Theng Vuthy, CDRI, Cambodia Rice-based Systems Research: Regional Technical Workshop Australian Centre for International Agricultural Research (ACIAR) 13-15 June 2012, Vientiane, Laos

1. DEVELOPING AGRICULTURAL
POLICIES FOR RICE-BASED
FARMING SYSTEMS IN LAO PDR
AND CAMBODIA
Rice-based Systems Research: Regional Technical Workshop
Australian Centre for International Agricultural Research
(ACIAR)
13-15 June 2012, Vientiane, Laos
Theng Vuthy, CDRI, Cambodia

2. Project partners
 University of Queensland
 National University of Laos
 Cambodian Development Resources Institute
 Chiang Mai University (Thailand)
 Centre for Agrarian Systems Research and
Development (Vietnam)

3. Project Aim
 Contribute to improved agricultural policies
for rice-based farming systems in Laos and
Cambodia, taking into account trends in
Thailand and Vietnam, in line with ACIAR's
food security initiative for the Mekong
region.

4. Objective 1
 To analyse current agricultural strategies,
policy processes, and policy settings in Laos
and Cambodia in the context of regional
social, economic and environmental
constraints and trends.
 Review agricultural constraints, trends, and
strategies in the region through interviews with
key informants, review of policy documents, and
analysis of secondary data.
 Prepare a comparative analysis and synthesis of
these constraints, trends, and strategies.

5. Objective 2
 To demonstrate the benefits of evidence-based
policy development in Laos and Cambodia
through feedback from selected case studies.
 Use locally grounded case studies to explore the
implementation and impacts of selected policies.
 Conduct project workshops to review, compare,
and analyse case studies in relation to
constraints, trends, strategies, and processes.
 Feedback to policy actors through Project
Advisory Group, reports, and policy briefs.

6. Objective 3
 To examine agricultural policy trends in other
countries in the region, especially Thailand and
Vietnam, and the implications of cross-border
trade and investment for policies in Laos and
Cambodia
 Identify
key policies and trends in Thailand and
Vietnam of relevance to Laos and Cambodia
 e.g.,agricultural commercialisation, crop
diversification, rural credit, mechanisation, contract
farming.
 Conduct case studies of direct impacts of traders
and investors from Thailand and Vietnam on

7. Objective 4
 To collaborate with agricultural policy agencies
in Laos and Cambodia to identify improved
policy options and strengthen policy
development processes
 Involve policy staff in training workshops, field
studies, analysis of data, and preparation of
policy options.
 Organise in-house reviews and policy forums in
Laos and Cambodia in conjunction with
collaborating policy agencies.
 Prepare a manual on evidence-based policy
analysis.

8. Timeline
 Workshop 1 - Inception Meeting (August 2011)
 Workshop 2 - July 2012
 Outputs of Year 1 - Dec 2012
 Workshop 3 - July 2013
 Outputs of Year 2 - Dec 2013
 Interim Project Report - March 2014
 Forums in Laos and Cambodia - May 2014

9. Phases of Research
 Year 1 – Rice policies in Cambodia and Laos (in
context of Thailand and Vietnam)
 Year 2
 Policies regarding agribusiness investment and
contract farming for non-rice crops (maize,
sugarcane, rubber, …);
 Policies regarding livestock production and trade
(cattle, buffaloes, …)

10. Components of Year 1 theme
 Regional overview and comparison of rice
policies
 Specification of rice farming systems (mainly
lowland)
 Production and input constraints (farm size,
land, seed, fertiliser, water, extension, credit,
risk)
 Output constraints (post-harvest, marketing,
trade barriers)
 Diversification (alternatives to producing rice
on the same land)
 Contract farming, farmer organisations

11. Case studies underway in Laos
 Irrigated and rainfed rice-based farming
systems in southern Laos (Savannakhet)
 techniques of rice production
 production cost and returns
 diversification of farm activities
 Supply of inputs and services to rice farmers
 seeds,fertilizer, water, credit
 government and private-sector
 Rice value chain and cross-border trade
 Laos-Vietnam
 Laos-Thailand

12. Case studies underway in
Cambodia
 Fertiliser supply chain: a case study in Takeo
Province
 Policy options for improving credit supply to
rice producers: a case study of in Takeo
Province
 Rice value chain: a case study in Takeo and
Southern Vietnam
 Rice contract farming in Cambodia: a case
study in Takeo and Kampong Speu provinces

13. Research problems and
rationale
 Rice is main crop, contributes to economic
growth
 In 2010-11, production is 8.4 m tons, surplus 4
m tons
 But there are constraints …
 Farm inputs – poor quality fertilizers, pesticides,
seeds
 Credit – limited access to working and investment
capital
 Rice marketing – high potential, but many issues
surrounding post-harvest operations and cross-

