Solar Salt Industry and The Salt Producers' Community of Kampot and Kep

Solar Salt Industry and the Salt Producers' Community
of Kampot and Kep
Options for a Sustainable Business Model
Prepared for
UNICEF CAMBODIA
Special Services Agreement

SSA/CBDA/2010/00003478-0
By
March 2011
SPCKK Sustainable Business Model
Preface
A report prepared for UNICEF by Indochina Research Limited and Agricultural
Development International.
This report1 is a final report for the Contract SSA/CBDA/2010/00003478-0 under the
National Program for Iodine Deficiency Disorders. The report presents an analysis of the
business model option for salt production in Cambodia.
The findings and recommendations in this report are the result of missions conducted by
IRL in Cambodia from January 10 to February 22, 2011 for UNICEF Cambodia, in support
of, and in response to requests from the National Sub Committee for Food Fortification
(NSCFF) and the Salt Producers Community of Kampot and Kep (SPCKK). The
development of a sustainable business model for the SPCKK is related to the ongoing
efforts to increase the household consumption of iodized salt in Cambodia, since the
SPCKK is the major supplier of domestic salt in Cambodia.
The authors would like to acknowledge the generous contributions of the members of the
National Sub Committee for Iodine Deficiency Disorders (NSCIDD), NSCFF, SPCKK and
staff members of UNICEF Cambodia through the interviews conducted one-on-one as well
as in groups. These constituents shared their knowledge and experience during various
meetings that covered short term and long term industry sector problems, stakeholders‟
goals, commercial and regulatory issues, and opportunities for performance
improvements. Participants included members of the Royal Government of Cambodia from
various ministries and departments, salt products industry leaders and donor agencies.
Authors of study are Terrance Mohoruk, Sok Muniroth, Andy Lowe and Tim Purcell of ADI
and Emiko Stock and Sinin Kith of IRL.
The views expressed in this report are those of the consultants and do not necessarily
reflect the views of UNICEF or the Royal Government of Cambodia.
Terrance Mohoruk
Team Leader
Phnom Penh, Cambodia
March 2011
1
To Be Cited as: IRL and ADI (2011) Solar Salt Industry and the Salt Producers' Community of Kampot and
Kep: Options for a Sustainable Business Model. Prepared for the UNICEF by Indochina Research Limited
and Agricultural Development International. Phnom Penh, Cambodia.
2
Indochina Research Limited and Agricultural Development International
Table of Contents
Preface ................................................................................................................................ 2
Table of Contents ................................................................................................................ 3
List of Tables ....................................................................................................................... 5
List of Figures ...................................................................................................................... 6
List of Boxes ........................................................................................................................ 7
List of Pictures ..................................................................................................................... 8
List of Abbreviations and Acronyms ..................................................................................... 9
Executive Summary ........................................................................................................... 10
1 Introduction ................................................................................................................. 17
2 Competitive Environment of the Salt Industry ............................................................. 18
3 Regional Perspective of the Salt Industry ................................................................... 20
3.1 Vietnam as a Salt Competitor .............................................................................. 20
3.2 Observations on the Vietnam Sector and its Impact on Cambodia...................... 25
4 Current Situation in the Salt Industry in Cambodia ..................................................... 26
4.1 Overview ............................................................................................................. 26
4.2 Governance ......................................................................................................... 27
4.3 Salt Producers Community of Kampot and Kep (SPCKK) ................................... 29
4.4 Solar Salt Production ........................................................................................... 30
4.4.1 Cambodia‟s Current Salt Production Process ........................................... 31
4.4.1.1 Inbound Raw Material Sea Water ............................................................. 31
4.4.1.2 Irrigation .................................................................................................... 32
4.4.1.3 The Salt Pans ........................................................................................... 35
4.4.1.4 Harvesting................................................................................................. 38
4.4.2 Solar Salt Production Best Practice .......................................................... 40
4.4.3 Intervention Recommendations to Improve Salt Production Quality ......... 43
4.5 Post Production ................................................................................................... 43
5 SWOT Analysis........................................................................................................... 45
5.1 Overview ............................................................................................................. 45
5.2 Manufacturing, Productivity and Quality .............................................................. 46
5.2.1 Strengths and Weaknesses ...................................................................... 46
5.2.2 Opportunities ............................................................................................ 47
5.2.3 Threats...................................................................................................... 48
5.3 Marketing, Distribution and Supporting Industries ............................................... 48
5.3.2 Opportunities ............................................................................................ 49
5.3.3 Threats...................................................................................................... 49
5.4 Investment Planning ............................................................................................ 49
5.4.2 Opportunities ............................................................................................ 50
5.4.3 Threats...................................................................................................... 50
5.5 Supply and Demand Fluctuations ........................................................................ 50
5.5.2 Opportunities ............................................................................................ 51
5.5.3 Threats...................................................................................................... 51
5.6 Public Sector Support and National Interest ........................................................ 51
5.6.2 Opportunities ............................................................................................ 52
5.6.3 Threats...................................................................................................... 52
6 Key Factors Affecting the Sustainability of the Salt Industry ....................................... 53
6.1 Introduction .......................................................................................................... 53
3
6.2 Baseline Advantages ........................................................................................... 53

6.3 Salt Market .......................................................................................................... 53
6.4 Supporting Industries and Services ..................................................................... 54
6.5 Organization, Cooperation and Collaboration ...................................................... 55
6.6 Adding Value in the Business Process ................................................................ 55
7 Strategic Initiatives for Improving the Cambodian Salt Industry .................................. 57
7.1 Introduction .......................................................................................................... 57
7.2 Capacity Building ................................................................................................. 59
7.2.1 Establishment of the Salt Industry Trade Association ............................... 59
7.3 Enhance Technological Capabilities .................................................................... 63
7.4 Enhance Supply and Distribution......................................................................... 66
7.5 Improve Quality Assurance ................................................................................. 67
7.6 Improve Marketing and Communications ............................................................ 68
7.7 Attract and Retain Investments............................................................................ 69
7.8 Public / Private Partnership ................................................................................. 70
4
List of Tables
Table 1 Top 10 Producers of Salt, 2004-2007 ................................................................... 19
Table 2 Salt Production Interventions ................................................................................ 43
Table 3 Retail buy/sell prices as at February 2011 ............................................................ 44
Table 4 Strategic Initiatives to Enhance Capacity Building ................................................ 62
Table 5 Strategic Initiatives to Enhance Technological Capabilities .................................. 65
Table 6 Strategic Initiatives to Enhance Supply and Distribution ....................................... 66
Table 7 Strategic Initiatives to Improve Quality Assurance ................................................ 67
Table 8 Strategic Initiatives to Improve Marketing and Communications ........................... 68
Table 9 Strategic Initiatives to Attract and Retain Investments .......................................... 69
Table 10 Strategic Initiatives to Enhance Public/Private Relationships ............................. 70
5
List of Figures
Figure 1 World Salt Production 1985-2007 ....................................................................... 19
Figure 2 SPCKK Organizational Chart .............................................................................. 29
Figure 3 Basic Stages in Solar Salt Production Processes ................................................ 41
Figure 4 Salt Sector Threat Chain .................................................................................... 53
Figure 5 Salt Industry Business Process Value Chain ...................................................... 56
Figure 6 Salt Trade Association Result Chain .................................................................. 59
Figure 7 SITAC Management Structure ............................................................................ 60
Figure 8 SPCKK Result Chain .......................................................................................... 63
Figure 9 Proposed SPCKK Organization Chart ................................................................ 64
6
List of Boxes
Box 1 Salt Production from Bac Lieu Province .................................................................. 20
Box 2 Improving Investment in Infrastructure ..................................................................... 20
Box 3 State Role in Purchasing Salt .................................................................................. 20
Box 4 Providing Interest Subsides for Salt Producers ....................................................... 21
Box 5 Import Quotas for Salt into Vietnam ......................................................................... 21
Box 6 Declining Prices hit Salt Production ......................................................................... 21
Box 7 Higher Production and Imports Depress Prices ....................................................... 22
Box 8 Improving Standards in Salt Production................................................................... 22
Box 9 Supporting Prices in Salt ......................................................................................... 23
Box 10 Vietnam Demand and Supply of Salt ..................................................................... 23
Box 11 Imports of Salt for Processing ................................................................................ 23
Box 12 Stockpiling Salt to Ease Price Falls ....................................................................... 24
Box 13 Interest Free Loans to Salt Producers ................................................................... 24
Box 14 Production of High Quality Solar Salt ..................................................................... 41
Box 15 Optimal Solar Salt Production Design and Operation ............................................ 42
Box 16 Solar Salt Upgrading.............................................................................................. 42
Box 17 Organization of the Salt Industry Trade Association of Cambodia ......................... 61
7
List of Pictures
Picture 1 SPCKK administration offices. ............................................................................ 30
Picture 2 A reservoir showing sea water which is not clear and has a brown clay color. ... 31
Picture 3 This reservoir is further away from the confluence of the inlet with the Kampot
River and therefore the raw material sea water is cleaner. ......................................... 31
Picture 4 A good example of one of a few concrete structures for inbound sea water to salt
pans. ........................................................................................................................... 32
Picture 5 A more typical entry point for inbound seawater ................................................. 32
Picture 6 There is significant contamination from machinery and operations such as this. 33
Picture 7 This is a good example of a pumping system and its canals which picks up less
clay and other insoluble components.......................................................................... 33
Picture 8 This concrete control system offers delivery of sea water to several locations.
The canals are unfinished and muddy. ....................................................................... 34
Picture 9 Secondary canal which is fed by the southern reservoir. The water is turbid and
has solid waste such as plastic packaging and other debris in the water. .................. 34
Picture 10 Contamination of inbound sea water is caused by exposed unfinished surfaces
as well as wind born particulates. ............................................................................... 34
Picture 11: Surface of new clay is pounded firmly into place. ............................................ 35
Picture 12: Newer salt pans have secondary canal systems around the perimeter. There
has been a proactive effort to accomplish smoother surfaces than in most pans /
dykes. ......................................................................................................................... 35
Picture 13: Crude wooden gating system for flooding the salt pans. The inbound sea water
picks up clay at this entrance since the soil is loose. .................................................. 36
Picture 14: Many salt pans are being converted to capped pipes for feeding of salt pans,
which reduces impurity pick up from opening the dykes that have wooden gates. ..... 36
Picture 15: The irrigation system of newer pans is more sophisticated with an apparent
design for sequential brine concentration, however, this was not being practiced. ..... 37
Picture 16: New pans interconnected unlike most other salt pans observed, however, the
intent was for simultaneous flooding of three pans rather than sequential brine
concentration. ............................................................................................................. 37
Picture 17: This is a typical series of salt pans, measuring 30 M X 15 M. The owner has 50
such pans in contiguous order. The workers harvest salt on a three day cycle and
harvest 20 salt pans per cycle in one day. .................................................................. 38
Picture 18: This figure illustrates that the collection of black contaminants is a regular
occurrence. ................................................................................................................. 38
Picture 19: The piles of salt are not formed in a manner to cause good drainage and he
workers take significant amounts of water along with the salt in their baskets. .......... 39
Picture 20: The surface is scraped and agitated, then the salt pan is drained and the clay
pounded and packed. ................................................................................................. 39
Picture 21: An older storage shed, shored up by clay embankment as well as wooden
braces. A new, larger storage shed under construction in the background. ............... 40
8
List of Abbreviations and Acronyms

ADI Agricultural Development International
ASEAN Association of South East Asian Nations
CWPD Cambodian Women for Peace and Development
FMCG Fast Moving Consumer Goods
GAIN Global Alliance for Improved Nutrition
ICCIDD International Council for the Control of Iodine Deficiency Disorders
IDD Iodine Deficiency Disorder
IFC International Finance Corporation
IRL IndoChina Research Limited
KHR Khmer Riel
MAFF Ministry of Agriculture, Forestry and Fisheries (Cambodia)
MARD Ministry of Agriculture and Rural Development (Vietnam)
MDG Millennium Development Goal
MIME Ministry of Industry, Mines and Energy
MoH Ministry of Health
MoP Ministry of Planning
MT Metric Tonne
NaCl Sodium Chloride (Salt)
NCCC National Committee for Climate Change
NCDD National Committee for Deconcentration and Decentralization
NCN National Council for Nutrition
NGO Non-Governmental Organization
NSCFF National Sub-Committee for Food Fortification
NSCIDD National Sub-Committee for Iodine Deficiency Disorders
RGC Royal Government of Cambodia
SITAC Salt Industry Trade Association of Cambodia
SME Small and Medium Enterprises
SPCKK Salt Producers Community of Kampot and Kep
SSA Special Services Agreement
SSTF Salt Sector Task Force
SWOT Strengths, Weaknesses, Opportunities and Threats
ToT Trainer of Trainers
UNDP United Nations Development Program
UNICEF United Nations Children's Fund
USAID United States Agency for International Development
USD United States Dollar
USI Universal Salt Iodization Program
WTO World Trade Association
9
Executive Summary
1. As with other comparative data regarding Cambodia, the salt industry is relatively
small. Based on the population base and the average per capita annual consumption of
household table salt, the consumer volume is estimated to be 80,000 to 90,000 metric
tonnes per year. The industrial consumption is considerably lower than neighboring
Thailand and Vietnam due to the relatively small production base and the industrial volume
in Cambodia is estimated to be 20,000 to 30,000 metric tonnes per year. If we observe the
population bases of Vietnam, 90 million, versus Cambodia, 14 million, one can predict a
consumer market demand for household table salt in Vietnam in the order of 500,000 to
550,000 metric tonnes per year. Due to significant production activities in the chemical
industry as well as the food processing industry, Vietnam has an industrial volume of salt
estimated to be an additional 500,000 to 800,000 metric tonnes; giving a total market
demand of between 1-1.3 million metric tonnes. These statistics are significant regarding
the market dynamics of salt trade and will be discussed in detail in this report.
2. Both Vietnam and Cambodia produce salt by the method of solar evaporation of
seawater. This ancient production process is common throughout the world and the total
annual production of salt is split between solar evaporation and mining of rock salt. The
quality and productivity of solar salt vary widely, based upon fundamental parameters and
methodologies, which will be discussed in detail in this report. Effectively all of Cambodia‟s
salt production is in the area between the towns of Kampot and Kep, south of Phnom Penh
and close to the Vietnam border. The quality and the productivity levels of solar salt in
Cambodia are relatively low and the vast majority of salt production in Cambodia requires
secondary processing in order to meet the common standards of purity, grain size and
moisture content for household table salt.
3. The salt industry in Cambodia is of national interest and the Royal Government of
Cambodia (RGC), in cooperation with UNICEF has implemented the Universal Salt
Iodization Program (USI) in Cambodia for several years. There are multiple reports and
publications detailing the progress of this program over time. The USI program has as its
core objective the elimination of Iodine Deficiency Disorders (IDD) and during the
implementation of the USI program RGC formed the National Sub Committee for Iodine
Deficiency Disorders and subsequently passed a Sub-Decree on Management of Iodized
Salt Exploitation in October 2003. The purpose of the Sub-Decree was to achieve the IDD
objective and to provide technical guidelines and regulatory parameters that would set out
a platform for iodized salt to become readily available to all Cambodian citizens.
4. Another significant development that occurred during the implementation of the USI
program was the transition from the Salt Board in Kampot to the registration of a legal
entity under the law in Cambodia. The Salt Producers Community of Kampot and Kep
(SPCKK) was formed and structured such that all the smallholder producers became
shareholders of SPCKK. This report will focus on the status of the SPCKK and bring
forward critical analyses regarding its performance as the primary entity engaged in the
objective of the Sub-Decree as well as the Millennium Development Goal related to IDD.
There are operational and policy matters investigated herein and the conclusions and
recommendations are directed towards the enhanced performance of the salt industry in
general and the SPCKK as the sector leader among stakeholders.
5. The objectives of UNICEF, through this investigation of the salt industry, are to analyze
the current status of the salt products industry in Cambodia and elsewhere and to develop
10
a long term sustainable strategy and business plan that will increase productivity and
quality, and enhance commercial activities, all in order to comply with the USI program
projections.
6. The fundamental statistics related to the salt industry in Cambodia would suggest that
many of the significant economies of scale simply do not and will not exist for the
foreseeable future. According to the Salt Institute, there are over 250 million metric tonnes
of global salt production annually and there are multinational corporations engaged in this
business. Therefore, it is appropriate to consider the option of cooperation and
collaboration among the domestic stakeholders along the value chain, in order to fulfill the
commercial requirements of the Cambodian market, while taking into account the global
perspective of the salt industry in highly focused activities and clearly defined interventions
yielding lower costs and higher quality. This report will also bring forward detailed analysis
of the salt industry in Vietnam in order to understand the market dynamics in that country
and the ultimate impact these have on Cambodia.
7. The strategy presented herein evolves from an acknowledgment of the limited supply
base, the relatively unsophisticated production process and the lack of a unified marketing
and distribution plan. This supply base will be discussed in detail within this report as there
are matters of government regulations, land title, common versus private infrastructure,
concessions and other commercial considerations. IRL and ADI consultants investigated
the salt sector through site visits and technical audits of operating facilities. Further, the
consultants held in depth interviews with stakeholders in the sector and suggest that a Salt
Sector Task Force, provisionally called the Salt Industry Trade Association of Cambodia
(SITAC) be established comprised of stakeholders from the public and private sectors, as
well as the donor community. This Task Force (SITAC) should be guided by the NSCIDD
and should bring donor agencies such as UNDP, IFC and others to the process of
developing a sustainable value chain, properly structured to supply 100 percent of
Cambodia‟s iodized salt for household consumption. It should be noted that there are
issues such as Climate Change Adaptation and Resilience, as well as the RGC‟s current
strategy of Deconcentration and Decentralization that must be considered and
incorporated into the business model. The RGC has established the National Committee
for Climate Change and the National Committee for Decentralization and Deconcentration
and the salt industry stakeholders must determine the best path forward regarding the
overarching objectives of these committees.
8. The salt industry in Cambodia has received significant support during the period of
1996 to 2010 and various interventions were sponsored by UNICEF and other donor
agencies through the NSCIDD and other venues. This support included an iodine subsidy
program which ensured that potassium iodate was supplied to the SPCKK. This program
terminated as of January 2011 and UNICEF now wants SPCKK to implement a business
plan that improves the commercial performance of the SPCKK and its shareholders and
have the cost of iodization of household salt sustainably absorbed by Cambodia‟s salt
producers.
9. Given that the strategy and business plan adopted by SPCKK will be based on a
limited supply base, one of the first tasks of the SITAC must be to validate the cost /
benefit analyses for the options presented in this report. These options include operational
enhancements through investments in irrigation systems, flood control and salt refining.
There are also recommendations regarding strategic alliances and expansion of the
capacity base of the SPCKK regarding marketing, distribution, inventory control and quality
management. This report will describe the fundamental benefits of certain investments by
11
the stakeholders, such as reallocating certain equipment and revitalizing selected

