Monday, 9 November 2009

KOGID blames bad weather for failing to meet corn target

(Posted by CAAI News Media)

Monday, 09 November 2009 15:00 Chun Sophal

Pailin official says local farmers are holding out for better prices, though.

SOUTH Korean company KOGID Cambodia Co has missed its target of buying 70,000 tonnes of red corn in the second half of 2009, citing roads made unusable by heavy rain.

KOGID Director Ung Savuth said Sunday the company was now likely to be able to buy only half the targeted amount.

Battambang and Pailin provinces were the worst affected areas, he said, causing the company to downgrade its planned purchases there from 20,000 tonnes to just 6,000 tonnes.

“It is hard for us to buy corn from farmers and to transport that corn because most of the roads in the area have been cut off or seriously damaged by rainfall,” Ung Savuth said.

The company paid 520 riels (US$0.12) per kilogram for the corn, which it said in July would be processed into animal feed for export. At the time, the company said it would invest $150 million in the project and expand its purchasing to as much as 150,000 tonnes within five years. It also planned to begin building a $1.2 million corn-drying plant in Battambang province’s Rotanak Mondol district by year’s end.
Farmers only want to sell their corn to buyers that give higher prices.

Baitong Director Phou Puy, who is also chairman of the Battambang Chamber of Commerce, said his company managed to buy just 13,000 tonnes of red corn from farmers in Battambang, Banteay Meanchey and Pailin provinces despite planning to purchase 100,000 tonnes of the crop.

Baitong also paid $0.12 per kilogram, he said.

“We really have difficulty in buying corn from farmers, as many of the dirt roads in the area are seriously damaged and cannot allow heavy transport loads,” Phou Puy said.

The three provinces could produce about 2 million tonnes of corn per year, he added, which would continue to go unsold if supply chains could not be sorted out.

“We could take hundreds of thousands of tonnes of corn if we were able to buy on time,” he said.

Pailin province Information Department Director Kong Duong said the failure of the companies to meet purchase targets was because local farmers were holding out for better prices, saying four large local buyers were competing with counterparts from Thailand to purchase corn at between $0.12 and $0.15 per kilogram.

“I think the roads are not the problem,” he said. “The price is the issue because farmers only want to sell their corn to buyers that give higher prices.”

Tauch Tepich, president of the Tauch Tepich Import Export Company, said he offered $0.18 per kilogram and had been able to source 4,700 tonnes of red corn out of a target of 5,000 tonnes. The company had a contract to supply the corn to Vietnam-based Saigon Trading Group (SATRA) at $0.20 a kilogram.

“We need 300 tonnes more to supply to our partner, but this is not a big concern because we have already met a very big proportion of our contract,” Tauch Tepich said.

Ung Savuth said KOGID still planned to buy between 30,000 and 40,000 tonnes of red corn over the coming dry season at $0.12 but acknowledged the firm could struggle at the prices it was willing to pay.

Cambodian farmers planted about 141,264 hectares of red corn, with a total production output of 561,584 tonnes, in 2008, according to figures from the Ministry of Agriculture.

Ministry figures also showed that total corn production last year was 611,865 tonnes from 163,106 hectares of land, principally in Battambang, Pailin, Kampong Cham and Kandal provinces.

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