14. Methodology
 Focus on Takeo
 One of main lowland rice production areas
 High flow of farm inputs, credit provision, cross-
border trade, and emergence of contract farming
 Qualitative approach – KIIs and FGDs in four
districts with different access to irrigation
 Respondents - farmers, traders,
contractors/millers, exporters, importers, MFIs,
government officials
 Secondary and primary data

15. Fertilizer value chain study
Theng Vuthy, PhD

16. Fertilizer import and distribution
points
Thai Entry Point
Thai Distribution Centers
Vietnam Distribution
Organic Distribution
Centers
Organic Entry Point Vietnam Entry
Points
Future Vietnam Urea
Entry Point

17. Fertilizer procurement and distribution
channels

18. Fertilizer channels in Takeo
Licensed Cambodian Importers
(1 based in Takeo, 4 in flow)
Prov. distributors / wholesalers Mobile distributors / wholesalers
Prov, District and Village Retailers
Seasonal Village Distributors
Credit sales Cash sales
Smallholder Farming Households
Note: Quality fertilizer flow ; Possible fake flow

19. Urea and DAP value chain (Feb,
2012)
Granular Urea DAP (USA)
% of imported % of imported
($/50 kg) price ($/50 kg) price
Bag Cost Importer at Vietnam border - - 31.5 100
Transport to Cambodia (<100km@$0.25) - - 0.3 0.8
Into store - - 0.1 0.2
Cost into Border Warehouse - - 31.8 101.0
Label change & importer's markup - - 1.7 5.3
Importers Selling Price 24 100 33.5 106.3
Transport to province (100 km @ 0.25) 0.3 1.0 0.3 0.7
Distributor markup and handling 0.8 3.1 0.8 2.2
Into store Provincial Distributor 25.0 104.1 34.5 109.3
Provincial distributor markup 0.5 2.0 0.5 1.4
Distributor selling price 25.5 106.1 35.0 110.7
Transport to village dealer & handling - - 1.0 2.9
Into store at village dealer - - 36.0 113.6
Dealer markup for cash sale 3.3 12.7 0.5 1.4
Retail Cash Price 28.8 118.9 36.5 115.0

20. Blended fertilizer samples nutrient
analysis
% Total % Total Total Nutrient
Sample # Product % Total N % Total P2O5 K2O Sulfur %
5. 20-20-15 21.90 10.50, 11.40 9.00 77.00
12. 20-20-15+TE 16.40, 16.80 16.70, 17.40 14.20 88.00
21. 20-20-15+TE 17.10 18.20, 18.00 13.60 68.22
24. 20-20-15 17.70, 18.50 19.50 11.60 90.18
28. 20-20-15 20.70 19.60 9.77 91.04
34. 20-20-15+TE 17.20 17.50, 17.30 12.80 86.36
38. 20-20-15 17.80, 18.10 21.20 10.40 90.36
42. 16-16-8-13(S) 13.90 5.51, 5.47 0.15 12.10 48.90
43. 16-8-8-13(S) 17.20 8.66 2.85 15.60 89.72
46. 20-20-15-13(S) 24.60 12.80, 12.20 11.90 2.12 89.64
60. 16-8-8-13(S) 16.30 6.80, 6.92 3.47 15.00 83.41
73. 20-20-15 + TE 17.80, 19.00 20.30 9.41 88.56
88. 20-20-15 + TE 16.10,16.20 20.30 11.70 87.64
92. 20-20-15 +TE 15.80,16.10 21.10 9.79 85.44
97. 25-20-10 +TE 23.00 19.60 12.30 99.82
102. 20-20-15 + TE 21.60 16.20, 16.60 9.43 86.60
Source: IFDC / WB, 2010; Note: Overall index value of the fertilizer is 98%

21. Fake fertilizer – how does it
happen?
 From blender/producers – either poor blending
quality or mixing (reported both from Thailand
and Vietnam)
 Adulteration and or dilution (e.g., mixing poor
fertilizer with good one)
 Re-bagging – putting poor quality or cheap
fertilizer in bag labeled with urea or DAP
 Coating with oil to change product appearance
(e.g., coating 6-20-0-4 to give DAP
appearance)
 During high prices in 2008-9, about 30% of
fertilizers were fake

22. Reduction of fake fertilizers
 MAFF and PDA cracked down on fake
fertilizers by
 increasing certification and training of wholesale
and retail shops
 farmer training and awareness
 Increase competition of importers for market
share in a small total market
 Farmers have realized that cheap fertilizers do
not provide good crop responses

