In the face of the deepening rice sector crisis, the government’s recent measures—including a cash influx directed toward millers—are nothing but clumsy stopgaps that may bring slight, artificial and temporary relief, but do not solve at all the problem of Cambodia’s collapsing agriculture industry.
—Letter to the Editor—
We are actually approaching the moment of truth when nothing can hide the failure of the government’s economic policy in general and agricultural policy in particular, if we can call “policy” a combination of neglect, incompetence, corruption and plunder that has been in action for decades and has led to the destruction or disorganization of entire sectors of Cambodia’s economy.
Injecting cash at the last minute in grossly inadequate amounts through the most unusual channels and calling for the “generosity” of government officials, the armed forces, wealthy businesspeople and other “friends” to personally “help” buy, store, dry and process rice—meaning doing the work of the cash-strapped professional rice millers in order to save them from bankruptcy—is a pathetic “policy” on the part of an unprofessional and desperate government having to deal with a situation that is getting more and more out of control.
In a previous letter to The Cambodia Daily on the same topic—“Struggling Local Rice Sector a Result of Government Neglect” (March 17)—I pointed to the fact that the looming collapse of the sector would have far-reaching economic, social and political consequences given the Cambodian population’s heavy reliance on agriculture in general and the rice industry in particular. But I also stressed that the government had completely ignored the real and structural causes of the crisis and therefore could not think of, and work on, the needed remedies.
In agriculture, as in many other sectors, the key word is productivity with its corollary: competitiveness. Even though world market prices for rice have recently declined, some producers still make profits and continue to thrive while others start to incur losses and face possible bankruptcy. The difference in their financial situations lies in the fact that the first group of producers are simply more competitive than the second one, and those who are more competitive are in such a favorable situation because they achieve higher productivity than their competitors.
It is undeniable that Cambodia’s agricultural productivity is much lower than that of neighboring and competing countries. Therefore, any genuine solution to the crisis requires that we address this regional, structural productivity gap.
The first requirement for an increase in productivity is a reduction in production costs. As a matter of fact, Cambodian farmers have always incurred relatively and excessively high production costs when it comes to fertilizers, transportation, electricity and interest rates. Any responsible government must strive to suppress “unofficial taxes,” bribes and other kickbacks that eventually and unduly increase production and distribution costs. In addition, commercial monopolies in countless sectors that are solely based on government corruption must be abolished so as to ensure free and fair competition that will necessarily lead to a further and significant reduction in prices and costs.
But above all, long overdue structural reforms need to be implemented in order to ensure—through an increase in productivity—the immediate survival and long-term prosperity of Cambodia’s agriculture: land reform and redistribution (instead of participating in land-grabbing, the government should ensure all farmers have enough land to viably cultivate); small-scale, widespread and effective irrigation throughout the country to help farmers diversify and harvest several crops per year; a nonprofit credit system especially designed to help farmers; agriculture technical centers to assist and guide farmers; the establishment of farm cooperatives, on a voluntary basis, that would increase farmers’ bargaining power; a government price-support policy with consistent mechanisms to ensure decent selling prices for farmers; and good communication networks (especially roads) to reduce the cost and time of transporting products from farms to markets.