Cambodia Export Diversification

And Expansion Program – Milled Rice

Annual Technical Report January – December 2014

2

ABBREVIATIONS AfD CDP/CIP CEDEP CG CMA CRF COrAA EIF EU FAM FCRE F&V G-PSF GHP GMP HACCP IFC ICS MAFF MEF MIH MoC MSME NAC NBC NPSL OM PPHM RDB RSF SECC SIAL SIArb SMEs SNEC UNOPS WTO

Agence Française de Développement Community Development and Community Investment Plans Cambodia Export Diversification and Expansion Program Corporate Governance Collateral Management Agreement Cambodian Rice Federation Cambodia Organic Agriculture Association Enhanced Integrated Framework European Union Farmer Association Management Federation of Cambodian Rice Exporters Fruit & Vegetable Government-Private Sector Forum Good Hygiene Practices Good Manufacturing Practices Hazard Analysis and Critical Control Points International Finance Corporation Internal Control Systems Ministry of Agriculture, Forestry and Fisheries Ministry of Economics and Finance Ministry of Industry and Handicraft Ministry of Commerce Micro, Small and Medium Enterprises National Arbitration Center National Bank of Cambodia National Payment System Law Organic Methods Post-harvest Methods Rural Development Bank Risk Share Facility Securities and Exchange Commission of Cambodia Salon International de l’Alimentation Singapore Institute of Arbitrators Small and Medium Enterprises Supreme National Economic Council United Nations Office for Project Services World Trade Organization

3

1. INTRODUCTION

Since 2008, the International Finance Corporation (IFC) has supported small and medium enterprises (SMEs) in Cambodia’s rural areas, especially those in the emerging rice sector. Cambodia’s agri SMEs are unable to realize their potential for a number of reasons, including an uncertain business environment, limited access to finance, and inefficient supply chains. The IFC Agro SME Program, largely funded by the EU, aimed to address these issues through an integrated approach utilizing IFC’s multiple business lines to create stronger and more resilient rural industries. In 2012, the United Nations Office for Project Services (UNOPS) and IFC agreed to implement the ‘Cambodia Export Diversification and Expansion Program – Milled Rice’ (also known as ‘CEDEP 1’). UNOPS is serving as the Trust Fund Manager (TFM) for the Enhanced Integrated Framework of the World Trade Organization (EIF/WTO), which funds CEDEP 1. IFC agreed to implement the ‘Milled Rice’ component of CEDEP 1, and is the Main Implementing Entity (MIE) for this component. In January 2013, IFC received the first financial contribution from UNOPS and commenced CEDEP 1 activities. CEDEP 1 support to strengthen and diversify export supply capacity for milled rice is an integral part of IFC’s overall effort to help the Cambodian rice sector become more competitive and export more high quality milled rice. This additional funding enables IFC to expand its interventions on rice export promotion that contribute to the government’s goal of exporting one million tons of milled rice by 2015. This report covers the January – December 2014 period. It covers the rice export and food safety interventions implemented by IFC, as per the Administration Agreement between UNOPS and IFC. The report describes the main project activities and key results as well as the difficulties encountered during implementation and measures taken to overcome them. The Progress Update table in Annex 1 shows the results as of December 31, 2014, based on the agreed-upon project logical framework between EIF/UNOPS and IFC. Annex 2 provides the funding status as of December 31, 2014. Annex 3 describes the Work Plan for CEDEP 1 Milled Rice.

4

2. SUMMARY OF OPERATIONS

IFC continued to implement the CEDEP 1 Milled Rice project as per its updated Work Plan, which was approved during the last Annual Technical Report covering calendar year 2013. As agreed with EIF-UNOPS, in terms of governance, IFC’s existing annual Program Steering Committee (PSC) continued to serve as the mechanism for reviewing the program’s progress and endorsing strategic recommendations. Representatives of the EIF/CEDEP 1 National Implementation Unit (NIU) at the Ministry of Commerce (MOC) attended the last PSC, held in January 2014 at the Ministry of Industry and Handicrafts (MIH) and chaired by the senior minister of MIH, HE Cham Prasidh. IFC continued to work closely with EIF/CEDEP 1 colleagues at the Ministry of Commerce (EIF/MoC Program Manager and DICO/MoC Director) to set up the Core Team for the Milled Rice Component of CEDEP 1. There are now five Core Team members for the Rice Component; two come from MIH, one from GDA/MAFF (General Department of Agriculture within the Ministry of Agriculture, Forestry and Fisheries) and the remaining two Core Team Members are from MoC. During this reporting period, the Core Team members attended several meetings and project events, including the THAIFEX Food Fair in May 2014 in Bangkok, the dissemination workshop on final findings and recommendations from the International Rice Market Studies, the Second Cambodian Rice Festival, and the TRT’s World Rice Conference. The Mid-Term Evaluation, commissioned by MoC and finalized late November 2014, was positive on the results achieved under CEDEP 1 program (see details of MT Evaluation on page 8 of this report) and also recommended that the milled rice component work be extended for a year to address the sustainability challenges of the sector’s recent success, strengthen the capacity of the newly established Cambodian Rice Federation (CRF) and realize the full potential impact from CEDEP 1 project implementation. Following the evaluation, recent guidance from the EIF Secretariat is that the project be extended by 6 months to December 31, 2015 on a no-cost extension basis. The project is in its final year of operations, as per IFC’s Administration Agreement with the United Nations Office for Project Services (UNOPS), signed on December 14, 2012. As recommended by UNOPS/EIF, IFC is working with MoC/EIF team on this 6 month extension, which will focus on CRF capacity building and continued support to the Cambodian rice sector to strengthen and diversify high quality rice exports.

In terms of sector development, the Cambodian rice export industry has been under price pressure over the past six months due to the collapse of Thailand’s Rice Pledging Scheme. This collapse has resulted in large volumes of Thai rice penetrating the world market. Despite the pressure, Cambodia still exported roughly the same volume of milled rice as it did in 2013; total volume of national rice exports from January to December 2014 was 387,061 metric tons (approximate monetary value: US$ 270,942,700), of which 50% was Cambodian fragrant rice.

At the project level, IFC has been able to convince The Rice Trader (TRT) to organize its Annual World Rice Conference in Cambodia with the participation of more than 600 rice traders and buyers from around the world, including 76 Cambodia rice exporters and export-ready millers. In conjunction, IFC provided technical support to the CRF and Cambodian rice exporters. IFC is pleased to report that Cambodia won the World’s Best Rice Award for the third time in a row. In addition, IFC’s support to Cambodia’s rice export promotion efforts contributed significantly to rice export volume growth. Based on the bi-annual survey conducted among project clients to determine ‘directly facilitated exports’, the project facilitated US$37,604,939 of rice exports over the January-December 2014

5

period (with fragrant rice accounting for more than half of the facilitated exports). This brings the value of the project’s total export facilitation efforts to US$ 74,120,423 of rice exports as of December 31, 2014. Further efforts to extend Cambodia’s rice export progress included the team supporting two trade missions to the US and EU, both of which are viewed as key potential markets for Cambodia’s fragrant rice. Further project highlights during the period included:

• Six of the Project’s Food Safety clients received their HACCP-certifications by International Certification bodies (TUV Rheinland and Bureau Veritas). The value of HACCP certification was further confirmed by a project monitoring and evaluation survey that found 92% of rice mills reporting improved access to international markets and 83% reporting improved performance and productivity as a result of their HACCP implementation and certification successes.

• After ten months of project support for Occupational Health and Safety (OHS), project client BRICo reached Stage 2 Audit and is ready for third party certification.

• Working closely with CARDI and client rice exporters, the project has facilitated DNA fingerprint analysis of one fragrant rice variety (Sen Kra Ob) to validate its varietal uniqueness. CARDI can now help the project purify the variety in order to release it in the future.