operations, in order to meet the internal demands of an effective steady state production
configuration. It is recommended that all of the SPCKK shareholders adhere to
standardized production procedures and provide salt to the industry that meets rigid
specifications, including maximum allowable impurities both soluble and insoluble. As the
newly formed SITAC takes over management of the salt industry, there will be a
committee formed to monitor and evaluate the production performance of all producers.
10. The recommended strategy and business plan also takes into account the relative
position of Cambodia within the salt industry of its neighbors in Vietnam and Thailand,
which is small when comparing total annual production on a per capita basis. A
compounding issue is the chronology of the policies and regulations as well as
international donor assistance respecting Vietnam and Thailand. Cambodia is well behind
Vietnam and Thailand in its industrialization and therefore does not have a chemical sector
or food processing sector or other industrial activities to increase the overall demand for
salt. This in turn results in commercial disadvantages including limited access to trade
credits, no investments in infrastructure and capital goods, no incentives for upgrading of
technologies, developing distribution and delivery systems, development of traditional
market partners and direct firm-level intervention regarding financial and operational
performance and management.
11. It is important to note the relevant practical experience in Cambodia versus Vietnam
and Thailand. Cambodia‟s neighbors rank highly in commodity exports and this leads to
high volume and value added commercial activities. As Cambodia‟s neighbors have
increased their industrial activities, certain market demands, policies and regulations have
driven decisions that ensure the availability of low cost iodized salt. This report will also
address the market dynamics in Vietnam and the impact of an open market there.
12. Strategically, the salt industry should be concerned about the sustainable domestic
supply of quality salt in Cambodia, however based upon the investigations related to this
report it appears that SPCKK has shown little inclination toward investing in technologies
or methodologies or otherwise ensuring a stable supply of domestic iodized table salt for
Cambodian citizens. SPCKK‟s production output requires secondary processing in order to
meet minimum standards for household table salt. This has resulted in high cost iodized
table salt for the consumer which in turn has resulted in the importation of cheaper salt
from Vietnam and Thailand. Fortunately, solar salt is a renewable resource and basic
production standards can be adopted to increase quality and productivity and so this trend
can be reversed.
13. The consultants were not able to examine the current articles of association of the
SPCKK, nor did the consultants review the annual financial statements submitted by
SPCKK to the tax authorities. The financial status of SPCKK is relevant to the on-going
commercial activities of the salt industry in Cambodia and it is therefore important to
determine if the SPCKK is creditworthy and solvent as a legal entity. Under the law in
Cambodia a community has no obligation to disclose its operations to the public; however
as part of its due diligence, SITAC must become familiar with SPCKK and its constraints.
14. The ideal scenario going forward would see the newly formed SITAC offer
creditworthiness and an ability to implement the strategy and business plan with a pre-
described investment plan that would: (i) upgrade technology and production practices; (ii)
bring fresh working capital and; (iii) improve productivity of the SPCKK members and
boilers and other stakeholders along the value chain.
12
15. A key challenge, facing Cambodia‟s salt industry as a whole, is to raise quality and
productivity in the sector up to globally competitive levels, or face the continued loss of its
market share to low cost producers overseas and in regional locations, which offer stable,
competitively priced supplies of iodized salt. Liberalization of imports of iodized and non-
iodized salt should be an integral part of the strategy since it will define the playing field in
terms of cost and quality, but one that offers few benefits to the SPCKK directly at this
time. It should be noted however that salt must be allowed into Cambodia under the
appropriate customs tax and duty tariffs established by the Ministry of Economy and
Finance. Cambodia must adopt a salt supply strategy based on optimizing the total
hectares of land exploited for salt, phasing out low productivity producers and practices,
while transitioning enough higher productivity areas under harvest to produce the quantity
and quality of solar salt needed by Cambodian citizens. This supply and processing
balance is crucial to the future success of the salt industry.
16. It is technically possible for Cambodia to improve the productivity and sustainability of
its solar salt to world class levels. Doing so will require a mix of investment, new codes
and regulations, and private sector management driven by fair and equitable monetary
incentives (taxes for government and profits for SMEs). There are several other donor
agencies working on related matters such as climate change and decentralization, nutrition
and health at this time. It is imperative that SITAC work closely with these groups and
provide input into their projects from the standpoint of investment and funding as well as
advocacy and policy reform.
17. The primary comparative advantage of Cambodia‟s solar salt sector is similar to any
other geographical region that has significant solar radiation and appropriate topographic
conditions to create solar salt pans. There is little else about Cambodia‟s situation to lend
to its competitiveness, without significant intervention and revision of business practices
and perhaps consolidation of production areas into larger salt pans with upgraded
irrigation systems. There is in fact a relative disadvantage to the Kampot and Kep
production areas in that the cycle of the monsoon season restricts the efficient production
of salt to the period from November to April. This scenario suggests that total production
during this period must meet domestic demand and there must be adequate storage
facilities and secondary processing facilities to compensate for the seasonality of the
sector.
18. The salt sector in Cambodia suffers from the common economic history of the region,
relative to its closed market eras. Following the introduction of free economy and open
markets, relatively few entrepreneurs have emerged, other than the large number of
traders. Only a few companies have developed long-term advantages in technology,
marketing, and innovation in design and quality in most industry sectors. Growth in the
finished products sector of the chemical and agricultural industries creates demand for
more and higher quality salt and this demand would normally fuel growth and profitability
of the supply side. However, the near term decision to create the SPCKK monopoly and
the subsequent dysfunctional domestic supply of salt is problematic and this requires
special attention and a systemic remedy.
19. The solar salt sector faces many constraints, such as outdated technology and harvest
practices, inadequate marketing and distribution, poor workforce development services,
and a lack of credit facilities among others. The potential SMEs in the sector have
additional issues regarding direct access to markets, poor negotiating skills and a lack of
organized long-term purchase and sale agreements. The salt industry, in general, is
13
hampered by a lack of (i) expertise and organizational structure to engage in regional

market dynamics (trade association); (ii) product development and quality certification; (iii)
human resource development and capacity building at provincial level; (iv) sales,
marketing, logistics and financial planning; (v) strategic planning and business
development; and (vi) manufacturing and process integration ensuring USI program
compliance.
20. Because of a limited supply capacity for solar salt, related to land mass and weather
constraints, the Cambodian salt industry cannot aspire to lead the market in volume
categories. Instead, to improve its competitiveness, the industry should pursue an
optimized small volume refinery configuration of 200,000 metric tonnes per year. This
would reduce cost of goods sold to the level whereby domestic salt could compete on
price and quality with imports. Such a near term solution would prepare the salt industry
for expansion based upon growth in the industrial applications for salt. Increased iodization
manufacturing capacity will require a consistent, high quality solar salt from the
smallholders in the SPCKK.
21. With a reliable domestic supply of iodized table salt and open market access to
imported salt, the Cambodian consumer should be able to purchase iodized salt at
competitive prices. If the strategy and business plan recommended in this report are
implemented, the cost of iodized salt will meet the global market and the distribution of
iodized salt to all Cambodian citizens will be ensured.
22. The following strategic initiatives are initial steps of a strategy for achieving sustainable
supply of iodized salt to Cambodian citizens:
1. Capacity Building. Institutionalize the Salt Industry Trade Association of Cambodia

(SITAC) under the law to unify industry stakeholders, improve upon all commercial
aspects of the salt industry, monitor and promote the industry‟s commercial
interests, engage in advocacy, and pursue long-term strategic goals. The near term
objective would see SITAC expand its capabilities beyond the current mandate of
SPCKK to become the apex trade association for the salt sector and become a
legal entity with a charter and Articles of Association under the Companies Act. The
roles and functions of SITAC are detailed in Section 7.1.1.
2. Enhance Technological Capabilities. Complete a feasibility study and cost /

benefit analysis for a 200,000 metric tonnes per year salt refinery and iodizing
facility2. Establish creditworthiness of owner operator and a financing scheme to
acquire new capacities and higher production quality. Complete a feasibility study
and cost / benefit analysis for upgraded irrigation systems at all seven production
areas that would deliver higher quality input seawater, discharge spent brine and
provide flood abatement. Complete a pilot project to reconfigure salt pans into
larger units and convert to sequence evaporation in order to achieve best practices
for solar salt production. Reposition Cambodia‟s salt industry capabilities in the
market to meet specifications and standards of high quality imported salt.
3. Enhance Supply and Distribution. Establish a strategic alliance with a capable

SME or NGO to develop an efficient and effective national distribution and inventory
system for salt. The system would include a dedicated warehouse and depot in
each province that would serve to maintain an appropriate level of inventory of all
2
Under good weather conditions Cambodia is currently able to produce around 200,000 tonnes of salt per
year.
14
grades of salt and would distribute salt to wholesalers and end-users. The
organization managing such a system would be responsible for sales and
receivables, as well as logistics coordination between SPCKK and other suppliers
of salt products. The appropriate NGO would have a vested interest in the
promotion of health for women and children and would have a national reach with
its organizational network. Commercial agreements and obligations of the parties
would be subject to negotiations and the best interests of SITAC and NSCIDD.
4. Improve Quality Assurance. Improve human resources and capabilities in all

aspects of solar salt processing and specification standardization. Form a quality
assurance within SITAC that would monitor and certify producers within SPCKK.
The quality assurance would also operate an analytical laboratory in order to track
batches of production and / or import shipments. The quality assurance would also
oversee the iodizing process whether it becomes part of the newly installed refinery
or it becomes a standalone unit operation. The quality assurance would also form a
strategic alliance with the Ministry of Health or other RGC agencies that would offer
access to laboratory staff and equipment as required.
5. Improve Marketing and Communications. Establish a marketing campaign

through the strategic alliance formed to operate the distribution and inventory
system. The selected NGO (CWPD) / SME would be mandated to implement a
marketing and communications campaign with an approved budget. The campaign
would best be aligned with on-going efforts of donor projects or ministries working
on health issues or rural development issues. SITAC would be responsible for
seeking out synergy and leverage opportunities for such collaborative efforts.
6. Attract and Retain Investments. The proposed manufacturing enhancements will

require significant capital investments. Certain investments will be for individual salt
producers while others will be on behalf of larger entities. The consultants
recommend that financing schemes and investment programs that have been
initiated in Vietnam and elsewhere be developed and brought forward. SITAC will
establish a finance committee and determine the best options for bringing forward
investments that would offer appropriate rates of return while achieving the
fundamental objectives of all stakeholders.
7. Public / Private Partnership. The RGC has declared the salt industry to be of
national interest and has promulgated the Sub-Decree on Management of Iodized
Salt Exploitation. In an attempt to effect critical mass and concentration of efforts in
the private sector, the Salt Board has been replaced by the Salt Producers
Community of Kampot and Kep (SPCKK). This legal entity is a de facto monopoly
and there appears to be significant shortcomings and constraints related to the
effectiveness of the SPCKK in fulfilling its mandate and in performing its role in
relation to the stated objectives of the NSCIDD and Sub-Decree No. 69. The
mounting and launching of the Salt Industry Trade Association of Cambodia
(SITAC) will expand the capacity and reach of the current SPCKK and will bring
significant stakeholders to the challenge. It will be SITAC‟s responsibility to
continuously interface with NSCIDD and other bodies of the RGC in order to
implement all aspects of Sub-Decree No. 69, the Cambodian and UN MDGs, the
commercial sustainability of the salt industry and its domestic producers. SITAC will
become the platform and venue for matters of advocacy as well as the commercial
interests of the salt industry.
15
23. The logic underlying these initiatives assumes that the salt industry in Cambodia will be
more productive, competitive and more profitable if its stakeholders act as a unified body
with significantly enhanced operational performance and expanded capabilities in key
areas. A properly functioning trade association is as a collection of companies participating
in commercial transactions and agreements and representing every segment of the
business value chain, including all goods and services relating to a final product entering
the market. For the Cambodian salt industry, this organization would link companies from
the private sector with ministries and provincial departments having a vested interest in
near term and long term success of the sector. Stakeholders would include all related and
supporting industries, service providers, as well as financial institutions and regulatory
bodies.
24. At present, the salt industry in Cambodia does not exploit the interdependence, mutual
good faith, or long-term commercial commitments necessary to bind its stakeholders and
potential strategic partners to bring efficiencies and drive profits. Salt companies outside of
Cambodia, which operate in the global arena and satisfy market demand with highly
efficient manufacturing parameters, have the potential to capture a significant portion of
the Cambodian salt market. As Cambodia‟s industrial sector expands, the consumption of
salt for manufacturing will grow and reflect similar ratios of consumer table salt to industrial
salt as currently exists in Thailand and Vietnam. These industrial applications for salt will
necessarily require high quality and consistent reliable standards of production.
25. To become more sustainable and less vulnerable to market dynamics, members of
Cambodia‟s salt industry must stop relying on the status quo of its monopoly and related
government policy and regulations regarding SPCKK‟s current mandate. The stakeholders
must expand upon the capabilities of SPCKK and address the other crucial business
matters such as standardized production specifications, marketing and distribution, access
to finance and sales planning, working together on strategic initiatives to become more
competitive in terms of price and quality. In pursuing and implementing such strategic
initiatives, members of SPCKK and SITAC will begin to work efficiently and effectively as a
unified industry association, reducing costs and improving performance along the supply
chain, reaping financial rewards from appropriate investments, and helping to achieve the
long term objectives of the NSCIDD, UNICEF and other donor organizations.
16
1 Introduction
26. Universal Salt Iodization (USI) is the most reliable, cheap and safe method for the
prevention and elimination of Iodine Deficiency Disorder (IDD). IDD has long been
recognized as a significant public health problem in Cambodia. In 1997, the results of a
national survey showed a total goiter rate (TGR) of 12 percent among 8-12 year-old school
children. In recognition of this problem, the Royal Government of Cambodia (RGC)
initiated a National Sub-Committee for the Control of Iodine Deficiency Disorders
(NSCCIDD) in 1996, focusing on USI as the primary intervention strategy to improve the
iodine status of the population.
27. The production of iodized salt started in 1999, though with limited success to produce
sufficiently large quantities. In 2000, only 14 percent of households were found to use
iodized salt. Due to the lack of sufficient legislation and enforcement of the existing
legislation, many small to medium salt producers in the coastal provinces of Kampot and
Kep continued to produce non-iodized salt. The situation changed dramatically with the
promulgation of Sub-Decree No. 69 on “The Management of Iodized Salt Exploitation” on
October 20, 2003 (effective October 2004).
28. The Salt Producers Community of Kampot and Kep (SPCKK) was formed in 2004 with
the participation of 167 salt producers. SPCKK is responsible for the coordination and
management of the iodization of salt, as well as for marketing and sales of all salt. The salt
producers are shareholders of the SPCKK, with the size of share proportional to the size of
their operations.
29. While IDD results have shown drastic improvements over the years, with more than 71
percent of households currently using iodized salt in Cambodia, in 3 provinces (Kep,
Kampot and Mondulkiri) the median UIE (Urinary Iodine Excretion) remains below 100µg/l;
indicating an inadequate intake of iodine. The two primary drivers of this are „leakages‟ of
non-iodized salt from salt production sites and cross-border importation of non-iodized salt.
Given the Cambodian market can generally be sufficiently supplied with domestically
produced salt, local iodized salt production is therefore a key to this public health situation.
30. The salt industry in Cambodia has received significant support during the period of
1996 to 2010 and various interventions were sponsored by UNICEF and other donor
agencies through the NSCIDD and other venues. This support included an iodine subsidy
program which ensured that potassium iodate was supplied to the SPCKK. This program
terminated as of January 2011 and UNICEF now wants SPCKK to implement a business
plan that improves the commercial performance of the SPCKK and its shareholders and
have the cost of iodization of household salt sustainably absorbed by Cambodia‟s salt
producers.
31. The development of the business plan aims to: (i) serve as a means for raising
investment capital; (ii) address vulnerability to weather and competition; and (iii) ensure
successful takeover of salt iodization costs.
32. The outline of this report is as follows; Section 2 presents the Competitive Environment
of the Salt Industry, Section 3 presents a Regional Perspective of the Salt Industry,
Section 4 presents the Current Situation in the Salt Industry in Cambodia,, Section 5
presents a SWOT Analysis, Section 6 presents Key Factors Affecting the Sustainability of
the Salt Industry and finally Section 7 presents Strategic Initiatives for Improving the
Cambodian Salt Industry.
17
2 Competitive Environment of the Salt Industry

