Sugar slowly moves to market
Sugar slowly moves to market
Cambodia's five major sugar producers exported just 4 percent of the country’s planned refined sugar capacity to the international market last year, equalling only 80,000 tonnes, a sign that government officials said means the sector still has ample room for growth as sugar companies push for higher yields.
According to data in the yet-unpublished annual report of the Ministry of Industry and Handicraft, nearly 100,000 hectares has been earmarked for sugarcane plantations with a planned capacity of 1.8 million tonnes of refined sugar per year. However, just a small portion of this land is currently under cultivation by five producers: Rui Feng and its four sister companies, Kamadhenu Ventures (Cambodia) Ltd, Phnom Penh Sugar Co Ltd, Yellow Field International Ltd, and Koh Kong Sugar Industry Co Ltd.
The report highlighted that the mammoth $1.5 billion project by Rui Feng could at full capacity earn profits of $180 million a year, providing it stuck to plan.
Oum Sotha, spokesman for the Ministry of Industry and Handicraft, said many sugarcane refinery factories were still working to expand their harvest to be able to export large volumes to the international market.
“The amount of refined sugar exported is still very low and factories need time to expand cultivation and secure purchase orders to speed up production for exporting,” he said.
While Thailand, the world’s second largest sugar producer after Brazil, has announced that it will drop subsidies for sugarcane farmers by the end of the year after a messy dispute with the World Trade Organisation (WTO) over concerns of global price manipulation, Oum said this would not necessarily make Cambodian producers more attractive.
“The Thai decision does not mean that our producers will have a chance to take away from their market control, as there are many reasons behind why it is so large,” he said, “If we want to tap into their market, we have to build up our own quality standards first.”
However, Sok Vanna, deputy director of the department of industrial crops at the Ministry of Agriculture, said the drop of Thai subsidies could help balance the regional playing field.
“If we have fair competition in the market, our yield of sugarcane would get more access to the market and prices would increase,” he said.
According to figures from Ministry of Agriculture, sugarcane was only harvested on 18,288 hectares of land last year, compared to 19,514 hectares in 2015.
“Farmers have moved towards growing cassava, which is easier to grow and harvest,” said Vanna, adding that sugarcane was almost exclusively a crop managed by large agro companies.
Mey Kalyan, senior adviser of the Supreme National Economic Council (SNEC), said sugar producers would need to ramp up exports to stay in business.
“If the slow investment continues, the sugar sector will not grow and we’ll lose the opportunity cost on the land and labour,” he said.
“The slow pace of exports is a serious issue and could lead to bankruptcies.”
