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Green Community Project

Project’s name:
Rice Miller, Battambang province

Project owner:
Mr. Phuo Puy, Chairman of Board of Director, Cambodian Green Community

Location:
National Road No. 05, 3 kilometers from Battambang downtown

Project’s aim:
– To build rice miller and mill rice for exportation and local consumption, create local employment, and collect paddy in order to stop paddy exportation.
– To establish Farmer Community with high quality and quantity in rice production for exportation.

“Establish Country Exporter Community in ASEAN” and “Promote Rice production to make Cambodia to become a rice exporter country in an average of 500,000 tons every year”, the high recommendation of Samdech Hun Sen, Prime Minister of Cambodia.

Project areas:
– To purchase paddy from village communities in Pursat, Battambang, and Banteay Meanchey provinces
– To mill rice for exporting at 10,000 tons in the first year and double in the next year

Project’s production capacity: –   Paddy dryer with capacity of 30 tons per hour

  1. Rice miller with capacity of 30 tons per hour.
  2. Paddy purchasing and milled rice from Pursat, Battambang, and Banteay Meanchey provinces
  3. Establishing Farmer Community in 546 villages in Pursat, Battambang, and Banteay Meanchey provinces
  4. Establishing paddy market to link between traders, farmers, and Royal Government

Construction period:        – 8 months, start from July 2008 on the land area of 9 hectares
– A building for dryer with capacity of 30 tons per hour
– Rice miller with capacity of 30 tons per hour
– Warehouse for paddy and rice storage

Project estimation cost:  USD 15,000,000.00
            Capital:                  USD   1,000,000.00
Bank’s borrowing:     USD 14,000,000.00

            Long-term borrowing            USD 5,000,000.00
Short-term borrowing           USD 9,000,000.00

Project’s Output:
-The farmers in Cambodian Green Community will be supplied seed, fertilizer, agricultural equipment as a loan, and loan for rice producing in North-West area for economic development.

– Establishing paddy market to ensure the price for local consumption and milled rice to export to international market at 10,000 tons in the first year and to stop paddy export.

– 54,600 farmers will obtain the benefit through Cambodian Green Community

Paddy Production in North-West Are

Basic Indicator in 2006

Sources: Key Indicators of Developing Asian and Pacific Countries: Cambodia

Introduction:

         Rice cultivation in Cambodia is recognized the coverage area on agricultural production and used as staple food for people. Cambodia has cropping land area about 2 million hectares for rice cultivation, and the yield about 2.26 million tons in the harvest season in 2006-2007. In the 1960s, Cambodia used to be in the rice exporter country in ASIA. Recently, Cambodia can produce as an average of wet-season paddy about 1.8 tons per hectare and dry-season paddy about 3 tons per hectare. Paddy yield has exceeded the local consumption since 1998, especially in 2005, 2006, and 2007, paddy production is produced over food demand as an average of 2 million tons per year.

In 2006 and 2007, paddy yield has increased up to 6.2 million tons which exceeds local consumption about 2.2 million tons that enables us to export rice about 1 million ton at approximately USD 540 million. As the result, our nation is proud of economic development which is under the talented leading of Samdech Hun Sen,Prime Minister of Kingdom of Cambodia.


Source: Conference’s reports, Ministry of Agriculture, Forestry, and Fishery

          This agricultural field success is under the talented leading of Samdech Hun Sen, Prime Minister of Cambodia who leads and sets the goal and gives the major priority on this field. Seeing the increase in food demand from year to year and with the best opportunity for Cambodia in producing and milling rice for exporting abroad, Royal Government has highly recommended that “Establishing The Rice Exporter Countries Association in ASEAN” and “Promoting rice production to enable Cambodia becomes rice exporter.”

North-West areas are huge paddy producing provinces including Pursat, Battambang, and Bantey Meanchey provinces on the land area of 550,000 hectares, about 25% of paddy production land area and irrigational system for water supply approximately 40%. In 2007, North-West area produced paddy about 1,315,358 tons deducting seeds and losses during harvesting 13% about 170,996 tons, and food demand in paddy 512,985 tons which had an excess about 631,377 tons.

In the three northwest provinces, there are 737 rice millers in which 467 medium rice millers have capacity to mill from 400Kg/h to 1,500Kg/h and 270 small rice millers have capacity to mill less than 400Kg/h. Those rice millers can collect paddy in average around 400,000 ton/year and maybe 30% of those rice millers mill rice for local consumption in the whole year.

Although these few years Cambodia has exceed paddy, our country still can not export milled rice and especially every wet season Cambodia becomes a milled rice importer.

This is caused of lacking the source of funds for buying stock and technology for drying in order to recycle for domestic consumption and exporting. Another thing, cause of world food demand increasing due to climate condition change which drives rice cropping land decreased, population growth, rice price daily increasing, together with globalization free market has pushed Cambodia to be the paddy exporter fulfilling the demand of exporting country. This paddy exporting has made the local rice’s price change sharply impact the people living condition and it is the greedy of the RGC also. The Price for rice number 2 has increased 20% for 3 months beginning of 2008 comparing to the end of 2007 from USD367/ton to USD440/ton. For rice number 1, price has increased 44%.

Milled rice exporting impacts sharply to the domestic production chain for example some rice millers lose rice production but purchase paddy for exporting to neighboring countries. These factors drive to lacking of rice fragment and bran for animal feeding, no husk for making fertilizers or serving brick/tile production etc… and increase employment after harvesting.

According to Rectangular Strategy of Samdech Hun Sen, Prime Minister of The Kingdom of Cambodia, Agriculture is the main pillar to develop by building some necessary infrastructures such road, bridge, dike, …etc. This makes rural people living condition improvement from day to day.

