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Logo of Phnom Penh Post newspaper Phnom Penh Post - Greatest potential seen in agricultural industry

Greatest potential seen in agricultural industry

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An EIC study showed that agriculture accounted for 71 percent of employ- ment, 31 percent of gross domestic product, and 3 percent of exports.

P

romoting agricultural industry is the best way of reducing poverty in Cambodia,

government and non-government officials agree.

Ly Thuch, chairman of the National Assembly's third commission (economy, planning,

business, agriculture, rural development and finance), said Cambodia's poverty rate

could fall to 21 percent by 2015 if the agricultural sector grew by 4 percent a year.

The Millennium Development Goals have committed Cambodia to halving poverty by 2015.

The national poverty rate was assessed at 47 percent in 1993, and reassessed in 2004

at 35 percent.

The poverty rate is the proportion of the population whose income falls below the

national poverty line, assessed by the World Bank in 2004 as 1,826 riels per person

per day. Of this, 80 percent is the cost of 2,100 calories of food, and the rest

is the cost of housing, clothing and other essential non-food items. The assessments

are a national average, with urban costs higher, and rural lower.

Thuch said poverty could be reduced considerably through an improvement in agricultural

growth rates. Citing World Bank figures, he said that despite an impressive average

national growth rate of 7 percent over the past decade, agriculture had grown at

just 3 per cent a year, including two years of negative growth.

At that rate, the poverty line would still be 28 percent in 2015.

"Food shortage is the world's and our greatest concern and it is important to

confront it," Thuch said. "The number of citizens increases every day and

that causes an increase in the daily demand for food. Agriculture plays a very important

role in reducing poverty throughout the country. It is an important income source

for Khmer citizens, especially farmers living in the countryside."

Sok Hach, director of the Economic Institute of Cambodia (EIC), said, "If our

agriculture increases 2 percent, our economy almost increases 2 percent due to an

increase in a lot of [related] work, particularly transportation services."

An EIC study - presented by the EIC during a Cambodia-Canada Legislative Support

Project Roundtable on Agriculture on February 15 - showed that the paddy yield in

Cambodia increased 0.87 percent a year between 1995 and 2005. However, Cambodia's

paddy yield was still lower than that of neighboring countries: Cambodia could yield

only two tons per hectare, but Vietnam four tons.

Thuch said 85 percent of people living in the countryside were farmers.

"We have many kinds of crops that have potential for export overseas, such as

carrots, potatoes, tomatoes, onions and others," he said. "But I know that

we still have weak points that prevent us reaching our export potential because we

have limited technical [expertise]. The quantity and quality cannot answer the demands

of the international market."

The EIC study showed that agriculture accounted for 71 percent of employment, 31

percent of gross domestic product (GDP), and 3 percent of exports.

Cambodia still had lackluster export performance in agriculture even though the world

market was already open to Cambodian agriculture products, according to the study.

Cambodian agriculture's share of world trade was only 0.0091 percent while Thailand's

was 1.97 percent and Vietnam's 0.55 percent.

Thuch said Cambodia needed to rebuild irrigation systems and build other infrastructure

to facilitate the development of the agricultural industry. It also needed to find

markets for its produce.

He said Cambodia still exported raw materials that sold cheaply. It needed to add

value to the raw materials by developing agricultural products for export to get

greater value and benefit. If produce was developed for export instead of being exported

as raw material, it would offer more tax to the state and create employment.

Thuch said Cambodia continued to lack human resources for developing food products,

as well as materials and investment capital.

Among the EIC study's recommendations were that the government allocate more funds

for building an irrigation network and for agriculture extension, that it take control

of the distribution network for fertilizers and pesticides, that it promote micro-finance,

develop market mechanisms, enhance the investment climate so that more investors

will put money into contract farming; and make further reforms to facilitate trade.

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