​Labour shortages as farmers cash in on rising land prices

Content image - Phnom Penh Post
As Cambodia slowly shifts away from labour-intensive agriculture, mechanised farming needs to take hold to sustain productivity. Victoria Mørck Madsen

​Labour shortages as farmers cash in on rising land prices

Despite an overall increase of 39 per cent in rice exports in 2015 compared to 2014, unstable profits garnered from small family-owned farms and the influx of factories are luring farmers away from the agricultural sector as they aim to cash in on rising land prices and earn more in factories, resulting in labour shortages that are dampening small-scale farm production.

Kim Heang, president of the Cambodian Valuers and Estate Agent Association (CVEA), said that land prices along National Road 2 and 3 have increased up to 20 to 30 per cent since last year, a combined result of farmers selling their land and a dramatic increase of interest from investors and factory owners looking to set up shop along the economic corridor that connects Phnom Penh to Ho Chi Minh City.

Yen Lorn, a farmer in Takeo Province, who owns a farm close to National Road 2, located to the north of a garment and shoe factory, said, “[The land price] used to be about $10 to $20 per square metre, [now] it has climbed up to about $30 per square metre.”

Lorn, who has stuck to farming and is also a local land broker, mentioned that in his village very few farmers own cattle, meaning they have to rent tractors to plough and harvest the rice. The cost, he said, can be as much as an additional $10 per hectare of rice paddy.

Another villager from Thbong Khmom Province, Phen Sreyla, a student at a local university in Phnom Penh, said that many of the farmers in her village are selling their land to factory developers at an average price of $2.50 per square metre. In recent years, she has observed four new factories being built, including a brick factory and a wood factory.

“Most of the land along those roads have been sold. Some of the land has been rented back to the farmers [while owners] wait to get higher prices. Negatively, this will affect farmers who have sold their land,” said Sam Vitou, executive director for Cambodian Center for Study and Development in Agriculture (CEDAC). He added that the cycle of selling and renting can lead to a trap as farmers have to pay more to plough.

Heang said that the majority of this farmland along the National Roads was purchased in 2005 and 2006 by pragmatic Phnom Penh residents who foresaw an increase in land prices once completed infrastructure attracted factories that would pay higher prices.

But for small family-owned plots, Vitou believes that farmers who sell their land can rarely afford to reinvest in farmland, while the majority of them “use the money to construct new houses, buy motorbikes or for other purposes [that make their lives easier].”

“Some of them work for other farm-owners, especially during the farming season, but, especially the women go to the factories. There also are many cases where [farmers] migrate to work in Thailand.”

This has resulted in a labour shortage, according to Aom Pov, a farmer in Kompong Chnang Province, who said, “there are young people going to work at garment factories every morning by the truckloads, so there isn’t enough manpower to help out in the rice farms.”She said that over the last few years, almost everyone in her village has given up farming, preferring instead to work in shoes or garment factories.

Most farmers along with those in the agriculture sector would pinpoint the selling off of farms due to low profits generated by unprofitable rice production because of bad weather like floods and droughts in the past four years, explained Vitou.

Content image - Phnom Penh Post
A new factory along National Road 2. Dit Sokthy

Besides the general decline in what the agrarian life has to offer, many Cambodians still prefer to shift away from farming as the occupation has become less appealing and new employment opportunities are arising, primarily amongst the younger generation.

David Van, managing director of business advisory firm Bower Group Asia, said one of the reasons for the decline of workforce in the agriculture sector is because farmers had to give away their farm land to MFIs and migrate to work in Thailand, calling it a “snowball effect” due to the possibility of people “defaulting in payment”.

Furthermore, the growing trend of farmers steering away from the agriculture sector can be observed in a recent report titled “Addressing The Skills Gap” released by the ADB. The study showed a steady decline of employment in the agriculture sector nationwide, with the employment rate of 51 per cent in 2012 declining to 48.7 per cent in 2013. Meanwhile, the industrial sector, like factory work, increased from 18.6 per cent to 19.9 per cent over the same timeframe.

Since rural areas account for the majority of all employment, the absolute number of people in rural areas moving out of agricultural employment is large, the report read with a 2.8 per cent decrease of employment from 2012 to 2013. Meanwhile, for the rural population, industrial employment sector rose to 19 per cent.

Vitou added that other vital factors affecting the Kingdom’s low agricultural productivity is the rising cost of increasing labour, and higher prices for fertiliser and gasoline compared to neighbouring countries, all of which combined leave farmers with little choice but to sell their land, he explained.

“This seems to be the trend of developing countries where the number of farmers becomes less and less. As our assessment for the next 10 years shows, around 25 per cent of rural households will continue farming with their main income coming from agriculture. Around 35 per cent will continue their farming but their main income will not be from agriculture. The rest will abandon agriculture,” he said.

However, independent economist Srey Chanthy, expressed more optimism on the matter, “If farmers sold their land and work for domestic factories and industries, that is great because labour is one of the key factors for [industrialisation]; even in advanced countries where many tasks in factories and industries can be automated or done by robots, labor remains important.”

Nevertheless, when a country does not have a sustainable and climate-resilient agricultural development policy, and an industrial development policy overshadows the importance of agriculture, he said, the overall impact will be negative.


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