Foreign Investment in Agriculture in Cambodia CDRI Working Paper ...

Annual average growth (gross value added) in the sector was at about 5.6 percent from
2002 to 2009. Such slow growth can be attributed to weak rural-urban linkages; unsecured land
ownership; sluggish investment, both public and private, particularly in irrigation, transport
and agricultural research; and limited support infrastructure such as availability of and access
to finance and affordable reliable energy and telecommunication services (World Bank 2004a,
2004b, 2006).
Crop farming dominated by paddy rice cultivation, contributes around half of the
national agricultural output. Fisheries, including freshwater, aquaculture and marine, account
for approximately 33 percent, livestock and poultry contribute about 16 percent, and forestry
and logging around 8 percent of total agricultural output.
2.2. Production and Harvested Areas
Alongside the rapid growth in manufacturing industry in the past decade, an expansion
of paddy rice, Cambodia’s main staple food, has been remarkable. The area under paddy rice
increased from about 2.4 million ha in 2004 to 2.7 million ha in 2009, resulting primarily from
the government’s expansion plan. Production also surged significantly from 4.2 million tonnes
in 2004 to 7.6 million tonnes in 2009, thanks to meagre loss of cultivated areas, which is the
difference between total cultivated and harvested areas. This substantial growth in production
has led to a considerable paddy rice surplus (Figure 2). The sub-sector is estimated to employ
around 2,940,000 people, which shows its significant potential to contribute to poverty
alleviation in rural Cambodia (UNDP 2007: 5).
There is also evidence of fast and stable growth in the production of other main crops such
as cassava, maize and soybeans, and a slight increase in mung beans, between 2002 and 2009
(Figure 3). This growth can be attributed to rising prices, pushed upwards by increasing demand
for these crops in neighbouring Thailand and Vietnam, which are their traditional buyers. In
terms of employment, soybeans, maize and cassava employ about 16,500, 12,500 and 4,000
workers, respectively (UNDP 2007: 5). Cambodia also produces a wide range of specialised
crops, including sweet potato, peanuts, sesame, sugarcane, tobacco, jute and vegetables.
A steep acceleration in rubber prices on international markets during the past decade
has generated considerable interest from both domestic and foreign investors in the sector in
Cambodia, making this the country’s main industrial crop. There has also been considerable
engagement by Vietnamese investors in recent years, but the exact magnitude of involvement is
difficult to estimate. The latest data from MAFF show that the total area under rubber plantation
(both mature and immature trees), including rubber estates, new investments in the form of
ELCs and smallholdings, was 130,921 ha in 2009, up from 82,000 ha in 2007. Figure 4 shows a
decline in the tapping (mature rubber) area, which seems to contradict the figures above: some
rubber trees are too old to be tapped and therefore have to be felled. Normally, rubber trees are
ready for tapping within three to five years of planting. MAFF data (2007) indicate that 25,275
ha of old (i.e. unproductive) rubber trees were felled between 1996 and 2006.
4 Foreign Investment in Agriculture in Cambodia