Cambodia Export Diversification and Expansion Program – Milled Rice

Project Update - March 10, 2015

In partnership with

Content of Presentation

IFC – a brief explanation

Agro SME Program – EIF CEDEP 1 context

CEDEP 1 ‘milled rice’ project in detail

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IFC - Background

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IFC: A MEMBER OF THE WORLD BANK GROUP

Conciliation and

arbitration of investment

disputes

Guarantees of foreign

direct investment’s

non-commercial

risks

Interest-free loans and grants to

governments of poorestcountries

Loans to middle-

income and credit-worthy low-income

country governments

Solutions in

private sector

development

IBRDInternational

Bank for Reconstruction

and Development

IDAInternational Development Association

IFCInternational

Finance Corporation

MIGAMultilateral Investment

and Guarantee

Agency

ICSIDInternational Centre for

Settlement of Investment Disputes

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EndingExtremePoverty

Boosting Shared Prosperity

From 18% to 3% of world population by 2030

Increased incomes for bottom 40% of every country

An Unprecedented Opportunity: Ending Extreme Poverty in One Generation

THE WORLD BANK GROUP’S TWIN GOALS

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IFC’s Interventions to Support Economic Development of Cambodia

ACCESS TO FINANCE

Increasing access to finance and expanding financial infrastructure

Investment Services

Advisory Services

REGULATORY & LEGAL FRAMEWORK

Improve the environment for doing business

Advisory Services

PS SUPPORT ACTIVITIES

Enhancing competitiveness of the

agribusiness sector

Advisory ServicesInvestment Services

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Investment Services

IFC has committed a total US$ 148 million in Cambodia

Clients

$10,000,000Loan

Cambodia Airport I & II

Lender2004

Equity Investment: Exited in 2014Loans: US$104.33 mil.

ACLEDA Bank

Investor2000

$5,000,000Loans

PRASAC

Lender2012

Société Concessionaire d’Aéroport

ACLEDA Bank PRASAC

INFRASTRUCTURE FINANCIAL MARKETS FINANCIAL MARKETS

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EIF CEDEP 1 - Context

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EIF CEDEP 1 Context

1. Improve the business enabling environment by developing & implementing policy reforms and capacity building activities

2. Enhance the development of SMEs in the agro-processing industry on the basis of a value chain approach for selected sectors

“Development of SMEs in the Agro Industry Sector” – EU program (5 years: 2008 – 2012)

2-year extension in 2012 until December 31, 2014

Multi-donor trust fund of EU, “MPDF” donors (Finland, IFC, Ireland, New Zealand, Netherlands, Switzerland) and Enhanced Integrated Framework/EIF (2013-2015)

Implemented by IFC, Government counterpart MIH and MoC, also working with various other governmental and educational entities

Building on IFC’s Advisory Services experience in Cambodia since 1999

Private Sector Development & Poverty Reduction

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Program Approach: A Concept

Investment Links e.g. ACLEDA

PRASAC

Comprehensive Approach to Agri Sector Development

Improving Business Environment

• Legal and regulatory reform

• Capacity building of SME Secretariat

• Outreach (G-PSF)

Improving Access to Finance

• A2F Policy Reform

• MFI support & product development

• Increase Financing for Agro SMEs

Improving Supply Chain Linkages• Capacity building at firm level

• Promotion of standards and certification

• Promotion of clean technologies

Global & Domestic Market

Enabling AgentsFarmers

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Typical Cambodian SMEs’ ConstraintsA case of Mr Seng Bonsor

Old, inadequate milling technology

Lack of market information

Unclear inspection and licensing regime

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The ‘Cambodia Rice’ Project (RSSP): 2012-2015

Overall Goal of the ProjectTo transform the Cambodian rice market by increasing product quality along the supply chain (from use of high quality seed to improved milling operations and efficiency) and facilitating access to high value export markets.

THE GOAL WILL BE REACHED BY WORKING ON THE FOLLOWING COMPONENTS:

Improving paddy quality

AIM: Increase farmers’ access to improved inbred planting seeds for high value rice varieties.