33. Cambodia‟s salt industry is centuries old, however, recently it has evolved under
specific parameters related to health matters, rather than classic commercial and
economic drivers. Since 1996 the salt industry has been driven by the external forces
associated with the Universal Salt Iodization Program (USI) and Iodine Deficiency Disorder
(IDD) and the objectives of UNICEF and other donors as well as the NSCIDD, the NSCFF
and various RGC ministries with interests in the health and wellbeing of Cambodia‟s
citizens.
34. These same parameters have influenced the salt production in many emerging
economies and as a result Cambodia‟s neighboring countries have been assisted by donor
programs such as the Global Alliance for Improved Nutrition (GAIN). In such cases that
UNICEF and other donors have contributed significantly, the USI program has catalyzed
both growth and standards in the salt industry. There have also been influences at the
ASEAN level and with WTO accession with open market conditions within the Customs
Tariff Codes. In Vietnam, Thailand and elsewhere in Southeast Asia, salt is imported and
exported in large volumes. This is driven primarily by market forces of quality and price
rather than the USI program objectives.
35. In recent years there has been significant downward pressure on the global market
price for industrial salt. Salt is a high volume, low value global commodity. According to the
Salt Institute, global production is in the order of 250 million metric tonnes per year. The
largest producers are China and the United States, with approximately 100 million tonnes
combined; see Figure 1. These major producers along with India, Germany, Canada and
Australia control over 60 percent of all salt produced and sold; see Table 1. As of the
middle of 2010 the international prices for bulk industrial shipments were between US$ 30
and 40 per tonne based upon quality. In Vietnam the Ministry of Industry and Trade set a
policy to allow importation of salt by large manufacturing and processing companies
because the price of commodity salt was cheaper than domestic solar salt. This in turn
caused an increase in inventories among the salt producing communes throughout
Vietnam who were and are looking for export markets for their production.
36. According to the investigations associated with this report the domestic prices in
Cambodia remain relatively high with the price of SPCKK salt to wholesalers in Phnom
Penh at 250 – 260 KHR or US$ 0.065 per Kg (US$ 65 per tonne). This wholesale price is
an open invitation to Vietnamese traders who recognize the opportunity to bring
reasonable quality salt at significantly lower prices into Cambodia along with the fruits,
vegetables and other market goods that already cross the border on a daily basis.
37. In 2009 as the global economic crisis drove down prices, Cambodia was faced with
another complication; severe flooding in Kampot and Kep, with the annual production of
salt falling to 25,000 tonnes. This was well below the domestic demand and SPCKK
officially imported salt from China to deal with the shortfall. Unofficially, other production
from Thailand and Vietnam found its way onto the Cambodian market. In 2010 the
production scenario recovered with 210,000 tonnes of output from the SPCKK members.
Unfortunately the combination of trader activities from 2009 along with downward pressure
on prices took its toll on SPCKK members with many producers selling only 30 percent of
their 2010 outputs. Indeed, today the SPCKK storage sheds are full and the member
producers are not working the salt pans at typical cycles.
18
38. Members of Cambodia‟s salt industry are concerned about the competitiveness and
long term viability of their industry compared to the salt industry of regional producers as
well as international importers. Among other conclusions drawn in this report it is critical
that regional competitiveness studies should be concluded in order to validate the
proposed strategic interventions and to confirm the long term strategy for increasing
quality and productivity and reducing costs. Under the aegis of SITAC, industry
stakeholders and vested interest departments and agencies must build capacities beyond
SPCKK‟s current skills and expertise and work together to improve performance both in
the salt pan fields and also in the marketplace.
Source: Salt Institute
Figure 1 World Salt Production 1985-2007
Table 1 Top 10 Producers of Salt, 2004-2007

Country 2007 2006 2005 2004
China 59.8 48.0 44.6 37.1
United States 44.5 46.0 45.1 46.5
Germany 19.8 18.6 18.7 16.0
India 16.0 16.0 15.5 15.0
Canada* 11.8 15.0 14.5 14.1
Australia 11.4 12.4 12.4 11.2
Mexico 8.4 8.5 9.2 8.2
Brazil 6.9 7.3 6.7 6.5
France 6.1 7.0 7.0 7.0
United Kingdom 5.8 5.8 5.8 5.8
All Other 65.5 55.4 58.5 40.6
Totals 257.0 240.0 238.0 208.0
Note: For Canada see Figure 1 back to 1948
Source: Salt Institute
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3 Regional Perspective of the Salt Industry

3.1 Vietnam as a Salt Competitor
39. The consultants have selected to investigate Vietnam for purposes of placing
Cambodia‟s salt industry into a regional perspective. Vietnam was selected because it is
currently engaged in exporting activities to Cambodia for many products including salt.
Further, there is reliable information available about the salt industry in Vietnam. The
following reports offer a collective illustration of the dynamics of Vietnams salt industry:
Box 1 Salt Production from Bac Lieu Province

With the next production season all set to start, farmers in Bac Lieu Province have 134,000 tonnes of black
salt still in stock, according to the province‟s Department of Agriculture and Rural Development. During the
last season at the beginning of this year, Bac Lieu, which, at 3,500 Ha, has the largest salt-production area
in the Cuu Long (Mekong) Delta, produced a record output of more than 266,000 tonnes, or two times the
quantity produced a year earlier. Of this, nearly 90 per cent was black salt.
In late June, the Ministry of Agriculture and Rural Development had ordered the Northern Food Corporation
to buy salt from farmers in Bac Lieu who had around 200,000 tonnes in stock. The corporation assigned the
Bac Lieu Salt Trading Joint-Stock Company to buy 30,000 tonnes.
To help farmers build warehouses to store their stocks, the provincial People‟s Committee has provided
more than 400 of them interest-free loans worth a total of USD 68,000.
Source: Vietnam News 2010
Box 2 Improving Investment in Infrastructure

Tightening salt imports and providing soft loans to poor households for salt making are among the measures
proposed by the Ministry of Agriculture and Rural Development to ease the difficulties faced by the industry.
The Social Policy Bank will lend salt makers USD 2,000 – 2,500 per hectare for 36 months if the proposals
are approved by the Government.
The ministry is also calling for prioritizing investment in infrastructure in salt making areas and increasing the
use of technology in production. The Government is set to continue developing salt fields in the central
region, especially in Ninh Thuan, Binh Thuan, and Khanh Hoa Provinces, to increase their productivity and
quality.
The ministry said attention should be paid to developing facilities to store salt. There are more than 15,200
Ha of salt fields in the country from which output is expected to reach 1.1 million tonnes this year, including
more than 300,000 tonnes for industrial use. In the first six months the country imported 230,000 tonnes of
common salt for more than USD 11 million.
Box 3 State Role in Purchasing Salt

The Northern Food Corporation yesterday began its first round of buying 30,000 - 40,000 tonnes of salt from
farmers in the Cuu Long (Mekong) Delta province of Bac Lieu. Ho Xuan Hung, deputy minister of Agriculture
and Rural Development, on Tuesday ordered companies to buy salt from the local farmers, who have
200,000 tonnes of salt in stock.
Hung made the request after he conducted a working visit at salt fields in Bac Lieu, which has the largest salt
production area in the Mekong Delta. Under the purchase round, the corporation will buy salt at prices in
accordance with market prices, and priorities will be given to buying salt at the fields from farmers and co-
operatives.
Ho Minh Xiem, chairman of the Bac Lieu Trading and Salt Joint-Stock Company, said his company had
bought black salt at fields for USD 0.025 per Kg and white salt for USD 0.050 per Kg. Bac Lieu has produced
a record high total output of more than 266,000 tonnes in a total area of 3,500 Ha in this year‟s salt
production season, according to the provincial Department of Agriculture and Rural Development.
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Box 4 Providing Interest Subsides for Salt Producers

The Government has approved an interest-rate subsidy of 100 per cent for loans for salt producers, which
will be effective until the end of the year. The Ministry of Agriculture and Rural Development (MARD) green-
lighted a plan that allows for up to USD 68,000 in loans to be provided to producers that are using at least
one hectare that have a one year contract.
Nguyen Tan Khuong, chairman of Dong Hai District People‟s Committee in southern Bac Lieu Province, said
the State would provide interest-free loans for farmers to buy construction materials so they could build
warehouses to store salt before the rainy season, when production declines. With these warehouses,
farmers would be able to store the salt, which would help stabilize prices. The Government also required
MARD to thoroughly inspect all of the projects that will build storage spaces. Projects that will potentially be
completed by the end of this year, but have been able to secure capital, will be given priority when applying
for loans.
The Government also mandated that the Northern Food Corporation buy and store 200,000 tonnes of salt by
September 30, of which 20,000 tonnes would come from the northern part of the country and 180,000 would
come for the central and south. The head of the Agro-forestry and Fishery Processing and Salt Industry
Department, Le Xuan, said the current El Nino has caused the dry season to begin in the southern provinces
earlier than usual.
According to the deputy head of the Ministry of Industry and Trade, Nguyen Thanh Bien, the official quota for
imported salt in 2010 is 260,000 tonnes.
In the first five months of this year, 725,000 tonnes of salt were produced, which was almost double the
amount that was produced during the same period last year. At the moment, salt prices are deflating. One Kg
of salt in the northern provinces range from USD 0.030 - 0.050, which is 40 per cent lower than the prices
from last year. More than 300,000 tonnes of salt produced has not been sold by farmers. MARD expects that
Viet Nam‟s total salt output in 2010 will reach more than 1.0 million tonnes, which would meet the domestic
demand.
Deputy Minister Bien said Viet Nam had to import salt in order to abide by its commitments to the World
Trade Organization. The salt that Viet Nam is importing is high-quality, which is used in the food production
industry. This type of salt is not produced in the domestic market.
Box 5 Import Quotas for Salt into Vietnam

The Minister of Industry and Trade revealed that in the first five months, Vietnam has imported 50,000
tonnes of industrial salt. The total salt volume that had been imported from the quota was 90,000 tonnes,
causing effects on the domestic salt price and inventory. The 2010 import quota of salt products was 260,000
tonnes, in which industrial salt counted for 180,000 tonnes and the remaining 80,000 tonnes for health care
and household usage.
In the first five months of this year, Vietnam has produced 773,000 tonnes of salt, which is 176 percent
against the same period of last year.
Box 6 Declining Prices hit Salt Production

Though salt makers in the Mekong Delta have a bumper crop this year, the bottom has dropped out of the
market, with sea salt fetching only USD 0.015 – 0.020 per Kg leaving salt-making households are in dire
distress. The price middlemen will pay for salt has fallen steadily from USD 0.080 to 0.010 per Kg in March
2009. It‟s a problem of oversupply and foreign competition.
Tuoi Tre reporters, who visited salt fields in An Ngai commune in Ba Ria-Vung Tau, saw only a few workers
harvesting salt, while nearly a dozen others sat idle nearby. These people see no purpose in harvesting the
salt, because there are no buyers.
Nguyen Van Gia said “it is now very sunny, excellent weather for making salt, but no one wants to work,
because they know they will not be able to sell the salt.” The salt makers have abandoned their fields,” he
21
added. Phan Thanh An added, sighing, “I have nearly hundred tonnes of salt unsold. I‟ve left it in the field.
The salt this year is not salty, but bitter”.
In a normal year, one hectare of salt field can produce 70 - 80 tonnes by the evaporation of sea water, but
this year the sustained dry, sunny weather has enabled higher production – an average of 100 tons per
hectare for the season.
According to the Ministry of Agriculture and Rural Development, by April 18, Vietnamese salt makers had
harvested 514,000 tonnes of salt, 66 percent more than in the same period of 2009.
Tran Quang Phung, General Director of the Southern Salt Group, agrees that the increase in salt output has
made the salt price drop. However, its not just Vietnam‟s internal demand and supply that‟s affecting the
market. The domestic salt price has also been influenced by a more liberal import policy, he explains, that
have brought 170,000 tonnes of imported salt onto the market.
Box 7 Higher Production and Imports Depress Prices

Higher production and imports of salt have pushed down the price on the local market and led to lay-offs. In
the first four months of this year, the country produced 350,000 tonnes of salt, twice that during the same
period last year, according to the Ministry of Agriculture and Rural Development. Meanwhile, the salt import
volume increased due to falling global prices. As a result, farmers sold salt at record lows of between USD
10.5 - 26.3 per tonne in mid-March and the trend will continue.
Le Xuan, director of the Department of Processing and Trade for Agro-forestry-fishery Products and Salt
Production, said during the last months of 2009, salt prices on the global market decreased sharply and
many enterprises took advantage of the situation to import large volumes, which they are now using in
production or trying to sell in the open market.
Under World Trade Organization (WTO) commitments, salt is one of the goods that have an import quota.
Firms can import salt subject to quotas with permission from the Ministry of Industry and Trade (MoIT) and
pay a tax rate of 5.0 – 10.0 per cent. Alternatively, they can import as much as they wish at a tax rate of up
to 50 per cent for refined salt and 60 per cent for industrial salt, without permission from MoIT.
Companies use the second method to import salt, so it is not easy for MoIT to calculate the total volume of
salt imported. Salt imports are usually calculated according to the market demand of manufacturers,
producers and consumers. The salt import quota this year is around 260,000 tonnes, 180,000 tonnes of
which will be used by manufacturers, while consumers will use the remainder. These statistics were
announced early this year so that enterprises could plan how much to import.
To deal with the over capacity problem, in March the Government decided to temporarily stop granting salt
import quotas. MoIT recently asked relevant ministries to work out ways to limit salt imports. It also asked
producers to shift to using locally produced salt. According to the department, total demand for salt will be
1.34 million tonnes for 2010. Local farmers, however, will be able to produce only around 1.0 million tonnes
due to favorable weather conditions.
Box 8 Improving Standards in Salt Production

The Prime Minister has assigned the Ministry of Agriculture and Rural Development and the Ministry of
Finance to work on quality, safety and hygiene standards for imported salt. He also asked the above
ministries to curb cheating on the importation of salt, and to propose ways of adjusting import taxes on salt
that is imported beyond the legal set quota.
The Ministry of Agriculture and Rural Development, the Ministry of Finance, and the Ministry of Industry and
Trade set the 2010 national customs quota for salt imports at 260,000 tonnes. To date, the Ministry of
Finance has allocated quotas of 140,000 tonnes to various companies.
22
Box 9 Supporting Prices in Salt

An official has suggested that the government support locally-produced salt prices in order to prevent
farmers from quitting due to plummeting prices. “The government has had policies to keep rice and coffee
prices stable by asking relevant agencies to buy produce from farmers at certain prices and stockpile them,
so why doesn‟t the government have such plans for the salt industry?” said Doan Xuan Hoa, deputy director
of the Department of Agriculture, Forestry and Fisheries Products Processing and Salt Industry.
Local salt prices are currently USD 0.030 per Kg, not much higher than the lowest price in mid-March of USD
0.015 – 0.020. Last year, 2009, salt sold at USD 0.080 – 0.100 per Kg. The current low prices are
discouraging many farmers from harvesting. Experts, including Hoa, said salt prices have plummeted this
year as bumper crops and the presence of imported salt on the local market formed an oversupply.
In February, the Ministry of Industry and Trade allowed local companies to import 170,000 tons of salt. But
Deputy Minister Nguyen Thanh Bien said in early March that the imports were for industrial use and would
not affect farmers.
But Hoa said due to low prices farmers would quit their jobs in the coming months and the targeted output of
one million tons would not be realized. To prevent the situation from becoming worse, the government
should plan to support salt farmers in terms of prices. It should set up a committee to calculate the rate of
support or the lowest price that businesses must pay for a kilogram of salt.
Box 10 Vietnam Demand and Supply of Salt

The Ministry of Industry and Trade (MoIT) has recently announced that in 2011 the country's demand for salt
will be about 1.35 million tonnes. Meanwhile, the domestic production will be about 1.0 million tonnes.
Together with the salt stockpile in 2010, this year, Vietnam will have to import about 182,000 tonnes of salt.
According to the statistics, in 2010, the country's salt output was estimated at 1.18 million tonnes, up 48
percent against 2009.
Currently, the salt stockpile in salt workers and salt producers is about 263,489 tonnes, mainly black salt.
Box 11 Imports of Salt for Processing

