Cambodian Agriculture Faces Raft of Challenges to Grow

A lack of technology innovations and rising logistic costs in Cambodia’s agricultural sector are making it tough to compete with more advanced global markets, an expert warns.
SMEs represent 98 percent of businesses in Cambodia, contribute 58 percent to GDP and provide 73 percent of employment of the total labor force. Picture: Sam
SMEs represent 98 percent of businesses in Cambodia, contribute 58 percent to GDP and provide 73 percent of employment of the total labor force. Picture: Sam

Cambodia’s agriculture sector faces a raft of challenges, including low productivity, lack of innovation and high logistic costs, making it difficult to compete with foreign imports, a senior NGO worker said on Thursday.

At an ACLEDA Agriculture Business Matching Event, Ty Sarin, Program Manager at Cambodia Partnership for Sustainable Agriculture (CPSA), said due to a lack of technology​ innovation, many farmers lack techniques and are using poor quality seeds.

Farmers have continued to use poor seeds for years, including seeds that are not properly bred. This decreases genes and makes them less resistant to disease, weather and other factors. In addition, it reduces yields, Sarin said.

"I recognize that crop breeding is still limited and for Cambodian farmers this is difficult and they are unable to compete with the import market due to high production costs, which makes them very competitive. So, many of them quit their jobs and migrate to do other jobs," he added.

CPSA works with companies, government agencies, civil society groups, farmers and financial institutions to link small farmers to the market, aiming to increase farmers’ profits and productivity while improving the environmental sustainability of farms.

The agriculture sector contributes 24.24 percent to national GDP and employs 35.5 percent of the workforce. During the pandemic, agriculture played a strong role in the recovery process, Sarin said.

Limited technical support and extension services​ are also a concern, Sarin said, adding that government funding remains limited. This makes it difficult for technical officials to widely disseminate information to farmers and agricultural villages.

Weakness in transport and logistics, infrastructure, such as electricity and roads, and access to agricultural finance are also extremely hard and costly, Sarin said.

"When interest rates are high, it is not profitable for farmers to invest in agriculture," he added.

Citing a source, Sarin said that at about a 7 percent rate loan already make it difficult to earn a profit in agriculture investment.

“If it is more than 10 percent, it is difficult to make a profit, but banks also find it hard to provide loans to farmers due to the long-term risk of high returns,” he said.

Cooperatives play important roles, and strengthening farmer organizations are also essential to improve production and marketing arrangements.

He said technology plays a key role in productivity improvement and market access. Linking producers to affordable and applicable technology is crucially important, and contract farming mechanism and quality standard of the products increases opportunities for access to a variety of markets and premium price options.

World Bank, citing the U.S. Department of Agriculture Foreign Agricultural Service, noted that Cambodia's production year 2021‒22 was positive for rice farming. This was due to better weather conditions coupled with increased adoption of new technologies, such as the use of drones to efficiently spray pesticides.

Production and export of mangoes and bananas are showing promising signs, the World Bank said. Yellow banana is now one of the most promising non-rice agricultural products, with exports increasing to $168 million in 2021, up from $112 million in 2020 (and $49 million in 2019), the World Bank said.

In the first three months of 2022, yellow banana exports accelerated further, reaching $59 million. Mango products are also slowly emerging. Exports of mangos reached $10 million in 2021.

However, the World Bank said rising ocean freight costs are hitting agricultural exports hard. The Cambodia Rice Federation said trucking costs to Cambodia’s main ports recently increased by 10 to 20 percent. Freight costs are now unpredictable, depending on the volatility of oil prices. Long-distance freight has been particularly hard hit.