Cambodia Investment Review

Cambodia chili targeted as export of choice to regional markets

Cambodia chili targeted as export of choice to regional markets

Brian Badzmierowski

Cambodia chili exports to Malaysia, Singapore, Thailand, and Indonesia will soon receive a boost after a joint study conducted by the General Directorate of Agriculture (GDA) and German Cooperation revealed untapped potential in the regional market.

The study commissioned by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) found that implementing strict quality and safety standards, streamlining production, and focusing on specific niches like organic chili exports could reap benefits for farmers, processors, and exporters in the Kingdom.

The Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) is a German development agency.

GIZ technical advisor Sin Sokhomony said that although many ASEAN countries grow chilis, they also heavily rely on imports from India or China. Malaysia, Thailand, and Indonesia were found to be the ideal regional markets for Cambodian chili exports.

“The potential chili products for export to these three countries are semi-processed products, such as dried chili, chili flakes, chili rings, chili powder, and chili oil. These products are less subjective to the local context or preferences of these countries, unlike chili paste, chili sauce, and pickled chili, all of which require manufacturers to understand the taste preference of people in the export markets,” he said.

“In addition, these semi-processed chili products can serve consumers directly or be used as a raw material in the food processing industry.”

Sin said thoroughly understanding the nuances of these markets was crucial to increasing exports, including researching preferred varieties, packaging and design preferences, and answering the growing demand for organic products. 

Quality and safety improvements needed to capture the organic Cambodia chili market

In a draft study report released last week at a workshop to garner support from the private sector and stakeholders, GIZ recommended the implementation of quality control and food safety systems for farmers and processors to ensure chili products meet international standards and appeal to importers in the target markets.

The development agency said it would partner with government agencies, including the Ministry of Commerce, to work with potential chili exporters to find possible importers in the target countries and establish business relationships.

Reliable supply chains and partnerships between farmers, processors, exporters, and government agencies would also be essential to growing the industry, per the report. 

Sin said Cambodia could capitalize on the growing demand for organic chilies in the target countries by growing chilis with low chemical residue that fulfill organic requirements.

The study reported that Thailand is home to an upscale organic market worth $20.2 million with an 8.5 percent annual growth rate. Singapore’s organic market is worth $50.2 million and is growing 20-30 percent per year, according to the study.

Smallholder cashew and cassava farmers in Cambodia will soon receive a much-needed boost in modernizing their farming techniques and reaching larger markets thanks to a new six million euro ($6.975 million) project being spearheaded by GIZ.

Investment needed to upgrade the chili value chain

Producing seeds domestically is another priority, as Cambodian chili farmers currently rely on imported seeds – mainly from Thailand – that may not be completely compatible with the local climate.

The report said that GDA’s breeding stations and the Cambodian Agricultural Research and Development Institute have the ability to implement chili breeding projects, but funding is needed.

Sin said: “Investment to develop the chili value chain is absolutely needed. Private sector [actors] such as producers and processors should increase their capital to boost production and processing capacity. Private and public banks, namely SME Bank and the Rural and Agricultural Development Bank, play an important role in supporting the capital for those key actors.”

Other recommendations included relocating chili plantations to higher altitudes to offset the low production during the rainy season and teaching farmers crop rotation techniques to reduce the risk of disease.

Processing techniques also need an overhaul to take advantage of increased demand for dried red cayenne chilis. Mixing traditional sun drying methods with the use of dehydrating machines would keep electricity costs down while allowing processors to increase their output, per the report.

Training and investment are also needed to increase the capacity of pepper processors. Currently, proper hygiene standards aren’t followed uniformly in the industry and improper storing methods lead to lesser quality products, the report said.

Three-year window to carry out each of its recommendations

The study also analyzed four major private pepper companies to assess their readiness for international export and found that only one – La Plantation – was currently qualified. The other three lacked in areas such as processing capacity, packaging fit for export, and motivation to serve the export market.  

In addition, GIZ will also support smallholder cashew and cassava farmers in Cambodia will soon receive a much-needed boost in modernizing their farming techniques and reaching larger markets thanks to a new six million euro ($6.975 million).

Chilis were chosen as the main focus of the study after a GIZ-commissioned research project completed in October 2020 found that the chili industry had less developmental and private sector support than the mango and cashew industries.

Despite this lack of support, chili exports are on the rise. According to the GDA, Cambodia exported 67,547.34 tonnes of chilis from January to July of 2021, an increase of almost 50 percent from the previous year.

Related Articles