Commodity Prices Q1, 2009

Biggest price decrease:

• Tomatoes down 53.14 percent
• Cabbages down 44.67 percent
• Cashew nuts down 39 percent
• Cucumbers down 35 percent

Biggest price increase:

• Pineapples up 23.53 percent
• Oranges up 22.5 percent
• Bananas up 21.25 percent
• Granulated salt up 20 percent

Source: Trade Promotion Department

FOOD prices dropped nearly 5 percent in the first quarter of this year, Ministry of Commerce figures show, representing a reversal on the huge price increases Cambodia saw in 2008.

The drops follow soaring inflation from January to October last year that raised fears over food security as prices on some products almost doubled in less than 10 months.

The latest figures, released Wednesday, show an overall downward trend in the price of the 36 foods surveyed, with 20 showing price decreases, 14 showing increases and two - pork and Thai milk - unchanged.

Vegetables appeared to be the hardest-hit food group with tomatoes (53.14 percent), cabbage (44.67 percent) and cucumbers (35 percent) all showing large drops in average prices over three months. Other foods that showed significant price drops were peanuts (34.29 percent), cashew nuts (39 percent) and palm sugar (22.11 percent).

Fruit prices, on the other hand, showed significant increases including bananas, pineapples and oranges, which recorded 21.25, 23.35 and 22.5 percent increases, respectively.

The price of salt increased 196 percent from January to October 18 last year, and grew a further 20 percent this year, with chicken prices up 16.11 percent.

The figures are in stark contrast to the boom in food prices last year where some products saw price increases of almost 200 percent.

The same basket of goods saw an overall increase of 36.9 percent in under 10 months in 2009.

Particularly strong performers included morning glory, which rose 150 percent; oranges, which rose 117.78 percent and black sesame which rose 80 percent.

Agricultural researcher and chairman of the board of directors at the Peace and Development Institute Kasie Noeu said famers were used to fluctuations in food prices and blamed the financial crisis.

"I will not lose hope and will continue to farm these products," he said.

For the cambodian

farmer, in order to improve their income, they should not go for rice.

Kasie Noeu said he would look to form relationships with other farmers, in order to strengthen their collective position.

"That way farmers can produce better-quality products by working together, sharing knowledge, and when it comes to purchasing anything they can buy at a better price and sell at a better price."

Certain products such as dried tapioca could be stored and sold when prices were stronger.

Farmers could also target markets where with shortages.

"Organic rice can be sold anywhere at top prices. With the high quality soil of Cambodia, Cambodian farmers can do it at a better price," he said.

The President of CEDAC's steering committee, Yang Saing Koma, said some farmers had more cause to be concerned than others due to the fact that some goods increased in value while others decreased.

It was hard for Cambodian farmers to compete in some areas such as vegetable growing and pig farming as competitors had certain advantages.

"For example, Vietnam because they have [better irrigation] and electricity is cheaper and they have better access to seeds and technology. Here the farmers are producing it under very difficult conditions."

The stability of rice prices, which had shown slight a drop and peaked at $33 for 50kg according to CEDAC figures, made it less attractive for farmers to diversify.

"For the Cambodian farmer, in order to improve their income, they should go not only for rice, but for vegetable and livestock production, but if their competition is so good, it may discourage the farmers to go for more diversification and it might become a big problem for us especially in terms of employment and income opportunities for the farmer."

Diversification would require significant help from the government, he said.

People who were returning to the land from the cities after losing their jobs would make this situation worse because it would increase competition for land.

They would need to look into other forms of farming to avoid making the situation worse, he said.

The Economist Intelligence Unit, which recently caused controversy with a report labelling Cambodia as potentially unstable, has predicted agricultural production will grow by three percent in Cambodia next year, despite the country's real GDP predicted to drop by 3 percent overall.

"Falling agricultural commodity prices will put downward pressure on rural incomes," it said.

The Ministry of Commerce declined to comment.