091015 KH Rice Sector Investment Potential

Potential for AgribusinessPotential for AgribusinessPotential for Agribusiness Potential for Agribusiness Investment in theInvestment in theInvestment in the Investment in the

Cambodian Rice IndustryCambodian Rice IndustryyySok MunirothSok MunirothSok MunirothSok MunirothTim PurcellTim Purcell

11 15 October 200915 October 2009

Overview of Agricultural SectorOverview of Agricultural SectorOverview of Agricultural SectorOverview of Agricultural Sector

50.0%

60.0%

0 pr

ices

)

30.0%

40.0%

50.0%

(con

stan

t 200

200320042005

10.0%

20.0%

al V

alue

Add

ed

0.0%

Per

cent

of T

ota

2003 48 7% 24 7% 3 8% 4 4% 1 1% 3 2% 2 6% 0 8% 3 6% 4 5% 15 5% 28 3% 7 6%

Total Paddy Cassava VegetableSoybeansRubber Maize Tobacco Other CasOther Crop

Crops Livestock Fisheries Forestry

P 2003 48.7% 24.7% 3.8% 4.4% 1.1% 3.2% 2.6% 0.8% 3.6% 4.5% 15.5% 28.3% 7.6%

2004 48.9% 21.5% 6.0% 4.3% 1.8% 3.1% 2.1% 0.3% 5.4% 4.5% 16.0% 27.5% 7.6%

2005 53.7% 26.4% 6.8% 3.7% 2.5% 2.4% 1.7% 1.3% 4.9% 3.9% 14.5% 24.9% 6.9%


Paddy Rice Production in Cambodia Paddy Rice Production in Cambodia

7,000,000 5,986,179 6,264,123 6,672,127 6,855,480

5,000,000

6,000,000

4,170,284

4,000,000

5,000,000 , ,

2,000,000

3,000,000

-

1,000,000

2004 2005 2006 2007 2008


RiceRiceRiceRice

Significant increases in global prices for rice and Significant increases in global prices for rice and other food staples in 2008other food staples in 2008

Rice price rises in Cambodia mirrored global trends Rice price rises in Cambodia mirrored global trends but not as highbut not as high

Cambodia unable to take advantage of Cambodia unable to take advantage of increased global prices because vast bulk of increased global prices because vast bulk of paddy was purchased at harvest and exported paddy was purchased at harvest and exported to Vietnam and Thailand for millingto Vietnam and Thailand for milling

Limited domestic stocks in CambodiaLimited domestic stocks in CambodiaVery limited exports of milled riceVery limited exports of milled rice


Trade Flows of Rice and PaddyTrade Flows of Rice and PaddyLao PDR

4

Unofficial ExportsPaddy

Otdar Mean Chey

Rotanak Kiri

∋4

44

444

Unofficial ExportsPaddy

Imports Thai Jasmine Rice

Banteay Mean Chey

Siem Reab Preah Vihear

Stueng Traeng

∋

444

4

Thailand

Kampong

Bat Dambang

Kampong ThumKrong Pailin

KrachehMondol Kiri

Pousat

4

4

4

4

4

4

Phnom Penh

Kampong SpueuPrey

Veaeng

Chhnang

Kampong Cham

Trade Flows in Cambodia

Viet Nam

Mok Va Border Gate4

44

44

4

444

4

4

Kampot

KandalSvay Rieng

Kaoh KongTrade Flows in Cambodia

Large Flow of Rice

Large Flow of Paddy

Imports of Thai Rice

Imports of World Food Program Rice

Medium Flow of RiceSmall Flow of Rice

Medium Flow of Paddy

200

kilometres1000

Mok Va Border Gate4

Chrey Thom Border Gate

Knom Samnar Border Gate

U ffi i l E t P dd

4

4Phmon DenBorder Gate

4

4

Official Exports

Imports WFPRice

Krong Kaeb

KampotTakaev

Krong Preah Sihanouk

55

Unofficial Exports PaddyRice

15 October 200915 October 2009

RiceRiceRiceRice

Significant opportunities for agriSignificant opportunities for agri--business business investment in integrated contract farming investment in integrated contract farming g gg gand milling operationsand milling operationsReturns to agriReturns to agri business highly variablebusiness highly variableReturns to agriReturns to agri--business highly variable business highly variable depending on year/seasondepending on year/season

