Tesco buying more produce
The hypermarket Tesco Lotus will increase its purchases of fruits and vegetables from Thai farmers by 30% to 80,000 tonnes, raising its export value of fresh food from Thailand by 1 billion baht this year.
Some of the Royal Project vegetables sold at Tesco Lotus. The retailer has not ruled out exporting Royal Project produce at some future date.
Exports of Thai produce via the Tesco network are forecast at 13.5 billion baht in 2012-2013, up from 12.5 billion in 2011-12.
Fresh fruits and vegetables will account for 10% of the company's sales this year, rising to 12% next year.
Chief executive John Christie said the company will also increase outlets for fruits and vegetables from Thailand's Royal Project Foundation through 1,000 Tesco Lotus stores.
He said, the value of the fresh fruits and vegetables purchased from the Royal Project Foundation is expected to rise by 25% this year to 30 million baht before doubling to 60 million in 2013.
Christie: Strong ties with Royal Project
Tesco has cooperated with the foundation for 12 years and is the biggest buyer in the retail sector.
Initiated by His Majesty the King, the Royal Project is renowned for its fresh produce grown by over 10,000 hill-tribe households in northern Thailand.
The cooperation with the foundation will promote Thai growers' potential for producing quality products, Mr Christie said. Tesco will specify the volume of purchases in advance for growers to plan and prepare, giving them financial stability.
Tesco Lotus will also work with the Royal Project to develop products in line with consumer preferences and offer advice on farming.
The plan includes improving packing and transport from farms to distribution centres.
Tesco has several vehicles travelling regularly between Bangkok and Chiang Mai to carry produce for the Royal Project.
Kamphol Adulavidhaya, the Royal Project's marketing director, said the foundation needs modern trade customers such as Tesco Lotus to expand the availability of its products nationwide.
"If Tesco can help us with the logistics, it helps reduce the cost," he said.
With cultivation of over 10,000 rai of land, the Royal Project sees annual revenue of 500 million baht with an average growth rate of 10%.
Mr Kamphol said the foundation will cooperate with big retailers to open small corners in supermarkets and launch new stores.
In terms of export potential, Mr Christie said the volume now produced by the foundation is not large enough and what is made is already consumed domestically. But Tesco does not rule out such cooperation in future.
The foundation exports less than 5% of its produce, mainly fresh vegetables to Singapore, Taiwan, Russia and European countries.