6

3. ACTIVITIES CARRIED OUT IN REPORTING PERIOD

In order to achieve the targeted outcome and impact level results, IFC carried out the following activities - all organized around the three CEDEP 1 Outcome Indicators. For more details on Impact, Outcome and Output achievements, please refer to Annex 1 and the Progress Update for the January-June 2014 period.

Outcome 1: The Enabling Environment for the Cambodian Private Sector to meet the Government’s targets for Milled Rice exports is enhanced and sustained through the creation of an Association of Rice Exporters and enhanced G-PS dialogue on Rice exports in G-PSF or other venues

Output 1: Technical working groups organized among rice millers and exporters as a precursor to establishing the association.

• Global Market Access Exco (GMA Exco): As part of the branding development and promotion strategy, IFC supported CRF in establishing the GMA Exco working group. The Exco is the third working group established by IFC for the rice sector, following the Technical Working Group on Rice Standards (2012) and the Export Promotion Working Group (2013). It is comprised of 12 members: ten from rice exporting companies, and two from CRF in advisory and coordinator roles. The first GMA Exco meeting was held in December to agree group principles, endorse the branding development and promotion strategy, and define key next steps. (Note: IFC and AFD/SNEC attended the GMA Exco meeting and contributed technical inputs, but are not members).

Output 2: Updated mapping of milled rice value chain (based on mapping in Rice Policy)

• Mapping of fragrant rice production and its market supply chain: The ToR for this mapping exercise has been approved and will be implemented in the next reporting period. The survey aims to achieve the following objectives: (1) A mapping of fragrant rice production in ten selected rice growing provinces in Cambodia, documenting land size, production volume, cropping patterns (wet and dry season varieties), irrigated and non-irrigated areas, farming techniques, sources of seed used, productivity, and potential for expansion of fragrant rice production in the future. (2) Assessment of market demand and supply chain of fragrant rice varieties from producers (farmers) to processors (rice millers), focusing on quality, price, volumes, distribution channels and key actors within the chain. (3) Recommendations for IFC sector clients on how to best enable the development and/or strengthening of the supply chains for fragrant rice.

Output 3: Creation and registration of the association

• TA for Cambodian Rice Federation (CRF): Meetings with CRF management identified priorities and areas for further IFC support. CRF requested IFC continue to focus on three technical areas: (i)creation of a business development strategy to be used by CRF; (ii) support for CRF in their delivery of IFC developed/designated products and services to members and other interested rice

7

exporting companies; and (iii) technical support on branding development and promotion for Cambodian rice products.

• Rice Mill Operations & Standards training: IFC designed a training course on rice mill operations and standards based on an earlier Training Needs Assessment (TNA), and discussions with EPWG members. In response to requests from farmers and exporters, training courses in four provinces (Phnom Penh, Battambang, Kampong Cham and Siem Reap) were conducted for 72 participants from 28 rice miller/exporter enterprises. IFC also provided customized consultancy services to three individual rice mills on rice mill efficiency and performance improvement.

• Ongoing engagement with Cambodian rice exporters: IFC organized four technical meetings on the following export promotion topics: i) preparation for the participation of Cambodian rice exporters at THAIFEX 2014; ii) results of the DNA Fingerprints of Cambodian Fragrant rice; iii) participation of Cambodian rice exporters at the TRT World Conference on Rice and Grains in Panama, as well as the SIAL Paris 2014 and European and US rice market missions; and iv) preparation for the Second Cambodian Rice Festival and the TRT World Rice Conference in Phnom Penh, Cambodia. IFC invited three speakers to present key concepts related to DNA Fingerprinting and rice market trends to export clients (Dr. Werner Nader from Eurofins/Germany and Dr. Ouk Makara from CARDI, and Subra V. Vice President, TRT for Asia).

Output 4: Mechanism(s) for regular consultation between Government and Rice exporters on milled rice exports established at G-PSF and other venues

• Formal G-PS consultation: With the establishment of the CRF in May 2014, IFC, together with AFD/SNEC, held a number of consultation meetings with the CRF management team to help ensure the federation move quickly into the role of an effective public-private sector communication platform for the rice sector. CRF conducted seven consultation meetings over the course of 2014 to present qualifications and raise government and financial sector support. The CRF met with: (1) MoC to discuss export of 100,000 metric tons to China; (2) a Chinese delegation to

discuss the same 100,000 metric tons export deal; (3) the Rural Development Bank (RDB) for access to

finance for CRF members; (4) MEF to advocate that trade partner countries allow Cambodian rice to be

imported without quota; (5) MSMEs to convey sector concerns in preparation for the G-PSF; (6) MAFF

to gain support on issues such as improved seed, access to finance, logistics and infrastructure; (7) MoC

for export potential to middle east countries (i.e, Kuwait).

• Revision of Cambodian milled rice standards: As noted in the previous report, standards were approved by the Senior Minister of the Ministry of Industry and Handicraft (MIH) on April 30, 2014, and have been translated into English for wider distribution and use.

8

Outcome 2: Cambodian Rice Millers are successful in identifying several new major import market opportunities (in addition to EU and Russia) and signing contracts in at least three new markets.

Output 1: Market Potential analyses and trade information developed for five new markets

• International Market Studies on Cambodian rice completed: Preliminary research on 15 of

the world’s major rice markets was conducted (Phase I), with six markets selected for further research and evaluation (Phase II). The countries selected for further study were China, France, the United States, Germany, Singapore, and Côte d’Ivoire. These studies provide fundamental market information for use in marketing strategies, including key barriers to the competitiveness of Cambodian rice in international markets. The six country reports were then designed to help the Cambodian rice industry and exporters understand specific markets and specific export opportunities, as well as strategic marketing options. The countries vary in size and importance within the world rice markets, but each one presents interesting long-term market opportunities for Cambodian rice exports.

CEDEP 1 Project Mid Term Evaluation (MTE), November 2014

A mid-term evaluation of CEDEP 1 was commissioned by the Ministry of Commerce (MOC) and

managed by the Department of International Cooperation (DICO) covering the 2012-2014 period

(CEDEP 1 first phase). The scope of the evaluation was to review project performance in order to

provide greater insight into the CEDEP I implementation operations and enable efficient and cost

effective project delivery and management. The mid-term evaluation also aimed to help to identify

obstacles to performance, provide justification for the 2nd phase of the project (2014-2016) and provide

information for the EIF global program level evaluation.

The main conclusion of the evaluation was that ‘the CEDEP I project is very positive in terms of results

achieved under the export market and product development for both rice and silk components. The

results show the potential of these two growing sectors in a difficult environment at national level with

high trade costs and at international level with a strong competition from the neighboring countries. The

results achieved should, thus, be praised and sustained during the second half of the project. This would

be possible only if efforts are made in building a strong institutional framework to accompany the

exporters in their export strategy and to facilitate coordination and strategic guidance at sector level’.

Relevant recommendations include the ‘time extension for a period of one (1) year for each component

in order to complete the expected results subject to satisfactory performance and availability of funds’

and ‘reinforce the coordination by setting up regular meetings between MIEs in order to discuss

progress achieved and issues that could arise during the project implementation’. Specific

recommendations for IFC include that the milled rice component work needs to continue with one year

to address the sustainability challenges of the sector’s recent success, strengthen the capacity of the

newly established Cambodian Rice Federation (CRF) and realize the full potential impact from CEDEP

1 project implementation.

9

• First dissemination workshop on the results from Phase I of the International Market Studies organized: IFC, in partnership with AFD and FCRE, organized the first workshop in February to disseminate results from the Phase I market studies. The workshop provided (a) a quantitative context for the forthcoming detailed work in the six aforementioned countries, and (b) a rationale for the selection of those countries from a “long list” of 15 countries. In addition, it was the platform for rice industry to provide comments in the selection of 6 countries to be studied and engage in the whole exercise.

