Improving the Cambodian Palm Sugar Industry
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The Cambodian Palm Sugar Value Chain Men Australasian Agribusiness Perspectives 2019, Volume 22, Paper 12 ISSN: 2209-6612 -------------------------------------------------------------------------------------------------------------------------------------- Improving the Cambodian Palm Sugar Industry Rithysen Men Postgraduate student, Centre for Global Food and Resources, University of Adelaide -------------------------------------------------------------------------------------------------------------------------------------- Abstract The Cambodian people have engaged in palm sugar production since ancient times and it has become a tradition of the Khmer people. Palm sugar has been considered more a commercial commodity over the past 10 years which has led to the use of innovative technology and product marketing strategies. Palm sugar has emerged as a new product that attracts many investors and exporters. In 2015 some 25 per cent (34.9 metric tons) of all types of palm sugar were sold locally, while 75 per cent (103 metric tons) was exported. A value chain analysis is undertaken and finds that, despite making progress, the chain has encountered some challenges such as limited capital investment by producers, lack of technical skills to produce good quality products, high labour intensity and the dangers associated with climbing trees. There are some suggestions proposed for improvement to support the performance of the chain. The suggestions include improving production techniques of producers, making contracts between producer associations and exporters, taking advantage of its existing Geographical Indication status and continuing research and development of the palm sugar sector. Key words: palm sugar, value chain analysis, geographical indication, contract farming Introduction Around 80 per cent of the Cambodian population live in rural areas and most of them depend on agricultural activities for their daily livelihood (MAFF, 2013). The agricultural sector contributed 25.3 per cent of GDP in 2017 (Index Mundi, 2017). From 2007 to 2014, the poverty rate significantly dropped from 47.8 per cent to 13.5 per cent of the population (World Bank, 2019). In terms of food, rice and fish are the basic daily foods that supply protein, while other crops also play important roles for daily life. The sugar palm tree is a common plant in Cambodia. The government has identified the sugar palm tree as one of its national identities, among other plants and animal species, due to its important role in the daily life of rural Cambodians. The tree is considered to be multi-purpose as it provides various benefits from roots to leaves. It can be used for many purposes including stems for construction, fruit for cupcakes, dessert or soup, and the juice can be extracted as palm sugar which provides high incomes for farmers (Borin, 1996). Australasian Agribusiness Perspectives, 2019, Volume 22, Paper 12 Page 204 The Cambodian Palm Sugar Value Chain Men “Thnot” is the common name of the palm tree in the Khmer language and the scientific name is “Borassus flabellifer”. There are two common types of palm tree from which juice can be extracted as palm sugar, namely palmyra palm and coconut palm. Cambodian famers extract palm sugar from palmyra palms (Figure 1). Figure 1. Palm sugar tree in Cambodia The Cambodian people have engaged in palm sugar production since ancient times and it has become a tradition of the Khmer people. The production of palm sugar has been considered more as a commercial commodity over the past 10 years which has led to the use of innovative technology and product marketing strategies. Palm sugar has emerged as a new product that attracts many investors and exporters (MoC, 2016). In addition, there are numerous features that make Cambodian palm sugar well known, including its low glycemic index, organic production, and pleasant taste. In the granulated form, its applications are similar to those of white sugar (MoC, 2016). Kampong Speu palm sugar, in particular, is renowned for its high quality and it was declared as a protected Geographical Indication (GI) product by the Cambodian government in 2010 and registered as a GI product of the European Union in April 2019 (Khmer Times, 2019). In this paper the value chain of palm sugar is examined and some suggestions are made to improve the performance of the chain and to improve the livelihoods of the palm sugar producers. Global Sugar Trade Sugar exists in a significant proportion of food and drinks and is commonly consumed around the world. The consumption of sugar globally was estimated at 173.4 million metric tons between 2015 and 2016, while 54 million metric tons of sugar was exported (MoC, 2016). However, the global market for palm sugar in 2017 was only 747,525 metric tons although it is expected to reach 958,512 metric tons by 2025 (Persistence Market Research, 2019). One of the reasons for this growth is concern among