PHNOM PENH, Cambodia — Nine women in red robes held platters of mangoes while delegates from Cambodia and China cut a red ribbon stretched between the mounds of tropical fruit in early June. The event at a wholesale market in Hebei Province, which ended with the releasing of balloons, heralded the arrival of the first fresh Cambodian mangoes imported directly to China. According to FreshPlaza, a produce business publication, initial demand was strong, according to market spokesman Yang Jianfei. “Everyone at the welcoming ceremony was astounded by the speed of sales,” Jianfei added, pointing out that the event’s four fruit-filled cargo containers were rapidly emptied. The achievement highlights China’s pivotal role in Cambodia’s agricultural industry, as the country’s main export market and source of investment. Local growers, analysts, and specialists, on the other hand, say the country still has a long way to go if it wants to fully realize the potential of its farms. Cambodia’s government is eager to increase agricultural exports, not least to diversify the country’s economy, which is highly dependent on the textile industry. China appears to be an ideal partner for achieving that goal. Since 2010, Beijing has been Cambodia’s primary source of development aid, with policy banks providing more than $5.8 billion to its Southeast Asian partner as of 2018. Agriculture is listed as 17 percent of a list of 100 China-funded projects during the last 20 years. It has funded huge irrigation projects and new rice mills, as well as constructing an agricultural school and supporting a “agricultural demonstration zone” in Kratie Province as a Belt and Road “priority” project. Following the signing of Cambodia’s first bilateral free trade deal with China last year, the recent mango exports are the latest milestone for the country. Although the deal’s exact contents have not been made public, officials have stated that it is mostly centered on agricultural products. According to government numbers quoted by local media, the first cargo of fresh Cambodian mangoes to China, which left in May, contributed to a more than 200 percent increase in mango exports in the first five months of this year. Exports like these could help Cambodia reduce its large trade deficit with its economic patron and largest trading partner. Cambodia sent little over $1 billion of the $8.1 billion in bilateral trade with China in 2020.
Cambodia’s farm sector is severely fragmented, with smallholders dominating. EPA/Jiji/Jiji/Jiji/Jiji/Jiji/Jiji/ Veng Sakhon, the country’s agriculture minister, has emphasized the advantages of having direct access to one of the world’s largest marketplaces. “Not only will it assist improve Cambodia’s economy during the COVID-19 pandemic, but it will also help eliminate poverty in rural areas,” he stated at a May ceremony. Fresh mango exports were permitted in June of last year after the countries finalized sanitary regulations for fresh fruit. Chinese regulators can certify that specific Cambodian orchards and packing companies fulfill the quality criteria required to ship directly to China under the terms of the agreement. Previously, Cambodian mango exporters had to travel through Vietnam to reach China. Bananas were the first Cambodian fruit to gain such certification in 2018, and exports to the Chinese mainland have already increased dramatically, jumping to $121 million in 2018 from $8 million in 2019. Longmate Agriculture, a Chinese-led joint company that established a 1,000-hectare banana plantation in southern Kampot Province in 2016, wants to more than double its present output of 20,000 tons per year. Cambodia, according to company director Hun Lak, is well-positioned since its soil is free of fusarium wilt, sometimes known as Panama sickness. Other banana producers in the region, such as the Philippines, have been struck by a devastating fungal disease. “Demand is increasing since Cambodia is just starting to grow yellow bananas, and our land is still virgin, so we’re not worried about diseases,” Lak explained. “We want to get to 50,000 tons each year.” Cambodia’s government hopes that China would legalize fresh longans next, as well as other tropical fruits such as dragon fruit. However, for Cambodia’s severely fragmented farm industry, which is dominated by smallholders, direct market access is no panacea. For starters, there’s the price of compliance. Quality standard compliance, according to Chan Sophal, head of Cambodia’s Centre for Policy Studies (CPS), is one of the country’s largest hurdles in terms of increasing exports. He went on to say that better public infrastructure will help cut costs. “My primary concern is if the sales price is sufficient to meet the additional compliance costs,” he said. “We still need better electricity, logistic systems, and better highways, additional roads to lower transportation costs,” Chan