Many enterprises have asked for permission to import salt, which worries salt workers. Firms want to import
salt, mainly for use in food processing. HCM City Chemicals and Electric Materials have asked for
permission to import 10,000 tonnes; the Green Energy Technology Company 50 tonnes. Other companies,
including Ajinomoto Vietnam in Dong Nai province, Hoan Vu Vietnam in HCM City and Viet Tien Food
Technology in HCM City have also asked for the permission to import salt.
The news immediately concerned salt workers and producers, who cannot sell their products. In fact, since
Vietnam joined WTO, the country has not prohibited salt imports and can only install technical barriers to
restrict them, based on specifications and quality. Under current regulations, salt imports must obey Circular
No. 23 (May 20, 2010), under which the Ministry of Industry and Trade, after estimating the volume of salt
needed to be imported each year, will grant quotas to enterprises.
However, cooperation between relevant ministries in calculating the import volume has not gone smoothly.
For example, in 2010, the Ministry of Agriculture and Rural Development (MARD) forecast that the domestic
output of 1.1 million tons could meet domestic demand, but the Ministry of Industry and Trade (MOIT) still
allowed the import of 260,000 tons of salt. Only when the salt price dropped dramatically, newspapers raised
alarms over the price decline, and the Government ordered enterprises to buy salt to go to storage from
domestic producers, did MOIT put an end to the imports.
According to Ngo Tri Dung, under current regulations, not all kinds of salt are allowed. Mainly raw NaCl used
in medical treatment, experiments, chemical industry and food processing is allowed and must meet
technical requirements stipulated in legal documents.
Prior to June 2010, many enterprises wanted to import cheap salt products at USD 20 - 30 per tonne that
contained impurities. However, since new legal documents stipulating the minimum quality were issued, very
23
few have asked for permission. In the last three months, only one company met customs requirements. With
the new laws, it will be impossible to import salt on a massive scale and only high quality salt, priced at USD
80 - 90 per tonne, can meet the new technical requirements.
However, the legal documents stipulating the quality of imports only set temporary regulations and will
become invalid after December 31, 2010. Industry experts want to prolong the technical barriers to protect
domestic production and prevent massive imports.
Pham Thanh Bang, Deputy General Director of the Northern Food Corporation, commented that, though the
salt imports would be inconsiderable, imports would still badly affect salt workers and plans to push salt
prices up to ensure their profits. “If we can produce industrial salt, we should not allow industrial salt to be
imported any more, except special kinds used in medical treatment and food processing,” he asserted.
Box 12 Stockpiling Salt to Ease Price Falls

The government has been asked to buy 200,000 tonnes of salt to help salt producers cope with the falling
prices. The Vietnam Northern Food Company (Vinafood) will buy the salt from domestic farmers, ensuring
that farmers receive profits of 30 - 40 percent, according to the director of the Ministry of Agriculture and
Rural Development's Department of Agro-forestry and Fisheries Product Processing and Trade and Salt
Industry, Le Xuan.
A survey from Vinafood reports that salt prices have dropped by 33 percent since last year. Salt is currently
priced at USD 0.03 - 0.04 per Kg in the northern region of the country and USD 0.015 – 0.020 per Kg in
central Vietnam.
This year's lengthy hot season, which brought in a bumper crop for farmers, along with an increase in salt
imports has caused prices to fall.
The Department of Agriculture and Rural Development in southern Bac Lieu province reported that salt
production in the province set a record for production this year, with an output of more than 200,000 tonnes.
However, only 30 percent of the province's salt has been sold because farmers are waiting for prices to rise,
said Tran Thanh Son from the department's rural development office.
"While waiting for prices to increase, farmers are having a difficult time protecting their products from the rain
and humidity," he said. Salt produced by local farmers is often used to process and store seafood and make
fish sauce.
Some sources estimate that between 500,000-600,000 tonnes of salt have been imported into Vietnam over
the past year, which is equal to 70 percent of the country's annual salt output. According to experts, most
manufacturing facilities prefer imported salt because of its cleanliness and whiteness.
Xuan explained that the ministry allows salt to be imported because the country' needs 1.3 million tonnes of
salt a year, but Vietnam only produces 1.0 - 1.1 million tonnes a year depending on weather. "Apart from
buying salt for farmers, the ministry will also suggest implementing other policies including providing salt
makers with industrial technology for production," he said.
Box 13 Interest Free Loans to Salt Producers

Ho Chi Minh City‟s agricultural and trade departments have proposed that the municipal administration
provides zero-interest loans to salt producers and trading companies badly hurt by falling prices. The
departments said the city‟s People‟s Committee should use its price stabilization fund to offer zero-interest
loans to help state-run businesses buy 68,000 tons of salt from fields in Can Gio District, the city‟s salt-
making area.
They said salt farmers and cooperatives should also be allowed to access such loans so that they can build
warehouses to store their produce, and wait for more favorable prices.
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3.2 Observations on the Vietnam Sector and its Impact on Cambodia
40. As illustrated with the reference reports above in Box 1 to Box 13, there are influential
market dynamics afoot in Vietnam. These will necessarily have an impact on the
Cambodian market. As the Cambodian salt producers respond to all challenges of the
competiveness of its sector, it would be important to investigate the opportunities to trade
with Vietnam, based upon sub-markets for specific quality grades. If the Cambodian
producers form collaborative alliances with Vietnamese producers, specifically those in
Bac Lieu, there is the possibility of mutually beneficial exchange of grades of solar salt for
certain end uses. Given the recent interventions by ministries in Vietnam, it would also be
important for NSCIDD members to communicate with their counterparts in Vietnam to
more fully understand the decisions taken and the outcomes of those policies and
regulations.
41. Given the importance of Vietnam as a supplier of many and various manufactured
goods and food items, it is not surprising that Vietnamese traders are placing bags of salt
on trucks that are already headed for Cambodia. It would be in the best interests of all
parties in the salt industry to formalize this trade and make it open and transparent.
42. The key observations made on the Vietnamese Salt Sector and its impact on
Cambodia are the following:
1. Vietnam‟s level of industrialization and its significant international trade activities

have resulted in an annual volume in the salt sector that is a multiple of
Cambodia‟s.
2. There are several key Vietnamese ministries with a vested interest in the salt
industry.
3. The Vietnamese Ministry of Agriculture and Rural Development has initiated certain
policies and regulations to protect the livelihoods of its rural poor salt producers and
has established a floor for the domestic market by negotiating purchase
agreements with large Vietnamese companies to hold and store salt and has further
established access to finance for smallholders.
4. Vietnam‟s Ministry of Industry and Trade has also initiated certain policies and
regulations to allow its commercial constituents engaged in manufacturing and
exporting a more competitive business environment and have established import
quotas for high quality salt for specific applications.
5. The Vietnamese government at the level of Prime Minister has intervened to

harmonize the overall objectives in the salt industry and to issue mandates to
stakeholders regarding their 1.3 million tonne per year salt sector.
6. The Vietnamese province of Bac Lieu is of similar capacity and orientation to the
Kampot and Kep regions in Cambodia and can be used as a comparative model for
the SPCKK in terms of responses to market issues.
7. NSCIDD must increase its efforts in the salt industry and expand its mandate in
order to prepare Cambodia for a competitive role in the sector as the country‟s
manufacturing sector grows in the coming years.
25
4 Current Situation in the Salt Industry in Cambodia

4.1 Overview
43. As has been previously stated in this report, Cambodia‟s salt industry is small in
comparison to that of Vietnam, its neighbor to the east and it is by no means a mature
sector. It consistently produces enough salt to meet its own domestic consumption needs
(80,000 to 90,000 metric tonnes per year), and industrial needs (estimated to be 20,000 to
30,000 metric tonnes per year) yet due to a lack of a coordinated national distribution
channel iodized salt fails to reach all Cambodians. The industrial consumption is
considerably lower than neighboring Thailand and Vietnam due to the relatively small
production base and the industrial volume in Cambodia. The salt industry as it stands,
lacks most, if not all of the key elements required to successfully and sustainably support
it.
44. The solar salt sector faces many constraints including outdated technology and harvest
practices, inadequate marketing and distribution, poor workforce development services
and a lack of credit facilities among others. The potential SMEs in the sector have
additional issues regarding direct access to markets, poor negotiating skills and a lack of
organized long-term purchase and sale agreements. The salt industry, in general, is
hampered by a lack of (i) expertise and organizational structure to engage in regional
market dynamics (trade association); (ii) product development and quality certification; (iii)
human resource development and capacity building at provincial level; (iv) sales,
marketing, logistics and financial planning; (v) strategic planning and business
development; and (vi) manufacturing and process integration ensuring USI program
compliance.
45. The RGC agreed to bolster the salt industry and meet the demands of the USI program
which has as its core objective the elimination of Iodine Deficiency Disorders. The RGC‟s
only effort to intervene in the salt industry to date was with the passing in October 2003 of
Sub-Decree No. 69. The Sub-Decree, while providing a catalyst for change within the
industry has not proven to provide enough impetus for the continued development of a
sector which is in much need of governance, access to credit, the creation of and
adherence to international quality standards, sales and marketing strategy and a reliable
distribution network.
46. The Salt Producers Community of Kampot and Kep (SPCKK) which was established in
2004 to coordinate and manage the production of iodized salt including its marketing and
sales has limited capacity to deal with the current situation the Cambodian salt industry
finds itself in. Section 4.3 describes SPCKK, its operation and its capacity.
47. According to the UN Millennium Development Goal the USI program in Cambodia will
be deemed successful once 90 percent of Cambodian households consume iodized salt
which contains standard iodine content by 2015. Currently only 73 percent of households
consume iodized salt and UNICEF states that the primary reasons the intake of iodized
salt has been particularly slow to progress in the past three years is high cost and low
quality when compared with salt from neighboring Vietnam. UNICEF does not work directly
in promoting salt; however they provide financial and technical support to NSCIDD to carry
out this task.
48. One of the most pressing and immediate concerns for Cambodia‟s salt trade is the
inherent lack of adoption of solar salt production best practices. Section 4.4 describes in
26
detail the practices currently utilized in Cambodia‟s salt producing areas of Kampot and
Kep.
49. Due to the limited capacity of the Cambodian salt sector in terms of investment,
production, quality control, marketing and distribution and external factors such as climate
change and the surplus in neighboring Vietnam, Cambodia and its citizens are vulnerable
to IDD brought about through limited access to affordable iodized salt but also to the
effects that market saturation, through the importation of foreign salt will have on those
people whose livelihoods depend on salt production. These constraints if attended to
effectively and efficiently in the near future can be mitigated, however left unattended and
given the growth of Cambodia‟s industrial sector the demand for salt will only serve to
increase and once a foothold has been established and trade arrangements have been
made, whether legal or illegal the plight of Cambodia‟s salt industry and the livelihoods that
depend on it will only worsen.
4.2 Governance
50. The National Sub-Committee for the Control of IDD (NSCIDD) was formed in 1996
under the guidance and leadership of the Inter-Ministerial Quality assurance (IMTC) of the
National Council for Nutrition (NCN). It‟s mandate; to increase the intake of iodine by
Cambodians through the increased production of iodized salt, education and
communication on the importance of iodine for the diet and on strategies to address IDD,
and monitoring and quality control of nationwide iodized salt production, import, distribution
and sale.
51. NSCIDD is comprised of about 15 members from eight government ministries and
some concerned NGOs/IOs. These include:
 Ministry of Industry, Mines and Energy (MoIME)
 Ministry of Health (MoH)
 Ministry of Planning (MoP)
 Ministry of Information (MoIF)
 Ministry of Education, Youth and Sport (MoEYS)
 Ministry of Rural Development (MRD)
 Ministry of Commerce (MoC)
 Ministry of Women‟s Affairs (MoWA)
 United Nations Children‟s Fund (UNICEF)
 German Technical Cooperation (GTZ)
52. To support the committee, further sub-committees have been established at the
provincial level however many of these activities are not yet active. Only 4 of the ministries
which comprise NSCIDD play an active role;
 Ministry of Industry, Mines and Energy (MoIME)
 Ministry of Rural Development (MRD)
 Ministry of Planning (MoP)
 Ministry of Education, Youth and Sport (MoEYS)
53. The RGC does not provide any budget for the operation of NSCIDD, rather all of their
funding is sourced from the likes of USAID and UNICEF. CamControl under MoC is
becoming more active in monitoring markets for iodized salt even though there is no
testing and enforcement of penalties.
27
54. In October 2003 the RGC decided to intervene in the salt trade by passing Sub-Decree
No. 69. The purpose of the Sub-Decree was to achieve the IDD elimination objective and
to provide technical guidelines and regulatory parameters that would set out a platform for
iodized salt to become readily available to all Cambodian citizens. This provided the
impetus the NSCIDD needed to formalize Cambodia‟s salt production. The body they
established to cater to this need was the Salt Producers Community of Kampot and Kep
(SPCKK).
55. NSCIDD realizes that the fundamental factors hampering its efforts to decrease IDD in
Cambodia are:
 Lack of awareness surrounding iodized salt and its health benefits