But consistent profits can be made through But consistent profits can be made through vertical integrationvertical integration


Profitability of Paddy Production Profitability of Paddy Production y yy y(% Gross Margin) 2008(% Gross Margin) 2008

38 35% 39 39%44.63%

49%55.27%

50.00%

60.00%Farmer Practice

Improved Practice

25.37%

38.35% 39.39%

21.30%

34.16%

30.00%

40.00%

10.22%

0 00%

10.00%

20.00%

0.00%Early Crop Medium Crop Late Grop Dry Season

CropHigh Value

Wet Season CropCrop


Profit Levels along Rice Value Profit Levels along Rice Value Chain 2008Chain 2008

45 00%

31.86%41.25%

30.00%35.00%40.00%45.00%

10 42%

18.75%15.00%20.00%25.00%

6.90% 4%10.42%

0.00%5.00%

10.00%


Seasonal Variation in Rice Seasonal Variation in Rice PricesPrices

Market price of Paddy and Milled rice from January to October 09, 2009(Riels/Kg)

Paddy Jan Feb Mar April May June July Aug Sept 9‐Oct‐09Aroma 1,150 1,200 1,250 1,300 1,350 1,350 1,400 1,500 1,600 1,600Mix 720 640 770 820 850 880 900 920 1,000 1,100IRR(66) 880 930 930 820 680 680 750 780 850 900Milled RiceAroma 2,500 2,700 2,800 2,800 2,850 2,900 3,000 3,050 3,100 3,150Mix 1,100 1,100 1,150 1,250 1,320 1,380 1,420 1,450 1,550 1,750IRR(66) 1,150 1,250 1,280 1,320 1,380 1,350 1,380 1,400 1,520 1,600

(S Ri Mill A i ti )(Source: Rice Millers Association)


Major Constraints in Rice FarmingMajor Constraints in Rice Farming

SeedSeedSeedSeedMaintenance of breeder stock requires significant public Maintenance of breeder stock requires significant public investment that can be undermined by commercial pressures forinvestment that can be undermined by commercial pressures forinvestment that can be undermined by commercial pressures for investment that can be undermined by commercial pressures for breeding centers to be financially viable. breeding centers to be financially viable. Certified seed is available but it is relatively expensive for most Certified seed is available but it is relatively expensive for most f d l 2000 t i t i d d h bf d l 2000 t i t i d d h bfarmers, and only 2000 metric tons is produced each year by farmers, and only 2000 metric tons is produced each year by AQIP Seed CompanyAQIP Seed Company..

Land TenureLand TenureLimited tenure rights (less than 10 percent of farmers hold landLimited tenure rights (less than 10 percent of farmers hold landLimited tenure rights (less than 10 percent of farmers hold land Limited tenure rights (less than 10 percent of farmers hold land titles) discourages investment in agricultural land.titles) discourages investment in agricultural land.


Major Constraints in Rice FarmingMajor Constraints in Rice FarmingFertilizer and PesticideFertilizer and Pesticide

Access to fertilizer and pesticides among smallAccess to fertilizer and pesticides among small scale farmers isscale farmers isAccess to fertilizer and pesticides among smallAccess to fertilizer and pesticides among small--scale farmers is scale farmers is extremely limited due to income and credit constraints, resulting extremely limited due to income and credit constraints, resulting in subin sub--optimal use of fertilizer. Knowledge of appropriate input optimal use of fertilizer. Knowledge of appropriate input

t h l l li it dt h l l li it dusage technology also limited.usage technology also limited.Price of (imported) Chemical fertilizer nearly doubled between Price of (imported) Chemical fertilizer nearly doubled between 2006 and 2007 2006 and 2007 seasons.seasons.

