Agriculture sector is playing important role in economic growth and poverty reduction. Cambodia has still the potential to significantly increase yields in rice production and consolidate food security, and this could provide a sizeable growth dividend in the short term. But experience has also shown that agriculture is unlikely to grow beyond 5 percent or so per annum, hence contributing less than 2 percentage points of growth per annum. Manufacturing will remain very important in absorbing new workers. The fact that urbanization has proceeded slowly, while value-added per worker in agriculture is similar to other countries at the same level of development, suggests that Cambodia is not taking full advantage of the agglomeration effects around urban centers. These should not be ignored, as they will contribute greatly to growth.

It is expected that the exports of milled rice productions will be increasing up to 200,000 tons from 20,000 in 2008. The private sector is required to maintain minimum stocks of 500,000 tons in 2009, up from 400,000 last year. Phou Puy, president of the Federation of Cambodian Rice Miller Association (FCRMA) which is responsible for all private rice exports, was quoted by the Phnom Post as saying that the increase would come despite higher government stock requirements.

Chan Sarun, the Minister of Agriculture, said in the annual conference Wednesday, November 27, 2008 that Cambodia’s rice yield for the 2008-09 harvest is projected to be up 400,000 tons from the last year to about 6.8 million tons of paddy rice, which is expected to create a 2.8 million-ton rice surplus.

According to the agriculture ministry’s primary survey of this year’s rice production, the average rice yield is projected at 2.6 tons per hectare. In particular, rice yield will be up to 3 tons such as Battambang, Prey Veng, Takeo and Kompong Cham.

Increasing the amount of rice yield is because Cambodian farmers are using better rice seeds, and educated about the use of higher yielding rice varieties. Agriculture consumes 85 percent of the world’s utilized water and the sector contributes to deforestation, land degradation, and pollution.

Rice traders hope that the investment will improve the quality of Cambodian milled rice and boost high-value exports through increased demand. Traditionally, Cambodia has almost exclusively exported unprocessed paddy.

Agriculture Minister said in the launch of The World Bank World Development Report 2008 (WDR 08) “Agriculture for Development” on January 31, 2008 that “It is obvious that agriculture still requires more investment across the board, including the private sector, and especially the development of farmer organizations –such as creating agricultural development associations or communities as well as enhancing the recognition of the value of agricultural products which are protected in some geographical areas.”

Yang Sang Koma, director of the Cambodian Center for Study and Development in Agriculture, said that he had expected that harvest to be slightly higher this year, but added that considering the dry spell from July to September in some areas, the harvest appears to be “not had at all”, reported the Cambodia Daily.

The performance of the agricultural sector was “more or less the same” as other years, he said, at adding that the government should increase investment in technology and irrigation to significantly improve agricultural productivity.

Phou Puy said that last year, it was expected to export 20,000 tons of milled rice to Malaysia, Germany and Brunei as part of a pilot scheme. And it was also expected to export about 500,000 tons of rice pady, reported the Phnom Penh Post.

Yang Sang Koma, said the demand of the agricultural market is huge, but the number of farmers who can produce for the market is less than 30 percent, even though farmers constituted more than 80 percent of the whole population, quoted from the World Bank Newsletter.

“The government budget for agriculture in 2009 was small compared to other ministries and did not allocate sufficient resources to provincial level authorities for implementation of agriculture programs, said Yang Sang Koma, quoted by the Cambodia Daily as saying.

“To add more value to the agriculture sector, the communities, donors, government and especially other actors in the private sector (SME) should make a joint effort by developing processing capacity, supporting the establishment of agriculture cooperatives, developing marketing strategy, networking by using information and communication technology as a tool, continuing rehabilitation of irrigation systems and strengthening water management capabilities, promoting contract farming, encouraging exports by providing trade facilitation, improving the investment climate to attract more investors in agro-industry and creating demand for agricultural products and promoting organic farming, reported the World Bank Newsletter.

Last year, Prime Minister Hun Sen banned on rice exports to neighboring countries -Thailand and Vietnam- during two months in an attempt to curb the increase in domestic rice price.

Increase in loans and low interest rate are important for boosting the agriculture sector in Cambodia in a bid to cushion the country form the world economic slowdown. Loans will help increase the extra money to expand the agriculture and help with the economic growth.

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