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Farmers biggest source of investment in agriculture

Farmers biggest source of investment in agriculture

Despite attention from Foreign Direct Investment (FDI) and official development assistance, farmers are by far the largest source of investment in agriculture, the State of Food and Agriculture 2012 report by the Food and Agriculture Organization published last week said.

Farmers in low and middle income countries invest more than US$170 billion annually, about $150 per farmer, in their farms, the report said. This is three times as much as all other sources of investment combined, four times the size of the public sector’s contribution and more than 50 times the size of official development assistance to these countries, the report said.

Chan Sophal, president of the Cambodian Economic Association, said it is difficult to compare numbers in Cambodia, where farmers are mostly smallholders, while FDI in agriculture is mostly about large farms such as rubber plantations.

He said there hasn’t been enough investment by government and donors in agriculture in Cambodia and agricultural development has been slow.

Sok Sarang, program officer at the Cambodian Institute for Research and Rural Development, said the average Cambodian farmer invests at least $150 per year “and due to the price of fuel and agriculture inputs, this trend of this investment is going upward”.

The report said FDI to Cambodian agriculture increased to $53 million from 2007-2010. Official development assistance to agriculture decreased to $50 million in 2010.

Despite the benefits of investing in agriculture, farmers in low and middle income countries often have weak incentives to invest, the report said.

Factors reducing incentives to invest can include poor governance, high levels of corruption, a lack of adequate infrastructure, the report said. According to the report, governments should enable an environment for agricultural investment and focus on smallholders who face specific restraints.  

Yang Saing Koma, president of the Cambodian Center for Study and Development in Agriculture, said there are very strong price variations in Cambodia. “For example, now the prices of paddy are very low, which discourages farmers . . . to invest in developing rice farming,” he said. “It also applies to other crops and products, like the case of cassava prices during last season, and the prices of pigs.”  

He said the government should have measures to ensure stable prices for agricultural products, to encourage investment.

“The producers should also work together to ensure improved access to markets and to gain more influence in pricing, including investment in storage and processing facilities,” he said.

To contact the reporter on this story: Anne Renzenbrink at [email protected]

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