• Second dissemination workshop on the final findings and recommendations from the International Market Studies organized: IFC, again in partnership with AFD and the newly established CRF (successor to FCRE), organized the second workshop in early September to disseminate final findings and discuss recommendations from the market studies. The workshop was attended by more than 100 participants, including exporters, ready-export millers, representative from EU and EIF/MoC, Core Team for Milled Rice Component, and other relevant stakeholders. Discussion centered on the fact that the countries vary significantly in market size and maturity, customer profile and preference, processing standards and quota or other commercial restrictions/agreements. As such, the strategies that Cambodia’s rice exporters will need to apply will also vary, and should also prompt the sector to implement capacity and quality upgrades at various stages along the supply chain. In addition to both, specific country and grouped market strategies, the study further testified to the need for Cambodia rice exporters to better diversify and personalize their customer base. Exporters currently still rely overwhelmingly on the EU and its preferential duty arrangement, with 62 percent of all exports destined for Europe. This policy advantage should be viewed as a finite opportunity to make inroads to growing product reputation and market share. Exporters should not under-appreciate the value of establishing personal contacts – as the study noted, importers from the EU, Singapore, and China all indicated a need for exporters to personally contact importers – many of whom are from multi-generational family-run businesses where personal relationships and trust are critical. Additionally, the study underlined the integral role government-backed trade delegations have to play in helping exporters obtain support from both the Cambodian government and the host countries. Representatives from the ministries as well as the Cambodian Rice Federation are important as advocates who can address their counterparts in new markets. The Federation in particular needs to be an important unifying force for the sector, particularly when developing market approaches. Given the recent progress in sector organization, productivity, and quality yield, and the accolades (including being awarded World’s Best Rice at the World Rice Conference the past three consecutive years) that have accompanied these gains, Cambodian rice is well-placed to meet the aforementioned expectations of international importers. It is time for exporters and sector representatives to visit new markets, initiate trial shipments, and establish valued relationships. In order to maximize the chances for success, the sector should first have established a clear identity (i.e., a brand). Cambodia should develop a unique fragrant/high-quality rice product name, mark of certification, and consider the creation of a protected geographical indication (PGI) for specific, limited regions in the country. Cambodian millers should also work hard to develop quality and lower costs. Mills should have farmers under contract to provide consistent rice quality and aim for near 100 percent capacity utilization at the mill. It is clear that ensuring high quality and reliable supply form the basis for increased trade.

10

As Cambodia is essentially a price-taker in the global marketplace, it will also be important to ensure processing costs are minimized and exporters are able to provide quality business services to their customers. Quality services and reliable product will serve the industry better over time than aggressive pricing, which should be viewed as a short-term element in a market penetration strategy. Furthermore, Cambodia’s fragrant rice is a high quality product that should not be sold on a price basis but rather on the basis of brand and value in a differentiated market.

Output 2: Manual on export procedures/trade facilitation issues for milled rice produced

• As reported in the last report, the update of the Export Manual for milled rice has been completed, with feedback and comments from key exporters and government agencies incorporated. It has been distributed to exporters and ready-export millers. Trade facilitation issues are now the jurisdiction of the CRF and their Global Market Access ExCo working group. At the time of publication, the CRF and the working group were working with the MoC to identify future strategies.

Output 3: Manual on SPS standards and certification requirements for milled rice produced

• Manual on Food Safety developed and distributed: In addition to three Food Safety manuals (ISO 22000, GMP, and HACCP manuals) and an Occupational, Health and Safety (OHS) manual developed during the previous reporting period, the project developed and distributed Food Safety and Occupational, Health and Safety (OHS) flyers to rice millers/exporters.

• Food Safety curriculum updated for local educational centers: To address the lack of consultants able to provide rice mills with food safety-related advisory services, IFC supported Battambang University (BBU), the Kampong Cham National School of Agriculture, and the Royal University of Agriculture (RUA) in revising their outdated food safety curricula to better reflect the needs of the agro processing industry in general and the rice sector in particular. To this end, IFC developed training curricula and conducted a training course on GMP/HACCP for 52 participants (lecturers and graduate students) from the University of Battambang. The curricula were adopted and integrated in the University’s regular coursework (Agri Quality Assurance Course, Course # FPR3307, Department of Horticulture, Animal Science and Food Processing, University of Battambang). This should help ensure a sustainable core of graduates specialized in food safety that can be directly involved in food safety consultancy services.

• IFC will provide an ISO 22000 Training of Trainers (TOT) to the three universities mentioned above based on the revised curricula. Details on this will be available in the next reporting period.

Output 4: Cambodian Rice Portfolio Catalogue developed and published

The portfolio catalogue of Cambodian milled rice was updated and published in the ‘Exporters Compendium 2014’, promotional Cambodian rice sector folders, the booklet of Cambodian milled rice standards, and the end-consumer promotional leaflet. All have been used by rice exporters in international trade fairs such as THAIFEX in 2014, US Rice Market Mission, World Conference on

11

Rice and Grain, EU Rice Market Mission, SIAL Paris 2014, the Second Cambodian Rice Festival and TRT’s World Rice Conference in Phnom Penh. IFC is now working with CRF to update the catalogue to include additional information, such as winning the World’s Best Rice Award for the third year in a row.

Output 5: Three new potential markets visited by groups of export-ready and exporting rice millers

Based on the International Market Studies on Cambodian rice as mentioned in Output 1 above, IFC facilitated two trade missions for Cambodian rice exporters:

• US Rice Market Mission: IFC successfully managed an August trade mission to the US for a group of Cambodian rice exporters. The mission visited Boston/Lowell, New York, New Jersey, San Francisco, Los Angeles/Long Beach. Exporters were able to meet with major buyers, Cambodian business community representatives, and honorary consuls. They also visited stores and supermarkets including Kam Man Foods, New BCN Trading, Well Luck, Specialty Food Association, Alter Eco Americas, Trader's Joe, Restaurant Depot, COSTCO, Lotus Foods (conference call) and Otis McAllister. In addition, in Los Angeles, the team met with the L.A. Port Authority, Walong marketing Inc., and IFC International Inc. The mission team compiled a wealth of fundamental market and marketing research. Lessons learned from the visits included:

o Buyers and their customers want to establish trust in both supplier and product quality. o Even the biggest buyers are keen on specialty features/unique branding that help the rice

sell. o Branding goes far beyond establishing a brand name. The classification 'Jasmine rice’ is

good for overall positioning but then the identity should also be uniquely Cambodian. Therefore the branding should play on all the positives that Cambodia has or represents, without being excessively historical or nostalgic; terms like ‘heirloom' and ‘tradition’ are good, but so are ‘progress’ and ‘modernity’.

o Aspects of social responsibility in demand are: caring about farmer benefits, sustainable agriculture, responsible sourcing.

o Certification standards of highest relevance are: a) high purity, b) specifications compliance, c) food safety, d) organic, e) fair trade, f) governmental and other institutional certifications (seals), g) USDA certifications, h) the Global Food Safety Initiative certification, i) Corporate Social Responsibility, j) code of conduct/ethics, k) respect for labor l) kosher/halal, m) ‘green and clean’: free of heavy metals, pesticides etc. n) no GMO, o) low glycemic index.

o Providers must display high ethical standards and credibility. They must deliver what they advertise or submitted as sample. They must be reliable and timely in their delivery.