 No organized and effective national distribution network
 Inefficient quality control and quality assurance processes
 No control over the price of iodized salt
 Illegal importation of non-iodized salt
Given the limited funding NSCIDD receives its capacity to put into place effective
strategies to mitigate the constraints stated above is very limited. Quality control is
essentially non-existent and emphasis is placed on ensuring salt is iodized but not on
ensuring it is iodized with the correct level of potassium iodate required to eradicate IDD.
56. With the exception of the passing of Sub-Decree No. 69 and the establishment of
NSCIDD which receives no RGC budget, the RGC plays no role in Cambodia‟s salt trade
even though the successful production and distribution of iodized salt would contribute
towards a healthier population. Food processors‟ in Cambodia are not required by law to
use iodized salt, however the introduction of such a law would provide another means by
which to increase the intake of iodine in the Cambodian diet and would only to serve to
increase the demand for iodized salt and create additional revenue.
28
4.3 Salt Producers Community of Kampot and Kep (SPCKK)
57. SPCKK is an association of 188 salt producers in Kampot and Kep which was
established in 2004 with the support of NSCIDD and UNICEF following the passing of
Sub-Decree No. 69 by the RGC. The SPCKK organizational model comprises 15 directors
who serve as the BoD and 9 executive committee members. The directors and executive
committee members are themselves all salt producers who produce salt for SPCKK. Every
5 years an election is held to elect a new Chairman for the BoD. Currently the position is
shared by two individuals. SPCKK comprises various departments and business units
each responsible for different areas of operation. Below is an organizational chart
depicting the structure of SPCKK.
Figure 2 SPCKK Organizational Chart
58. SPCKK purchases salt from its members for 100 riel/kg (50 riel prior to production and
50 riel upon collection of the salt) and sells it on their behalf. While SPCKK maintains that
profits are used on 1) SPCKK operations and 2) interest free loans for its members for salt
production purposes; current investment is offering few tangible benefits to improve the
quality of salt production.
59. SPCKK has an absolute monopoly on Cambodia‟s salt production industry. A benefit of
this is that the iodization process is able to be more easily monitored however the negative
impact is that they alone determine the cost of purchase and the cost of sale. The cost of
SPCKK salt is higher and of a lesser quality than that of informally imported non-iodized
salt which serves as one of the key issues facing Cambodia‟s salt sector.
29
Picture 1 SPCKK administration offices.
60. SPCKK plays no role in the distribution of salt. The sales and distribution process is
simply to receive an order, collect payment for that order up front to fund the iodization of
the purchased salt and the purchaser arrives to collect their order. SPCKK appears
reluctant to play any role other than the role just described which highlights the need for
the introduction of an effective and efficient marketing, sales and distribution network. Only
by doing so will iodized salt be truly available to all Cambodians.
4.4 Solar Salt Production
61. Cambodia‟s salt sector operates within the confines of a small stretch of coastline
between Kampot and Kep on the south eastern coast of Cambodia near Vietnam. The
weather in Kapmpot and Kep in addition to their close proximity to the South China Sea
provides the ideal environment for solar salt production. The weather plays a crucial role in
the successful production of solar salt, yet the threat that global climate change poses on
the production of salt is more serious now than ever before. In addition to the threat that
erratic weather holds, Cambodia‟s monsoon season restricts the efficient production of salt
from November to April. Consequently, the need for financial and technical intervention is
more critical to the long term success and sustainability of Cambodia‟s salt sector than
ever before.
62. Cambodia‟s iodized salt production is in essence similar to that of other solar salt
producing nations in terms of the process used to produce it. A fundamental difference
however is the lack of best practice adopted by Cambodian salt producers beginning with
the sourcing of salt water, the dams and dykes used to channel the water into the salt
pans, the quality of the salt pans themselves, the harvest process, post harvest storage
facilities and practices, and the iodization of the salt itself.
63. This section is going to detail the current practices adopted in Cambodia for the
purposes of salt production then present a case study highlighting best practice before
drawing a comparison between the two to identify areas for intervention aimed at
improving Cambodia‟s salt production.
30
4.4.1 Cambodia’s Current Salt Production Process
4.4.1.1 Inbound Raw Material Sea Water
64. The raw material sea water used for Cambodia‟s solar salt production is sourced
slightly upstream of minor tributaries feeding into the South China Sea. This is not ideal
due to the confluence of the fresh water river mouth, reducing the salinity of the water and
increasing the waters susceptibility to contamination by soluble and insoluble impurities
carried downstream from Kampot Town. It is channeled via dams or pumped into
reservoirs ready to be carried through a series of canals into the salt pans. The reservoirs
collect organic and inorganic waste either through rubbish being disposed of or collected in
the reservoirs or through silt and clay being disturbed from the bottom of the reservoirs.
Below are images of reservoirs from the Kampot and Kep regions with varying degrees of
turbidity.
Picture 2 A reservoir showing sea water which is not clear and has a brown clay color.
Picture 3 This reservoir is further away from the confluence of the inlet with the Kampot River and therefore the
raw material sea water is cleaner.
65. The dams used to allow water in and out the reservoirs vary in terms of quality as is
shown in the images below.
31
Picture 4 A good example of one of a few concrete structures for inbound sea water to salt pans.
Picture 5 A more typical entry point for inbound seawater
4.4.1.2 Irrigation
66. The water from the reservoirs is pumped into canals using pumps owned by the
individual producers. Of note in the images below the set up and/or the quality of some
pumps poses a contamination threat to the quality of the sea water used in the salt
production.
67. Effective irrigation is critical to the running of salt production as it serves to effectively
provide and remove sea water from the salt pans. During the 2009 floods when the water
was reaching between 3cm to 2m, irrigation would have helped mitigate the risk posed to
salt production. Consequently, the harvest of 2009 proved to only produce a yield of
25,000 tonnes, well below the average.
32
Picture 6 There is significant contamination from machinery and operations such as this.
Picture 7 this is a good example of a pumping system and its canals which picks up less clay and other
insoluble components.
68. The canals used to carry the water from the reservoirs to the salt pans are exposed to
windborne contaminants, are made of clay and often are made using poor workmanship.
These factors in addition to the quality of the raw material sea water further add to the
prospect of producing poor quality salt.
33
Picture 8 this concrete control system offers delivery of sea water to several locations. The canals are
unfinished and muddy.
Picture 9 Secondary canal which is fed by the southern reservoir. The water is turbid and has solid waste such
as plastic packaging and other debris in the water.
Picture 10 Contamination of inbound sea water is caused by exposed unfinished surfaces as well as wind born
particulates.
34
4.4.1.3 The Salt Pans
69. The salt pans used to produce the salt have their surface made of manually
compressed clay given the absence of adequate funding for alternative technology such
as heavy duty plastic lining3. The use of clay as the surface for the salt pan decreases the
rate of evaporation that the introduction of alternative technologies would otherwise
provide. The quality of the salt pans and the risk of contamination vary between producers.
The worse the workmanship of the pan construction and its surrounding walls and the
more exposed the pan is to loose gravel, the more likely the risk of contamination.
Picture 11: Surface of new clay is pounded firmly into place.
Picture 12: Newer salt pans have secondary canal systems around the perimeter. There has been a proactive
effort to accomplish smoother surfaces than in most pans / dykes.
70. Dependant on the weather, between 2cm to 6cm of sea water is fed into the salt pans
through either wooden gates or pipes. Recently, efforts have been made to increase the
use of pipes with plastic caps by several producers reducing the risk of contaminants
entering the salt pan.
3
While it may not be economical to cover all salt pans in the industry, or affordable by the smaller producers,
SPCKK has indicated its willingness to assist in providing lines of credit to those producers willing to
upgrade.
35
Picture 13: Crude wooden gating system for flooding the salt pans. The inbound sea water picks up
clay at this entrance since the soil is loose.
Picture 14: Many salt pans are being converted to capped pipes for feeding of salt pans, which
reduces impurity pick up from opening the dykes that have wooden gates.
71. Some producers have designed and built more sophisticated pans which implies they
understand the best practice concept of sequential brine concentration however the
practice hasn‟t been adopted. Instead all sequential pans are being flooded simultaneously
to produce more salt rather than to produce salt of a higher quality.
36
Picture 15: The irrigation system of newer pans is more sophisticated with an apparent design for
sequential brine concentration; however, this was not being practiced.
Picture 16: New pans interconnected unlike most other salt pans observed, however, the intent was
for simultaneous flooding of three pans rather than sequential brine concentration.
37
4.4.1.4 Harvesting
72. The ideal salt production cycle for producing finer quality salt is between 7-10 days
although salt is also harvested between 2-5 days. The difference in cycles is weather
dependant. Salt production capacity is between 20-40 tonnes per hectare per year
depending on the location and quality of the salt pan and the weather. This is in
comparison with industries such as Sri Lanka, which can produce up to 90-100 tonnes per
hectare per year.
Picture 17: This is a typical series of salt pans, measuring 30 M X 15 M. The owner has 50 such pans
in contiguous order. The workers harvest salt on a three day cycle and harvest 20 salt pans per cycle
in one day.
73. One of the areas of the production process which causes the most contamination of the
salt is the harvest process. This occurs primarily through clay being scraped from the salt
pan while collecting the salt as is evident in the images below.
Picture 18: This figure illustrates that the collection of black contaminants is a regular occurrence.
74. Salt is gathered into piles called pies. Ideally pies will be gathered to a foot in height
and left to stand for a period of time to allow maximum drainage and drying however in
most cases the salt is immediately transported to nearby storage sheds and the salt pans
38
are prepared for the next production cycle. This indicates that many producers are not
aware of harvesting best practice and don‟t understand the implications of immediate salt
pie removal. The method of preparing the salt pans for re-flooding involves scraping and
agitating the surface of the salt pan, draining the residual sea water and brine and
pounding the clay surface until it is smooth.
Picture 19: The piles of salt are not formed in a manner to cause good drainage and he workers take
significant amounts of water along with the salt in their baskets.
Picture 20: The surface is scraped and agitated, then the salt pan is drained and the clay pounded
and packed.
75. SPCKK iodizes the salt at the producer‟s storage sheds prior to removing the salt for
sale to traders or boilers. The current storage capacity is between 300 – 4000 tonnes
depending on the size of the salt pan production area.
76. The poor state of many producers storage sheds means the salt is susceptible to the
absorption of climatic and surface moisture. This negatively impacts the iodization
39
process. Additionally the salt is also more prone to the collection of contaminants, for
example wood scrapings from the interior of the sheds.
Picture 21: An older storage shed, shored up by clay embankment as well as wooden braces. A new,
larger storage shed under construction in the background.
4.4.2 Solar Salt Production Best Practice
77. The Box 14, Box 15 and Box 16 describe best practice methods to achieve the
production of high quality solar salt. To understand the implications of best practice
methods it is useful to outline the evolution of solar salt production and the current
practices of the Cambodian salt industry. The first form (pre-historical method) of solar salt
production concentrates the salt in a single pan in a one-step process; see Stage I, Figure
3. This is the method currently used in Cambodia.
78. This method has certain disadvantages since the salt produced contains all the
ingredients of seawater and it is very difficult to produce relatively pure salt (in fact it
requires great experience). Moreover, this method of salt production is a batch process
with limited production rates.
79. The second form is the process of salt recovery using a two stage process; see Stage
II, Figure 3. The first pond, usually called the nurse pond, was used for the production of
saturated brine, which was fed into the second basin, usually called a crystallizer. In the
two-stage process it is now possible to achieve a continuous salt production process and
to unbind the salt production rate. More importantly, it enables the elimination of salts with
less solubility than sodium chloride (i.e. Calcium Carbonate and Calcium Sulphide since
these crystallize in the first basin and remain there.
80. The third form (and currently best practice) uses a three stage process; see Stage III,
Figure 3. This divides the nurse pond into several interconnected basins. With this design
the seawater enters the first basin and as it flows through the next ponds and evaporates
in the sun its concentration increases. Thus by the time it reaches the last basin, which
has now become the nursing pond, it has a concentration of 25.7° Be, corresponding to
the saturation level where sodium chloride precipitates out. This production method
ensures greater control over the concentrations and quantities of the brine fed through the
system, thus resulting in the unobstructed production of much better quality salt, increases
dramatically the quantity of salt produced as the average brine concentration in the system
of ponds decreases drastically (there is an inverse proportion between evaporation levels
40
and concentration of brine), and creates a more environmentally sustainable living

ecosystem for wetland conservation.
Source: Korovessis and Lekkas (2000)Solar Saltworks Production Process Evolution – Wetland Function.
Figure 3 Basic Stages in Solar Salt Production Processes
Box 14 Production of High Quality Solar Salt
The solar salt production process has relatively few parameters by which the quality of the salt and the
production yield are determined.
The first point is the purity of the inbound raw material sea water and brine pre-concentration area. During
evaporation the increase in the concentration of salts of the sea water progresses from the starting density of
3.85 °Bè to 26 °Bè, when the NaCl begins to precipitate. During this process there are several requirements:
• The sea water should increase its concentration gradually, without back-mixing
• The sea water should be retained without volume lost due to seepage
• The bottom of the salt pans should be impervious and dark to facilitate maximum absorption of solar
radiation
• The sea water should remain clear, allowing solar radiation to reach the bottom of the salt pans
• Calcium carbonate and calcium sulphate, should crystallize prior to the brine reaching density of 26°Bè
when NaCl begins to precipitate and the brine should be transferred after this crystallization
• Nutrients and biological material present in the raw material sea water should be consumed fully by
succession of species whose life is supported by the respective salinity of the brine
• The brine entering the salt pans should be free of excessive organic material that would negatively
influence the salt crystallization
The second point is the salt crystallization area or salt pan where the NaCl precipitates from brine as the
density increases from 26 °Bè to 28.5 °Bè. The salt pans require the following:
• The sea water should be retained without volume lost due to seepage
• The brine should support the existence of Halobacterium which colours the brine red and
increases the absorption of solar radiation. Halobacterium also oxidises organic matter that is detrimental to
salt quality. Organic matter causes formation of fine, impure crystals and agglomerates with impurities
41
trapped inside. Brine free of organic matter allows growth of large, clear and pure salt crystals
• The coloured brine layer should be thick enough to avoid reflection of solar radiation from
the white salt crystals back to the atmosphere
• The brine should proceed through a series of salt pans without back-mixing and the 28.5°Bè brine is
drained, facilitating faster evaporation and avoiding contamination of salt with impurities, such as
magnesium, sulphate, etc.
• Salt pan dike construction should prevent contamination of brine and salt with insoluble clay and other
components
• The harvesting method should recover maximum portion of crystallized salt but avoiding
contamination with insoluble material from the surface of the salt pans
The third point is the solar salt processing that purifies the salt prior to delivery. This purification process
should fulfill the following requirements:
• Remove mother liquor (spent brine after 28.5°Bè) from the salt crystals so that the salt crystal surface will
be free of magnesium and sulphate impurities
• Remove gypsum crystals and insoluble impurities from the salt so that the salt crystal
surface will be free of calcium sulphate and insolubles and the salt will be white in colour
• Remove excess moisture from the salt so that no brine will drain from the salt during
handling and storage, causing additional losses
Source: Environmental Balance of Salt Production Speaks in Favour of Solar Saltworks, 1st International Conference on the Ecological
Importance of Solar Saltworks (CEISSA 06)
Santorini Island, Greece, 20-22 October 2006
Box 15 Optimal Solar Salt Production Design and Operation
The requirements described above can be satisfied by:
• Appropriate solar salt pan design, taking into account the climatic and geological
conditions, as well as sea water quality and the mechanical and hydrological design and operation of the
entire production area
• Solar salt operations, as an open environmental system having its own biological balance and metabolism
of nutrients, must be understood and correctly managed to achieve the goals of production capacity and the
quality of the salt crystals (large, hard, clear and pure)
• A salt purification process should be employed that rinses and purifies the salt crystal surface fully with
minimum consumption of utilities and minimum of losses
Box 16 Solar Salt Upgrading
Simple washing of solar salt crystals will remove the surface impurities. The more washing that is required,
the more loss of salt production. Experts have devoted much time and effort to this subject (Sedivy, 1988;
1996). As a result, they have developed processes that remove more impurities from salt, use less water and
recover the dissolved salt to reduce the production losses. If the salt is of poor quality and contains impurities
inside the crystals, certain processes also remove these by selectively cracking the crystals to free the
enclosed impurities.
Prediction of the salt purity achievable with these processes cannot be transformed into a quantitative
standard. Calculating salt purity is only possible by testing the salt in the laboratory, using a sequence of unit
operations identical to the sequence employed in the production process. Experts have developed and
standardized such procedures to investigate salt samples as an integral part of quality control and quality
assurance.
- Edible salt can be iodised by spraying it with a potassium iodate solution

- 60 ml of potassium iodate, costing about USD1.15 – 1.30 are required to iodise a ton of salt
- Salt is an effective vehicle for distributing iodine to the public because it does not spoil and is
consumed by everyone in the population in fairly predictable amounts
- Salt that is iodised with potassium iodate may slowly lose its iodine content by exposure to excess
air over long periods
42
- the alkali metal iodide over time and exposure to excess oxygen and carbon dioxide slowly oxidizes
to metal carbonate and elemental iodine
- the elemental iodine then evaporates
4.4.3 Intervention Recommendations to Improve Salt Production Quality

81. The consultants concluded after conducting a comparative analysis between current
solar salt production practices used in Cambodia and those recognized as „best practice‟
that the following interventions would significantly improve the quality of solar salt
produced in Cambodia. The geographic constraints of Cambodia‟s salt production were
also taken into account.
Action Objective Validation

Provide extension services To raise awareness on solar Producers adopt best
to salt producers to impart salt production best practice practice in their salt
salt production best practice production
knowledge
Promote best practice set up Reduces sea water Quality of sea water used in
and use of pumps contamination salt production is improved
Upgrade canals to adhere to Reduces seepage and Quality of sea water used in
best practice standards reduces the risk sea water salt production is improved
contamination
Rebuild salt pans to support To reduce levels of Salt quality improves
the best practice of impurities in their solar salt
sequential salt pan feeding
Replace wooden dams with Improves the quality of the Quality of sea water used in
concrete dams and wooden sea water used in the salt salt production is improved
dykes with plastic pans
Resurface salt pans with Reduces seepage, Yield increases and salt
dark, durable plastic liners decreases evaporation time quality improves
and mitigates the risk of
scraping contaminants into
the salt when harvesting
Build adequate storage To mitigate the risk of post Salt quality improves
facilities harvest moisture absorption
and exposure to
contaminants
Table 2 Salt Production Interventions
4.5 Post Production
82. There is currently no salt boilers association in Cambodia although there is a tentative
plan for the NSCIDD to establish one in the near future. Boilers and Traders determine the
cost they wish to sell salt for. Prior to 2011 salt boilers received support from UNICEF for
the iodization of salt however now that this support has ceased boilers will need to cover
the cost of iodization.
83. Boilers have no formal relationship with SPCKK other than to purchase salt. Salt is
purchased from SPCKK for between 220-230 riels/kg in three grades ranging from 1-3 with
grade one being the salt of the best quality and highest price. Boilers prefer to purchase
43
grades two and three as it increases their profit margins. Boilers sell their salt to
wholesalers and/or retailers in 3 gram, 6 gram or 1kg packages.
84. The inputs used to for boilers to refine the salt are rice husk as fuel as firewood and
charcoal are too expensive and iodine which until recently was subsidized by UNICEF.
Potassium iodate itself is not expensive (in 2006 60 ml of potassium iodate cost
approximately USD$1.15 and was used to iodize a tonne of salt).
85. Salt is retailed in two types; pulverized and pebbly. All pulverized salt is iodized and the
packaging either has no labeling at all or the labeling is of a brand which is not SPCKK‟s
but most likely the boilers or traders it was purchased from. Pebbly salt is sold as iodized
and non-iodized and contains no branding at all. Non-iodized pebbly salt is often used to
cure meat as a preference to iodized salt as it was noted that iodized salt creates a bad
smell.
86. Most of the salt sold is to the markets or local residents. Retailers have no tools with
which to measure the level of iodization in their product however they are told when they
purchase the salt from the trader or boiler which packages are iodized or un-iodized4.
While there is much salt retail competition, prices remain consistent between them. Typical
buy/sell prices per kg at the time of writing are:
Type of Salt: Buy in Price: Sale Price:

