market opportunity scan (non land based)€¦ · study, the main sources of information were end...

MarketOpportunityScan(NonLand‐Based)

FinalReport

March2014

PreparedforSNVNetherlandsDevelopmentOrganisationby

FINAL

FINAL Page 1 of 59

TableofContentsExecutive Summary ........................................................................................................................................... 2

1 Background .................................................................................................................................................... 5

2 Methodology .................................................................................................................................................. 6

2.1 Assessment Framework .......................................................................................................................... 7

2.2 Data Collection Tools ............................................................................................................................... 8

2.3 Fieldwork Planning .................................................................................................................................. 9

2.4 Fieldwork ............................................................................................................................................... 10

2.5 Data Processing and Analysis ................................................................................................................ 12

3 Opportunity Assessments ............................................................................................................................ 13

3.1 Household Items: Brooms ..................................................................................................................... 13

Case Study: Kampot Brooms ....................................................................................................................... 15

3.2 Chick Breeding ....................................................................................................................................... 16

3.3 Fingerling Breeding ............................................................................................................................... 18

Case Study: Mr. Riech Chan ........................................................................................................................ 20

3.4 Fish Processing: Dried Fish .................................................................................................................... 21

3.5 Incense Production ................................................................................................................................ 24

3.6 Sedge Mat Production ........................................................................................................................... 26

3.7 Noodle Production ................................................................................................................................ 28

3.8 Organic Fertilizer ................................................................................................................................... 30

3.9 Pickled Mustard Greens ........................................................................................................................ 32

3.10 Sausage Production ............................................................................................................................. 34

3.11 Construction Contracting .................................................................................................................... 36

3.12 Summary Findings & Evaluation ......................................................................................................... 37

4 Strategy Recommendations ......................................................................................................................... 39

4.1 Sedge Mats ............................................................................................................................................ 39

4.2 Organic Fertilizer ................................................................................................................................... 43

4.3 Broom Production ................................................................................................................................. 47

4.4 Dried Fish ............................................................................................................................................... 52

4.5 Pickled Mustard Greens ........................................................................................................................ 56

4.6 Other Opportunities .............................................................................................................................. 57

Bibliography .................................................................................................................................................... 59

FINAL

FINAL Page 2 of 59

ExecutiveSummaryThe PADEE (Project for Agricultural Development and Economic Empowerment) has been established to

help the agriculture sector increase productivity and empower the poor people in the provinces of Takeo,

Kandal, Prey Veng, Svay Rieng, and Kampot, with a total of 33 districts, 246 communes and 984 villages (4

per commune). Every village will form an Improved Group Revolving Fund (IGRF), which will have 50

community members per group. The goal is to improve access to finance and improve access to technology

and markets, which shall help the group to sustainably diversify and increase its source of income.

As part of the PADEE project, this market assessment was designed to identify demand‐driven

opportunities for the landless beneficiaries as a supplemental income source. Strong market demand was

the most important selection criteria, followed by feasibility, including for female beneficiaries. Ideas for

potential opportunities were drawn from three main areas: agriculture‐linked processing of food products,

community‐based manufacturing, and vocational skills and service‐based opportunities.

Given the broad range of potential opportunities, our team conducted a thorough assessment of more

than 40 opportunities to identify the top 10 that could potentially be suitable for the project objectives for

primary data collection, specifically opportunities enjoyed high demand locally and potentially on

international markets, relatively simple and inexpensive production process, suitable for women and

appropriate for several producers in the community, among other criteria. The selected opportunities

were:

1. Chick breeding 2. Fingerling breeding 3. Meat processing (sausage) 4. Fish processing (dried fish) 5. Noodle production 6. Organic fertilizer production 7. Sedge mat production 8. Broom production 9. Incense production 10. Construction cooperative 11. Mustard greens pickling

The fieldwork was designed with a significant degree of flexibility in order to allow for quick adaptation in

the field as the new information was discovered. With market demand being the primary focus of this

study, the main sources of information were end consumers, retailers, and intermediaries; producers and

service providers were also interviewed to gather information about production requirements and

constraints to assess feasibility for the PADEE beneficiaries.

It should be pointed out that the eleventh opportunity – pickling – was added in the last two provinces of the field study after it had been identified as a product in high demand. Expanding the scope of the study became possible due to preliminary data analysis on the original ten opportunities that indicated two of them as less suitable for the project beneficiaries. As a result, our team reallocated resources in the field to better align our research with the project objectives.

In addition to interviewing key value chain actors, our team conducted market observations and reached out to local government authorities to gather information for a more complete picture of market demand and local production for each opportunity.

Two rounds of qualitative coding were performed on collected raw data, while available quantitative data were processed separately to be used as supplemental information for developing detailed

FINAL

FINAL Page 3 of 59

recommendations. All eleven opportunities were evaluated by the team members based on our selected criteria to identify the top four with the most potential to serve as a supplemental source of income for landless PADEE beneficiaries. The top four selected opportunities, for which our team developed detailed strategic recommendations, were:

Fish processing (dried fish)

Organic fertilizer production

Sedge mat production

Broom production

However, based on the results of the validation workshop with community members and representatives of the Ministry of Women’s Affairs, our team added recommendations for pickling of mustard greens as the fifth suitable opportunity.

Due to the varying nature of selected opportunities, the recommendations provided are tailored to specific challenges of each individual production process with the understanding that not every opportunity will constitute an appropriate activity for all five target provinces. However, this flexible approach provides the PADEE beneficiaries with a range of options to explore and adapt to the needs and capabilities of their communities. There is also potential for greater community integration and establishment of backward linkages between the beneficiaries with available land and the relatively landless producers, as well as engaging other community members in providing additional services, such as delivery and packaging of the final product. In addition, the EMC team identified several local producers and intermediaries in the target provinces who have been successful in their business and are able and willing to share their experience and provide technical assistance to the PADEE beneficiaries in their communities.

The following tables summarize recommended actions for each of the five opportunities:

Sedge Mats

1. Quality improvement through formalized

training (production techniques, design

concepts, etc.)

2. Production efficiency improvement through

vertical integration and improving

distribution channels and logistics

3. Gradually extend training to more people in

the community to address labor shortages

4. Emphasize establishing strong linkages to

larger markets (domestic and international)

to avoid market saturation Mechanization of

production process

5. Backward linkages with input suppliers within

the PADEE project

6. Engaging local producers’ expertise from

Kandal as an example of successful

community‐based business

7. Consider specializing in one or two different

types of sedge mats and building a local

brand

8. Produce limited amount of associated

products from sedge as a risk mitigation

strategy

Organic Fertilizer

1. Explore the possibility of composting

2. Explore communities’ capability and

willingness to produce biogas

3. Use existing expertise from local and

international NGOs

4. Improve distribution and market links for

manure sellers to create a more coherent

market

5. Consider the possibility of generating

additional income on partially catering to the

demand from Vietnam and other provinces

Pickled Mustard Greens

1. Ensure timely supply and high quality of raw

materials

2. Promote vertical integration of the production

process

3. Provide additional services, such as hygienic

packaging

4. Explore different varieties of pickled mustard

greens

FINAL

FINAL Page 4 of 59

Broom Production

1. Quality improvement through formalized

training (weaving techniques primarily)

2. Production efficiency improvement through

organizing the process on a seasonal basis to

maximize the use of available resources and

produce enough product for the high demand

season (dry season)

3. Emphasize establishing strong linkages to larger

markets through local traders that distribute

the product to a variety of buyers, as well as to

other provinces and Phnom Penh.

4. Engaging local producers’ expertise from

Kampot as an example of successful local

business, as well as case studies from Vietnam

Backward linkages with input suppliers within

the PADEE project

5. Produce limited amount of associated products

as a potential diversification strategy

6. Consider limited exports to international

markets as an additional options for the most

successful manufacturers

Dried Fish

1. Quality improvement, specifically drying

techniques, through introducing

technology

2. Quality improvement through training on

proper processing techniques, storing, and

hygiene

3. Production efficiency increase through

specialization, based on local consumer

preferences and available inputs

4. Strengthen distribution links, both to

larger markets and smaller retailers

Consider establishment of a seasonal

market link to cater to holiday demand

spikes

5. Explore the possibility of providing

additional services, such as product

packaging and distribution

6. Consider establishing market link with

traders who cater to overseas Cambodian

diaspora

FINAL

FINAL Page 5 of 59

1 BackgroundThe PADEE (Project for Agricultural Development and Economic Empowerment) has been established to help the agriculture sector increase productivity and empower the poor people in the provinces of Takeo, Kandal, Prey Veng, Svay Rieng, and Kampot, with a total of 33 districts, 246 communes and 984 villages (4 per commune). Every village will form an Improved Group Revolving Fund (IGRF), which will have 50 community members per group. The goal is to improve access to finance and improve access to technology and markets, which shall help the group to sustainably diversify and increase its source of income.

The objective of this particular study is to identify four viable business opportunities for PADEE beneficiaries. In particular these business opportunities will be non‐land based, i.e., families owning less than a half hectare of land will be potentially able to pursue them. These so called non‐land‐based opportunities are roughly sought in three main areas:

Agriculture‐linked processing of food products

Community‐based manufacturing

Vocational skills and service‐based opportunities

Figure 1: High level opportunity selection process

The study is structured as a rapid market opportunity scan designed with a necessarily flexible research approach, eventually narrowing down a wide range of opportunities into the four most viable ones. Extensive literature review and expert interviews fed into a varied long list of opportunities, which was then narrowed down to a short list of ten opportunities to be researched in the field at the PADEE target area. This selection was done based on our evaluation framework and in agreement with SNV. More details regarding study methodology are outlined in the next section. The resulting livelihood opportunities evaluated in this report are:

Chick breeding

Fingerling breeding

Meat processing (sausage)

Fish processing (dried fish)

Noodle production

Organic fertilizer production

Sedge mat production

Broom production

Incense production

Construction cooperative

Mustard greens pickling1

1 This eleventh opportunity was added in the field research stage after it became apparent that fingerling breeding may not be viable and the team scanned for additional opportunities to evaluate.

FINAL

FINAL Page 6 of 59

2 MethodologyWe started our research with a thorough literature review on conducting general market analysis, as well as more specific studies for agro‐processing and community‐based manufacturing that were available. In parallel with the literature review, we conducted extensive desk research and brainstormed a variety of potential high‐demand opportunities fit for Cambodian context. Other main sources of information were local media sources, and especially expert interviews conducted in Phnom Penh, including with representatives from relevant NGOs, the Ministry of Labor and Vocational Training, and the National Employment Agency.

As a result, we were able to devise an initial set of assumptions that was used as the first and the most general set of criteria, since these assumptions reflect the overall objective of the project:

Market‐driven (focus on demand)

Pro‐poor policies: low risk, low tech, low capital

Focus on the informal economy

Focus on domestic market demand

Preference for female engagement

Preference for supplemental income

Preference for vertical integration

Sustainability

Scalability

This filter yielded what we call the Opportunities Long List of about 40 options for further analysis. The mid‐stage criteria in Phase II addressed the most important market factors with a focus on the demand side, with some variation from sector to sector (see section 2.1). Practical considerations were also taken into account; most importantly the fact that PADEE interest groups of at least 15 people would have to be formed for each opportunity ultimately selected. This led to many of the vocational training centered opportunities such as motorcycle repair to be discarded, as one village will be unlikely to be able to absorb another 15 mechanics into the market.

Additionally, the local nature of such shops (beauty salon, repair shop, etc.) makes a poor fit for a rapid market assessment where only a few locations in each province are visited. Local villages where such services are currently absent, which might give an opportunity to introduce them, are much more easily identified by local authorities. We thus recommend that in areas where there is an interest in setting up these activities, that vocational training be pursued through existing TVET based training centers, based on sensible supply and demand parameters.

Data for these mid‐stage criteria were obtained from the publicly available sources and expert interviews in Phnom Penh. In addition, we engaged resources within EMC (consultation sessions among EMC staff, both local and international), as well as consultation with SNV. In addition, our team focused on identifying opportunities that could be undertaken by more than one household in the community and potentially scaled up in the future, which again disfavored such options as running a beauty salon and providing vehicle repair services.

The mid‐stage criteria were applied to the 40 long‐listed opportunities, which resulted in creation of the Short List of ten options with most market potential for further analysis in the field. The ultimate goal of our research was to be able to rank these criteria by priority for each of the examined opportunities to be able to select the top four with the most potential. Findings from the field research can be found in section 3 of this report, while section 4 contains recommendations for the opportunities found to have sufficiently high potential, primarily based on market demand and absence of prohibitive barriers to entry.

FINAL

FINAL Page 7 of 59

2.1 AssessmentFrameworkThe criteria to filter the long list down to the eventual list of ten opportunities for fieldwork is based first and foremost on the key criteria from the first stage. Additionally a number of possible criteria has been identified to be able to funnel the initially large number of opportunities, resulting in ten opportunities with sufficient potential yet with a certain amount of heterogeneity among the three types. Some of these criteria are general for all opportunities, while others are specific for either agriculture‐linked, community manufacturing, or service‐based opportunities. See the figure below for an overview of the selection criteria.

Figure 2: Selection criteria used to funnel opportunities

FINAL

FINAL Page 8 of 59

EMC used Porter’s Five Forces model as the main source of detailed evaluation criteria for selecting the top four opportunities to recommend. The model, presented below, focuses on competitive rivalry and thus provides a thorough analytical framework for identifying competitive market opportunities without prohibitive barriers to entry.

Figure 3: Porter’s Five Forces Framework

Source: Porter, M.E. (1980) Competitive Strategy, Free Press, New York, 1980.