• EU Rice Market Mission: The EU market mission in October entailed meetings with prospective corporate buyers and store visits in Germany, Belgium, the Netherlands, and France. It also included the participation (a booth exhibition) in SIAL, Paris. The most informative meetings with individual companies at their locations (as opposed to the many contacts at SIAL) took place with MARS (Belgium), Davert (Germany), Eurofins Lab and Eurobasmati (Germany), Alesie, Fair Trade Original, Van Sillevoldt Rijst (all in Holland). The fundamental values of the European buyers are the same as in US, however, the mission learned important aspects which may be particularly

12

European traits and should be applied to the global marketing strategy and eventually the brand promotion of Cambodian premium Jasmine rice, such as:

o Targeted buyers of Cambodian Jasmine rice are processors, not mere traders. o Beyond the trust requirements, the image of suppliers in regard to compliance with

ethical, responsible and sustainable sourcing is critical to many. The team obtained detailed information on these requirements and how buyers audit suppliers.

o Most, if not all companies are interested in specialty rice, whether this is based on cultivation (organic, in EU called ‘bio’), sustainable agriculture, or processing such as brown rice, parboiled rice and ‘minute’ rice.

o Several buyers visit the source country and bring along selected customers. o Interestingly, Eurobasmati, Germany, for instance is a channel for Cambodian rice to

Iran/Iraq. This demonstrates the importance of joint collaborations with target buyers that go beyond trading.

o One company challenged the mission team on the formulation of a Unique Selling Proposition (USP). This is the key difference between commodity trading via price only and actual marketing that responds to customer and consumer needs (value addition).

• The following were findings similar to those in the USA:

o Food Safety and Quality Safety certifications are a ’must’ and not promotable competitive features; HACCP is standard but EU buyers want more such as ISO 22000, BRC, IFS.

o The key fields of consumer preferences can be grouped as follows: pleasure (‘feel-good’, curious/exotic, taste varieties), health (including cultural/religious considerations such as halal/kosher), convenience (pack sizes, ease of preparation), and ethics (social, fair trade, responsible, environmental).

Output 6: Exporting rice millers participated in four key rice trade fairs and buyer-seller meetings

• Following on the First Cambodian Rice Festival in Siem Reap in 2013, IFC helped organize a “Cambodia: World Best Rice Cuisine” event to promote Cambodian rice among foreign ambassadors in Cambodia. Co-hosted by the Cambodian Hotel Association (CHA), Cambodia Chef Federation (CCF), and Thalias Group, the event was presided over by the Senior Minister of Commerce and the Minister of Tourism.

• Successful participation in THAIFEX 2014: IFC provided technical support to 23 rice exporting companies (46 participants) to promote Cambodian rice products for the third consecutive year at the THAIFEX ‘World Food of Asia’ in May in Bangkok. IFC manned the “Cambodia Rice Pavilion”, developed promotional materials, and introduced Cambodia's newly developed Rice Standards. It was an excellent opportunity for the exporters to promote their products and network with existing and potential buyers.

• Successful participation in World Conference on Rice and Grain: Given the trend of South American buyers to diversify their suppliers, IFC provided technical support and facilitation to a group of five rice exporting companies to promote Cambodian rice products at the World Rice Conference in Panama in August. This was the first time Cambodian rice exporters attended this

13

conference and promoted Cambodian rice in South America, which was considered a promotional and networking success.

• Successful participation in SIAL Paris 2014: IFC, in partnership with AFD/SNEC, the French-Cambodian Chamber of Commerce (CCFC), the Cambodian Rice Federation (CRF) and the Cambodian Chef Federation, provided technical support and facilitation to a group of rice exporting companies and export-ready millers to promote Cambodian rice products at the SIAL Paris in October. SIAL is the largest agri-food industry exhibition in the World. It gathers more than 5,000 exhibitors and registers more than 150,000 visitor entries (mainly professionals). The decision to participate in SIAL was primarily to use the exhibition as an opportunity to introduce and improve the image of Cambodian rice and to build business relationships with food industry and buyers/distributors in France, Europe and beyond. Together with IFC clients, the team manned the “Cambodia Rice booth”, developed and distributed promotional materials and introduced Cambodia's World’s Best Rice to all visitors. Senior Minister Sun Chanthol, Cambodian Ministry of Commerce together with H.E Nuth Narang, Royal Ambassador of Cambodia to France participated in the Cambodian rice cooking show at the event. Cambodian exporters also met with French businesses that could potentially be buyers or suppliers of equipment or services. Also, Cambodian rice exporters participated in “Cambodian Rice Promotion Dinner” at Le Carre Des Feuillants prepared by Chef Alain Dutournier, associated with Cambodian Chef Luu Meng, as well as the Press Conference. This specific event aimed to enhance the image of quality of Cambodian rice, expose to different media to promote Cambodian rice and pursue the building of business relationships.

• Successful organization of the second Cambodian Rice Festival: IFC, in partnership with AFD/SNEC and CRF, organized the Second Cambodian Rice Festival in Phnom Penh in November. Similar in content and design to the previous event, the festival aimed at promoting Cambodian rice among tourists and foreign residents in Cambodia. In addition, the event also aimed to raise awareness within Cambodia of the high quality and wide variety of locally grown rice. The festival also organized the second national rice competition, with the winning samples to be submitted to the “World Best Rice” competition at the annual World Rice Conference in Phnom Penh 2014. The festival brought together the many stakeholders in the industry, such as farmers, millers, exporters, and representatives from support organizations and government ministries involved in the rice sector. Approximately 1,200 people participated in this event, including 76 rice exporting millers also participated, from whom 24 submitted samples for the rice competition. The festival broadly covered by different national and international media, in total 20 representatives from newspapers, magazines and TV stations.

• Cambodia wins World’s Best Rice Award for the third consecutive year at the TRT World Rice Conference (WRC): After spending four years working with TRT to promote Cambodian rice, IFC was able to convince TRT to conduct its annual WRC conference in Cambodia. The TRT WRC is the annual gathering of rice industry professionals, with a conference agenda set out to map the future direction for rice markets, and how price trends will be shaped. This year, the conference attracted over 600 delegates from all over the world. It was a huge networking and promotion opportunity for the Cambodian rice sector, and it is therefore high

14

praise for a Cambodian fragrant rice sample to have won the “World Best Rice Award 2014” in the tasting competition for the third consecutive year. This award attracted significant media coverage, and senior Cambodian government officials appreciated the joint EU, EIF and IFC program which made it possible.

Outcome 3: Cambodian Rice Millers are successful completing export contracts in the three targeted markets - by meeting quantities, quality, price requested by importers, especially with respect to fragrant rice which is developed as the leading Cambodian rice brand and meeting SPS standards requested by importers.

Output 1: Established a Cambodian fragrant rice brand for an export-quality milled fragrant rice able to compete with Thai fragrant rice and conforming to international market standards.

• IFC aided CRF in developing a branding strategy for Cambodian rice based on competitive analysis of leading global exporters, market research, and in-country missions. The strategy covers a i) definition of terms for a common understanding of what branding entails; (ii) situational analysis: review of the export (supply chain) development thus far, current status of export marketing and promotion channels; (iii) branding in three steps: Create Brand Identity, Research and build desired Brand Image, Build Brand Equity; (iv) market access requirements and customer demand and preference; (v) a road map on how to create and sustain a brand image that is attractive to target markets/customers; and (vi) considerations for the selection of a brand name. This was a critical step toward brand development and promotion of Cambodian rice. This strategy has been endorsed by CRF and key exporters, and outlines key next steps for implementation, including the establishment of Global Market Access Exco (Branding Working Group). IFC will enlist an external branding consultant to coordinate the process of branding and image campaign. The details on this exercise will be available in the next reporting period.

