THE final draft sub-decree regulating formal, written agreements between farmers and investors was under discussion this week, Ministery of Agriculture, Forestry, and Fisheries officials said yesterday.

Speaking at a consultation meeting on the Contracted Agricultural Products sub-decree, Minister Chan Sarun said the new rules were expected to receive government assent by August, and would help reduce the risk involved in the agricultural business and boost future production.

“The sub-decree will set the legal conditions required for connecting farmers and investors together to ensure effective agricultural production,” he said.

Previously, agreements in the sector did not require a legal contract. Agricultural transactions often fell apart when disputes arose, negatively affecting potential foreign investment in the industry, said Chan Sarun.

By formalising terms such as prices in written contracts, he said, the law would lower the potential for disputes.

“We hope that the sub-decree under discussion will help boost commercial agriculture for both small and medium farmers.”

Growing acacia on about 7,000 hectares in Kampot province, First Biotech Company president Chan Sothea said the sub-decree would help the plantation expand, as it would bind both parties to the terms of a single contract.

“I think companies will be more confident in investing because they will have the law as their base,” he said.

Kun Lim, head of Corporate and Regulatory Affairs at British American Tobacco Cambodia, said that even though Cambodia will finally have a law on formalising contracts for the agricultural sector, enforcement could remain an obstacle.

“It was just one step to make parties become more confident in each other,” he said.