CAMBODIA: Agro investors must be flexible

French agribusiness Socfin Group, which has managed rubber plantations in Cambodia since 2008, has seen rubber prices plummet and land claims multiply while waiting for its first returns on investment.

Discussing the company’s investment in Cambodia and operating challenges with “The Phnom Penh Post”, Jef Boedt, general manager of Socfin Cambodia, said that the company has two plantations in Mondulkiri province. It has planted 7,500 hectares in total of rubber trees. It has already invested USD 80 million, and for that, it also needs a big social infrastructure. Currently, the company has 600 employees and eventually it will have 2,000 and estimates over 10,000 people are living on its concessions.

Speaking about the status of Socfin’s operations in Cambodia, Jef said: “We are still in an investment phase. Our concessions are completely planted, but rubber is a long-term business. You plant a tree and it takes six years to be ready for harvest. We’re on the cusp of moving from an investment phase to production. As of now, we are producing on 500 hectares. For us that is still small and it’s the first test, because we’ve had a long dry period in Cambodia. If you follow our investment phase we’ve planted around 1,000 hectares every year, so if you calculate, in the next six years we will be at full production.”

While talking about global rubber prices that have dropped off sharply in recent years and how this will affect the company’s business plan, he said that, unfortunately, they are going to be producing when prices are low. But they know they are here for the long haul and they know that rubber prices are following cycles. In their business plan, they are prepared for that. And that doesn’t change their plans. They have to be more careful and emphasize more on cost effectiveness and fine tuning of the operations.

Being in the rubber business Jef said he is always hoping rubber prices will go up fast. But these rubber prices are linked to raw materials that have very low prices as well. And he said he doesn’t think immediate changes are going to come soon. "It will be 2018 or 2019 before things begin to brighten," Jef concluded.

Source: Daily “The Phnom Penh Post”, Phnom Penh; 29 Jan 2016
(Syed Rashid Ali, Karachi, Pakistan)