2.2 DataCollectionToolsUsing the evaluation criteria as guidelines for topics of interest, the EMC team designed two sets of tools for this market opportunity scan: semi‐structured questionnaires and a check list of topics to cover in unstructured key informant interviews. The areas of assessment covered in both research tools included:

Current market demand and patterns

Sales and production volumes

Consumer preferences

Product characteristics

Price sensitivity and willingness to substitute

Market infrastructure

Imports (from other provinces and international)

Associated products

Startup and operational costs

Production requirements, challenges, and barriers to entry

Overall business challenges and opportunities The questionnaires were envisioned as the main data collection tool for this study and were tailored to different types of actors that were selected for interviews. Given the considerable areas of information overlap, the EMC team decided against creating separate questionnaires for each actor within each of the ten opportunities and instead focused on the following eight:

FINAL

FINAL Page 9 of 59

Producers

Buyers (retailers)

Joint retailers/producers

Traders

End consumers

Buyers (farmers)

Buyers (chick/fingerling raisers)

Restaurant owners In addition, several sections of opportunity‐specific questions were added to relevant questionnaires to be used when needed (for example, on quality issues with agro‐processed products and on availability of organic fertilizer). This fit well with the general flexible approach of the study and required a certain degree of on‐the‐spot analysis from the team members.

The interview guides (check lists) were designed for the conversations with local PDA and PDoWA authorities, as well as contractors in the construction industry. Considering the highly flexible nature of such conversations, EMC assigned senior field team members to conduct these interviews.

Given the time constraints and specific objectives of this study, the team decided to use convenience sampling to identify potential interviewees. Specifically, we targeted big markets of provincial or regional level as a place where several key actors were most likely going to be located, such as retailers, end consumers, and even traders. In addition, we used available information to locate as many producers as possible before the start of fieldwork. As a result, our sample should not be considered representative of the entire population in each province. Nevertheless, we were able to triangulate certain data points across different information sources.

2.3 FieldworkPlanningWith flexibility being the main defining characteristic of our research approach, the EMC team invested additional effort into preparatory work for the field study. Our main objective was to schedule and plan in advance all the elements we could predict in order to mitigate potential confusion and mismanagement in the field.

Firstly, EMC asked for SNV’s input on identifying government officials and other actors in the PADEE target districts who might be able to provide contact information for relevant producers in the areas they are responsible for. As a result of this effort, we were able to identify location of several producers and used that information as a starting point in developing our detailed field schedule in order to maximize the utility of our limited time in the field. It should be noted here that not all producers of interest were identified at this stage; moreover, some of the information turned out to be outdated, so necessary substitutes had to be made in the field. Nevertheless, the EMC team was able to create a reasonably accurate field schedule with a certain degree of flexibility built into it to maximize our time in the field.

Based on the predicted locations of key producers, our team was able to identify additional provincial markets to visit that are located in the same areas or on the way, as presented in the table below:

Province Main Market Additional Markets

Kandal Ta Khmao Sa’ang Prek Touch

Prey Veng Prey Veng Neak Loeang Svay Antor

Svay Rieng Svay Chrum Veal Yon

Takeo Takeo Somraong Yong Ank Tasom

Kampot Samki ChukSes Sor

FINAL

FINAL Page 10 of 59

Using estimates on the number of interviews possible to conduct in a day, logistics, team structure, availability of other resources, and factoring in potential challenges, EMC estimated the conservative sample size for this market opportunity scan to be 149 interviews.

Drawing on previous experiences and expertise of our colleagues, EMC team was allocated an additional vehicle for this study to be able to cover a larger geographic area and reach out to as many interviewees as possible.

After careful deliberations EMC decided to include a consultant as part of the field team in order to make quick decisions and better adapt to the unforeseen challenges in the field, as well as maintain constant communication and provide regular updates to the Project Manager and Advisor in Phnom Penh.

Figure 4: Final field team structure

2.4 FieldworkFieldwork was undertaken in the five target provinces (Kandal, Prey Veng, Svay Rieng, Takeo, and Kampot); the first team leader was responsible for Kandal, Prey Veng, and Svay Rieng; the second one – for Takeo and Kampot. The consultant was present in four provinces, except Prey Veng. The same four field researchers were engaged throughout the entire fieldwork, which allowed for them to “own” several opportunities each in order to collect information for a more complete market picture.

In each province, the team split with several people staying at the market to conduct interviews on five or six opportunities, while others went out to the villages to talk to producers, as well as farmers and fish/chicken raisers. At the same time, two senior team members scheduled and conducted one or two interviews with the provincial authorities.

Given the relatively small sample size per opportunity, the team used additional tools at their disposal to gain supplemental information, such as market observations and targeted short conversations with available respondents. These valuable qualitative data were documented and later incorporated into the analysis of the ten opportunities.

Moreover, the team had to adapt to the changing circumstances in the field on several occasions. Several times a one‐on‐one interview would turn into an impromptu focus group discussion, when other retailers and customers joined the conversation. This required altering the style of questions on the spot, as well as demanded more from the interviewer who had to assume the role of the moderator in order to manage

Consultant

Researcher Researcher Researcher Researcher

Team Leader (trip #1)

Team Leader (trip #2)

FINAL

FINAL Page 11 of 59

several channels of conversations. In other instances, the interview had to be paused to allow the interviewees conduct their business activities; in these cases, the team looked for opportunities to obtain additional information through unstructured interviews with the customers and other retailers nearby for a more complete picture.

During our visits to the smaller markets, the team would conduct a quick scan of the available products to evaluate the presence, if any, of the products of interest. After that, team member would conduct brief interviews with available retailers and customers on the most important topics, such as market demand and supply chains.

Additionally, when actors of interest were not available to meet with in person, we collected their contact information and conducted phone interviews, when possible. This was especially relevant for construction contractors and traders, who were often traveling on business during the interview.

Given the necessary flexibility of our approach to identify the most viable market opportunities as quickly as possible, for the second field trip in Takeo and Kampot our team made the decision to reduce the effort spent on two opportunities (fingerlings and incense) and use

available resources for examining another option from our wait list (pickles). This decision was made for two reasons:

1. After three provinces, it had become sufficiently clear that both fingerling breeding and incense stick production had several production constraints that would most likely prevent them from being selected for the final stage.

2. Throughout our market observations, team members noticed the ubiquitous presence of pickles, specifically a certain type of cabbage, and its popularity among consumers, which prompted the decision to reallocate some resources to this opportunity.

It should also be noted here that, while following our research protocol was certainly a priority, in some cases researchers had to think on their feet and adjust the research protocol to the situation on hand, for example:

Several market interviews had to be cut short due to suddenly intensified market activities;

Several respondents were not able to provide certain information, such as specific costs and phone numbers, so those questions had to be rephrased or skipped altogether;

If the identified interviewee was not available for some reasons, researchers had to take initiative and search for other potential respondents in the area who could provide relevant information.

At the end of each day, the team gathered for a wrap up meeting. The main objective was to summarize and record the findings of the day, as well as provide the opportunity for the researchers to give feedback and discuss challenges encountered in the field. Team leaders and consultant provided additional training, coaching and advice in order to improve future work and resolve the issues, when possible.

FINAL

FINAL Page 12 of 59

Overall, due to incorporating previous lessons learned, as well as using additional research tools and quickly adapting to the changing field situation, our team was able to significantly exceed the estimated sample size:

Province Total

Kandal 38

Prey Veng 43

Svay Rieng 40

Takeo 38

Kampot 39

Total 198 interviews

2.5 DataProcessingandAnalysisThe scope of this study presented the team with several challenges during fieldwork. The most important challenge has to do with a relatively small sample size per opportunity (15‐20 interviews on average). Specifically, with such a small sample size ignoring the outliers would mean considerable information loss, so they had to be included in the analysis with proper caution.

Another challenge presented itself in certain questions included in our research tools. Given the educational level and other sociocultural factors attributed to our respondents, more abstract concepts, such as “business success factors”, were sometimes difficult to interpret. There were also issues with questions on market size, as the extent of respondents’ knowledge varied greatly. Additionally, there was no consistency with units of measurement due to the diverse nature of the opportunities in question. This presented additional challenges for processing the quantitative portion of our data.

As mentioned above, the diverse nature of the examined opportunities resulted in two different datasets: quantitative and qualitative. Our team decided to analyze them separately in order to prevent information loss and potentially be able to triangulate some of the findings.

Given the information‐rich qualitative data and a variety of tools employed to collect it, EMC decided to engage the four field researchers in the first round of analysis in order to minimize information loss. To make it possible, consultant and senior team members conducted a brief training on qualitative data coding and supervised the process. As a result, the first round of coding was performed on raw untranslated data and covered not only questionnaires, but also researchers’ personal notes and other observations. The second round was conducted by EMC staff and consisted of simultaneous translation, data entry, and preliminary analysis through thematic grouping of the responses. In addition, the EMC team paid a visit to Orussey market in Phnom Penh to gather additional information from the wholesalers that distribute their product to the target provinces. At the same time, quantitative data were separated, cleaned, and entered into a different database.

In the end, EMC was able to create comprehensive narratives for each of the 11 opportunities that describe the product characteristics, consumer preferences, demand, market size and level of development, as well as production challenges. Quantitative data were used to support the arguments, where possible. At the end of each narrative, our team included brief SWOT analysis and a preliminary conclusion on the opportunity’s suitability as an additional source of income for the landless PADEE beneficiaries.

FINAL

FINAL Page 13 of 59

3 OpportunityAssessments

3.1 HouseholdItems:Brooms

ProductcharacteristicsandconsumerpreferencesThere are several types of brooms currently available on the market, and phka smau broom is the most commonly sold item. Overall there seem to be visible quality differences between Cambodian and Vietnamese produced brooms (often with a plastic handle). The majority of the respondents across all target provinces agreed that imported brooms are generally of much higher quality than locally produced ones (“thicker”) and tend to last longer. As a result, there is a considerable difference in price: imported brooms can be up to three times more expensive than local ones.

Most respondents expressed a desire to buy locally produced brooms to support the local industry, but would prefer them to be of a better quality than they currently are. In fact, retailers universally cited quality as the most important factor in deciding between locally produced and imported products. In some cases, retailers only sell the bottom part of the broom as a replacement that can be attached to a plastic handle.

The situation is somewhat different in Kampot, where there are local producers who are able to make good quality brooms that sell at a similar price as the Vietnamese ones and are exported to the neighboring provinces (see the case study below).

MarketdemandMarket demand for brooms is consistently high across the target provinces with the majority of retailers and traders reporting either constant or increased volume of sales over the last couple of years and indicating the possibility of future growth in sales. However, retailers that deal primarily with end consumers reported somewhat limited demand for the product. Several respondents suggested that there might be a seasonal pattern to the demand for brooms: higher in the dry season and lower in the rainy season.

Local producers that were available for an interview in three provinces confirmed that their production had increased and could potentially grow even further – according to them, there is enough demand to sell everything they make.

Overall, demand for brooms seems to be relatively inelastic across the provinces with end consumers willing to pay a higher price when the product is in low supply, as well as pay extra for better quality and other improvements.

MarketsizeandinfrastructureThe market for both local and imported brooms in the target provinces is relatively well developed with a variety of retailers and traders involved, who work with local producers scattered across villages, as well as producers in Vietnam.

Brooms, especially phka smau brooms, were often spotted even at smaller markets where other common products were not present. Most retailers at markets prefer to deal with several suppliers in order to be able to negotiate the price and have constant supply of product. However, they never buy from producers directly since they don’t know their location and/or do not have the resources to collect the product themselves. The majority of retailers and traders tend to deal in both locally produced and imported brooms since there is demand for both. One trader indicated his preference for locally produced brooms

Average number of brooms purchased by retailer per month = 52

Average sale price per broom = $1.1

FINAL

FINAL Page 14 of 59

due to their being considerably cheaper. Additionally, traders are generally willing to support local production especially if the quality could be improved.

ProductionconstraintsandbarrierstoentryLocal production is limited and is confined to hand‐made brooms. There is generally no specialized training involved, producers tend to learn from their relatives. Some of them indicated willingness to get trained in order to produce a better quality product that could compete with Vietnamese imports.

The most serious production constraint aside from lack of technique is lack of inputs. Phka smau is only available for two‐three months in the target areas, while in Vietnam it seems to be available year round. As a result, local producers either limit their production to one cycle per year or have to import input materials form Vietnam, which increases the amount of capital needed, as well as operation costs. Lack of labor is also a constraint for some producers since this is a relatively labor‐intensive process.

Figure 5: Broom production SWOT analysis

Conclusion: High potential as a source of additional seasonal income based on inputs availability, provided quality improvement through training.

STRENGTHS

•Constant demand

•Low tech

•Low capital

WEAKNESSES

•Low skill level

•Low quality

•Input constraints

OPPORTUNITIES

•Training

•Quality improvement

•Vertical integration

•Local branding

THREATS

•Import competition

•Market saturation

Average production

cost per cycle = $251

Outlier (medium size

production) = $8,625

per year

Average start‐up capital = $120

Outlier = $3,000 (medium size production)

Average cost of materials per cycle = $183

(73% of production cost)

FINAL

FINAL Page 15 of 59

CaseStudy:KampotBroomsDuring our interviews in Takeo, we noticed that, unlike in the previous three provinces, some people preferred to buy Khmer brooms because they were not only cheaper, but also of better quality than the Vietnamese ones. At first we thought it was a misunderstanding; but when we asked where these brooms were coming from, we were referred to several producers in Kampot. Of course we felt it was necessary for our study to find them and ask what their trade secret was.

