Shanghai-listed firm mulls fertiliser production in Cambodia
Shanghai-listed firm mulls fertiliser production in Cambodia
A Shanghai-listed firm’s inquiry into the Cambodian agricultural fertiliser market has stirred hopes for the establishment of additional local factories that could lower domestic prices of the plant growth substances from their elevated levels, and underpin the competitiveness of the Kingdom’s agricultural and agro-industrial products on overseas markets.
On March 20, Chea Vuthy, deputy secretary-general of the Council for the Development of Cambodia’s (CDC) Cambodian Investment Board (CIB), met with a delegation from Anhui Guangxin Agrochemical Co Ltd at the CDC – the government’s highest decision-making body for large-scale investments.
The company’s representatives claimed to be seeking to understand the local investment environment as well as the opportunities available in the manufacturing of agricultural fertilisers in the Kingdom, the CDC noted in a statement.
The statement suggested that Anhui Guangxin Agrochemical’s visit to the Kingdom may have been motivated by a meeting between Prime Minister Hun Sen and Chinese President Xi Jinping in Beijing early last month.
It added that Vuthy invited the company to apply for an investment as soon as possible.
Cambodia Rice Federation (CRF) president Chan Sokheang, who is also CEO of Bayon Heritage Holding Group Co Ltd, a fertiliser importer, welcomed the company’s move.
A potential local agricultural fertiliser factory will lower prices for the commodity and bring in more investment to the agricultural and agro-industrial sectors, he said, underscoring that imports account for a sizeable portion of domestic supply.
“We in the agricultural and agro-industrial sectors truly rejoice at and applaud the intent of any players wanting to invest in agricultural fertiliser production, as that would attract many more investors to agriculture, and business in agriculture and agro-industry would also pick up.
“Fertiliser prices will also come down, with [agricultural and agro-industrial] production costs falling in tandem,” Sokheang added.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, reflected on the importance of largely agrarian countries such as Cambodia obtaining the fertilisers needed to grow crops.
As domestic production increases, fertiliser prices dip along with agricultural and agro-industrial production costs, yielding in higher incomes for farmers and investors in the field, he said.
In general, local factories also mean job creation, as well as demand for natural resources and agricultural products such as corn, beans and cassava that can be grown locally, he added.
Vanak explained that, without large-scale fertiliser factories, Cambodia exports raw products to nearby countries to process into finished goods, which it then imports. Substantial amounts of imported fertilisers are required to meet domestic demand, he said, listing Vietnam, Thailand and Japan as notable sources.
“Farmers and agricultural investors … all want large-scale local factories that could bring down the price of agricultural fertilisers, which have been rising every year,” he said, adding that the subsequent diminished production costs will enable Cambodian products to better compete in the international market.
For reference the Ministry of Commerce reported that the Kingdom imported more than $480 million worth of agricultural fertilisers and pesticides in 2022, representing an increase of about six per cent over 2021.
By comparison, data from the General Department of Customs and Excise (GDCE) indicate that Cambodia imported “fertilisers” and “miscellaneous chemical products” (which includes pesticides) to the tune of $276.523 million and $593.407 million in 2022, respectively, down 3.62 per cent and up 40.90 per cent over 2021. These correspond to chapters 31 and 38 of the Harmonised System (HS).
Trading Economics data similarly shows that, in 2021, Cambodia imported “fertilisers” worth a total of $286.91 million, of which $152.03 million was from Vietnam, $90.04 million from Thailand and $5.58 million from Japan.
On the Shanghai Stock Exchange, Anhui Guangxin Agrochemical’s share price fell 0.13 yuan or 0.39 per cent to close at 32.92 yuan on March 21 for a market capitalisation of 21.26 billion yuan ($3.1 billion) and 52-week range of 21.52-34.85 yuan, with 2.77 million shares traded or 52.12 per cent of the 65-day average of 5.31 million, according to the Wall Street Journal.
For the quarter ended September 30, the firm reported sales/revenue of 2.101 billion yuan, down 13.90 per cent quarter-on-quarter; net income of 607 million yuan, down 9.95 per cent; and total assets of 12.467 billion, up 8.43 per cent, the news outlet indicated.
It also noted an EBITDA (earnings before interest, taxes, depreciation and amortisation) for the previous quarter of 801 million yuan, up 14.63 per cent from 699 million yuan in January-March 2022.
