Conclusions and Recommendations

Overall, the results show that rice contract farming by Angkor Kasekam Roongroeung Co Ltd (AKR) brings a number of benefits to smallholder farmers in Cambodia. Through contract farming, there are new income earning opportunities to produce high-value rice for the export market with minimal expense by the public sector. By introducing new institutional arrangements taking advantage of the existing commune structure established during the socialist regime, AKR successfully establishes farmers' organizations and uses them effectively to deliver credit for seeds and to extend organic rice farming practice, including integrated farming practice, to farmers. Most importantly, by promoting farming practices in which the poor in remote areas have a comparative advantage, AKR successfully facilitated coordination and intermediation to provide market access for farmers living in remote areas where organizational capacity in the public sector is weakest.

The characteristics of farmers who benefited the most are farmers with larger land sizes, larger family sizes, younger household heads, and farmers with a higher level of education. Progressive farmers living near the highway are likely to be the first group joining contract farming. However, it is interesting to note that this same group of farmers is also more likely to leave contract farming early as there are more market opportunities in areas where infrastructure is more developed. Since production under contract is restricted and in particular AKR restricts the use of agrochemicals to address the demand in the export market, farmers who have access to the local market for chemical rice moved on to intensify their farming practices to increase profit. It could be said that by undergoing organic contract farming, farmers were empowered to become independent farmers who intensify farming systems in a more sustainable way than farmers who have never undergone contract farming.

For farmers who live far away from the highway or live near the forest where soil fertility is good, arrangements under AKR to produce organic rice for export appear to be appropriate and long-lasting. From the point of view of poverty, this is a highly positive outcome for farmers in remote areas, as contract farming brings to them market access along with the introduction of sustainable farming practice.

Nevertheless, the results point to the fact that contract farming by AKR is not inclusive of the poorest farmers typically with land size below one hectare and with lower levels of education. Public sector attention will be required for this group of farmers. Overall, contract farming under AKR is not without problems and public attention may be required in the areas of empowering farmers' groups to increase bargaining power with this firm that is currently holding a monopsony position. More firms should be encouraged to enter into contract farming.

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Comment(s)

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1. Anthony M. Zola
   (posted 02 July 2008 / 12:54:22 AM)
   
   This is an excellent contribution to the current debate about contract farming in mainland Southeast Asia.
   
   I have conducted research for the ADB, much less sophisticated than this study, and had similar results. Smallholder farmers were better off if they were engaged in contract farming than when they sold daily labor to local concessions / nucleus estates.
   
   My congratulations to the research team. It is not an easy topic on which to conduct research.
   
   Anthony Zola
   Bangkok, Thailand
   & Vientiane, Lao PDR