First we reached out to a trader in Kampot, Ou Phou, who has been trading for almost eight years and currently works with 12 local producers in several villages. He has high quality standards and only workd with those suppliers who know make good and sturdy brooms. With some of them, he has been working for years and fully trusts their ability to supply product of consistently high quality; however, he says he is always loooking for other suppliers who can meet his requirements. Up to 8% of his product goes to wholesalers and retailers in Takeo and Kandal, as well as end consumers in Kampot.

To find out more about why Kampot brooms seemed to be of better quality than anywhere else, we went to meet a producer, Yieu Im, who lives and works in the Dang Tong district of Kampot. Im has been making brooms for seven years and, contrary to our expectations, she has not received any official training, but learned the technique from her neighbors. She said that she tries to only make good quality brooms that last longer and don’t shed as much, but this process is more time consuming. If in one day she could make up to 60 “regular” brooms, she can only make 30‐40 high quality ones. She sends most of her brooms by romok2 to a trader who then brings them to Phnom Penh, Takeo, and sometimes even Thailand. The rest of the product is sold directly to end consumers in Kampot.

When asked about production challenges, Im confirmed that input constaint was, indeed, the main reason she couldn’t expand her production. In Kampot, phka smau that is commonly used to make brooms grows around the mountain, but there are not enough people in her household to collect sufficient when it’s in season. In fact, other producers in the area rush to collect phka smau around the mountain at the same time, so there is a lot of competition for input material, not to mention competition from Vietnam. However, Im is confident that if she could overcome input constraints she would be able to sell all the brooms she could make.

2 A flatbed transport vehicle typically towed behind a motorbike.

FINAL

FINAL Page 16 of 59

3.2 ChickBreeding

ProductcharacteristicsandconsumerpreferencesChicken is one of the most popular foods in Cambodia. Almost every household in rural areas raises chickens as part of its food stock and often sells them at the market when there is a surplus. Although there is a growing number of farms raising chickens, our survey reveals that consumers generally prefer organic, i.e. home‐raised chicken. In fact, “organic” chicken can be sold at a higher price than chicken from a farm.

Due to high demand, small‐scale business of chick breeding looks promising. However, the feasibility of this business strongly depends on technical knowledge in addition to relatively high capital requirements.

MarketdemandCurrent producers report that there is generally high enough demand for chicks so that they can sell as many as they breed, especially in Kampot. Demand and especially price of chicks fluctuates based on season. The high production season is in the dry season, while in the rainy season it is difficult to raise and take care of chicks, as they more easily get sick and die.

In addition, it is reported that the demand for chicken has been growing in the last few years. As a result, demand for chicks has also increased. Most of the chicken raisers expressed their desire in buying more chicks in the future if there are chick breeders in the area; however, the survey revealed that the chicken raisers find it hard to buy enough chicks as there are only few breeders in each province. Most of the time the chick breeder is not able to meet the customer’s (chicken raiser) demand. This has pushed chicken raisers to breed chicks themselves.

Exceptionally, in Takeo, training has been provided by NGOs and local government, which led to the establishment of more chick breeders in the area.

MarketsizeandinfrastructureBased on our research, there is a large enough market for organic chicken. Most chick breeders can sell their chicks to farmers within their provinces. There are generally no middlemen involved in the transaction.

ProductionconstraintsandbarrierstoentryCapital required for buying good breeding chickens is fairly high. In addition, proper and sufficient knowledge of breeding techniques is also required. Most respondents noted that they had difficulties accessing training and financing when starting their breeding business. Currently, one of the major production constraints among interviewed producers is a low survival rate ‐ only 60% to 70%. Moreover, the production of chicks is quite rare in the surveyed provinces.

As such, low knowledge in breeding, vaccination and hedging techniques prevent farmers from entering this business. It is also noted that chick breeding is high cost and high risk for a relatively low return, even though there is strong demand for chicks.

Start‐up capital required is between $400 to $5,000

Operational costs, including inputs, are between $860 to $3,360

FINAL

FINAL Page 17 of 59

Figure 6: Chick breeding SWOT analysis

Conclusion: The business has medium potential overall as a source of income for PADEE beneficiaries given its medium demand size and medium capital and technique requirements.

STRENGTHS

•Strong demand

WEAKNESSES

•High capital

•Limited knowledge

•Poor vacination infrastructure

•Labor intensive

OPPORTUNITIES

•Training

•Design better financing scheme

THREATS

•Desease

•Low productivity

FINAL

FINAL Page 18 of 59

3.3 FingerlingBreeding

ProductcharacteristicsandconsumerpreferencesTo ensure food security and find additional sources of income, many Cambodian farmers recently started to raise fish. Generally, farmers raise several species, including Trey Pra, Trey Kap Sor and/or Kap India, Trey Chhpin, Trey Andaeng, and Trey Tilabia, which are also the species that are commonly bred by fingerling producers. One fish raiser from Kandal believes that Vietnamese fingerlings have better quality. However, the majority of fish raisers interviewed prefer locally produced fingerlings.

From the producer’s side, one fingerling producer in Svay Rieng asserted that his fingerlings’ quality is higher than in Vietnam, while fingerling producers in Kampot reported the opposite. They say that Vietnamese producers have better access to input products (drugs/medicines) for breeding that they cannot find in Cambodia. These products reportedly make the fingerlings grow faster.

MarketdemandIn Kandal and Takeo, fingerling producers consistently reported demand growth; in Prey Veng and Kampot it is the opposite. The price of fish went down last year in Prey Veng, and as a result the number of fish raisers declined; moreover, there is high competition from imported fingerlings form nearby provinces and Vietnam, as well as limited market demand in Kampot. However, in Svay Rieng, market demand is reported to be constant. All fingerling producers across target provinces reported there is a seasonal pattern of demand, but it seems to be different in each province.

In general, demand for fingerlings seem to be relatively inelastic across all the provinces; the fish raisers indicated they will still buy when the fingerlings are in low supply and at a higher price, as they will continue to raise fish.

MarketsizeandinfrastructureAccording to the respondents’ estimates, there are on average seven producers per province. There is only one province where producers supply fingerlings only to the local market (high competition and limited market demand for exports). Producers in other four targets provinces supply to several provinces, including Battambang, Siem Riep, Kampong Cham, Kampong Speu, and Phnom Penh. Imported fingerlings from Vietnam are brought into Kampot and Prey Veng by traders. There are also fingerling imports from Prey Veng and Phnom Penh to Takeo.

Most fish raisers prefer buying local fingerlings because they are easy to access. Fish raisers tend to buy imported fingerlings whenever there is no local supply in their area.

ProductionconstraintsandbarrierstoentryMost fingerling producers reported that their fingerlings grow slower than the Vietnamese ones since they lack technical know‐how and experience to produce higher quality fingerlings. Because of that, sometimes their production is unprofitable. There are also some other important constraints stopping them from growing their business, including limited market demand, lack of capital for business improvement, high competition, and labor shortage. For example, one fingerling producer in Prey Veng holds only 40% of the local market share, with

‐ Average start‐up capital (fingerling

producer) = $ 13,750 (outlier=$800)

‐ Average production cost (fingerling

producer) = $12,094.17 (outlier=$333)

‐ Average material cost (fingerling

producer) = $10,162.5 (outlier=$180 and

$550)

FINAL

FINAL Page 19 of 59

imported fingerlings occupying the rest.

In general, fish raisers across all target provinces face a lot of problems, including limited technical know‐how that leads to low yield, lack of river water for changing water in the pond, declining fish prices, lack of labor, and lack of capital. Most of them raise fish on a small scale for household consumption. As such, it is an indirect constraint to the fingerling producers since it factors into lower demand for fingerlings.

Figure 7: Fingerling breeding SWOT analysis

Conclusion: Due to a variety of production constraints, fingerling raising does not constitute an appropriate opportunity for PADEE beneficiaries to replicate.

STRENGTHS•Constant demand or even growth

•Fish raiser prefer local fingerlings

WEAKNESSES•Limit techincal know‐how among producers

•Lack of capital for business improvement

•Labour intensive (medium)

•Low input supply

OPPORTUNITIES

•Provide proper training



THREATS•Limited market demand

•Declining a number of fish raisers

FINAL

FINAL Page 20 of 59

CaseStudy:Mr.RiechChanRiech Chan, a long‐time resident of Kandal village in Svay Rieng, used to be a well‐known fingerling breeder in the area. He ran a successful medium‐sized business for ten years until he finally decided to stop in 2012. His fish nursery business sign can still be seen on the side of the road.

After that, despite his advanced age, Chan started a new business of breeding chicks in addition to tending to his cows and a rice field. He was kind enough to take time out of his busy day to share his expert advice and insights on both opportunities with our team, as well as help us assess their suitability for PADEE beneficiaries.

The main reason for stopping his fingerling breeding business was lack of labor in his household. His son had moved to Ta Khmao for work, so it became increasingly difficult for him and his wife to manage a complex household on their own. So he opted for chick breeding instead due to its less labor‐intensive production process.

However, for ten years his fingerling breeding business was very successful; he produced several varieties that are in demand locally and even exported his fingerlings to other provinces, including Battambang, Kampong Cham, Takeo, and Prey Veng. His buyers were not only fish raisers, but also smaller fingerling breeders in the area. According to Chan, with proper technique and constant care he managed to raise better quality fingerlings than those imported from Vietnam.

When asked about which opportunity would be the most suitable for PADEE beneficiaries, Chan was fairly certain that chicks would be easier to manage in poor households for a number of reasons. Drawing on his unique experience as a successful producer of both, he drew a quick comparison table of advantages and disadvantages of chicks and fingerlings, which is presented below:

FACTORS FINGERLINGS CHICKSDemand x x Technology xCapital x Labor x Disease x

In his opinion, while there is sufficient demand for both, chicks are easier and cheaper to breed, especially if the household has stable supply of electricity to maintain the incubator.

FINAL

FINAL Page 21 of 59

3.4 FishProcessing:DriedFish

MarketdemandandconsumerpreferencesProcessed fish comes in a variety of types in Cambodia, from ubiquitous prahok to several types dried fish (trey ngiet) that cater to specific tastes. Throughout our research, we noticed several products from this category present at most markets we visited; however, their popularity seems to vary from province to province and sometimes even within province (for example, between town and village consumers). The price also varies and depends primarily on quality, with the saltiest and simplest trey ngiet being the cheapest.

The table below summarizes the most important distinctions in consumer preferences with regard to several identified types of dried fish. This is, however, not an exhaustive list.

Product Province Consumer Preferences and Demand

Trey ngiet roh (and trey ngiet tuok)

Prey Veng Most popular variety

Svay Rieng Second most popular item (after prahok)

Takeo Most popular

Trey ngiet chiem Kampot Fairly popular, especially among villagers and farmers (cheap and available)

Trey ngiet haum Prey Veng Popular along with trey ngiet roh

Trey ngiet pra Takeo Most popular, along with trey ngiet roh

Kampot Most popular

Overall, trey ngiet roh and very similar trey ngiet tuok appear to be the most popular product in the category; it is sold more or less everywhere and is on average cheaper than other types of try ngiet.

It should be noted that when asked directly about their preferences of imported and locally produced trey ngiet, most consumers indicated their preference for local product to support local industry. Some consumers also revealed their concerns over chemicals potentially used in production of imported products.

There is a seasonal pattern to demand as well. For most retailers, it tends to increase around major holidays, sometimes up to three or four times. Demand is somewhat elastic for processed fish, especially trey ngiet, since it is not a staple food. Several customers said that given the choice, they prefer fresh fish and produce and only buy small amounts of trey ngiet as a supplementary product. However, they tend to buy it regularly, even if the price varies, and most indicated their willingness to pay more for better packaging and quality improvements.

FINAL

FINAL Page 22 of 59

MarketsizeandinfrastructureThere are some local producers, but it is a fairly small‐scale production. Most of them sell their product at the market themselves. Several retailers pointed out that the number of similar sellers at the market has recently increased, which has led to decreased demand for each individual seller (for example, Takeo market has ten regular retailers of trey ngiet).

Retailers indicated their preference for carrying a variety of processed fish products to cater to different consumer preferences. This includes locally produced trey ngiet, as well as deliveries from Phnom Penh. It is commonly perceived that locally produced trey ngiet is of inferior quality (not dried properly and not tasty). Additionally, local product may not be available throughout the entire year, so retailers try to diversify their supply sources, including importing from Vietnam. On average, retailers at markets reported constant, but limited demand for trey ngiet from end consumers. In addition, out‐migration was cited as a reason for a relative decrease in demand in the recent years.

There are numerous distribution routes for trey ngiet, including producers‐retailers, retailers that work with multiple suppliers, including those in Vietnam, traders that bring trey ngiet from Phnom Penh, Svay Rieng, and Vietnam, as well as small resellers that buy large amounts of several types of trey ngiet at a provincial market and then distribute it in their villages and in rice fields.

ProductionconstraintsandbarrierstoentrySeveral producers and retailers mentioned that one of the main challenges in this relatively uncomplicated production process is properly drying the fish, especially during the rainy season, so that it lasts long and has the taste and appearance consumers expect.

Input availability (fresh fish) varies by province and often determines the end price for trey ngiet. There are several known producers in Takeo and Kampot, but none in Kandal (trey ngiet is brought to local markets from Phnom Penh). It also appears that people with access to fresh fish, such as fish raisers themselves, are more likely to produce trey ngiet, even if in small amounts.

Overall, the production seems to be constrained by lack of proper drying techniques and limited access to bigger markets in order to increase customer base.

Orussey Market Follow Up

After several retailers had referred to Orussey market in Phnom Penh as their source of trey ngiet, we decided it was necessary to follow up with wholesalers there in order to find out their sources of product supply. We also wanted to know why their product was considered to be of higher quality.