Sophal remarked. Another worry is how inclusive agriculture development would be, given that many of Cambodia’s major fruit plantations are owned by Chinese investors or are joint ventures with them. “It will contribute to the creation of certain jobs. “We agree that China is a big market for agricultural projects,” said Yang Saing Koma, founder of the Cambodian Center for Study and Development in Agriculture. “However, rather than working with Chinese investors and a few tycoons, the Cambodian government should have a policy and strategy to support small and medium farmers, how they can produce and enter the Chinese market.”” According to Saing Koma, the most pressing job is to organize Cambodia’s growers, the majority of whom are smallholders. He claims that fragmentation has caused inefficiencies in the sector. These can be seen in the periodical gluts and shortages of certain goods in various places, as well as Cambodia’s importation of fruits and vegetables that it raises itself. According to a World Bank assessment released in June, Cambodia’s agricultural industry has been a bright spot in the coronavirus pandemic, remaining “resilient” and benefiting from greater labor availability when other sectors such as tourism were hurt by layoffs. According to the Economist Intelligence Unit, the country’s agricultural exports were $932 million last year. The figure, which represents a nearly 17 percent increase over the previous year, accounted for only 5.4 percent of total exports, which are dominated by clothing and footwear. The EIU ascribed the increase in 2020 to a boost in the value of rubber exports, as well as the Chinese market opening to Cambodian bananas, due to a pandemic-driven surge in demand for personal protective equipment. However, given the shortage of finances for processing facilities, future expansion is expected to be limited. According to EIU analyst Imogen Page-Jarret, such investment from the government, which is focused on value-added sectors like electronics assembly, appears improbable. “Most agriculture in Cambodia is currently made up of small individual homesteads producing unmilled rice and other unprocessed crops,” she said. “Typically, the items are exported to Thailand and Vietnam for processing. In terms of additional value, this is a big loss.” Agriculture diversification and productivity have been dubbed a “important” yet “uphill undertaking” by Cambodia’s government. A Ministry of Agriculture spokeswoman supplied images of parts of Cambodia’s new Agricultural Development Policy, which seeks to increase the industry by 3% per year, from $5.5 billion in 2019 to $7.8 billion in 2030, in answer to queries about its plans to strengthen the sector. The EIU is less enthusiastic, forecasting annual growth of 1.9 percent, but cautioning that the figures are subject to extreme weather events such as droughts and floods. Another big stumbling block for the country’s farmers is logistics. After selling their 50,000-hectare cassava plantation in Indonesia, Lu Song and his wife, He Yan, relocated to Cambodia in 2012. Long Wo Agriculture, which has a 2,000-hectare farm, started with cassava and then added dried mangoes in 2018. Fresh mangoes have also been exported to China, but exclusively through Vietnam until this year. The two now own and operate one of five plants in Cambodia that are certified to cure fresh mangoes for direct shipment to China. According to Lu, Cambodia’s benefits — low labor costs, inexpensive land, a favorable environment for tropical fruits, and a close relationship with Beijing — must be balanced against the disadvantages, which include a low level of technology and issues with electricity and transportation. Shipping is a significant stumbling block. Mangoes have a shelf life of 20 to 25 days once picked, although shipping from Cambodia takes an average of 12 days. “It can take up to 15 days,” Lu explained, “which means we only have 10 days to sell it at the market.” Air freight is prohibitively expensive. Overland shipping to Vietnam takes three days, although it is more expensive and difficult to transport large amounts. The government, NGOs, and business groupings, according to Ratha Chan, country director of the Cambodia Partnership for Sustainable Agriculture, must plan for the long term. Cambodia will be locked at the bottom of the supply chain as a raw produce exporter without strong leadership, he warned, with local employees staying cheap labor. “Our industry will not thrive if we rely just on low-skilled, low-cost workers. Cambodia must progress up the supply chain “he stated Saing Koma agrees, and believes that with the correct rules in place, the sector can one day compete with Cambodia’s $10 billion garment industry in terms of exports. “There is a lot of work to be done, but it is doable. Is the government equipped with the necessary policies and personnel?”/n
