Thailand: the grassroots economy reaps benefits from targeted support under One Tambon One Product

After the OTOP programme that was initially launched in 2001 to promote poverty reduction and aid the recovery from the economic crisis in Thailand during the 1990s fell short of its intended goals to lift up the rural grassroot economy, the Government reinforced the support measures of the programme in the 2010s. Notably, the effectiveness of the latest efforts is indicated by the increase in sales value per OPC product throughout the 2010s, which implied that rural producers are attaining income growth.

Key issue: the need to empower the grassroots economy

Despite the implementation of various support measures in the 2000s, rural producers and local communities struggled to take full advantage of local special produce and resources under OTOP in Thailand. The Government was, therefore, faced with the challenge to strengthen OTOP producers at the grassroots level to enable them to take advantage of economic opportunities using local resources.

Solution: build the capacity of rural One Tambon One Product producers

To tackle this issue, the Government has strengthened measures aimed at building the capacity of OTOP producers, empowering them with entrepreneurial skills and providing the tools required to effectively market their products.

Background

At the turn of the century, poverty reduction and recovery from an acute economic crisis were the major agenda items of the Government. In response, the Government of Thailand launched the OTOP programme by adopting the concept of the One Village One Product (OVOP) movement, which originated in Oita prefecture, Japan, in 1979. The majority of OTOP products are agro-based and produced by small-scale producers. In 2021, a total of 55.9 percent out of the 208 860 products were agro-based products, and 55.4 percent of the 93 414 OTOP producers were community-based occupational groups, followed by individuals (42.9 percent) and small and medium-scale enterprises (1.6 percent).

The products are evaluated in terms of being OPC products, using a five level rating system, ranging from 5-star to 1-star (5-star being the best), based on the following criteria: (1) exportable with brand equity; (2) produced continuously and consistently; (3) standardized in a good quality and well received by customers; and (4) reflecting the identity of the community with a unique story. In the early years of the programme, the producers in rural areas struggled to promote their products due to their limited business knowledge and experiences. In 2004, almost 70 percent of the products among the 26 497 products evaluated for OPC were categorized as being either 2-star (60.3 percent) or 1-star (9.5 percent). This situation improved by 2009, with the share of 2-star and 1-star products decreasing to 37.4 percent. However, the total number of OPC products also decreased, and the grassroots economy was still not empowered to the intended level due to insufficient capacities in such areas as management, production, quality control, branding and marketing.

Implementation

The following measures were taken in the 2010s to strengthen grassroots producers:

(1) Hands-on entrepreneurial and technical support: Starting in 2012, a total of 878 economic service centres were established at the district level to support local individuals, occupational groups and entrepreneurs in their effort to start and manage their businesses. Along with knowledge networks at the community level, the OTOP Academy was established in seven locations to enable OTOP producers to be mentored by successful producers and experts in a holistic manner and develop products of high quality and standards to meet customers’ expectations. For example, the academies were set up in the provinces of Saraburi and Phra Nakhon Si Ayutthaya to provide support related to food processing. Among the resource persons at the academies are individuals who have excelled in such areas as product standards and quality control, product development, processing, packaging and branding, and marketing, including digital marketing and product photography.

(2) Inclusive marketing and promotion support: In terms of marketing and promotion, “OTOP Traders” are identified and registered to assist the producers of products with a rating of 1 to 3 star who have limited marketing and distribution capacity. The OTOP Traders act as an intermediary between the producers and consumers in the provincial and national markets. Regulations issued in 2018 ensure that OTOP traders do not compete with OTOP producers. They also urge traders to extend advice to the producers from the perspective of buyers. In addition, to date, 61 display and sales outlets have been established in 19 provinces, including local shops and restaurants carrying OTOP products and OTOP shops established at private or public venues, such as airports. Exhibitions and events are organized at local, provincial, national and international levels periodically, mainly for the producers of OPC products with a 3 to 5 star rating. For example, 459 034 OTOP groups/individuals participated in the 2019 OTOP City event, which had more than 1.2 billion visitors and generated sales and orders that exceeded 1.5 billion Thai baht (THB) (USD 48 million). Moreover, online marketing is expanding sales channels through the OTOPTODAY website (https://www.otoptoday. com/) and those operated by the private businesses.

(3) Community tourism: The OTOP Nawatwithi project was launched in 2018 to promote smaller-scale community tourism, namely tourism aimed at attracting outsiders to experience the charm of the villages and generate income for the local population. In contrast, the OTOP Village Champion initiative, launched in 2006, has supported relatively largescale tourism destinations. Currently, more than 3 200 OTOP Nawatwithi villages are working to make tourism more inclusive.

Impact

Support measures are benefiting the grassroots economy, as indicated by the increase in OTOP producers and sales volume, and the improvement in the quality of their products. The number of OPC products expanded by 94 percent from 2012 to 2019, and the share of higher quality (3-star and above) OPCs is increasing steadily (Figure 1). In addition, the OTOP Nawatwithi project is supporting tourism, in conjunction with product development under OTOP, both of which are generating income for local communities. A study conducted in 41 communities in Mahasarakham province indicated that the number of tourists visiting these communities increased from 3 240 in the fiscal year 2018 to 19 798 in the following year (Sankote and Kamnuansilpa, 2020). The aggregated annual income of business operators increased from THB 13 million (USD 403 000) to THB 22 million (USD 708 400), on average, which was approximately THB 537 000 (USD 17 300) per community.

Key resources 

Bureau of Promotion of Local Wisdom and Community Enterprises, the Department of Community Development, Ministry of Interior https://cep.cdd.go.th/

Sankote, P., & Kamnuansilpa, P. 2020. Performance of the OTOP Nawatwithi tourism community project, Mahasarakham province. Journal of Graduate MCU KhonKaen Campus, 7(4): 299–310.