Interestingly enough, most wholesalers actually produce trey ngiet themselves in their own houses in Phnom Penh, especially trey ngiet roh and tuok. Trey ngiet pra is sometimes brought over from Kampong Chhnang. They then sell to a variety of resellers that bring it to different provinces, as well as Vietnam and even further abroad to cater to the Khmer diaspora.

As far as the higher quality of trey ngiet produced in Phnom Penh, one producer/retailer said that she uses a special machine for drying the fish at her house instead of simply drying it in the sun. No chemicals are used in production, which is sometimes a concern with trey ngiet from Vietnam. This may explain why numerous customers and retailers in the provinces pointed out that trey ngiet from Phnom Penh was always dried properly. However, this is a preliminary conclusion.

FINAL

FINAL Page 23 of 59

Figure 8: Dried fish SWOT analysis

Conclusion: Given the variety of trey ngiet products, constant demand, and a relatively complex market infrastructure, there are a number of potential options for PADEE beneficiaries to use for income supplementation; overall, this opportunity has medium to high potential, but additional targeted research might be needed.

STRENGTHS

•Constant demand

•Low tech

•Low capital

•Low labor

WEAKNESSES


•Limited local market

•Quality issues

OPPORTUNITIES

•Better quality (training)

•Local branding

•Links to bigger markets

THREATS

•Local market saturation


FINAL

FINAL Page 24 of 59

3.5 IncenseProduction

ProductcharacteristicsandconsumerpreferencesIncense is used in every Cambodian household. It is easy to buy at traditional markets and home shops in the cities as well as in rural areas. There are some local producers in the target provinces; however, the competition of imported incense from Vietnam has been increasing lately. It is hard for local producers to compete with imported products in terms of both price and quality. The common perception is that imported incense sticks are of much better quality and also cheaper.

MarketdemandAlthough each household uses it daily to some extent, it can be considered a seasonal product because there is a big increase in demand during religious holidays and events. The sale volume ranges between 100g to 200g per day for every retailer in high season and drops down about 50% during low season.

Despite the fluctuation of demand, price is relatively constant during the year. Customers have started to shift from buying locally produced incense to imported incense. They believe that imported incense is cheaper and smells better. Due to such preferences, retailers tend to focus on more sales of imported incenses, especially those from Vietnam.

MarketsizeandinfrastructureConsumers can buy incense almost anywhere across the country; it is a very common product. Therefore, retailing infrastructure is very well developed. Market size is therefore large because every household uses it, although it fluctuates depending on religious holidays.

In Prey Veng, local people provide additional service by bringing the incense stick powder from Vietnam to package it locally and sell to retailers in the market. The capital required is stated to be very high since all the packaging materials are imported from Vietnam. In other target provinces, almost all retailers expressed satisfaction with having Vietnamese traders distribute finished product directly to the market with higher quality and even cheaper when compared to locally produced incense.

ProductionconstraintsandbarrierstoentryCapital requirement needed for a start‐up incense producer is reported to be around $1,000. The majority of interviewed producers reported self‐financing. Besides capital, producers have two major production challenges. One is the lack of formal training. All producers interviewed indicated that they learned from older family members. Since the production uses little machinery in addition to lack of training, there is a very low productivity. Another challenge is input source. Existing producers get inputs from Vietnam or a factory in Phnom Penh. It is impossible to find all the necessary inputs locally or even in the nearby areas. Moreover, current input quality does not allow them to produce incense with good smell to compete with imported products. It even more difficult to compete because production in Vietnam uses more machinery and is of bigger scale, which brings down their costs consistently. As a telling example, one producer in Kandal has given up producing incense and turned to trading Vietnamese incense instead, as the profit margin is higher.

As such, unavailability of training and fierce competition of imported incense are serious barriers to entry. For retailing, barrier to entry is low. Retailers can easily get supply from locally produced and imported incenses from traders or wholesalers. Capital requirement for retailers is low as well.

FINAL

FINAL Page 25 of 59

Figure 9: Incense production SWOT analysis

Conclusion: Despite its demand size, limited potential for demand growth and significant import competition on quality and price, this opportunity has low potential as a viable source of additional income for the PADEE beneficiaries.

STRENGTHS

•Medium technology

•Constant demand

WEAKNESSES

•Seasonal demand

•Lack of training


•Lack of machinery

•High capital

OPPORTUNITIES

•Training



•Local branding

THREATS


FINAL

FINAL Page 26 of 59

3.6 SedgeMatProduction

ProductcharacteristicsandconsumerpreferencesThere are a variety of sedge mats and plastic substitutes currently available on the market. They are produced locally, as well as imported from Vietnam and Thailand, and vary significantly in terms of quality and price. Respondents generally agree that Khmer sedge mats are of comparable quality (although this is not a universal opinion) and more beautiful; however they tend to be more expensive (but not always). Sedge mats that are imported from Vietnam vary in quality (sometimes they are actually made of plastic, not straw). Since the sedge mat is a popular and commonly used item Cambodian households all of these varieties sell, but to different consumer segments. Based on several responses from market retailers, older people prefer authentic Cambodian mats, while younger consumers tend to buy cheaper imported mats.

MarketdemandAs noted above, there is a certain level of demand for several different varieties of sedge mats. Cambodian mats tend to sell out slower than the imported ones, according to the sellers at local markets. In fact, the volume of sales is relatively low overall considering that sedge mats are a long‐lasting item. As such, local market becomes saturated relatively quickly.

There is also a clear seasonal trend in demand: it is considerably higher during major holidays, when sedge mats are used for traditional ceremonies. It is difficult to assess demand elasticity for Cambodian sedge mats: although this is a necessary item in virtually every household, there are substitute products available.

Overall, small retailers at local markets report limited demand from end consumers (out‐migration is one of the reasons cited); traders and

wholesalers reported constant or even increasing volumes of sale since they sell to bigger retailers and sometimes export to other provinces.

MarketsizeandinfrastructureMarket infrastructure appears to be relatively developed with a variety of individual retailers, collectors, and big traders involved who trade in both local product and imports. Some retailers prefer to buy directly from local producers because it allows for quick and flexible transaction (no need to buy large amounts, can always come back for more product, when needed). Others work with collectors and other traders in order to save time and have more product variety. Two of the three local producers interviewed sell only to collectors and do not know where their product is distributed after that. According to the traders interviewed, there are five known producers in Kandal, but around 30 in Takeo. However, there are also more than 20 traders in Takeo.

ProductionconstraintsandbarrierstoentryThe main production constraint is lack of inputs in the target provinces, especially colored straw that has to be imported from Vietnam or elsewhere. This increases the cost of production and the overall selling price of locally produced mats, which makes them less competitive compared to the imported ones. Quality can be an issue as well given the lack of proper training.

Based on the answers from three producers in three different provinces, average costs of production is around $125.

FINAL

FINAL Page 27 of 59

Conclusion: This opportunity has medium to high potential to be a source of additional income, if input constraints can be addressed and linkages to bigger markets provided.

STRENGTHS

•Constant demand (domestic and exports)

WEAKNESSES


•Limited local market

OPPORTUNITIES

•Better quality (training)

•Local branding

•Links to bigger markets

THREATS

•Local market saturation


FINAL

FINAL Page 28 of 59

3.7 NoodleProduction

ProductcharacteristicsandconsumerpreferencesIn Kandal province, the research focus was on fresh yellow noodles as this type had the highest demand compared to other types. However, the research team quickly found that in four other provinces, Prey Veng, Svay Rieng, Takeo, and Kampot, the most popular product in this category was koy teav. As a result, further research was directed to this noodle product instead.

Koy teav is commonly used for breakfast and sometimes comes with banh kanh. As mentioned above, koy teav was found to be in highest demand compared to other noodle products in all provinces but Kandal. Respondents across all the provinces agreed koy teav either from Phnom Penh or Vietnam is similar in quality and definitely better than locally produced variety. Interestingly enough, end consumers prefer local product over imported, as they believe there are less chemicals used during production and it is cheaper. In contrast, retailers3 and restaurant owners4 shared a similar preference for Phnom Penh’s koy teav due to its being thinner, tougher, and less perishable. In summary, end consumers cited their concerns over chemicals and the taste of product, while retailers and restaurant owners across all provinces look for best quality (fresh, white color, soft, small string, and tough) and longer lasting product. This finding was also supported by producers.

MarketdemandMost of the respondents, including producers, retailers, and restaurant owners across all target provinces reported either constant or growing demand over the last few years.

There were only three respondents (one producer from Prey Veng and one from Kampot, and one trader from Takeo) that indicated declining demand due to out‐migration of local people and market competition from Phnom Penh. All producers and sellers indicated seasonal demand pattern of Koy teav, which is the highest around big holidays (Pchum Ben, Chinese or Khmer New Year, etc.).

In general, demand for koy teav seems to be consistently inelastic in all our target provinces due to consumers willing to buy when product is in low supply at a higher price, as well as pay more for better quality and good packaging.

MarketsizeandinfrastructureThere are various types of koy teav available either locally or imported from Phnom Penh and Vietnam through retailers and traders, as there is a demand for both. Nonetheless, some retailers and traders prefer the local product as long as the quality is comparable. Sellers usually sell local koy teav and several imported brands from Phnom Penh (ordered from Orussey and Olympic markets). In Kandal, retailers told us that there was no local production in the province, and all koy teav was imported from Phnom Penh. During our visit to Orussey market, we found out that koy teav sold there is made at a factory in the city,

3 One retailer in Takeo prefers buying local Koy teav since she wants to support local industry. 4 Restaurant owners have different preferences in quality: restaurant owners who serve Koy teav in soup prefer to buy from Phnom Penh, but restaurant owners who served fried noodles want local product as it fits with their menu.

‐ Average selling in peak season (producer)

= 67.50 Kg/day (outlier 200kg and 300kg)

‐ Average selling in low season (producer) =

31 Kg/day (Outlier 80kg)

‐ Average selling price (producer) = $0.92/kg

FINAL

FINAL Page 29 of 59

which may explain its high quality. On average, there are between two to eight producers per province. The number of traders varies; for example, there are five known traders in Takeo and two in Kampot.

One trader in Kampot receives free delivery of product from his suppliers in Phnom Penh. Another trader in Takeo pays for delivery herself. Majority of retailers at markets are likely to have several suppliers in order to be able to diversify their product type to satisfy their clients, ensure constant supply, and get a small discount. Based on observations of the research team, it has been concluded that demand for noodles is higher and more consistent at bigger markets than at small local ones, where retailers do not tend to stock large amounts of products since its perishable.

ProductionconstraintsandbarrierstoentryProducers usually stated the main constraint stopping them from growing their business is limited market demand in their local area. In addition, lack of capital for production improvement, as reported by one producer in Svay Rieng, is also a constraint.

There are also some difficulties in producing top level product, as reported by two producers in Prey Veng and Kampot. It has to do with limited technical know‐how and lack of good packaging. One producer in Prey Veng learned to produce Koy teav by herself, while other producers are more likely to receive informal training from their relatives. One producer in Svay Rieng got additional training from Provincial Department of Mines and Energy and is able to produce higher quality product. One of the retailers interviewed in Kandal, as well as wholesalers in Phnom Penh indicated that a drying machine is necessary to produce the highest quality product.

Figure 10: Noodle production SWOT analysis

Conclusion: This opportunity has medium potential overall for PADEE beneficiaries, provided technical assistance and stronger market links.

STRENGTHS

•Demand constant or even growth

•End consumer prefer local product

•Low production cost

WEAKNESSES

•Technology requirement

•Frequently serve as only for breakfast

•High competition (Phnom Penh and Viet Nam Koy Teav)

•High start‐up cost

OPPORTUNITIES

•Provide additional training


•Local branding

•Vertical intergration

THREATS


‐ Start‐up capital to be a producer is

range between $25 to $5,000

‐ Average production cost=$21.44

‐ Average material cost =$16.91

FINAL

FINAL Page 30 of 59

3.8 OrganicFertilizer

ProductcharacteristicsandconsumerpreferencesOrganic fertilizer can be produced in a variety of ways (composting, biogas residue, etc.), but in the target provinces the commonly used variety is dried manure. Several respondents are aware of and sometimes use liquid fertilizer (residue from biogas, see text box). Another respondent specifically stated that he was not interested in composting, but would continue using dry manure as organic fertilizer. Overall, awareness of other types of organic fertilizer seemed to be fairly low.

Both rice farmers and vegetable growers use organic fertilizer regularly, but it appears to be most popular for vegetable growing, while three quarters of the interviewed rice farmers tend to use a combination of organic and chemical fertilizer.

All respondents universally agree that organic fertilizer is better for the soil in the long term and results in higher yield and better quality products, but it is somewhat difficult to use for rice production due to the specifics of the planting process. It is also considerably cheaper than imported chemical fertilizer and generally considered to be of consistently high quality.

MarketdemandMarket demand for organic fertilizer is relatively high in the target provinces. It is used more or less by everyone who grows rice and/or vegetables in the area. Most respondents (farmers) indicated their willingness to use more organic fertilizer, but it is generally difficult to buy enough due to limited local production and unreliable supply.

There is a seasonal pattern to market demand that depends upon rice production cycle, but vegetable growers tend to use varying quantities of organic fertilizer throughout the year, depending on the type of vegetables they grow (onions, cabbage, as well as watermelons and durians). Those producers who regularly sell their product agreed that they would most likely sell everything they produced if they could increase their production volume. Farmers indicated their willingness to pay higher prices when organic fertilizer is in low supply because of its effectiveness, although some stated that it is also due to the fact that the current price is fairly low. Some farmers only buy additional fertilizer when their own supply is not sufficient.

Overall, the demand seems to be fairly high in qualitative terms, but very few respondents were able to report desired quantities. In addition to local demand, there is some demand from Vietnam as well, especially in Svay Rieng; however, it is unclear how consistent it is.

