ADB, Cambodia Aim to Commercialize, Climate Proof Rice Production

An ADB-assisted project will help Cambodia transform the predominantly subsistence rice sector into a commercially oriented industry, while taking care of land and water resources.

PHNOM PENH, CAMBODIA – The Asian Development Bank (ADB) has approved loans of $55 million to help Cambodia transform the predominantly subsistence rice sector into a commercially oriented industry, while taking care of land and water resources.

“Helping Cambodian farmers boost the quantity and quality of paddy will help boost rice exports, improve access to regional and international rice markets, enhance national and household food security, and improve incomes of participants along the rice value chain,” said Bui Minh Giap, Natural Resources and Agriculture Economist in ADB’s Southeast Asia Department. “At the same time, climate change adaptation measures will allow the sector to cope more effectively with an increasing number of extreme weather events.”

Agriculture dominates the Cambodian economy, employing 60% of the workforce with about 80% of the population dependent on the sector for their livelihoods. Rice is the dominant crop. While surpluses are produced, the quality of exported rice is often variable and poor due largely to inadequate processing and storage capacities. In addition, over 10% of all households suffer from food shortages for 1 to 2 months of the year because of rice price fluctuations induced by supply and demand imbalances and constraints in domestic distribution.

Cambodia aims to become a major rice exporter but there are legal and regulatory hurdles to commercial production. ADB’s Climate-Resilient Rice Commercialization Sector Development Program―which will run through to 2019―will help address regulatory obstacles, improve rice value chain infrastructure, and support services, while protecting agricultural land and raising its productivity.

The project loan will be channeled to the provinces of Battambang, Kampong Thom and Prey Veng, the largest rice producing provinces in the country, to help farmers improve crop productivity and their efficiency along the rice value chain. Funds will also be utilized for legal and regulatory reforms to promote local seed production and distribution, strengthen agricultural land management, improve capacity of farmers’ organizations, promote contract farming, and encourage domestic trading and export of milled rice.

An efficient rice value chain and increased productivity will benefit about 1 million low income rice farming households, with each expected to gain additional income of $300 a year by 2020.

In addition to the ADB’s loans, ADB will also administer loans and grants of $9.5 million from the ADB’s Strategic Climate Fund and a $14.6 million grant from the Global Agriculture and Food Security Program. The Government of Cambodia will supply $8.3 million for a total program investment cost of $87.4 million.