Government Launches $60 Million Project to Help Small Farmers

The government yesterday launched the first phase of a project to help 15,000 farming families commercialize their operations and bring their produce—rice, cassava, chickens and silk—to market.

“The supply and demand in the country is not balanced—like with vegetables, so there are imports to fill the demand,” Commerce Minister Pan Sorasak said at the event yesterday at the Commerce Ministry in Phnom Penh. “We need to understand and organize a system to boost the harvests of these crops.”

The project, Accelerating Inclusive Markets for Smallholders, has two components: building infrastructure to help farmers, and offering special microfinance deals, including longer terms and 20 percent government subsidies.

Meng Sakphuseth, country program officer of the International Fund for Agricultural Development—which is loaning $36 million for the project—said a conservative estimate for the project’s value was $62 million, possibly rising as high as $80 million.

The government is contributing about $8 million, with $16 million more coming from the private sector. Three microfinance institutions—Prasak, Amret and LOLC—are also set to participate. The Commerce Ministry says the project, which it will implement with the Finance Ministry, will run for six years until 2023.

Market access has been a hot topic in the sector, with several local NGOs working on ways to get local produce to market, and government officials pushing to have Cambodian vegetables made available at tourist destinations.

Chou Ngeth, senior consultant at Emerging Market Consulting, said the issue was a vital one for Cambodia’s agricultural sector, but the new project could struggle to be sustainable unless it became a permanent part of the government’s work.

“There is little to no market information for agriculture products at the moment,” Mr. Ngeth said. “There are many other problems, including production techniques and farmers’ commitment to business.”

“The government needs to have a dedicated budget, resources and well-functioning institution,” he said. “Otherwise, the effort will die when it runs out of funds.”

Peou Rathana, researcher at the nonprofit Climate Change, Agriculture and Food Security and a professor at the Netherlands’ Utrecht University, said there was a lot of work to do to improve Cambodian farmers’ competitiveness, especially internationally.

“Cambodia mainly produces fresh products,” she said. Its farmers are “not very good at processing as we don’t have the capacity…. The country is looking at the bottom of the value chain. That usually is the trickiest.”

Ms. Rathana stressed the importance of the industry being led by professional agricultural businesses and those that understand global food supply and demand.

“One of the problems is everyone in Cambodia produces one product in the same period, which pushes the price down so low. But they don’t understand that yet,” she said.

Ms. Rathana added that the new government initiative was an important step to facilitate market access for smallholder farmers and to prioritize key crops, but that its success would depend on having “strong farmers’ collectives and suitable farming.”

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