The document outlines Cambodia's agricultural transformation over the past 10 years and identifies opportunities and risks going forward. Key changes include increased productivity, expansion of rice milling, changing labor patterns, and infrastructure growth. Driving forces were policy reforms, investment, technology adoption, and higher food prices. Sustaining growth requires improving the business environment, public-private partnerships, skills development, and strategic national programs. The diagnostic study will analyze four commodities across regions using surveys, focus groups, and comparing to a previous study to inform Cambodia's agricultural roadmap.

1. Cambodia Agriculture in
Transition:
Opportunities and Risks
Stakeholders Consultation
September 18, 2013
Himawari Hotel, Phnom Penh

2. Outline
1. Background
2. Agricultural Transformation
3. Major Changes in Cambodia Agriculture over the past 10 Years
4. Drivers of Change
5. Opportunities and Risks
6. Diagnostic Study Objectives and Methodology
7. Key Questions for Today’s Consultation

3. BACKGROUND

4. -
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Rice Production (mt)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1994 1997 2000 2004 2007 2010
Poverty Rate in Cambodia
0
10
20
30
40
50
60
Underweigth Stunted (short) Wasted (thin)
Nutritional Indicators (from CDHS)
2000 2005 2008 2010
Processor
35%
Input Suppliers
9%
Machinery Sellers
6%
Crop Collectors
45%
Rice Sellers
5%
2011 Share of Turnover by Types of Agribusiness
Processor Input Suppliers Machinery Sellers Crop Collectors Rice Sellers

5. The Good, ….
 An impressive growth of agriculture over the past 10 years
o Agricultural GDP annual growth rate at 4.6% over 2001-2011, one of the
highest in the world
 A steep decline in poverty
o More than 1% decline per year in poverty rate
 Increasing connectivity
o Cambodia has a population of about 14.6 million, and 19 million mobile
phone subscribers in 2012
 Major surpluses in agricultural production
o Rice, Maize, Cassava, Cashews, Rubber
o But deficit in vegetables, pork, oil

6. The Bad, …
 An underdeveloped processing Industry
o Most commodities (paddy, cashews, cassava, maize, cattle, soya beans,
…) are exported in raw form
 An agriculture which is mostly rainfed
o Irrigation coverage only 24% of cultivated areas
 An agribusiness sector mostly consisting of traders and
informal businesses
o Less than half of the agroenterprises have some degree of
formality (eg registration)

7. And the Ugly
 Still high levels of malnutrition
o Malnutrition of children under 5 still too high
 Poor levels of food safety
o Lack of standards and standards enforcement
 Unsustainable Practices
o Cassava production and deforestation
o Degrading soil fertility
o Indiscriminate use of plant protection chemicals

8. Questions
 Can past growth be sustained? or even accelerated?
 Can poverty be reduced faster?
 Can malnutrition be reduced faster?
 Can value added in agriculture be increased faster?

9. AGRICULTURAL
TRANSFORMATION

10. Agricultural Transformation
1. Agriculture becomes less important
 As a share of Labor
 As a share of GDP
2. Agriculture becomes more productive
 In terms of higher agricultural labor income
 In terms of higher GDP
3. Society’s perception of farming changes
 From a way of living, unattractive and full of drudgery
 To a honorable professional activity

11. % Agriculture
Labor Force
0%
100%
20%
40%
60%
80%
LOW
HIGH
% Agriculture
in GDP
Poor RichPer Capita Income
TotalValue
Value of Agricultural
Output per Worker in
Agriculture
Total Value of
Agricultural
GDP

12. The Challenges of Agricultural Transformation
 Growing rural – urban gaps
 Youth exodus from rural areas
 Increasingly vocal farmer organizations
 Adoption of technology innovations
 Land consolidation
 Corporate agribusiness sector and SMEs
 …

13. The Link between Rural non-Farm and
Agriculture
 Strong Agricultural Growth strong growth of Rural Non
Farm Economy (RNFE).
 Rural non-farm activities improve food security by
diversifying income sources and improving the ability to
cope with shocks
 Rural non-farm activities generate employment for the
poor
 Employment growth in the rural non-farm sector is
typically faster than in the rural farm sector

14. CHANGES IN AGRICULTURE
OVER PAST 10 YEARS

15. Internal and External Changes
Internal
1. Productivity
2. Rice Milling
3. Labor
4. Land
5. Connectivity
External
1. Food prices
2. Cross-border trade
3. New Entries

