King backs venture to help local farmers

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The article is below... here's Nui's comments...

The concept is good but the capex of each franchised store is too high...so in the end the market channel is in the hand of the rich again but that is not as important as the store will not be able to expand so fast. If you have massive agriculture product outputs but very few distribution channel, then you're solving the most basic and historic problem. No one can beat the law of supply and demand so if there are lots of farm products but very few distribution channel, even though there is no real excess demand in the over all long term market, as perishable products can not get distributed fast enough due to the limited channels, a temporary excess demand occurs at the moment. If you want the farmers to be able to sell their products at high price, then we have to put limit on thier products (like the OPEC limits their oil production) or eliminate multiple tiers between producers and buyers and as you can see with 30 million Baht minimum capex for small stores...how many can you open in a year? It's sad to see good ideas fail but I am afraid this time it will be the case. I really hope though our Majesty the King is able to help the people he is trying to help.

King backs venture to help local farmers

Franchise plan for Golden Place

Post Reporters

His Majesty the King has initiated a plan to establish a Thai-owned retailing franchise to help market local products, supplied directly from farms, and supported by the local community under his self-sufficient economy concept.

 

To support the move, Suwannachad Co has been formed, with His Majesty holding 70% of its 10-million-baht registered capital, and a retail chain called Golden Place has been launched. Two other shareholders are Dhanin Chearavanont, chairman of the Charoen Pokphand Group; and Wanlop Chiaravanont, a director of CP Group. The two senior executives each hold a 15% stake.

 

The firm is considering two options for its retail franchise: convenience stores or supermarkets. The franchise is targeting both the overseas and domestic markets. Suwannachad already operates five Golden Place outlets, but once a final corporate plan is set, it will expand its retail chain by up to 25 outlets, both at home and overseas, within two years.

 

Four of the five outlets are located in Bangkok, one each on Rama IX Road, Sukhaphiban III Road, CP Tower on Silom Road and Chan Road, and the other, the most recent, is in Hua Hin. As the franchise plan has yet to be finalised, the five stores are being run on a trial basis. The shop on Rama IX Road has 400 square metres of retail space, while that on Sukhaphiban III has 600. The other shops each equal about two shophouses.

 

The store sells mainly fresh and processed products supplied by local communities. Products from the Royal projects will also be available at Golden Place shops.

 

Experts check product quality at farms and supply farmers with technology. Some of the speciality products include sweet corn, Tab Tim fish (nile tylaphia), and dairy lines from the Chitrlada project. Low prices and margins are the key to boosting sales.

 

The firm says many investors are interested in becoming franchisees for the new retail venture. A small shop would require up to 30 million baht in capital and about 15 workers. A medium-size store would need 16-30 staff and 30-60 million baht. Executives said they would not rush to expand outlets but would wait until farmers had a steady supply of products. However, observers caution that intense competition in the retail industry, saturated by discount stores and supermarkets, could make it hard for Golden Place to secure good locations.