Hong Kong-based investment firm Green Leader Holdings Group is investing up to $200 million to develop farmland and establish processing factories for the production and processing of cassava in Cambodia.
Due to the ease with which it can be processed into starch, its neutral taste, its thickening capabilities, its favorable textural characteristics, and its low protein and lipid levels which give cassava starch a higher level of purity, cassava is the most popular feedstock for starch production. These qualities have led to a rise in the use of cassava starch in the food and beverage industries as well as in the production of fuel, adhesives, textiles, and paper, resulting in a CAGR of 2.2 percent between 2009 and 2016, and reaching a volume of 6.6 million tons in 2016, according to IMARC Group. Because of the industry’s rapid growth, Cambodia’s cassava industry has been valued at US$500 million per year as of 2015.
In Cambodia, cassava is the second largest agricultural crop after rice, according to the Cassava Handbook supported by China-Cambodia-UNDP Trilateral Cooperation Cassava Project Phase II. Mostly grown by smallholders, the cassava produced in Cambodia is largely exported to neighboring countries that have greater processing abilities. Almost completely dependent on its neighbors, Vietnam and Thailand, Cambodian cassava is then marketed by secondary countries to China and other international buyers.
Currently Cambodia has 600,000 hectares of farmland in cassava production, with an annual output of 14 million tons of fresh cassava according to Ministry of Agriculture, Forestry and Fishery (MAFF) data, reports Khmer Times. However, Cambodia is home to only seven processing plants, some of which are underdeveloped, unsustainable, and lack working capital.
Michael Tse, CEO of Green Leader Holdings, told Khmer Times that the firm plans to develop farmland in the country for the growing of cassava, and plans to build a total of 20 processing plants in order to lift the country’s processing capacity to where Green Leader Holdings Group will be a”game changer” for the industry.
The company already has acquired land in Snuol Special Economic Zone in Kratie province, Cambodia, where ground will be broken on April 1 for the company’s first cassava starch processing facility, which is expected to be online by early November. Land has also been acquired in Tboung Khmum province for the site of the company’s second processing factory.
A third site is currently being scouted between Kratie and Stung Treng provinces – two major cassava producing regions in the country, and by the end of next year, Green Leader expects to have five processing facilities built.
In order to achieve the critical economies of scale necessary to drive industry-wide growth, Green Leader’s factories will all be built as “modules”, or according to a standard design and with standardized equipment to ensure capacity of 100,000 tons of cassava starch per year. Likewise, each plant will be built within 50 kilometers of areas under cultivation that can supply 400,000 tons of fresh cassava per year, as one ton of cassava starch requires four tons of fresh cassava. Such a plan is believed by the investment firm to lead to an ease of training for workers and a higher level of quality control for its product.
Working with MAFF, the UN Development Program, and the Ministry of Commerce (MOC), Green Leader has agreed to establish smallholder contract farming schemes under which the company will provide training, expertise, equipment, and inputs, the cost of which will be deducted from payments given to farmers for the fresh cassava they supply. With this assistance, Green Leader is aiming to lift yields from between 10-15 tons per hectare to 25 tons per hectare.
Through this public-private partnership, Tse explains that the company has been cultivating 2,500 hectares of cassava in Pursat province to strengthen its expertise, and has been engaging with cassava experts in China’s Guangxi province, which is geographically and climatically very similar to Cambodia. The company also is working in partnership with MAFF to establish a student exchange program with Cornell University and the Royal Agricultural University.
-Lynda Kiernan