Bangkok--24 Nov--Tesco Lotus
Tesco Lotus, Thailand's leading retailer, showcases its roadmap towards sustainable development through direct sourcing of local produce, promoting mutual benefits between business, society and customers. Part of the initiative is the direct sourcing deal for locally grown tomatoes in Chiang Mai province. Through the project, local farmers are able to generate a steady source of income for their families, customers are able to buy safe and fresh produce at reasonable prices, while the community benefits from the stimulation of the economy and food waste is curbed.
Mr. Charkrit Direkwattanachai, Head of Corporate Communications and Sustainability, Tesco Lotus, said "Having operated in Thailand for more than two decades, Tesco Lotus is committed to promoting sustainable growth and creating shared value among all of our stakeholders. By supporting local farmers, we are able to strike a balance of mutual benefits of our business, local communities, the society at large, as well as the environment."
During a visit to a tomato farm in Mae Tho in Chiang Mai's Hod district, one of the most important areas in Thailand for tomato growing, Tesco Lotus's Head of Quality, Ms.Pornpen Nartpiriyarat, explained the rationale and process behind the retailer's direct sourcing initiative.
"This year, we have increased the volume of produce we buy from local farmers through direct sourcing by more than 150%. Tesco Lotus provides not only a sales channel for farmers, but also knowledge and support in crop planning to help farmers achieve the most successful and cost-effective crop management. Crop planning is significant in the prevention of an oversupply of crops when demand is low, which leads to farmers not getting the best prices possible for their produce."
"In the past, farmers around here would grow whatever crops they wanted. Middlemen would then come and bring the produce to Tesco Lotus's distribution centre. Our quality control department would then check that the produce passed our quality and safety standards. A lot of goods were turned down because they contained insecticides or failed to meet our standards. The farmers lost their income and they couldn't do much with the rejected crops."
Before the retailer implemented direct sourcing where possible, as much as 60-70 percent of produce would be turned down, especially fruits and vegetables with a shorter shelf life.
Ms. Pornpen added that "Direct sourcing solves the problem at the root cause. We discuss with the farmers from the outset what to grow and what's in demand during specific periods, so that farmers are able to plan their crops accordingly, minimise food waste and achieve the most optimum prices. In addition to that, we also counsel them on international safety and hygiene standards as per the Good Agricultural Practices (GAP) codes which govern the production, harvesting and postharvest handling of fresh fruits and vegetables."
Mr. Charkrit added that while society at large benefits from having strong businesses that generate income and bring about economic prosperity, businesses also depend on society to generate consumption and to provide products and services. Only by creating shared value between all parties involved, true growth and sustainable development can be achieved.
The benefits from Tesco Lotus's direct sourcing initiative at this particular tomato farm – one of hundreds others around the country the retailer works with – are plain to see. Farmers are able to generate more than 1 million baht of revenue per year from selling 360 tonnes of produce to Tesco Lotus. Customers also benefit from having fresh tomatoes that have an extended shelf life of six days instead of five days. The tomatoes are also of higher quality, as Tesco Lotus sources tomatoes that are of specific sizes, weighing between 55-110 grams.
Communities and the environment also benefit from less food wastes, saving as much as 30 tonnes of sub-standard tomatoes every year. Knowledge about modern farming methods and agricultural best practices also help farmers to preserve soil quality and other natural resources, leading to sustainable development for farmers.
"Tesco Lotus has initiated several community and social development programmes throughout the years, as we believe it is part of our responsibility to use our scale for good. We have begun to adopt CSV for some of our initiatives, in order for communities, the environment and also our customers to truly benefit. Direct sourcing is one such attempt, in which we exercise our expertise and our ability to create shared value for our customers, the communities, the environment, as well as our business operation," Mr. Charkrit concluded.