Cambodia has no shortage of agricultural products, like cashew and rice, but in the absence of adequate facilities to process and value-add the raw material in the country, farmers fail to profit from their toiling in the farms and the revenue flow to the national economy also gets affected. The commodity has the potential, but faces the limitations of processing facilities, Prime Minister Hun Sen said, recently. Cashew is one such farm produce in Cambodia most of which is shipped out to other countries in the raw form. The importing countries process the raw cashew nuts and sell the value-added products in domestic as well as global markets, which increases their returns manifold. Welcoming Prime Minister Hun Sen’s remarks, Uon Siloth, President of the Cashew nut Association of Cambodia (CAC), told Khmer Times, the association “supports the words of the Prime Minister and actively participates in the development of the cashew industry in Cambodia.†The association is helping farmers to grow low-cost, high-quality seeds to supply to factories, and acts as a liaison between farmers and factories, looking for opportunities and obstacles, business and solutions, Siloth said. The Cambodian government has identified cashew as an agro-industrial crop and also one of the 12 priority crops and has been taking various steps to raise its output and competitiveness through economic diversification. Uon Siloth, President of the Cashew nut Association of Cambodia, recently attended the World Cashew Conference held in Dubai. CAC The lack of domestic processing facilities can also be understood from these figures. As of October 2022, over 469,515 tons of raw cashew nuts were exported by Cambodia. While neighbouring and one of the largest importers of Cambodian raw cashew nuts, Vietnam accounted for 467,301 tons, Thailand bought 2,050 tons, India, which is among the largest global producers of the commodity, imported 150 tons, China took 13.5 tons, Japan 0.14 tons and the Philippines 0.05 tons. During the same period about 600 tons of processed cashew nuts were exported. Of this, Thailand’s share was 264.44 tons, China accounted for 229.84 tons, Japan 74.43 tons, Taiwan 24 tons, South Korea 7 tons and Switzerland 0.12 tons. Between 2019 and 2022, the country also exported 184.9 tons of processed cashew nuts to Japan. And most of this (around 126.44 tons) was exported only last year. The Kingdom exported 670,000 tons of raw cashew nuts to international markets worth $1.07 billion in 2022, which was 34.65 percent down compared to the previous year. In 2021 the country exported 1.1 million tons of cashew nuts, in 2020 around 950,000 tons and in 2019 about 600,000 tons. Of the total shipment of cashew nuts, Vietnam accounted for 660,000 tons. For the current season, two Vietnamese companies have made contracts for 70,000 tons of cashew nuts. According to the CAC, Vietnam buys mostly wet cashew nuts which are cheaper than fresh produce from Cambodia. After the import, Vietnamese companies dry the commodity and segregate cashew nuts as per their quality, size and various other parameters. The good quality nuts are sold to processing companies while the rest is supplied to oil mills for crushing. “There is a high dependence on the Vietnamese raw cashew nut market with associated loss of value addition opportunity. If processed locally for export it would create an additional $202 million in annual export value based on 2019 market prices. It would also create 28,000 direct jobs in cashew factories and up to seven times that number in indirect activities. “In addition, improvements in post-harvest handling and infrastructure can increase farm and local handler incomes by up to $75 per ton with a relatively low level of investment,†stated the National Cashew Policy Recommendations 2020-30. The cashew sector is in need of investment in processing and packaging facilities, and in the production of value-added finished products, In Lay Huot, Chairwoman at Chey Sambo Cashew Nut Processing Handicraft in Kampong Thom province, reportedly said. “The investment in local processing will not only contribute to value-addition to cashew products but also create jobs and markets for farmers via contract farming,†Lay Hout was quoted as saying in local media reports. As the local processing capacity is small with few facilities, cashew cultivated in Cambodia is primarily exported in shells and unprocessed. The investment is needed to achieve the 50 percent processing capacity by 2032 as envisaged in the National Policy on Cashew Nuts approved in January 2023, Siloth said at present it would be difficult to answer. While around 22 small cashew processing plants are registered with the CAC, Vietnam has more than 100 such units. The CAC president said, domestic cashew units are small and are unable to make large purchases. At present “two medium-sized factories with a production capacity of 4,000 tons and 17 small units with below 1,000 tons capacity of dried seeds per year are functioning in the country,†said the CAC president. Referring to a study, he said cashew nuts processed locally turn out to be more expensive than Vietnamese products. Vietnamese companies have many advantages, like a skilled workforce, new machinery, cheap water, electricity and logistics. Also, they import duty-free raw materials under special tariffs for the agricultural industry, he added. Because of these reasons, the CAC President said, “The price of processed cashew nuts comes out higher in Cambodia than in Vietnam,†and that makes it difficult to compete and sell. Underlining the profit margin between raw and value-added products, Siloth said while the price of dried cashew seeds was between 4,300 riels per kilogram and 6,800 riels per kilogram in 2022, the processed cashew fetched between 30,000 riels per kilogram and 42,000 riels per kilogram. Officials of the Cashew nut Association of Cambodia met with representatives of the Japanese companies on the proposed setting up of cashew processing units in Cambodia. CAC Processing of cashew in the country will lead to better returns for cashew farmers and also reduce dependence on Vietnam, he added. However, some big processing units are likely to be set up by 2025. “We expect four more factories – two from Japan, one from China, one from Malaysia – to be set up in the Kingdom in the next two-three years,†said the CAC President. Siloth recently met representatives of Japanese companies, who expressed interest in reviving their plans to set up cashew processing units in Cambodia and export the product to consumers in Japan. The Japanese companies were working on the project for some time had conducted field and feasibility studies and also examined areas for the plant in Kampong Thom, but could not complete the process and set up the processing unit as the Covid-19 pandemic took the world in its