Output 2: Promoted the Cambodian fragrant rice brand

• Key promotional materials updated and distributed: IFC, CRF, EPWG and other exporters collaborated on an update of the existing promotional materials to reflect the recent achievements of Cambodian rice, especially the World’s Best Rice Award. Further promotional tools developed this reporting period included: (1) a “Recipe Book” in English and French developed to educate tourists on Cambodian rice; and (2) the third VDO clip highlighting the prestige of Cambodian rice for international markets. These VDO clips are available on www.youtube.com: “Cambodia, Rice Country”: https://www.youtube.com/watch?v=kCRQ_R87iso “The First Cambodian Rice Festival 2013”: https://www.youtube.com/watch?v=Cmq--UcW0rA “Cambodian Rice – White Gold”: https://www.youtube.com/watch?v=skVyULhVvqg

• In addition, the Facebook page of ‘Cambodian Rice Exporters’ has reached more than 3,701 individuals, an increase of more than 2,000 followers during this reporting period.

15

• The listing of Cambodian rice quotations: IFC technical assistance to exporters included registration of its rice price quotations at the global price index, Live Rice Index (LRI). Rice prices are publicly available and updated every week. This is expected to help promote Cambodian rice in the international market.

Output 3: 8 Rice Millers have received their HACCP certification

• On-going Food Safety Advisory Services: During this reporting period, six Food Safety clients were HACCP-certified by International Certification bodies (TUV Rheinland and Bureau Veritas). As part of project monitoring and evaluation, a survey found 92% of rice mills reported improved access to international markets and 83% reported improved performance and productivity as result of HACCP implementation and certification.

• Bi-weekly coaching and guidance to five rice mill clients to meet GHP/GMP, HACCP/ISO 22000 requirements has resulted in five having already completed the necessary documentation, audits and infrastructure improvement and now awaiting third party certification. After ten months of project support on Occupational Health and Safety (OHS), project client BRICo has reached Stage 2 Audit and is ready for a third party certification. Certification will help BRICo to differentiate itself from the rest of the Cambodian rice exporters.

• DNA fingerprint of Cambodian rice varieties established: In addition to DNA fingerprints of rice varieties adopted by rice authority CARDI reported in the previous progress report, IFC closely collaborated with CARDI and rice exporters to facilitate further DNA Fingerprint analysis on a rice variety and validate that it was different from Thai rice (Pathumthani). The results were successful, and CARDI is now looking to purify this variety and release it at later stage.

• Based on the bi-annual exporters’ survey, the project directly facilitated 284 contracts/deals (US$53,754,693) of exports of Cambodian fragrant rice to both old and new markets – this is an additional 165 contracts/deals (US$29,191,040) achieved during this reporting period.

16

4. DIFFICULTIES ENCOUNTERED AND MEASURES TAKEN/PLANNED

Cambodian rice millers and exporters are challenged by a shortage of working capital, high levels of rice stock and a decline in milled rice prices due to large volumes of Thai rice dumped on international markets. As a result, most rice millers and exporters sell their rice at a loss in order to pay debts; rice mill owners prioritize cash generation to pay debts over mill infrastructure improvement, including Food Safety related upgrades. In addition, since most rice mills are located in rural areas and salaries offered by rice mills are not competitive, it is hard to find and keep qualified personnel. As result, some rice mills may be delayed in getting HACCP or other Food Safety certifications. Mitigation: IFC will monitor project progress with particular attention to delays resulting from macroeconomic or staff related issues. Client rice mills may need to hire full-time, short-term consultants to assist with Food Safety documentation and implementation (instead of relying on staff, with the risk of losing them during the process). Efforts with rice industry had to be redirected. As reported in the last annual report, IFC spent significant time and effort to identify a rice industry association that best represented the Cambodian rice export sector, and subsequently started working with FCRE. However, the MoC initiated a merger of the three existing rice industry bodies to create the “Cambodian Rice Federation” (CRF). The CRF was formally established in May, with 15 executive board members, including a president and three vice presidents. While it is a step forward in terms of unifying the sector, it has also pushed back IFC’s rice sector support, as progress made with FCRE has to be restarted with the CRF. IFC has initiated dialogue and engagement with this new industry body to determine advisory needs and IFC’s support role until such time that they can take over roles and responsibilities from IFC in due time. Note that with FCRE an exit strategy was already under consideration. Mitigation: IFC, in coordination with AFD/SNEC, has held a number of consultation meetings with the CRF management team to better understand their needs and priorities and to identify potential areas where IFC can provide support. IFC has already started to engage with CRF concerning core project activities and will continue to work with AFD/SNEC to provide more technical support and discuss cooperation strategies. CEDEP 1 project extension period is short in duration. Although the project will most likely achieve all original targets (output/outcome/impact), the Mid-Term Evaluation commissioned in 2014 recommended that the CEDEP 1 – Milled Rice Component should be extended for one year, in order to address the sustainability challenges of the sector’s recent success, strengthen the capacity of the newly established Cambodian Rice Federation (CRF) and realize the full potential impact from CEDEP 1 project implementation (see more details on MTE report in text box on page 8). However, as pointed out earlier in this report, the EIF Secretariat agreed to only a 6-month extension of all 3 components of the CEDEP 1 Project. This poses a challenge for the IFC, as it agrees with the MTE findings that a 12-month extension is indeed needed to sustain the project’s success, especially concerning CRF’s capacity building. In addition, certain project activities implemented in 2015, such as the development of an international rice branding campaign need further support beyond the proposed extension period. Mitigation: IFC will intensify its collaboration with CRF in the agreed-upon areas of capacity building during the

17

coming months, in order to guarantee the continuation of high quality sector support by the time CEDEP 1 phases out. At the same time, IFC is discussing with different development partners (AfD, ADB, USAID and CAVAC/DFAT) in order to explore potential interest and synergies between the programs and see where other DPs can come in with CRF support. In addition, IFC is currently developing its 2016-2020 national program and is assessing ways to support the rice and other agri sectors in Cambodia, inclusive of industry association strengthening.

18

Annex 1: PROGRESS UPDATE Cambodia Export Diversification and Expansion Program - Milled Rice (December 2014)

Strategy of Interventions Key Performance Indicators Baseline Target Progress Results as of Dec 2014

Impact #1: As rice is the largest employment sector of

the Cambodian economy, development of milled rice

exports will have a positive impact on poverty

reduction, especially through income growth in many

regions of the country. Development of the sector

supports Cambodia’s efforts to meet its MDGs

• Export of milled rice increase by

100% from 2011 baseline of

approximately 140,000 MT

• National rice export

volume: 140,000

metric tons (2011).

• National rice export

value: US$

84,280,000

• 380,000 tons

• US$ 229,400,000

• 387,061 tons

• US$ 270,942,700

(Average price ~ $700/ton)

Impact #2: The competitiveness of Cambodian rice

exports is increased, resulting in better earnings of rice

millers and farmers in the milled rice supply chain, led

by its higher value fragrant rice segment.

• Value and volume of rice export

directly facilitated by the

project.

• Volume of rice

export deals

facilitated: 0 tons

• Value of rice export

deals facilitated:

US$ 0

• 81,000 tons

• US$ 48,762,000

• 105,776 tons

• US$ 74,120,423

Outcome #1: The Enabling Environment for the

Cambodian Private Sector to meet the Government’s

targets for Milled Rice exports is enhanced and

sustained through the creation of an Association of

Rice Exporters and enhanced G-PS dialogue on Rice

exports in G-PSF or other venues

• Number of

constraints/challenges

identified in Rice Policy that

have been addressed

• 0 • 4 constraints/

challenges identified

in Rice Policy

addressed

Note: As reported in the

last progress report, the

new industry called

“Cambodian Rice

Federation – CRF)

established in late May

2014 represent the

industry. IFC has discussed

with CRF and agreed that

the 4 constraints identified

previously with the former

industry body, FCRE, are

still valid. These include:

(1) Milled Rice Standards;

(2) Food Safety; (3)

Branding; and (4)

• Cambodian Milled Rice

Standards developed and

endorsed by the

government.

• Branding strategy for

Cambodian rice endorsed by

CRF.

