Cambodia Banks on Groundbreaking South Korean Investment for Cashew Processing Ascent

Published 2023년 8월 10일

Emerging as a global leader in cashew production, Cambodia faces a significant gap in its processing capacity, limiting its potential in the value chain. With production estimates reaching 650,000 mt in 2023, there's an urgent push for international investments to enhance the country's processing infrastructure. Cambodia anticipates collaboration with South Korea to strengthen its cashew processing sector, following a feasibility exploration mission in Aug-23 regarding the establishment of a plant with a 7,500 mt annual capacity. Authorities bank on the success of this project to attract much-needed future investment into the processing industry.

In recent years, Cambodia has become one of the world's leading cashew producers, following a significant increase in cashew plantation areas since 2017. Production surged as these trees matured (typically three to four years after planting). However, production somewhat decreased from the peaks in 2021, as climate change, high-input costs, and low cashew prices led to the removal of several cashew plantations. In 2023, production is estimated at 650,000 metric tons (mt), ranking it among the top three global producers alongside Ivory Coast (estimated at 1.2 million mt) and India (also estimated at 650,000 mt).

In Mar-23, Prime Minister Hun Sen expressed his vision for Cambodia to be the world's premier cashew supplier. Recognizing the significance of cashews, Cambodia's agricultural strategies have earmarked it as one of 12 priority crops. With ambitious targets, the National Policy on Cashew Nuts plans for a 25% production increase by 2027 and a 50% surge by 2032. While surging cashew production has brought the country many financial and social benefits, the low position in the value chain has limited potential. The country's cashew processing capacity remains notably underdeveloped.

The lack of domestic processing is a common occurrence in many of the world’s top cashew-producing countries. Vietnam, Cambodia's neighbor, dominates the cashew nut processing industry. Vietnam imports raw cashew nuts (RCN) from leading global producers and subsequently exports processed cashew kernels. In 2022, Vietnam accounted for two-thirds of the global cashew kernel exports, even though they produced just 8% of the world's cashews. According to the Cambodia Cashew Association, in the first half of 2023, 610,000 mt of cashews were harvested, of which 574,000 mt were exported to Vietnam and 12,000 mt to India as RCN. In comparison, Cambodia exported less than 200 mt of cashew kernels over the same period.

Cambodia is actively looking to expand its cashew processing capacity, with calls for international investments in infrastructure and processing plants amplified since 2017. The campaign is championed by the Cambodia Cashew Association (CAC) and the Cambodia Cashew Federation, both aiming to foster a domestic processing industry in collaboration with key Far East export markets. In February, Japan’s Top Planning Japan Co., Ltd. expressed interest in constructing a large cashew processing plant in Cambodia, which will also turn the cashew shells into biofuel. However, the feasibility of the project is still under research.

More recently, in Aug-23, the South Korea Overseas Agro-Resourced Association undertook a fact-finding mission in Cambodia, aiming to establish a cashew processing facility. This move might enable South Korea to directly source some of its cashews from Cambodia, bypassing the usual processing in Vietnam. The project’s initial goal is to assess the viability of a plant with a processing capacity of 7,500 mt of RCN annually. Though this might seem modest, it holds potential as a model to entice further investments in the future. The CAC is optimistic that the exploratory mission will lead to establishing a new plant, or at least investment in the current processing facilities. They are banking on the success of this initiative. If the new processing plant proves fruitful, authorities believe it will attract additional international investments to Cambodia's emerging cashew processing industry.

Cambodia has actively sought investments from countries like Japan, South Korea, Singapore, and Malaysia. While these nations might be smaller importers, they've been prioritized due to their economic ties, strategic geographic locations, and potential for further investments in Cambodia.