Exports of The Production to Be Unaffected by Debt Crisis

The export to the US and the EU continue to grow though these countries encountered the debt crisis. Main investors are from China and Japan coming to the Kingdom particularly to invest in garment industry, said Ok Boung, Secretary of State of Ministry of Commerce yesterday.

The Kingdom’s exports soared up by more than 46% to US$2.677 billion in the first seven months of the year, compared to US$1.827 billion in the same period of last year. Among the products exported, milled and unmilled rice, cassava, corn increased by 186% to US$245 million; and demand for garment and textiles jumped by 43.29% to US$2.334 billion.

However, the import soared up by 50% to US$3.788 billion from US$2.614 billion during the same period last year. The import of food and beverage, petroleum, raw garment material, automobile, increased remarkably by 23.58%, 140%, 17.78%, and 56% respectively, according to official data. In addition, the construction material increased by almost 213% to US$367.7 million. So it reflected the rebound the real estate sector in Cambodia, said Sung Bonna, president of the National Valuers Association of Cambodia yesterday.

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Farmers Accurately Recall Sales and Other Agricultural Data Months after Harvest

Agriculture is critical to development, especially in Sub-Saharan Africa, but little is known about the quality of agricultural statistics. In a new working paper, Kathleen Beegle, Calogero Carletto and Kristen Himelein address one aspect of data collection: Will it compromise data quality if farmers are asked to recall detailed events months after harvest? The authors, drawing on data from three national surveys conducted over a year, find little evidence of recall bias for the average farm household. Indeed, farmers’ reports of harvest information, crop sales and use of fertilizers and hired labor are not significantly different when they are interviewed more than eight months later, instead of soon after the harvest. Although this isn’t evidence that agricultural data are not of poor quality, it does address at least one aspect of data collection, namely whether the length of the recall period could compromise data quality.

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Agriculture in Cambodia

(investincambodia.com)

Agriculture

The Council for the Development of Cambodia (CDC) recently approved agricultural investment projects worth more than $230 million, involving rubber, palm oil and sugar production and processing.

China’s Yellow Field International Ltd and Great Field International are planning to invest $74.6 million and $66.4 million respectively to grow sugar cane and other crops; Vietnam plans two rubber plantations and processing factories; a Malaysian company is investing in a palm oil plantation, while United States-based Horizon Agriculture Development and Singapore and Malaysia’s Mondul Agri Resources plan to invest $28.8 million and $30 million respectively to grow rubber trees.

For investors looking to grow and process crops, Cambodia is an ideal location as it has plenty of land available for agricultural concessions. From 1993 to 2009 a total of 126 companies were granted land concessions for growing crops, according to a report from the Ministry of Agriculture, Forestry and Fisheries. Concessions for the period totalled 1,335,724 hectares in 16 Cambodian provinces.

Cambodia is rich in farmland and hopes to attract more investment to the sector. The country wants to develop its rice exports and therefore welcomes investors, especially those willing to work with small farmers. In return for investments such as credit and technical assistance, farmers would be contracted to sell their crops to the investor.

Rice
Currently the world’s 15th biggest rice producer, Cambodia is targeting annual rice exports of 1 million tonnes within five years. The country plans to raise rice production to 9 million tonnes of paddy by 2015, up from the current 7 million tonnes.

To achieve this target, Cambodia needs more foreign investment in order to construct rice mills. At present, most of the Kingdom’s rice is sent to Vietnam to be milled and re-exported.

The Royal Government has introduced a number of measures aimed at boosting the country’s rice-export capacity. It is urging local banks to provide money for rice-related business and has pledged to guarantee 50 percent of commercial bank lending to producers. Capital at the Rural Development Bank has been doubled to $36 million, and licence requirements for exporters are being scrapped.

Other government plans include strategies to build irrigation systems, provide technical services, land reform, financing, marketing, developing farming communities and improving institutions.

According to the Ministry of Commerce, 4,369 tonnes of milled rice was exported from January to June 2009. But in the first half of 2010, the ministry says 107,291 tonnes of milled rice was exported – an increase of 2,356 percent. This represents a value of $13.438 million, up from $2.193 million in 2009.

Prior to the Pol Pot era, Cambodia produced 500,000 imperial tons of rice in excess of domestic demand. Total paddy production was 2.38 million tons, which represented 1.1 percent of world paddy production. But as a result of the civil war, Cambodia was left unable to produce enough rice to even feed its own people. Not until 1995 did the country achieve self-sufficiency once again.

