GO­ING AGAINST THE GRAIN

Although rice has been the sta­ple food of Cam­bo­dia since the days of the Angkor god-kings, econ­o­mists say farm­ers need to re­duce their re­liance on the crop in or­der to re­vi­talise the King­dom’s strug­gling agri­cul­ture in­dus­try

Southeast Asia Globe - - Business / Future Of Agriculture In Cambodia - By Paul Mil­lar

ATthe height of the Kh­mer Rouge regime in Cam­bo­dia, once the cities stood empty and the fields teemed with the worn-out work­force of a na­tion torn apart, Pol Pot had a plan. In­spired by tales of the vast fields and lim­it­less yields of the Kh­mer Em­pire, the man who would even­tu­ally be blamed for the deaths of al­most two mil­lion of his own peo­ple dreamed of a Cam­bo­dia that would be­come the cor­nu­copia of South­east Asia. Rice pro­duc­tion quo­tas were set: more than triple what they had been in peace­time. They were never met.

For mil­len­nia, rice has been the back­bone of Cam­bo­dia’s all-en­com­pass­ing agri­cul­tural sec­tor. But with global rice prices fall­ing and neigh­bour­ing coun­tries such as Thailand and Viet­nam mo­bil­is­ing their vast re­sources and work­forces to boost do­mes­tic pro­duc­tion, ex­perts say the crop that has un­der­pinned the na­tion’s rise and fall needs to give way to more prof­itable al­ter­na­tives.

Guil­laume Vi­rag, co-founder and CEO of Project Alba, a for-profit so­cial

en­ter­prise that part­ners with small­holder farm­ers in de­vel­op­ing coun­tries, said that Cam­bo­dia’s once-flour­ish­ing agri­cul­ture in­dus­try was in many ways locked in a fu­tile strug­gle against the na­tion’s more de­vel­oped neigh­bours as long as it re­mained fo­cused on a few sta­ple crops.

“You’re in an emer­gency state with agri­cul­ture,” he said. “Ir­ri­ga­tion tech­niques, soil work, soil strat­egy is a strong is­sue, be­cause peo­ple have grown rice over and over. And com­pe­ti­tion with Viet­nam and Thailand, China, coun­tries that are much more ad­vanced in agri­cul­ture. There is a cost prob­lem, in­her­ently – a lot of in­puts in the agri­cul­tural sec­tor don’t come cheap, and so all to­gether there are very few crops on which Cam­bo­dia is cur­rently com­pet­i­tive on an in­ter­na­tional level.”

Nowhere is this lack of com­pe­ti­tion more ap­par­ent than in the King­dom’s sta­ple rice crop, which con­tin­ues to make up the bulk of Cam­bo­dia’s agri­cul­tural ex­ports. De­spite ex­port­ing al­most 300,000 tonnes of milled rice in the first six months of this year – an in­crease of more than 7% rel­a­tive to the same pe­riod in 2016 – poor in­fra­struc­ture and high en­ergy costs have left the mar­ket price for white rice in Cam­bo­dia con­sis­tently higher than its com­peti­tors Thailand and Viet­nam. Cam­bo­dia has also failed to come close to the gov­ern­ment’s own de­clared goal of one mil­lion tonnes of rice ex­ports per year.

In spite of this, many small­holder farm­ers in Cam­bo­dia con­tinue to rely on the ce­real as the cor­ner­stone of their crop pro­duc­tion. Jun Arii, board di­rec­tor of the Ja­panese Busi­ness As­so­ci­a­tion of Cam­bo­dia and a vo­cal pro­po­nent of agri­cul­tural di­ver­si­fi­ca­tion, said that the King­dom’s in­creas­ing lev­els of rice pro­duc­tion failed to re­flect the na­tion’s needs.

“It’s not about ex­pand­ing the pro­duc­tion of rice or en­hanc­ing the ex­port of rice at all,” he said. “It’s about try­ing to find an al­ter­na­tive crop for rice which will max­imise the re­turn to the farm­ers and – I like to go along in line from a food se­cu­ri­ties point of view – prob­a­bly four mil­lion tonnes of rice pro­duc­tion is am­ple suf­fi­ciency for Cam­bo­dia.” Fore­casts from the UN’s Food and Agri­cul­ture Or­gan­i­sa­tion pre­dict that favourable rain­fall will push this year’s do­mes­tic rice pro­duc­tion over ten mil­lion tonnes – just a slight in­crease on 2016’s out­put.

