Agriculture Ministry Looks to Drop Middlemen

As middlemen continue to absorb the lion’s share of profits in Cambodia’s farming sector, the Agriculture Ministry is planning to set up a committee to promote direct links between farmers and the companies that ultimately put their products on the market.

Despite a sub-decree on “contract farming” being approved in 2011, farmers continue to sell their products mainly to intermediaries, leaving them with less security and lower profits come harvest time.

Chao Sinh, vice chief of the postharvest technology office in the ministry’s department of agricultural engineering, said Tuesday that a new push would be made to encourage binding, pre-harvest agreements between farmers and the firms selling their products.

“The most important thing is that they [farmers] will have a reasonable price,” Mr. Sinh said. “The middleman is [currently]… the most benefited actor in the process. They buy at a cheap price and sell at a higher price.”

Mr. Sinh said the Mediation Committee for Contract Farming, headed by Agriculture Minister Ouk Rabun, would also step in when contractual issues arise.

“For example, if there is a dispute between farmers and a company in a contract, the committee would mediate,” he said. “It will also join in preparing contract signings between farmers and companies.”

Mr. Sinh said more widespread implementation of contract farming would also lead farmers to grow the crops that are most in demand on the market, as well as encouraging firms to invest in better technology for trusted farmers.

But while Mr. Sinh said contract farming would also help lower costs for agriculture firms by alleviating direct spending on operations and land, Yi Bunhak, deputy director of the ministry’s agro-industry department, said companies have been reluctant to trust farmers.

“Mostly, we have noticed that farmers seem interested in contract farming, but companies don’t because they said they do not have enough funds to pay contracted farmers,” he said.

“They have to pay farmers two months in advance before harvest season once they have signed a product contract with farmers.”

Mr. Bunhak said there was not an exact timeline for the formation of the government’s committee. “But the agriculture minister has been pushing us to prepare documents for the establishment of the committee,” he said.

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