Plans to increase the production capacity of Kampong Thom-based Chey Sambor Cashew Nut Processing Handicrafts is underway despite the current low prices of processed cashew nuts in the international market.
Construction of the plant, which would be built together with a Japanese firm starting October this year, is expected to complete early 2024, said Lai Huot, owner of Chey Sambor cashew nut company.
At present, documents are being prepared for permit application to expand the factory’s capacity while earthworks are ongoing to get the land ready for construction, she told The Post on August 7,
Local customers, who are looking to increase exports, especially to China and Thailand, support her expansion plans, although the production lines have not seen much activity in the past few months as processed cashew prices have dropped.
The plant employs about 100 workers.
According to her, fresh cashew nuts in 2023 are of better quality compared to 2022, with prices rising to $1,500 to $1,700 per tonne from $1,200 per tonne.
However, the price for processed cashew nuts is “very low”.
“Many customers buy processed cashew nuts to export to international markets, but they offer a very low price of about $6.5 per kilogram, which is lower than the cost price. The appropriate price is actually more than $8 per kilogram,” she said.
Lai Huot has previously said the expansion project would see the addition of two or three machines to the existing two machines in the plant.
With the existing machines, the handicraft plant can process between 60 and 100 tonnes of cashew nuts, also known as the finished product, in one month.
On June 14, this year, the Ministry of Commerce, introduced the National Policy on Cashew 2022-2027, which is aimed at developing production, processing and creating a competitive cashew market.
This was to ensure sustainability and economic diversification, as well as turn Cambodia into a major producer and supplier of cashew products to serve local, regional and global markets.
In an interview with The Post, Cashew Nut Association of Cambodia (CAC) president Uon Silot said the national policy is important as it encourages farmers and investors to improve the quality, expand the cultivation and processing of cashew to promote the export of quality finished products to international markets.
In the past, the non-inclusion of cashew nuts in national policies affected growers who experienced market and price problems during harvests.
“Because the local market is small, over 90 per cent of raw or unprocessed cashew products are sold by traders to neighbouring countries to be processed into finished products.
“The exports of unprocessed seeds cost Cambodia millions of dollars a year in revenue. Thus, I believe that the national cashew policy would increase the domestic processing capacity from about five per cent to 30 per cent by 2027,” he said.
Silot claimed that the policy would encourage farmers to strengthen and expand the cultivation of cashew, which has been slow in recent years because of the continuous price decline in raw cashew nuts.
The low price resulted in farmers cutting down some 100,000ha cashew plantations to plant other crops.
Regarding the impending rise in processing capacity, Silot said there are around 30 small cashew processing factories and three medium-sized plants in Kampong Thom, Kampong Cham and Preah Vihear provinces.
In order to boost domestic cashew processing to 30 per cent from five per cent now, at least 50 additional medium-sized factories are required, he pointed out.
In 2023, CAC data showed Cambodia had about 700,000ha of cashew plantations, with some 70,000ha at risk of being cleared for cassava cultivation or other crops.
Cashew trees usually bear fruit after five to six years (except M10 and M23 varieties which fruit after two years) and produce yield for 25 years. On average, one hectare of land yields between 1.5 to 1.8 tonnes per year.
In 2019, Cambodia exported about 600,000 tonnes of cashew nuts, 950,000 tonnes in 2020, 1.1 million tonnes in 2021 (about 24 per cent of the total global exports) and 670,000 tonnes in 2022.