Es­ti­mates of the to­tal area taken up by rice pro­duc­tion range be­tween two-thirds and three-quar­ters of the King­dom’s cul­ti­vated land – a fact that will come as lit­tle sur­prise to any trav­eller thread­ing high­ways that run through seem­ingly end­less rice fields. In 2013, the to­tal pro­duc­tion area for rice in Cam­bo­dia was more than three mil­lion hectares. The next most pro­duced crop, maize, cov­ered just un­der 240,000 hectares. Ac­cord­ing to Vi­rag of Project Alba, the gov­ern­ment’s fo­cus on im­prov­ing poor con­di­tions for the na­tion’s rice farm­ers was po­lit­i­cally pre­dictable – just last month it pumped an­other $80m into the sec­tor to keep prices sta­ble.

“If you’re in Cam­bo­dia, rice is a quick win,” he said. “If you im­prove any­thing on rice you have a so­cial im­pact that’s very large. That’s why the fo­cus is so strong on it – you have a very strong base of farm­ers, and the path for­ward is rel­a­tively sim­ple: just bring millers into the coun­try, in­vest in in­fra­struc­ture, make sure you get con­tract farm­ing in place to im­prove your seeds and you see how to move for­ward with mas­sive vol­umes.”

For Thailand and Viet­nam, com­par­a­tively ad­vanced na­tions with pop­u­la­tions that dwarf Cam­bo­dia’s 15 mil­lion, plans to in­ten­sify rice pro­duc­tion are sup­ported

by a large labour force and in­fra­struc­ture that leaves the King­dom in the dark. Arii ar­gued that rather than blindly fol­low­ing in the foot­steps of its neigh­bours, Cam­bo­dia would do well to forge its own path in the world of agri­cul­ture.

“Creat­ing the coun­try’s di­rec­tion is rather im­por­tant, in­stead of go­ing to the labour­in­ten­sive, heavy in­dus­try – you can have that in Thailand or Viet­nam,” he said. “So Cam­bo­dia still can find their own av­enue for build­ing a suc­cess­ful coun­try.”

Ac­cord­ing to re­search by Cam­bo­dia’s Cen­tre for Pol­icy Stud­ies, the coun­try im­ports any­where be­tween 200 to 400 tonnes of veg­eta­bles from neigh­bour­ing coun­tries ev­ery day – a stag­ger­ing four­fifths of do­mes­tic con­sump­tion. Ac­cord­ing to Yang Saing Koma, for­mer pres­i­dent of the Cam­bo­dian Cen­tre for Study and De­vel­op­ment of Agri­cul­ture, it is only by build­ing up prof­itable do­mes­tic sup­ply chains for pro­duce that Cam­bo­dia might out­flank its com­peti­tors, rather than get­ting bogged down in an un­winnable numbers game.

“Even if we con­tinue to grow rice, we need to go to­wards high-qual­ity premium and or­ganic rice,” he said. “My idea is that we first fo­cus on the re­place­ment of im­ports, and se­condly on the ex­port of high-qual­ity, unique prod­ucts – or­ganic rice, premium rice, pep­per, Mondulkiri cof­fee. There are so many unique prod­ucts that we have to de­velop.”

For some crops, such as the high-qual­ity pep­per cul­ti­vated in the na­tion’s south that has made Kam­pot part of the lex­i­con of high-end cui­sine, the re­wards have al­ready been re­alised for many en­ter­pris­ing farm­ers. And while Vi­rag sug­gested that farm­ers blessed with large plots of land should con­tinue to in­vest in crops that could be eas­ily mech­a­nised to lower labour costs – such as the ce­re­als that un­der­pin much

MY IDEA IS THAT WE

FIRST FO­CUS ON THE RE­PLACE­MENT OF IM­PORTS, AND SE­CONDLY ON THE EX­PORT OF HIGH-QUAL­ITY, UNIQUE PROD­UCTS – OR­GANIC RICE, PREMIUM RICE, PEP­PER, MONDULKIRI COF­FEE”

of the ex­ist­ing in­fra­struc­ture – he said it was a lux­ury that the ma­jor­ity of Cam­bo­dian farm­ers could ill-af­ford.