Liquid Biogas Residue

Sam Sarun is a rice and vegetables grower in the Chreh‐Chentrie district in Prey Veng. About a year ago she got trained by a local NGO Santesana on how to produce biogas using cow dunk. With a help of a micro loan (total startup capital required was around $500), Sarun built a processor and started producing electricity for her household using dunk from her own cows, which also allowed her to use liquid biogas residue for growing rice and vegetables, particularly cucumbers.

She is extremely satisfied with biogas’ productivity, as well as with being able to reduce her expenses on electricity and chemical fertilizer.

However, despite all the benefits, her volume of production is limited due to capital and input constraints, so she cannot sell liquid biogas residue to her neighbors – she only has enough for growing her own rice and vegetables.

FINAL

FINAL Page 31 of 59

MarketsizeandinfrastructureAlthough a fair number of villagers seem to produce at least some amount of organic fertilizer, the majority of producers keep it for their own use and only a few sell it regularly. There is no set price for the product; it is usually determined by the seller or through negotiation. While most farmers interviewed buy directly from producers in their own or neighboring villagers and sometimes from animal farms in the area (from 2‐3 suppliers on average in order to collect enough product), there are a few traders involved in the process as well. One trader in Prey Veng has a relatively successful business in collecting organic fertilizer from a number of producers around the province in order to export it all to Kampong Cham for use on plantations; he buys from anyone in the province who is willing to sell. Another trader in Svay Rieng brings fertilizer to Vietnam. Additionally, in Svay Rieng there is some small‐scale trade across the border to Vietnam; daily deliveries are made by local children.

In general, there is no clearly defined market infrastructure for organic fertilizer with most transactions happening on as needed basis within the same village or commune. And while most interviewed farmers stated that organic fertilizer is available in the area, less than 10% of the respondents are able to buy as much as they need/want most of the time.

ProductionconstraintsandbarrierstoentryThe main production constraint for this type of organic fertilizer is, of course, limited number of animals. Most producers tend to collect organic fertilizer for their own farming needs and only sell when they have extra. Other associated constraints are related to taking care of the animals, which can be labor‐intensive. On the other hand, the production process is fairly low tech and low capital.

Figure 11: Organic fertilizer SWOT analysis

Conclusion: Due to its high demand and overall low barriers to entry, this opportunity could be a viable source of additional seasonal income, provided more developed market infrastructure, as well as introducing other forms of organic fertilizer (composting and biogas) and additional services (collecting).

STRENGTHS

•High demand (domestic and exports)

•Low tech

•Low capital

WEAKNESSES


•Low market development

OPPORTUNITIES

•Different production techniques (composting, biogas)

THREATS

•Government barriers to exports

•Competition from chemical substitutes

FINAL

FINAL Page 32 of 59

3.9 PickledMustardGreens

ProductcharacteristicsandconsumerpreferencesOur team decided to focus on pickles in two remaining provinces, Takeo and Kampot. Finally, Spey pickle (mustard greens) was selected, as there is high demand and low constraints in terms of production. In fact, the producer and retailer is usually the same person.

Cambodian pickles can be made from one type of vegetable or a mix of two or three different kinds. Many types of pickles are available at the market; they can all be made locally for retail and/or household consumption. However, Spey pickle is the most popular one and cheap to make, as reported by producers. To have the best quality of Spey pickle, it needs to be fresh and homemade, as people believe that it contains fewer chemicals. Spey pickle can be kept up to three days, but sellers can keep it fresh even longer with more salt.

Buyers prefer locally produced pickles to the imported product, looking for fresh, not too sour, crispy, and long lasting pickles.

MarketdemandMarket demand of Spey pickle varies between different geographic locations within provinces; it is likely to be similar between the two provinces, according to the retailers interviewed. Some retailers stated that demand has been constant5 or even declining in the last couple years since the number of producers‐retailers has increased6. On the contrary, one retailer in Takeo reported demand growth despite the increased number of other sellers7. Demand of Spey pickle is high in rice planting and harvesting season, which is also the season of low supply of fresh vegetables, as indicated by retailers.

In short, demand for Spey pickle is likely to be inelastic due to consumers still wanting to buy when the product is in low supply. Moreover, they’re willing to pay more for better packaging and good product quality (specifically, better hygiene and freshness). MarketsizeandinfrastructureMany Spey pickle suppliers have entered the market and report production growth over the years. Fresh mustard greens are imported from neighboring provinces, Battambang, or even Vietnam when it is in low supply. In Kampot, fresh mustard greens are imported from Vietnam8 in the rainy season, mainly due to flooding. Nonetheless, it’s rarely bought by producers to make pickles for sale as it’s not of very high quality, one retailer said.

ProductionconstraintsandbarrierstoentryThe major production constrain of pickle is lack of inputs. Local fresh mustard greens can’t be found year round; it’s only somewhat available in rainy season, particularly from August to October. Moreover, lack of labor is also a barrier for sellers who

5 One respondent in Takeo reported that her selling situation has been constant over last few years and she can sell as much as she produces. 6 Only one retailer in Takeo indicated that demand decreased as consumers now also produce Spey pickle at home. 7 The number of sellers increased from two in last two years to seven, as stated by a respondent in Kampot. 8 Fresh mustard greens are imported from Vietnam through Chhuk market in December, another respondent in Kampot reported.

‐ In peak season, average sale = 46.25kg/day

‐ Average sale in low season = 27.5 kg/day

‐ Average sale price per Kg = 0.30

Average production cost/day =

$20.85

There are 10 producers in

average available per market.

FINAL

FINAL Page 33 of 59

want to increase their production volume, one retailer in Takeo stated. Producers can’t usually make pickles of consistently high quality due to varying quality of input supply. Some producers reported that there are now more sellers in the market, which makes it difficult for their business to grow. One producer reported lack of experience in making pickles as her challenge.

Commonly, pickle business is not capital intensive; respondents cited using their own money to start a business. Generally, there is no specific training received by producers as they are likely to get training from their relatives9.

Figure 12: Pickled mustard greens SWOT analysis

Conclusion: Due to its relatively high demand and uncomplicated production process, this opportunity has medium potential as an additional source of income for the PADEE beneficiaries, provided strong market linkages.

9 There is one respondent in Takeo who has never obtained any training at all.

STRENGTHS

•Constant demand or even growth

•Low technology

•Low capital requirement

•No competition from imported product (end consumer like only local product)

WEAKNESSES

•Low quality

•Low input supply

OPPORTUNITIES

•Proper training


THREATS


•Competition

FINAL

FINAL Page 34 of 59

3.10 SausageProduction

ProductcharacteristicsandconsumerpreferencesSausage is produced from either beef or pork, and both varieties are equally popular. Throughout the interviews in targeted provinces, there is a consensus that people like purchasing locally produced sausage as it is fresh and can help support local business.

However, these locally produced sausages have strong competition from Vietnam, Siem Reap, and Phnom Penh. It is cited that sausage from Siem Reap is tastier and those from Vietnam and Phnom Penh, last longer and have a more attractive color.

Price is important, but it’s only one of the factors that drive sales. Customers expressed that they are willing to pay more if sausages are packaged better, have better quality with more lean meat than fat, and are properly dried, fresh and tasty.

MarketdemandRegardless of locations in targeted survey provinces, demand for sausage is seasonal. It peaks in periods of traditional celebrations, such as Pchum Ben and New Year. It is noticed that the lowest season is between November and January. Another key finding is that the overall demand has been constant for years.

The main input of sausage is beef or pork; therefore the price of sausage directly depends on the price of beef and pork. When price of pork/beef is going up or down, the price of sausage tends to follow suit. Retailers pointed out that demand is relatively elastic and tends to fall when the price increases, as there are many substitute products available on the market. In other words, they have noticed that when pork/beef price increases, price of sausage starts going up, which causes quantity of demand to fall as people switch to fish and other products.

Volume/Value per Day Small Retailer Medium Retailer Big Retailer

Low Season 2kg 5kg 10kg

High Season 5kg 20kg 50kg

MarketsizeandinfrastructureIt is very common to find sausage in the market. Retailing infrastructure sausage is very well developed. Those retailers tend to diversify their products by selling all sorts of food items. Therefore, there is strong competition. For locally produced sausage, retailers can directly buy from producers. Some producers cover the whole supply chain from processing to selling. However, for imported sausage from Vietnam and other provinces in Cambodia, retailers buy from traders and wholesalers.

Some retailers who are able to trace the source of imports tend to cut out traders/wholesalers for a higher profit margin. They would call suppliers directly, quick cash transaction is made through informal money

transfer and product delivery is arranged by taxi.

ProductionconstraintsandbarrierstoentryThere are very few local producers for several reasons. First, to produce long lasting product, it is necessary to only use good quality meat and processing technique. Second, with minor difference in price, consumers tend to buy well‐known sausage, such as from Siem Reap.

However, capital requirement is relatively low for a small‐scale business of retailing/producing. It is reported that only around $500 to $3,000 is needed

FINAL

FINAL Page 35 of 59

for starting production. Existing producers reported that they self‐financed their business.

Key barriers to entry for sausage processing are technical knowledge and using only high quality inputs. Yet, retailing has almost zero barriers to enter due to low capital requirements and ease of getting the product from suppliers.

Figure 13: Sausage production SWOT analysis

Conclusion: This opportunity has low to medium potential, given its constant, but somewhat limited demand size and several production challenges.

STRENGTHS

•Constant demand

•Low tech

•Low capital

WEAKNESSES

•Not enough knowledge on processing techniques


OPPORTUNITIES

•Training



•Local branding

THREATS


FINAL

FINAL Page 36 of 59

3.11 ConstructionContractingIn addition to agro‐processed and manufactured products, our team wanted to investigate potential service opportunities for the PADEE beneficiaries. Based on the desk research and expert interviews conducted in Phnom Penh prior to fieldwork, construction contracting was chosen as the opportunity with the highest potential demand. Specifically, our team wanted to investigate how construction is done in the context of informal economy in our target provinces and what could be potential point of entry. We were able to locate and interview two contractors in each province, except Kandal. All eight contractors were fairly consistent in their answers.

DemandandlocationSeven out of eight contractors interviewed agreed that demand for their services has been on the rise lately. One expressed his doubts over demand for construction this year (2013) and attributed it to the general economic situation.

It is interesting to point out that there is a variety of services these contractors provide: some are responsible only for providing labor, other procure materials as well, while another one combines construction with small repair services.

They work generally around their villages with occasional projects in the neighboring districts and provinces.

LaborThe respondents were fairly consistent in their preferred ways of sourcing labor. In most cases, they reach out to their friends and family members, provide basic training, and try to keep the same laborers for every project (on average, ten people per project); however, they have to take into account their availability as well, so there is always some turnover.

SkillsandtrainingThe majority of the respondents have been construction workers in Phnom Penh or other provinces themselves for several years (3‐4 on average). After having learned construction and management skills, they chose to return to their villages and start businesses of their own. However, this is not the only source of income for most respondents as they work on a project basis.

ChallengesLabor supply seems not to be a problem; even if the preferred and known workers are not available, it doesn’t take long to train new ones for a specific project through their extensive personal networks. One contractor mentioned that it has become somewhat more difficult for him to find enough workers because a lot of people now work at different factories instead.

There is generally no contract between the contractor and his laborers, although is some cases there is a contract between the client and the contractor (even though some expressed their skepticism over its usefulness in solving disputes).

Conclusion: despite the high demand for construction, it is difficult to identify the most suitable way for the PADEE beneficiaries to get involved in the process due to its highly personalized and informal nature; overall, this opportunity has medium potential.

FINAL

FINAL Page 37 of 59

3.12 SummaryFindings&EvaluationBased on the selection criteria identified for the final phase of this analysis, we created several categories

of thematically relevant criteria and ranked each of the eleven opportunities on a scale of low to medium

to high. We then summarized individual scores to assess each opportunity’s overall potential as a suitable

option to meet the main objective of this market scan. The results table can be found on the following

page.

Based on our analysis, we preliminary recommend the following four opportunities with high and

medium to high overall potential:

Brooms

Organicfertilizer

Sedgemats

Driedfish(treyngiet)

Additionally, the following opportunities with medium potential could be considered:

Pickled cabbage

Chick breeding

Noodles (koy teav)

FINAL

FINAL Page 38 of 59

Summarytableofallopportunitiesassessedagainsttheselectedcriteria

Demand sizeGrowth

prospects

Demand

variation

(seasonality)

OverallInput

constraints

Capital

(startup &

operating)

Skills &

techiquesOverall Reach Complexity

Household items (brooms)High Medium Low High Medium Low Low Low High Medium High potential

Sedge matsMedium Medium Low Medium High Low Medium / High Medium High Low

Medium to high

potentialOrganic fertilizer High High Medium High Medium Low Low Low High Low High potential

Noodles (fresh yellow and

kuy tieu) Medium Medium High Medium Low Medium Medium Medium Low High Medium potential

Chick breedingMedium High Medium Medium

Medium /

High Medium Medium Medium Low Low Medium potential

Processed fish (trey ngiet)Medium /

High Medium Medium High Low Low Medium Low Medium High

Medium to high

potential

Pickles (cabbage)High Medium Medium Medium Medium Low Low Medium

Medium /

High Low Medium potential

Processed meat (sausage)Medium Low High

Low / Medium Medium Medium Medium / High Medium Medium Low

Low to medium

potentialFingerling breeding Medium Low / Medium Medium Low High High High High Low Low Low potential

Religious items (incense) Medium Low High Low High Medium High High Medium Low Low potential

Construction contracting High High/Medium Medium Medium N/A Medium/High Medium Medium N/A Low Medium potential

Recommendation

Demand Barriers to entry

Opportunity

Market characteristics

FINAL

FINAL Page 39 of 59

4 StrategyRecommendationsThis section contains recommendations for programs to support PADEE beneficiaries in pursuing the

opportunities chosen based on market demand conditions. It provides detailed recommendations for the

four opportunities that were selected with the highest potential, as per this study’s terms of reference,

which are; sedge mats, organic fertilizer, broom production and dried fish (trey ngiet). In addition to this,

we also provide some high level recommendations for the medium potential opportunities; chick raising,

pickled cabbage and noodle production, which may be useful in some areas of the PADEE program.

