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.