With the building of a new processing factory in Battambang, cotton is becoming a popular agricultural growth market
If growing cotton is more profitable than corn, I will change.
KERT Serey has grown corn on her 5 hectares of land in Ou village, Battambang province for years, she said, but in July made a decision with her family to commit all her land to growing cotton.
She wasn’t the only farmer in the area to make the switch, despite a recent malaise that saw the domestic industry lie almost completely dormant for close to 25 years.
Up to this year, farmers in western Cambodia were growing only about 50 hectares of cotton per year, mainly in Battambang but also Pailin, Banteay Meanchey and Siem Reap provinces.
Since the planting season began in July, farmers in the area have put roughly 1,200 hectares of cotton under cultivation, a figure that is expected to grow 40 percent annually in the coming years, said Kong Chan, project manager of Seladamex Co, which recently completed construction of a US$2 million cotton-processing plant 28 kilometres outside of Battambang town in Sdao commune.
“We want to revive this … crop,” he said.
Like many industries in the Kingdom, the cotton industry began to die during the Khmer Rouge era when almost all agricultural resources were focused on rice production. Between 1965 and 1975, the industry – established by the French – thrived, and thousands of acres of the crop were harvested each year.
Although planting continued under the Pol Pot regime, a lack of markets for the cotton, coupled with years during which insects devastated the crop, led Cambodian farmers all but give up on cotton by 1985.
In September, however, Seladamex’s cotton plant began processing cotton, thereby creating huge demand for the crop.
The plant site itself includes 100 hectares for cultivation, and even taking into account the increasing number of fields converted to cotton, Kong Chan said, the factory will need more.
“Now we are just encouraging farmers to start growing again, so the quantity they are producing is still low: It cannot meet the production capacity of the plant,” he said.
This year Seladamex given 14 tonnes of free cotton seeds, purchased from Vietnam at $8 per kilogram, to Cambodian farmers in a bid to spur production, said Kong Chan.
Many farmers say that converting to cotton makes good business sense aside from the lure of free seeds. Kert Serey said Thai buyers of corn and beans had regularly dropped the prices they were willing to pay for corn and beans – one of the main reasons that her family switched to cotton this year.
“I am not worried about the market because I have seen the [cotton] plant with my own eyes,” she said.
The factory has attempted to persuade farmers to switch to cotton by guaranteeing $400 a tonne, a price guaranteed in a written, legally binding contract, says Kong Chan.
San Mong Tol, a 20-year-old farmer in Neangpuon village, Battambang province, said that although he still has doubts about whether his cotton will be bought, he plans to step up from 1 hectare of cotton this year to 7 hectares next year if things go well this harvest.
“This is just a pilot growing project,” he said, adding that his revenue would be comparable to that from growing corn.
In terms of insecticides and clearing weeds, cotton is less expensive and time-consuming compared to corn, he added.
Another farmer in nearby Treng commune, 62-year-old Chhim Meng, said he also has doubts because of the huge increase in the supply of cotton that is likely to follow this year’s harvest.
“If growing cotton is more profitable than corn, I will change and grow cotton on my other 7 hectares next year that currently grow corn,” he said, after planting 7 hectares of cotton recently.
From 7 hectares of corn he would expect to get about $3,500 in revenue, he said, and he could expect an output of at least 2 tonnes of cotton per hectare, or $5,600 for 7 hectares selling cotton at $400 per tonne to Seladamex.
Given the current price of cotton on world markets and dropping global supply, farmers in Cambodia should be optimistic about getting more for their crop in the near future.
Demand up as supply falls
The International Cotton Advisory Committee said Monday that world cotton production would fall 4.7 percent in the year until July, mainly due to a declining crop in China, the biggest producer. At the same time, the Washington-based organisation said in a report this week, consumption will rise to 23.6 million tonnes from 23.1 million tonnes.
Demand for the material is also likely to increase at the Seladamex factory, Kong Chan said. The plant is capable of processing 15 tonnes a day, meaning that if the 1,200 hectares now under cultivation were to result in 2 tonnes per hectare come harvest time, there would only be 2,400 tonnes of cotton for the year. Kong Chan says he hopes to see at least 1,000 tonnes harvested. The factory can handle about 5,475 tonnes per year, and there are plans for expansion of the facility, he said.
Currently the plant can separate only dried raw cotton, but there are plans depending on financing to add $1.5 million in machinery to produce thread and cloth, Kong Chan said. This capacity would provide an obvious advantage for a garment industry that relies exclusively on imported raw materials. This is the aim in the next five years, he added.
“I have spoken to factories in Vietnam, China and South Korea and they told me that they would buy all the cotton we have,” he said. “They will buy at the international market price of roughly $1,500 a tonne.”
The only stipulation, he added, would be reaching a level of quality that Cambodia is struggling to attain.
Seladamex also hopes to sell to the only complete cotton-processing plant in Cambodia, in Kampong Cham province, which currently relies on Taiwanese imports – “if they grant us a competitive price”, Kong Chan said.
In the immediate future, farmers in western Cambodia will harvest the first major cotton crop in the past generation starting this month. And once Seladamex processes the resulting cotton, Kong Chan said, Seladamex will export to Vietnam “for the first time”.