IrrigationIrrigationIrrigationIrrigationLack of irrigation in many areas reduces the productivity of rice. Lack of irrigation in many areas reduces the productivity of rice. Where irrigation is present, operation of water user groups Where irrigation is present, operation of water user groups g p p g pg p p g preplete with politicization and free rider effects.replete with politicization and free rider effects.


Major Constraints in Rice FarmingMajor Constraints in Rice Farming

ProfitabilityProfitabilityIn many areas rice production is a marginally profitable activity In many areas rice production is a marginally profitable activity due to technical factors such as climate and soil due to technical factors such as climate and soil fertility/salinity.fertility/salinity.

CreditCreditE h dit i il bl i l l di i tE h dit i il bl i l l di i tEven when credit is available commercial lending requirements Even when credit is available commercial lending requirements dictate that loans are not tailored to agricultural activities or the dictate that loans are not tailored to agricultural activities or the seasonal nature of agricultural production. seasonal nature of agricultural production. Credit application procedures are complex and not tailored to Credit application procedures are complex and not tailored to small loans sizes for inputs. small loans sizes for inputs. Farmers find it difficult to access loans for emergency cashFarmers find it difficult to access loans for emergency cashFarmers find it difficult to access loans for emergency cash Farmers find it difficult to access loans for emergency cash purposes and have to resort to high interest loans from purposes and have to resort to high interest loans from moneylenders.moneylenders.


Major Constraints in Rice TradingMajor Constraints in Rice TradingTransportation CostsTransportation Costs

Increased fuel costsIncreased fuel costsIncreased cost of vehiclesIncreased cost of vehiclesUnofficial FeesUnofficial Fees

CapitalCapitalHigh interest rates for working capital from moneylenders High interest rates for working capital from moneylenders (Larger traders can obtain short(Larger traders can obtain short--term loans from banks and term loans from banks and MFIsMFIs))

P th t t h l iP th t t h l iPostharvest technologiesPostharvest technologiesShortage of local storage facilities since 2007Shortage of local storage facilities since 2007D i i l b hiD i i l b hi l k f if i t t tl k f if i t t tDrying is only by sunshine Drying is only by sunshine –– lack of uniform moisture contentlack of uniform moisture contentPackaging is only in polyPackaging is only in poly--weave bags at the field/mill levelweave bags at the field/mill levelHandling is becoming expensive as daily wages increaseHandling is becoming expensive as daily wages increase


Handling is becoming expensive as daily wages increaseHandling is becoming expensive as daily wages increase

Major Constraints in Rice TradingMajor Constraints in Rice TradingQualityQuality

Low quality of marketable paddy and riceLow quality of marketable paddy and riceq y p yq y p yPoor milling efficiencyPoor milling efficiencyMost rice is ‘blended’ and not a pure varietyMost rice is ‘blended’ and not a pure variety

InfrastructureInfrastructurePoor roads and bridgesPoor roads and bridgesInadequate storage within the Inadequate storage within the provincesprovinces

Lack of organized channelsLack of organized channelsggMarket places are not well maintainedMarket places are not well maintainedCollection and distribution centers are poorly organized, Collection and distribution centers are poorly organized, PackhousesPackhouses are very inefficient and rely solely on hand laborare very inefficient and rely solely on hand laborContracts are hard to enforceContracts are hard to enforceP k t d d d i i f tiP k t d d d i i f ti


Poor market demand and price informationPoor market demand and price information

Rice Milling CompaniesRice Milling Companies in in CambodiaCambodia

Only small number of mills have a capacity Only small number of mills have a capacity to mill more than 9t/hrto mill more than 9t/hrAngkor Rice. Angkor Angkor Rice. Angkor KasekamKasekamRoongroeungRoongroeung Co Ltd (AKR)Co Ltd (AKR)RoongroeungRoongroeung Co., Ltd. (AKR)Co., Ltd. (AKR)

capacity of 10 tons/hr capacity of 10 tons/hr –– although it only operates at 30% of its capacity. although it only operates at 30% of its capacity. normally processes 20,000 tons of paddy annually,normally processes 20,000 tons of paddy annually, hhas storage for 30,000 tons of paddyas storage for 30,000 tons of paddy..