Cotton
From its $2 million cotton plant in Battambang province, Seladamex Co. Ltd exported its first 100 tonnes of unprocessed cotton and 360 tonnes of cotton seed in May 2010.

The company shipped 50 tonnes of unprocessed cotton to Vietnam, 40 tonnes to China and 10 tonnes to Japan, while all of the seed went to Vietnam. The raw cotton sold for $2,200 per tonne, and the seed $250.
Seladamex expects to export another 200 tonnes of raw cotton and 400 tonnes of seed to these countries throughout 2010. The cotton plant is capable of processing 15 tonnes a day with an overall plant capacity of around 5,475 tonnes per year.

The company is encouraging local farmers to grow cotton by providing a guaranteed purchase price and free cotton seeds to the farmers.

Cotton-growing had almost ground to a halt in Cambodia, killed off by low prices, difficulty in finding buyers, insects, and Pol Pot. Prior to 1975 the industry thrived with thousands of hectares harvested each year.

Pepper
In 2009 half of the year’s total Kampot pepper output of 14 tonnes remained unsold by year end. But since gaining Geographical Indicator (GI) status early in 2010, stocks sold out within months of being officially registered.

According to World Trade Organisation guidelines, GI strictly regulates every aspect of a product’s properties to assure both its high quality and regional distinctiveness.

Prior to receiving GI status, Kampot pepper sold for around $3 per kilo, but this has now risen to $5.75 per kilo.

Around 17 tonnes of pepper was produced in the 2010 season on 9.75 hectares of farmland in Kampot province. Only 10 tonnes met the GI quality standard, of which around 6 tonnes were exported abroad.
In the 1930s almost all of the pepper consumed in France came from Indochina. Kampot pepper in particular was of exceptional quality and rapidly became ‘the spice of choice for French restaurants’.

Sugar
In June 2010 Cambodia sent 10,000 tonnes of raw sugar to the United Kingdom ― the Kingdom’s first shipment of sugar to an overseas market in over 40 years.

It was exported by Koh Kong Sugar Industry whose plant opened for operation in January 2010. The company says it expects to harvest between 200,000 and 250,000 tonnes of sugarcane in 2010 and plans to increase its export volume to between 20,000 tonnes and 25,000 tonnes of raw sugar to Europe’s markets in 2011.

The plant has the capacity to crush 700,000 tonnes of cane per year, with an expected raw sugar output of about 70,000 tonnes of sugar per year.

Koh Kong Sugar Industry is a $60 million joint venture between three partners – Thai investor Khon Kaen Sugar Industry Public Ltd holds 50 percent, Taiwanese investor Vewong Corporation holds 30 percent, and Cambodian investor Ly Yong Phat holds 20 percent.

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No crocodile skin exports in 2010

Crocodile skins will not be exported from Cambodia in 2010 despite a 13-year effort to encourage commercial farming, a representative from the Fisheries Administration (FiA) has said.

Nao Thuok, Directore General of FiA, announced on Sunday that Cambodia still cannot export crocodile skins into international markets because the country’s farms have not been able to fulfill industry standards.

“We are looking for companies which are capable of investing in large-scale [operations] in order to create opportunities to export crocodile skin into international markets,” he said.

Cambodia has been trying to encourage the trade of crocodile skin since 1997 by training farmers with skills and methods needed to raise crocodiles. But so far the effort has seen negligible results.

To improve the quality of skin for export, animals must be raised in individual pens in order to prevent damage .

According to small-scale farmers, who currently sell baby crocodiles to foreign markets for meat, millions of dollars are needed to set up such enterprises.
Kaing Sarin, owner of a 3,000-crocodile farm in Prek Kampeus commune, Kandal Steung district, Kandal province, said that raising crocodiles for skin takes a very long time.

“At present, we only breed crocodile hatchlings for sale because we need the money to buy food to supply our crocodiles,” he said Monday.

However, Nao Thuok said his FiA did not support the export of young crocodiles to Vietnam and China, as farmers earn just US$15 to $17 per animal.

A standard crocodile skin can be sold for $200 on the international market.

According to the FiA, the crocodile skin business could earn Cambodia $30 million per year.

“We aim to encourage the export of crocodile skin because the trade can generate high income to help support our national economy,” said Nao Thuok.

