AC Supports Improved Production through New Business Venture

How One Agricultural Cooperative Is Expanding Its Business to Support Members

Agricultural cooperatives, or ACs, are common in Cambodia as organizations in which many small farmers work together as a business. Many provide loans or sell agro-inputs to members, or support members to grow and sell their crops. Without business experience and market expertise, however, many ACs find it challenging to operate successfully within Cambodia’s dynamic horticulture market system.

Stoeng Sangkae Agriculture Cooperative is one such AC. Located in Battambang province with roughly 2,500 members, Stoeng Sangkae AC was established in 1998 to provide loans to its members, 80 percent of whom are farmers growing rice, mango, and vegetables, with small business owners comprising the other 20 percent. After officially registering in 2017, the AC wanted to expand its business activities to better support its members, but was unsure of how to begin.

Stoeng Sangkae AC committee members meet to discuss current constraints and future business plans.

©Feed the Future Cambodia Harvest II/2018/Solina Kong

Then, in January 2018, Stoeng Sangkae AC members attended a “Know Your Market” business and marketing skills training hosted by Feed the Future Cambodia Harvest II and partners. Alongside more than 200 horticulture sector actors, including other ACs and agro-input retailers and dealers, Stoeng Sangkae AC members participated in sessions designed to enhance participants’ capacity to market quality agro-inputs and provide technical advice to farmer customers.

Afterwards, the AC decided to begin selling agro-inputs to its members, recognizing room for improvement on its old model. “Previously we bought agro-inputs from nearby input dealers, which is a bit expensive,” said San Sean Ho, the AC committee leader. “Then we would apply those inputs on our farms based on our own experience, which was sometimes ineffective and raised the cost of production.”

With facilitation assistance from Harvest II, the AC connected with two specialized input supply companies. In addition to expanding members’ access to quality inputs, the companies provided technical trainings and on-farm demonstrations on fertilizer and pesticide application, and helped the AC set reasonable input prices for its members.

The AC was still constrained by a lack of capital, however. To help address this constraint, Harvest II facilitated a meeting between the AC committee and a microfinance institution (MFI) to discuss loan opportunities. By establishing collateral and other required documentation, the AC was able to access loans.

By accessing loans from an MFI and connecting with input supply companies, the AC has purchased 20 tons of agro-inputs to supply to its farmer members.
©Feed the Future Cambodia Harvest II/2018/Solina Kong

As a result, Stoeng Sangkae AC has been able to expand its operations to support its members. The AC continues to provide loans to members, and has purchased 20 tons of agro-inputs to sell to producer members, storing surplus in its warehouse. The AC also serves as a mango collector for its farmers, buying 20 tons of mango from its members last year. This year, the AC plans to double its sourcing, selling between 40 and 50 tons of mango to Misota Co., a local mango processing company, through a purchasing agreement facilitated by Harvest II.

By partnering with the MFI, Stoeng Sangkae AC was able to access the capital it needed to expand its business activities, and its agreement with Misota ensures a stable market for its members’ products. “By linking with the input supply companies,” Sean Ho added, “we receive both technical knowledge and reasonable prices, helping us lower the cost of production and increase quality.”

The result is an AC that, by forming mutually beneficial commercial relationships with other market actors, is better equipped to support its members to expand production, improve quality, and increase sales, contributing to a stronger and more robust horticulture market system.

New Horizons for Pursat Oranges

How One Orange Buyer Is Investing in His Supply Chain to Bring More Fruit to Market

Oranges from the province of Pursat are one of Cambodia’s most popular fruits. Prized for their sweet, slightly tart flavor, these unique green oranges are in high demand year-round. During the dry season, however, growers have trouble producing oranges of sufficient quantity and quality, and buyers face difficulties securing an adequate supply.

Khun Sopheap, a collector in Phnom Kravanh district, Pursat province, has partnered with Feed the Future Cambodia Harvest II to address these challenges through improved supply chain management. He began by working with Harvest II to establish and strengthen contract agreements with his growers, arranging to purchase farmers’ entire harvest for an agreed-upon price – 40 percent of which is paid up front – and sharing the costs of inputs with his producers, giving them access to the capital they need to purchase inputs and expand production.

Khun Sopheap has implemented numerous new business practices to improve his supply chain management, helping his producers expand production, increasing his sales.

©Feed the Future Cambodia Harvest II/2018/Solina Kong

To further build Sopheap’s growers’ capacity to produce during the dry season, when the supply of oranges falls by around 70 percent, Harvest II connected Sopheap with two agro-input supply companies to provide his growers with quality fertilizers and pesticides and hold ongoing trainings on their correct use. Harvest II also collaborated with one of the companies to conduct an exposure visit for Sopheap and 10 of his producers to observe drip irrigation systems at successful off-season orchards in other provinces.

“Hearing 1,000 times is not equal to seeing a single time,” said Sopheap, quoting a popular Cambodian proverb. “Drip irrigation is such a good technology to practice on farms. It makes for very convenient fertilizing and watering and saves times and labor, which will help us produce higher quality oranges during the dry season.”

With support from the input supply company, Sopheap decided to pilot drip irrigation on his own farm before showcasing this best practice to his producers and helping them install similar cost-shared irrigation systems on their farms.

An exposure visit, hosted by Harvest II in collaboration with an input supply company, introduced Sopheap and his producers to drip irrigation systems that they can replicate on their own farms.

©Feed the Future Cambodia Harvest II/2018/Solina Kong

“Harvest II is like a bridge to safely bring me across difficult roads,” he said. “I am connected to more actors, which helps me to establish stronger business relationships and increase my sales.”

Sopheap’s success demonstrates the potential of improved supply chain management as a win-win for all market actors. Sopheap increases his sales, while his producers increase production and are thereby able to maintain a stable market for their oranges. The input supply companies expand their business by establishing new loyal customer bases and creating larger markets for their goods and services.

Furthermore, as Sopheap and his various market partners continue to increase their sales and create new jobs, they generate ripples within the horticulture sector, helping establish new business relationship norms. By partnering with entrepreneurs like Sopheap, Harvest II is working towards a more robust market system and a stronger Cambodian economy – and year-round access for Cambodian consumers to delicious Pursat oranges.