The International Fund for Agricultural Development (IFAD) has signed a $194 million financing agreement to improve the livelihoods of 100,000 smallholder farmers in Cambodia.

During an official visit to Cambodia, IFAD president Alvaro Lario inked the deal with Vongsey Vissoth, Permanent Secretary of State, Ministry of Economy and Finance. It aims to support smallholder farmers through pro-poor agricultural development, according to a tweet from IFAD Asia.

The project will boost rural incomes by encouraging farmers to organise and coordinate through grassroots organisations, invest in productive assets to raise competitiveness, and partner with agribusiness to improve market access.

The signing follows an IFAD delegation that visited the Kingdom earlier this month, led by Jyotsna Puri, Associate Vice-President of the Strategy and Knowledge Department, and Reehana Raza, Regional Director for Asia and the Pacific.

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During the trip, the delegation met key officials, including Prime Minister Hun Sen, to discuss investments to promote inclusive and sustainable agricultural growth in rural Cambodia.

According to IFAD, poverty in Cambodia has significantly reduced in the last two decades. However, the covid-19 pandemic coupled with the war in Ukraine has reversed this upward trajectory. Today, the poverty rate has climbed to 18 percent from 10 percent in 2019.

IFAD added that rural families, especially small-scale farmers, are particularly vulnerable. Three-fourths of all of Cambodia’s 6.8 million farmers are small-scale and struggle to achieve the scale and consistent quality of produce required by export and domestic markets.

“From our experience in Cambodia, we know that there is great potential for small-scale farmers to be resilient and contribute in measurably significant ways to economic growth. This will require, among other things, investments in infrastructure, building value chains, irrigation facilities, creating markets, and ensuring access to financial services,” said Jyotsna Puri during the visit.

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The $194 million financing agreement is the first deal to be sealed since the delegation visited Cambodia.

Since 1996, IFAD has helped finance 12 rural development programmes and projects in the country worth $950.48 million, of which $309.08 million came from IFAD's own resources. These investments have benefited more than 1.56 million Cambodian households.