Cambodia agriculture

Processing Is the Missing Link for Cambodian Fruit Exports

Cambodian agricultural products still rely substantially on the Thai and Vietnamese markets — not just because of their geographical proximity, but also because of their looser legal requirements.
A vendor rides a motorcycle loaded with bananas along a street in Phnom Penh on March 17, 2021. Picture: Pring Samrang
A vendor rides a motorcycle loaded with bananas along a street in Phnom Penh on March 17, 2021. Picture: Pring Samrang

Cambodian agricultural products still rely substantially on the Thai and Vietnamese markets — not just because of their geographical proximity, but also because of their looser legal requirements.

Uy Chengheng, 28, studied fruit processing techniques in Thailand while getting his master’s degree in Industrial Engineering from Mahidol University.

It made him think of his home province of Battambang, where there was an abundance of fruit, but farmers struggled amid the peaks and troughs of prices and harvests.

Together with his sister Uy Sothearyna, a graduate in Food Science Engineering from the Institute of Technology of Cambodia, Chengheng started Navita in late 2020. Already, the business is growing from a family enterprise to a company exporting to Australia, Japan and Singapore, and eyeing markets in France, Germany, Italy, Spain and the U.K.

“I observed that there is plenty of fruit in our country, they can do it and the technique is not too difficult, why don’t we start doing it too?” Chengheng said.

Uy Chengheng and his sister Uy Sothearyna
Uy Chengheng and his sister Uy Sothearyna

Navita Food Production began by buying fresh fruits from farmers and turning them into dried fruit products, packaging and reselling their finished products in local markets. They use no sugar or preservatives, and currently offer mango, tomatoes, pineapples, longan and dragonfruit.

Chengheng said that aside from creating jobs and new opportunities, the approach helped stabilize market prices for farmers.

According to the Agriculture Ministry, 64% of Cambodian agricultural exports went to Vietnam and 21% to Thailand in the first nine months of this year.

That is despite free-trade agreements signed with more than 10 partner countries in a bid to grow agricultural exports, Cambodia cannot sell its raw agricultural products directly to developed economies due to sanitary control — the country initially has to export to Thailand or Vietnam for processing.

Fruit is considered a high-risk export product, and it is necessary to follow strict phytosanitary measures. Though Cambodia is developing its value chains, processing capacity and logistic infrastructure, it cannot yet fulfill requirements from third-country markets. Negotiations for sanitary requirements can take one to five years.

The dependence on neighbouring markets creates a higher risk of disruptions due to short-term decisions by those governments, said Ratha Chan, country director of the Cambodia Partnership for Sustainable Agriculture, on Nikkei Asia.

In August, Thailand imposed a ban on longan from Cambodia after China decided to suspend the imports of Thai longan due to mealybugs.

China removed the imposition four days later, but Cambodian farmers and exporters hesitated whether they could re-enter their longan to Thailand's market.

This resulted in government intervention. Prime Minister Hun Sen sent his officials to buy up the Pailin longan, as Agriculture Minister Veng Sakhon said the government would purchase up to $49 million of the fruit.

According to Chan, the lack of processing capacity is the main barrier for the country's agricultural sector.

The lack of capacity is due to insufficient human resources, a high cost of compliance to meet standards, lack of accredited laboratories, the sector’s fragmentation, and farmers’ difficulties accessing affordable financing, he said.

Chengheng said that seeing farmers’ produce rot due to lack of market access was part of what spurred him to develop his business with his sister.

Their love for the agroindustrial sector and the combination of their skills and learnings from university were key to their growth, he said.

“The skills we have are the foundation of our business, despite being new to the market,” Chengheng said.

More investment in food processing businesses like Navita is needed for Cambodia to become a food hub for the global market.