Golden Rice. Golden Rice. it f 10 t /hit f 10 t /hcapacity of 10 tons/hr capacity of 10 tons/hr

maiden order is to ship 12,000 tons of brown Jasmine to Reunion (via containers) where it maiden order is to ship 12,000 tons of brown Jasmine to Reunion (via containers) where it will be milled and rewill be milled and re--exported to the E.U.exported to the E.U.


Rice Milling CompaniesRice Milling Companies in Cambodiain CambodiaRice Milling CompaniesRice Milling Companies in Cambodiain CambodiaGreen Trade CompanyGreen Trade Companyp yp y

has 6 rice mills has 6 rice mills –– four of which are located in PP four of which are located in PP –– combined capacity of 10 tons/hr. combined capacity of 10 tons/hr. 46 warehouses with storage capacity of 56,000 tons of rice in PP and 5 provinces. 46 warehouses with storage capacity of 56,000 tons of rice in PP and 5 provinces. The utilization rates of the mills and the warehouses appears to be limited as the firm typically The utilization rates of the mills and the warehouses appears to be limited as the firm typically

ill 5ill 5 10 000 t f dd ll Milli i ld f 5510 000 t f dd ll Milli i ld f 55 60% t d60% t dmills 5mills 5--10,000 tons of paddy annually. Milling yields of 5510,000 tons of paddy annually. Milling yields of 55--60% are reported. 60% are reported. The firm’s highest quality rice is a 10The firm’s highest quality rice is a 10%.%.

LorLor NgorNgor PengPeng Rice Mill Co. Ltd. Rice Mill Co. Ltd. rreportedly has a milling capacity of 12.5 tons/hreportedly has a milling capacity of 12.5 tons/hr..

Loran ImportLoran Import--Export Co., Ltd. Export Co., Ltd. 4 mills with a combined capacity of 12.5 tons/hr.4 mills with a combined capacity of 12.5 tons/hr.4 mills with a combined capacity of 12.5 tons/hr.4 mills with a combined capacity of 12.5 tons/hr.Annually mills approximately 20,000 tons of paddy. Annually mills approximately 20,000 tons of paddy. They produce 5% rice, but most of their sales (under “LH” brand) are a 15%.They produce 5% rice, but most of their sales (under “LH” brand) are a 15%.


Rice Milling CompaniesRice Milling Companies in Cambodiain CambodiaRice Milling CompaniesRice Milling Companies in Cambodiain CambodiaMen Men SarunSarun Group Group pp

40 rice mills located throughout the country 40 rice mills located throughout the country process 150,000 tons of rough rice annually. process 150,000 tons of rough rice annually. its largest rice mill has a capacity of 24 tons/hr. Operating 20 days each month, its product its largest rice mill has a capacity of 24 tons/hr. Operating 20 days each month, its product

t dl l lit f ilit / li /WFPt dl l lit f ilit / li /WFP i l li l lreportedly evenly split for military/police/WFP reportedly evenly split for military/police/WFP vsvs commercial sales. commercial sales. the main mill typically processes 90,000 tons annuallythe main mill typically processes 90,000 tons annuallyThe group’s other mills typically have capacities of 1The group’s other mills typically have capacities of 1--2 tons/hr2 tons/hr..

