Facilitating global access to Cambodia’s fruits and vegetables

A business implements a holistic approach, applying interventions at various levels to improve the horticulture supply chain

Observing supply chain challenges occurring throughout Cambodia’s horticulture sector, the newly established, joint-venture company AgriOn Cambodia (AgriOn) devised a multifaceted action plan that envisions a dependable, sustainable supply of locally grown, safe fruits and vegetables to domestic and international markets. Investing to improve storage and logistics, working with producers to adopt improved production practices and establish traceability systems, and developing formal contract agreements with producers, AgriOn aims to implement a new business model to promote Cambodia’s horticulture sector on a global scale.

Feed the Future Cambodia Harvest II “Harvest II” awarded an Investment Accelerator grant to AgriOn to support the expansion of their operations through an investment in logistics and cold-storage equipment. The investment includes cold rooms, refrigerated trucks, conveyers, cleaning machines, water filtration systems, packaging machines, and other equipment. This equipment improves the collection and transport of fruit and vegetables. Refrigerated trucks transport fresh, quality produce to a cold storage facility to wash, clean and package it in accordance with food safety standards, followed by refrigerated transport to local and international markets. Since receiving the pay-for-performance based Harvest II grant, AgriOn invested $221,469 and hired 23 new employees including eight females.

Harvest II awarded a grant to AgriOn to establish a sustainable supply chain to domestic and international markets.

The investment improves storage and logistics and promotes compliance with food safety standards, increasing local and international competitiveness and access to Cambodia’s products. AgriOn’s Director Mr. Marith Chhor recently stated, “with the grant from USAID, it not only helps us in funding, but it may help us access more high-value markets like the US and EU, and give more chances to Cambodian growers.”

AgriOn’s multi-pronged action plan includes forging a dependable and high-quality supply chain by working closely with local agricultural cooperatives (ACs) and farmers to supply quality inputs, provide training, and connect them to reliable suppliers of greenhouse technology. In collaboration with PDAFF, AgriOn works with their producers to implement good agricultural practice (Cam-GAP) standards to improve quality and yields. In March, AgriOn provided technical training to 187 producers from 18 ACs in Battambang province, sharing various practices including crop cultivation, land treatment, and soil testing.

AgriOn signs contract farming agreements with representative from ACs to supply various fruits and vegetables.

Encouraging development across Cambodia’s horticulture sector, AgriOn establishes contract farming with farmers and farmer groups.  The company signed contract farming agreements with a total of 418 farmers from 33 ACs across 11 provinces. Mr. Nop Nun from Tasei AC and Mr. Long Mom from Meanchey AC, representatives from two producer groups that have contract agreements with AgriOn, shared that they are very happy working with AgriOn and receiving the support they provide, including technical support, record keeping, and market access.

In collaboration with various partners including Harvest II, AgriOn continues actively working to improve Cambodia’s horticulture sector through the implementation of a holistic, multi-pronged approach.  AgriOn is establishing a sustainable supply of local and safe fruits and vegetables to both domestic and international markets through investment, training, and contract farming.

 

 

 

 

 

Exposure visit encourages market & product diversification

New connections unlock a multitude of exciting opportunities in the longan subsector. 

Uncertainty regarding standards, quality and packaging creates challenges in the fresh and processed longan sector. To address these issues and expand distribution, longan actors require a better understanding of market expectations in terms of quality, quantity, and production requirements.

Observing these challenges, Feed the Future Cambodia Harvest II “Harvest II” organized two events for longan actors to learn, observe, and develop connections in potential markets. Harvest II assembled 16 longan actors including processors, exporters, suppliers, a logistics company, and agricultural cooperatives (AC) from Battambang province to discuss collaboration opportunities. Harvest II recruited a consultant to assist these actors to increase competitiveness and unlock access to export markets by identifying and exploring target markets. The meeting established new connections and resulted in the members forming a Telegram group to share market and technical information, raw material supply, and logistics arrangements. 

Longan actors visit KCCV Plantation’s market to gain a better understanding of product expectations and requirements.