[contributed by TA to rice

federation (output1) and support

the formal mechanism for

consultation between

Government and CRF (output4)]

19

Strategy of Interventions Key Performance Indicators Baseline Target Progress Results as of Dec 2014

Productivity and Paddy

Quality (Improved seed).

Output 1: Technical working groups organized among

rice millers and exporters as a precursor of the

association

• Number of technical working

groups formed

• Number of meetings of technical

working groups

• 0

• 0

• 1 technical working

group

• 30 meetings

• 3 technical working groups

formed with support of the

project (Rice Standard

Technical Working Group,

and Export Promotion

Working Group; Global

Market Access Exco).

• 11 meetings

Output 2: Updated mapping of milled rice value chain

(based on mapping in Rice Policy)

• Mapping published and

disseminated

• 0

• 1 report • In progress. The recruitment

of the consulting firm to

conduct this mapping

exercise is being finalized.

The firm is expected to

commence their works in

Feb, 2015.

Output 3: Functioning association created and

registered • Registration of Association

• Association website established

• Meetings of Association

organized

• 0

• 0

• 0

• 1

• 1

• 12

• Done

• Website created

• 11 rice exporter meetings

organized with support from

IFC.

Output 4: Mechanism(s) for regular consultation

between Government and Rice exporters on milled

rice exports established through G-PSF or other venue

• Formal channel for G-PS

communication identified

• Number of formal G-PS

consultations on rice

• 0

• 0

• 1

• 8 formal G-PS

consultations

• 1 (CRF)

• 12 formal G-PS consultation

on rice organized by FCRE

(meeting with Institute of

Standard of Cambodia – ISC -

to discuss and finalize the

revision of Cambodian Milled

Rice Standards, meeting with

the Tax Department on VAT

for milled rice for export;

meeting with MEF on access

to finance issues; meeting

20

Strategy of Interventions Key Performance Indicators Baseline Target Progress Results as of Dec 2014

with MoC and MEF on

transport costs on national

road #4 from PHN to SHV;

and meeting with General

Department on Customs and

Excise).

• (1) Meeting with MoC to

discuss on agreement to

export rice China; (2)

Meeting with MoC and China

delegates to discuss about

MoU to export 100,000

metric tons of Cambodian

rice to China; (3) Meeting

with RDB to discuss about

access to finance issue for

CRF members; (4) Meeting

with MEF to discuss on trade

partner countries to allow

Cambodian rice to be

imported without quota; (5)

Meeting with MSME to raise

concerns and suggestions

from rice sector for the G-

PSF; (6) Meeting with MAFF

to discuss to gain their

support on rice related issues

such as improved seed,

access to finance, logistics

and infrastructure; (7)

Meeting with MoC to discuss

about potential opportunity

to export Cambodian rice to

middle east countries, i.e

Kuwait.

21

Strategy of Interventions Key Performance Indicators Baseline Target Progress Results as of Dec 2014

Outcome# 2: Cambodian Rice Millers are successful in

identifying several new major import market

opportunities (in addition to EU and Russia) and

signing contracts in at least three new markets.

• Five new export markets (outside

EU and Russia) have been

identified and three have been

visited and explored. Export

contracts are being negotiated in

at least three of them.

• New markets

identified: 0

• New markets

procured

Cambodian rice: 0

• 5 new markets

identified.

• 3 new markets

procured Cambodian

rice.

• 7 markets identified. Besides

Israel reported previously, 6

additional markets/countries

were identified international

market studies on

Cambodian (US, China,

Singapore, Ivory Coast,

France, and Germany).

• 3 new markets procured

Cambodian rice (US, EU and

Israel)

[contributed by market

analysis from five target

markets (output1),

development and promotion

of Cambodian rice catalogue

(output4), and the

participation of rice

exporters and export-ready

millers in trade fairs,

exhibitions and other

business matching (output6)]

Output 1: Market Potential Analyses/Trade

information developed for five new markets • Five market potential analyses

prepared and disseminated

through workshops

• Road Map Pillar 2 KPI 2.3.1.b: A

minimum of two new and large

scale distribution channels to

overseas markets have been

identified

• Number of

workshops

organized to

disseminate

information about

potential markets: 0

• At least two

workshops organized.

• 2 dissemination workshops

organized. One to present

the results from phase 1 of

the market studies. And two

to present the final results

and recommendations.

Output 2: Manual on export procedures/trade

facilitation issues for milled rice produced • Manual prepared and

disseminated through workshops

• Manual on export

procedures/trade

facilitation: 0

• Dissemination

workshops: 0

• Manual on export

procedures/trade

facilitation: 1

• Dissemination

workshops: 2

The update on manual on export

procedures/trade facilitation has

completed. This is now in the

hands of CRF and their Global

Market Access ExCo. It is one

important part of their mandate

22

Strategy of Interventions Key Performance Indicators Baseline Target Progress Results as of Dec 2014

to improve the export

procedures and costs.

They are working with the MoC

on that. IFC continues providing

support to CRF on this area so

that they regularly provide

updates to all exporters.

Output 3: Manual on SPS standards and certification

requirements for milled rice produced • Manual prepared and

disseminated through workshops

• Food safety manual:

0

• Workshops/training

sessions: 0

• Food safety manual: 2

• Workshops/training

sessions: 16

• 3 Food safety (GMP, HACCP

and ISO 22000 ) manuals + 1

OHS manual developed

• 9 GMP/HACCP/ISO22000

training sessions +1 OHS

awareness training session

organized.

Output 4: Develop and publish Cambodian Rice

Portfolio Catalogue • Portfolio Catalogue published

and disseminated through

workshops

• 0

• 1 portfolio document The catalogue of Cambodian

milled rice for export was again

updated/published has used

during 2nd

Cambodian Rice

Festival and TRT’s World Rice

Conference.

Output 5: Three new potential markets have been

visited by groups of export-ready and exporting rice

millers

• Number of participants and

number of trade missions

• Number of

exporters and

export-ready millers

participated in trade

missions: 0

• Number of trade

missions: 0

• Number of exporters

and export-ready

millers participated in

trade missions: 20

• Number of trade

missions: 3

• 29 (4 for US and 25 for EU

and France)

• 2 trade missions (US and

EU/France)

Output 6: Export-ready and exporting rice millers

have participated to four key rice trade fairs and

buyer-seller meetings

• Number of participants and

number of trade fair

participations

• Road Map Pillar 2 KPI 2.3.1.c:

Rice traders and exporters

participate to trade fairs and

buyer-seller meetings

• Number of

exporters and

export-ready millers

participated in trade

fairs and key buyer-

sellers meeting: 0

• Number of trade

fair participations: 0

• Number of exporters

and export-ready

millers participated in

trade fairs and key

buyer-sellers

meetings: 30

• Number of trade fair

participations: 6

328 exporters and export-ready

millers participated in 9 trade

fairs and key buyer-sellers

meetings as per below:

• THAIFEX in May 2013: 18

exporters and export-ready

millers participated.

• First Cambodian Rice Festival

23

Strategy of Interventions Key Performance Indicators Baseline Target Progress Results as of Dec 2014

in October 2013: 800 people

participated, of which 18 rice

exporting companies, which

submitted the samples for

the first national rice taste

competition.

• TRT/WRC in Nov 2013: 43

exporters and export-ready

millers participated.

• Business Cocktail Networking

with Hong Kong Merchants

Association in Phnom Penh

in Dec 2013: 73 Cambodian

and Hong Kong

exporters/importers

participated.

• THAIFEX in May 2014: 46 (23

exporters and export-ready

millers (from 23 companies)

participated.

• World Conference on Rice

and Grain in Panama, August

18-20, 2014: 5 exporters and

export-ready millers

participated.

• SIAL Paris 2014, October 19-

23, 2014: 25 exporters and

export-ready millers

participated.

