By Andrew Nette
PHNOM PENH, May 19 (IPS) - Cambodian government sees opportunity for this impoverished country in the global rise in food prices that could help turn the fortunes for its agrarian economy.
But, while Khmer and foreign experts agree that there is considerable room for Cambodia to improve its production of rice, fruit, vegetables and other crops, they also say that the economic, physical and geographical challenges are huge.
Even if Cambodia can increase the production of crops like rice, doubts exist as to whether small-scale farmers are positioned well enough to take advantage of the situation.
Cham Prasidh, minister for commerce, told the English-language Cambodia Daily newspaper in early May that the food crisis provided an opportunity for the country to transform itself into one of the world’s rice bowls. "For Cambodia now, we see rice as gold," he was quoted as saying.
The minister said the increased value of foodstuffs, particularly rice, was moving the government to reconsider its economic strategy and place greater emphasis on agriculture. He said the government wanted to double the area under rice cultivation to five million hectares.
The government and donors are also pinning their hopes on agriculture as a way of alleviating endemic rural poverty. Eighty percent of Cambodia’s 14 million people live in rural areas, as also an estimated 90 percent of the country’s poor.
"We estimate that only 7 to 8 percent of (Cambodia’s) total rice production is traded on the international market," said Mahfuz Ahmed, Senior Agricultural Economist in the South-east Asia department of the Asian Development Bank (AsDB).
"An additional three million tonnes would make the country a major player in the rice market but first they have to improve quality and production."
"We have the potential to become a key supplier of rice on the world market after Thailand and Vietnam," said Yang Sang Koma, president of the Centre for the Study and Development of Cambodian Agriculture (CEDAC).
"We might even be able to replace Vietnam, which has peaked in its capacity."
"It is realistic but they have to have clear policies. On the one hand they talk about Cambodia becoming a green basket, on the other they push industrial zones. What do they really want?"
The World Bank and other donors agree Cambodia needs to place more emphasis on agriculture, and point out that successful agricultural production in China and Vietnam acted as a stimulus for broader industrial and manufacturing growth.
It is generally accepted that Cambodia now grows more rice than it consumes, approximately 2 to 4 million tons per year and has done so since the mid-nineties.
Although land under cultivation has also increased over the last decade, surpassing 2.5 million hectares in 2006, according to figures from the ministry of agriculture, this is still amongst the lowest in the region.
According to AsDB’s Ahmed, the average amount produced hovers around 2.5 tons per hectare, with some farmers producing 3 tons, and most 1 to 1.5. This compares with Vietnam’s 4 kilos per hectare.
"Most farmers are poor and live from harvest to harvest. They are subsistence orientated and focused more on survival than increasing production,’’ Koma said.
Cambodia exported 1.48 million tons of milled rice during the 2007-2008 season, a figure the government wants to increase to 5 million, besides boosting production of crops such as soya beans, cashew and corn.
"Ten years ago they did not have enough food, so the fact that they export as much as they do is a considerable achievement," said Ahmed.
"They could probably produce more and export it. The area currently under cultivation is still below that in the mid-sixties."
"The increased value of rice should be good for Cambodia," agreed Thomas Keustas, the World Food Programme’s country director in Cambodia.
"The question is how much can the rice harvest increase given that the costs of inputs are also increasing.’’
Farmers are facing the full brunt of the inflationary pressures hitting Cambodia. Fertilizer has doubled in price, and fuel has increased by 6 to 7 per cent in the last six months. But price rises are just one obstacle facing increased farm production.
Others include lack of seed production, uncertain land tenure in much of the country, lack of technical information, and poor infrastructure such as roads and irrigation.
Lack of access by small-scale farmers to rural credit is a particularly pressing constraint. According to some figures, only four percent of loans from banks went to agriculture in 2007.
These barriers make it difficult for Cambodia to compete with the productivity of farmers in Thailand and Vietnam, where transport, fertilizer and pesticides are all cheaper.
"How do you compete with the sophistication of agricultural produces in Vietnam, where strawberries are picked and on the shelves of supermarkets in Phnom Penh in 24 hours?" said one long-term foreign observer.
"People talk about buzz words like improving value chains. At the moment when it comes to agriculture all you have is a pile of links that no one has welded together."
"All these factors mean farmers are not well placed to take advantage of increased prices,’’ said the observer who did not wish to be named.
‘’They sell their crop after harvest because their production costs are so high compared to their revenue, much of it to Vietnamese and Thai traders who travel from farm gate to farm gate, within days of it being harvested." sDB’s Ahmed believes that storage facilities are important.
"Small farmers cannot take advantage of the marketing realities unless they can hold onto their crop for 3 to 4 months rather than 60 days as is currently the case.’’
"Even if Cambodia can increase its rice harvest, any increased profitability is likely to be captured by middle men and their agents unless the farmer has some choice about who they sell to and when,’’ said Ahmed.
"This bargaining power will only occur when they have greater access to storage facilities, roads, credit, and so on. At the moment the point at which they sell is the point at which the price is lowest."
The question now is, does the government have the political will to shift the balance of power across the board to increase the bargaining power of farmers?
While experts believe the government’s emphasis should now be on getting a good harvest next year, work is needed to ensure that farmers can take advantage of this.
"In the long term the question is whether enough resources can be mobilised and whether they can be delivered to the households that need them on time," said Ahmed.
"Government alone cannot do this, it requires a joint effort with donors and NGOs."
"Physical facilities are important but it will not solve the problem on its own," argues CEDAC’s Koma, who works with farmers on marketing organically grown produce, including locally certified organic rice.
"Our farmers are very subsistence oriented. We need time to develop more commercially oriented farmers."
"We also need to re-orient the people who work with the farmers, the extension workers and NGOs.
They have a basic knowledge of agriculture, perhaps some community development experience but no business skills,’’ said Koma.
Cambodia’s potential can be gauged by the fact that large investors, including several private equity funds, are beginning to see opportunities in this country’s agricultural sector.
May 20, 2008
