A Japanese real estate developer has helped Cambodia take a big step toward becoming the world’s top cashew exporter, a goal that might not be as distant as it appears at first glance.

Mirarth Holdings, in early June, commemorated the completion of a small cashew processing plant in the central province of Kampong Thom, next to Siem Reap.

“The new plant symbolizes Cambodia’s strategy to become the biggest exporter of cashews in the world,” Kampong Thom Vice Gov. Nhek Ban Kheng said.

The development of a processing hub is a key initiative of then Prime Minister Hun Sen, who currently serves as president of the Senate.

Kampong Thom cradles Tonle Sap, Southeast Asia’s largest freshwater lake and known as the “beating heart of Cambodia.” The province is also home to the archaeological and World Heritage site of Sambor Prei Kuk.

Although Cambodia is a leading cashew producer, many growers do not earn enough income to pull themselves out of poverty because the country sends the nuts to neighboring Vietnam to be processed and re-exported.

Harvested raw cashews do not keep for long. They must be sun-dried and undergo a long process that includes cleaning, steaming, airing, shelling and peeling. The peeling alone is labor intensive. In addition, their moisture content must be carefully managed to keep the nuts from decomposing or cracking if too dry.

According to Mirarth, the new plant has two processing lines brought from Vietnam that can treat 8 tons of unshelled nuts a day. As cashews lose about three-quarters of their mass while being processed, the plant is able to ship 2 tons of finished nuts per day. Assuming that the plant operates 300 days a year, it will be able to ship 600 tons annually.

Mirarth is soliciting some 30 workers from local farming families, and the plant will be an important additional source of income for them. The Tokyo-based company will not only sell processed nuts but also use removed husks for biomass fuel. Nothing will be thrown out.

Mirarth is planning to construct another plant in Cambodia with an annual processing capacity of 20,000 tons, and Cambodia grows enough of the nuts to keep dozens more processing plants busy.

According to the Cashew nut Association of Cambodia (CAC), the country produced 650,000 tons of raw cashews in 2023, and almost all of them were exported without being processed.

“Workers who gain experience in Kampong Thom will become managerial candidates in the future,” Kentaro Taniguchi, an executive officer at Mirarth, said at the ceremony.

Japanese Ambassador to Cambodia Atsushi Ueno was also on hand. “A model case has been created in Kampong Thom,” he said. “I hope it will pump-prime an expansion of the approach across Cambodia.”

The small plant has a lot riding on it, as the Cambodian government expects cashews to be a harbinger of Phnom Penh’s agriculture promotion drive.

Cambodian cashew growers are used to selling their harvests to foreign buyers for around $1 per kilogram. But shelled nuts can sell for more than $10 per kilogram.

Cambodian growers are expected to win higher prices when direct trades with domestic plants give farmers an alternative for moving their highly perishable harvests. Foreign buyers, meanwhile, are expected to have their bargaining power eroded.

The country’s agriculture initiative comes as global cashew production increases, having roughly doubled in volume over the past two decades.

Cambodia is also a major producer of mangos, pepper and rice. Increasing the added value of agricultural products is key if the nation’s primary sector of industries, which accounts for more than 20% of its gross domestic product (GDP), is to grow stronger.

However, to become the No. 1 cashew exporter, Cambodia must first topple its business partner Vietnam, the current market leader.

Globally, shelled cashew exports in 2018 totaled 523,659 tons. Of that, 300,000 tons, or 57%, came from Vietnam, according to the International Nut & Dried Fruit Council (INC).

But a survey by the U.N. Food and Agriculture Organization (FAO) shows that while the world produced 3.85 million tons of unshelled cashews in 2018, Vietnam contributed only 9% to the total. As for shelled nuts, Vietnam produced less than 100,000 tons, significantly less than its 300,000 tons of exports.

Meanwhile, the CAC says Cambodia out-produces Vietnam 2-1 in raw cashews by volume. FAO data shows Vietnam ranks No. 3 after Ivory Coast and India, while Cambodia is lumped in with “other producers.” But CAC’s estimate raises questions.

The CAC estimates that 95% of cashews produced in Cambodia go unprocessed to Vietnam, and a survey commissioned by the Japan International Cooperation Agency (JICA) indicates that Vietnamese buyers often smuggle unshelled cashews into Vietnam.

The CAC estimate and JICA survey suggest Vietnam processes large amounts of nuts produced in Cambodia and exports them as “made in Vietnam.”

“The issue of Cambodian cashews being exported as Vietnamese cashews highlights concerns over mislabeling and the integrity of agricultural exports,” said Uon Silot, country director of the CAC.

Vietnam is able to purchase mass quantities of unprocessed cashews from Cambodia due to the latter’s lack of processing skills and proper storage sites. Cambodians, therefore, expect a great deal from Mirarth’s new processing center.

The CAC is fighting on other fronts to gain some cashew clout. It is striving to boost recognition of the M23 variant of cashews, a hybrid of native and introduced varieties that feature large-sized nuts. It is also pushing the creation of a mechanism to trace a nut’s origin back to the grower, and overseas buyers to use made-in-Cambodia labels, Uon Silot said.