distributing Agchem Products to Thai Farmers — Getting Your Strategy Right

The Market

The Thai agchem market is worth about $450 million at the end-user level and it is split as follows:

Over the past few years, an attempt has been made by the Department of Agriculture that regulates the agricultural chemical industry, to clear out sub-standard products arising from intense competition in the supply chain. A new set of registration rules was enacted. Toxicology studies and field efficacy trials of GLP standards are required to be submitted and all existing product registrations had to be re-registered.

Many distributors and product registrants have spent hundreds of thousands of dollars to re-register their portfolio of products under the new and more stringent guidelines. Their thoughts were that although it would cost them dearly, it would be worthwhile as this exercise would weed out the weaker and smaller players that do not have the funds to invest in re-registrations. Unfortunately, this exercise did not have the intended effect as many small players are still around today. Some who have invested in the re-registrations have duplicated their new registrations and supply products under different brand names to the smaller players.

The Thai agchem market is one where both small and large distributors and suppliers have a part to play and have their own distinct channels to the farmers.

The Supply Chain

The typical supply chain in Thailand is one in which importers who are registration holders import either technical-grade products or fully-formulated ones and then supply them to dealers and sub-dealers spread throughout the country. Farmers typically buy from these dealers and sub-dealers.

In forming your market entry strategy, it is important to understand that there are two quite distinct routes available to channel your products to the farmers. The dealerships generally fall into two distinct groups, the large and top-tier ones and the smaller, second-tier ones. They are, in turn, supplied by top-tier suppliers and second-tier players respectively.

The top-tier suppliers are the majors such as Bayer, Syngenta, Dow, BASF, and DuPont, along with a few strong and reputable home-grown suppliers such as Sotus International, Erawan, Inter-Crop, Pato, and Thep Watana. These tend to supply to the top-tier dealerships, which cater to the more affluent and sophisticated farmers who grow crops of higher-value such as tropical fruit for the export market.

 

The second-tier and smaller suppliers sell their products to the second-tier dealerships and sub-dealerships:

 

 

Because the top-tier dealerships build up and maintain their own reputation in the eyes of their more affluent and sophisticated farmers who do not take any risks in using sub-standard products, their doors tend to be closed to the second-tier importers-distributors and registration holders.

In light of the above situation, if you have products meant to be targeted at the more affluent and sophisticated farmers, it is important to choose the correct distributors who have access to the top-tier dealerships. Having said that, it is not easy to find room or gaps in the product portfolio of these top-tier distributors in a very competitive and over-supplied and over-serviced markets.

Farmer cooperatives play a small role in supplying agchem products to members. They typically get their supplies from second-tier suppliers and importers.

A Profile of the Dealerships

 Farmer cooperative:

  • Serves localized farmers at district levels
  • Provides loans (maximum Baht 50,000) to members of good financial standing
  • Deals in agricultural inputs as well; prices are comparable to dealerships
  • Reports to Department of Agriculture Extension & Cooperatives under the Ministry of Agriculture
  • Conducts technical meetings in conjunction with suppliers for members

 Second-tier dealership:

  • Deals with mostly local Thai suppliers
  • Annual sales turnover of approximately Baht 50 million and below
  • Serves less affluent farmers growing rice and vegetables
  • In-house marketing and promotion is generally not done
  • Farmers show up and pick up what they buy; limited deliveries to farms

 Small-medium first-tier dealership:

  • Deals with both reputable local Thai suppliers as well as the majors
  • Annual sales turnover of Baht 50-100 million
  • Generally single outlet operations
  • Serves quite affluent farmers growing vegetables and some fruit for the local markets
  • In-house marketing and promotion is done at farmer level, e.g. local concerts and lucky draws
  • Some deliveries are made to the larger accounts

Large first-tier dealership:

  • Deals with the top-tier local suppliers as well as all the majors
  • Annual sales turnover of Baht 100 million and above
  • Generally operates more than one outlet
  • Serves the most affluent farmers growing very high-value fruit crops such as durians, mangoes, rambutans, mangosteens, longkong, lime for local markets and for exports
  • Shop-floor and warehousing is tidy and well-organized
  • Merchandising is very evident. Have staff capable of handling farmers’ queries
  • In-house marketing and promotion is done at farmer level, e.g. holding local concerts and lucky draws
  • Key suppliers often have agronomists stationed in these outlets to do direct promotion to farmers and answering farmers’ questions
  • High level of deliveries made to the large farms they service

Sub-dealership:

  • Deals with lower-tier local distributors and sub-distributes for first-tier dealerships. Generally, no accounts with the majors as well as the first-tier local suppliers
  • Annual sales turnover of under Baht 25 million
  • Single-outlet operators
  • Serves smaller farmers and farmers who are very close geographically
  • Farmers usually show up on motorbikes or in pickup trucks to take goods to their farms

Conclusions

Getting your products to Thai farmers is not merely a matter of getting them registered and finding a distributor. It is important to understand the Thai agchem market sectors and determine which crop sectors are to be targeted.  Finally, and most importantly, find and appoint the right distributor which has access to the right dealers serving the targeted farmers. In this over-supplied and over-serviced market, convincing the right distributors to carry your product will always be a challenge. Nevertheless, adopting the right distribution strategy will ensure having market access that leads to successful marketing of your products to the Thai farmers.

 

 

CS Liew founded Pacific Agriscience Pte Ltd in December 1998 in Singapore. Prior to that CS gained over 20 years of international working experience in the crop protection and crop nutrition business working for American Cyanamid, Ciba-Geigy, Uniroyal and Nufarm. His 20-year corporate life was enriched by his hands-on involvement in Market Research, Product and Sales Development, Joint Venture Management and Acquisitions. He can be reached at [email protected].