4.1 SedgeMatsSedge mat production can be organized and conducted at the household level and provides the necessary

degree of flexibility to accommodate other primary income generating activities, such as rice cultivation.

As most handicraft production takes place in rural communities, it creates more income generating

opportunities for the rural population, particularly women.

Sedge mat production in Cambodia is primarily manual, and skills are often passed through generations.

While sedge mats are a popular household item in Cambodia, the overall quality of product does not

always meet standards demanded by the export market. Consecutively, there is room for overall

production technique and quality improvement. Additionally, there are input constraints in the target

provinces, which can result in reliance on imported raw materials, either from Phnom Penh or Vietnam.

The following recommendations propose a community‐based approach to sedge mat manufacturing that

covers the entire production process, from sourcing raw materials to delivery to the buyer. This approach

allows for addressing production constraints and strengthening of market linkages through shared effort,

provided sufficient level of community cohesiveness.

RecommendationsSummary

Overarching recommendation: use rural community as the main organizational unit to

address production constraints and build up critical mass for linking with larger

domestic and international markets.

Actionable recommendations that built

and improve on the existing production

and market factors.

Potential improvements and new

approaches to consider.

1. Quality improvement through

formalized training (production

techniques, design concepts, etc.)

2. Production efficiency

improvement through vertical

integration and improving

distribution channels and logistics

5. Mechanization of production

process

6. Backward linkages with input

suppliers within the PADEE project

7. Engaging local producers’ expertise

from Kandal as an example of

FINAL

FINAL Page 40 of 59

3. Gradually extend training to more

people in the community to

address labor shortages

4. Emphasize establishing strong

linkages to larger markets

(domestic and international) to

avoid market saturation

successful community‐based

business

8. Consider specializing in one or two

different types of sedge mats and

building a local brand

9. Produce limited amount of

associated products from sedge as

a risk mitigation strategy

DetailedRecommendations

1. Achieve quality improvements through formalized training (production techniques, design

concepts, etc.) Cambodian sedge mats are generally perceived to be of decent quality; however,

when compared to imported Thai and Vietnamese mats, some respondents indicated quality issues

that did not justify the relatively higher price of the Cambodian product. Most sought‐after quality

characteristics, as indicated by our respondents, are thickness, bright colors and pattern design,

and durability. According to the Cambodian Sedge Mat Business Association (CSMA), the average

price for a 120x200cm mat is $20, but it varies depending on production quality and design.

With regard to meeting international standards, particular attention should be paid to the quality

of weaving and of input materials, as well as design, colors, and finishing. According to the expert

from CSMA, weaving has to follow certain rules in order to produce sedge mats good enough for

export. There are significant quality differences between sedge mats for domestic consumption

and for export; in fact, sometimes raw materials that were not of high enough quality to meet

international standards are used to produce sedge mats for local markets. CSMA has recognized

different requirements for domestic and international markets and usually provides additional

training to selected weavers from their traditional suppliers in Kandal in order to enable them to

produce sedge mats of international quality.

As such, quality improvement through providing targeted training to producers should be

considered as the first intervention in order to cater to the market demand, both domestic and

international. Introduction to design concepts, especially related to sedge mats produced for

export, could be considered as additional improvement after the basic production has been

mastered. Both training cycles should be designed in consultation with current intermediaries and

exporters (see the list of contacts) in order to meet the market requirements.

2. Production efficiency improvement through vertical integration and improvement of distribution

channels and logistics. In order to effectively compete on price, better coordination of the

production and distribution process should be considered. Currently, there are virtually no

established distribution channels or transaction schedules in the surveyed provinces. Planned

production through coordination with buyers (traders and end consumers) allows for more

efficient procurement of raw materials.

FINAL

FINAL Page 41 of 59

In fact, transportation costs have been indicated as an occasional constraint, both in terms of

sourcing the product from local producers and expanding the distribution area. Specifically, one

trader prefers not to bring his product to other provinces because the price of transport makes the

final selling price prohibitive; he can only afford to export if the starting price of sedge mats is

relatively low. Establishing a more permanent working relationship with local transportation

service providers could potentially help negotiate a better price.

3. Gradually extend training to more people in the community to address labor shortages. Labor

shortage can be a constraint considering other livelihood activities that household members are

involved in, including rural‐urban migration, as reported in some cases. This can be addressed

through gradually expanding the training to more people in the community in order to allow for

rotation of workers, based on the actual production needs. This can include not only

manufacturing, but also procuring raw materials and delivering the final product to the buyer.

4. Emphasize establishing strong linkages to larger markets (domestic and international) to avoid

market saturation. For this particular opportunity, even though a local market exists, we

recommend emphasizing establishing strong links with larger markets, both domestic and

international. The data show that individual retailers selling to end consumers at smaller markets

tend to report constant, but limited demand due to rapid market saturation. However, based on

our data, there may be more opportunities to supply more sedge products to other provinces,

Phnom Penh, and international markets.

Traders and collectors who work across several provinces identified in this market scan, as well as

CSMA, have potential to serve as the initial entry point for establishing such market linkages,

provided the final product meet their quality standards and price expectations. In addition,

interviewed producers mentioned traders who buy their product regularly, but have no contact

information for them. Connecting with them is not impossible, but will require time and

concentrated effort.

5. Consider experimenting with mechanization of the production process. As mentioned above,

sedge mat production in Cambodia is still primarily manual. However, in the Mekong Delta in

Vietnam mechanical looms have recently been introduced in traditional craft communities in order

to significantly increase productivity.10 While we are not arguing for blanket mechanization of the

entire production in Cambodia, it is possible to explore a possibility of introducing one or two

looms in the most successful weaving communities to supplement manual production and bring

the business to the next level. This should be done with caution and monitoring of the potential

effects on smaller producers.

6. Create backward linkages with input suppliers within the PADEE project. Limited input availability

has been reported as a production constraint in some cases, particularly with regard to dyed sedge

that has to be imported either from Phnom Penh or Vietnam. The community‐based approach has

potential for yielding a solution through involving PADEE beneficiaries with access to land in order

to encourage them to cultivate and process sedge, perhaps in limited volumes.

10 A brief description of the process can be found here: http://vietnamnews.vn/sunday/features/245871/mechanisation‐transforms‐craft‐villages.html

FINAL

FINAL Page 42 of 59

In this case, training should be offered on sustainable collection, proper drying, storing, and dyeing

techniques in order to produce the best quality raw material for sedge mat weaving. Additionally,

sedge producers should be linked directly to the weavers, which suggests organizing this within the

same village or commune as the best approach to cut other transportation and transaction costs

and ensure constant business.

7. Leverage local producers’ expertise from Kandal as

an example of successful community‐based

business. To maximize the efficient use of resources

for training and production process organization, we

suggest engaging local expertise from successful

producers from Kandal that have been trained and

supported through a previous project of similar

nature.11 This expertise can cover such topics as

production technicalities, specific requirements for

export, necessary skills, etc.

Contact information for one successful female producer interviewed during our study is included in

the table below.

8. Consider specializing in one or two different types of sedge mats and building a local brand.

There is also a possibility of introducing specialization by sedge mat type. It is possible to suggest

that, due to different quality, price and design preferences of different consumer sectors,

producers can customize their production techniques and input requirements to more efficiently

use available resources. This option should be explored in careful coordination with traders. In

addition, this strategy has a potential to result in creation of local brands.

The expert from CSMA also pointed out that there are two main types of sedge mats currently

being traded: traditional and modern. Either type requires knowledge of very specific weaving

techniques, as well as a certain degree of creativity to produce high quality sedge mats of the

modern type.

9. Produce limited amount of associated products from sedge as a risk mitigation strategy. Sedge

can be woven into a variety of different products, such as smaller mats, baskets, wallets and

purses, etc. The assumption is that such items are less labor‐intensive than traditional sedge mats

and can be made with left over raw materials.

While the demand for these associated products has not been studied specifically in our market

assessment, it is possible to suggest that diversification could serve as an effective risk mitigation

technique.

11 A brief description is available here: http://www.phnompenhpost.com/national/sedge‐mat‐industry‐thinks‐global

FINAL

FINAL Page 43 of 59

OverviewofProductionFactors

Resources needed Sedge grass, color or dyed grass, rope Start‐up capital $100‐250 (1 outlier = $10) Production cost per cycle (year) $50‐157Labor requirements Labor intensive production process

Relatively high skill level required for good quality product

Potential market linkages Traders can link to national markets; also export potential

Risks Inputs, market links, limited market reach (no strong links to traders), import competition, not enough tech knowledge

RecommendedLocationSedge is typically grown in downstream lowland areas or at the bank of flooding areas. With this in mind,

Svay Rieng is probably not the most suitable location for sedge mat production due to geographic

characteristics. Kandal already has reasonably developed production centers that can serve as models for

establishing community‐based sedge mat manufacturing in neighboring provinces.

While further careful consideration of other factors is needed, at this point it is possible to suggest either

Prey Veng or Takeo as potential locations for a pilot project, primarily due to availability of suitable land for

sedge cultivation.

ListofPotentialContacts

NAME FUNCTION CONTACT INFORMATION

Mr. Choek Nop Trader Takeo province, Bati district

097 971 6554

Ms. Sueng Khon Trader Kandal province, Kien Svay

district

015 792 169

Ms. Sraeng Li’ieng Producer

(trained by GIZ project)

Kandal province, Ksach

Kandal district

012 571 465

Ms. Ngoun Sokkim Cambodian Sedge Mat Business

Association

Phnom Penh

092 708 375

4.2 OrganicFertilizerDue to agriculture being the main occupation of the majority of rural Cambodian population, demand for

organic fertilizer is consistently high, albeit there are seasonal variations that depend primarily upon rice

cultivation cycle, when it’s often combined with chemical fertilizer. However, vegetable growers seem to

be the main users of organic fertilizer and tend to need it to some extent throughout the year. Despite the

high demand, however, the supply is unreliable and consistent local production of organic fertilizer for sale

in targeted provinces is virtually nonexistent.

FINAL

FINAL Page 44 of 59

Moreover, our market scan revealed that use of organic fertilizer in the target provinces is mainly

constrained to manure, while other types of organic fertilizer, such as compost and liquid biogas residue,

do not appear to be well known among the farmers. As for manure, its production is fairly limited, depends

mainly on the availability of livestock and currently does not constitute a consistent market. The lack of

developed market infrastructure is somewhat surprising given the unanimity of opinion that organic

fertilizer is better for the soil in the long run, not to mention affordability and health benefits.

Our data suggest that there are a number of different ways to address the gaps in the current supply and

demand model for organic fertilizer in the target provinces, from introducing new production techniques

to enhancing existing collection routines.


Overarching theme: The following recommendations propose an exploratory

approach that would allow for investigation and testing of several production

techniques new to the communities of interest, as well as seek to improve and expand

existing collection and distribution links.

1. Explore the possibility of composting

2. Explore communities’ capability and willingness to produce biogas

3. Use existing expertise from local and international NGOs

4. Improve distribution and market links for manure sellers to create a more

coherent market

5. Consider the possibility of generating additional income on partially catering to

the demand from Vietnam and other provinces


1. Explore the possibility of composting. Introduce composting from biological mass, including food

scraps, which can be a relatively landless option and requires no livestock. While it is quite possible

that some households in the targeted provinces practice composting on a limited scale for personal

use, there appears to be no market awareness of the product. The process, although it requires

some technical training, is relatively simple and can be adopted for individual households. The only

land needed for composting is a small plot anywhere around the house (about 1.5 square meters)

for a compost pile.12

12 More details on household composting can be found here: http://www.ecokohchang.com/composting‐in‐thailand/

FINAL

FINAL Page 45 of 59

The training required for successful composting should cover such topics as choosing the right spot

for the compost pile, selection of appropriate biological materials for composting13, construction of

the compost bin, controlling the odor and pests, and others. An additional option, given sufficient

level of community cohesion and willingness, is to initiate a community composting site that can

potentially be developed into a community business with shared costs and profits.

The second part of the training could cover proper storing and transportation techniques, as well

as developing marketing plans for produced compost and integration with the agricultural

community in order to establish a reasonable price and develop a constant market for the

product.14

2. Explore communities’ capability and willingness to produce biogas. Biogas production for a

variety of purposes is slowly gaining recognition in Cambodia, although its potential for use as

organic fertilizer could be publicized even further. However, despite the undisputable benefits of

biogas use, its production is not necessarily affordable or straightforward and requires extensive

training, as well as financial support. Nevertheless, it is certainly feasible, as the successful example

of a farmer in Prey Veng shows.

In fact, the potential benefits of biogas production and fertilizing properties of its liquid residue are

lucrative enough to explore the possibility of community‐based production model. Provided

adequate level of community cohesiveness, it is possible to address input constraints through links

with local manure suppliers (it is needed, although in limited amount), as well as some financial

constraints. Technical training on biogas production and utilization should be provided to all

interested community members to ensure consistency of knowledge and community buy‐in.

Produced liquid biogas residue can then be sold to nearby villages or organized into a larger

business that would supply to larger markets. Additional training should be provided on marketing

techniques to ensure maximum market penetration.

