Hopes grow as agriculture sector gains from initiative
Indonesia exchange links up with CDX
AS ONE of the Kingdom’s main engines of economic growth, the agricultural sector has been drawing increased attention recently from both the government and development partners.
Millions of dollars have been poured into agriculture projects by both the state and international NGOs, investments which are bearing fruit for many of Cambodia’s farmers.
Kean Sophea, deputy director of the Department of Horticulture and Subsidiary Crops at the Ministry of Agriculture, said the funds have brought positive change for thousands of growers across the country.
“There are a lot of changes to the farmers’ livelihood. We noticed that their income is increasing two-fold.
“Depending on the amount of available funds, we can facilitate a lot of the teamwork and cooperation where farmers can discuss their issues and share experiences to achieve high-quality production,” he said.
However, Sophea said many farmers were reluctant to change their work methods. “Farmers do not like to work based on a structure and keeping records. They like to farm the traditional way.”
In mid-2016, the Ministry of Agriculture announced that it would put $20 million into a three-year initiative to support those growing crops along the Mekong River.
The goal of the project was to supply 160 tonnes a day of quality and safe vegetables to local markets.
More than 2,000 crop farmers and 200 rice cooperatives signed up and are still taking part in the project.
The program was meant to reinvigorate vegetable farming that followed good agriculture practices (GAP) stan- dards focusing on 13 priority crops including lettuce, chili peppers, tomatoes, cucumbers and zucchini.
The International Fund for Agricultural Development (IFAD), one of the largest funding partners for the country’s farming sector has, since 1996, given $189.5 million to implement 10 projects.
They help promote the sector, boost human resources, protect farmers from shocks and improve the commodity supply chain.
Meng Sakphouseth, a coun- try program officer at IFAD, said agriculture in Cambodia has been an engine of growth and it still provides an important, albeit decreasing share of rural incomes.
“Poverty rates are dropping fast and are at a historical low. The diversification of the Cambodian economy and transformation of its agriculture sector have been two mutually reinforcing trends over the past two decades.
“And, they are supported by public policies which promote market-driven growth, open trade and private investments,” he said.
Lach Mom, a vegetable farmer who grows crops on 1.5 hectares in Kampong Thom province, said under the project, her family has seen positive change.
“I receive a lot of support and encouragement from the project managers. They teach us to plant and give us seeds. Now we can easily sell our produce at the market,” she said.
Mom said after joining the project, she earns more than $250 a month.
“Before I planted my crops without knowing the basics, and my production was not good. Now I don’t worry about my farming and am not as concerned about my income as before,” she said.
Chan Sophal, the director at the Centre for Policy Studies, said that implementing agricultural projects is key to help farmers.
“Agricultural projects promote the awareness of farmers to understand technical farming, increase production and income. We are pushing growth in the rice sector as well as the vegetable and animal farming sectors,” he said.
Commercial horticulture has struggled to take root in Cambodia, which as a result imports about 40 percent of its fruits and vegetables at a cost of around $200 million a year. CAMBODIA’S central counterparty firm, Derivatives Exchange (CDX), announced their cooperation with Indonesia-based Jakarta Futures Exchange ( JFX) on Friday and expressed hope that the move would boost growth in the Kingdom’s derivatives trading market.
Signed in Phnom Penh, the agreement was facilitated by the Securities and Exchange Commission of Cambodia (SECC).
SECC Director-General Sou Socheat said since its launching three years ago, Cambodia’s derivatives market is showing of progress.
“After launching the market in 2015, we are seeing noteworthy improvement as the sector gets more awareness and confidence,” he said.
Derivatives trading consists of two main entities, a brokerage firm and central counterparty that acts as a clearing house.
Cambodia’s capital market regulator announced late last year that it would suspend the issuance of new central counterparty licences to derivatives trading firms, claiming capping the market at four was sufficient in serving current demand.
The SECC has, to date, granted licences to four central counterparty companies and 14 derivatives brokers.
According to Socheat, however, currently, more than 10 brokerage firms applying for derivatives trading licenses.
“The rapid growth of brokers [in this sector] is now showing the potentail of the derivatives market in Cambodia,” he said.
Under the SECC’s minimum capital requirements, central counterparties are required to put down at least $5 million, while brokerage firms must put down $250,000.
Sammy So, CEO of Cambodian Derivatives Exchange Co Ltd, said that the cooperation between the two companies would boost the derivatives market in Cambodia.
“Through this deal, CDX will be able to receive advanced technologies in order to contribute to bring in more progress,” he said.
JFX is a central counterparty firm with more than 20 years in Indonesia’s derivatives trading market.
Stephanus Paulus Lumintang, director of JFX, said the Kingdom’s derivatives market is now showing progress that will encourage more active trading.
“This cooperation has created another key for the financial sector and will lay a solid foundation for accelerating markets in Cambodia,” he said.