“The more we produce rice, the poorer and poorer we get”
By: Paul Millar - POSTED ON: September 18, 2017 | Business
Economists say farmers need to reduce their reliance on the crop in order to revitalise Cambodia’s struggling agriculture industry
At the 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 labour-intensive, 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 four-fifths 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 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 market-oriented. You will see the development of medium- to large-scale farming in high-value 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 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.”
This article was published in the September edition of Southeast Asia Globe magazine. For full access, subscribe here.
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