A local subsidiary of a South Korean confectionary giant is investing $40 million to develop what it claims will be the world’s largest pepper plantation on a sprawling 1,000-hectare estate in eastern Cambodia, a company executive said yesterday.

Welt Bio Co Ltd, a wholly owned subsidiary of Sam Kwang Food, has already planted pepper on 120 hectares of a 350-hectare plot in Mondulkiri province, and will cultivate the remainder of the plot next year.

Sister company Brise Bio Co Ltd recently purchased the adjacent 650 hectares of land that Welt Bio is preparing for cultivation.

Hojin Yi, director of Welt Bio, said the company was watching commodity spot prices closely, and projections would determine what crop eventually gets planted.

“We will plant pepper or maybe coffee on this land,” he said. “But right now, pepper is still more profitable.”

Welt Bio has also planted pepper on 35 hectares in Tboung Khmum province’s Memot district, with the first harvest expected sometime next year.

According to Yi, the company will produce about 20,000 tonnes of pepper – or about 5 percent of global production – once the full 1,000 hectares under cultivation is ready for harvest sometime around 2020.

Sam Kwang Food has earmarked $40 million for its Cambodian pepper project, with construction of a 4,200-square-metre processing factory at the Mondulkiri site expected to begin early next year.

“We have invested about 60 percent [of this capital] until now, and will invest the remaining 40 percent soon,” Yi said.It is a bold move for a company that prior to arriving in Cambodia in 2014 had no experience in the pepper industry. Yi said his employees have battled various insect pests and plant diseases, but with pepper vines maturing nicely on the company’s pilot plot in Memot district the first returns appear within reach.

According to Yi, the goal of the ambitious pepper project was to diversify the revenue streams of the South Korean confectioner.“Our parent company has been producing chocolate and jams for over 30 years,” he explained.

“We cannot expect much price movement as the price [of these products] has stabilised, so we were looking for another high-profit industry and saw that pepper prices kept going up.”

Yi added that the peppercorns produced on Welt Bio’s plantations would not be used in any of the parent company’s confectionary products. Instead, they will be processed on-site and shipped to Vietnam for delivery to markets in South Korea and Europe.

“We will ship the pepper to Ho Chi Minh City directly using our own trucks,” he said, adding that arrangements for the 280-kilometre trip would be coordinated by a Vietnamese logistics firm.

According to the Ministry of Agriculture, over 6,100 hectares of pepper is currently under cultivation in Cambodia, of which about a third is harvestable.

Local pepper farms – mostly smallholder plots – produced a total of 12,000 tonnes this year, compared to about 9,800 tonnes in 2015. Ministry spokesman Lor Reaksmey said while he was unaware of Welt Bio’s project, a plantation of this scale would create much-needed jobs in a remote corner of the country.

“We welcome support any agricultural investment in Cambodia, as it’s important to help farmers and give people jobs in that area, which should reduce the number of people going abroad in search of work,” he said.

“And if the investment is successful, the company would be able to share its technical experience with farmers or engage in contract farming.”