people over diabetes and obesity resulting from excess sugar consumption. Palm sugar has a low glycemic index of 35 versus 90 for white refined sugar. Sugarcane and sugar beet are the two main sources of world commercial sugar. Sugarcane accounts for about 74 per cent of the global sugar market, while sugar beets accounts for nearly 25 per cent. The remaining small proportion includes sugar from palm, sorghum and the sugar maple. Australasian Agribusiness Perspectives, 2019, Volume 22, Paper 12 Page 205 The Cambodian Palm Sugar Value Chain Men From 2008 to 2016, Brazil was the world’s largest sugar producer, followed by India, the European Union, Thailand and China (Figure 2). Within the same period, Brazil was also the world’s top sugar exporter, followed by Thailand and Australia (USDA, 2016) (Figure 3). According to the recent food outlook by FAO, Brazil remains the world’s top exporter of sugar accounting for 34.4 per cent of sugar exports (FAO, 2019) (Figure 4). Figure 2. Top global sugar producers Figure 3. Top global sugar exporters Indonesia, Ethiopia, India, Cambodia and Thailand are the major palm sugar producers, while the United States has the largest palm sugar consumption at around 500 metric tons per month (Ananda Ventures, 2017). Although palm sugar is relatively small compared to the overall sugar market, the market for sugar substitutes is growing considerably. There is an estimate that palm sugar trade globally is relatively small accounting for less than 1,000 metric tons (MoC, 2016). Australasian Agribusiness Perspectives, 2019, Volume 22, Paper 12 Page 206 The Cambodian Palm Sugar Value Chain Men Figure 4: Shares of world sugar exports-2018 (million metric tons, raw value) (Source: FAO, 2019) 5.4% 18.1% India Thailand 35.3% Brazil 34.4% Mexico 4.0% 2.8% European Union Cambodia Palm Sugar Production, Potential for Trade and Market Analysis Production Palm sugar production in Cambodia is consumed domestically in the form of paste and is exported in the form of sugar powder. Although national palm sugar statistics do not exist as it is a new commercial commodity, it is estimated that domestic consumption accounts for about 30 metric tons, while exports accounts for about 100 metric tons (MoC, 2016). However, a rapid appraisal conducted by the Ministry of Commerce estimates that the production of palm sugar is around 14,000 metric tons in paste form. This quantity of palm sugar paste could produce 9,100 metric tons of sugar powder as the output of powder from paste is 65 per cent. Therefore, the export amount of 100 metric tons accounts for only 1 per cent of total production (MoC, 2016). It was reported recently that palm sugar was exported to 25 countries as of 2019 (Sokhorng, 2019). The major importers of Cambodia palm sugar powder are Japan, Korea, Taiwan, Germany, France and the United States. The 2014 export value was estimated to be between US$190,000 and US$290,000. According to statistics from the Ministry of Commerce, Kampong Speu, Kampong Thom, Kampong Chhnang and Svay Rieng are the top four producing provinces in Cambodia. Kampong Speu is by far the largest, with palm sugar powder production increasing dramatically from 24,890 kg in 2013 to 53,262 kg in 2015 (Table 1). Potential for Trade Palm sugar has the potential to reach wider national and international markets due to the substitutability of its granulated form of sugar for white refined sugar (MoC, 2016). In 2016, 1.2 million palm trees were harvested (MoCo, 2016). Despite having no regular update of palm trees, as of 2010 there were around 3 million palm trees (Table 2). According to the Ministry of Commerce, the average productivity of a single tree is 80 kg of palm sugar powder. The production of palm sugar can be estimated at 240,000 metric tons a year. The current estimated production of 9,100 metric tons represents only 4 per cent of the potential (MoC, 2016). Therefore, the potential for export is worth US$648 million, at a palm sugar powder value of US$2.7/kg (Figure 5). Palm Sugar Market Analysis This study uses data on Kampong Speu palm sugar powder (both organic and Geographical Indication (GI) of the Ministry of Commerce) production and trade available from members of the Kampong Speu Palm Sugar Association (KSPA) as an illustration of the value chain (Figure 6). Australasian Agribusiness Perspectives, 2019, Volume 22, Paper 12 Page 207 The Cambodian Palm Sugar Value Chain Men Table 1. Sugar production by different types (kg) of the top four provinces (2013-2015) Year Type Svay Rieng Kampong Thom Kampong Chhnang Kampong Speu 2013 Powder - 1,770 2,950 24,890 Paste 10,030 39,300 19,500 76,900 Bloc 7,200 60 - 1,200 Syrup - - - 600 Total 17,230 41,130 22,450 103,590 2014 Powder - 1,345 830 35,548 Paste 10,230 36,300 22,100 71,950 Bloc 6,400 1,200 - 1,100 Syrup - - - 600 Total 16,630 38,845 22,930 109,198 2015 Powder 678 2,160 1,310 53,262 Paste 11,150 34,200 20,100 47,300 Bloc 6,200 1,600 - 1,320 Syrup - - - 750 Total 18,028 37,960 21,410 102,632 Source: MoC (2016) Figure 5.