3. Use existing expertise from local and international NGOs. It is recommended to consider the

possibility of establishing partnerships with local and international organizations that work on

promoting composting and other forms of sustainable waste management in Cambodia to leverage

their expertise in the sector, particularly with regard to technical aspects of production and

marketing.

Some examples include Royal University of Agriculture, CEDAC, Husk Cambodia that partner with

Composting Toilets International, Cambodian Education and Waste Management Organization,

and others.

4. Improve distribution and market links for manure sellers. Currently, there is only rudimentary

market infrastructure for manure trading, which is generally limited to purchasing dried manure by

the farmers themselves from several suppliers in their village and neighboring area, provided they

have enough excess manure to sell. This method, while a traditional way of trading manure, is not

13 More on types of compost and potential raw materials can be found here: http://www.thai‐organic‐compost.com/organic‐fertilizer.html 14 More on marketing for compost, as well as some technical aspects of production, can be found here: https://www.whenyouwish.com/upload/54e42da6‐6412‐494b‐a57c‐53d6cb09875d.pdf

FINAL

FINAL Page 46 of 59

the most efficient one, considering that only 10% of respondents in our study claimed that they

could always find enough manure for their farming needs.

While increasing manure production may be outside the scope of this project, it is certainly

possible to improve distribution practices and establish more stable market links for manure trade,

especially during demand peaks. There is a limited number of traders involved in local manure

trade, but overall market links are fairly weak. It is possible to suggest that there might be an

opportunity for interested PADEE beneficiaries to provide collection services and capitalize on

bridging the gap between supply and demand.

5. Capitalize on existing demand in Vietnam and other provinces. Given the current lack of supply of

organic fertilizer for local farming needs, this opportunity should be considered with caution.

However, if the main objective is to gain additional income, exporting organic fertilizer, particularly

dried manure, could be a relatively straightforward option. Currently, this is done either by

producers themselves (or, rather, by their children that carry limited number of fertilizer bags

across the border to Vietnam) or through a trader. For example, a trader in Prey Veng supplies

organic fertilizer for plantations in Kampong Cham and has to work with a large number of

suppliers in his province in order to meet the demand.

It is possible to explore if the current distribution routes, particularly to Vietnam, could be

formalized in an economically sustainable manner in order to yield additional income for PADEE

beneficiaries who could participate in distribution, collection, as well as provide other necessary

services.


Resources needed For biogas: manure, bricks and cement (to construct the bio digester) For composting: any organic material

Start‐up capital Low for compostingProduction cost per cycle (year) No data Labor requirements Generally low; but depends on effort spent

gathering material Potential market linkages High local demand as well as potential linkages with

other provinces and even Vietnam (from Svay Rieng province)

Risks Raw materials (manure primarily), no established market, lack of interest in selling

FINAL

FINAL Page 47 of 59

ListofPotentialContactsNAME FUNCTION CONTACT INFORMATION

Mr. Toem Chaap Trader

(sells to Kampong Cham)

Prey Veng province, district Piem Ro

088 930 4275

Ms. Sam Sarun Producer

(biogas)

Prey Veng province, Chan Trea district

088 383 6922

Ms. Chie Somaly Trader

(sells to Vietnam)

Svay Rieng province, Chan Trea district

097 909 5063

4.3 BroomProductionTiger grass (phka smau) broom production can be a relatively simple process once the necessary training

has been provided and reliable input supply established. Like sedge mats, the main advantage of

production is that it can be organized and conducted at the household level and creates more income

generating opportunities for the rural population, particularly women. Tiger grass broom production has

inherent seasonality due to raw material availability during specific months, which can serve as a basis for

coordinated community approach. In addition, there is a certain degree of seasonality in market demand: it

is generally higher during the dry season.

There are several types of brooms used on a regular basis in Cambodia that can be made locally. There are

also significant imports from Vietnam where, unlike in Cambodia, similar tiger grass brooms are produced

throughout the year and tend to be of higher quality, as well as more expensive.

The following recommendations propose community‐based approach to tiger grass broom manufacturing

that covers the entire production process, from sourcing raw materials to delivery to the buyer. This

approach allows for addressing production constraints and strengthening of market linkages through

shared effort, provided sufficient level of community cohesiveness.

FINAL

FINAL Page 48 of 59


Overarching recommendation: leverage existing success stories to improve local

product quality, address input constraints and build up critical mass for linking with

larger domestic markets.



and market factors.




formalized training (weaving

techniques primarily)

2. Production efficiency

improvement through organizing

the process on a seasonal basis to

maximize the use of available

resources and produce enough

product for the high demand

season (dry season)

3. Emphasize establishing strong

linkages to larger markets through

local traders that distribute the

product to a variety of buyers, as

well as to other provinces and

Phnom Penh.

4. Engaging local producers’

expertise from Kampot as an

example of successful local

business, as well as case studies

from Vietnam

5. Backward linkages with input

suppliers within the PADEE project

6. Produce limited amount of

associated products as a potential

diversification strategy

7. Consider limited exports to

international markets as an

additional options for the most

successful manufacturers


1. Quality improvement through formalized training. Khmer brooms are generally considered to be

of much lower quality than the ones imported from Vietnam due to the lack of technical

knowledge on broom weaving among local producers who, according to them, have never been

FINAL

FINAL Page 49 of 59

properly trained. As a result, Khmer brooms are considerably cheaper than the Vietnamese ones,

although there is consistent demand for both. One reported exception is several producers in

Kampot that supply brooms of comparable quality that sell at a higher price.

According to several traders interviewed, they would be willing to purchase more local brooms if

they were of better quality. Moreover, the customers interviewed in the five target provinces also

indicated their willingness to pay a higher price for locally produced brooms if they last longer. As

such, providing specialized training to existing producers and interested beneficiaries makes for a

logical first step. See recommendation 4 for suggestions on how to obtain relevant training inputs.

2. Production efficiency improvement through organizing the process on a seasonal basis. In order

to effectively compete on price and maximize the use of labor and raw materials, better

coordination of the production and distribution process should be considered. In the target

provinces, raw material (tiger grass) is only available two to three months per year and overlaps

with rice cultivation leading to lack of labor to collect enough inputs.

One way to address this would be to organize labor available in the community in advance in order

to dedicate enough workers to the tiger grass collection. In fact, this can be done for a small fee, as

currently practiced in parts of Vietnam.15

In addition, the manufacturing process should start earlier in order to accumulate enough finished

product before the beginning of the dry season when tiger grass brooms are reportedly in high

demand.

3. Emphasize establishing strong linkages to larger markets through local traders. For this particular

opportunity, it is preferable for producers to establish strong linkages with local traders who can

distribute their product to larger markets and to other provinces, as is the case with producers in

Kampot. As mentioned above, there are several traders who indicated their interest in purchasing

more of the local product if it meets their quality standards, as well as customers who are willing to

pay a higher price (comparable to the price of imported product). The contact information for

these traders is listed in the table below.

In addition, some local market retailers indicated their interest in supporting local producers,

provided the quality of the product is adequate. It should be noted, however, that these individual

retailers tend to report constant, but limited demand and are somewhat cautious about stocking

up on the product. Therefore a strong focus on supplying to provincial and national markets is

recommended.

4. Engaging local producers’ expertise from Kampot as an example of successful local business, as

well as case studies from Vietnam. As mentioned above, there are several producers in Kampot

who seem to know better weaving techniques and as a result supply their product to several

markets, including other provinces. One case in particular is a female producer in the Dong Tong

15 There are several Vietnamese news articles available that describe the practice:

http://botanyvn.com/print.asp?param=news&newsid=481

http://www.xaluan.com/modules.php?name=News&file=article&sid=161542

http://baophuyen.com.vn/Phong‐su‐‐‐Ky‐su‐89/8805806506505763

FINAL

FINAL Page 50 of 59

district who might be able to provide advice and practical guidance on not only broom‐making

techniques, but also setting up and operating a successful business and lining with traders.

Another interesting case study – Sanda Co. Ltd. ‐ with a focus on female empowerment is found in

Hoa Binh, Vietnam, where a local broom weaver grew her business through training and employing

women from her community, successfully reaching export markets.16

5. Backward linkages with input suppliers within the PADEE project. Limited input availability has

been reported as a production constraint, resulting in producers’ having to purchase additional

tiger grass for weaving brooms when they are not able to collect enough in their location. There

are two main reasons for that: limited seasonal availability of tiger grass itself and insufficient labor

to collect enough due to overlap with rice cultivation season. The community‐based approach has

potential for yielding a solution through involving PADEE beneficiaries with access to land in order

to encourage them to cultivate and process tiger grass, at least in limited volume.

In this case, training should be offered on sustainable collection, proper drying, and storing

techniques in order to produce the best quality raw material for tiger grass brooms. Additionally,

tiger grass growers should be linked directly to the broom makers, which suggests organizing this

within the same village or commune as the best approach to cut other transportation and

transaction costs and ensure constant business.

6. Produce limited amount of associated products as a risk mitigation strategy. There are a number

of smaller household items that can be made from tiger grass, such as small scoops (bongky), trays

for drying rice (lhey), and others. The assumption is that these products are less labor‐intensive

and can be made with leftover raw materials to maximize the use of inputs and provide additional

source of income. Although brooms are a commonly used household item that enjoys consistent

demand, it may be advisable to diversify production to some degree.

7. Consider limited exports to international markets as an additional option for the most successful

manufacturers. Although, given their domestic popularity, the preferable distribution option for

tiger grass brooms are national markets, the possibility of limited exports should be considered as

well. The Sanda Co. case from Vietnam could serve as an example of this business model. In

addition, there is potential for creating a Cambodian brand of this popular household item for the

most successful businesses.

16 More information can be found here: http://archive.is/ZzjYY and here http://www.un.org.vn/en/what‐we‐do‐mainmenu‐203/joint‐programmes‐a‐teams‐mainmenu‐208/joint‐programme‐on‐green‐production‐and‐trade/2163‐vietnamese‐businesswoman‐selected‐as‐a‐finalist‐for‐the‐global‐‘women‐in‐business’‐award.html

FINAL

FINAL Page 51 of 59


Resources needed Tiger grass, stick (for holders), rope, wires (for weaving)

Start‐up capital $100‐250 (1 outlier $3000) Production cost per cycle (year) $360‐425 (1 outlier $8625) Labor requirements Labor intensive production process

Reportedly not enough people to collect the raw material when it’s in season

Potential market linkages Local and provincial markets, as well as export to other provinces and Phnom Penh

Risks Shortage of inputs, labor shortage to collect raw material, lack of training, import and domestic competition

RecommendedLocationKampot already has reasonably developed production communities that can serve as models for

establishing community‐based broom manufacturing in neighboring provinces, as well as provide

necessary technical expertise for training design.

Given the relatively similar demand size for brooms in all target provinces, the choice of the pilot location

for the training will depend on the willingness of participants, as well as local availability of or interest in

cultivating raw materials.



Mr. Ou Phow Trader Kampot province, Chook

district

012 256 123

Mr. Choeun Pon Trader Takeo province, Bati district

097 926 2198

Ms. Yieu Im Producer Kampot province, Dong Tong

district

097 501 9175

Mr. Nou Bunthea Trader Kandal province, Kean Svay

district

077 381 138

FINAL

FINAL Page 52 of 59

4.4 DriedFishLocal dried fish (try ngiet) production in the surveyed provinces, although this is a popular and omnipresent

product, is fairly limited due to a variety of factors. Limited and seasonal input availability is certainly one

of the most important ones, but it varies from province to province. Inadequate drying process, however,

seems to be a general problem in the surveyed locations.

It should also be noted that the current market for dried fish is relatively diverse both in terms of available

products and distribution routes; as such, it presents several entry points for intervention to consider.

The following recommendations propose extensive training focused on several aspects of quality

improvement, as well as strengthening of existing market links and potentially establishment of new routes

to reach the most responsive consumer segments.


Overarching recommendation: capitalize on customers’ interest in supporting local

production through improving the quality and hygienic standards, as well as tailor

production and distribution to local preferences and larger markets.



and market factors.



1. Quality improvement, specifically

drying techniques, through

introducing technology


training on proper processing

techniques, storing, and hygiene

3. Production efficiency increase

through specialization, based on

local consumer preferences and

available inputs

4. Strengthen distribution links, both

to larger markets and smaller

retailers

5. Consider establishment of a

seasonal market link to cater to

holiday demand spikes

6. Explore the possibility of providing

additional services, such as product

packaging and distribution

7. Consider establishing market link

with traders who cater to overseas

Cambodian diaspora

FINAL

FINAL Page 53 of 59


1. Quality improvement through better drying process. Based on the information provided by end

customers and retailers during our market scan, there is room for quality improvement for dried

fish products sold at local markets. One of the most important characteristics of any kind of dried

fish that the customers look for is its level of dryness. Locally produced dried fish is sometimes still

damp, which damages its taste and makes it more perishable. Producers themselves suggested

that it is difficult to produce top level product due to the long time it takes to dry the fish properly,

especially during the rainy season. As a result, customers and retailers prefer to buy dried fish from

Phnom Penh and other locations where the quality is perceived to be higher, even though they

express their desire to support local production.

While fish drying is not a particularly complicated process, it is possible to suggest there is room for

improvement. Preliminary research suggests that there is relatively simple and affordable

equipment that can be used by local producers to improve and the quality and speed of the drying

process. For example, a simple solar dryer is fairly inexpensive to buy or construct, but it allows for

faster, more thorough, as well as hygienic drying process.17 Another interesting option is exploring

the possibility of using improved cook stoves for home‐based fish processing.18

2. Quality improvement through other training. In addition to concerns over the dryness of locally

produced processed fish, some customers and retailers mentioned potential use of chemicals in

production, especially in products imported from Vietnam, low standards of hygiene, fat content,

as well as other health‐related concerns. This observation presents an opportunity for additional

training on making a better and healthier product with fresh local ingredients that could potentially

present an opportunity for creating a local brand with strong emphasis on quality, especially in

urban markets. This training could cover such production aspects as selection of ingredients,

hygiene standards, storing, etc.

