Introduction

In spite of accelerated expansion in other sectors such as industry and services since 1993, agriculture remains the backbone of the Cambodian economy. The sector employed more than 70% of Cambodia's labor force in 2004 and accounted for more than 30% of the country's GDP.

Rice farming is the major agricultural activity in Cambodia, accounting for nearly one third of the country's total agricultural value added. However, due to inefficient farming techniques and limited irrigation networks, the yield level of rice farming in Cambodia is well below that of its neighbours. Given the current low yields and the large remaining uncultivated area, there is significant scope for rice farming development in Cambodia.

Cambodia is endowed with natural resources and weather conditions that favour rice farming, but its comparative advantage in rice farming has yet to be exploited. The country's rice production is mainly for self-sufficiency, and commercial rice exports are still at an early stage.

Limited market access and underdeveloped agricultural infrastructure are two major bottlenecks constraining rice farming development in Cambodia. While the Cambodian government can help ease these constraints through extension services and public investments, contract farming is an institutional arrangement in the private sector that may eventually help to overcome some of the constraints.

For smallholder farmers in transition economies, market access is especially important because it means their production is not limited by their own consumption or the local market. The access to broader markets via contract farming allows smallholder farmers to exploit their comparative advantages in natural resources, environment, and other areas. For example, when farmers produce for local consumption, it may not be an advantage that they have clean soil as a result of the less intensive use of chemicals because local consumers may be indifferent to the organic features of farm products. However, when farmers produce for international markets where consumers with higher income levels are willing to pay premiums for organic products, having clean soil becomes a comparative advantage.

Rice contract farming in Cambodia has been implemented by Angkor Kasekam Roongroeung Co Ltd (AKR). This company has been introducing large-scale contract farming arrangements of non-certified organic rice since 2001 and the accumulative number of farmers who have joined the contract is reportedly over 32,000 households. A survey has been conducted to compare contract and non-contract rice farmers in terms of their farming practices, economic conditions and social characteristics. Data obtained using this survey allows us to assess the impacts of contract farming on rice farmers' performance in Cambodia.

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

Post a Comment

We welcome your feedback on this publication. Post a comment. ADBI is not obliged to acknowledge or publish comments and may abridge or edit them before web posting.

Comment(s)

There are [1] comment(s) for this entry. Post a comment.

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