Entrepreneur finds local answer to hotels' import produce needs

Photo by: Kyle Sherer
Sim Rasy in front of 1st Modern Bucher Shop.

The Phnom Penh Post

Written by Kyle Sherer
Thursday, 12 February 2009

SIM Rasy, founder of Siem Reap's "1st Modern Butcher Shop", is trying to break down a frustrating catch 22 that has kept the province's farmers on the brink of destitution despite a soaring demand for produce.

"When I arrived in Siem Reap, most of the NGOs assisting rural workers said they didn't have a market for their farmers," he said.

Despite living in near poverty, he explained, most farmers only grow for three months a year - enough to feed their families, but not enough to make any kind of meaningful profit by trade.

"But the rich hotels import 10 tonnes of produce a day from Vietnam. So I knew for a fact that the market was there."

The farmers have the time, land and ability to grow what the hotels have a pressing need to purchase - but the supposedly universal forces of supply and demand are not bridging the gap. In 2004, Rasy began a quest to find out why.

Sim Rasy's investigation was hardly an academic one. "The Department of Agriculture rented me land to farm on because I knew I had to experience it for myself," he said.

And the first lesson he learned was that there was no agricultural reason to limit production so severely. "I found that it is possible to grow for 365 days a year, not just three months."

He then discovered that farmers are dependant on cash-in-hand transactions to survive, while hotels buy goods on credit. In the absence of a brokering body between the parties, hotels continue to import their produce and farmers simply grow for themselves.

To solve the problem, Sim Rasy opened the 1st Modern Butcher Shop last year and now buys from 10 Siem Reap farmers, paying them with cash and selling the produce to Siem Reap hotels, restaurants and supermarkets.

He hopes that this year he can expand the wholesale operation. But he needs to solve the cash flow problem.

Sim Rasy needs to find a fund with less than 10 percent interest per year, and this will allow him to buy from more farmers with cash and sell to more hotels for credit. Rasy projects that if the fund were secured, Siem Reap farmers could provide hotels with up to 30 percent of their produce within two years.

"We cannot supply 100 percent of produce, but we can reduce the import rate," Rasy said.