3. Specialization in a particular product variety. One particular characteristic of the dried fish

demand that emerged during our market scan is product diversity. Moreover, the popularity and

availability of each type seem to vary from province to province and sometimes within provinces.

However, given the differences in raw material availability between the target provinces, it is

recommended to build local production with this as a main factor. Input availability is also the main

determinant of the final selling price of dried fish. As part of this strategy, establishment of linkages

with local fish raisers and traders should be considered in order to secure supply or raw materials.

However, if the final product is not the most popular variety in the local area, in which case there is

a possibility of establishing trade links to larger markets or different provinces where it is more in

demand, due to the diversity of the market. Additionally, the potential of local branding should be

explored, given sufficient availability of raw material and other local specifics.

17 A description of a solar dryer can be found here: http://www.solarfooddryer.com/Kit_Info.htm and here: http://www.motherearthnews.com/diy/build‐a‐solar‐food‐dehydrator.aspx?PageId=2 18 More information can be found here: http://www.fintrac.com/cpanelx_pu/cambodia/14_35_8658_Snapshot%2038%20‐%20New%20Stove%20Improves%20Fish%20Processing.pdf

FINAL

FINAL Page 54 of 59

Another point to consider in developing specialization of dried fish production is level of awareness

of local consumers of different varieties.

4. Strengthening of distribution links. As mentioned before, dried fish is popular virtually everywhere

in the country and can be found at every market, regardless of its size. There are numerous

distribution routes for the product, including imports from Vietnam. Based on the data collected

during our market scan, it appears that there are, however, several distinct consumer segments

can be identified that prefer different varieties of dried fish. While more nuanced assessment

tailored specifically for investigating consumer preferences is needed to obtain the full pictures,

overall the preferences for dried fish seem to depend on socioeconomic status and location of

consumers. In particular, farmers and villagers tend to prefer cheaper and saltier variety that lasts

longer; there are smaller resellers that cater to this consumer segment by delivering the product to

their door or straight to the rice fields during the cultivation season. At the same time, urban

consumers prefer fresher varieties and are more concerned about health effects and other quality

issues.

With this in mind, it seems reasonable to link producers of specific varieties to concrete retailers,

traders, and smaller resellers for more targeted outreach to consumers. This will allow for

minimizing the losses due to unsold and spoiled product, as well as mitigate the issue of limited

availability of local products throughout the year, when supply has to be supplemented through

imports from other provinces and Vietnam. One of the ways to start developing these links could

be assessing the distance between PADEE beneficiaries who are interested in producing dried fish

and the types of markets in the area. The focus should be made on proximity advantage to

maximize the value added, balanced with consumer preferences in that specific location.

5. Incorporate seasonality of demand into production model. Taking into consideration the seasonal

pattern of demand for dried fish, it is recommended for PADEE beneficiaries to establish a regular

connection with retailers and traders to supply specific types of dried fish to cater to holiday

demand spikes. Such agreement will be beneficial for both sides as it will yield additional income

for the producers and mitigate the risk of undersupply for the sellers, when consumer demand for

dried fish increases up to three or four times. The two most obvious periods of high demand are

Khmer New Year and Pchum Ben.

6. Provision of additional services including packaging.

Another recommendation for earning supplemental

income for PADEE beneficiaries who are unable or

uninterested in producing dried fish themselves is

providing additional services along the value chain.

One of the findings of our market scan indicates that

consumers are willing to pay a slightly higher price

not only for better quality dried fish, but also for

packaging, as hygiene standards are one of the

concerns with local product. With sufficient training, this service can be provided by virtually any

member of the household to generate supplemental income. Other services, such as delivery and

distribution, should also be considered.

FINAL

FINAL Page 55 of 59

7. Explore export potential. While dried fish is a popular product for domestic consumption in

Cambodia, our research suggests that certain traders in Phnom Penh are able to capitalize on

demand for the product among overseas Cambodians as well. It is possible to suggest that, taking

into consideration previous recommendations on specialization, adequate quality and hygiene

standards, there is an opportunity for PADEE beneficiaries to establish links with these traders in

order to supply specific varieties of dried fish that meet international standards.


Resources needed Fish and salt, other spices, ice Start‐up capital $75‐250 (2 outliers, in Phnom Penh $1000‐2000)Production cost per cycle (year) Rural: $164 ($151 for raw materials) / PP: $950

($850 for raw materials) Labor requirements Not very high. But can be difficult to find workers

because of the strong smell Potential market linkages Mostly provincial markets and Phnom Penh; local

tastes vary per location Risks Inputs (seasonal, varies by province), lack of tech

knowledge to make high quality product; health and hygiene concerns from some customers

RecommendedLocation

As mentioned above, the market for dried fish is relatively well developed in all five target provinces.

However, local production seems to be generally lacking due to a variety of factors; as such, any province

could be a reasonable location for a pilot, provided local specifics of input availability and consumer

preferences are taken into consideration.



Ms. Tang Sivteang Trader/Producer

(also exports)

Phnom Penh, Orussey Market

088 8660 777

012 935 375

Che Lie Mean Chey Trader/Producer Phnom Penh, Orussey Market

088 9511 112

015 702 99

Ms. Bun Lom Producer Kampot province, Kampot

district

017 877 326

FINAL

FINAL Page 56 of 59

4.5 PickledMustardGreensPickled vegetables, especially a particular type of pickled mustard greens (chruk spey) are a popular food

item that is relatively easy and risk free to produce. However, it appears that local customers have

particular requirements to the quality of raw materials and freshness of the product.

As mentioned before, this opportunity was investigated in less detail than the original ten because it was

added to the list only in Takeo and Kampot provinces, when its high demand became obvious to the team,

and resources were shifted away from less attractive opportunities. As a result, the data available are less

detailed, although some characteristics of production and consumption became apparent. It appears that

the main constraint is the lack of inputs during parts of the year. In addition, some training may be

required on the best pickling techniques, as well as hygiene standards. Production is relatively simple, but,

according to some respondents, can be labor intensive.

It should also be noted here that some local markets are experiencing market saturation due to recent

increase in the number of sellers; as such, it is necessary to identify locations with remaining gaps in

supply.

DetailedRecommendationsAlthough a more detailed study is needed in the other target provinces, the information the team has been

able to collect yields the following recommendations:

1. Ensure timely supply and high quality of raw materials. Due to the specific nature of the final

product, it is crucial to have a reliable supply of fresh inputs (primarily mustard greens). Customers

indicated their sensitivity to the quality of the final product, with freshness being the main

concern. Currently, the producers we interviewed have to use several input suppliers from Phnom

Penh, Kandal, and other provinces to ensure sufficient supply of raw materials and they still

experience difficulties in finding enough. In addition, there are some concerns among producers

about possible chemical use in imported mustard greens, especially from Vietnam; local product

seems to have better reputation (there are suppliers in both Takeo and Kampot, although their

market share is unclear).

With this in mind, it is highly recommended to explore available options for establishing strong

backward linkages in the community to ensure reliable supply of fresh inputs and reduce operation

costs through minimizing transportation fees and other related expenses.

2. Promote vertical integration of the production process. It is recommended to link producers

directly to the market retailers or distribute the product to end consumers, because the final

product is perishable. Moreover, since it generally remains fresh only for 2‐3 days, the production

process has to be continuous and well measured, i.e. produce enough to sell within 1‐2 days only

to avoid leftover product that cannot be stored. It should be noted that it is possible to keep

pickled vegetables longer than 2‐3 days by adding more salt, but that is a matter of personal taste,

as well as a potential health concern.

These factors suggest that it is crucial for producers to have very strong links to both raw materials

suppliers, as mentioned above, and retailers or consider retailing their product themselves, as is

often done by successful retailers that we have interviewed.

FINAL

FINAL Page 57 of 59

3. Provide additional services, such as hygienic packaging. As could be expected, freshness and

safety are major consumer concerns with such a perishable product as pickled vegetables.

Consumers indicated their willingness to pay a higher price for better packaging, while retailers

suggested that guarantee of hygienic safety of their product is one of the key success factors of

their business.

This finding suggests two potential interventions: providing additional training to producers on

hygiene standards and including additional services, such pre‐packaged product to alleviate

consumer concerns. There is also potential for strong branding based on freshness and high

hygiene standards to make the product more competitive.

4. Explore different varieties of pickled mustard greens. It has been suggested by some producers

that, despite a relatively simple recipe, it is possible to produce a “special” kind of pickle that is

more expensive (twice the price of regular chruk spey) and enjoys constant demand from local

customers, although it generally sells in smaller quantities than the regular variety. While we do

not have any specifics on what is different about this variety (except that it is a more labor‐

intensive production), this finding suggests that there is a possibility for diversification, provided

sufficient inputs and labor.

Other associated products, primarily other kinds of pickled vegetables, can also be produced in

limited quantities as a diversification strategy, based on the size of local demand for them.

4.6 OtherOpportunities

Chickbreeding

Chick breeding does present a number of production challenges that prevents it from being recommended

as an appropriate opportunity for PADEE beneficiaries. However, it does enjoy relatively constant demand

and should be completely disregarded.

In fact. It may be beneficial to recommend chick breeding in limited scope for communities that are

planning to engage in chicken raising, which is a promising income generating opportunity across all the

target provinces, as revealed by other studies. This will allow for vertical integration of community

production and will minimize transportation expenses, as well as tailor production size to the demand.

Noodles

Kuy tieu, as well as several other types of noodles, are another popular food item that has constant

demand on a daily basis and does involve a complicated production process. However, existing supply

generally meets the demand, especially at larger markets. One option to generate additional income for

PADEE beneficiaries with limited time available is to cater to seasonal demand spikes, when the sales go up

by several times around the major holidays.

To capitalize on the seasonality of demand, it is necessary to establish strong links with retailers who tend

to experience shortages in supply around the holidays and are looking for additional producers to work this

that will meet their quality standards. It is also recommended to include delivery in the services provided

by producers to establish a more direct link and ensure rapid delivery, since this is a perishable product.

FINAL

FINAL Page 58 of 59

Depending on the cost and availability of inputs in a particular location, the average daily profit can be up

to $7.

Particular attention should be paid to fresh yellow noodles that are often made “on order” when needed in

large quantitates due to their extreme perishability. This type of noodles is particularly popular in Kandal,

according to our research, but is sought after in other target provinces as well during the holiday season.

FINAL

FINAL Page 59 of 59

BibliographyBauld, S. (2011). Market Analysis and Five‐Year Marketing Strategy for the Tourist Handicraft Sector in Kampong Thom Provinc., Asian Development Bank, Cambodia.

Cambodia Harvest: Helping Address Rural Vulnerabilities and Ecosystem Stability. (2013). New Stove Improves Fish Processing. USAID, Cambodia. Department For International Development. (2008). Making Value Chains Work Better for the Poor: A Toolbook for Practitioners of Value Chain Analysis. Agricultural Development International, Cambodia. Emerging Markets Consulting. (2007). Kampong Speu Market Assessment. United Nations Development Program, Cambodia. Hoornweg, D., Thomas, L., Otten, L. (1999). Composting and Its Applicability in Developing Countries. The World Bank, USA. Hundley, C., Emerging Markets Consulting. (2005). Cambodian Commodity Chain Analysis Study, Coalition to Address Sexual Exploitation of Children in Cambodia and Plan International, Cambodia.

Ostertag, C. F. (2004). The Territorial Approach to Rural Business Development, Module 2: Identifying and Assessing Market Opportunities for Small‐Scale Rural Producers. International Center for Tropical Agriculture, Colombia.

Seng, K. (2011). Creative Industries Support Program, Final Report: Sales and Market Access. United Nations Development Program, Cambodia.

UNCTAD. (2011). Empretec Women in Business Award 2012. United Nations, Geneva.

NewsSources

Chakrya, K. S. (2009). Sedge Mat Industry Thinks Global. The Phnom Penh Post, Cambodia. Retrieved at http://www.phnompenhpost.com/national/sedge‐mat‐industry‐thinks‐global

Eco Koh Chang. (2012). Composting in Thailand – Get Started! Retrieved at http://www.ecokohchang.com/composting‐in‐thailand/ Fodor, E. (2006). Build a Solar Food Dehydrator: Preserve Your Harvest with the Free Energy from the Sun. Mother Earth News, USA. Retrieved at http://www.motherearthnews.com/diy/build‐a‐solar‐food‐dehydrator.aspx?PageId=2#axzz2x3qHgq9Y Natural Agriculture (2013). Organic Fertilizer. Natural Agriculture Co., Ltd, Thailand. Retrieved at http://www.thai‐organic‐compost.com/organic‐fertilizer.html Thông, Đ. (2006). Chổi đót sẽ xuất ngoại? Báo Phú Yên Online, Vietnam. Retrieved at http://baophuyen.com.vn/Phong‐su‐‐‐Ky‐su‐89/8805806506505763 Viet Nam News (2013). Mechanization Transforms Craft Villages. Retrieved at http://vietnamnews.vn/sunday/features/245871/mechanisation‐transforms‐craft‐villages.html

XaLuan.com. (2010). Thanh Hóa: Sắm Tết Nhờ Thu Hoạch Cây Đót. Vietnam. Retrieved at http://www.xaluan.com/modules.php?name=News&file=article&sid=161542

market opportunity scan (non land based)€¦ · study, the main sources of information were end...

Documents