Farmers Will Need Help To Realize Rice Windfall

Last year, Son Peisei, 31, a rice farmer in Battambang province, didn’t bother to fertilize her rice field. She deemed it too expensive, despite harvesting just 0.7 tons of rice from her 1-hectare field, down from 2 tons the year before.

This season, however, Son Peisei is doing everything she can to produce more rice.

“I want to increase [the yield] to 3 tons of rice per hectare,” she said in a recent interview. “Rice is be­coming white gold.”

Industry watchers say that surging global demand for grains means rice prices are likely to stay high.

While that’s a burden for rice consumers, particularly the urban poor, it’s also a potential windfall for the majority of Cambodians who are rice farmers. But Cambodia has a long way to go to realize the promise of its golden fields, officials say.

“If the price increase is permanent, which I think is the consensus view, it means there are things farmers can do at the margins to improve production,” said Eric Sidgwick, a senior country economist for the Asian Development Bank in Cambodia. But “without further improvement in rural infrastructure and land, that will only get farmers so far. The government will have to step in,” Sidgwick said.

“A farmer may want to be able to plant more rice, but he may be fi­nancially constrained—he doesn’t have enough land or he can’t get seeds or fertilizer in order to in­crease production.”

Agriculture Minister Chan Sarun said Sunday that this season’s paddy harvest should reach 7 million tons, up 500,000 tons from last season.

In addition to improving agricultural education the government is encouraging farmers to use high-yield, purebred rice seeds and natural fertilizer, Chan Sarun said.

The government also plans to increase the amount of land on which rice is cultivated-though he did not specify by how much or where it would come from-and to radically expand rural irrigation systems.

Irrigation is still sparse in Cambodia where just 7 percent of arable land is irrigated, compared with 45 percent in Vietnam, according to UN Development Program.

Chan Sarun said that by 2009, the government aims to put 50 percent of cultivated land in the country under irrigation.

Currently most farmers reap just one rain-fed rice harvest a year while fewer than 10 percent of farm households take advantage of agricultural education programs, according to UN Development Program.

For the moment, however, there’s not much that eager farmers like Son Peisei can do to boost production, said Yang Saing Koma, president of the Cambodian Center for Study and Development in Agriculture.

Farmers, Yang Saing Koma said, would love to produce more rice, and some have vowed to pay closer attention to intensification techniques. While that alone could boost this season’s harvest 10 to 15 percent. Many would love to grow a second crop, but lacking irrigation systems, all they can do is pray for early rains.

“You have the farmers, you have the water, you have the farmland, you have the technology to increase production. Now what you need is investment,” said Jo Scheuer, Cambodia country director for the UNDP.

Government spending on agriculture increased more than tenfold in the last decade, to $50 million last year, according to the Ministry of Finance. Even so, agricultural investment has lagged behind other sectors.

From Aug 1 1994 through Sept 30 2007, approved investments in agriculture were $220 million, one-tenth of the $2.3 billion for industry, less than an eighth of the $1.9 billion for tourism, and half the $461 million for the service sector, according to data from the Cambodian Investment Board.

Now, rising rice prices may start to attract more private-sector money.

“Cambodia used to be the rice bowl of the world,” said Marvin Yeo, co-founder of Frontier Investment & Development Partners, a private equity firm that hopes to raise $250 million by year’s end. Yeo said his fund plans to pump about one third of its capital into agro-business, from rice farms and rice mills, to alternative fuel crops like jatropha and rubber plantations.

Though yields in Cambodia have been growing, reaching 2.62 tons of rice per hectare last year, according to the Ministry of Agriculture, the UN’s Food and Agriculture Organization says they’re still among the lowest in the region.

Only Brunei Darussalam and East Timor ranked worse in 2006, while yields were 4.89 tons per hectare in Vietnam, 3.5 in Burma and Laos, and 2.9 in Thailand.

“We have hardly one crop per year. You use land three or four months, then leave it idle for 6 or 7 months. In Thailand they have one week before the next crop,” said Tin Ponlok, a national project coordinator at the Ministry of Environment.

Land titling is also a problem; UNDP says most rural households don’t have secure title to their land, making them vulnerable to land-grabbing and loath to invest in property they can’t prove they own.

Lack of credit also puts the brakes on rural development. UNDP estimates that less than a third of farmers have access to institutionalized credit; the rest must rely on local moneylenders who may charge between 7 to 10 percent interest per month.

Tin Ponlok said many farmers take out such high-interest loans to pay for seeds and fertilizer, the cost of which is rising as oil gets more expensive, which they must repay at harvest time. Many are then forced to sell their crops cheaply to repay their loan and can’t stockpile enough rice to feed their family throughout the year, he said.

According to the Cambodia Development Resource Institute, in 2004, 65 percent of farmers didn’t cultivate enough rice for their own consumption.

Moreover, many farmers sold their harvest in November and December last year, before prices spiked, thus they may have missed the market’s signal to grow more, CDRI said.

What farmer Son Peisei wants most right now is more land.

“I’m sad I don’t have big fields to grow rice,” she said. A little more rain probably wouldn’t hurt either.

(Additional reporting Prak Chan Thul)


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