INTERNATIONAL demand for animal feed is pushing corn prices higher, fuelling the growth of the industry in western Cambodia.
Corn prices have increased by some 25 percent year on year, leading to an increase in land being planted, Battambang province farmers said.
“If the prices remain at this level, I will expand my cornfields from 5 hectares to 10 hectares,” said Seng Chenda, 36, a corn producer in Rotanak Mondol district’s Treng commune.
Her corn fetches between US$130 and $135 a tonne this year, compared to 2010 prices of between $100 to $110 per tonne.
Kheng Samnang, 30, a farmer who has two hectares planted with corn this year, hopes the price will continue to increase.
“I will continue to crop corn if the price keeps increasing but if not, I will grow cassava as many farmers right now are growing cassava,” she said.
The rise in prices is caused by increased demand for export, which agro-industry firms say provides opportunity for expansion.
South Korean-owned KOGID Cambodia Company plans to build four more corn processing plants in the Kingdom by 2013 at a total cost of US$38 million, said the firm’s Sales and Marketing Manager Seng Sokhom.
International orders for animal feed are on the upswing, leading to the expansion plans, he said.
The firm had exported 50,000 tonnes of corn last year, but aims for exports as high as 70,000 to 100,000 tonnes in 2011 to meet the increased international demand.
“We want to expand our exports overseas this year,” he said.
The firm intends to open a processing plant in Pailin province by year’s end, with further expansion to follow over the next two years.
“We plan to set up three more corn-drying plants in Kampong Cham, Kandal, and Kampong Speu or Kampong Som (Preah Sihanouk) provinces by 2013,” he said.
The firm had launched in 2009 with an announced $150 million investment to grow and process corn, based out of Battambang province’s Rotanak Mondol district.
KOGID Chief Production Manager Ha Min-woo said the Kingdom’s agriculture sector was growing rapidly, with strong potential to develop further.
“We want to push agriculture here, letting the international market know about Cambodia and bring more profit to local people,” he said. The firm is eyeing expanding production of agricultural products such as cassava, rice and beans, as well as corn.
KOGID is looking to increase the practice of contract farming, where the price for the crop is set at the start of the season through contracts inked with farmers.
Presently, farmers are often at the mercy of market forces when they sell their produce at the end of the harvest season.
“Farmers are selling corn to Thai and Vietnamese brokers, and these markets are unpredictable,” he said.
“Sometimes they buy at a low price, and sometimes they don’t buy at all.”
However, local corn brokers say farmers have received higher prices in recent months.
Kim Huoy, a Rotanak Mondol district corn broker, said increasing prices for corn has led to more farmers growing the crop.
“We expect to export 200 tonnes of corn to Vietnam at a cost of $120 to $130 per tonne, compared to last year’s $100 per tonne,” she said.
Demand for corn from Vietnam and local firms such as CP Cambodia was on the upswing, driven by animal feed production.
“Corn is a good product to sell this year, and prices are increasing too,” she said.
Corn exports had jumped 38 percent compared year on year in the first two months of 2011, the latest period for which statistics are available, according to the Ministry of Commerce Camcontrol department.
In January and February 6,694 tonnes of corn was shipped to foreign markets, including Thailand, Vietnam and Taiwan, compared to 4,481 tonnes in the same period last year.
“We welcome foreign investment in the sector to export overseas,” Ministry of Commerce Secretary of State Chan Nora said yesterday.
Cambodian authorities worked to promote export-quality corn on international markets, with China seen as a particularly strong future destination for corn shipments.
“We can export directly to China with agriculture products, as they [Chinese experts] have already checked the quality of products, certifying it as good enough to export abroad,” he said.
Meanwhile, corn fell for a fifth straight week on speculation that warmer weather will aid crop development in the US, the world’s biggest producer and exporter.
However, it has increased about 77 percent over the last 12 months, US government data showed. ADDITIONAL REPORTING BLOOMBERG