PhouPhou PoyPoy Rice MillsRice Mills2 rice mills on the outskirts of2 rice mills on the outskirts of BattambangBattambang City with a combinedCity with a combined2 rice mills on the outskirts of 2 rice mills on the outskirts of BattambangBattambang City with a combinedCity with a combinedcapacity of 9 tons/hr.capacity of 9 tons/hr.Factories can achieve a milling outturn of 60Factories can achieve a milling outturn of 60--62%. 62%. Having invested in a new hotel in Having invested in a new hotel in BattambangBattambang, the rice mills are operating only 7 days/month., the rice mills are operating only 7 days/month.


Rice Milling Companies in CambodiaRice Milling Companies in CambodiaBaitongBaitong (Kampuchea) Plc. (Kampuchea) Plc.

rice mill in rice mill in BanteayBanteay MeancheyMeanchey ((MongulMongul BoreyBorey district) with a capacity of 2 tons/hr. up to 8,000 tons of district) with a capacity of 2 tons/hr. up to 8,000 tons of storagestoragestorage. storage. a new rice mill is under construction near a new rice mill is under construction near BattambangBattambang City (City (BattambangBattambang District) District) -- planned as a planned as a turnkey facility with 60 tons/hr turnkey facility with 60 tons/hr –– which will make it the largest single rice mill in Cambodia by far. which will make it the largest single rice mill in Cambodia by far. The mill, with its primary focus on the E.U. market, will mill both fragrant and nonThe mill, with its primary focus on the E.U. market, will mill both fragrant and non--fragrant rice and fragrant rice and

t ll ill h i h k b i i t t l th ill’ dt ll ill h i h k b i i t t l th ill’ deventually will have rice husk burning equipment to supply the mill’s energy needseventually will have rice husk burning equipment to supply the mill’s energy needs..

Paragon Corporation. Paragon Corporation. Paragon, which once was involved in rice milling and Trading, shut down its rice operations severalParagon, which once was involved in rice milling and Trading, shut down its rice operations severalParagon, which once was involved in rice milling and Trading, shut down its rice operations several Paragon, which once was involved in rice milling and Trading, shut down its rice operations several years ago to concentrate on property development and construction. With the real estate market years ago to concentrate on property development and construction. With the real estate market having crashed, having crashed, Paragon is in the midst of what appears to be advanced negotiations with potential joint venture Paragon is in the midst of what appears to be advanced negotiations with potential joint venture partners from the Philippines to build a major rice milling operation by 2011 including storagepartners from the Philippines to build a major rice milling operation by 2011 including storagepartners from the Philippines to build a major rice milling operation by 2011, including storage partners from the Philippines to build a major rice milling operation by 2011, including storage facilities located in six different sitesfacilities located in six different sites..

Ying Yang Rice Headquarters. Ying Yang Rice Headquarters. In contrast to the other firms which will mill Rough rice, Ying Yang In contrast to the other firms which will mill Rough rice, Ying Yang –– which is a Cambodianwhich is a Cambodian--French French joint venture joint venture –– will polish and refine milled rice for export. will polish and refine milled rice for export. Located in Located in SihanoukvilleSihanoukville Port, Ying Yang’s processing equipment will be operational by midPort, Ying Yang’s processing equipment will be operational by mid--July with July with a capacity of up to 12 tons of milled rice/hr.a capacity of up to 12 tons of milled rice/hr.


a capacity of up to 12 tons of milled rice/hr.a capacity of up to 12 tons of milled rice/hr.

Major ConstraintsMajor Constraints in Rice Millingin Rice Millingjj ggCambodian farmCambodian farm--gate prices are 35gate prices are 35--40% 40% below those in Thailand andbelow those in Thailand and VietnamVietnambelow those in Thailand and below those in Thailand and Vietnam.Vietnam.This comparative advantage is negated by This comparative advantage is negated by high marketing, milling, and shipping costs high marketing, milling, and shipping costs ––both domestically and via formal export both domestically and via formal export channelschannels..Lack of Working CapitalLack of Working CapitalLack of Working CapitalLack of Working Capital

There is a lack of working capital among millers for purchases of There is a lack of working capital among millers for purchases of paddy at harvest time, due to cash purchases of paddy and paddy at harvest time, due to cash purchases of paddy and sales of milled rice on credit. As a result, rice mills are often idled sales of milled rice on credit. As a result, rice mills are often idled for periods of time, limiting the amount of paddy that can be for periods of time, limiting the amount of paddy that can be domestically milled. Limited capital also precludes improvement domestically milled. Limited capital also precludes improvement


yyin milling technology and expansion in milling capacity.in milling technology and expansion in milling capacity.