The FiA added that it wants to create one or two large scale commercial crocodile farms.

According to a report from the Ministry of Agriculture, Forestry and Fisheries, last year Cambodia’s 600 crocodile farms bred a total of 185,000 crocodile hatchlings.

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Investors Interested in Agriculture Projects in Cambodia

Cambodia has quietly started to turn up on the agendas of major agriculture, ethanol, bio-diesel, sugar and other producers and forest  plantation growers as an attractive and interesting site to locate projects.

Cambodia has the lowest cost agricultural land in the region with figures that are substantially cheaper than its neighbors Thailand, Vietnam or Malaysia.  This has interested many new companies with projects to grow crops like sugarcane, cassava, teak and other timber, palm plantations, etc. who have been approaching Runckel & Associates over the last 6-8 months to perform due diligence on these projects and to help shepherd them through the Cambodian approval process.

Agricultural land in Cambodia is generally provided to qualified projects by the Cambodian government on a lease basis.  Leases can be 70 years or in some cases up to 99 years.  Payment for approved projects for the land lease is paid to the government in a one-time fee and total costs are not that dissimilar from those being charged in Brazil, which also is seeing a boom in agriculture related projects managed by foreign countries.

In Cambodia, large plots of agricultural land in locations with reasonable access to infrastructure are available but many areas still lack the road structure and access to utilities that are found in more developed countries.  Solutions to dealing with these can be developed, however, such as the use of electrical generators, installation of solar panels, wind power generation and other devices.  All of these technologies are readily available in the region.  Even though these increase costs somewhat, even with these improvements figured in, relative land acquisition costs are still quite competitive and this is what is leading many of the companies to search out the better sites now.

Beyond actual land acquisitions, the Cambodian government has an approval process for the actual project and there are local requirements that must be met.  These differ from province to province but they are easily dealt with as long as you select a local advisor with good knowledge of the country and as long as you adequately perform due diligence on all partners and major service providers.

Runckel & Associates sees Cambodia in 2008 as an attractive location for well thought out agricultural projects and looks forward to continued work with many companies on these projects.

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Economists in Cambodia See Boon for Agriculture in 2011

Agriculture is the main sector in Cambodia.  It has been contributes more than 30 percent to the GDP and is valued at around $10 billion per year. The sector has shown growth of 5 percent annually, even while other economic drivers like industry sector and tourism were stunted by the crisis.

Agriculture acted as an important role in gained the attention of many economists as it helped prop up the country’s flagging economy.

Peter Brimble, chief economist for the Asian Development Bank mentioned that he expects the agriculture sector to grow in 2011, especially thanks to more focus form the government and its long-term rice policy.

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Cambodia Increases Rice Exports:

For most Cambodians, improving quality of life and basic need means improving the quality of crops and growing rice. Agriculture is one of Cambodia’s most important economic sectors, owing to the fact that the vast majority of the population a full 85 percents are farmers. Yet agriculture output in Cambodia lags far behind that of many countries, making it more difficult for farmers to live off their land. Thus, agriculture development has become a key area of focus for government leaders, NGOs and private companies alike. By introducing farmers to new techniques and technologies, they hope to improve quality of life for farmers and help boost output at every stage of production from seed to sale.

In recently, Cambodia and Vietnam are now said to control up to 60 percent of rice exports in the ASEAN region. This has raised fears and concerns from Thai rice growers, the concerns being raised by the Thai rice exports themselves.

Thai Rice Exporters Association Director, Somkiat Makcayathorn said that Thailand is facing enormous challenges to its rice exports to the ASEAN market, brought about by relatively higher prices and tariff cuts under the ASEAN Free Trade Area or AFTA.

This has made Thai rice less appealing to regional buyers, resulting in Thailand giving already lost its market leadership in ASEAN.

Rice from Vietnam and Cambodia now control up to 60 percent of the market, according to Somkiat.

Thai rice makes up only 30 percent of the ASEAN market share, down from as much as 60 percent five years ago, as key buyers including Singapore, Malaysia and the Philippines have turned to Vietnam.

Vietnam last year exported 6.5 million tones of milled rice, with the figure for the first five months of this year totaling 3.1 million, slightly lower than 3.3 million tones for Thailand, said Samkiat.

“More importantly, Vietnam’s rice exports are mainly in the form of white rice, while Thai rice shipments have parboiled and glutinous rice combined.”

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