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Cambodia Agriculture in

Transition:
Opportunities and Risks
Stakeholders Consultation
September 18, 2013
Himawari Hotel, Phnom Penh

Outline
1. Background
2. Agricultural Transformation
3. Major Changes in Cambodia Agriculture over the past 10 Years
4. Drivers of Change
5. Opportunities and Risks
6. Diagnostic Study Objectives and Methodology
7. Key Questions for Todays Consultation

BACKGROUND

Poverty Rate in Cambodia

Rice Production (mt)


10,000,000

50%

9,000,000

45%

8,000,000

40%

7,000,000

35%

6,000,000

30%

5,000,000

25%

4,000,000

20%

3,000,000

15%

2,000,000

10%

1,000,000

5%

0%

2003

2004

2005

2006

2007

2008

2009

2010

2011

Nutritional Indicators (from CDHS)

2012

1994

1997

2000

2004

2007

2010

2011 Share of Turnover by Types of Agribusiness


Rice Sellers
5%

60
50

Processor
35%

40
30

Crop Collectors
45%

20

Input Suppliers
9%

10
0

Underweigth

Stunted (short)
2000

2005

2008

Machinery Sellers
6%

Wasted (thin)
2010

Processor

Input Suppliers

Machinery Sellers

Crop Collectors

Rice Sellers

The Good, .

An impressive growth of agriculture over the past 10 years


o

A steep decline in poverty


o

More than 1% decline per year in poverty rate

Increasing connectivity
o

Agricultural GDP annual growth rate at 4.6% over 2001-2011, one of the
highest in the world

Cambodia has a population of about 14.6 million, and 19 million mobile


phone subscribers in 2012

Major surpluses in agricultural production


o

Rice, Maize, Cassava, Cashews, Rubber

But deficit in vegetables, pork, oil

The Bad,

An underdeveloped processing Industry


o

An agriculture which is mostly rainfed


o

Most commodities (paddy, cashews, cassava, maize, cattle, soya beans,


) are exported in raw form

Irrigation coverage only 24% of cultivated areas

An agribusiness sector mostly consisting of traders and


informal businesses
o

Less than half of the agroenterprises have some degree of


formality (eg registration)

And the Ugly

Still high levels of malnutrition


o

Poor levels of food safety


o

Malnutrition of children under 5 still too high


Lack of standards and standards enforcement

Unsustainable Practices
o

Cassava production and deforestation

Degrading soil fertility

Indiscriminate use of plant protection chemicals

Questions

Can past growth be sustained? or even accelerated?

Can poverty be reduced faster?

Can malnutrition be reduced faster?

Can value added in agriculture be increased faster?

AGRICULTURAL
TRANSFORMATION

Agricultural Transformation
1. Agriculture becomes less important

As a share of Labor

As a share of GDP

2. Agriculture becomes more productive

In terms of higher agricultural labor income

In terms of higher GDP

3. Societys perception of farming changes

From a way of living, unattractive and full of drudgery

To a honorable professional activity

HIGH
100%

% Agriculture
Labor Force

60%

40%

20%

Value of Agricultural
Output per Worker in
Agriculture

Total Value

80%

Total Value of
Agricultural
GDP

% Agriculture
in GDP

0%

Poor

Per Capita Income

Rich

LOW

The Challenges of Agricultural Transformation

Growing rural urban gaps

Youth exodus from rural areas

Increasingly vocal farmer organizations

Adoption of technology innovations

Land consolidation

Corporate agribusiness sector and SMEs

The Link between Rural non-Farm and


Agriculture

Strong Agricultural Growth strong growth of Rural Non


Farm Economy (RNFE).

Rural non-farm activities improve food security by


diversifying income sources and improving the ability to
cope with shocks

Rural non-farm activities generate employment for the


poor

Employment growth in the rural non-farm sector is


typically faster than in the rural farm sector

CHANGES IN AGRICULTURE
OVER PAST 10 YEARS

Internal and External Changes


Internal
1.

Productivity

2.

Rice Milling

3.

Labor

4.

Land

5.

Connectivity

External
1.

Food prices

2.

Cross-border trade

3.

New Entries

Internal Changes
1.

2.

