SPECIAL REPORT

through legal channels.

In fact, the UN Food and Agriculture Organisation projected that 44 per cent of total rice export in 2018 was subject to smuggling.

Unofficial figures say two million tonnes of rice are sold illegally every year.

These stocks that filter through porous means are rebranded and sold as Thai or Vietnamese rice. The activity is so prevalent that an MAFF official remarked that “any crackdown on the illegal rice trade would cripple the rice farming segment”.

When asked, CRF president Song Saran dismissed it as a black market activity.

“Some varieties [fetch] a good price [from] Vietnam and other ASEAN countries. Farmers grow mostly white rice as per Vietnam market demand, so they work through middlemen.

“Fragrant and special aromatic rice are exported to international markets,” he said, adding that CRF continues to explore new export markets in Europe and the Asia Pacific for special aromatic and fragrant rice.

“Competitiveness is the key element to diversify markets and product strategies [but] we need to lower logistic and energy costs, and other input costs for growers so they get more opportunity in global markets,” Saran said.

In the long term, the government should modernise irrigation, and mechanise and digitalise the sector.

“For the medium term, we will focus on developing climate-friendly rice, reduce input cost, improve competitiveness and implement rice technology for traceability,” he said.

Rising non-performing loans

All this sounds good but the conflict of interest and bureaucracy among the ministries in providing funds to farmers continue to affect the sector’s progress, CFAP’s Sotha said.

CFAP represents 21,138 households in 12 provinces where 46 per cent or 9,769 households are headed by women. In total, it has 105,690 members and female farmers make up 52 per cent of that.

“For instance, the functions of laws and policies related to agriculture and farmers’ associations are unclear to the officials from the sub-national level right down to the village.

“The government does not have sufficient expertise. Sometimes [we see] some intervention where seeds are distributed after a drought or flood. However, not every farmer has access to it,” he said.

It should be noted, though, that the MAFF works with agencies including the semi-autonomous Cambodian Research and Development Institute, International Rice Research

Institute and UN agencies.

In the meantime, Sotha stressed that funds should serve the interest of farmers, particularly the smallholders who represent some 80 per cent of the rural population in Cambodia.

“The government must involve farmers’ associations and agriculture cooperatives in funding programmes so that the voice of the farmer is heard,” he said.

Funding, in this instance is pertinent as the farming community remains among highly-indebted groups in the country who possess loans with microfinance institutions and microfinance deposit-taking institutions.

In 2019, the non-performing loan (NPL) ratio of the agriculture sector registered 7.4 per cent, a trend that has been rising since 2014.

In comparison, the manufacturing sector recorded an NPL ratio of three per cent while other sectors came in around two per cent, NBC said.

Granted, the credit growth to the agriculture sector had dipped to eight per cent in 2019 from 11 per cent in 2017 due to unfavourable weather conditions and slower sectoral productivity growth, the expansion in NPL ratio could result in banks being reluctant in providing loans.

“[ This] should explain a slower growth in banks’ credits to the sector in the last few years,” the central bank said.

Reduce the producer-buyer gap

Going forward, the government is banking on the sector to help the economy. Of late, Hun Sen has been praising the industry’s resilience in the current economic landscape while calling for efforts to fortify it.

Even the impending CambodiaChina Free Trade Agreement is based on the premise of raising exports on agriculture and agro-processing products to China.

First though it has to resolve the endemic problems in the sector, Sotha said.

He said smallholders and rural folk are in debt and are having to lose their homes and farmland due to discrepancies in the policies and economic development. As if climate change was not bad enough, their condition is exacerbated by Covid-19, which has only widened the gap between rice producers and buyers.

“The government must urgently intervene to connect the two parties and ensure proper and regular markets. Farmer associations and cooperatives must be allowed to buy rice from its members to store and sell for them,” Sotha said.

The government and international development partners should focus more on supporting farmers to overcome challenges and raise the allocation for the sector in the national budget.

“There should also be a critical study over how much rice is needed internally and externally, what type of rice is required and for which markets,” he said.

Similarly, the government must formulate a strategy to export rice directly and regularly to Vietnam or facilitate cooperation between the buyers and farmer associations to protect farmers.

International Fund for Agricultural Development (IFAD) country director Kaushik Barua said the next phase of focus is on imparting new skills and technology to farmers, investing in value chain-related infrastructure, and providing access to credit on appropriate terms to smallholders.

IFAD has loaned $544.2 million to Cambodia for 10 projects over the last 25 years.

Seeing that farmers are mostly reliant on rain-fed agriculture, there should be diversification by moving to higher value-added areas such as vegetables, and building more climate-resilient infrastructure.

“A lot of the work is underway, but farming communities need to maintain their focus on moving up in terms of technologies, value-adding, and enhancing resilience,” Kaushik said.

At the same time, the government should ensure that domestic demand is maintained to absorb agriculture production while efforts are made to provide comprehensive social support and cash transfer programmes.

“Finally, to ensure that farming families are kept out of poverty, the twin support of social protection systems and more production-oriented support have to work in complementarity and synergy,” he said.