CAMBODIA: CORN (MAIZE) PRODUCTION PROJECT An Investment Concept
CONCEPT <ul><li>Cambodia – Is the potential food basket of South-east Asia </li></ul><ul><li>Corn – a basic animal feed raw material and prices are rising </li></ul><ul><li>Approach – large-scale farming (3,000 scaled to 15,000 hectares) using Western technology (centre pivot irrigation) and management; marketed to feed millers in Vietnam and Thailand or for export to China </li></ul><ul><li>Structure – private equity; guaranteed Economic Land Concession; 100% foreign ownership </li></ul>
The Kingdom of Cambodia <ul><li>In the centre of South-east Asia </li></ul><ul><li>Excellent agriculture </li></ul><ul><li>Stable government </li></ul><ul><li>Good market access </li></ul>More maps More information on Cambodia
Corn (Maize) <ul><li>World market 867 myn tons (2011/12) </li></ul><ul><li>Dominated by North America </li></ul><ul><li>Asia is a major net importer (China uses 160 myn tons, other Asian countries import net 40 myn tons) </li></ul><ul><li>Major raw material for animal feed – used for chickens, pigs and cattle </li></ul><ul><li>Demand and prices are rising </li></ul><ul><li>Neighboring countries Thailand and Vietnam have major corn milling and animal feed industries </li></ul>More information…….
Approach <ul><li>Agricultural and market conditions in Cambodia are perfect for corn (maize) production ( link to land use map ) </li></ul><ul><li>The Government of Cambodia grants Economic Land Concessions (ELC) with long-term guarantees </li></ul><ul><li>Foreign investment is welcomed – the UK is the largest foreign investor this year in Cambodia (see footnote) </li></ul><ul><li>Thailand and Vietnam animal feed millers will absorb output </li></ul><ul><li>Note: In 2011 UK is the largest investor with the promised investment of USD 2.22 billion, followed by the domestic investor of USD 1.29 billion and Chinese with USD 1.13 billion (source: sophirom.wordpress.com) </li></ul>
Location of the Proposed Economic Land Concession <ul><li>Kompong Speu Province </li></ul><ul><li>Three hours drive from the capital, Phnom Penh </li></ul><ul><li>On the main A4 route to the port of Sihanoukville </li></ul>
<ul><li>Scale and Technology </li></ul><ul><li>Initial 3,000 to 5,000 ha. plot </li></ul><ul><li>Scaled up to 15,000 – 20,000 ha. </li></ul><ul><li>Fully mechanized </li></ul><ul><li>Centre pivot irrigation supplied by Valmont (Valley), the world’s leading manufacturer </li></ul><ul><li>Three crop harvests annually </li></ul><ul><li>Full community safeguards and social responsibility integrated with the project </li></ul>More about Centre Pivot Irrigation
<ul><li>Productive output </li></ul><ul><li>Three crops a year provide 18 tons per ha. or for 5,000 ha. = 90,000 tons </li></ul><ul><li>At the decade-long actual average price of corn of $136/ton this output is valued at US $12.24 million (GBP 7.65 myn). Current corn price is over US$273/ton. </li></ul><ul><li>Also note that the Thai producer price typically has a premium of 11% over the international corn price. </li></ul><ul><li>Costs: </li></ul><ul><li>A full cost-benefit and returns study is required at feasibility stage. </li></ul>Profitability
Growth Plan Initial 3,000 to 5,000 ha provides a profitable return and solid experience of the production and market conditions With success and knowledge of the market land area can be added incrementally in similar sized plots The business can be vertically integrated with scale into animal feed production The farm can eventually form the basis of animal feed-lots and meat production
Financing Installation and start-up investment costs will be in the order of $3,000/ha (depending on infrastructure requirements. Basic initial capital for start-up of US $15 million ( GBP 9.4 million) Partners Possible co-financers include regional agribusinesses such as Charoen Phokpand or Saha Farms (both Thai animal feed producers; InfraCo Asia may provide start-up capital to cover infrastructure; the Asian Development Bank could be a longer term development partner for financing expansion.
