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January 3, 2009 by phalla (Edit)
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Written by KAY KIMSONG
Friday, 02 January 2009

With foreign direct investment and the property market in the grips of market crisis, experts say the agriculture sector should be the government’s focus

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Photo by: Tracey Shelton
Rice farmers in rural Cambodia. Experts hope that a strong agricultural sector will insulate the country from the economic crisis.
DEVELOPMENT officials called on the government this week to devote more resources to the agricultural sector in an effort to mitigate the effects of the global economic crisis.

Kang Chandararot, president of the Cambodia Institute for Development Study, said that while the tourism and garment sectors continue to struggle for access to international markets during the slowdown, Cambodia’s agriculture sector holds the best hope of weathering the crisis.

“We face a difficult situation, but the government should use most of the [nearly] US$1 billion in donor aid to develop our rural areas as a top priority,” he said.

He said greater improvements in rural development would cut poverty and reduce dependence on loans from banks or microfinance institutions.

“While direct loans from banks and microfinance institutions provide necessary support, aid through the rural development and agriculture ministries should be used to modernise our agricultural methods,” Kang Chandararot said.
Such aid could be used to renovate Cambodia’s aging water systems, find new seedlings and fertilisers, and improve rural markets, he said.

Bank lending for infrastructure improvements poses risks for farmers, said Tep Khunnal, governor of Malai district in Battambang province, who has proposed a new community-based capital savings and lending initiative.

“I understand that loans and financing from outside are necessary, but capital reserves established in Malai district could be sufficient for providing financing to local farmers,” Tep Khunnal said.

“We are thinking of a community bank, where farmers can borrow money at low interest rates,” he said.

The governor said Malai farmers expect to earn about $5 million from this year’s harvest of corn, beans, cassava and rice, despite a dip in some commodity prices.

The price of corn per tonne is $144, down 58 percent from June and July this year, when it sold for $346 per tonne, he said.

“We met with a large group of farmers in Malai district to discuss what crops would be best to plant next year based on our predictions of how the prices might fluctuate,” he said.

He added that based on recent analysis by agricultural experts, crop prices would rise in late 2009 on a predicted increase in oil prices to between $60 and $80 per barrel.

Son Koun Thor, president and CEO of Cambodia’s Rural Development Bank, said the global financial crisis was not likely to affect farmers in remote areas who had little access to larger markets.