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HomePublicationsBrowse ListingRice Contract Farming in Cambodia: Empowering Farmers to Move Beyond the Contract Toward IndependenceFarming Characteristics

Farming Characteristics

The sample farmers plant rice for both commercial purposes and self-consumption. Due to taste preference, farmers generally plant traditional varieties on the consumption plots. In the following we compare the three types of farmers' production characteristics in their commercial operations, which are presented in Table 2. Table 2 [ PDF 14.6KB | 1 page ] also presents the farmers' entire operations (including farming for own consumption).

A. Rice Fields (hectares)

On average, contract farmers have larger rice fields and use a higher percentage of their rice fields for commercial purposes (Table 2). An average contract farmer controls 1.71 hectares of land (including both own and rented land) and uses 1.64 hectares of the land for rice farming, 46% of which is used to plant commercial rice. An average former-contract farmer controls 1.30 hectares of land and uses 1.26 hectares of the land for rice farming, 26% of which is used to plant commercial rice. An average never-contract farmer controls 1.03 hectares of land and uses 1.02 hectares of the land for rice farming, 5.4% of which is used to plant commercial rice (Table 2). The low percentage of commercial rice fields for nevercontract farmers indicates that most of them are subsistence farmers.

On average, contract farmers have a lower harvest ratio (46%) than former-contract farmers (55%) for the entire operation. The difference is even greater in commercial fields (Table 2).

B. Rice Price (riel per kg of rice)

Compared to former- and never-contract farmers, contract farmers enjoy significant price premiums in their commercial operations. On average, contract farmers can sell their commercial rice at 747 riel per kg, higher than former-contract farmers' 684 riel per kg and never-contract farmers' 645 riel per kg (Table 2).

High rice price is a major factor attracting farmers to join the contract, which not only subjects them to strict quality standards but also constrains their freedom in farming activities such as the use of seeds and chemicals. Former-contract farmers' average commercial rice price is not significantly different from that of never-contract farmers.

C. Revenue (riels per hectare)

As contract farmers can sell their rice at higher prices, one may expect that they would have higher revenues, which nevertheless turns out not to be the case.

On average, contract farmers' revenue (per hectare) from commercial operations is 722,000 riel, which is lower than former-contact farmers' 920,000 riel but not significantly different from never-contract farmers' 684,000 riel.

D. Yield (kilos of rice per hectare of land)

The reason that contract farmers' price premiums do not give them higher revenues is because of their relatively low yields.

Contract farmers' average yield in the commercial field is 947kg per hectare, which is lower than former-contract farmers' 1,343kg but not significantly different from never-contract farmers' 1,059kg (Table 2). This may indicate that the organic practice recommended by AKR for contract farmers did not lead to lowering yield from traditional practice.

The yield differences between contract and former-contract farmers indicate that inflexibility in farming practices may be a factor motivating farmers to abandon the contract. That is, farmers would choose to abandon the contract if the freedom to farm more intensively could compensate for the lost price premiums and if there was a market for their rice.

E. Cost (riels per hectare or riels per kg of rice production)

On average, contract farmers spend 1,493,000 riel on one hectare of commercial rice operation, which appears lower than former-contract farmers' 1,803,000 riel and nevercontract farmers' 1,661,000 riel. However, the differences are not statistically significant (Table 2).

For commercial operations, the average ratio of contract farmers' cash costs to their total costs is 34%, which is not significantly different from former-contract farmers' 38%, but lower than never-contract farmers' 46% (Table 2).

For commercial operations, the average ratio of contract farmers' labor costs to their total costs is 79%, which is not significantly different from former-contract farmers' 78 % but higher than never-contract farmers' 71% (Table 2).

F. Profitability (riels per hectare)

The average profit (cash and non-cash inputs included) for contract farmers in commercial operations is -711,000 riel per hectare, which appears higher than former-contract farmers' - 882,000 riel and never-contract farmers' -977,000 riel. But the differences are not statistically significant (Table 2).

While contract farmers' average total profit is negative, their average cash profit is 213,000 riel per hectare, which reflects the fact that most of their costs (66%) are non-cash costs (mainly family labor). Former-contract farmers' 332,000 riel of cash profit appears higher than that of contract farmers, but the difference is not statistically significant (Table 2).

There are only 27 never-contract farmers reporting activities in commercial rice farming; and their average cash profit is only -30,000 riel (Table 2).

G. Labor Structure

On average, contract farmers spend 1,250,000 riel on labor costs (266,000 riel in cash) on one hectare of commercial operation, lower than former-contract farmers' 1,522,000 riel (308,000 riel in cash) and never-contract farmers' 1,308,000 riel (361,000 riel in cash), but the differences are not statistically significant (Table 3 [ PDF 13.1KB | 1 page ]).

