Hong Kong & Phnom Penh, Cambodia | 28 November - 10 December 2016
In December 2016, GIFT brought leaders from Asia, Europe and Africa to Phnom Penh, the capital of Cambodia. They were challenged with developing a new business model to strengthen the country’s struggling rice sector which employs three million Cambodians or 20% of the population.
Working with SOMA Group, a leading local conglomerate led by GLP alumni and current President of the Cambodian Rice Federation H.E. Sok Puthyvuth, participants produced a business plan for “farmer-centric” contract farming to support increased yields, improved seed and rice quality and ensure the financial benefits are shared more equitably between agribusiness and smallholder farmers.
The GLP encourages you to push the boundaries of common assumptions and really challenge what is important in today’s world. It was an inspiring experience that I will never forget.
Dr. Alexandra Seeber | Team Leader Global Product Management Pharma Solutions | BASF (Germany)
The GLP challenged me to think deeply about current global issues and dynamics and broadened my perspective on them. These are crucial for leadership development in this rapidly changing world where the status quos are being challenged.
Tsze Shin Tan | Vice President, Risk Management Group | DBS (Hong Kong)
Cambodia is an economic success story after decades of conflict and political unrest. Since 1989, Cambodia has pursued market-oriented reforms and development, leading to some of the most drastic reductions of poverty in the region. Cambodia’s poverty rate fell from 52.2% in 2004 to 20.5% in 2011, vastly exceeding expectations.
According to the World Bank, this was due to better rice prices, better wages for both agricultural and urban workers, and improvements in health and education. However, the World Bank also noted that Cambodia’s poor, while no longer in poverty, remain susceptible to economic shocks.
Development of Cambodia's main industries—agriculture, garments, tourism and construction—led to a strong average growth rate of of 7.67% between 1994 and 2015. Cambodia's principal crop is rice, accounting for 15% of agricultural value added. 75% of Cambodia's cultivated land is used for rice.
Phnom Penh is Cambodia's capital, economic center, and its largest city, with a population of about 1.5 million 10% of Cambodia’s total.
(Source: Quang Nguyen, GLP Participant)
Phnom Penh was made the country's permanent capital by King Norodom I in 1866. By 1920, the city was known as the "Pearl of Asia."
The city is also a symbol of Cambodia’s recovery. Foreign investment and development aid has rebuilt the city, and it is now a major tourist destination.
(Source: Quang Nguyen, GLP Participant)
DISTINGUISHED GUEST SPEAKERS
In both Hong Kong and Cambodia, GLP participants heard from respected leaders in business, civil society and media.
Former Chairman of HSBC Asia-Pacific and Member of GIFT's Advisory Council
CEO for New Markets of Prudential Asia
H.E. SOK PUTHYVUTH
CEO of SOMA Group & Chairman of the Cambodian Rice Federation
ON THE GROUND IN CAMBODIA
Cambodian rice is some of the world’s best. Cambodian rice strains have won the “World’s Best Rice” award from the World Rice Conference three years running.
However, the sector faces competition from high-quality rice from Thailand and cheaper rice from Vietnam. Cambodia’s productivity is far below its competitors: Vietnam can grow about 10-11 tons per hectare, while Cambodia’s average hovers around 3-5 tons.
Participants travelled to Takeo Province, by the Vietnam border, to talk to farmers, as well as other parties in the rice value chain.
Farmers shared the difficulty of getting access to quality inputs and financing for their crops. They noted that they would be open to new ways of farming—though they would first need to be proven effective.
Participants visit AQIP, the only national seed producer. Despite being an integral part of the rice value chain, Cambodia's seed production capacity is much lower than what is needed.
Rod Bassett, Head of SOMA's agriculture division (pictured right), walks participants around SOMA's main rice farm. Advanced techniques and timely technological interventions protected SOMA's harvest in what was otherwise a tough year for Cambodia's farmers due to the third successive drought.
Participants visit one of Cambodia's underutilised rice mills. This particular rice mill is running at only 10% capaicty due to a lack of good quality produce and drying and storage facilities in proximity to production hubs.
WORKING TOWARDS A SOLUTION
The GLP uses real-world field projects to hone the practical skills needed to manage diverse teams in unfamiliar situations. Through meetings with government, community and business leaders, and through frank and open discussions amongst themselves, participants learn to navigate conflicting and contradictory views to transform concepts and theories into realities on the ground.
Participants developed a plan for SOMA proposing a new business called FairSmart Agri: a contract farming system that would provide better inputs and training for Cambodia's many smallholder farmers while preserving the farmer's ownership of their land.
Below are a few slides from the full business plan developed by participants.
Every Global Leaders Programme ends with a public forum, where participants present highlights from their business model to an audience of local community leaders, businessmen, government officials, representatives from NGOs and international agencies, and students.
IN THE MEDIA
"Contract farming has received a number of deserved criticisms...But a model of "farmer-centric" contract farming could mitigate these issues, while still facilitating the benefits of scale."
"A visiting delegation of agricultural experts suggested that Cambodia’s struggling rice industry should develop a contract farming model that if used systematically would help confront the complicated supply chain dynamics that bog down smallholder farmers."