Rising commodities prices are making Cambodia rethink its strategy for economic growth, Minister of Commerce Cham Prasidh said Thursday.
Rather than focus on building niche markets, such as organic rice or labor-friendly garment manufacturing, and negotiating favorable trade deals with the developed world, rising food prices mean Cambodia has a chance to transform itself into a profitable rice bowl for the world, Cham Prasidh said in an interview.
“Since we start to see the effect and implications of the food crisis in the world, we may be in the process now to reconsider what we should do,” he said.
“For Cambodia now, we see rice as gold,” he said.
Unlike oil, Cambodia’s other recently discovered commodity, the price of which is notoriously fickle, Cham Prasidh said it is a safe bet that the bottom won’t fall out of the rice market anytime soon.
“There’s a lot of people that need food,” he said.
“If the population grows at a rate of 2.4 percent, you need food to grow three times this 2.4 percent in order to supply the population with food.”
The market itself, through rising rice prices, has given farmers incentive to grow more; what the government needs to do is further support them, Cham Prasidh said, by improving rural infrastructure, especially irrigation, expanding rural credit, and getting Cambodian farmers better access to world markets.
This week Thailand scrapped its controversial proposal to form an OPEC-like rice cartel, but Cham Prasidh said Cambodia still advocates forming an association of rice exporting states with Thailand, Vietnam, Burma and Laos.
Unlike the Organization of Petroleum Exporting Countries, a rice cartel would not impose production and price constraints, he said.
Instead, the idea, which he said was floated by Prime Minister Hun Sen in 2005, would help Laos, Cambodia and Burma learn from their more developed neighbors Thailand and Vietnam how to better grow and market rice, he said.
“There is nothing about setting up a unique price [for rice] in the region so we can bargain with other people. No production caps,” he said.
The proposed association will be discussed at an October Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy summit in Hanoi.
While still a small producer, Cambodia, unlike some of the world’s larger food producers, has ample room to further boost productivity yields and expand land under cultivation, government officials and agricultural experts say.
Land under cultivation has increased over the past decade, surpassing the nation’s 1967 benchmark of 2.5 million hectares in 2006, according to the ministries of Agriculture and Finance.
Yields have also improved from 1.79 tons of rice per hectare a decade ago to 2.62 tons last year, but the UN’s Food and Agriculture Organisation says they’re still among the lowest in the region.
Overseas development assistance could be refocused on expanding irrigation, Cham Prasidh said.
Already, Cambodia has quadrupled spending on irrigation in the last four years, boosting coverage to nearly 1 million hectares, government officials said.
Cham Prasidh wants to see that increase to 3 to 5 million hectares.
Cambodia exported 1.48 million tons of milled rice during the 2007-2008 season. Longterm, he would like to see Cambodia export 5 million tons of milled rice annually, as well as boost mung bean, soybean and corn output.
Ministry of Finance Secretary General Hang Chuon Naron said Cambodia’s farmers are facing an unprecedented situation: Farming, long plagued by low profits and underinvestment, has become lucrative.
“Farming for the first time is profitable,” he said. “Now ask garment workers, they’ll say it’s better for them to plant rice.”
Hang Chuon Naron said that by raising productivity from 2.5 to 3 tons of rice per hectare, Cambodia could boost annual production of paddy from 6.4 to 7.5 million tons.
Expand into the nation’s 70 percent forest cover—a controversial proposition—and expand land under cultivation from 2.5 to 3 million hectares, and annual paddy production could hit 9 million tons, he said.
Other interests also compete for land, such as efforts to preserve forest cover and expanding rubber plantations, which the government has been promoting in the face of booming rubber prices, Hang Chuon Naron said.
“This is a competing agenda. This must be resolved before Cambodia can be a green basket,” he said.
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