• Second Cambodian Rice

Festival, November 18 2014:

76 exporters and export-

ready millers, of which 24

rice exporting companies,

which submitted the samples

for the first national rice

taste competition.

• TRT/WRC, November 18-20

2014: 76 exporters and

24

Strategy of Interventions Key Performance Indicators Baseline Target Progress Results as of Dec 2014

export-ready millers

participated

Outcome #3: Cambodian Rice Millers are successful

completing export contracts in the three targeted

markets by meeting quantities, quality, and price

requested by importers, especially with respect to

fragrant rice which is developed as the leading

Cambodian rice brand and meeting SPS standards

requested by importers

• Increase in volume of exports to

the three new markets targeted

under project

• Number of rice millers HACCP

certified

• Road Map Pillar 2 KPI 2.3.a:

Exports to a minimum of three

new markets in two years

• Road Map Pillar 2 KPI 2.3.b:

Exports of “new products”

increase (in this case, “branded”

Cambodian fragrant)

• Number of

contracts signed to

procure Cambodian

fragrant rice in both

new and old

markets: 0

• Value of contracts

signed (procuring

Cambodian fragrant

rice) in both new

and old markets:

US$ 0

• Volume of rice

processed in

compliance to FS

standard: 0 tons

• 54 contracts signed.

• Total value of

contracts signed:

US$8,127,000

• 105,000 tons in

volume of rice

processed in

compliance to FS

standards

• 284 contracts signed.

• US$53,754,693

[contributed by the

establishment of Cambodian

fragrant rice in the import

markets (output 1), and

promotion of Cambodian

fragrant rice (output2)]

• 23,316 tons of milled rice

processed in compliance to FS

standard

[contributed by technical

improvements validated by

certification (output 3)]

Output 1: Establish a Cambodian fragrant rice brand

for an export quality type of milled fragrant rice

competing with Thai fragrant rice and responding to

expectations of import markets

• Number of media appearances.

• 0 • 30 media

appearances

• 63 media appearances

Output 2: Promote Cambodian fragrant rice brand • Number of campaigns and events

at which the brand is

prominently promoted

• 0 • 6 campaigns and

events.

Note: To align with the

international trade fair

events in output 6 of

outcome 2, the project

11 events in which Cambodian

rice has been promoted:

• THAIFEX 2013 in May

• First Cambodian Rice

Festival in October

• TRT/WRC in Nov

• “Dinner with Cambodian

25

Strategy of Interventions Key Performance Indicators Baseline Target Progress Results as of Dec 2014

plans to support (over

the project lifespan) 6

campaigns and events,

as the target for this

indicator.

Rice” with Foreign

Ambassadors in Cambodia

Jan 2014

• THAIFEX 2014 in May

• World Conference on Rice

and Grain Aug, 2014

• US Rice Market Mission,

Aug 2014

• EU Rice Market Mission,

Oct 2014

• SIAL Paris, Oct 2014

• 2nd

Cambodian Rice

Festival, Nov 2014

• TRT/WRC, Nov 2014

Output 3: 8 Rice Millers are supported to become

HACCP certified • Road Map Pillar 2 KPI

2.3.1.d:Techncial support is

provided to rice millers to meet

quality specifications and SPS

requirements

Number of rice miller

obtaining food safety

certification: 0

8 rice millers obtaining

food safety certification.

• 7 (Brico, Loran, Amru,

Khmer Food, CARMA Rice,

Hak Se and White Gold)

were HACCP certified

26

Annex 2: Cambodia Export Diversification and Expansion Program – Milled Rice Budget versus Actual Expenditures

Table 1: Funding status as of December 31, 2014 (US$)

Sources

Funding (US$)

From Inception to December 31, 2014

Committed Received (US$)

Outstanding (US$) Original

Currency US$

UNOPS USD 1,112,847 500,000 612,847

Total Gross Donor Contribution 1,112,847 500,000 612,847

Less: Administrative Fees 55,642 25,000 30,642

Total Net Donor Contribution ( A ) 1,057,205 475,000 582,205

Investment Income ( B ) 1,875

Total Source of Funding = (A+B) 476,875

Total Expenditures 144,516

TF Balance ( C ) 332,359

Burn Rate (Total Expenditure / Total Source of Funding)

15% Available Fund (Outstanding + TF Balance)

914,564

27

Table 2: Overall Program: Budget vs Actual Expenditures as of December 31, 2014 (in USD) – cost category

Cost Category Budget Actual Expenses

as of Dec 31, 2014

Overall Program Burn

Rate (%)

Staff Costs 272,394 71,337 26%

Consultants 265,500 23,400 9%

Travel 244,000 14,057 6%

Contractual Services 197,000 24,408 12%

Communication and Rent 78,311 1,295 2%

Other Expenses 0 10,019 0%

Program Spending 1,057,205 144,516 14%

IFC Administration Fee 5% of Fund 55,642 25,000 45%

Total 1,112,847 169,516 15%

28

Table 3: Budget versus Actual Expenditures as of December 31, 2014 (in USD thousands) - Cost Category

Inception to December 31, 2014 Budget FY2015

(Jul 2014-Jun 2015)

Budget Actual Expenses

Burn Rate (%)

Staff Cost 115 71 62% 162

Consultants (Inc. Temp) 171 23 14% 285

Travel 84 14 17% 124

Representation 0 0 0

Contractual Services 38 24 64% 4

Communication and IT Chargeback 8 0 5% 16

Office Rent 8 1 11% 16

Equipment/Furniture 0 0 0

Other Equipment and Building Expense

0 0 0

Other Expense 19 10 51% 5

Total Expenditures 444 145 33% 613

Note: The Rice program is multi-donor funded (EIF and EU) and given the expiration of EU funds by December 31,

2014, program spending was predominantly charged to EU funding resulting in lower burn rate against EIF

funding. Furthermore, to fully utilize the EU funding some prior period expenditures reported in the June 30, 2014

report were reposted to EU as well.

29

Annex 3: Work Plan CEDEP 1 Milled Rice Component (Indicative Project Activities) – Updated December 2014

Strategy of Intervention Year 1 Year 2 Year 3

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Preparatory Quarter:

Indicative Activities:

• Preparation of Year 1 Annual Work Plan (AWP)

• Staffing

• Formation of Component Steering Committee, including TORs

• Identification of key experts

• Consolidation of list of current or potential exporters

Outcome #1: The Enabling Environment for the Cambodian Private

Sector to meet the Government’s targets for Milled Rice exports is

enhanced and sustained through the creation of an Association of

Rice Exporters and enhanced G-PS dialogue on Rice exports in G-PSF

or other venues

Output 1: Technical working groups are organized among rice millers

and exporters as a precursor to the association

Output 2: Updated mapping of milled rice value chain (based on

mapping in Rice Policy) (to be done with stakeholders)

Output 3: Functioning association is created and registered –

Cambodian Rice Exporters Association (CREA)

Output 4: Mechanism(s) for regular consultation between

Government and Rice exporters on milled rice exports is(are)

established through G-PSF or other venue and utilized

Indicative Activities:

• Convene meetings with exporters to identify issues in areas of Trade Facilitation, Export Financing, Compliance (Quality Management), Production Technology and Rice

Supply, and the design of a Cambodian fragrant rice brand image. These meetings lead to formation of Technical Working Groups and provision of rice mill operations and

standards training courses.

• Consultation mechanisms identified and agreed among exporters and government lead agencies

• Mapping of Rice Export Value Chain (focus on trade facilitation element) is updated with exporters and rice millers

30

• Annual review/update of Value Chain

• Legal/administrative assistance to register the association

• Consultative meeting with Thai Rice Exporters Association, possibly through a country visit

• Baseline information compiled

• Cambodian Exporters Association website designed

• Leverage financial support given to the CRF through the RSSP (IFC) project collaboration with AFD/SNEC to enhance the CRF's development to make their operations

sustainable.