 Following the meeting, Harvest II organized and conducted a two-day exposure visit to Phnom Penh for 12 longan actors from the newly formed group. Sessions with experienced market actors focused on three areas of growth:

1.    Encouraging the adoption of good manufacturing practices (GMP), hazard analysis critical control point (HACCP), and food processing standards, certified fruit processing companies CSL Enterprise and KCCV Company shared their experiences, provided guidance, and advice to participants.

2.    Promoting value-added longan products, Harvest II introduced the participants to food processing experts at the Institute of Technology of Cambodia (ITC) and Phnom Penh Packaging Company (PPPC) to discuss processing, product packaging and branding.

3.    Facilitating market distribution expansion, introductions and meetings were held between longan actors with buyers, wholesalers, and premium markets.

The visit employed active learning and knowledge sharing to advance the longan sector, promoting improved production standards, value-adding, and diversification. Mr. Uy Chhengheng, co-founder of Navita shared what they learned from the visit, “Navita now knows about Lucky market’s requirement on their new products, that helps Navita improve their products by themselves to be able to sell at Lucky in the future.”

A visit to Chip Mong premium market during the exposure visit resulted in a partnership with CSL.  

Harvest II continues to support increased prosperity and sustainability across Cambodia’s horticulture sector. Working with market actors, Harvest II connects and assists in forging critical partnerships and strategies to improve production practices, strengthen the supply chain and diversify distribution networks.

A chain reaction, beginning with the initial meeting and continuing with the exposure visit, produced a multitude of fruitful partnerships for the longan actors. New market diversification partnerships include KCCV selling Agro Nature’s products in their Phnom Penh markets and CSL Enterprise successfully introducing and launching their new products in AEON, Lucky and Chip Mong premium markets. Engaging product diversification, wholesaler Chheng Sreyleap now supplies fresh dragon fruit to fruit processor Navita for processing. Further agreements facilitated by these events include Yim Bunthoeun supplying fresh longan to KCCV and AC Ponleu Pichenda supplying fresh longan to Chheng Sreyleap and KCCV. Additionally, the group formed Telegram groups with PPPC to share packaging advice and with ITC to access technical information for processed products.

Harvest II continues to support increased prosperity and sustainability across Cambodia’s horticulture sector. Working with market actors, Harvest II connects and assists in forging critical partnerships and strategies to improve production practices, strengthen the supply chain and diversify distribution networks. 

 

Strengthening the Horticulture Sector through Contract Farming

Agricultural Cooperatives in Battambang use contract farming to guarantee consistent and quality supply

Businesses in Cambodia’s horticulture sector are often hampered by the lack of formal agreements to clarify mutual expectations in business dealings. Contract farming is a formal agreement to promote trust and clarify expectations around product quality, quantity, timing, and price. However, many actors fail to form contract farming agreements because they don’t know what’s involved and don’t understand the benefits. 

Feed the Future Cambodia Harvest II “Harvest II” encourages the adoption of contract farming as a tool of mutual benefit for both farmers and buyers. Harvest II facilitated a contract farming signing event between Tasei Agricultural Cooperative (AC) and five ACs, from Battambang and Banteay Meanchey provinces, and the buyer REMIC. The Provincial Department of Agriculture, Forestry and Fisheries (PDAFF) from Battambang served as the witness for the event. In the agreements, Tasei AC agreed to source vegetables from the five ACs based on price, quantity, type of vegetable, and other binding conditions agreed to by both parties. 

Farmers harvest curly cabbages in Tasei Agricultural Cooperative’s net houses in Battambang. 

Before entering into the agreement, Harvest II introduced these ACs to growing safe vegetables under net houses. Observing a strong interest, Harvest II connected them with Tasei AC to provide net house building services and sign agreements to work together. Among these ACs, PichChenda AC originally focused on growing longan but after seeing the benefits, they expanded to also include vegetables. Harvest II supported 30 of the AC’s members’ joining Cam-GAP trainings conducted by PDAFF. 

Prior to the signing of the agreement, Tasei AC sourced around 600 kg of vegetables per day from its members, but after signing the agreement, they can now source an average of two tons per day. Tasei AC supplies these vegetable to REMIC, one of the leading buyers in Phnom Penh, and other buyers across the provinces. Additionally, Harvest II connected Tasei AC with Laey Baitong, a vegetable supplier in Battambang. The two parties have partnered together to capture the growing market demand. 

