Cambodia’s agriculture sector is expanding rapidly, and value-added processing (agro-processing) offers a strategic pathway to unlock much greater economic benefits. By reducing its reliance on exporting raw produce and increasing local processing, the country can significantly boost rural incomes, capture more export value, and foster sustainable growth.

1. Current Export Landscape & Growth

• In 2024, Cambodia exported 11.7 million tonnes of agricultural products, generating about US$4.8 billion, equivalent to ~22% of GDP. Phnom Penh Post+2Phnom Penh Post+2
• In the first 10 months of 2024, the Kingdom earned US$3.4 billion from agricultural exports, but most of these exports were in raw/unprocessed form. KHMER SME
• By the first half of 2025, exports reached 7.83 million tonnes, with US$2.87 billion in revenue. The Better Cambodia

These strong export numbers show that Cambodia has both production scale and access to international markets. But the value chain is still underdeveloped: much of the export value is “leaked” because processing happens overseas rather than in Cambodia.

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2. The Problem: Under-Processing & Import Dependency

a) Low Rate of Domestic Processing

• Only about 10% of Cambodia’s agricultural output is processed domestically, according to industry estimates. B2B Cambodia+1
• Processed agricultural exports account for only ~8% of the total export value of Cambodia’s agri-sector. B2B Cambodia
• This means 90%+ of exports are raw or minimally processed, limiting the country’s share in higher-value markets. B2B Cambodia

b) Import Patterns: Cambodia Brings In High-Value Agri-Food

• Despite being a major agricultural producer, Cambodia imports large volumes of processed food and high-value agri-products. Cambodia Development Resource Institute+2Ag & Natural Resources College+2
• According to a trade-policy study, Cambodia’s import share of processed agri-food was as high as 84% in certain periods (e.g., 2014–2018), while exports of processed food were only ~12%. Konrad Adenauer Stiftung
• Key imports include sugar, food preparations, non-alcoholic beverages, refined starches, and prepared meats. Agecon Search
• This import dependency shows a structural weakness: Cambodia exports low-value raw crops but relies on foreign countries for more processed or consumer-ready food.

c) Trade Imbalance with Neighbors

• Cambodia’s trade with Vietnam is notably imbalanced in agri-products: while Cambodia exports many raw agricultural goods to Vietnam (e.g. cassava, cashews), it imports higher value goods like processed food, machinery, and feed from Vietnam. FreshPlaza
• This dynamic underlines how neighboring countries benefit from processing Cambodia’s raw exports, then re-exporting or supplying finished goods back to Cambodia and regional markets.

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3. Why Processing Matters — The Potential Gains

1. Higher export value
   Processing products (e.g., drying cassava, shelling & roasting cashews, producing canned fruit or packaged rice) can significantly raise export prices compared to raw forms.
2. Job creation & rural development
   Building processing plants creates local jobs in processing, packaging, quality control, logistics, and more — spreading benefits beyond farm gate.
3. Import substitution
   If Cambodia can produce processed foods locally, it could reduce its reliance on imported consumer agri-products (sugar, flour, processed meats, snacks).
4. Resilience & brand building
   Value-added processing allows Cambodia to build brands, raise quality, and compete in premium global markets (EU, U.S., China). It also makes the sector more resilient to raw commodity price swings.

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4. Key Areas with High-Value Processing Potential

Here are some promising sectors for Cambodia to scale up agro-processing:

• Cassava: Turning cassava into starch, flour, chips, or even tapioca products.
• Cashew nuts: Shelling, roasting, packaging — rather than exporting raw nuts.
• Rice: Milling, vacuum packaging, branding (especially fragrant rice).
• Tropical fruits: Mango, banana, longan → dried fruit, puree, juice, frozen snack.
• Fisheries / Aquatic Products: Fillets, canned fish, dried fish, value-added aquaculture.
• Niche products: Kampot pepper, coconut products, specialty oils, honey.

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5. Barriers & Challenges to Scaling Processing

• Lack of technology & modern facilities: Many processors are small and can’t afford advanced machinery. B2B Cambodia
• High post-harvest losses: Without proper handling, 20–50% of produce may be lost before processing or export. B2B Cambodia
• Skills gap: Limited technical skills in food processing, quality control, and machinery maintenance. Konrad Adenauer Stiftung
• Cost disadvantage: Processed local goods are sometimes more expensive than imported products, making them less competitive domestically. Konrad Adenauer Stiftung
• Trade-policy / regulatory: Need for better sanitary and phytosanitary (SPS) infrastructure, food safety standards, and certifications to meet export market requirements. Trade-guide sources note limited SPS compliance is a barrier. Trade.gov
• Import duties & VAT: While some materials may benefit from duty exemptions, Cambodia’s general tariff structure and VAT on imports can affect the cost of processing inputs. Council for the Development of Cambodia

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6. Strategic Pathways & Recommendations

To make Cambodia a regional hub for high-value agricultural processing, here are some strategic moves:

1. Incentivize investment in agro-processing facilities — through tax breaks, special economic zones, or public-private partnerships.
2. Strengthen SPS capacity: Expand food safety labs, certification bodies, and training so more processed goods meet export-grade standards.
3. Support SMEs: Offer low-interest loans, technical assistance, and training to small and medium agribusinesses to adopt better processing equipment.
4. Improve logistics & cold chain: Build or subsidize cold storage, proper transport infrastructure, and post-harvest facilities to reduce loss and maintain quality.
5. Marketing & branding: Develop “Made in Cambodia” quality brands for processed products (e.g. premium rice, dried fruit, roasted cashew) for export.
6. Promote cooperatives: Encourage farmer cooperatives to aggregate supply, invest in shared processing facilities, and gain scale.
7. Policy advocacy: Work with government to tailor incentives, tariff regimes, and FTA benefits for value-added agri-products.

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7. Risks to Watch

• Overinvestment without market demand could lead to overcapacity.
• Global price volatility: processed goods may still be subject to demand and price swings.
• Competition from neighboring exporters (Thailand, Vietnam) with more mature processing industries.
• Environmental risks: processing perishable goods requires energy, water, and may generate waste; sustainability needs to be built in.

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8. Conclusion

Cambodia is at a pivotal moment in its agricultural development. With surging production, growing export capacity, and supportive trade agreements, the structural shift toward value-added processing can unlock a new era of prosperity. By strengthening its processing industry, Cambodia can keep more value locally, reduce import dependence, create jobs, and build globally competitive brands — transforming from a raw commodity supplier into a regional agribusiness powerhouse.