Local conglomerate Soma Group on Friday signed a joint agreement with Thai company C.P. Intertrade (CPI) to construct a large-scale rice mill and refinery in Cambodia that is expected to produce six times more rice per hour than most large millers in the country, officials from both companies said.
The $50 million project is expected to start operations sometime in the first quarter next year, and will be constructed on 30 hectares of land in Kompong Speu province, Soma Group CEO Sok Puthyvuth said at a news conference announcing the initiative.
“The majority of the investment funds are contributed by our partner for the purpose of increasing production and export of high quality rice to world markets as the global demand for it is very high,” he said.
Mr. Puthyvuth, who is the son of Deputy Prime Minister Sok An, was recently elected as the president of the new Cambodian Rice Federation, which aims to link industry stakeholders and iron out the inefficiencies plaguing the sector.
Once completed, the mill is expected to be able to process 400 to 600 tons of high-quality rice per day, or 62.5 tons per hour, Mr. Puthyvuth said. On average, most rice millers in Cambodia currently mill between about 3 to 10 tons of rice per hour.
Mr. Puthyvuth explained that the Soma Group would contract with farmers and middlemen to offer the best prices that bring higher returns to the farmers. “We will…offer them good prices that bring higher profits to them,” Mr. Puthyvuth said.
Prasit Damrongchietanon, president of CPI, said the two companies would work to target more countries to export rice.
“This joint venture represents a significant milestone for the Cambodian rice industry as CPI will bring its state-of-the-art expertise in rice milling and refining as well as ready market access to more than 100 countries in the world,” he said.
Mr. Damrongchietanon said rice milling and refining machines costing between $15 million and $20 million will be imported from Japan and the U.S. for the project.
The quantity of rice exported from Cambodia during the first five months of the year also increased by more than 1,400 tons compared to the same period in 2013, rising from 146,854 to 148,262 tons, according to the export figures from the Secretariat of the One Window Service for Rice Export Formality.
Industry officials said the low increase of about 1 percent was because Thailand has offered its rice at cheaper prices than Cambodia. For example, long-grain low-quality white rice from Thailand is sold in international markets at about $355 per ton, while the same type of Cambodian rice is sold at $410 per ton.
“Thailand released its high stockpile of low-quality rice at more attractive prices than Cambodia’s,” said Van David, secretary-general of the Cambodian Rice Federation and executive director of Boost Riche, an export company.