Is Cambodia a new agricultural power?
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Is Cambodia a new agricultural power?

Hun Manet, the new Cambodian prime minister and son of the previous prime minister and former military general Hun Sen, recently announced the implementation of a new strategic policy for local agricultural development.

Under the new policy, the national government aims for Cambodia to become one of the world's top ten agricultural-producing countries while also contributing to broader efforts to become an upper-middle-income economy by 2030 and a high-income nation by 2050.

It is undoubtedly an ambitious goal for a country that saw decades of civil war, political instability, violence, and isolation, leaving it as one of the world's poorest countries.

In recent years, food security has become a top-tier issue for the country's top leaders. While the country has made significant progress in socio-economic development in recent years, food insecurity is still an ongoing and serious issue amid global and regional food supply and price fluctuations. According to a recent United Nations report, about 2.5 million Cambodians -- around 15% of the population -- experience severe food insecurity.

With a population of around 16.5 million people, nearly 80% of which live in rural areas. Agriculture plays a key role in the country's economy. Cambodia's population relies heavily on agriculture and fisheries, which employs up to 49% of the country's labour force and accounts for 22% of the country's gross domestic product (GDP). Sixty-five percent of Cambodians rely on agriculture, fisheries, and forestry for their livelihoods.

Agriculture remains largely dominated by rice (70%), the country's most important export commodity and major crop. This is followed by subsidiary and industrial crops (such as sugar cane) (20%), rubber plantations (7%), and permanent crops (such as cashew) (4%), rendering the country reliant on rice.

However, its leading markets are varied, demonstrating the country's interest and willingness to pursue a diversification strategy. In 2023, Cambodia exported nearly 8.45 million tonnes of agricultural products (US$4.3 billion, or about 155.2 billion baht) to about 75 countries and regions, with China, Vietnam, and Thailand among the main markets.

Although agriculture could be a strong driver of socio-economic growth and food security in Cambodia, a number of concerns must first be addressed.

The rise of climate-related disasters (such as severe droughts) is notably severe too. Cambodia also faces high disaster risks from flood and drought due in part to high levels of exposure and vulnerability and a low adaptive capacity. Cambodia's 4.5 million hectares of cultivated land is mainly rainfed, making it reliant on the weather and precipitation. Thus, the agriculture sector is particularly vulnerable to climate-related disasters. Increased temperatures, increasingly unpredictable weather, and shifting precipitation patterns alongside extensive damming for hydropower throughout the Mekong Basin, could impact food security and human health through reduced freshwater availability, declines in agricultural and fishery production, and increases in water-borne diseases.

Rural families, especially small-scale farmers -- who make up 75 percent of the country's 6.8 million farmers, are among the most vulnerable, given their dependence on agriculture for their livelihood.

To address these interlinked issues, the government and policymakers may encourage crop diversification to reduce reliance on rice, such as the cultivation of more less water-consuming resilient and climate-resistant crop varieties alongside the irrigation of land.

Early warning systems for weather forecasting and climate monitoring could also be implemented to help farmers take preventive measures or adjust their farming practices accordingly. Australia, which has significant experience in areas such as agricultural technologies, disaster risk management and monitoring, and climate change adaptation, can help.

Water resources must be managed better, too. As the country experiences seasonal water scarcity and has limited potential for water harvesting and storage facilities to improve water availability due to relatively flat topography, Cambodia could look to countries like Australia where improved water use efficiency in the agricultural sector (such as through drip irrigation systems) has helped reduce water stress concerns. In recent decades, water-use productivity by Australian cotton growers has improved by 40% due to yield increases and more efficient water-management systems.

In addition to improving the country's production and post-harvest infrastructure, as well as transport and logistic infrastructure to strengthen agri-food value chains, access to finance and knowledge should also be improved alongside increased access to agricultural inputs and machinery for increasing labour productivity.

Cambodia's lack of further processing technology for the production of higher value-added products is another concern. Due to the limited processing capacity of Cambodian agricultural products, the majority of the country's exported goods are primary products. In response, policymakers could improve the processing capacity of Cambodian agricultural products through infrastructure, financing, and research and development (R&D) for processing and product development.

Foreign direct investment (FDI) opportunities in Cambodia's agricultural sector should not be ignored either. The commercialisation and development of processing industries, for instance, could offer such opportunities. A meeting between the chairman of Asian agribusiness Wilmar International and the Cambodian prime minister earlier this year shows that there is interest in doing so.

A growing number of countries in the region are also interested in greater agricultural and food cooperation with Cambodia. Aside from Australia, one of the country's long-standing strategic partners and major agricultural development partners, inter-regional investment remains possible. In September last year, Memorandums of Understanding on agricultural cooperation and small business development were signed by Southeast Asian states as part of broader efforts to push the Association of Southeast Asian Nations (ASEAN) towards stronger economic integration.

Other countries are interested, too. For instance, Indonesia, Cambodia's sixth-largest trading partner, is eyeing potential investments in Cambodia's rice bowl. In November 2023, the first shipment of Cambodian rice reached Indonesia.

Thailand, also Cambodia's second-largest trade partner in ASEAN, aims to reach US$15 billion in bilateral trade, including agricultural trade, by 2025.

Elsewhere, import-reliant Japan remains interested in Cambodian agricultural exports, while South Korea has announced it will continue to implement joint agricultural projects with Cambodia.

Cambodia's biggest trading partner, China, is interested in agricultural investment and food security cooperation with Cambodia, a Belt and Road Initiative country. Outside of participating in the new Asean-China food security agreement, the two countries seek stronger bilateral agricultural cooperation, as recent agreements to establish a "Fish and Rice Corridor" and a Sino-Cambodian "Industrial Development Corridor" demonstrate.

Outside of Asia, both France and Israel have expressed interest in agricultural cooperation.

Cambodia's greater emphasis on local agricultural production and grand ambition of becoming one of the world's biggest agricultural producers face numerous domestic challenges.

While it is clear that the government and policymakers will face a tough battle in addressing these concerns, opportunities for international, regional, inter-regional, and bilateral agricultural and food security cooperation with the country remain.

Genevieve Donnellon-May is a research associate at the Asia Society Policy Institute and the Asia Society Australia.

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