Risks Land grabs - Check this link Country risk - B2 ( Moody's ) B+ ( S&P ) Commodity market risk – Corn price falls below long-run average of US$3.5/bu ($136/ton) Corruption – Contract enforcement is an issue as is extortion and casual corruption Physical safety – Minor from crime and accident, no political risk
About Our Management Team FoodWorks Company Limited is a British-owned Hong Kong based company specializing in natural resource management with a particular focus on agriculture, agribusiness and rural development. We offer a unique range of services to investors and other implementing projects in the world’s most challenging environments. More information on our management team
Thank You For more information: www.foodworks.ag Back to start
More information on Cambodia Population – 14.8 million Constitutional monarchy with an entrenched stable “democratic” government One of the best economic records in Asia, with economic growth growing an average 6.0% for the last 10 years, nearly 8% now Per capita income in PPP - $2,470 and $1,040 in nominal per capita Why Invest in Cambodia?
<ul><li>Cambodia is an attractive investment opportunity for a few key reasons. </li></ul><ul><ul><li>An income tax rate of 20 percent and </li></ul></ul><ul><ul><li>Policy to attract foreign investment </li></ul></ul><ul><ul><li>Additional tax incentives </li></ul></ul><ul><ul><li>Tax holidays of between six and nine years from initial investment. </li></ul></ul><ul><ul><li>Cambodia allows for 100 percent foreign owned businesses. </li></ul></ul><ul><ul><li>Lack of price controls on goods and services </li></ul></ul><ul><ul><li>No restrictions on repatriation of funds </li></ul></ul><ul><li>Its status as an undeveloped country also works to the benefits of investors through tariff-free exports, which Cambodia has when trading with partners like the United States, Canada and Europe. </li></ul><ul><li>Entrance into Cambodia is a gateway to the rest of the ASEAN market and domestically, the signs of an emerging middle class are appearing. </li></ul><ul><li>As part of the Greater Mekong Sub-region (GMS), Cambodia is strategically located in a hotspot for both economic and political influence. over US$10 billion has been pledged for infrastructure projects which will build economic corridors between countries in the region. Back to Main slide </li></ul>Why invest in Cambodia?
Prices of the major food commodities – cereal grains (wheat, corn, rice), oilseeds and beverages have trended up consistently in the last decade. High demand (e.g., from emerging economies with high growth like China) has not been matched with supply. This provides an opportunity for investors. But suitable sites can present challenges – which is where we come in. For more information click here or back to main slide
Management and Technical Expertise Our key management staff and technical experts have years of professional experience operating in the most challenging environments. In 2010-11 they have worked in Afghanistan , Cambodia , Laos, Indonesia, Malawi, Pakistan, South Sudan Tanzania, Yemen. We provide our clients with individual specialist advisors or with teams that integrate various specializations and skills under a FoodWorks Team Leader. For this investment we partner with Valmont , the world’s leading manufacturer of irrigations systems . Key Personnel
Centre Pivot Irrigation Systems <ul><li>Centre pivot irrigation is a form of overhead irrigation consisting of several segments of pipe joined together and supported by trusses, mounted on wheeled towers with sprinklers positioned along its length. The machine moves in a circular pattern and is fed with water from the pivot point at the center of the circle. </li></ul><ul><li>The technology has dramatically changed irrigated agriculture. </li></ul><ul><li>Results include: improved irrigation efficiency, labor saving, and suitability of the system for most soil and topography. </li></ul><ul><li>Improved water distribution has contributed to better yields. </li></ul>Operation and management is relatively simple and can be adjusted for various crops and soils. The system also lends itself well to the application of agricultural chemical such as fertilizer, herbicide and pesticides. Back to Main Slide
Key Staff Dr. Shane Tarr PhD Senior Rural Development Advisor Dr. Tarr has a distinguished academic career and has subsequently worked on a variety of agricultural development projects notably in the Greater Mekong Sub-Region. He has a doctorate in social science and an MSc. degree in agriculture. He speaks Khmer. Back to main slide Geoffrey Quartermaine Bastin Managing Director GQB is an Oxford University educated economist with 30+ years experience of natural resource development particularly in agriculture and agribusiness. He has worked on over 60 projects in Africa, the Middle East and Asia including Cambodia.. Email: [email_address]
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