23. Farm credit
Kem Sothorn

24. Supply of credit to rice farmers
 Good supply of credit from MFIs
 Borrowers increasing, mostly larger farmers
 Most small farmers still cannot access credit
 Factors limiting access to available credit -
 Lack of collateral
 High risk and vulnerability among the poor
 Small farm size and poor physical infrastructure
 Lack of skills to use credit effectively
 Lack of livelihood diversification
 Difficulties in forming group loan

25. Impacts of credit on rice
farmers
 Not all credit used for agriculture
 Farmers mostly use credit to diversify income
sources and for household expenditure
 Most farmers access inputs from traders on
credit with high interest rate
 General improvement in living conditions and
food security, partly because of access to credit
 Women are better managers of household
expenditure and investment

26. Preliminary observations
 Credit for rice farmers can work effectively if
there is good combination of
 physical infrastructure
 market availability
 skill and extension services
 mechanisms to cope with shocks and reduce
vulnerability
 Most MFIs focus on their own sustainability
rather than helping farmers by reducing interest
rates

27. Rice value chain
Nou Keosothea and Chhim Chhun

28. Links in rice value chain
Store in the
Sun dry house
Local rice
mill Transport to
Village or Phnom
Farmers
local Penh
produce
collectors
varieties Provincial rice mill
of rice Exporting
Regional
traders
Transport to
Vietnamese traders
Vietnam
Indicate the huge amount of paddy

29. Relationships in rice value
chain
 Farmers sell rice immediately after harvest
 Local traders the first link, transporting to regional traders
 Vietnamese traders are key to setting price, quality, and
quantity
 Actors get information (prices, quantity, quality) mainly from
Vietnamese traders
 Traders manipulate information for own benefit
 Farmers are price takers
 No active producer organizations in place
 Local traders are short of capital
 capacity to buy rice about 5-10 tons per day
 no storage facility

30. Prices and margins along chain
Wet season rice Dry season rice
Key Value Chain Actors Price % of farm Price % of farm
(riel/kg) gate (riel/kg) gate
Farmers’ selling price 1,000 100 850 100
Handling and transport 150 15 - -
Village or local collectors’ markup 150 13 20 2.4
Village or local collectors’ selling price 1,300 130 870 102.4
Regional traders ‘/ millers’ handling and markup 200 20 80 9.4
Regional traders’ / millers’ selling price 1,500 150 950 111.8
Exporters’ handling and markup - - 80 9.4
Vietnamese traders’ buying price - - 1,030 121.2

31. Preliminary findings
 Wet season rice is for home consumption, dry
season rice is for income and repayment of
input costs
 Post-harvest operations inefficient – storage,
Cambodia trading capacity, investment capital;
 Farmers are price takers, no bargaining power
 Local and regional traders make more profit
 Rice marketing is highly dependent on
Vietnamese traders who set prices, quality, and
quantity of rice marketed in Cambodia

32. Rice contract farming
Nou Keosothea

33. Nature of contractual
arrangements
 Contractor solely developed the contract terms
 Contractor provided rice seed without interest
and bought rice about 300 to 500 riel/kg above
market price from contracted farmers
 Farmers not included in contracting process
and can only agree or disagree with the
contract terms
 Local authorities (villages and communes)
were used to monitor the contract terms at the
village level and received cash 50 riel/kg from
contactor
 Contractor managed, controlled, and approved

34. Benefits to contracted
smallholders
 Received good quality seed without
interest
 Guaranteed market with better price
 For farmers who kept the contract terms,
cash loan at 1.4% per month
 cf. MFI interest rate 2-3 % per month
 Received technical support from
contractor which can improve yield (e.g.
0.5-1 ton/ha)
 Overall increase in rice price for villages

35. Problems faced by famers
 Obeying contract terms on quality,
moisture content, and transportation to the
mill
 Lack of cost and benefit analysis of CF
membership
 Natural disasters - drought and flash flood
led to farmers losing money
 Some contract farmers did not follow the
contract terms and contractor did not
renew contract for whole village

36. Conditions enabling smallholders to benefit
from CF schemes
 Secured market for the product
 Increasing credit for ‘good’ farmers
 Better selection of farmers and locations
 Good management to plan, organize, and
coordinate production
 Provide technologies that are suitable for small
famers
 Strict monitoring of quality and quantity of
members’ product to benefit whole community

37. Summary
 Contract farming has benefited ‘good’ farmers
in study areas by giving access to …
 good quality seed
 credit
 technology
 market
 Benefits come with problems of …
 monitoring
 complying with the contract terms
 natural disasters (drought and flood)

38. Next steps for Year 1 plan
 Analysis and draft case study reports
 Sharing research findings in regional
workshop in Danang in July
 Revised draft reports addressing comments
from the workshop
 Publish in ACIAR report