Value Chain Development for Sustainable/Organic Agricultural Products

Person on rice field

By Dennis Rochel on Unsplash

Value Chain Development for Sustainable/Organic Agricultural Products
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Food and Agriculture
Business Model Description

Through B2B and B2C models, companies can offer their digital platform to farmers at affordable service fees so that farmers can sell their products directly to consumers. This IOA will help increase profitability for farmers from reduced price-cutting by middlemen, give both farmers and consumers greater negotiation power and influence over prices from direct contact with each other.

These business models can also help develop the value chain for sustainable and organic products by giving farmers confidence and clearer insights into demand from consumers and other relevant information services. Investors can invest money in companies or start-ups that develop such digital platforms offering end to end solutions. An example of a company active in this space is:

FarmTo is a start-up, conjoined in 2018 that allows farmers to decide the prices of their products and directly market to consumers. Farmers can tell their stories and origins through the platform in order to help consumers gain confidence in the sustainability, quality, and safety of the products (1). FarmTo has categories for Good Agricultural Practice Standards, and organic products. The products are from rural and remote farms in Thailand and accessed by customers in urban areas, especially in Bangkok. Despite slow growth during the pandemic, as of June 2021, FarmTo had more than 1,500 farmers, especially in remote regions, that had downloaded and utilized the application as a sale channel, and expects high growth during the post-pandemic recovery period.

Expected Impact

Linking the farmers and consumers will help farmers improve their livelihoods and be encouraged to engage in sustainable and organic agriculture.

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
5% - 10% (in ROI)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
No Poverty (SDG 1) Zero Hunger (SDG 2)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Life on Land (SDG 15)
Sector Sources
  • 1) https://www.depa.or.th/storage/app/media/file/investment-bulletin.pd 2) https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3269779 3) https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0258134 4) https://www.boi.go.th/upload/content/Thailand,%20Taking%20off%20to%20new%20heights%20@%20belgium_5ab4e8042850e.pdf 5) https://www.ldd.go.th/PDF/DevelopmentPlanNo.13.pdf 6) http://stiic.sti.or.th/wp-content/uploads/2018/10/BCG_Final1.pdf 7) https://thailand.un.org/th/node/103307 8) https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?locations=TH 9) https://www.moac.go.th/moaceng-magazine-files-422991791792 10) https://thethaiger.com/news/government-allocates-851-million-baht-for-organic-farming-and-projects
IOA Sources
  • 1) https://mgronline.com/smes/detail/9630000113115 2) https://ap.fftc.org.tw/article/1411 3) https://www.depa.or.th/storage/app/media/file/investment-bulletin.pdf 4) https://www.worldbank.org/en/country/thailand/publication/thailand-economic-monitor-july-2021-the-road-to-recovery 5) https://sustainabledevelopment.un.org/content/documents/279482021_VNR_Report_Thailand.pdf 6) https://www.ldd.go.th/PDF/DevelopmentPlanNo.13.pdf 7) https://uk.practicallaw.thomsonreuters.com/3-602-5267?transitionType=Default&contextData=(sc.Default)&firstPage=true#co_anchor_a860206). 5267?transitionType=Default&contextData=(sc.Default)&firstPage=true#co_anchor_a860206 8) https://www.baac.or.th/th/content-product.php?content_id=14262 9) https://globalorganictrade.com/country/thailand 10) https://www.pier.or.th/abridged/2020/11/#fnref-1 11) https://www.moac.go.th/moaceng-magazine-files-422991791792 12) https://thailand.un.org/th/node/103307 13) https://www.fao.org/3/ae538e/ae538e06.htm 14) http://planning.dld.go.th/th/images/stories/section-5/2560/strategy11.pdf 15) https://www.depa.or.th/storage/app/media/file/depa-Promotion-Plan-Book61-65.pdf 16) https://www.acfs.go.th/standard/download/eng/GAP_Food_Crop.pdf 17) https://actorganic-cert.or.th/th/ourservice-th/service/