World Bank Stresses Farming’s Role in Economy

New skyscrapers may be the news in Phnom Penh, but what econ­omists stressed Thursday at the launch of the World Bank’s an­nual flagship report was a need to put the focus back on Cambodia’s farms.

The bulk of the 9.5 percent GDP growth the country experienced in 2007—slightly diminished from 10.8 percent growth the previous year—favored industry and service sec­tors, but, according to World Bank ex­perts, it is agriculture that triggers ma­jor growth in other sectors.

Derek Byerlee, director of the Bank’s Agriculture for Develop­ment report, said that agriculture spurred the major leaps taken in In­dia, China and Vietnam.

“In the early days, agriculture was a major stimulus,” he said, ad­ding that helping farmers diversify away from rice toward higher-value crops is one way to foster that kind of development in Cambodia.

Although agriculture occupies a shrinking share of Cambodia’s GDP—currently at 30 percent, down from 40 percent a decade ago—sustainability in the sector is cru­cial, Finance Ministry Secretary of State Hang Chuon Naron said.

“Fluctuation in agriculture would undermine overall growth,” he said, adding that focusing on agriculture should not be done at the expense of more pressing needs in a particular region of the country.

In Malai, where the soil is fertile and trade with Thailand is close at hand, agricultural success has been achieved through 9-hectare land concessions and microcredit loans, he said, adding that the average Malai family earns $2,000 a year, higher than the national average.

But he said that a case study in a less fertile commune, located in Kandal province’s Khsach Kandal district, shows that in some areas, the focus should be elsewhere, off the farm. “Agriculture alone cannot sustain that area,” he said.

Regardless, there is a glaring link between agriculture development and poverty alleviation, Agriculture Minister Chan Sarun said.

Though the poverty level—currently at 30 percent, according to the Finance Ministry—has continually dropped over the years, from 47 percent in 1994 and more than 34 percent in 2004, the vast majority, 90 percent, of those living in poverty still reside in rural areas.

According to a presentation by World Bank senior economist Luc Christiaensen, GDP growth in oth­er sectors tends not to have the equiv­alent impact on poverty alleviation as agriculture GDP growth.

“[Agriculture growth] is 2 to 4 times more poverty-reducing than growth from non-agriculture,” he said.

World Bank Country Manager Nisha Agrawal said that better links between farms and markets are needed, as well as land access and security, and a good investment climate to stimulate the participation of the private sector in agriculture.

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