16. Internal Changes
1. Productivity improvements
 Changes in cropping patterns during the wet season (early, medium, late)
 Adoption of new improved varieties and improved seeds
 Irrigation investment
 Intensification in use of inputs and mechanization
2. Expansion of the rice milling industry
 Paddy and Rice Export Policy
 Domestic investment and FDI
 Federation of Rice Millers and Cambodia Rice Exports Associations
 Information about Exports
 Programs and projects (EU/IFC, ADB, AusAID, IFAD, AFD, USAID, FAO)

17. 0%
10%
20%
30%
40%
50%
60%
70%
80%
Rice Maize Cassava Sugarcane
Yield Increase (2003-2012)
0
50,000
100,000
150,000
200,000
250,000
2009 2010 2011 2012
Rice Exports (mt)
%
5%
10%
15%
20%
25%
30%
Landless 0.01-0.50ha 0.51-1.00ha 1.01-1.50ha 1.51-2.00ha > 2.00ha
2004
2011
• Less Landless
• More fragmentation at low size
• More consolidation at high size

18. Internal Changes (continued)
3. Labor
 Increasing scarcity of labor due to internal and external migration
 Scarcity of skilled labor
 Increasing cost of labor in rural areas (twice if compared to 10 year
ago)
 Mechanization as a response to scarcity and cost
4. Land
 Preliminary data indicate both fragmentation and consolidation
5. Infrastructure and Connectivity
 GMS initiatives in regional connectivity (East-West and North-South
corridors)
 Railway and port infrastructure improvement
 Major dams and hydroelectric plants under construction

19. 100
110
120
130
140
150
160
170
180
2007 2008 2009 2010 2011 2012
CPI and Food Price Index (2006=100)
CPI Food

21. External Changes
6. Food Prices
 Food crisis has been an opportunity for Cambodia’s farmers
 Likely to remain high
 Emergency Reserves and Disaster Preparation
7. Increasing cross-border trade
 Informal exports of paddy, cashew nuts, maize, sesame seeds, soya beans, cassava
 Imports of vegetables, livestock, inputs and machinery
 Each citizen in CAM exporting 1 ton of agricultural products
8. New entries in the world and regional rice market
 Myanmar high potential for food supply and benefits from EBA
 India a source of world food markets instability
 Vietnam starting fragrant rice
 Thailand losing competitiveness

22. DRIVERS OF CHANGE

23. Drivers of Change
Policy Investment Technology External
Factors
• Relatively liberal
laissez faire
• Regional
integration and
access to regional
markets
• Rice Policy
• Public
expenditures on
agriculture,
irrigation, R&D,
and rural
development
• Infrastructure
(transport)
• Private sector
• Adoption of improved
technology by
farmers
• Mechanization
• Modern inputs (seed,
chemicals)
• Higher food
prices

24. OPPORTUNITIES AND RISKS

25. Opportunities
 Cambodia becoming a reliable global supplier of safe and
quality food and products (eg rice, maize, fish, cattle,
pepper, rubber, cashews, cassava, fruit)
 A dynamic Cambodian agribusiness sector creating value
added and employment in a growing and well-connected
rural non-farm economy.
 A food and nutritionally secure population with access to
a healthy and diversified diet.

26. Risks
 Business environment not conducive to Agrifood investment and to the
emergence of a dynamic formal agribusiness sector
 Low volumes and efficiency of public investment in agriculture
 Rate of innovation adoption slowing down
 Environmental Sustainability at danger (eg. cassava and deforestation, loss of
soil fertility and biodiversity as a result of poorly designed hydro dams)
 Vulnerability to highly variable and extreme climatic events
 Highly variable global markets (food, feed and biofuels)

27. Need for New Drivers of Change?
1. More favorable business environment for private sector investment in
agrifood sector
2. Public private partnerships and innovation
3. Improved human resources and capacity of farmers and value chain
actors
4. Service providers to meet the need of commercial farmers
5. Operationalization of inclusive growth and regional development
6. Establish new strategic national programmes (beyond rice)
7. National programs on food safety and nutrition
8. National programs on competitiveness
9. National programs on risk preparation

28. DIAGNOSTIC STUDY
OBJECTIVES AND
METHODOLOGY

29. Objectives of the Diagnostic Study
 Provide analytical inputs, improved information basis, and evidence-
based recommendations for more competitive and sustainable farming
systems in Cambodia. Specifically:
(i) Provide inputs for the preparation of the road map for the Ministry
of Agriculture, Forestry and Fisheries (MAFF) and Supreme National
Economic Council (SNEC) for the implementation of the long-term
strategic agriculture sector goals of the Cambodia Vision 2030 and
Rectangular Strategy; and
(ii) Provide diagnostics for the preparation of the Government or
donor funded investments programs which would support
implementation of the above strategies and required institutional
development support.