On average, contract farmers spend 2,695 riel on labor costs to produce one kg of rice in their commercial operations, higher than former-contract farmers' 2,237 riel and nevercontract farmers' 2,261 riel, but the differences are not statistically significant (Table 3).

On average, the three types of farmers are not significantly different in their commercial operations with respect to the ratio of family labor in total labor, the ratio of hired labor in total labor, or the ratio of females in total labor. However, contract farmers use a relatively lower percentage of exchanged labor in their commercial operations (Table 3).

H. Material and Operating Costs

On average, contract farmers spend 242,000 riel on material costs (including transportation costs) per hectare of commercial field, lower than former-contract farmers' 280,000 riel and never-contract farmers' 353,000 riel, but the differences are not statistically significant (Table 4 [ PDF 14.7KB | 1 page ]).

On average, contract farmers use 543 riel of material costs to produce one kg of rice, lower than former-contract farmers' 786 riel and never-contract farmers' 561 riel, but the differences are not statistically significant (Table 4).

1. Seed

On average, contract farmers spend 52,000 riel on seeds for one hectare of commercial operation, which is lower than former-contract farmers' 74,000 riel but not significantly different from never-contract farmers' 53,000 riel (Table 4).

On average, the three types of farmers do not differ significantly in their seed costs in terms of per kg of rice production. Their seed prices are also not significantly different (Table 4).

2. Chemical Fertilizer

With respect to commercial operations, the average chemical fertilizer costs per hectare for contract farmers and former-contract farmers (59,000 riel and 70,000 riel respectively) are significantly lower than for never-contract farmers' (110,000 riel) (Table 4). It is noted that while AKR recommends that contract farmers do not use chemical fertilizer, it is not strict in its monitoring system. There is a lack of clarity on what is considered organic practice as defined by AKR. During field visits, farmers explained that they used chemical fertilizers only during land preparation but not during the cultivation period, so they considered that they were complying with AKR's requirements.

On average, former-contract farmers spend 90 riel of chemical fertilizers in producing one kg of rice, lower than contract farmers' 180 riel and never-contract farmers' 224 riel (Table 4). As AKR promotes soil improvement techniques to farmers under the contract, this factor may have contributed to former-contract farmers' relatively high efficiency in the use of chemical fertilizer (in terms of cost per kg of rice production). In contrast, never-contract farmers' rice fields have a relatively low efficiency in the use of chemical fertilizer as soil improvement techniques were never extended to them. Hence, they usually need to use more chemical fertilizers to produce a given amount of rice.

There is no significant difference in the prices of chemical fertilizer encountered by the three types of farmer (Table 4).

3. Compost

On average, contract farmers use 66,000 riel of compost on one hectare of commercial field, which is similar to former-contract farmers' 64,000 riel but lower than never-contract farmers' 103,000 riel (Table 4). In general, the requirement for compost declines as soil structure improves after a few years of organic practice. Nevertheless, it is not clear in this sample whether lower use of compost among contract and former-contract farmers is due to a better quality of land or a lack of available compost.

It is interesting also to note that the price of compost is significantly higher for never-contract farmers (6,130 riel per cart compared to 5,311 riel per cart for contract farmers and 4,460 riel per cart for former-contract farmers). This may be due to the fact that never-contract farmers have a significantly lower number of livestock and hence have to rely on purchased manure (Table 1).

To what extent the promotion of the use of compost by AKR resulted in raising awareness among other groups of farmers about the importance of using compost would be an interesting topic for further investigation.

4. Pesticides

All three types of farmer have very low pesticide costs for one hectare of commercial operation, which are not statistically different (Table 4). It should be noted that the pesticides used by contract farmers could be biological pesticides because AKR extended technologies for making biological pesticides using herbal extract to farmers under contract. Unfortunately, the questionnaire did not distinguish between biological and chemical pesticides.

5. Irrigation

Contract farmers' average irrigation cost for commercial operations is 16,000 riel per hectare, lower than former-contract farmers' 34,000 riel per hectare (not statistically significant) and never-contract farmers' 42,000 riel (Table 4). This indicates that contract farmers may have a better water supply and/or they have better agricultural land.

6. Machinery

Contract farmers' average machinery cost of 50,000 riel per hectare appears higher than former-contract farmers' 42,000 riel and never-contract farmers' 44,000 riel, but the differences are not statistically significant (Table 4). Their machinery costs in terms of per kg of rice production are also not statistically significant (Table 4).

7. Transportation

Contract farmers' average transportation cost (per kilo of rice production) is 44 riel, higher than former-contract farmers' average 8.1 riel (not statistically significant) and never-contract farmers' average 5.3 riel.

Download this Discussion Paper [ PDF 167.1KB| 31 pages ].




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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

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

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