The Kingdom’s agriculture products have for many years relied on exports to neighbouring markets. And cassava is among the crops with the best-earning potential for the Kingdom.
Now, plans by Hong Kong-based Green Leader to invest $150 million on a cassava processing plant could boost the industry even further. The facility in Kratie province, which broke ground in April and is set to be operational by the end of the year plans to process some 600,000 tonnes of the crop annually.
Its CEO Michael Tse sat down with The Post’s Cheng Sokhorng to talk about the cassava industry’s potential in Cambodia.
Why did you decide to open a factory here and what are you expecting from the cassava industry?
Cassava is the second largest crop in Cambodia. The Ministry of Agriculture says about 600,000ha of land is currently being cultivated with cassava, with annual production of about 14 million tonnes.
However, there are less than seven cassava starch processing factories operating in the Kingdom. Most of the fresh roots are exported to Vietnam and Thailand as raw material for their processing plants.
In a way, Cambodian farmers are forced to sell their fresh roots to neighbouring countries and are subject to price fluctuation and unstable market conditions.Green Leader sees the opportunity to become a market leader in this important sector.
By building a state-of-the-art processing plant, we can utilise the abundant fresh roots planted by the farmers and process them into cassava starch and modified starch, which is in demand in other Asian and European countries. And by working with them via a contract farming scheme, we can leave the added value to the local farmers by guaranteeing them a stable market and favourable purchase price.
This is a win-win situation for them and Green Leader as an investor.
How will your investment here change the Kingdom’s notoriously rocky agriculture market?
By having a processing plant in areas where cassava is grown, Green Leader can provide farmers with a stable market.
And, working with the United Nations Development Programme (UNDP), the Ministry of Agriculture, Forestry and Fisheries and Ministry of Commerce, we will develop a contract scheme with farmers to sell their fresh roots to our factory above a minimum price.
This is a win-win situation for us as we need a secure supply of fresh roots while the farmers can sell directly to us for a better price and avoid the middleman who manipulates the selling price.
The challenge is in executing a contract scheme with numerous farmers. This is where we need the support and experience of the UNDP and government institutions.
Contract farming can be arranged through local agriculture associations, which is much easier as it helps to maintain a good working relationship.
What benefits will local people and farmers obtain?
Our mission is to improve the farmers’ livelihood by buying their fresh roots. Although they have land and labour, the majority of them have little money to buy agricultural equipment like tractors to improve their land. They also lack funds to buy fertilisers, thus the output of fresh roots is poor.
We can improve their yields by providing agricultural services such as ploughs and fertilisers through credit under the contract scheme. This will help the farmers increase their output and make more money after deducting the additional services and goods costs.
Many Chinese companies have made promises in the past to set up cassava factories, but none seemed to have materialised. How does your company plan to invest in Cambodia?
We are a Hong Kong-listed company. As the name of our company implies, we aim to be a leading investor in the green sector. We are fully committed to investing in Cambodia’s agriculture sector.
Our first factory in Snuol district has an annual production capacity of 150,000 tonnes of starch/modified starch, which makes us the largest such facility in Cambodia.
With our first factory up and running, we will start building additional ones in other locations that have a sufficient supply of fresh roots.
It is our plan to establish five facilities within the next three years, which will provide a stable market of around three million tonnes of fresh roots.
We will invest $150 million over the next three years and are confident that our cassava starch processing plants will be successful and prosper Cambodian farmers.
Finally, we are hopeful that our model of public-private partnership will be successful and attract other green investors to participate in Cambodia’s agriculture sector.
This interview has been edited for length and clarity.