Major Constraints inMajor Constraints in Rice MillingRice Millingjj ggLow Paddy QualityLow Paddy Quality

Millers are constrained by poor paddy quality in the form of mixedMillers are constrained by poor paddy quality in the form of mixedMillers are constrained by poor paddy quality, in the form of mixed Millers are constrained by poor paddy quality, in the form of mixed varieties from farmers and/or traders. varieties from farmers and/or traders. Inadequate postInadequate post--harvest handling (particularly drying). harvest handling (particularly drying). This results in high levels of broken rice and limits entry into This results in high levels of broken rice and limits entry into higher value markets and for exporthigher value markets and for export..

ffLow Levels of Milling TechnologyLow Levels of Milling TechnologyHigher levels of broken rice than more modern machines. Higher levels of broken rice than more modern machines. The majority of mills use old equipment from Vietnam and China The majority of mills use old equipment from Vietnam and China that is inadequate for sophisticated sorting of finished rice. that is inadequate for sophisticated sorting of finished rice. Rice milling use diesel engines to process their milling becauseRice milling use diesel engines to process their milling becauseRice milling use diesel engines to process their milling because Rice milling use diesel engines to process their milling because electricity cost is high (Urban electricity cost $0.18electricity cost is high (Urban electricity cost $0.18--0.20 and Rural 0.20 and Rural area is $0.30area is $0.30--$0.90 when Vietnam is less than $0.10 per $0.90 when Vietnam is less than $0.10 per KwhKwh))


Major Constraints inMajor Constraints in Rice MillingRice MillingMajor Constraints inMajor Constraints in Rice MillingRice Milling

Lack of Market AccessLack of Market AccessRice millers have limited access to foreign Rice millers have limited access to foreign ggmarkets, due to the inability to produce markets, due to the inability to produce consistent amounts of standardized varieties consistent amounts of standardized varieties of milled rice. of milled rice. Market access is also compromised by limitedMarket access is also compromised by limitedMarket access is also compromised by limited Market access is also compromised by limited information about foreign market conditions information about foreign market conditions and competitive factorsand competitive factorsand competitive factors.and competitive factors.


List of MajorList of Major International Rice International Rice TradersTraders

Name Location Name LocationName Location Name LocationADM Tarrytown,

New YorkLouis-Dreyfus Corp Geneva

Ascot Commodities

Geneva Nidera Lausanne

Capezzama Geneva Phoenix Commodities BangkokCapezzama Geneva Phoenix Commodities BangkokCerealInvestments Co

Geneva Novel Commodities Geneva

Dewisri Paris The Rice Company Roseville, CaliforniaOlam Singapore Toepfer SingaporeGeneral London Voest-Apline BangkokGeneralProduce & Fibre

London Voest-AplineIntertrading

Bangkok


List of Major International Rice List of Major International Rice BrokersBrokers

Jackson & Son Co. (London) Limited Jackson & Son Co. (London) Limited ––LondonLondonLondonLondonSchepensSchepens & Company N.V. & Company N.V. –– BelgiumBelgiumJ.S. Commodities J.S. Commodities -- LondonLondon


MajorMajor Constraints in Rice Constraints in Rice ExportingExporting

Domestic storage facilities atDomestic storage facilities atPrivate millsPrivate millsPrivate millsPrivate millsProvincial levelProvincial levelPort facilitiesPort facilities