“The av­er­age farm size in Cam­bo­dia is half a hectare, so you’re not do­ing the same thing,” he said. “If you have small land, you have to do higher-value crops if you want to im­prove your in­come in the long-term. Switch part of your pro­duc­tion to veg­eta­bles, for ex­am­ple, or spices, fruits, to things that bring much more value per square me­tre.”

Cam­bo­dia’s agri­cul­ture sec­tor will rely heav­ily on sub­sis­tence farm­ing for years to come, although in­creas­ing in­dus­tri­al­i­sa­tion and au­to­ma­tion across the re­gion is a dif­fi­cult trend to ig­nore. For Koma, the in­evitable trans­for­ma­tion of small­hold­ers’ plots into larger-scale com­mer­cial op­er­a­tions presents a ma­jor chal­lenge for a sec­tor that has been his­tor­i­cally slow to adapt to change.

“In the next ten to 15 years, we will see maybe around 20 to 25% of all Cam­bo­dian farm­ers re­main­ing com­mer­cial farm­ers – so Cam­bo­dia will not be 70-80% farm­ers any more,” he said. “The num­ber would de­crease, but would be more pro­duc­tive, more com­pet­i­tive and more mar­ke­to­ri­ented. You will see the de­vel­op­ment of medium- to large-scale farm­ing in high­value prod­ucts like durian, like pep­per – this kind of farm­ing sys­tem that takes a big cap­i­tal de­vel­op­ment.”

Per­haps more press­ing than the spec­tre of au­to­ma­tion is a com­mon strug­gle fac­ing farm­ers across the re­gion: as the cities of South­east Asia swell with the force of ur­ban de­vel­op­ment, more and more young work­ers are leav­ing fam­ily farms and look­ing for a more lu­cra­tive liv­ing. Mey Kalyan, a se­nior ad­vi­sor to the Supreme Na­tional Eco­nomic Coun­cil and chair­man at the Royal Univer­sity of Phnom Penh, said

IF YOU’RE IN CAM­BO­DIA, RICE IS A QUICK WIN. IF YOU IM­PROVE ANY­THING ON RICE YOU HAVE A SO­CIAL IM­PACT THAT’S VERY LARGE. THAT’S WHY THE FO­CUS IS SO

STRONG ON IT”

that young Cam­bo­di­ans were in­creas­ingly leav­ing the prov­inces to work across the bor­der in Thailand or in the fac­to­ries sur­round­ing Phnom Penh.

“The more we pro­duce rice, the poorer and poorer we get,” he told South­east Asia Globe. “I roughly cal­cu­lated that to earn [the same] money as a nor­mal worker in a gar­ment fac­tory, one has to grow six hectares of rice. Can you and I do that? It’s tough work. It’s not re­ward­ing. That’s why it’s not at­trac­tive.”

Although crit­ics within the labour move­ment ar­gue that the min­i­mum wage re­mains too low to meet the needs of ev­ery­day work­ers, the manda­tory monthly salary in Cam­bo­dia’s cru­cial gar­ment man­u­fac­tur­ing sec­tor has more than dou­bled in the past six years to just over $150 a month. By con­trast, the av­er­age monthly wage for rice farm­ers is es­ti­mated to be any­where be­tween $50 to $100. For a na­tion that has been so thor­oughly dom­i­nated by its agri­cul­ture in­dus­try through­out its his­tory, Vi­rag said, it is a strik­ing change.

“When you see the move­ment of the gen­eral pop­u­la­tion, es­pe­cially young folks, it’s go­ing to be out of agri­cul­ture very strongly,” he said, not­ing that the pre­vail­ing es­ti­mate that 80% of house­holds re­lied on farm­ing was severely out-dated. “If you look at the numbers to­day, you are go­ing to be at some­thing like 40%.”

And with more than half of Cam­bo­di­ans now own­ing smart­phones, the dis­con­nect be­tween the younger gen­er­a­tion and their par­ents is grow­ing more pronounced. Ul­ti­mately, Kalyan said, new en­trants into the work­force could not be blamed for seek­ing a steady liv­ing fur­ther afield than the fail­ing fam­ily plot.

