Integrating Trade and Agriculture in Cambodia
More than 150 high level participants from major ministries, universities, donor agencies, civil society and media attended a national forum about the importance of integrating trade and agriculture in Cambodia.
The forum, entitled ‘Cambodia’s Agrarian Structure in the Context of Trade Integration’, was held in Phnom Penh at the end of June, and discussed international experiences on the impact of trade integration on agrarian structure, and appropriate land and investment policies.
Organized by the Cambodian Government, with support from the World Bank Group (including the World Bank Institute), AusAID, FAO, CIDA and GTZ, and in cooperation with Technical Working Groups on Land, Agriculture and Water, the forum brought together policy makers civil society and other stakeholders.
Chairman of the Foundation for Advanced Studies on International Development Professor Yujiro Hayami said globalization and competition led to distinct agrarian structures and institutions, for both large plantations and small contract farmers according to specific product characteristics. For products like rice, corn and soy bean that are not perishable, easy to store and transport, family farms have proved to be more efficient since they have the advantage of low supervision cost, and they can respond effectively to market demands provided supporting market infrastructure is in place.
On the other hand, large plantations have advantages in cases where the export of perishable products requires close coordination between production, transport and processing, such as bananas and black teas. The standardization of agricultural products’ quality and quantity is important for export, he added.
Access to land is crucial for rural growth and poverty reduction. Research manager at the World Bank Dr. Gershon Feder discussed the experience of land titling in several countries. He pointed out that land reform and distribution should be a transparent and participatory process, and should come together with complementary measures, such as investment, credit and output market access.
“The issue of land reform is sensitive due to its links with political and economic vested interests. In this context, the role of government is crucial to prevent land conflicts and reduce transaction costs,” Dr. Feder said.
To link trade integration to agriculture and farmers, the forum focused on a contract farming approach which could link low-ability farmers with agri-business. Prof. Hayami stressed the importance of developing trader groups, simplifying and enforcing contracts, and establishing trust between traders and farmers.
Secretary of Commerce H.E. Sok Siphana emphasized the role of government in building market channels, addressing high transaction costs in value chains, reforming customs and investing in infrastructure to facilitate trade.
Chairman of the UK-based Overseas Development Institute Dr. John Farrington presented coping mechanisms used by the poor, and other vulnerable groups, in the context of global trade integration.
“To effectively support small land holders, the roles of private and public sectors have to be clearly defined. Social welfare policies need to be designed to take into account families unable to engage in productive activities,” Dr. Farrington said.
The role of public and private investment was another topic discussed at the forum. Dr. Shenggen Fan from the International Food Policy Research Institute, talked about the effectiveness of public investment in countries like India and China. Evidence from these countries shows that public investment in agricultural R&D, rural education and rural infrastructure is effective in promoting growth and reducing poverty.
Secretary General of the Ministry of Economy and Finance Dr. Hang Chuon Naron stressed that the Government of Cambodia encourages increased state investment in rural infrastructure and building market institutions.
Other speakers stressed the need for improving transparency and governance to encourage private investment in rural areas.
However, local researchers presented evidence on continued landlessness, poverty and malnutrition among rural residents in Cambodia, and they discussed the need for strengthening pro-poor policies and social protection.
President of Centre d’Etude et de Développement Agricole Cambodgien (CEDAC) Dr. Yang Saing Koma said family agriculture is important in Cambodia to ensure food security and employment opportunities, especially for the growing number of young people.
“Cambodia can compete through ecological-based family agriculture … especially by delivering organic products, such as organic traditional rice varieties,” Dr. Yang said. “Cambodia should allocate land for absorbing a growing farming population rather than allocating land to private concessions for large-scale agribusiness.”
Nisha Agrawal, the Country Manager said: “the seminar focused on exactly the right issues that the Cambodian’s are struggling with on a daily basis and brought in world class experts to lead the thinking and discussions on these issues. This is exactly what is needed here in Cambodia where some of the very basic questions on agrarian structure issues have not been answered yet and in fact could go in the wrong direction in the absence of knowledge about what has worked well and what has not worked well in other countries. The seminar was able to provide good international evidence on what model would be right in what circumstances and provided options for the Cambodians to think about.”
The Ministry of Economy and Finance, along with donors, also expressed appreciation of the national forum, stressing the importance of conducting follow-up research and dialogue and continuing to build consensus across ministries and among all stakeholders.
During the forum, participants raised the following issues to be discussed further:
- Access to land, has become rapidly uneven within the last ten years, with 12 percent of farmers landless. Access to agrarian land was the first issue identified by the participants. Cambodia faces important decisions regarding how to influence land allocation through prioritization of use and distribution of state lands. Expedition of land registration and titling to avoid land encroachment was given priority by participants. Social land concession (to farmers) was a favorable option, but the availability of land, and the quality of land, was still a concern.
- Some regions and households have not been able to benefit from the new opportunities provided by trade integration; therefore the agriculture sector is suffering. Participants identified problems which hinder farmers’ ability to export their products: poor infrastructure, lack of marketing services, lack of information, R&D and extension services, price uncertainties and other risks, inadequate rural financing, and inadequate institutions for contract farming.
- Public and private investment is required to support agricultural development and export competitiveness. How to improve an investment climate through governance-enhancing measures is a major challenge. Participants stressed the importance of strengthening the judicial system, reducing transaction and transport costs, and protecting property rights and intellectual property rights. To encourage private investment (both domestic and foreign) in agriculture, security, rural infrastructure, clearly defined land tenure must be addressed. There is an urgent need to expedite the land registration process, and clarify tenure area
(Source: The World Bank Newsletter, Volume 3, Number 7, July 2005)