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High food prices failing to benefit farmers: experts

High food prices failing to benefit farmers: experts

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Economists say the government needs to step in to increase food yields, subsidise prices and promote Cambodian agriculture abroad

Tracy Shelton

Cambodia's strong agricultural potential remains untapped, and farmers are suffering, say experts.


66%

of farmers do not

produce a surplus

Poor infrastructure

and lack of government planning are hindering

the growth in the agricultural sector,

say experts.

WITH high food prices failing to boost rural real incomes, experts are pressing for a national action plan to help more farmers cash in on rising commodities prices.

But the overwhelming majority of rural Cambodians are net purchasers of rice - only 34 percent are producing enough food to sell. Experts say the government needs to step in to  make the sector more productive and profitable.

"The market is huge enough to absorb Cambodia's products. The problem is on our side. The problem is our quality and quantity of supply," said Dr Kang Chandararot, head of the economics unit at the Cambodia Institute of Development Study.

The latest figures from the Cambodian Development Research Institute paint a disturbing picture of Cambodia's agricultural sector.

The CDRI said 19.1 percent of households do not have an acceptable level of food consumption. The Tonle Sap region has been the hardest hit, with more than 40 percent of households being deemed "food insecure" by CDRI.

This, despite a food boom that has lifted incomes of farmers in neighbouring Thailand and Vietnam.

The apparent failure of the free market to meet basic needs is leading experts to call for the government to step in.

it would be

effective to subsidise equipment and inputs like fertiliser.

Kang Chandararot urged government intervention in order to generate more surpluses for export, turning high food prices to Cambodia's advantage.
"From a macroeconomic view, it would be effective to subsidise equipment and inputs like fertiliser and seeds and to subsidise electricity and fuel. The government will have to increase and expand its irrigation systems," he said.

Beneficiaries

The CDRI report says that the main beneficiaries of the price boom have been farmers already producing a surplus, typically growing rice, cassava or soybeans.

Piseth Long of the project implementation office at the Asian Development Bank (ADB), said that 2.6 million people struggle to feed themselves as a result of high food prices.

The government has intervened to prevent rice prices spiralling out of control and now sells rice at a subsidised price through the Green Trade Co. Moreover, with the help of the Asian Development Bank, the government has enacted a "food for work" program where day labourers are paid in rice.

But according to Chan Sophal, the author of the CDRI report, the "food for work" program's budget of US$40 million means it has not been enough to eradicate food-security fears among  Cambodia's poor. "The need is much greater," he said.

The nearly 40 percent increase in food prices in Cambodia has taken a heavy toll on Cambodia's poor, according to a September 25 CDRI briefing paper, "Impact of High Food Prices in Cambodia".

The poorest 40 percent of Cambodia's population spends about 70 percent of its income on food, meaning even a slight jump in food prices can have significant effects.

Cutting back

With the price of rice jumping 100 percent this year and meat prices increasing by 50 to 70 percent, the CDRI found that half the families in Cambodia have cut back on food to save money.

However, the picture is clouded by the fact that currently the government does not have good information about the level of national food availability. To solve this, CDRI argued that Cambodia needs better data collection particularly on its paddy exports - the overwhelming majority of which goes unrecorded.

Piseth Long said, "If they wanted to, the government could collect all the data at customs checkpoints....  [With that information] we'll know exactly how much to export. We'll know exactly how much stock we can keep in the country."

This data could be particularly helpful next season with parts of the country in drought, CDRI said.

Though food prices have been stable since July, they remain high, and millions of people remain at risk, according to Piseth Long.

CDRI concluded "immediate interventions by government, development partners and civil society organisations are needed."

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