• Strengthen the operational capacities of the CRF and through that there appreciation by her members by facilitating/supporting the following:

• Assist the CRF to set up a services portfolio including the provision of training courses for member companies on topics that had been identified through needs analysis.

o Organisation and conduct of training courses, beginning with access to finance:

How to prepare and how to present a business plan (a loan application) to a bank. Two audiences would comprise of middle and top management.

o One interactive workshop with financial institutions and loan seekers.

• Support the creation, administration and promotion of a collective Rice Brand.

Outcome# 2 Cambodian Rice Millers are successful in identifying

several new major import market opportunities (in addition to EU

and Russia) and signing contracts in at least three new markets.

Output 1: Market Potential Analyses/Trade information developed

for five new markets

Output 2: Manual on export procedures/ trade facilitation issues for

milled rice produced

Output 3: Manual on SPS standards and certification requirements

for milled rice produced

Output 4: Develop and publish Cambodian Rice Portfolio Catalogue

Output 5: Three new potential markets have been visited by groups

of export-ready and exporting rice millers

Output 6: Export-ready and exporting rice millers have participated

to 4 key rice trade fairs and buyer-seller meetings (actual timing

depends on event calendar)

Indicative Activities:

• Create an event calendar (rice trade fairs and related fairs, national, regional, international)

• Update baseline information including list of international buyers/investors interested in Cambodian rice

• Market research on attributes of Cambodian fragrant rice (domestically, as well as perception of current international buyers)

• Update Cambodian Rice Export Potential Assessment at HS 6 level and HS 8 for aromatics

o Current markets vs. potential markets

o Trade flows, including competitors trade flows

o Market access conditions

o Nature of demand - parboiled, aromatic, organic, brown

• Workshop on market research, identification of market opportunities, and identification of sources of information and networks, including overseas Government representatives

(trade information and promotion channels)

31

• Workshop with capacity training on the use of on-line Market Analysis Tools

o Select 5 new (out of the top ten) milled rice importers in the world (ITC’s trade maps)

o Analyze trade-flows and competition

• Workshops with exporters on preparing for market prospecting and participation to trade fairs, (one workshop before each mission but can be reduced to round table briefing

meetings)

• Debriefing workshops after each market visit, each participation in trade fairs

• Preparation/briefing meetings to no less than 9 (better 12 = 4x/year) Cambodian participations in trade fairs: Timing and number depends on actual event calendar

• Training workshops:

o Contracts and negotiations, international trade laws, settlement of claims, arbitration

o Export packaging and labelling, product adaptation, branding

o Costing, positioning, pricing

o Purchasing and supply management

• Manual on trade facilitation produced by TWG and translated into Khmer

• Cambodian rice product portfolio agreed upon and published by the Association’s Working Groups

• 9 Market prospecting missions to target markets (elaborated during Market Analysis work shop)

• Round table meetings with visiting international buyers/rice traders

• Assist Cambodian Rice Exporters through CRF in setting up an overseas trade promotional network involving Cambodian diplomatic missions including honorary consulates.

• Strengthen the domestic awareness i.e. the national promotion base for Cambodian premium Jasmine rice (Brand) through Cambodian Rice events (festival, dinner, tasting

competition, AEON Mall) and follow-up via billboards, posters, VDO dissemination and similar. Target: Leading restaurants mention Cambodian Jasmine rice in their menus.

Outcome #3: Cambodian Rice Millers are successful completing

export contracts in the three targeted markets by meeting quantities,

quality, and price requested by importers, especially with respect to

fragrant rice which is developed as the leading Cambodian rice brand

and meeting SPS standards requested by importers

Output 1: Establish a Cambodian fragrant rice brand for an export

quality type of milled fragrant rice competing with Thai fragrant rice

and responding to expectations of import markets

Output 2: Promote Cambodian fragrant rice brand

Output 3: 8 Rice Millers are supported to become HACCP certified

Indicative Activities:

• A promotional concept and standard flyer and poster for a Cambodian fragrant rice identity is created (note: fragrance in Cambodian perception is linked to Rumduol, Mitrella

Mesnyi, national flower)

• Recruit consultant for above to work with Association’s working group

• Poster is distributed to prominent locations in Cambodia frequented by visitors (airports, hotels, tourism offices)

• Market visits under outcome #2, outputs #5 and #6

• Promote brand through Cambodian booth at Trade fairs (rice, tourism, food, hospitality)

• Factual information on Cambodian rice and rice exporters and promotional material is disseminated to all Cambodian Embassies’ Commercial sections abroad, trade

promotion offices, tourism organisations etc.

32

• Press conferences

• Exporters adopt the Cambodian fragrant rice brand/logo and display it together with their individual brands.

• Exporters use Cambodian brand in association with their product lists and invoices

• Cambodian Rice Exporters Association (CREA) Website promotes Cambodian Rice

• CREA sets aside advertising budget for Cambodian rice

• Presentations to expose millers to new export enhancing products/technologies such as extrusion of broken rice and fortified rice (e.g. NutriRice)

• Group training on HACCP organized for selected group of rice millers

• On-site training for HACCP organized in 8 rice millers/exporters

• 8 rice millers’ application for HACCP certification and 1 rice mill application for OHS supported

• DNA fingerprint of Cambodian Rice Varieties Established

• Help Cambodian Rice Exporters (via CRF), using the collective Brand, to formulate and strategically promote their Unique Selling Proposition (USP)

• Help CRF/CRX to obtain Seals and Certificates beyond the required technical Food Safety certifications that respond to Consumer Preferences

• Build capacity of CRF to organise the participation in international trade fairs and conferences. Target: to support CRF's participation in 3 out of the following 7 events:

- World Expo Milan (01 May-31 October)

- SIAL China (Shanghai, 06-08 May) plus market mission?

- THAIFEX WoFA (Bangkok, 20-24 May)

- Fancy Food Show New York (June/July)

- ANUGA (Cologne, 10-14 October)

- TRT-WRC (location tbd, November)

- Fancy Food Show San Francisco (January 2016)

• Lobby the RCG through the CRF to embark on a Branding Cambodia campaign to enhance the image of Cambodian export products based on the image of the country of

origin (‘Made in Cambodia’)

Original Currency

US$000

UNOPS USD 1,113 500  613Total Gross Donor Contribution 1,113 500 613

Less:  Administrative Fees 56 25 31Total Net Donor Contribution ( A ) 1,057 475 582Investment Income ( B ) 2 Total Source of Funding = (A+B) 477 Total Expenditures 272 TF Balance ( C ) 205 Burn Rate (Total Expenditure / Total Source of Funding) 57%

Available Fund (Outstanding + TF Balance) 787

Table 1: Funding status as of March 31, 2015 (US$)

Sources

Funding (US$000) From Inception to March 31, 2015

Committed  Received (US$000)

Outstanding (US$000)

Table 2: Overall Program: Budget vs Actual Expenditures as of March 31, 2015 (in USD) – cost category

Cost Category  BudgetActual Expenses

as of Mar 31, 2015

Overall Program Burn 

Rate (%)Staff Costs 272,394 161,525 59%

Consultants 265,500 31,280 12%

Travel 244,000 16,805 7%

Contractual Services 197,000 27,161 14%

Communication and Rent 78,311 21,428 27%

Other Expenses 0 14,166 0%Total  1,057,205 272,365 26%

IFC Administration Fee 5% of F 55,642 25,000 45%Total 1,112,847 297,365 27%

Staff Cost 162 Consultants (Inc. Temp) 31 Travel 17 Representation 0 Contractual Services 27 Communication and IT Chargeback 6 Office Rent 15 Equipment/Furniture 0 Other Equipment and Building Expense 0 Other Expense 14 Total Expenditures 272 

Inception to March 31, 2015