Bulk handling transportBulk handling transportBulk handling transportBulk handling transportTrucks, trains, boats within CambodiaTrucks, trains, boats within CambodiaU l di t tU l di t tUnloading at portsUnloading at ports


MajorMajor Constraints in Rice ExportingConstraints in Rice ExportingMajorMajor Constraints in Rice ExportingConstraints in Rice ExportingTransport costsTransport costs

ContainersContainersTruckingTruckingTruckingTruckingInformal feesInformal fees$39 6/MT f PP Sih k ( d$39 6/MT f PP Sih k ( d$39.56/MT from PP to Sihanouk port (around $39.56/MT from PP to Sihanouk port (around $48$48--$50/MT including unofficial$50/MT including unofficial fees and fees and

hh ))otherother costs)costs)TaxesTaxes


Transportation Cost for Agricultural Transportation Cost for Agricultural Products (US$/t/100km)Products (US$/t/100km)15

14

16

7.510

12

46

8

4

2

4

0

Cambodia Vietnam Thailand2626

Cambodia Vietnam Thailand15 October 200915 October 2009

MajorMajor Constraints in Rice ExportingConstraints in Rice ExportingMajorMajor Constraints in Rice ExportingConstraints in Rice Exporting

I t ’ f d lit d tifi tiI t ’ f d lit d tifi tiImporters’ food quality and certification Importers’ food quality and certification standardsstandards

Difficult to certify exports to importers Difficult to certify exports to importers standardsstandardsSPS certification from MAFFSPS certification from MAFFGMP Certification lacking (chemical physicalGMP Certification lacking (chemical physicalGMP Certification lacking (chemical, physical GMP Certification lacking (chemical, physical and biological contamination )and biological contamination )F i ti f ki t i l dF i ti f ki t i l dFumigation of packing materials and Fumigation of packing materials and containerscontainers


KhaparaKhapara beetlebeetle

Opportunities for Agribusiness Opportunities for Agribusiness Investment in RiceInvestment in Rice

Hi h t ti l f i t t d t t f iHi h t ti l f i t t d t t f iHigh potential for integrated contract farming High potential for integrated contract farming and milling operationsand milling operationsSi ifi t h ll i t f dd dSi ifi t h ll i t f dd dSignificant challenges in storage of paddy and Significant challenges in storage of paddy and milled ricemilled rice

L k f d t f ilitiL k f d t f ilitiLack of modern storage facilitiesLack of modern storage facilitiesLack of bulk handling facilitiesLack of bulk handling facilitiesHigh levels of investment in infrastructure neededHigh levels of investment in infrastructure neededHigh levels of investment in infrastructure neededHigh levels of investment in infrastructure needed

100,000 t bulk storage >$15 million100,000 t bulk storage >$15 millionTransportation to Port, Storage at Port, Loading onto Ships, Transportation to Port, Storage at Port, Loading onto Ships, Limited capacity at port for bulk commoditiesLimited capacity at port for bulk commodities

Working Capital requirements significantWorking Capital requirements significant


OpportunitiesOpportunities for Exportsfor ExportsOpportunitiesOpportunities for Exportsfor ExportsExport sales should be focused on high Export sales should be focused on high

lit ti i d l dlit ti i d l dquality aromatic rice and low grade nonquality aromatic rice and low grade non--aromatic rice. aromatic rice.

concessionary financing for lending to rice millers concessionary financing for lending to rice millers for operating andfor operating and capital expensescapital expensesfor operating and for operating and capital expensescapital expensessignificantly lower port and export chargessignificantly lower port and export chargeseventually upgrade transport and porteventually upgrade transport and porteventually upgrade transport and port eventually upgrade transport and port infrastructure infrastructure

i li l i hb ii li l i hb icapitalize on lower transport costs to neighboring capitalize on lower transport costs to neighboring markets by negotiating bilateral bonded markets by negotiating bilateral bonded warehouse arrangementswarehouse arrangements..


091015 KH Rice Sector Investment Potential

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