Cambodia’s agriculture sector has been immune from Covid-inflicted impact and enjoyed strong growth during the pandemic as financing for the sector has increased, a leading banker said on Friday.
At a gathering on Friday with more than 50 Japanese investors at ACLEDA headquarters in Phnom Penh, the bank’s President and Group Managing Director, In Channy, said ACLEDA’s loans for the agriculture sector account for 20 percent of its total outstanding loans of $5.8 billion. Compared with the whole financial sector, financing for agriculture accounts for 39 percent.
“Why we increase finance for agriculture [is] because it’s safe compared with other sectors, especially during Covid,” Channy said.
“Other sectors [are] impacted by Covid, but agriculture is isolated from the impact of Covid-19, so it’s so successful,” he added.
Agriculture is crucial in Cambodia as the sector, according to a senior rice executive, will continue to grow because other countries, such as Thailand and Vietnam, have moved to plant other crops that are more expensive than rice. Some regions have changed from agricultural land to commercial land.
The agriculture sector contributes 24.24 percent to national GDP and employs 35.5 percent of the workforce.
Kanda Yogo, Chairman of the Japanese Business Association of Cambodia (JBAC), told journalists at the sideline of the event that, as of June 2022, eight new Japanese companies have entered the Cambodian market. He did not give any further details.
Due to the pandemic, the number of Japanese investors and investors from other countries has decreased, but predicted that from now on, the numbers will grow, Yogo added.
The 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.