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Amru Rice and the business model in developing and thriving the benefits for Agricultural Cooperatives in Cambodia

On 07 June 2021, Chairman and CEO of Amru Rice, Mr. Song Saran, has given the presentation as one of the speaker in the webinar: “Agricultural Cooperatives in Cambodia: Development and Benefits”, Co-host by National University of Battambong (NUBB), and University of Vigo-Spain.

By given the stage to present the Amru’s Business model specific on the 4Ps (Public-Private-Producer-Partnership), Mr. Song Saran said that this business model was started in 2014 with the contract farming business model with 8 Agricultural Cooperative (ACs) in Preah Vihear province with 200 farmers participating in organic rice production. Amru also facilitate an assured market for the smallholder farmer’s hinged on a fair price above local trader’s offer; an add-on premium price if their products meet organic standards; the organic certification of their products using European and USDA organic standards on which farmers were trained and adopted, including an internal inspection system of their compliance. In 2015, this scaled-up to 13 ACs with 2,000 households supplying 5,000 tons of organic rice based on contracts. In 2016, the program grew to 18 ACs and 4,000 farmers producing 11,000 tons. In 2020, Amru’s contract farming model works with 82 communities equal to 8,000 farmers.

Contract farming business model in Cambodia is linked mostly to the smallholder’s farmers, in which, Mr. Song Saran stated that the 4Ps model has helped them in multi-ways with supported from multi-sectors, such as following activities:

  • direct add on value of more than USD 1.3 million per year to the producers since 2018. We paid farmers an average cost of USD 340 per metric ton for organic rice or higher than USD 140/MT offered by farm gate traders.
  • ACs were linked to the Royal Government’s fund to the Rural Development Bank (RDB) that helped the purchase of paddy rice from farmers.
  • Farmers and ACs gained access to technical services to strengthen cooperatives and to train farmers on quality standards and sustainable farming practices.
  • We introduced BlocChain applications through the BlocRice which traced farmers’ transactions with Amru and our exports buyer SanoRice using digital or Android phone technology now used by 200 farmers
  • We leveraged two micro-financial institutions AmK and Chamrouen to set up a special harvest loan based on the producer’s contract agreement that enabled lending to the ACs of nearly half a million dollars;
  • We moved forward the Sustainable Rice Platform in Cambodia by engaging with the International Finance Corporation (IFC) to support SKO rice production using the contract farming model with some 23 ACs;
  • Organic rice farming using global product standards and certifications have expanded in Cambodia with new contracts in Mondulkiri through the RiceTech Project with the Dutch government, with some Cambodia Rice Federation members replicating our model and business expansion into organic cassava and cashew.

Before concluding his speech, Mr. Song Saran has raised up about how to move forward with 4Ps and multi-sector platform by upgrading the 4Ps, since small producers needs access to pre-financing, climate-resilient seeds and farm inputs and more efficient technologies and investment capital.

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