Pulverized salt 900 riel/kg 1500 riel/kg
Iodized pebbly salt 800 riel/kg 1000 riel/kg
Un-iodized pebbly salt 600 riel/kg 800 riel/kg
Table 3 Retail buy/sell prices as at February 2011
4
Rapid test kits can only determine whether potassium iodate is present within the salt sample, not the
concentration of iodine.
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5 SWOT Analysis
5.1 Overview
87. At the core of a successful business plan is a logical strategy. A strategy helps an
industry determine where to improve, what to achieve, and how to achieve it. As a planned
response to marketplace challenges, it is based on an analysis of an industry‟s internal
and external competitive environment. This section of the report briefly describes the
strengths, weaknesses, opportunities, and threats presented by the competitive
environment of Cambodia‟s salt industry.
88. In recent times the global economy has changed significantly and likely irreversibly.
The latest figures indicate that China has now surpassed Japan as the second largest
economy after the United States. The global financial crisis, coupled with the responses in
the energy and food sectors, have had profound impacts on many countries. The
strategies and actions of other countries and global corporations in many sectors have
contributed to excess supply and weak prices for many commodities. Cambodia, which
has approximately 200,000 metric tonnes of annual salt production in a good season,
cannot affect the global salt market and prices. Moreover, the salt industry in Cambodia
appears to be in market isolation due to recent decisions by the RGC and other
stakeholders, dealing only with internal matters rather than global economic impacts.
89. Some results are:
1. The salt producers‟ operations are inefficient with low productivity and quality;
2. The production season for the salt industry is short, inconsistent and uncertain;
3. Certain trader operations are engaged in the illegal import of non-iodized salt;
4. Smallholders within the SPCKK are not selling their full allotments of recent
production through official channels and there is evidence that non-iodized salt
consumption in Kampot and Kep is relatively high compared to other provinces;
5. The domestic salt market and domestic salt production have been in a balance of
supply and demand until recent events of the 2009 flood, coupled with the 2010
price drops; and
6. Complacency with traditional favorable financial returns for the senior members of
the SPCKK has left the domestic market in Cambodia open to competition from
neighboring countries due to relatively lax border control and a steady flow of
inbound goods.
90. Government policies and activities coupled with little to no interest on the part of the
private sector in the salt industry has had an adverse affect on the growth and
development of Cambodia‟s salt industry. The only exception being the small scale boiler
operations that have emerged to refine the coarse discolored SPCKK salt into fine grain
white table salt. The government is fully supportive of the SPCKK and although the RGC
has itself passed Sub-Decree No. 69, there appears to very little else that the RGC is
proactively doing to ensure that the objectives within the Sub-Decree are met.
45
91. Within the RGC there is a National Council for Nutrition (NCN), chaired by the Minister
of Planning. Within the NCN, there are the NSCIDD and NSCFF. The multitude of donor
agencies and government departments, including the Council of Ministers, the Ministry of
Planning, Ministry of Women‟s Affairs, Ministry of Agriculture Forestry and Fisheries,
Ministry of Industry Mines and Energy, Ministry of Health, Ministry of Commerce, Ministry
of Rural Development, Ministry of Economy and Finance, Ministry of Youth Education and
Sports, Ministry of Interior, and the institutions connected to them, have a direct and
indirect interest in, and certain influence on the salt industry but collectively do not have a
common strategy for supporting it. Moreover, the iodine subsidy program and the expiry of
that subsidy in January 2011 have affected market dynamics significantly. Of further
significance, the stakeholders have limited their investigations to consumption surveys
respecting iodized salt and have not collected the technical data and commercial
information necessary for informed business planning and related policymaking.
92. As noted above, Cambodia has a short salt production season and a limited number of
hectares with conditions appropriate for solar salt production. Therefore Cambodia has no
comparative advantage for its salt industry. Further, the current situation offers no
competitive advantage because there has been no incentive to upgrade productivity and
quality until recent events opened the market to higher quality imports at lower prices.
93. Performance improvements are constrained by the lack of investment capital and the
high interest rates and short terms for working capital or other credits. The industry
stakeholders are not making concerted efforts to formulate long term investment plans and
to secure external financial alliances under favorable terms and conditions. Industry
members, as represented by the SPCKK, do not organize or control activities along the
value chain and there are inefficiencies due to the current business environment and the
informal relationships among stakeholders. Linkages among stakeholders are weak and
immaterial, thereby limiting the benefits and effectiveness of the SPCKK and support
service companies or agencies. Two key shortcomings in the business enabling
environment is access to finance and distribution.
94. In the following paragraphs we analyze the strengths and weaknesses, opportunities,
and threats of various aspects of Cambodia‟s salt industry: manufacturing, productivity and
quality; marketing, distribution and supporting industries; investment planning; supply and
demand fluctuations; public sector support and national interest; and the salt industry trade
association.
5.2 Manufacturing, Productivity and Quality

5.2.1 Strengths and Weaknesses
95. There has been no recent investment in new technology in the salt industry in
Cambodia, other than the mounting of the headquarters of the SPCKK. There are mobile
iodizing units that were donor supplied and these are in various states of operating
effectiveness. The members of SPCKK have no standards of operations regarding the size
and shape of the individual producer‟s salt pans. There are no specifications or standards
regarding the design and materials for the boundaries of the salt pans, the irrigation
systems feeding the salt pans and the methodologies for harvesting the salt. There are no
design parameters or metrics regarding the surface of the salt pans and there is evidence
that there is a high rate of diffusion and pick up of impurities into the salt as it crystallizes.
There are no product specification requirements among producers and no certification
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standards in order to qualify them as being able to supply salt to the SPCKK system. The
inbound seawater is taken from the inlets directly adjacent to the production areas and this
water is a blend of seawater and fresh water due to the confluence of the tidal waters and
the Kampot River and other fresh water runoff. This inbound raw material is variable in its
turbidity and other aspects of composition. There are seven major production areas within
the Kampot and Kep region and SPCKK has no production plan among the individual
producers in these areas.
5.2.2 Opportunities
96. As has been reported previously to UNICEF, countries such as Sri Lanka and India
follow specific production processes and methodologies, in order to achieve high yields
and low levels of impurities in their solar salt. The basic concept is to achieve three levels
of brine concentration as the seawater evaporates. As these levels of concentration are
achieved the workers move the brine to consecutive salt ponds. The result is that certain
undesirable salts are left behind in the first pan, the clean NaCl salt is left behind in the
second pan and the high concentration brine still containing heavier undesirable salts is
moved to a third pan and ultimately discharged. Further the workers are very careful to not
disturb or agitate the salt pan surface and this precludes undesirable mixture of the salt
pan surface materials, either clay or sand or both, into the NaCl salt from the second pan.
These production practices will greatly enhance production performance.
97. Many salt production areas in other countries have a consistently higher quality of
seawater with lower total soluble and insoluble components and a higher NaCl content on
a percentage basis. A proper investigation, through water sampling, surveying and
analysis would confirm the optimal source point(s) for inbound seawater for all seven
production areas. The results of this investigation could indicate that one or more irrigation
systems need to be installed in order to improve the raw material stream(s) for the salt
production areas. The consultants have noted that the turbidity of the raw material
seawater varied considerably from one production area to another. In all cases this was a
result of a combination of better design and better maintenance of water canals and
reservoirs as well as the source point for the inbound seawater.
98. There are many solar salt producers that have the comparative advantage of massive
salterns and salt plains. There is a salt plain in Bolivia that has a diameter of 160 Km,
whereas the Boeng Rung 1 & 2 production areas have a diameter of only 5 Km. With the
limited production area available for solar salt production, Cambodia must ensure that
these production areas are enhanced in order to yield the highest possible quality salt. In
this regard the Board of Trustees and the Executive Committee have investigated the
opportunity to line the salt pans with thick black plastic film. This feasibility study must be
completed and SPCKK must determine the best option for surface treatment of salt pans,
since there are various techniques. Further, this study must include the impact of salt pan
surface treatment in isolation versus coupling this upgrade with new irrigation systems and
higher quality inbound seawater.
99. In the past three years in Sri Lanka, Lanka Salt Ltd. has invested in a 15 metric tonnes
per day salt refinery that produces high quality iodized salt. Lanka Salt Ltd. produces 70
percent of Sri Lanka‟s domestic market salt and this investment has increased the profits
of the company considerably. A cost / benefit analysis should be completed for the
installation of a 200,000 metric tonnes per year salt refinery, in order to determine if this
would be appropriate to meet the future market demand in Cambodia.
47
5.2.3 Threats
100. In 2009 there was significant flooding in Kampot and Kep. These floods reduced the
season‟s production to a mere 25,000 metric tonnes. In 2010 the weather was
considerably drier and SPCKK members produced 210,000 metric tonnes. Various
international agencies, such as UNDP and others are intensely concerned about climate
change and the impact this will have on traditional activities and the livelihoods of the poor
in vulnerable regions. The consultants have observed that climate change resilience and
adaptation will be necessary in the near future for SPCKK and its members. In this regard,
the salt industry in Cambodia must collaborate with a vested interest donor agency in
order to fully understand the potential impacts of changing weather patterns.
101. Because of shortages in 2009, Cambodia opened the salt market to imports from
China. Other imports found their way to Cambodia as well. During 2010, notwithstanding
large volumes of domestic production, the imports of salt continued. Due to downward
pressure on the global price of salt and other commodities as well as the dynamics in the
Vietnamese market described above, the volume of imports grew. The salt industry in
Cambodia must be responsive to the market in terms of quality and price in order to
remain the leader in domestic market share.
5.3 Marketing, Distribution and Supporting Industries

102. As stated above, there is a multitude of players invested in the outcome of the USI
and IDD programs in Cambodia. The consultants recognize that UNICEF has a MDG
objective and this report does not lose sight of this. However the report deals with the salt
industry as any other industrial sector with respect to best practices and competitiveness.
In this regard, the consultants have observed that the SPCKK has a limited commercial
mandate, whether self-imposed or otherwise. There are significant gaps in the business
practices of the SPCKK. Among other constraints, there is no marketing plan, even though
there is a logo and a brand name that are underutilized. The average citizen in Cambodia
should be seeking the SPCKK brand by default and this brand name should impart
consumer confidence for quality and ICCIDD compliance.
103. Iodized table salt for household consumption is by definition a consumer product and
should be considered in the category of fast moving consumer goods (FMCG), since it is
purchased in small packages and with high frequency. As with other FMCG items table
salt must be readily available throughout the distribution channels in order to be restocked
at retail continuously. SPCKK must develop a distribution strategy and ensure that
inventories are held in each province at key geographic locations. Further, the quality of
SPKK production falls short of standard specifications for household table salt and must be
refined by boilers. Currently the boilers in Cambodia are an unorganized number of
entrepreneurs attending to market demand through a series of preferred wholesalers on a
city to city basis. This informal system falls short of effective market penetration at the
district and village levels.
104. SPCKK has no formal contractual alliances with supporting companies for sales,
marketing and distribution. Further it has no capacity to manufacture a consumer grade
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product and places 50 Kg bags of low grade salt into the market as a semi-finished
product with respect to household consumers.
5.3.2 Opportunities
105. As mentioned previously, there are many interested parties connected to the salt
industry. There are various ministries which currently have significant international donor
projects underway. In many cases these projects have logical connection to the stated
objectives of the USI and IDD programs. It is therefore reasonable to predict that there are
potential strategic partners in Cambodia that could join the SPCKK under the auspices of
an expanded salt trade association (SITAC). One such potential alliance is with the
Cambodian Women for Peace and Development (CWPD). This NGO has significant reach
and its mandate is clearly aligned with the objectives of USI and IDD. A feasibility study
should be completed to determine the optimal structure and practical relations, obligations
and responsible parties respecting sales promotion, marketing campaigns and distribution
channels for iodized household table salt with the CWPD organization as the core partner.
106. As the food processing industry grows in Cambodia, so too will national brand
names. There are many nationally distributed brand name food products in Cambodia
today. There are other national brand non-food consumer goods that are widely
distributed. SPCKK / SITAC should investigate the options available to form an alliance
with a national or an international firm that is currently distributing products to key central
locations in each province. This could become the initial phase of collaboration with CWPD
or an alternative approach. Collaboration with a recognized brand name operation would
achieve brand loyalty and consumer confidence.
5.3.3 Threats
107. If the salt industry in Cambodia continues to underperform in the areas of marketing
and distribution and continues with its premium price regime, then competitors will gain
more market share over time. Such competitors could be international or national. It is in
the best interests of Cambodian citizens that the RGC and all stakeholders associated with
the National Council for Nutrition support an open market for iodized salt products, thereby
assuring Cambodian citizens the highest quality for the lowest possible cost. If the salt
industry in Cambodia under its current configuration (SPCKK) fails to provide competitively
priced salt new entrants will arrive in the market.
5.4 Investment Planning

108. The salt industry in Cambodia is confined to a relatively small geographic territory.
The total number of production areas is small and readily manageable as a total of 4,500
hectares. To date there has been no exhaustive investigation into the optimum
applications for capital investments in order to bring the salt industry in Cambodia into a
globally competitive situation. The parameters which must be validated are raw material
inputs and the manufacturing processes. These parameters must then be applied to the
desired outputs of quality and capacity.
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5.4.2 Opportunities
109. It is reasonable to predict that in the near term, given the resources being applied to
the agriculture sector in Cambodia its farmers will diversify their crops, expand their
outputs and drive growth in the food processing sector. With this assumption comes the
linkage to an increase in the demand for industrial salt. The salt industry in Cambodia must
be prepared to provide salt for both household consumption and for manufacturing
applications.
110. In order to come forward with an appropriate and well-informed investment plan, the
salt industry must take a holistic approach and investigate the influences of future
economic development on the domestic market, determine the impact of climate change
on the salt production areas, analyze the interplay between the Kampot River and other
fresh water runoff and the seawater intended to be the raw material for the salt producers,,
examine all options to upgrade damns and dikes and canals and reservoirs and salt pan
surfaces in order to invest in a systemic change throughout all stages of salt production,
and then finally assimilate all this data and information into an optimal investment plan for
the growth and sustainability of the salt industry.
111. These investigations will bring forward recommendations for an optimized set of
conditions for the salt industry and will illustrate anticipated returns on each individual
investment along with the impacts on productivity and quality. These would be presented
in a prioritized manner, assuming an upper limit on capital investment for the production of
200,000 to 400,000 metric tonnes per season.
5.4.3 Threats
112. The variables within such investigations are considerable. If the major premise of
industrial growth is compelling, then the investigations must be commissioned. However,
the findings may illustrate unacceptable levels of investment required to achieve an
optimized set of conditions for salt production in Kampot and Kep to achieve desired
quality specifications and standards.
5.5 Supply and Demand Fluctuations

113. Cambodia‟s salt industry produced 210,000 metric tonnes in 2010 through the
members of the SPCKK. In 2009 however these salt producers were limited to 25,000
metric tonnes due to severe flooding and damage to salt pans and seawater supply
canals. The salt industry has no control over weather systems and these are not
predictable. The domestic market demand is relatively stable and will likely grow on a
birthrate basis as well as a manufacturing basis. The salt industry currently has no
production planning system. Sales of salt in 2010 were approximately 100,000 metric
tonnes which is within the anticipated range. However, the 2010 production figures and
sales figures imply that SPCKK and its members are holding in excess of 100,000 metric
tonnes of inventory. The SPCKK members have very few options regarding the 2011
production season, given that there is no formal production plan and no alternative sales
channel. SPCKK members are making individual decisions to continue to produce salt and
fill their storage sheds, sell salt unofficially into the market, or stop production.
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5.5.2 Opportunities
114. It is a reasonable response by SPCKK to produce as much salt as possible in 2010,

given the events of 2009. However, with this decision there must be contingency plans for
increased inventories. These contingencies should include possible export options and
long term trade agreements with neighboring countries to buy and sell various grades of
salt under certain conditions. This would result in cash reserves rather than salt reserves if
there is an unexpected natural calamity or other negative impact on production or sales. It
is also important for SPCKK to develop an inventory system which has reach beyond the
production areas of Kampot and Kep. As stated previously there are valid reasons in terms
of marketing and distribution for such an expanded inventory base, however this would
resolve the current dilemma of having to stop production in a good harvest season due to
lack of storage.
115. There are alternative strategies to deal with impacts of crises on production or
fluctuations in the market demand. These are generally established as buy and sell
agreements with friendly competitors. In the case of the Cambodian salt industry, such a
plan would put a cap on production or would have a trigger point for the sale of significant
volumes of salt to an offshore partner.
5.5.3 Threats
116. If SPCKK continues to be completely reactive in these matters, there will likely be
imbalance among supply and demand, inventory and production capacity. This will have a
negative impact on smallholders within SPCKK and their respective workers, since these
constituents are solely dependent upon the sale of their production for their livelihoods.
5.6 Public Sector Support and National Interest

117. The RGC has committed itself to the high level objectives of the National Council for
Nutrition (NCN). The related Sub Committees are Food Fortification and Iodine Deficiency
Disorders. The RGC has also promulgated Sub-Decree No. 69 which declares that iodized
salt exploitation would be critical in eradicating IDD. The Sub-Decree however does not
nominate a particular entity as the responsible party to implement the terms and conditions
and simply issues a general comment that all parties must enforce the Sub-Decree. The
SPCKK has been registered with a mandate to produce salt and in association with
UNICEF and the Ministry of Planning has participated in a subsidy program whereby
potassium iodate was supplied free of charge to SPCKK in order to increase the
consumption of iodized salt by Cambodian citizens. According to NSCIDD representatives
the SPCKK has been left to its own management without accountability to NCN or any
other RGC entity.
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5.6.2 Opportunities
118. The SPCKK has a limited mandate and has suggested that it is narrowly focused on
solar salt production. SPCKK recognizes its issues of quality and has stated that it wishes
to upgrade its members‟ salt pan surfaces with plastic liners. It has also stated that it has
no interest in mounting a refinery, developing a distribution and inventory system, or
promoting itself as the national brand for iodized table salt. Further, SPCKK has no
capacity to regulate quality standards and specifications. The RGC has an opportunity to
elevate the salt industry to a sector of national interest, since the NCN has a mandate to
eradicate IDD and otherwise promote food fortification and micro-nutrients. Given the
constraints within the current business environment of the salt sector and given the limited
mandate of the SPCKK, the RGC has an opportunity to establish an entity that would
address the long term sustainability of the salt industry and ensure the self sufficiency of
Cambodia respecting the production and consumption of iodized salt.
5.6.3 Threats
119. Even though there are many international donor organizations working with the
various ministries attached to the NCN, the NSCIDD and the NSCFF, it may be difficult to
establish a champion for the cause. Departments and Ministers may be otherwise
occupied and budgets may be set. If the RGC is complacent with respect to the current
constraints and shortcomings within the salt industry, market forces will continue to drive
the outcomes and these outcomes may or may not be aligned with the stated objectives of
the NCN and the donor community, nor be in the best interest of Cambodian citizens.
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6 Key Factors Affecting the Sustainability of the Salt Industry