30. Phasing of the Diagnostic Study
 Phase I – Structural Changes in Agriculture over past 10
years
 Financial and economic analysis of farming systems
 Interpret the broader economic context and provide deeper
assessment of current policy environment.
 Phase II - Forward looking scenarios for future agriculture
growth pathways
 Based on expected changes in consumer demand, trade patterns and
implications of climate change, and deeper analysis of dynamics
between agriculture and non-agriculture sectors.

31. Methodology of the Diagnostic Study
Farm Enterprise
Models
Policy
Simulations
Sector
Performance ROADMAP

32. Survey
Three Types of Respondents
1. Key Informants (at Provincial, District, and Commune Level)
2. Focus Groups at the Commune Level
3. Individual Farmers
Three Types of Survey Tools
1. Key informant checklist
2. Focus Group Discussion checklist
3. Individual Questionnaire

33. Four Commodities
1. Rice
2. Maize
3. Cassava
4. Vegetable

34. Commodities
Commodity Growth
(2003-2012)
Key Changes Rationale
Rice • Production
(7.8%)
• Yield (4.5%)
• Adoption new varieties
• Mechanization
• Rice Milling Industry
growing
• Higher prices
internationally
• Food security
• Large income and employment
impact
• High export potential
• High impact on processing industry
Maize • Production
(13.1%)
• Yield (3.0%)
• Adoption of hybrids • Integration with feed industry
• Potential for export
Cassava • Production
(41.7%)
• Yield (6.4%)
• Use of upland and
forestland
• Integration with starch and feed
industry
• Integration with biofuel
• High export potential
Vegetables • Production
(12.8%)
• Yield (7.8%)
• Rapidly increasing
demand and imports
• Nutrition and food safety
• Import substitution

35. Zones, Provinces, Districts, Communes
 3 Zones
 6 Provinces
 12 Districts
 12 Communes
 Chosen among the ones we visited 10
years ago for the Agrarian Structure Study

36. Locations of the SurveyZone (3) Province (6) District (12) Crop (4) Commune (12)
Mekong Kampong Cham Memot Maize / Cassava Dar / Memot
Srey Snathor Rice Prey Poh / Prek Damboke
Kandal Sa Ang Vegetable / Maize / Rice Prek Ambel
Kandal Stoeng Rice / Vegetable Siem Reap
Takeo Batti Rice / Vegetable Champei
Tram Kok Rice / Vegetable Tram Kak
Coastal Kampot Chhouk Rice / Vegetable Meanchey / Trapeang
Phleang
Kampong Bay Rice / Vegetable Traey Koh / Andong Khmer
Tonle Sap Battambang Ek Phnom Rice / Vegetable Prek Khpop / Prek Norin
Banan Rice / Cassava / Maize Kanty 2 / Chheuteal
Bantey Meanchey Malai Maize / Cassava Ou Sampou
Mongkol Borei Rice Rohat Touk

37. KEY QUESTIONS FOR TODAY

38. Key Questions
1. What are the most significant changes in Cambodia
agriculture over the past 5-10 years?
2. What have been the driving forces beyond these
changes?
3. What do we need to sustain or even increase past
growth?
4. What suggestions do we have for the study team
proposed methodology?

39. Notes for the Discussion

40. Changes Drivers of
Change
Sustaining the
Change
Methodology
Internal
1.Productivity
2.Rice Milling
3.Labor
4.Land
5.Connectivity
External
1.Food prices
2.Cross-border trade
3.New Entries
1. Policy
2. Investment
3. Technology
4. External Factors
1.More favorable
business environment
2. PPP and innovation
3.Improved HR and
capacity of farmers and
value chain actors
4.Service providers to
meet the need of
commercial farmers
5.Operationalization of
inclusive growth and
regional development
6.New strategic national
programmes
1. Four commodities
(rice, cassava, maize,
vegetables)
2. Three types of
respondents (experts,
fgd, farmers)
3. Three regions
4. Six Provinces
5. Compare with study
conducted in the
same communes 10
years ago