Productivity improvements

Changes in cropping patterns during the wet season (early, medium, late)

Adoption of new improved varieties and improved seeds

Irrigation investment

Intensification in use of inputs and mechanization

Expansion of the rice milling industry

Paddy and Rice Export Policy

Domestic investment and FDI

Federation of Rice Millers and Cambodia Rice Exports Associations

Information about Exports

Programs and projects (EU/IFC, ADB, AusAID, IFAD, AFD, USAID, FAO)

Yield Increase (2003-2012)

Rice Exports (mt)

80%

250,000

70%
200,000

60%
50%

150,000

40%
100,000

30%
20%

50,000

10%
0%

Rice

Maize

Cassava

Sugarcane

2009

2010

2011

2012

30%
25%

Less Landless

20%
2004

15%

2011

More fragmentation at low size

10%

More consolidation at high size

5%
%
Landless

0.01-0.50ha

0.51-1.00ha

1.01-1.50ha

1.51-2.00ha

> 2.00ha

Internal Changes (continued)


3. Labor

Increasing scarcity of labor due to internal and external migration

Scarcity of skilled labor

Increasing cost of labor in rural areas (twice if compared to 10 year


ago)

Mechanization as a response to scarcity and cost

4. Land

Preliminary data indicate both fragmentation and consolidation

5. Infrastructure and Connectivity

GMS initiatives in regional connectivity (East-West and North-South


corridors)

Railway and port infrastructure improvement

Major dams and hydroelectric plants under construction

CPI and Food Price Index (2006=100)


CPI

Food

180
170
160
150
140
130
120
110
100

2007

2008

2009

2010

2011

2012

External Changes
6.

7.

8.

Food Prices

Food crisis has been an opportunity for Cambodias farmers

Likely to remain high

Emergency Reserves and Disaster Preparation

Increasing cross-border trade

Informal exports of paddy, cashew nuts, maize, sesame seeds, soya beans, cassava

Imports of vegetables, livestock, inputs and machinery

Each citizen in CAM exporting 1 ton of agricultural products

New entries in the world and regional rice market

Myanmar high potential for food supply and benefits from EBA

India a source of world food markets instability

Vietnam starting fragrant rice

Thailand losing competitiveness

DRIVERS OF CHANGE

Drivers of Change
Policy
Relatively liberal
laissez faire
Regional
integration and
access to regional
markets
Rice Policy

Investment
Public
expenditures on
agriculture,
irrigation, R&D,
and rural
development
Infrastructure
(transport)
Private sector

Technology

External
Factors

Adoption of improved Higher food


technology by
prices
farmers
Mechanization
Modern inputs (seed,
chemicals)

OPPORTUNITIES AND RISKS

Opportunities

Cambodia becoming a reliable global supplier of safe and


quality food and products (eg rice, maize, fish, cattle,
pepper, rubber, cashews, cassava, fruit)

A dynamic Cambodian agribusiness sector creating value


added and employment in a growing and well-connected
rural non-farm economy.

A food and nutritionally secure population with access to


a healthy and diversified diet.

Risks

Business environment not conducive to Agrifood investment and to the


emergence of a dynamic formal agribusiness sector

Low volumes and efficiency of public investment in agriculture

Rate of innovation adoption slowing down

Environmental Sustainability at danger (eg. cassava and deforestation, loss of


soil fertility and biodiversity as a result of poorly designed hydro dams)

Vulnerability to highly variable and extreme climatic events

Highly variable global markets (food, feed and biofuels)

Need for New Drivers of Change?


1.

More favorable business environment for private sector investment in


agrifood sector

2.

Public private partnerships and innovation

3.

Improved human resources and capacity of farmers and value chain


actors

4.

Service providers to meet the need of commercial farmers

5.

Operationalization of inclusive growth and regional development

6.

Establish new strategic national programmes (beyond rice)

7.

National programs on food safety and nutrition

8.

National programs on competitiveness

9.

National programs on risk preparation

DIAGNOSTIC STUDY
OBJECTIVES AND
METHODOLOGY

Objectives of the Diagnostic Study

Provide analytical inputs, improved information basis, and evidencebased recommendations for more competitive and sustainable farming
systems in Cambodia. Specifically:

(i)

Provide inputs for the preparation of the road map for the Ministry
of Agriculture, Forestry and Fisheries (MAFF) and Supreme National
Economic Council (SNEC) for the implementation of the long-term
strategic agriculture sector goals of the Cambodia Vision 2030 and
Rectangular Strategy; and

(ii)

Provide diagnostics for the preparation of the Government or


donor funded investments programs which would support
implementation of the above strategies and required institutional
development support.

