The recent signing of a memorandum of understanding (MoU) between Chinese-owned Artwell Tapioca Limited and two Cambodian firms – ID Capital Plc and Advance Digital World Trade – will significantly enhance the direct export of dried cassava to China, according to Ministry of Commerce officials.
The MoU on “strategic cooperation” between the three companies was formally signed on September 17, on the sidelines of the China-ASEAN Expo in Nanning, the capital city of China’s Guangxi Zhuang Autonomous Region.
Ministry undersecretary of state Svay Nakry witnessed the signing ceremony.
The primary objective outlined in the MoU is to facilitate the export of dried cassava to China within an eight-year timeframe. This is set to unfold in three distinct stages, said the ministry in a September 18 social media post.
Penn Sovicheat, another undersecretary of state and spokesperson for the ministry, highlighted that the ASEAN-China Free Trade Agreement and the Cambodia-China Free Trade Agreement have motivated companies to increase their direct cassava purchases from the Kingdom.
He further noted that in the past, the nation’s cassava exports to China often traversed through neighbouring Thailand and Vietnam, resulting in various challenges related to pricing and market dynamics.
In light of these two significant free trade agreements, numerous local companies have now registered with the commerce ministry, seeking permission to directly export dried cassava to the world’s second-largest economy.
“In Cambodia, we have fertile land for cassava cultivation, attracting Chinese companies keen on direct cassava purchases. Our farmers are committed to maintaining cassava quality. It’s evident that the export of dried cassava to China will see sustained growth,” he said.
He added that most Chinese companies that buy cassava from Cambodia process it into tapioca starch, ethanol and other products as Cambodia’s cassava is of good quality and has a high concentration of tapioca starch, making the processing more profitable.
“We have high hopes for this cassava product, following the success of milled rice and cashew nuts, which we expect can access significant markets, not only in China but to other countries as well. While we acknowledge the market’s competitiveness, we are exploring alternate markets,” he affirmed.
EL Chhinh, president of the Cassava Farmers Association of Cambodia, said a Chinese company had recently engaged in negotiations to purchase cassava from the association. However, the talks were unsuccessful as the firm demanded stringent technical standards while expecting a lower price compared to domestic sales.
“Indeed, selling directly to China can be profitable. However, meeting China’s high standards demands significant capital investment, which we currently lack. I believe that if companies invest in cassava processing infrastructure and technology, exporting directly to China will yield even greater profits,” he suggested.
Chhinh added that this year, cassava cultivation has decreased nationwide by approximately 20 to 30 per cent due to an extensive drought, leading to the loss of many stored seeds intended for planting. Meanwhile, the market price of these seeds has also surged.
A report from the Ministry of Agriculture, Forestry and Fisheries indicates that in the initial eight months of 2023, exports of cassava chips totalled over 960,000 tonnes, marking a decrease of more than 40 per cent.
Fresh cassava exports exceeded 720,000 tonnes, down by over 24 per cent. Tapioca starch exports, at over 24,000 tonnes, declined by more than 52 per cent, while cassava pulp exports surpassed 60,000 tonnes, reflecting a 675 per cent increase compared to the same period in 2022.