Enhancing milling efficiency

AIM: Increase the efficiency and output quality rice mills/re-processors through adoption of mill management software and food safety systems.

Marketing Cambodian rice

AIM: Develop and implement a strategy to increase Cambodian rice exports, especially fragrant rice, to support the RGC Rice Export Strategy

The EIF CEDEP 1 Milled Rice Component

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Milled Rice Export Promotion:

Key results as of December 2014

building on IFC’s rice sector support since 2008

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Directly facilitated rice exports: US$ 74 million – more than 50%

is fragrant rice.

World’s Best Rice Award three years consecutively

Revised Cambodian Milled Rice Standards approved

First 6 Cambodian rice mills were HACCP certified

DNA fingerprint of Cambodian fragrant rice varieties established

Cambodian rice heavily promoted in different international trade

exhibitions, conferences and other promotional activities

(THAIFEX Bangkok, TRT Panama, SIAL Paris etc)

Key Project Highlights as of December 2014

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Outcome 1: Enabling Environment for Cambodian private rice sector

• Rice Standards Technical Working Group (RSTWG) and Export Promotion Working Group (EPWG) were established.

• MoU signed between IFC and FCRE (former industry body – currently merged with a newly established CRF) - Formal G-PS started under FCRE reign

• A number of consultations with CRF conducted

• Core Team for Rice Component created – started to engage with project activities, i.e THAIFEX May 2014, 2nd CMB Rice Festival etc

• Revised Milled Rice Standards Approved by MIH (second version)

• On-going capacity building for CRXs with different topics by different key speakers (Subra, Dr. Werner, Dr. Makara)

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Outcome 2: Identifying market opportunities

• International Market Studies on Cambodian rice completed – first

dissemination workshop organized

• Participated in international trade exhibitions (THAIFEX 2013 and

2014), and TRT WRC in HK/CMB - Cambodia won 2nd/3rd WBR Award

• Promotional events: 1st and 2nd CRF 2013/2014, Cambodia: World

Best Rice Cuisine, and business matching with HK Rice Merchants’

Association.

• Developed and published Cambodian rice portfolio catalogue

• Manual on FS developed and training rolled-out.

• Working with local education centers to update FS curriculum

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Outcome 3: Food safety management system and rice branding development and promotion

• Revised Cambodian Milled rice standards approved by Sr. Minister of MIH (second version)

• 6 Cambodian rice mills HACCP Certified – 4 more expected to be certified by June 2015.

• DNA fingerprint of Cambodian fragrant rice varieties established – adopted and issued by CARDI.

• Branding strategy for Cambodian rice is being developed - based on the findings from the market studies, market missions and consultations with industry body and EPWG.

• Continuous promotion of Cambodian rice: promotional materials, VDO clips, FB page, www.WorldBestRice.biz, Youtube, global price index (LRI)

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A rapidly growing export sector and specific interventions

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100,000

200,000

300,000

400,000

2010 2011 2012 2013 (p)Volume of rice export facilitated by the project (directly and indirectly)

Volume of rice export at national level

TRT/WRC 2011

• Seed multiplication • Food safety• THAIFEX 2012• Buyers 'visits • TRT/WRC 2012 • World Best Rice Award 2012

• Seed multiplication• Food safety • THAIFEX 2013 • CAM milled rice standards• Cambodian Rice Festival • TRT/WRC 2013 in HK • International price quotes listed

Key ChallengesReaching targets, but also sustaining growth

• The industry body which IFC has signed MoU with (FCRE) has merged with the NEWLY established CRF – MoC’s strategic move.

Timeframe for the exit strategy need to be adjusted Branding strategy needs to be properly implemented, particularly on

use and protection, and code of conduct needs to be developed. Time to measure the impacts from this branding support is too short.

• Following each market mission, proper market penetration strategies with follow-up plan need to be developed and implemented to realize the full potential – lesson learned from recent market mission to USA.

• FS engagement with rice mill clients takes time, from 12 to 18 months. difficult to see the full impact in short-term (market access)

• Promoting Cambodian rice is really fully depending on a ‘supply chain’ approach: from farm to fork, with improved linkages between seed growers, farmers, processors, traders and exporters.

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Thank YOU