Farmers and industry insiders say the potential for domestic sales is there as demand rises – but there are hurdles to overcome

Cambodian dairy industry veteran Keo Sun dreams of a return to the 1960s, when he was in charge of operations at Apsara Milk Factory and the state-owned company sold dairy products throughout the region.

“During that time we exported milk to Hong Kong, Thailand and Vietnam, which didn’t produce milk as it does today,” Sun recalls. “But now we are behind those countries due to the civil war.”

After the Khmer Rouge era, Sun returned to the industry, but a lack of funding and scant dairy farming know-how means dairy production has never really recovered.

But, with rising domestic consumption in a country that imports all of its dairy produce, Sun and many others are eyeing a comeback for the Cambodian dairy industry.

Sun is acting president of the Cambodia Dairy Cow Association, an organisation with 10 members and 20 cows producing just 50 litres of milk for local buyers each day.

He has years of experience with the ups and downs of the sector, having begun a dairy farming project in Koh Krobei Village in Mean Chey district 16 years ago.

Helped by Swiss food giant Nestle’s venture into Cambodia in 1998, the dairy farmer was tasked with recruiting fellow farmers for a cross-breeding program that would see them artificially inseminate local stock with sperm from breeds producing greater quantities of milk.

“At first, there were 40 people interested in this project,” Sun recalls.

“Back then, the villagers had about five to six cows per household and, in the year 2000, Nestle bought artificial breeding equipment and sperm from Australia,” he said.

But things didn’t quite go to plan.

In 2002, Nestle shut down production of its only locally produced product – Bear Brand Sweetened Creamer, as production had become economically challenging, much of which the company said at the time had to do with the smuggling of dairy products over the border from Thailand, rendering locally made goods uncompetitive.

Sun, however, remembers a different set of problems that year that led to the downfall of the project.

“It was flooded all around. At Koh Krobei there was no grass for the cows to eat, not even space for them to sleep. Around 60 per cent of the cows died, although a few people decided to stay on,” he said.

“Over the years, no less than 100 hybrid cows were born that could take milk production to another level, but farmers sold them when the beef price went up; some others sold the cow because it was necessary to feed the family,” he added.

Yang Saing Koma, president of the Cambodian Center for Study and Development in Agriculture (CEDAC), whose organisation has offered to help sell smallholders’ milk in the past, said the potential for domestic sales is there but there are still many hurdles for production to overcome.

“There is big market for dairy products out there, but farmers need training on raising techniques, capital and facility to be able to produce according to the demand,” he said.

Aside from the handful of very small producers, like those with the Cambodia Dairy Cow Association, the Kingdom imports all its dairy products, and the import numbers have been rising.

Cambodia-specific figures are difficult to come by, but one indication of growing demand is that the Kingdom’s imports of dairy, including milk, cream, butter and cheese, have jumped from $4 million in 2009 to $15 million in 2013, according to the UN Commodity Trade Statistics database.

Increased consumption has attracted some bigger players in recent years, but there are still challenges to overcome before production on an industrial scale becomes economically viable.

In 2011, 7NG Group entered into a joint venture with Sweden’s HPT Dairy Company, investing in a $2.5 million dairy cow farm and fresh milk production facility aiming to produce 1.2 million litres by 2012. Despite the optimism surrounding the deal at the time, the project has yet to yield Cambodian-made products.

Another who has long eyed the market is Mong Reththy Group (MRG), who in 2009 planned a $27 million dairy farm with British farming firm Lordswood Farm to supply both meat and dairy products to the local market. The plan is now on hold as MRG say the high cost of animal feed makes production unsustainable.

“If the feed issue cannot be solved, we will not be able to go on with the project,” Mong Reththy, president and CEO of MRG told the Post.

Reththy’s project is eyeing 1,000 head of cattle. Even that, he added, would accommodate just 10 per cent of the local market. “Cambodia imports 100 per cent of its necessary dairy products. The market is so huge we would need 10 farms with 1,000 cows each producing 20 litres per day to reach that demand,” he added.

For the farmers at the Cambodia Dairy Cow Association, there is still hope that challenges can be overcome and their persistence will one day pay off.

“We are in a stage of expanding milk production and need to find bigger markets. Once farmers can produce enough milk, we can start setting up a processing facility,” Keo Sun said.