Agriculture
Neak Oknha Mong Reththy speaking at the 14th Government Private Sector Forum, Nov 2008

An estimated 85 per cent of 14 million Cambodians live in rural areas and depend upon agricultural cultivation as their primary means of subsistence or livelihood. Intervention to improve agricultural performance will greatly benefit a large number of people who are among those most affected by poverty.

The Cambodian agriculture & agro-industry sector has developed significantly in recent years and has great potential for investment, employment creation and as a source for economic growth. For instance, rice production has increased by more than 50 per cent since 2005. However, the sector is starting from a low base and suffers from fragmented and weak supply chains, low productivity and underdeveloped infrastructure. Support structures that will enable increased yield, quality and access to markets are also deficient.

The agriculture sector in Cambodia remains underdeveloped due to a lack of investment and reliance on old cultivation techniques and low quality seeds.

In response to the aforementioned constraints, as a Co-Chair of the Agriculture & Agro-industry Working Group, I would like to report the concerns of the private sector regarding the following issues:

Priority Agricultural Products
Most farmers are not informed about the demand for agricultural products in the world or domestic markets. They usually plant the same crops year after year. Now that there is a food crisis, they can obtain better prices for their crops if they plant the right ones, with good quality seeds, in accordance with international standards.

Unfortunately, recently we have seen that prices of agricultural products have decreased unimaginably in the international market. For example, one ton of top-grade rubber used to fetch over $3,000, but now the price is only $1,500; the palm oil price has decreased from $1,200 per ton to only $400 now; the price for tapioca flour has dropped from $530 per ton to only $220. The private sector understands that the Ministry of Commerce has selected 19 priority products for export, but farmers are unaware of this strategy.

The private sector thinks that the Minister of Agriculture, Forestry and Fisheries (MAFF) should encourage the use of land for the development of agriculture and disseminate information on opportunities for farmers in partnership with the Ministry of Commerce. In addition, the private sector suggests that MAFF provide guidance to farmers on which crops to plant, market demand and commodity prices. Then MAFF should source the right seeds and grains to provide to farmers and train them on techniques to obtain better yields.

Contract Farming
Small producers and farmers clearly face the danger of market failure and production problems. This is because these farmers cannot supply the market with sufficient products at an appropriate price. There is no guaranteed price for their products, in particular after harvest, which is a major challenge that small farmers and producers must overcome in the long run. In order to deal with this problem, contract farming can serve as a means to develop the market and to bring about technology transfer, which would benefit both producers and supporting companies.

The private sector thinks that MAFF should encourage contract farming between buying companies and farmers in order to ensure appropriate prices for products and technical assistance. In addition, the private sector would like to request that the Royal Government establish a framework and strengthen enforcement of contracts between farmers and large buying companies in order to ensure nationwide effectiveness.

The aforementioned issues were discussed by the Agriculture and Agro-Industry Working Group on 17 November 2007 under the chairmanship of His Excellency Chan Sarun, Minister of Agriculture and myself. Through discussions, the private sector clearly understands that the private sector’s idea has already been implemented by the Royal Government and the Ministry of Agriculture. I, as a Co-Chair of the Agriculture and Agri-Industry Working Group, together with USAID and the International Finance Corporation, in collaboration with His Excellency Chan Sarun, Minister of Agriculture, Forestry and Fisheries, have worked together to successfully solve the problem of importing pigs, which affected pig raising by domestic farmers.

These issues are important for private sector development in the Kingdom of Cambodia, for now and in the future.

Neak Oknha Mong Reththy, Chairman of Mong Reththy Group, is also the Co-chair of the Agriculture and Agro-Industry Working Group. He also serves as Vice-President of the Cambodia Chamber of Commerce.