grip and stalled most of the economic activities. However, their return to Cambodia is encouraging, Siloth added. After the setting up of two units for cashew nuts, two more factories are likely to be started for processing byproducts. “Once the two factories are opened, there will be two more,†Siloth said without elaborating. The first two units are likely to have the capacity to process around 20,000 tons of cashew nuts separately per year. Thus, together these factories will be processing 40,000 tons of commodity, according to the media reports. The other two plants could be a cashew-crushing oil unit and the industrial charcoal factory and use the crushed cashew nut shells as raw material, stated the reports. After a meeting, this month with representatives of Top Planning Japan Co Ltd and its Director General, Minister of Agriculture, Forestry and Fisheries (MAFF) Dith Tina said, “I welcome and encourage the investment of Japanese companies in Cambodia, which have been processing cashew nuts for export to the Japanese market, as well as plans to build a large factory in Cambodia to bring Cambodian cashews to the world market, both cashew nut products and cashew shells turned into fuel.†In order to add more value, he advised the company to adhere to the principles of the environment, and increase the promotion and processing of packaging to get good support in the Japanese market and the international market. Addressing a graduation ceremony of the National Technical Training Institute of Cambodia on February 27, Prime Minister Hun Sen said cashew (the commodity) has the potential to become a big foreign exchange earner but faces the limitations of processing facilities. Cambodia will become one of the main cashew nut contributors, one of the largest contributors (to the world market) in the future because now the nation can export about 1 million tons of unprocessed cashew nuts a year, the Prime Minister said. He said Cambodia’s industry development policy was launched to attract investors to invest in the processing industry by using raw materials that are available in the country such as cashew nuts, paddy, cassava and sugarcane. The Prime Minister called upon investors and the private sector to invest in processing facilities to produce finished cashew products. The government has enacted the National Policy on Cashew Nuts for 2022-27 which aims to increase production and value-added, giving hope to cashew farmers. It is aimed at increasing cashew production, improving the quality of the commodity, promoting the setting up of local processing and value-addition and increasing the domestic processing capacity to at least 25 percent by 2027 and 50 percent by 2032. Cambodia has more than 500,000 hectares of land across 10 provinces where cashew is cultivated. CDC The government also aims to boost cashew exports through market diversification, setting up cross-sectoral linkages, promoting trade facilitation, cost reduction and market superiority. “Cambodia has raw materials, but processing is not enough. So Cambodia wants to attract investors to process locally available raw materials, and the point is that it will create jobs and create added value for products,†the Prime Minister said on February 27. The National Cashew Policy Recommendations 2020-30 envisions “building on the competitive advantages of Cambodia for the production of cashew nuts and building a value-addition infrastructure and industry that will facilitate access to high-value export markets. Such development can build a sector that increases rural incomes for farmers and labourers, creates employment in sector development and processing for young people, and builds a sustainable, profitable export industry.†“There is a high dependence on the Vietnamese raw cashew nuts market with associated loss of value addition opportunity. If processed locally for export it would create an additional $202 million in annual export value based on 2019 market prices. It would also create over 28,000 direct jobs in cashew factories and up to seven times that number in indirect activities. In addition, improvements in post-harvest handling and infrastructure can increase farm and local handler incomes by up to $75 per ton with a relatively low level of investment,†it stated. At present, more than 500,000 hectares of land are under cashew cultivation in 10 provinces of Kampong Thom, Ratanakkiri, Kratie, Kampong Cham, Preah Vihear, Stung Treng, Oddar Meanchey, Tbong Khmum, Mondulkiri and Siem Reap, according to CAC. Of this, Kampong Thom province has the largest cashew plantation of 90,959 hectares, followed by Kratie province with 47,858 hectares, it added. Cambodia figures among the top producers of cashew in the world, and despite the unfavourable weather conditions it is expected to produce between 500,000 tons and 700,000 tons of the commodity this year, said the CAC president. According to Siloth, in 2022 per ton price of cashew was between $1,350 and $1,700, and it varied between $1,300 and $1,600 in 2021. A year earlier in 2020 the price was in the range of $1,500 to $1,800. In 2019, the commodity fetched between $1,800 per ton and $2,000 per ton. Like any other commodity, the price of cashew depends on market factors, like global productivity, availability, general demand, quality of the produce, etc. However, cashew nuts produced in Cambodia are of very good quality in terms of out-turn and nut size and have good demand in the international market. World production of cashews ranges between 720,000 tons and 790,000 tons (kernel basis) per year. India with 170,000-195,000 tons of annual production ranks first, followed by the Republic of Côte d’Ivoire (Ivory Coast) of Africa, Vietnam and Tanzania with an average production of 149,000 tons, 82,000 tons and 53,000 tons, respectively. Among the Association of Southeast Asian Nations (ASEAN) member states, Cambodia, Vietnam and the Philippines are big producers of the commodity. “Cambodia has the potential to become a supplier of processed cashews in its own right and not just a seller of unshelled nuts to Vietnam and India for processing. Cambodia grows enough cashews to establish its own successful processing industry, which could earn $30-40 million more each year for the cashew industry. Since Cambodian cashews are largely grown without agrochemicals, reliable testing and certification could establish Cambodia in the organic cashew market and help it earn substantially more income,†said an International Finance Corporation (IFC) report. Cambodia’s cashew sector has strong potential to grow, create jobs and improve incomes for tens of thousands of poorer, rural Cambodians, the IFC report said, adding, cashew nut kernels earn high prices in markets around the world and consumption has been growing steadily in both long-standing and new markets, and is likely to continue.