Hong Long Investment and Development Co Ltd, a jointly-owned Cambodian and Chinese company, is planning to invest $80 million in large-scale agricultural projects in Battambang province in the coming years, a company official said Monday.
“It is a long-term investment,” said Hong Long, company chairman, adding that the company did not expect to turn a profit for 10 to 15 years.
Deputy Prime Minister and Funcinpec’s Parliamentarian for Battambang province Nhiek Bun Chhay said that he had personally developed a relationship with the Chinese investors funding the company and invited them to invest in Cambodia.
“This company is a good one because it is well known in its home country,” he said.
The first phase of the project will be the construction of an $8 million rice-milling factory in Battambang, which produces more rice for export than any other province in the country, Hong Long said.
The company also has plans to use technology imported from China to develop new strains of livestock, rice, vegetables and fruits.
It will be several years, however, before suitable strains are ready, Hong Long said.
Meanwhile, the company will work on developing a sizable plantation—estimated at about 8,000 hectares—by offering contracts to local farmers in Battambang and Banteay Meanchey provinces, he explained.
The farmers will own and work the land themselves but will be provided with Hong Long’s modified seeds. The company will then buy the farmers’ crops and ready them for domestic sale or export.
“After we have good strains for those animals and plants, we will sign contracts with our farmers,” Hong Long said.
One senior government official knowledgeable in Cambodia’s rice industry said he was surprised by the announced cost of the project. Most rice mills that he has seen in Cambodia cost between $2 million or $3 million, he said, speaking on condition of anonymity.
Seng Chhoeurth, Battambang’s deputy director of agriculture, said he was pleased with the prospect of a guaranteed market for the province’s farmers.
“If [farmers] have an assured market, they won’t rush to sell their products for a cheap price after harvest time,” he explained.
Cambodia has a shortage of rice millers and, as a result, unprocessed paddy is often exported at below-market prices.
A representative at the Council of Development for Cambodia said that Hong Long Co had already obtained a license for the rice-milling plant and was in the process of licensing its other investment plans.
Ultimately, the company will also produce packaged beef and dairy products.
Hong Long said that his company was eyeing China as a potentially lucrative market because 297 agriculture products can be exported there tax free.
But all of this will take time, Hong Long warned.
“I think that as long as we are profitable within 15 years,” he said. “It won’t be a long time for agricultural investment.”