Phasing of the Diagnostic Study

Phase I Structural Changes in Agriculture over past 10


years

Financial and economic analysis of farming systems

Interpret the broader economic context and provide deeper


assessment of current policy environment.

Phase II - Forward looking scenarios for future agriculture


growth pathways

Based on expected changes in consumer demand, trade patterns and


implications of climate change, and deeper analysis of dynamics
between agriculture and non-agriculture sectors.

Methodology of the Diagnostic Study

Farm Enterprise
Models
Sector
Performance

Policy
Simulations

ROADMAP

Survey
Three Types of Respondents
1.

Key Informants (at Provincial, District, and Commune Level)

2.

Focus Groups at the Commune Level

3.

Individual Farmers

Three Types of Survey Tools


1.

Key informant checklist

2.

Focus Group Discussion checklist

3.

Individual Questionnaire

Four Commodities
1.

Rice

2.

Maize

3.

Cassava

4.

Vegetable

Commodity Growth
(2003-2012)

Key Changes

Rationale

Rice

Adoption new varieties


Mechanization
Rice Milling Industry
growing
Higher prices
internationally

Food security
Large income and employment
impact
High export potential
High impact on processing industry

Production
Commodities

(7.8%)
Yield (4.5%)

Maize

Production
(13.1%)
Yield (3.0%)

Adoption of hybrids

Integration with feed industry


Potential for export

Cassava

Production
(41.7%)
Yield (6.4%)

Use of upland and


forestland

Integration with starch and feed


industry
Integration with biofuel
High export potential

Vegetables

Production
(12.8%)
Yield (7.8%)

Rapidly increasing
demand and imports

Nutrition and food safety


Import substitution

Zones, Provinces, Districts, Communes

3 Zones

6 Provinces

12 Districts

12 Communes

Chosen among the ones we visited 10


years ago for the Agrarian Structure Study

Locations
of
the
Survey
Mekong
Kampong Cham
Memot
Zone (3)

Province (6)

Kandal

Takeo
Coastal

Tonle Sap

Kampot

Battambang
Bantey Meanchey

District (12)

Crop (4)

Commune (12)

Maize / Cassava

Dar / Memot

Srey Snathor

Rice

Prey Poh / Prek Damboke

Sa Ang

Vegetable / Maize / Rice

Prek Ambel

Kandal Stoeng

Rice / Vegetable

Siem Reap

Batti

Rice / Vegetable

Champei

Tram Kok

Rice / Vegetable

Tram Kak

Chhouk

Rice / Vegetable

Meanchey / Trapeang
Phleang

Kampong Bay

Rice / Vegetable

Traey Koh / Andong Khmer

Ek Phnom

Rice / Vegetable

Prek Khpop / Prek Norin

Banan

Rice / Cassava / Maize

Kanty 2 / Chheuteal

Malai

Maize / Cassava

Ou Sampou

Mongkol Borei

Rice

Rohat Touk

KEY QUESTIONS FOR TODAY

Key Questions
1.

What are the most significant changes in Cambodia


agriculture over the past 5-10 years?

2.

What have been the driving forces beyond these


changes?

3.

What do we need to sustain or even increase past


growth?

4.

What suggestions do we have for the study team


proposed methodology?

Notes for the Discussion

Changes

Drivers of
Change

Sustaining the
Change

Methodology

Internal

1.
2.
3.
4.

1.More favorable
business environment

1. Four commodities
(rice, cassava, maize,
vegetables)

1.Productivity
2.Rice Milling
3.Labor
4.Land
5.Connectivity

External
1.Food prices
2.Cross-border trade
3.New Entries

Policy
Investment
Technology
External Factors

2. PPP and innovation


3.Improved HR and
capacity of farmers and
value chain actors

2. Three types of
respondents (experts,
fgd, farmers)
3. Three regions

4.Service providers to
meet the need of
commercial farmers
5.Operationalization of
inclusive growth and
regional development
6.New strategic national
programmes

4. Six Provinces

5. Compare with study


conducted in the
same communes 10
years ago