 

 

Topics:

Agrichemicals

Agrichemicals

Monsanto Speaks on Dicamba Issues in Arkansas

Monsanto’s Chief Technology Officer, Robb Fraley, issued a statement following the Arkansas State Plant Board’s proposal to ban dicamba, triggered by more than 200 drift complaints that had been made to the board.

Agrichemicals

Arkansas Plant Board Votes to Ban Dicamba — Now What?

"I just think a lot of guys didn’t really comprehend how bad it could be." --Bob Scott, Professor and Weed Scientist at the University of Arkansas Cooperative Extension Service

Agrichemicals

BASF: ‘Closely Monitoring’ Dicamba Situation in Arkansas

Engenia is the only dicamba formulation labeled for use in Arkansas crops.

Agrichemicals

Threat of Dicamba Ban Looms in Arkansas

A deluge of complaints about drift prompted the proposal to place an emergency ban on dicamba.

Adjuvants

Clariant Steps Up R&D Investment

Inaugurated on June 21, the new greenhouse at Clariant Innovation Center (CIC) takes Clariant’s Crop Solutions product development support to a new and unique level.

Agrichemicals

Nufarm’s Abamex Insecticide Receives Additional Registrations

With an updated label for the insecticide Abamex from Nufarm, more specialty crops — including mandarin oranges — can benefit from

Agrichemicals

Jebagro Acquires Significant Stake in Panamanian Company Grupo Agrosol

Jebagro GmbH, Hamburg, Germany has acquired a significant stake in the Panamanian company, Grupo Agrosol. Grupo Agrosol is based in

Agrichemicals

India Farmer Unrest Over Pesticide Prices Prompts Government Response

Union agriculture minister Radha Mohan Singh has asked the pesticide industry to bring down prices.

Agrichemicals

It’s India’s Time: Reforms to Shake Up the Sector

"Make in India" is poised to end the tide of booming Chinese exports, which make up 55% of the $925 million India imports worth of technical, intermediates, and finished products each year.

Agrichemicals

Monsanto, Atomwise to Use Artificial Intelligence to Discover Crop Protection Products

Monsanto Company and Atomwise have formed a unique research collaboration to increase the speed and probability of discovering and developing

Asia

Sumitomo, BASF Sign Agreement to Develop New Fungicide

Sumitomo Chemical and BASF, two of the world’s leading chemical companies, announced today their entry into a collaboration agreement for

Agrichemicals

Willowood USA Named One of Fastest Growing Businesses

Since Willowood USA started in 2010 in Roseburg, OR it has been growing quickly to provide crop protection products to

Arysta LifeScience
Agrichemicals

Arysta LifeScience Prepares for Direct Sales in The Netherlands for 2018

Arysta LifeScience’s unique combination of innovative crop protection technologies and BioSolutions have been available in The Netherlands for many years.

Adjuvants

Vive Crop Protection Names Darren Anderson President

Vive Crop Protection is pleased to announce the recent appointment of Dr. Darren Anderson as President. Anderson was one of

Agrichemicals

Adama Acquires Fungicide, Insecticides from Syngenta

Adama acquires the Bravo (Chlorothalonil) family of fungicides, including the products Bravo Weather Stik®, Bravo Ultrex® and Bravo® ZN, as well as the insecticides Fulfill® (Pymetrozine), Trigard® and Armor® (both containing Cyromazine).

Agrichemicals

ChemChina Completes the Second Settlement of the Tender Offers for Syngenta

China National Chemical Corporation (ChemChina) has announced the successful completion of the Second Settlement of ChemChina’s tender offers for Syngenta.

day 2 trade summit
Adjuvants

BRANDT Products Approved for Use with New Cropping Systems

Eleven BRANDT formulations approved for use with new dicamba and 2,4-D herbicides.

Insecticides

Vive Crop Protection, SipcamRotam Enter Partnership

Vive Crop Protection and SipcamRotam are pleased to announce a partnership to bring to market new products containing Vive’s Allosperse Delivery System for the turf, ornamental, and specialty markets.

Corn Field
Fungicides

AMVAC Closes Deal for Three Product Line Acquisitions from Adama

AMVAC Chemical Corp. announced the closing of its acquisition of three new products to its portfolio – abamectin insecticide, chlorothalonil

Latest News

Agrichemicals

Monsanto Speaks on Dicamba Issues in Arkansas

Monsanto’s Chief Technology Officer, Robb Fraley, issued a statement following the Arkansas State Plant Board’s proposal to ban dicamba, triggered by more than 200 drift complaints that had been made to the board.

Agrichemicals

Arkansas Plant Board Votes to Ban Dicamba — Now What?

"I just think a lot of guys didn’t really comprehend how bad it could be." --Bob Scott, Professor and Weed Scientist at the University of Arkansas Cooperative Extension Service

Agrichemicals

BASF: ‘Closely Monitoring’ Dicamba Situation in Arkansas

Engenia is the only dicamba formulation labeled for use in Arkansas crops.

Agrichemicals

Threat of Dicamba Ban Looms in Arkansas

A deluge of complaints about drift prompted the proposal to place an emergency ban on dicamba.

Adjuvants

Clariant Steps Up R&D Investment

Inaugurated on June 21, the new greenhouse at Clariant Innovation Center (CIC) takes Clariant’s Crop Solutions product development support to a new and unique level.