6.1 Introduction
120. The Cambodian solar salt industry is unlikely to ever become competitive in large
volume exports into the global market due to capacity and logistical constraints. Within the
medium to long term, however, it can become more competitive by improving productivity
and quality and enhancing other aspects of the business environment. The sustainability
strategy recognizes that the survival of Cambodia‟s salt industry depends on shared long-
term obligations, responsibilities, and commercial linkages between salt producers and
other stakeholders which will improve the efficiency and efficacy of the entire industry. The
objectives within the sustainability strategy include preparation for the anticipated growth in
the food processing sector as the agriculture industry in Cambodia expands and becomes
more diversified.
Figure 4 Salt Sector Threat Chain
6.2 Baseline Advantages
121. Cambodia‟s small land mass available for solar salt production constrains the
expansion of the salt industry; therefore, local producers must position themselves to
address the domestic market needs for the next five to ten years. SPCKK currently enjoys
a preferred position and a majority market share. This is a significant advantage and the
stakeholders in the salt industry must formulate plans to maintain this position in the
market. As Cambodia‟s population base and industrial activities base increase its salt
producers, through proper management practices, will be able to satisfy this domestic
market with high quality salt products.
6.3 Salt Market
122. The salt market is global in scope and many countries import and export various
grades of salt for specific applications. There are market leaders in terms of production
and export and within these countries there are multi-national corporations participating in
production and trade. The world‟s largest salt producing company is K+S. It recently
acquired Morton Salt from Dow Chemical, one of the world‟s largest chemical companies.
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K+S paid USD 1.68 billion to Dow for Morton. K+S is based in Germany and produces
more than 30 million metric tonnes of salt annually with salt revenue of USD 1.36 billion.
123. In Cambodia the market is at a level that has not attracted significant competition
historically. However, as Cambodia‟s private sector evolves and enterprises emerge with
production requirements similar to Vietnam, Thailand and Malaysia there will be demand
for specific grades of salt. It will fall to the salt industry in Cambodia to respond to this
demand or yield this volume to imports. In a related processing scenario, the cottage
industry producers of prahok consume approximately 10,000 metric tonnes annually and
SPCKK and SITAC must be proactive in this market segment to ensure that fish is
fermented and the paste is made with iodized salt, thus enhancing iodine intake among
Cambodia citizens.
6.4 Supporting Industries and Services
124. In its current configuration, the salt industry in Cambodia is centered on the salt
producers in Kampot and Kep and the balance of the business enabling environment is left
to chance. Orders placed with SPCKK are on a cash-in-advance basis, which triggers the
iodizing of the volume of salt ordered and client then acquires the salt on ex-works terms,
thereby taking responsibility for transportation. SPCKK appears to not have an active
marketing campaign and many different brand names appear in the market. Since SPCKK
grade of salt does not meet international standards for table salt, a number of secondary
processors have emerged. These “boilers” convert SPCKK coarse, high moisture content,
off-color salt to a finer grain, whiter color and low moisture content product intended for
household consumption. The boilers have neither a formalized relationship among
themselves, nor a standardized contractual relationship with SPCKK. In this respect there
is a lost opportunity to organize production planning, distribution and satellite inventories
which would enhance market penetration at the district and commune levels.
125. As described in this report, there must be further evaluation of the costs and benefits
to re-configure the salt industry and organize SMEs, NGOs and provincial authorities to
take on significant responsibilities as regards customer education and training, distribution
and delivery, marketing and sales and secondary processing and packaging.
126. There are many factors that contribute to a successful industry sector. Much
depends on the comparative advantages however; equally important is the behavior of the
stakeholders within the sector, whether these firms are primary or secondary vendors or
service providers. In successful industry sectors, members standardize production and
packaging, environmental impact criteria, product specification coding, financial terms,
joint procurement, and labor standards. Only a strong trade association consisting of
members representing all sections of the industry can address such important issues and
meet all demands appropriately in the market.
127. Within the proposed sustainable business model, the salt industry would be
institutionalized as the Salt Industry Trade Association of Cambodia (SITAC), a legal entity
recognized by all stakeholders, including the RGC and NCN as the apex organization
representing the salt industry. SITAC would develop a detailed business plan to govern its
functions, delegate standing committees to direct and monitor strategic initiatives, and
work to implement action plans for near term and long term industry goals. Ultimately,
SITAC would work with similar organizations in ASEAN member states to coordinate
efforts and form regional strategies.
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128. RGC has created the NCN and within this council the NSCIDD and the NSCFF. The
numerous ministries represented in the related government departments need to
reallocate resources and redefine their mandates. If the public sector would support a
single strategy and allocate resources according to prioritized strategic initiatives, the
industry‟s competitive position will be strengthened. RGC would approach several
international donors with a request for financial support to mount SITAC and utilize
consultants to ensure that the strategic initiatives are properly implemented and efficiently
financed. The salt industry would maintain a permanent dialogue with the government
through SITAC and keep the government stakeholders informed of the changes in the
marketplace.
6.5 Organization, Cooperation and Collaboration
129. To implement strategic initiatives, members must formalize long-term commercial

relations according to clearly defined deliverables. This will standardize expectations,
oblige various parties to meet specified terms and conditions, and strengthen the industry
in general while encouraging vertical integration of operations. Old behavior must yield to a
new organization and full cooperation, driven entirely by market and customer demands.
Such cooperation, based on good faith and trust, means sharing risk as well as reward
over the long term. Over time, each stakeholder will invest in resources and capacities to
offer effective and efficient services in the market.
6.6 Adding Value in the Business Process
130. As in all industry sectors there are standards and specifications that need to be met
in order to satisfy the market. The salt industry in Cambodia requires significant
investments in various unit operations within the manufacturing process as well as
marketing, sales, inventory and distribution.
131. SPCKK has indicated that it is aware of its issues respecting quality and productivity
and it is investigating the option of lining its salt pans as a solution. There are other
operational matters that will also need to be addressed in order to achieve ICCIDD
standards and compliance.
132. Currently there are stakeholders engaged in the delivery of salt to the domestic
market that function in an independent and disorganized manner. The salt industry must
analyze all unit operations and determine the most cost effective configuration of the
sector regarding the business model and process. All industry participants will benefit if
each member accepts responsibilities and obligations and performs to higher standards.
This does not imply that each stakeholder has only one option. Each must analyze long-
term relationships and participate in several scenarios. The prevailing goal is to remain
aware of and comply with the requirements of the end user, whether that is the village
household or a manufacturing enterprise. Stakeholders must always satisfy their
customers, whether internal or external in the business process. If diligently and effectively
pursued, this strategy will improve each part of the value chain, from the sea to the market,
and every stage of the business process; see Figure 5.
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Administrative and Management Functions

(includes strategy function, process innovation and technology improvement)
Product Procurement Production Distribution Sales & Customer

Development Marketing Service
Figure 5 Salt Industry Business Process Value Chain
133. Each of the stages of the value chain are described in turn:
134. Product Development. Improvement of technological capabilities will have

ramifications for salt producers. As the market grows and the private sector evolves, there
will be demands in the market for additional grades of salt, both iodized and non-iodized.
135. Procurement. Best practices adapted from certain countries must be implemented
and this implies joint procurement initiatives and other supply chain management
recommendations.
136. Production. Currently SPCKK outputs low quality and upgrades in production are
required. Further SPCKK salt is passed on to secondary process firms in order to meet
market demands for household table salt. Vertical integration must be analyzed.
137. Distribution. The long term strategic initiatives will force salt producers to develop
their own brand and to undertake their own distribution, or as an alternative a formal
contractual relationship will emerge with a third party supplier. Direct connection to the
marketplace and greater ownership of the distribution channels will improve margins and
reduce the threat of having Cambodian salt lose market share to imports.
138. Sales and Marketing. SPCKK relies on customers‟ initiatives to order salt.
Gathering market intelligence will benefit the salt producers who currently do not have
access to real-time knowledge of the marketplace. Developing a long-term marketing plan
will be an important step in allocating resources according to consumer needs, rather than
production capabilities. A market intelligence database that tracks provincial consumption
trends should be established.
139. Customer Service. The strategic initiatives proposed will require closer interaction
with and knowledge of the ultimate end user‟s behaviors and preferences. The introduction
of technical data specification sheets, material safety data sheets, and certification of
compliance that are standard procedure in the international market will provide the means
necessary to understand customer needs more efficiently and to react quickly to changes
in the marketplace. Direct communication with consumers will promote long-term
relationships and consumer confidence.
140. Administrative and Management Functions. Institutionalizing the salt industry

under SITAC, improving corporate governance, ensuring transparency, developing human
resources, and improving standards of raw materials and other resources will require
proactive management as well as cost effective financing of investments. Education and
training for business and finance managers, as well as skilled technicians, is imperative.
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7 Strategic Initiatives for Improving the Cambodian Salt

Industry
7.1 Introduction
141. Currently all salt producers whether large or small, are members of and shareholders
of the Salt Producers Community of Kampot and Kep (SPCKK). This legal entity was
organized in order to bring the many salt producing smallholders together and offer a
platform from which the NSCIDD and other stakeholders could continue to pursue the
objectives of the USI and IDD programs. As a result of a subsidy project whereby Kiwanis /
USAID and UNICEF provided potassium iodate through the Ministry of Planning to the
SPCKK there was a significant increase in the consumption of iodized salt at the
household level across most provinces in Cambodia. Surveys and other investigations
were conducted and several reports have been published illustrating such trends. Other
consultancies were commissioned to advise the stakeholders in Cambodia about best
practices and market development in other countries, since the UNICEF USI program is a
global initiative.
142. In order to achieve sustainable outcomes for the USI and IDD programs, further
steps must be taken to secure the commercial viability and competitiveness of the salt
producers in Cambodia. As in all business analyses the investigation by IRL and ADI has
indicated certain shortcomings and constraints in the salt industry operations as well as
within the regulatory and institutional frameworks. These must be addressed concurrently
and in the near term so that the salt industry in Cambodia can maintain a long term
domestic market presence. In so doing, there will be a reliable domestic organization with
the commercial autonomy and the social responsibility to meet the goals of the RGC and
the Cambodia citizens. The consultants have observed that several key parameters in the
salt industry must be addressed in the near term in order improve quality and productivity
and thereby assure competitive conditions for Cambodia‟s salt producers in light of the
global and regional influences at play.
143. The consultants recommend the implementation of the strategic initiatives described
in this report in order for SPCKK and its members to meet the market demands in terms of
quality and price and to earn profits under such market conditions. The consultants have
not fully analyzed the cost of goods sold by SPCKK and its members, however the
domestic market prices are relatively high and likely not sustainable in the near term due
to readily available imported salt at lower prices. This market pressure is seen to be
coming primarily from Vietnam today, however salt can be sourced as a global commodity
and depending on the grade and quality, and it can arrive at the ports in Cambodia at a
price of USD 40 per metric tonne from any number of suppliers. SPCKK is currently selling
its production to wholesalers in 50 Kg poly bags at USD 62 per metric tonne. As noted
above Vietnamese producers are selling in to the domestic market at USD 30 per metric
tonne. Clearly the volumes of Vietnamese salt entering Cambodia will likely trend upwards
with this price gap, depending on quality and delivery costs. Although the consultants did
not have the time to research the market influences from Thailand it is highly probable that
similar prices are available from salt producers in that country, since Thailand, even more
so than Vietnam, is engaged in the consumption of large volumes of salt for primary and
secondary manufacturing, along with a domestic consumer market based upon the
population base of 70 million citizens.
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144. The salt producers of Cambodia must develop a strategy that takes into
consideration the terms and conditions of accession to the World Trade Organization as
well as Cambodia‟s obligations under the ASEAN treaties and membership agreements. In
the near term is not likely that a protectionist or isolationist strategy will be successful.
Indeed it is not in the best interest of Cambodian citizens and the private sector to be
paying a premium prices for salt products, whether these be iodized table salt for
household consumption or industrial grade salt for primary processing.
145. Development and sustainability of the salt sector will likely depend on how
successful the trade association becomes as it expands its mandate beyond the current
activities of the SPCKK. Such development will also depend on RGC‟s readiness to
implement the proper legal conditions and policies for doing business in an open market
and enabling environment.
146. In Cambodia there are limited geographic areas for solar salt production, since
Cambodia has a relatively small coast line as compared to its Southeast Asia neighbors.
Further, of the few kilometers of shoreline, there is also only one stretch land that has low
flat flood plains adjacent to the sea. Kampot and Kep currently have 4,500 Ha under salt
pan production and there is not much land upon which to expand this. A second and
equally significant constraint is the weather. Kampot and Kep have a relatively short
production season, running for December until April and this further constrains the growth
of the salt industry in the future. Cambodia must begin to raise its productivity by
introduction of specialized production techniques and contemporary efficiency practices.
These enhanced working conditions will require better educated workers and therefore,
specific work force development through education and training must be pursued.
147. Effort should be devoted to improvements in marketing. SPCKK and other

stakeholders have been content to move products into the market under favored
conditions. Although SPCKK has a registered logo, it is not exploited to the degree
possible in terms of promoting quality and compliance with RGC and UNICEF objectives.
In the future, consistent high profile marketing campaigns, coupled with efficient
distribution and readily available inventories on a national basis, will be required to
maintain market share at the consumer retail level.
148. The consultants recommend the following seven strategic initiatives are pursued in
order to reach salt industry sustainability targets:
1. Capacity Building
2. Enhance Technological Capabilities
3. Enhance Supply and Distribution
4. Improve Quality Assurance
5. Improve Marketing and Communications
6. Attract and Retain Investments
7. Public / Private Partnership
149. Components and action items for these initiatives, along with their objectives and
success indicators, are presented in the tables below. Certain activities will develop the
industrial infrastructure and the enabling environment crucial for implementation, while
others address operational issues, policy issues and market opportunities. Stakeholders
will mobilize the necessary resources, develop the action plans, and implement these
initiatives over the next two years.
58
7.1.1 Capacity Building: Establishment of the Salt Industry Trade

Association
150. This initiative would institutionalize the salt industry under the law and create the Salt
Industry Trade Association of Cambodia (SITAC), a single-purpose, dedicated legal entity,
that would consolidate and unify stakeholders, help the industry reach strategic goals,
collaborate with the government, and monitor manufacturing issues, commercial interests,
environmental issues, finance issues, market stabilization, product development, human
resource development, procurement policies, import and export matters, trade and tax
policies, research, and testing and certification standards. It also calls for establishing a
strict code of performance for SITAC and industry members to ensure the accountability,
reliability, and operational and financial performance acceptable in the global marketplace
and to all investors and stakeholders in Cambodia‟s salt industry.
Figure 6 Salt Trade Association Result Chain
59
151. SITAC would have a structure similar to the model below in Figure 7 and its functions
are outlined below in Box 17.
Board of Directors
Strategic Development
Executive Committee Committee
Marketing and
Quality Assurance Distribution and
Finance Committee Communications Production Committee
Committee Inventory Committee
Committee
ISC
NCN CWPD
Rural Development Bank SPCKK CamControl
SPCKK SPCKK
MFIs Boilers Association MIME
CWPD Transport Company
SITAC Laboratory
Figure 7 SITAC Management Structure
60
Box 17 Organization of the Salt Industry Trade Association of Cambodia

 As noted in section 3.1, the government of Vietnam is clearly engaged in the matters of the salt
industry and since the RGC has established the NSCIDD and has issued Sub-Decree No. 69, there
must be further steps taken to address the many issues facing the salt industry today and in the
future
 The SPCKK as it is structured has limited authorities, budgets and capacities to deal with the
commercial dynamics described above in Vietnam
 The SPCKK has its focus on manufacturing and the coordination of its 188 shareholder producers
 SPCKK has no mandate nor action plan for meeting international quality standards nor globally
competitive pricing
 SPCKK has no specific mandate to implement Sub-Decree No. 69
 Sub-Decree No. 69 speaks only to the eradication of IDD and not the sustainability of the salt
industry in Cambodia and with this long term strategy the objectives related to ID will remain at risk
 NSCIDD should approach RGC with a recommendation for a follow-on Sub-Decree
 The Sub-Decree would create the Salt Industry Trade Association of Cambodia (SITAC)
 SITAC will be formed under the law in Cambodia and will be given ultimate responsibility to
implement Sub-Decree No. 69 as well as other matters respecting the salt industry
 A core founding member of SITAC will be SPCKK and SPCKK would be charged with production of
solar salt and the enforcement of minimum quality standards and certification of all production units
within its community
 ISC and CamControl would become members of SITAC and head up the quality assurance and
would also institutionalize iodized salt for consumers
 An NGO such as the Cambodian Women for Peace and Development (CWPD) would join SITAC
and work with SPCKK to develop an efficient and effective distribution system and inventory
program, including establishing SPCKK depots in each province
 CWPD, with its extensive network and membership, would head the distribution and marketing
committee which would monitor the domestic, regional and global dynamics of the salt market and
would also supervise import and export activities of salt based upon market demand
 Micro finance institutions would join the finance committee and develop credit schemes for salt
producers in cooperation with the Rural Development Bank
 SITAC would sign an alliance agreement with Bac Lieu Province Salt Producers to develop
collaboration initiatives in favor of the smallholder producers
 The alliance with Bac Lieu would include procurement of potassium iodate, enforcement of quality
standards for salt imports and exports between Cambodia and Vietnam and other commercial
matters leading to mutual benefits and market stabilization
 SITAC would also form a strategic development committee that would investigate investment
opportunities to enhance the salt industry in Cambodia, including feasibility studies for irrigation
systems for the delivery of seawater and discharge of spent brine; for flood abatement; for
resurfacing the salt pans with plastic liners or other technologies; and for salt refinery operations
intended to process and upgrade SPCKK‟s solar salt production
 The salt boilers in Cambodia would join SITAC and would form a secondary processing committee
enforcing specification standards and certification procedures
61
Table 4 Strategic Initiatives to Enhance Capacity Building

