The dearth of domestic cashew processing plants means many farmers are abandoning the nut and growing more profitable crops: rubber and cassava
Cashew stocks unloaded in Ratanakkiri. Farmers say they are becoming disadvantaged by the lack of local processing plants.
FACED with a stagnant market for local cashews, farmers of the high-end nut are switching to other crops, according to local agriculture experts.
Without domestic processing plants to purchase cashews, farmers are forced to sell to the nearest buyer, Vietnam, which is one of the world's biggest cashew processors and exporters, according to Yang Saing Koma, president of the Cambodian Center for Study and Development in Agriculture.
Cashews in Cambodia are harvested mainly in the provinces of Kampong Cham, Kampong Thom and Ratanakkiri, which are near Vietnam.
"Currently, the cashew nut market in Cambodia is very small, and what we export to Vietnam is just raw product so Cambodian farmers get a bad price," said Yang Saing Koma.
Vietnam imported about 150,000 tonnes of cashews from Cambodia and South Africa in the first half of 2008.
The country has exported about US$850 million worth of cashews this year, according to a Vietnamese news report.
Yang Saing Koma said that in Cambodia the industry would continue to decline unless local processing infrastructure was developed to provide Cambodian farmers a deeper pool of buyers.
Cambodia's only cashew processing plant, the now- defunct CAMAG in Kampong Cham, used to purchase a minuscule 150 tonnes per year, according to Tim Purcell, an agriculture specialist based in Phnom Penh with the NGO Agriculture Development International.
A June 2007 report from the Economic Institute forecasted a decline in the domestic cashew industry.
We export [Raw product] to vietnam...so cambodian farmers get a bad price.
The agency warned that by exporting 95 percent of its raw product to Vietnam, Cambodia was forgoing too much of the value-added chain for its cashew industry to remain profitable.
According to the EIC report, the main barrier to investment in processing plants in Cambodia is staggering energy costs, which remain significantly higher than in Thailand and Vietnam.
Farmers who once dedicated their fields to cashews are now growing rubber and cassava.
"Cashew nuts are only exported to Vietnam, there's really no local market. But with cassava and rubber, they are purchased by local companies at competitive prices," said Suon Dy, head of the Department of Industry, Mines and Energy in Kampong Cham.
He said that at current market prices, one hectare of cashews yields around US$1,000 worth of product per year, compared with nearly $2,500 for rubber and cassava.
Global demand for rubber and cassava has climbed in recent years.
Cassava is used to produce ethanol, one of the main alternative fuels promoted by the global campaign against climate change.
Natural rubber has also been increasingly prized, by China especially, following dramatic hikes in the price of oil, as it is used to make its synthetic alternative.
Local processing conditions also favour the prospects for both crops: Cambodia processes about half the cassava it grows, and by law refines all of its locally harvested rubber.
Meas Sothearvy, head of the agriculture ministry's statistics office, said that while it was too early to tally nationwide yields for this year's harvest, inspections suggest there are significant declines in cashews.
For 37-year-old Prum Chorn and others in the former cashew growing district of Memot in Kampong Cham province, the benefits of switching to rubber crops were overwhelming. "Cashew nut yields once a year and is bought at low prices from middlemen to go to Vietnam," he said.
"Rubber yields daily and is purchased at high prices from rubber factories within the province."
Similarly, Ing Taingleng, 73, from Kampong Thom's Baray district, said he's following the lead of other farmers in the province and this year would replace half of his 20-hectare cashew farm with rubber crops.
"The price of cashew nuts has not changed for several years now; it's still $500 to $700 a ton depending on the quality," he said.
"And we can only export to Vietnam. With rubber, the price is going up a lot and there is a strong market in Cambodia."