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Government plugs rubber switch

Latex collects in a dish at a rubber plantation in Kampong Cham province last year.
Latex collects in a dish at a rubber plantation in Kampong Cham province last year. Hong Menea

Government plugs rubber switch

The government is seeking intrepid smallholder farmers to pilot a project that would transform 6,000 hectares of cropland in two provinces into a patchwork of small rubber plantations.

The Ministry of Agriculture is eyeing 5,000 hectares of land in Ratanakkiri and 1,000 hectares in Battambang for the project, and has already secured interest from thousands of smallholder farmers, according to Pol Sopha, general director of the ministry’s rubber development department.

“In the first step, we identified 2,500 farming families in two provinces, Battambang, Ratanakkiri, who were willing to invest in growing rubber and ready to convert their land from crop farms to rubber plantations,” he said yesterday.

The ministry is currently preparing a feasibility study on the substitute crop project.

If approved by the ministers of agriculture and finance, the government will apply for a $13 million loan from French development agency AFD to cover the low-interest loans it will distribute to farmers that sign on.

“Rubber plantations hold potential for farmers as they will receive financing at a low interest rate, receive technical training from the AFD, and their rubber plantation will have a high yield, which will secure their family’s financial future,” Sopha explained.

The terms of the loans to be distributed to farmers have not been decided, he added.

The government’s push for smallholder rubber plantations comes as rubber prices show a bounce after a five-year global supply glut that depressed prices. The price for natural rubber recently topped $2,400 per tonne, making the cash crop profitable once again, according to Sopha.

Cambodia currently has more than 430,000 hectares of rubber plantations, the majority of which are large-scale projects on economic land concessions (ELCs). Smallholder farms cultivate rubber on about 150,000 hectares.

Sopha estimates that another 300,000 hectares could be brought under cultivation.

Heng Sreng, director of Cambodian rubber producer Long Sreng International, which has over 5,000 hectares of rubber under cultivation in Kampong Cham province, cast doubt on the wisdom of the project, arguing that rubber was a cash crop better suited for large producers that can leverage economies of scale. He said smallholder farmers would be better off investing in crops such as mango or longan, which offer higher returns.

He said a farmer could earn $10,000 profit per year from a hectare of mangoes, compared to $4,500 per year from rubber and with far less risk.

“Rubber is not a priority for smallholder farmers as its market is volatile and producers remains dependant on other countries because there are no rubber factories here,” he added.

Sreng said AFD-backed loans to farmers could help raise them out of poverty, but only if used for profitable crops.

“Farmers will face a lot of risk if they convert from their usual crop to rubber plantations,” he said. “However, it would be suitable if they had free land and wanted to invest in a large-scale rubber plantation.”

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