“Peo­ple are look­ing for op­por­tu­ni­ties – some­times good some­times bad, some­times to serve the short-term pur­pose,

but not the long-term,” he said. “But peo­ple are still poor, so they are hun­gry for im­prov­ing their liv­ing stan­dards. And com­bined with the in­ter­net age, with TV, they know what is hap­pen­ing in other coun­tries, how much the salaries are. All this is dif­fi­cult to stop. In­stead I think we have to make Cam­bo­dia more at­trac­tive.”

Pro­grammes such as USAid’s Cam­bo­dia Har­vest and Vi­rag’s Project Alba aim to do just that. As of 2013, more than 10,000 house­holds had di­ver­si­fied their crop­ping with the Har­vest’s as­sis­tance. And Vi­rag said that his team has helped dou­ble the in­come of more than 500 small­holder farm­ers in Kam­pot and Takeo prov­inces by help­ing them to di­ver­sify their crop pro­duc­tion, in­vest in drip ir­ri­ga­tion and mod­ern equip­ment and by pledg­ing to buy the re­sult­ing crop at a fixed price.

For Kalyan, though, this change can­not be ac­com­plished by the pri­vate sec­tor – or for­eign aid – alone.

“The main, main, main, main prob­lem in Cam­bo­dia is, for ex­am­ple, if I’m a farmer and I want to shift from rice to pep­per – but do I have enough sup­port? Enough tech­ni­cal knowl­edge to shift?” he said. “It’s very dif­fi­cult. So that is the role of the gov­ern­ment and I think the gov­ern­ment’s work on this is not suf­fi­cient.”

Koma ar­gued that while more gov­ern­ment sup­port in re­search and de­vel­op­ment, tech­nol­ogy, qual­ity con­trol and cer­ti­fi­ca­tion was ur­gently needed, it was also im­per­a­tive that small-scale farm­ers banded to­gether as col­lec­tives in the face of fierce re­gional com­pe­ti­tion.

“Our farm­ers need sup­port to be or­gan­ised, be­cause only a strong farm­ers’ or­gan­i­sa­tion will be able to com­pete in the mar­ket,” he said. “Big-scale farm­ing, it can have ac­cess to cap­i­tal, low in­ter­est rates. But small-scale farm­ers, they have ac­cess

to a small amount of cap­i­tal at a very high in­ter­est rate – two or three times higher than the big-scale farm­ers.”

Ul­ti­mately, Kalyan said that Cam­bo­dia’s agri­cul­tural sec­tor would not be saved by scale, but by strat­egy.

“Cam­bo­dia has no need to do a big pro­duc­tion – num­ber ten in the world, num­ber five in the world, we can’t do it,” he said. “We have to tar­get the niche mar­ket, not vol­ume, be­cause we can­not com­pete on vol­ume. But we have to do some­thing we are good at. To do this with flex­i­bil­ity, with in­no­va­tion, and with own­er­ship from the peo­ple. I think the peo­ple will an­swer.”

THE MORE WE PRO­DUCE RICE, THE POORER WE GET. I CAL­CU­LATED THAT TO EARN THE SAME MONEY AS A NOR­MAL WORKER

IN A GAR­MENT FAC­TORY, ONE HAS TO GROW SIX HECTARES OF RICE”

Clock­wise from top: farm­ers plant rice in a field in Cam­bo­dia’s Kam­pong Speu province; a farmer sprays pes­ti­cide on a paddy field in In­done­sia’s West Java province; a se­nior Thai of­fi­cial pre­sid­ing over a plough­ing cer­e­mony scat­ters rice seeds; a worker watches rice grains fall into the back of a truck in a paddy field in Bangkok

Clock­wise from top left: a cy­clist rides past a rice field on the out­skirts of Hanoi; a worker lays out rice to dry in the sun at an in­dus­trial rice mill in Thailand; a farmer in­volved with the Al­pha Project in Cam­bo­dia holds up seeds; farm­ers plant rice in a

field in Cam­bo­dia’s Kan­dal province

A farmer har­vests chillies in Cam­bo­dia (left); farm­ers carry rice bales through a field in Kam­pong Speu province

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