Siam Organic Takes on Poverty Among Thai Farmers
A blend of fragrant jasmine rice and black rice, our Jasberry rice has extremely high levels of antioxidants, 40 times higher than brown rice, seven times higher than kale and four times higher than quinoa.
The then-students at Sasin School of Management found there were up to 17 million Thai farmers living in poverty. Rice farmers, in particular, earned on average US$0.40 a day, which is six times below the poverty line.
Thailand’s rice pledging scheme in 2011, which allegedly ended up causing billions of dollars’ worth of state losses, turned a spotlight on the persisting issue of poverty among farmers. It also prompted Peetachai “Neil” Dejkraisak and Pornthida “Palmmy” Wongphatharakul to do something about it.
The then-students at Sasin School of Management found there were up to 17 million Thai farmers living in poverty. Rice farmers, in particular, earned on average US$0.40 a day, which is six times below the poverty line.
Instead of setting up a non-governmental organisation that would rely on donations, Neil and Palmmy decided to start Siam Organic, a for-profit social enterprise that tackles the same issues. “The idea was to use the market to solve the problem of poverty, to make it sustainable and to run a real business,” Siam Organic CEO, Neil shared.
They focused on two missions: improve small-scale farmers’ livelihood in a sustainable and scalable manner, and create innovative, delicious and healthy organic products for consumers worldwide.
After finding a lab-developed non-GMO rice variant, they worked another three years to stabilise it such that it could be grown in Thailand’s paddy fields.
Siam Organic’s Jasberry® Rice was the end result. A blend of fragrant jasmine rice and black rice, it has extremely high levels of antioxidants, 40 times higher than brown rice, seven times higher than kale and four times higher than quinoa.
To get to this stage however, they needed farmers on board, which was not so simple. Many farmers had already lost faith in the system that kept them in poverty for generations. As part of their mission, the young entrepreneurs aimed to empower farmers to improve their circumstances.
They didn’t think of it that way before. They were losing money growing rice because for them it’s a subsistence crop — they grow it mainly to eat and sell whatever is left over. They didn’t think of it in terms of making an income. Even if they didn’t have money and had more debt than before, they would still have food on the table and they were okay with that.
“What we’re really trying to do, beyond just giving them new crops to grow and buy from, is essentially converting them from chemical to organic farming, not using pesticides and educating them on basic economic concepts like costs,” Neil explained.
“They didn’t think of it that way before. They were losing money growing rice because for them it’s a subsistence crop — they grow it mainly to eat and sell whatever is left over. They didn’t think of it in terms of making an income. Even if they didn’t have money and had more debt than before, they would still have food on the table and they were okay with that.”
Fortunately, 25 farmers in a remote northeastern part of Thailand decided to get on board with them. They would eventually become the foundation on which trust was built in Siam Organic. “We started to educate them — made them think about how much it cost to grow crops, how much money they made,” Neil added. “It’s about financial education and changing their perspective towards sustainability.”
With rice being a staple food for 77 per cent of the world’s population, Siam Organic hopes to open up many opportunities for the farmers to make sustainable income. “Typically, they will just grow it and sell it to the middle man,” said Neil. “But in our value-chain, the rice mill and the packaging are also run by the cooperative. They’re making many layers of profit by creating that value. That also attracts younger people and women to join the packing facility.”
On the farmers’ high degree of involvement in the production process, Neil said it empowered farmers to think more progressively. “They now have to think about keeping the rice from contamination before packing,” he said. “To put it simply it was almost like we taught the farmers how to run a business, and the many aspects involved. The farming, the processing, food safety, food standards, documentation, finance, and internal control. We share all this knowledge with them and grow at the same time.”
Siam Organic also encourages financial literacy and savings. The farmers are part of a savings programme where they can put their money in the cooperative and get a significantly higher interest rate than banks, to encourage savings.
They also use a barter system (organic fertilisers in exchange for rice) and microfinancing, so there is no need to exchange cash. Today, Siam Organic has grown from working with 25 farmers in 2011 to more than 2,500 farmers. These farmers are earning 11 times more than the average Thai rice farmer. The company has started exporting its products a little over two years ago, to countries such as the United States, Singapore, Hong Kong, Malaysia and UAE.
The Siam Organic team, led by co-founders Palmmy (first from left) and Neil (second from right).
With plans to grow further and increase its marketing, what is their biggest challenge now? “I think it’s getting people. I think the workforce is super competitive nowadays and people want a job that is ‘sexy’ and fast-moving, like a job in the tech sector. A social enterprise is not as ‘sexy’ and maybe doesn’t pay as much, but it needs even better talent,” said Neil. “In the social sector, what you get is people who have passion and want to do something good but may not have the skills, or may not understand business. Higher turnover rates seem to be common in a lot of industries today too, and not just in the social enterprise sector.”
With this, and their limited marketing budget in mind, the company has been leveraging partnerships to expand their reach. “Telling our story with a limited budget is a big challenge but I think we at least have a unique story to tell. We received digital marketing training from DBS bank at the end of April. We’re working with Cedele and Fairprice Finest too. I think it just comes down to partnership. You’ve got to have good partners overseas who help tell your story and spread the word. We can’t do it ourselves.”
Part of telling this story is also educating consumers. Costing more than the usual staple of white rice, how does the company get consumers on board with Jasberry rice? “Jasberry rice is absolutely delicious, and goes well with any dishes, unlike brown rice and the other so-called superfoods. This has been the main draw, even if consumers are not aware of the social aspect of the product. It goes without saying, that Jasberry rice is fantastic for your health also!”
Telling our story with a limited budget is a big challenge but I think we at least have a unique story to tell. We received digital marketing training from DBS bank at the end of April. We’re working with Cedele and Fairprice Finest too. I think it just comes down to partnership. You’ve got to have good partners overseas who help tell your story and spread the word. We can’t do it ourselves.
“Of course, you still have to convince them that it’s worth the money. Rice is a pretty price-sensitive product, because it’s a staple food. So, we have to educate people that since this is what you eat every day, and if you’re only spending maybe two to three per cent of your food spending on it, perhaps you can afford to spend a bit more because this product is actually much better for you.”
At a time when Southeast Asia is seeing rising trends of obesity and diabetes, Siam Organic has a great opportunity to take on the market, and potentially forge more partnerships in the quest to promote healthy eating.
Neil noted that in Singapore, for example, the government was taking steps to cut down rates of diabetes by encouraging people to eat more brown rice. “As a social enterprise, we don’t have the budget to educate people on that level,” he said. “However, since we have similar objectives, there is room for collaborations and partnerships, where we can offer sustainable solutions. I think, in general, that’s an important role that social enterprises need to play more, going forward.”
MELODY ESPAÑOL
Melody Español is the Managing Editor of THink.
JULY 2019 | ISSUE 5
Profit for Good
