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A more direct path for mango exports

A farmer collects harvested mangoes in Kandal province in 2013.
A farmer collects harvested mangoes in Kandal province in 2013. Heng Chivoan

A more direct path for mango exports

Sweet and juicy mangoes grown in Cambodia have been finding their way into top Asian markets for years, but until now only through Thai and Vietnamese brokers, and often repackaged or processed into juices and jams to disguise their Khmer origin.

Local producers’ lack of modern processing and packaging equipment meant the only way to access the lucrative Chinese, Japanese and South Korean markets – where the value of Cambodian-grown mangoes can jump by 6,000 percent – was indirectly through middlemen, who raked off most of the profit. But a number of companies are looking to change this supply chain model, and investing accordingly.

A local subsidiary of Hyundai Corporation, the South Korean conglomerate best known for producing cars and SUVs, is sinking $4 million into developing a processing and distribution centre in Cambodia for mangoes and other fruits. Last November, Hyundai CNF Inc inked a deal with local mango producer Mao Legacy Co Ltd to establish the facility in Kampong Speu province.

“We invested $4 million into an exporting system and facility to produce high-quality mangoes for export to the global market,” Lee Changhoon, representative for Hyundai Corporation (Cambodia) Co Ltd, said yesterday.

The commercial facility will wash, process and package mangoes grown on Hyundai’s 400-hectare plantation, as well as Mao Legacy’s 2,000 hectares of mango farms. A planned expansion will add processing lines.

“To add value, we plan in the next step to set up another facility for drying and freezing mangoes to produce juice, jams, etc,” Lee said.

He added that the synergies of the two companies – Mao Legacy’s network of farms producing high-quality mangoes and Hyundai’s global presence – should readily open new markets in Europe, Asia and the Middle East for premium Cambodian mangoes. The first shipments are expected by the end of the year.

“Firstly we will focus on the Korean and Japanese markets,” he said, adding that the government signed a memorandum of understanding (MoU) with South Korea in December 2015 to begin official exports, while Japanese market regulations were similar to those of South Korea.

Lee said Hyundai’s investment in modern processing and packaging equipment will give local mango farmers an alternative to selling their crop to Thai and Vietnamese brokers. This will not only ensure higher earnings for the farmers, but will protect them from market vicissitudes, such as border closures and temporary import bans by Thai or Vietnamese authorities.

“We will teach farmers and local communities how to produce good-quality mangoes,” he said. “Farmers will no longer have to worry about buyers or price, because we will contract to buy from them.”

Agro-industrial conglomerate Mong Reththy Group (MRG), the first Cambodian company to officially export mangoes, already has a three-year lead on Hyundai.

Since 2013 it has been working with a Singaporean partner to develop a mango processing plant in Preah Sihanouk province. The company is investing in washing and grading machinery, and recently ordered EPE foam-net machines, which envelop individual mangoes in soft packaging material for long-haul shipments.

MRG chairman Mong Reththy said last year his company delivered some 60 tonnes of mangoes to Europe. This year it is looking to crack into the Chinese market.

Reththy compared Cambodia’s mango production potential to that of China’s top mango producing area, Hainan Island, but noted discrepancies in price, volume and quality. Mango farmers in Cambodia can earn between $8,000 and $10,000 per hectare a year, while those in Hainan pull in $25,000 to $30,000 per hectare.

“Cambodia has the potential to grow mangoes much the same as Hainan in China, but the price and quality are different, which limits our farmers’ living standards,” he said.

“We have to learn the technical aspects from them and bring packaging systems here in order to add value to our mango products, especially direct exports to China, which is a huge market.”

A third commercial mango processing facility appeared on the horizon recently. A joint venture between locally incorporated Blooming Pka and Singapore’s InfraCo Asia has commissioned a feasibility study on establishing a mango processing plant in Cambodia.

The project envisions a washing and cleansing facility for fresh mangoes, as well as a processing plant for value-added products such as dried mango and juice. The mangoes would be sourced from local smallholder farmers or cooperatives.

In Chayvan, president of the Kampong Speu Mango Association, which comprises 135 members with 10,000 hectares of mango farms, said direct exports have traditionally been blocked by hygiene-related issues, including critical sanitary and phytosanitary (SPS) certification.

“Our mangoes in Kampong Speu province are recognised as high quality by buyers, but our legal system has proven a barrier to direct exports and our pest control capacity is still limited,” he said.

Chayvan said the absence of SPS certification has resulted in Cambodian farmers having to sell their mangoes to Thai and Vietnamese brokers for as little as 800 riel ($0.20) per kilo.

According to Yin Chansothy, deputy director of the industrial crop department at the Ministry of Agriculture, Cambodia has about 65,000 hectares of mango farms, producing over 1 million tonnes per year.

He said top-tiered mangoes like the ones that farmers sell for just 2,000 riel ($0.50) per kilo in Cambodia can fetch up to $30 per kilo at supermarkets in Europe and South Korea.

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