Harvest II facilitates a contract farming signing event between Tasei AC with five other ACs, and buyer REMIC, witnessed by PDAFF.

Even though many businesses were negatively impacted by the pandemic, Tasei AC has expanded, increasing from 26 to 49 net houses and building an estimated 120 net houses for other cooperatives across the provinces. The expansion created jobs for 26 Cambodian migrant workers returning from Thailand, helping them generate income during the crisis. 

The leader of Tasei AC, Mr. Nob Nun, has worked as a farmer in the past. This experience inspired him to help other farmers implement better farming techniques. He welcomes new ideas and support from various development projects including Harvest II. He shared, “Through Harvest II, we have expanded our services, building more net houses and sourcing more vegetable from other ACs. Through contract farming, farmers are happy to work with us because we help them find markets for their products.” 

Tasei AC is one of many safe vegetable suppliers, working to not only expand their cooperative but also help other ACs grow. Through the establishment of strong connections with multiple actors, Tasei AC brings quality and safe local products to Cambodia’s people, encourages healthy living and promotes the country’s sustainable landscape.

New Financial Product Help Businesses Accelerate Growth

Through Harvest II’s grant, AMK introduces supply chain financing to help address MSME’s financial constraint.

Access to finance is critical for business growth, increasing working capital, improving production, and strengthening the supply chain. Many businesses find themselves unable to expand as they cannot access financing in a timely manner, consequently restricting the effective planning and managing of cash flow.

In January 2020, Feed the Future Cambodia Harvest II “Harvest II” awarded a grant to AMK Microfinance Institution to pilot supply chain financing (SCF) for horticulture MSMEs. SCF is a type of working capital designed to address a company’s short-term financing needs and is a fairly new financial product for AMK.

AMK promoted its SCF model, introducing the customized financing products and services to 26 SMEs (including five women entrepreneurs). As a result, AMK approved the financing of $1.5 million to four market actors including an exporter and input firms in the vegetable and longan subsectors.

Mr. Yim Bunthoeun, a longan exporter in Battambang was one of the actors who qualified for the loan. AMK approved loan  to Bunthoeun to use as working capital to increase his longan purchases. Bunthoeun uses this money to promptly pay farm owners for maintaining the longan farms before flowering and harvesting, and repays AMK after the product is sold. Bunthoeun said, “This loan is important for me as I can expand my purchasing and increase the amount of fresh longan export.”

Yim Bunthoeun collects fresh longan from farmers ready to export to Thailand.

To support Bunthoen on quality production, Harvest II linked the exporter to input firms Khmer Angkor Farmer (KAF) and Drone Khmer Technology (DKT) to receive technical production training and access quality inputs to boost longan yield. In addition, Harvest II supported the General Directorate of Agriculture (GDA) in delivering Cam-GAP training to 422 longan producers.  Forty of these producers applied for Cam-GAP certification, aiming to receive premium pricing for their quality products.

Harvest II assisted Bunthoeun access new markets by connecting him with the safe food mart of KCCV Company in Phnom Penh. The market is currently sourcing 100 kgs of fresh longan per week from Bunthoeun. Harvest II hosted a visit for the exporter to visit and learn about the processing lines of the processing company CSL Enterprise in Phnom Penh, as he would like to set up a longan drying facility to add value to longan. The project also connected him with various processors during business matching events, aiming to increase access to export markets and explore new business opportunities.

Harvest II organizes a business matching event for 16 longan actors to discuss collaboration opportunities.

Bunthoeun said, “I want to expand my export markets not just to Thailand. This is a great opportunity for me to connect with other business partners. Thanks to Harvest II, I have increased not just supply and quality but also access to new potential markets.”

AMK also approved and disbursed supply chain financing to Azaylla in the amount of $20,000. Azyalla used the entire financed amount for expansion of their working capital to a double increase of sales to retail markets such as Chip Mong and Grocerdel in Phnom Penh.

Through Harvest II’s grant program, the project supports various actors including processors, exporters, financial institutions, businesses and farmer associations not just improving production and supply chains, but also accessing new opportunities that help them grow and expand beyond their limits.