Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development - Agricultural production - Irrigation

Development Context. During the last decade, Cambodia has achieved impressive economic growth with gross domestic products (GDP) averaging 10% per annum during the 2004-2010 period. Despite its declining GDP share from 46% in the 1990s to 34% in 2010, agriculture remains an important sector in the national economy. It is an important source of livelihood for 85% of the population. Paddy production covers 84% of cultivated land and contributes about 38% of agricultural value added or 13% of the national GDP in 2010. Paddy production has been crucial in creating employment and reducing the national poverty rate from 47% in 1993 to 30% in 2010. The Royal Government of Cambodia (RGC) set the annual GDP growth target of 7% and poverty reduction rate of 1% per annum from 2009 onwards. Given its significant share in the national GDP, rice continues to play a crucial role in enhancing macro-economic stability, food security, and poverty reduction. However, to achieve economic growth on a broader and sustainable basis, substantial constraints in rice value chain need to be removed.

Key binding constraints in rice commercialization observed include: (i) production is largely traditional and unorganized; (ii) value chains are weak and fragmented; (iii) agro-industry small and medium-sized enterprises (SME) are under-developed; (iv) intra- and inter-sector connectivity is limited particularly with energy, finance and transport constraining production and market access; and (v) domestic marketing standards are low and rice trading with regional and global markets is limited. These constraints are due largely to the lack of an enabling legal and/or regulatory environment for strengthening market linkages, productivity enhancement, organized production, and sustainable access to finance, among others. In terms of natural resources, while Cambodia is endowed with ample land and water resources favorable for paddy and other crop production, use efficiency of these resources is suboptimal due to limited capacity in agricultural land management and underinvestment in increasing total factor productivity. Therefore, it is critical for agricultural land to be managed efficiently and effectively by practicing sound agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and environmental and climate change risk/vulnerability mapping and management.

Innovative Features. The SDP is among the first initiatives in Southeast Asia that contemplates rice commercialization and simultaneously addresses resilience of its underlying agro-ecological system. As a matter of fact, the evolution and development of a commercial rice value chain will create pressure on natural resources which may cause degradation of the soil, loss of biodiversity or soil and/or water pollution. The SDP's interventions will increase resilience by promoting sound agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and environmental and climate change risk/vulnerability mapping. In this regard, the SDP, if implemented successfully, will be a role model for climate resilient cropping practices for rice in response to growing global food demand. Moreover, although the primary focus of the SDP will be on rice commercialization, the enabling legal, regulatory and institutional conditions put in place for rice will also create favorable conditions for the commercialization of other agricultural commodities. This will enable Cambodia to promote agricultural diversification and economic growth on a broader and sustainable basis.

Justifications for Adopting the SDP Modality. The proposed interventions include a policy reform component, an investment component, and an associated technical assistance. The SDP modality is preferred and proposed for the following reasons. Commercialization of rice that addresses resilience of its underlying agro-ecological system will entail adjustments in legal framework and relevant regulations coupled with institutional strengthening of relevant actors. While this is necessary, it will not be sufficient to unlock the potential of supply chain actors including private sector investors and individual households. Therefore, policy and regulatory reforms will have to be accompanied by well sequenced/timed investments that enhance factor productivity. In this regard, adopting the sector development program modality for the proposed interventions is not only desirable, but necessary. Moreover, the RGC is firmly committed to rice commercialization to enhance economic growth and food security. Significant adjustment costs are associated with its implementation.

Increased net incomes of stakeholders along the rice value chain.

Enhanced production of quality rice in Cambodia while preserving the natural resource base

Conducive legal and regulatory environment established to facilitate climate-resilient rice commercialization

Agricultural land-use zoning improved.

Climate-resilient rice value chain infrastructure developed

Rice value chain support services enhanced to improve quality of Cambodian rice

Weather-indexed crop insurance piloted

Efficient program management and implementation

Output 1 - A Conductive Legal and Regulatory Environment Established to Facilitate Climate-Resilient Rice Commercialization. The program has complied with all the policy conditions for the first tranche. For the release of second tranche, there are 12 policy conditions. All twelve policy actions are achieved as 4 February 2022

Output 2 - Agricultural Land-use Zoning Improved. MAFF prepared Commune Agro-Ecosystem Analysis (CAEAs) for all 90 target communes and established rice ecosystem dataset and soil classification dataset. MAFF produced 3 provincial rice ecosystem maps, 13 district rice ecosystem maps, 3 provincial soil classification maps, 13 district soil classification maps, 3 provincial land use maps and 13 district land use maps.

