Although rice has long fed both the people and the economy of Cambodia, experts say that crop diversification and increased investment are needed to take the agriculture industry to the next level
Under a single strip light hanging from a pole in Phnom Penh’s tin-roofed Psar Kabko market, Ros Chhang sits on a wooden platform with her legs crossed, a black-and-gold shirt hanging loosely off her ageing frame. In front of her, rows of wilted kale and plastic baskets containing potatoes, peppers and onions await buyers in the unrelenting, mid-morning heat.
“It’s more difficult than it used to be,” said Chang, who has been selling fruit and vegetables for close to 40 years. “Fewer people buy produce from the market now. The wholesale price fluctuates a lot. Sometimes it’s very expensive.”
A few feet away, opposite one of the market’s makeshift hair salons, 23-year-old Cheum Seakly tells us that the wholesale price of the rice she buys from Battambang also keeps rising. “I don’t know why,” she said, shrugging her shoulders. “Nobody explains why the price goes up, it just does. And I’m losing customers.”
Vendors aren’t the only ones struggling to stay afloat. Further down the supply chain, a perfect storm of high transportation costs, low productivity, limited investment and inefficient governance mean that farmers across the country are also struggling to make ends meet. In search of a better life, many have moved to the capital or crossed the border into Thailand. The farmers left behind must produce more with less.
In the eyes of Mey Kalyan, a senior advisor to the Supreme National Economic Council and a chairman at the Royal University of Phnom Penh (RUPP), the ongoing exodus mirrors the country’s skewed approach to economic development.
“Cambodia needs to have a well-balanced policy that also takes care of agriculture but, so far, it has been too focused on urban areas, with lots of investment coming from abroad and pushing up land prices,” said Kalyan. “So, if you buy land [to invest] in the agriculture sector, [from the outset] the investment is huge, because the prices have already been pushed up, [which] discourages investment in agriculture.”
But investment is what Cambodia’s largely subsistence-based agricultural sector desperately needs. While neighbours have implemented wide-ranging rice subsidies, developed infrastructure and ploughed money into research and development in a bid to boost productivity, Cambodia’s farmers have been largely left to their own devices. As a result, they are losing business to their more-competitive peers in Vietnam and Thailand, according to Yang Saing Koma, former president of the Cambodian Centre for Study and Development of Agriculture.
“[Farmers in neighbouring countries] can produce goods at a lower cost, because capital and inputs are much cheaper than in Cambodia,” he said. “They also have very strong research and development, which is weak in Cambodia, and build their own value chains.”
The challenges are exacerbated by increasingly erratic weather patterns caused by global climate change and rampant deforestation. In 2016, the World Food Programme, Unicef and the UN’s Food and Agriculture Organisation surveyed 2,400 households across 25 provinces to determine the impact of that year’s drought, widely regarded as the worst the country had experienced in half a century. They found that 32% suffered water shortages and 62% income losses, with an average decline in earnings of 19%. Meanwhile, 67% of children under five years of age fell prey to diarrhoeal illnesses.
Consequently, many analysts are encouraging Cambodia’s rice farmers to diversify their crops. Given that cultivating rice is dependent on seasonal rainfall, diversification offers a way of protecting rice farmers from the economic losses caused by increasingly unpredictable weather and a means of generating higher incomes by producing higher valued commodities.
Silk is one such commodity. As it stands, the country imports 400 tonnes of it every year. But because Cambodia’s farmers have never been taught how to raise healthy silkworms, the country only produces one tonne per year, according to Kalyan, who hopes his research programme at RUPP will help to reverse the trade imbalance.
The programme, which has already received substantial funding from the Cambodian government, researches the best ways to raise silkworms, educates farmers on how to cultivate cocoons from the worms and communicates with the private sector to ensure the programme’s direction is aligned with market demands.
By convincing financially stable farmers who occupy prominent positions within their communities to bear the brunt of the initial investment required to produce silk and then encourage their neighbours to follow suit, the programme hopes many Cambodians will begin cultivating silk in addition to their staple rice.
“You don’t need much water, or good irrigation systems, for it to work… You need only two things – silkworms and food, which is the mulberry tree,” said Kalyan. “We import 400 tonnes, so we know that there is already a market for silk yarns in Cambodia… and unlike rice, the production cycle is only one month long, so farmers can have monthly salaries.”
While Kalyan acknowledges that it will take a long time for Cambodia to develop its silk production industry into a fully integrated value chain that links RUPP to the country’s farmers, tailors and garment factories, the success of Thailand’s silk industry – which is helping to train individuals from RUPP’s programme – gives him hope. The first batch of silk yarns should be produced by May 2018, he said.
Cambodia’s agricultural industry faces significant challenges. But these also present opportunities, especially for investment in tech
Kalyan’s attempt to produce a fully integrated silk value chain in Cambodia is far from the only initiative aimed at improving the fortunes of the country’s ailing agricultural industry. Recognising the potential for technology to significantly boost the productivity levels of Cambodia’s subsistence farmers, last November, the Mekong Business Initiative (MBI) – a joint venture between the Australian government and the Asian Development Bank – launched the Mekong Agriculture Technology Challenge (Match), a regional startup accelerator focused on agricultural technologies.
According to MBI’s Cambodia country manager Sak Sambath, without the introduction of new technologies, it will be very difficult for the country’s farmers to compete.
“Technology can help farmers improve production, improve the management of processing facilities or facilitate connections to the market,” he said.
The accelerator hopes to attract global agricultural technology – or agritech – startups to move to the region in return for a small cash incentive, connections to a different network of partners and investors, and greater visibility across the Mekong region. Moreover, it hopes to nurture a selection of promising, local agritech startups by helping develop their business models into attractive propositions that turn the heads of global investors.
The prospect of discovering the next Airbnb, Facebook or Uber may get investor hearts racing more than investing in agricultural startups, but without farms, cities can’t exist. As the ongoing rural exodus in Cambodia demonstrates, the fortunes of town and country are inextricably linked and investors would do well to broaden their horizons, according to Sambath.
“A steadily growing population means we need to produce more food, a task that is becoming increasingly difficult in the face of rural labour shortages caused by growing urban migration,” he said. “Combined with competition from neighbouring countries, Cambodia’s agricultural industry faces significant challenges. But these also present opportunities, especially for investment in tech.”
This article was first published in Globe Media Asia’s Focus Cambodia 2018 magazine.