Actions Objectives Success Indicators
Engage consultants to mount To establish the framework and Salt industry announces national
SITAC as a legal entity and create support system for collaborative strategy to be adopted and
its Articles of Association, action necessary for sustainable launches collaborative projects for
establish its structure and growth and competitiveness. common benefit.
membership and develop its To promote cooperative mutually The government accepts
operating budget for its inaugural beneficial behavior among industry‟s collective
year stakeholders in the salt sector, in recommendations and offers
order to gain productivity support by way of policy reforms
increases and unit cost and dedicated resources among
decreases, along with quality appropriate ministries.
enhancement. Industry receives support and
To implement all other strategic assistance from donor agencies,
initiatives. including multilateral financial
institutions.
Individual firms and stakeholders
benefit as industry value chain
becomes effective.
Develop a business plan for To formalize and specify SITAC incorporated and
SITAC that specifies vision, objectives and describe how sustainable with Articles of
mission, objectives, and action these will be achieved, with a Association and Charter.
plans including timelines, resource plan to ensure Strategic objectives achieved
membership and management sustainability. efficiently over the term of
structures, and financing engagement of consultants‟
mechanisms. consultancy project.
Define a code of ethics and To create concern for social and Competitive business environment
establish guidelines and protocols corporate responsibilities with for salt industry.
for SITAC members to meet respect to NCN, NSCIDD and Ability to attract and retain
standards of financial return and NSCFF. workers and professional staff, as
social obligations. To comply with good corporate well as strategic partners.
governance practices.
Create a shared vision and To behave as a new industry and More investment in the sector and
common objectives based on a set objectives with shared better standard of living and work
new behavioral model for the salt benefits, beyond the gains of the ethics, as industry meets social
industry. current participants. obligations and responsibilities.
To use proven best practices in Industrial efficiency, stability, and
manufacturing, sales and improved market performance.
marketing, marketing intelligence,
sales and distribution networks,
linkages and strategic alliances to
drive effective business decisions.
To facilitate buy-in from
government and workers alike.
Use external resources and To use advocacy as a strategic Better conditions for value chain
international donor assistance for tool of competitiveness. and open market.
advocacy and lobbying that To develop internal expertise in The removal of existing
unifies stakeholders in influencing creating a favorable and enabling commercial barriers and policy
the government on infrastructure, business environment. constraints.
transportation, trade regulations
and labor policies.
62
7.2 Enhance Technological Capabilities
152. This initiative calls for improving the productivity of solar salt processing in Cambodia
to reduce unit costs, improve product consistency and reliability while meeting international
standards and improving customer service. As of this writing there are three specific
aspects of production recommended for investigation: (i) improving supply of seawater raw
material and develop discharge system for spent brine and flood water (sequential salt
pans); (ii) improving configuration, design and surfaces of salt pans; (iii) mounting a state
of the art integrated salt refinery.
153. The initiative would see SPCKK retain its role as the entity primarily responsible for
the production of solar salt. Investment in SPCKK‟s capability, both in terms of its technical
capability and its business operations capability would see its capacity increase. SPCKK
will only be in a position to produce higher quality salt, achieve market growth, absorb the
cost of the potassium iodate and attain sustainability following financial and technical
investment.
154. SPCKK‟s 188 salt producers would receive salt production best practice training by
SPCKK Trainers of Trainers (ToT‟s). Through the adoption of best practice methods, and
the development and application of SPCKK‟s sales and marketing strategy and processes,
the quality of salt will improve and the demand will increase.
Figure 8 SPCKK Result Chain
63
155. To support the initiative, changes to the organizational structure of SPCKK are
required. The following new business units need to be established and all three units need
to be intrinsically linked to achieve maximum effect:
 Sales & Marketing

 Production & Extension Services
 Planning & Logistics
156. Sales & Marketing: a sales and marketing strategy and its supporting processes
needs to be developed to provide a clear and manageable roadmap for SPCKK to
strengthen its brand and diversify its sales channel.
157. Production & Extension Services: SPCKK requires investment to develop a

production and extension services unit resourced with dedicated staff responsible for
improving the technological capability of its 188 members. Provision of quality control and
quality assurance training will be a vital offering of the production and extension services
unit. A quality product is critical to the success of building a strong brand and generating
increased sales.
158. Planning & Logistics: the development of strong and successful distribution and
inventory partnerships will provide SPCKK with the foundation necessary to drive the
expansion of its salt market and increase its sales leading to greater distribution and ease
of access of iodized salt.
Figure 9 Proposed SPCKK Organization Chart
64
Table 5 Strategic Initiatives to Enhance Technological Capabilities

Engage consultants to complete To determine optimal location Demonstrable improvement in the
feasibility study to design and points of intake for highest purity quality of solar salt anticipated by
mount a series of irrigation seawater the increased purity of inbound
systems for all seven production To evaluate cost / benefit of seawater
areas. installing irrigation systems to Costs of irrigation systems readily
increase quality of seawater at offset by projected sustainability of
source and to maintain such market share and related prices
quality throughout the delivery linked to higher quality salt.
system to the salt pans. Costs of irrigation systems readily
To improve the quality of solar salt offset by the reduced impact of
by providing higher purity flooding on the physical structure
seawater. of the salt production areas.
To improve the quality of solar salt
by establishing a discharge
system which would allow for the
removal of spent brine with its
undesirable impurities.
To establish a flood abatement
system in order to afford Climate
Change Resilience and preclude
costly damage to salt pans.
Engage consultants to complete To reduce the level of impurities in Costs of refurbishment readily
feasibility study to refurbish the the solar salt production offset by projected sustainability of
salt pans in all seven production attributable to pick up of soluble market share and related prices
areas. and insoluble components within linked to higher quality salt.
the physical structure of the salt
pans and the network of dikes and
walkways in the production areas.
Engage consultants to complete To determine the costs and return Costs of mounting integrate
feasibility study to mount a salt on investment of a manufacturing refinery readily offset by projected
refinery with output capacity of facility meeting international unit costs of salt production,
200,000 metric tonnes. standards. sustainability of market share and
To achieve an integrated related prices linked to higher
production configuration that quality salt.
would have the capacity to meet
Cambodia market demand for
household iodized table salt.
65
7.3 Enhance Supply and Distribution
159. This initiative calls for the establishment of a distribution and inventory system that
would enhance the reach and penetration of SPCKK salt on a national basis in Cambodia.
The system to be validated would include selection of optimal locations in each province,
transport options, size and number of inventory warehouses, optimal education and
training programs, structure and organizational capacities of best partner. The
investigation would also define the relationship between SPCKK and the distribution
partner with responsibilities and obligations of the parties and would further result in the
establishment of a distribution committee within SITAC.
Table 6 Strategic Initiatives to Enhance Supply and Distribution

Engage consultants to complete a To determine the cost effective Selection of best practices for
feasibility study and benchmarking modalities used effectively by review within the feasibility study.
study regarding best practices for other nations regarding the USI Recommendation for potential
maximum penetration of iodized and IDD goals. partner(s).
salt in developing countries. To screen SMEs and NGOs to Alliance formed and distribution
determine optimal skills and and inventory system established
capacities for SITAC partner for national coverage in all
To ensure that the enhanced provinces.
distribution system included a
communications plan for
household consumers and direct
linkage to relevant ministries with
NCN interests.
66
7.4 Improve Quality Assurance
160. This initiative calls for the improvement of human capacity in all aspects of solar salt
processing and specifications and standardization. It would ensure compliance with
various international standards and would establish production parameters and guidelines
for various salt grades as per applications and market demands. It would also result in the
establishment of a quality assurance within SITAC and the quality assurance would form
an alliance with the Ministry of Health and the Ministry of Commerce among other
stakeholders within RGC. A final result of this initiative would be the mounting of an
accredited quality control and quality assurance laboratory with strict protocols and
procedures.
Table 7 Strategic Initiatives to Improve Quality Assurance

Establish a quality assurance To determine the level of training Established code of conduct with
committee within SITAC. and the required human capacity recognized best practices for slat
to function properly as the QC and industry QC and QA regimes.
QA responsible party for solar salt Representation on quality
production in Cambodia. assurance committee from
To ensure that representatives appropriate ministries.
from all sides of the NCN are Mounting of QC and QA
engaged in standardization and laboratory.
compliance.
Accreditation from international
To warrant and certify that laboratory for quality assurance
household table salt meets committee and its operations.
international and RGC standards
Adequate human capacity to fulfill
and specifications.
its mandate.
To audit and authorize all
producers and secondary
processors, including boilers,
wholesalers, traders and
importers.
67
7.5 Improve Marketing and Communications
161. This initiative calls for significant enhancement to the current brand awareness of
SPCKK salt and its quality, specifications and attributes. A marketing campaign and a
communications and education plan must be established and implemented to ensure
consumer awareness and consumer confidence. Assuming CWPD is brought in for the
distribution and inventory initiative, this organization is well placed to execute training and
education as well. It is a strong fit for is overarching mandate of women‟s well being. The
campaign would be designed to be inclusive of the objectives of NCN and the Ministry of
Health. This initiative would establish the marketing and communications committee within
SITAC and would ensure exploitation of certain synergy and leverage with donors and the
RGC.
Table 8 Strategic Initiatives to Improve Marketing and Communications

Establish the marketing and To develop a marketing plan and CWPD engages its network in a
communications committee within a related campaign with an national campaign.
SITAC. appropriate budget. Monitoring and evaluation of
To develop partnerships with the brand awareness and health
Ministry of Education Sports and benefits awareness.
Youth and the Ministry of Health Increased household consumption
to launch an education an d of high quality iodized table salt.
training campaign.
To fully exploit the significant
network of members and offices of
CWPD to implement the plans.
To standardize messages and to
promote health benefits.
68
7.6 Attract and Retain Investments
162. This is initiative calls for the development of financial models and multi-year financial
projections that would be built into a prospectus that would compel private sector
investors, multilateral development agencies and the RGC to apply funds to achievement
of the performance enhancements described and recommended in this report. The entire
salt industry with all unit operations and ancillary activities must be built into a financial
model that illustrates adequate rates of return for all proposed investment. Further, these
financial projections must be presented to appropriate audiences in order to bring
competitively priced debt and / or equity to the salt industry in Cambodia. This initiative
would establish the finance committee within SITAC and would engage experts to fully
develop the investment plans related to the strategic initiatives described herein.
Table 9 Strategic Initiatives to Attract and Retain Investments
Actions Objectives Success indicators

Establish the finance committee in To bring representatives from A robust set of analyses and a
SITAC. other SITAC committees and creditworthy investment plan
other non-SITAC stakeholders to based on realistic financial
the development of business projections.
propositions that would validate
significant investments.
To oversee the financial well
being of SITAC and the salt
industry.
Engage consultants to bring To fully exhaust all options in all A compelling investment plan and
forward all results of related initiatives and bring forward creditworthy financial projections.
feasibility studies and cost / optimal configurations, modalities
benefit analyses and assimilate and technologies.
these into an investment To match all performance
prospectus. enhancements against related
costs in order to best suit the
market today and in the near term.
69
7.7 Public / Private Partnership
163. This initiative calls for a declaration by the RGC that the salt industry is of national
interest and for tangible support from RGC through representation on the committees
within SITAC. This initiative will also result in the on-going cooperation and collaboration
between NCN, NSCIDD, NSCFF and certain ministries through a Sub-Decree or
Memorandum of Understanding (MOU) with SITAC. As a result of this initiative certain
ministerial members will become active on the SITAC Board of Directors and the
Executive Committee, while other representatives of RGC will be standing members of
other SITAC committees. This public / private partnership will become the platform for
policy reform and will establish the regulatory framework for SITAC.
Table 10 Strategic Initiatives to Enhance Public/Private Relationships
Actions Objectives Success indicators

RGC promulgates a Sub-Decree To establish a platform for Minimal conflicts in policymaking
or signs an MOU with SITAC. advocacy. and decision making.
To ensure proper and meaningful Better understanding of industry
representation of the interests of issues and RGC objectives.
NCN within the salt industry.
To conduct strategic studies and
policy analysis, monitor industry
performance, and make
recommendations to the
government.
To have forum for participatory
policy and strategy making that
ensures efficient resource
allocation and effective
implementation.
Investigate support opportunities To obtain funds for development Funds available for development.
and facilitate funding for industry programs and strategic initiatives.
development from donor
agencies.
Use short-term technical
assistance to prepare proposals.
Investigate and recommend policy To have the government accept Effective and efficient policy
reforms to accelerate industry recommendations with confidence reform and enhance business
development. in the collective opinion of enabling environment.
stakeholders
Secure tax credits for expenses To enable the private sector to Private sector contributes more to
incurred for and contributions to manage and finance sector collaborative activities that
SITAC activities. activities. develop the salt industry.
Pursue tax credits for human To provide incentive for Improved human resource base,
resource development budgets, development of human resources, more innovation, and sustainable
research and development research and development, and market share.
consortia, and market promotion. marketing.
70

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Solar Salt Industry and the Salt Producers' Community

of Kampot and Kep

Options for a Sustainable Business Model

Special Services Agreement

Phnom Penh, Cambodia

6.2 Baseline Advantages ........................................................................................... 53

List of Abbreviations and Acronyms

the stakeholders, such as reallocating certain equipment and revitalizing selected

hampered by a lack of (i) expertise and organizational structure to engage in regional

1. Capacity Building. Institutionalize the Salt Industry Trade Association of Cambodia

2. Enhance Technological Capabilities. Complete a feasibility study and cost /

3. Enhance Supply and Distribution. Establish a strategic alliance with a capable

4. Improve Quality Assurance. Improve human resources and capabilities in all

5. Improve Marketing and Communications. Establish a marketing campaign

6. Attract and Retain Investments. The proposed manufacturing enhancements will

2 Competitive Environment of the Salt Industry

Source: Salt Institute

Figure 1 World Salt Production 1985-2007

Table 1 Top 10 Producers of Salt, 2004-2007

3 Regional Perspective of the Salt Industry

Box 1 Salt Production from Bac Lieu Province

Box 2 Improving Investment in Infrastructure

Box 3 State Role in Purchasing Salt

Box 4 Providing Interest Subsides for Salt Producers

Box 5 Import Quotas for Salt into Vietnam

Source: Vietnam News 2010

Box 6 Declining Prices hit Salt Production

Box 7 Higher Production and Imports Depress Prices

Box 8 Improving Standards in Salt Production

Box 9 Supporting Prices in Salt

Box 10 Vietnam Demand and Supply of Salt

Box 11 Imports of Salt for Processing

Box 12 Stockpiling Salt to Ease Price Falls

Box 13 Interest Free Loans to Salt Producers

3.2 Observations on the Vietnam Sector and its Impact on Cambodia

1. Vietnam‟s level of industrialization and its significant international trade activities

5. The Vietnamese government at the level of Prime Minister has intervened to

4 Current Situation in the Salt Industry in Cambodia

 Lack of awareness surrounding iodized salt and its health benefits

4.3 Salt Producers Community of Kampot and Kep (SPCKK)

Figure 2 SPCKK Organizational Chart

Picture 1 SPCKK administration offices.

4.4 Solar Salt Production

4.4.1 Cambodia’s Current Salt Production Process

4.4.1.1 Inbound Raw Material Sea Water

Picture 5 A more typical entry point for inbound seawater

4.4.1.3 The Salt Pans

Picture 11: Surface of new clay is pounded firmly into place.

4.4.2 Solar Salt Production Best Practice

and concentration of brine), and creates a more environmentally sustainable living

Figure 3 Basic Stages in Solar Salt Production Processes

Box 14 Production of High Quality Solar Salt

Box 15 Optimal Solar Salt Production Design and Operation

The requirements described above can be satisfied by:

Box 16 Solar Salt Upgrading

- Edible salt can be iodised by spraying it with a potassium iodate solution

4.4.3 Intervention Recommendations to Improve Salt Production Quality

Action Objective Validation

4.5 Post Production