MLMUPC/NIO prepared commune land use plans (CLUP) for 90 communes and established a national on-line CLUP database for the storage, management, and dissemination of CLUP data to stakeholders across Cambodia.

Output 3 - Climate Resilient Rice Value Chain Infrastructure Developed. For irrigation, MOWRAM/NIO completed rehabilitation of 9 irrigation schemes benefitting 82 villages, 20,510 households. Total 100,095 farmers, (51%) women got access to water through these irrigation schemes 9 subprojects created a combined potential irrigated area of 18,586 hectares.

For Paddy Drying and Storage Facilities (PDSs), contracts for 5 PDSs at 5 rice mills signed and construction of 4 PDSs are completed, and another is at 80% physical completion. The 5 PDS facilities can dry 2,280-3,380 tons paddy per day and extend the storage capacity by 40,000 tons.

For Seed Processing and Storage Facilities (SPSs), two modern SPSs are now established at two selected Agricultural Stations. MAFF completed procurement of 2 SPS facilities and their construction works are achieved at 70% and are expected to complete by Q3 2022.

Regarding subproject associated initiatives, MAFF conducted 7 capacity building programs on laser land levelling to potential contractors, farmers, provincial department of agriculture, forestry and fisheries and provincial implementation office (PIO) staff and 41 potential contractors including 7 Females (17%). Subsequently, PIOs signed 17 contracts with service providers to level 2,078 hectares of paddy field and now 100% completed benefitting 9,718 farmers i (55% women). As a positive impact, in addition to project support, the trained contractors have been hired by farmers and levelled 889 ha.

Total 9 farmer water user committees (FWUCs) were established with 84,659 beneficiaries including 44,321 (52% female) registered as FWUC members. Total 223 members including (48% female) are in the FWUCs Management Committees received 247 FWUC trainings on O&M of irrigation schemes conducted including study tours of FWUCs to learn successful O&M.

Output 4 - Rice Value Chain Support Services Enhanced to Improve Quality of Cambodian Rice. Through letter of agreement approved by ADB, 231 tons of registered rice seed were produced by the 3 selected agriculture stations and sold to ACs and seed producer groups to produce 9,139.21 tons of certified seed for onward sale to farmers and traders. Total 601.77 tons of certified rice seed were produced using project funds through ACs.

MAFF completed renovation of the National Seed Testing Laboratory and equipped with necessary equipment. MAFF conducted 244 training programs on rice seed production, post-harvest techniques, agricultural machinery utilization, rice quality inspection, rice milling technology, sustainable rice production, and effects of climate change to 14,743 participants (51% women).

The program conducted 3 study tours for officials from EA and IAs and rice millers to modern rice milling facilities in Cambodia, Thailand, and Malaysia. The program conducted 3 workshops on 'Financial Access of Farmers for Rice Production for a total of 190 participants (8% women). Rice Millers Capacity Development is now carried out.

PIOs carried out 25 business matching activities linking rice millers, 57 ACs producing rice seeds as well as paddy, exporters and ARDB. PIOs also provided training on storage and safe use of agriculture chemicals and inputs to inputs suppliers. A total of 1,174 inputs suppliers (33% women) attended the training.

Output 5 - Weather-indexed Crop Insurance WICI) Piloted

By December 2021, Rice SDP achieved: (i) a provisional list of 340 villages for WICI pilot testing prepared after detailed consultation with local authorities; (ii) procurement and installation of 23 automatic rain gauges in WICI pilot testing areas completed; (iii) designing of the WICI product based on satellite and selected weather stations data completed; and (iv) 147 training/technical meetings on WICI scheme conducted with a participation of 2,241 participants (28% women) from regulator office, insurance companies, meteorological and weather data agencies, agriculture research institutes, MFIs, agriculture input suppliers, provincial officials and others.

The Insurance Companies sold the WICI Policy to farmers in April -June 2021. A total of 675 farmer households including 336 female households (50%) bought the WICI policy for 887ha of rice producing areas. The FORTE insurance company is currently making insurance payments to 351 of 430 farmers who suffered from dry spell and/or excess rainfalls.

Output 6 - Efficient Program Management and Implementation. The government established PMO at the EA, NIOs at the Ministries and PIOs at provinces. The program had changed the project implementation consultancy from firm to individual consultants due to slow work progress. The change has significantly improved the implementation and has saved $2 million from consulting budget which will be utilized for continuing with some capacity building activities, building 6 AC warehouses and drying yards, and 1 FWUC building.