Based on the geography, economy, product quantity, market demand, price and trust conditions on the Rectangular Strategy Policy of RGC, Mr. Phuo Puy chairman of board green community has decided to invest in the amount of USD 15 million for building rice miller, warehouse, and install rice crop dryer for stock to ensure the quality and mill for local consumption and select the best rice for exporting.

This project plan provide value chain in paddy/rice field taking part in poverty reduction in northwest region and prepare to export rice to the international market.

I. Constructing office, warehouse, rice miller, and installing dryer and machinery, transport.

II. Management structure and human resource demand

III. Production mill recycle of rice

IV. Farmer community formation for paddy exporting and ensure to purchase under market price by guarantee the quality and quantity.

V. Financial status and financial needs

I-Constructing office, warehouse, rice miller, and installing dryer and machinery, transport.

1-1 Geography

Office building, warehouse, rice mill are going to be constructed on 9 hectares along the national road no.5 about 3 km from Battambang town (Battambang-Sereisophon) which are under construction.

1-2 Office building, warehouse and rice miller

  1. Paddy crop dryer installation on 7,200 m2 and has capacity to produce 30T/h or 150T/day.
  2. Rice miller house sizes 9,120 m2 and install rice miller which can produce 30T/h.
  3. Office building, recycle, mill the rice size 7,680m2 and install recycle machine and package can produce 30T/h and can store milled rice around 15,000 Ton.
  4. Head office

.1 small room: 30m2 for 10 persons meeting.
.1 big room: 48m2 for 20 to 25 persons meeting.
.12 office rooms: for 20 persons working.
.1 conference hall: 800m2 for 300 persons meeting.
This construction takes 8 months to build started from July 2008.

1-3 Machinery and Transport means

This investment plan will purchase machinery and transport means for serving the production chain such as:
. 1 Generator 500KW
. 3 Elevator 3T
. 5 Big truck 5 Ton

II-       Management structure and human resource demand

After construction, all production activities are under controlled of board of director and manager. Management structure is formed into 3 level such as Board of Director (shareholders), manager (daily management) which is recruited by BOD and 4 different technical office managers. To ensure the production processing smoothly, this investment plan needs technical office, expert and worker around 58 persons.

Management structure chart

III-Production, mill and recycle rice

3-1 Planning to purchase paddy around 5% of paddy exceed the food demand in northwest around 630,000Ton paddy. This paddy is purchased from Cambodia Green Community, non-member farmer, small rice millers in the northwest provinces around 30,000 Ton for the 1st  year, and 62,000 Ton for 2nd year, 87,000Ton for 3rd year and 108,000 Ton for 4th year and 126,000 Ton for 5th year. Paddy number one 20%, paddy number two 20% and simple paddy 20% and use dryer to dry paddy crop which has capacity to dry 150Ton paddy/day to ensure the quality of rice and not broken many.

Here are the strategies for mutual supply:
a)Purchasing paddy from non-member farmer with the competitive price.
b)Purchasing paddy from green community by providing them funds, fertilizers, seed or agricultural equipment or food supply … etc and then collect back the paddy yield.
c)Rice market establishing in order to purchase paddy from broker or buy and sell paddy and milled rice from others rice millers.

Paddy purchasing in 2009 table

rice, milled rice number two 4,500 Ton rice and 5,700 Ton rice, fragment rice 4,400Ton and bran 4,400Ton. For exporting milled rice is 100Kg provide 45Kg or equivalent to 45%. Simple rice is 100Kg provides 60Kg or 60%. Market supply rice is rice number one and two exporting around 90% and 10% for local consumption and simple rice 50% for export and 50% for local consumption.

Current market, it is expected to distribute to Phnom Penh and some provinces and sell to rice millers either. Whereas the foreign market we have partners such as German, Malaysia, and others countries which communicate with us like Phou & Rickners Rice ( Cambodia) Limited, Kealy Enterprise (USA)-Rice, Euricom (ITALY)-Rice and Others, May 5th Dimension-Belgium, Alter Trade Japan … etc.

Rice Price in 2009 table

IV- Farmer community formation for paddy exporting and ensure to purchase under market price by guarantee the quality and quantity.

4-1 First, need to study about the geography and canal system to the paddy production and be easy to use water to rescue during the draught happening.
4-2 Formation of farmer community 71 communities in 71 villages which have 7,500 member households and continue till community ensure that they can produce paddy in order to meet the demand of factory in order to export.
4-3 Providing credit such as; seed, or cash in order to produce malis, somaly, kroya, and sen pidor paddy …etc.

V-        Financial status and financial needs

Reference to current price and buying and selling in the financial projection for the first year, it shows the surplus of USD 832,382. The average ratio of income to cost of goods sold over five years projection is 1.41. The ratio of income to total expense (exclude depreciation and profit tax) is 1.19. The ROE and ROA for the first year is 83% and 5% respectively. Based on the financial projection and analysis, it require the short term loan of USD 9 million and long term loan of USD 5 million with service fee 1% and interest rate 10% and 6% respectively. The surplus projection will be fluctuated if the interest rate and short term loan changed. The ROE for the second year is increased 3 times and third year is 2 times. The average ROE, ROA and IRR over five year is yearly increased 4.5, 10% and 1.8 respectively. The projection is yearly required for regular working capital USD 10 million and average USD 30 million.

Short term Financial needs for the result above shown as following graphic

On behalf of BOD, Cambodia Green Community, and the owner of this investment plan, we would like to propose the head of RGC Samdech Hun Sen, Prime minister of the kingdom of Cambodia to consider about concessional funds to the investment plan on rice milling in Battambong province in order to benefit the farmers, traders, government officer in the northwest and developing national economy and call for all related ministries for supporting to this investment especially the banks or financial institutions on providing loan for investment plan on exporting milled rice.

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