developing agricultural policies for rice-based farming systems in lao pdr and cambodia
DESCRIPTION
Theng Vuthy, CDRI, Cambodia Rice-based Systems Research: Regional Technical Workshop Australian Centre for International Agricultural Research (ACIAR) 13-15 June 2012, Vientiane, LaosTRANSCRIPT
DEVELOPING AGRICULTURAL POLICIES FOR RICE-BASED
FARMING SYSTEMS IN LAO PDR AND CAMBODIA
Theng Vuthy, CDRI, Cambodia
Rice-based Systems Research: Regional Technical Workshop
Australian Centre for International Agricultural Research (ACIAR)
13-15 June 2012, Vientiane, Laos
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)
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.
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.
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.
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 agricultural development in Laos and Cambodia.
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.
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
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, …)
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 Rice value chains (esp. cross-border studies)
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
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
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-border trade
Issues of agribusiness – rice contract farming
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
Theng Vuthy, PhD
Fertilizer value chain study
Fertilizer import and distribution points
Organic DistributionVietnam Distribution
Centers
Vietnam EntryPoints
Organic Entry Point
Thai Distribution Centers
Future Vietnam Urea Entry Point
Thai Entry Point
Fertilizer procurement and distribution channels
Licensed Cambodian Importers (1 based in Takeo, 4 in flow)
Prov. distributors / wholesalers
Prov, District and Village Retailers
Seasonal Village Distributors
Smallholder Farming Households
Credit sales Cash sales
Mobile distributors / wholesalers
Note: Quality fertilizer flow ; Possible fake flow
Fertilizer channels in Takeo
Urea and DAP value chain (Feb, 2012)
Granular Urea DAP (USA)
($/50 kg)% of imported
price ($/50 kg)% of imported
price
Bag Cost Importer at Vietnam border - - 31.5 100
Transport to Cambodia (<100km@$0.25) - - 0.3 0.8Into store - - 0.1 0.2Cost into Border Warehouse - - 31.8 101.0Label change & importer's markup - - 1.7 5.3Importers Selling Price 24 100 33.5 106.3Transport to province (100 km @ 0.25) 0.3 1.0 0.3 0.7Distributor markup and handling 0.8 3.1 0.8 2.2Into store Provincial Distributor 25.0 104.1 34.5 109.3Provincial distributor markup 0.5 2.0 0.5 1.4Distributor selling price 25.5 106.1 35.0 110.7Transport to village dealer & handling - - 1.0 2.9Into store at village dealer - - 36.0 113.6Dealer markup for cash sale 3.3 12.7 0.5 1.4Retail Cash Price 28.8 118.9 36.5 115.0
Sample # Product % Total N % Total P2O5
% Total K2O
% Total Sulfur
Total Nutrient %
5. 20-20-15 21.90 10.50, 11.40 9.00 77.0012. 20-20-15+TE 16.40, 16.80 16.70, 17.40 14.20 88.0021. 20-20-15+TE 17.10 18.20, 18.00 13.60 68.2224. 20-20-15 17.70, 18.50 19.50 11.60 90.1828. 20-20-15 20.70 19.60 9.77 91.0434. 20-20-15+TE 17.20 17.50, 17.30 12.80 86.3638. 20-20-15 17.80, 18.10 21.20 10.40 90.3642. 16-16-8-13(S) 13.90 5.51, 5.47 0.15 12.10 48.9043. 16-8-8-13(S) 17.20 8.66 2.85 15.60 89.7246. 20-20-15-13(S) 24.60 12.80, 12.20 11.90 2.12 89.6460. 16-8-8-13(S) 16.30 6.80, 6.92 3.47 15.00 83.4173. 20-20-15 + TE 17.80, 19.00 20.30 9.41 88.5688. 20-20-15 + TE 16.10,16.20 20.30 11.70 87.6492. 20-20-15 +TE 15.80,16.10 21.10 9.79 85.4497. 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%
Blended fertilizer samples nutrient analysis
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
Fake fertilizer – how does it happen?
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
Reduction of fake fertilizers
Kem Sothorn
Farm credit
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
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
Impacts of credit on rice farmers
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
Preliminary observations
Nou Keosothea and Chhim Chhun
Rice value chain
Links in rice value chain
Farmers produce varieties of rice
Sun dryStore in
the house
Village or local collector
s
Local rice mill
Provincial rice mill
Vietnamese traders
Regional traders
Transport to Phnom
Penh
Transport to Vietnam
Exporting
Indicate the huge amount of paddy rice
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
Relationships in rice value chain
Prices and margins along chain
Key Value Chain ActorsWet season rice Dry season ricePrice
(riel/kg)% of farm
gatePrice
(riel/kg)% of farm
gateFarmers’ selling price 1,000 100 850 100Handling and transport 150 15 - -Village or local collectors’ markup 150 13 20 2.4Village or local collectors’ selling price 1,300 130 870 102.4Regional traders ‘/ millers’ handling and markup 200 20 80 9.4Regional traders’ / millers’ selling price 1,500 150 950 111.8Exporters’ handling and markup - - 80 9.4Vietnamese traders’ buying price - - 1,030 121.2
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
Preliminary findings
Nou Keosothea
Rice contract farming
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 whole process of contractual arrangements
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 that have contract farming
Benefits to contracted smallholders
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
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
Conditions enabling smallholders to benefit from CF schemes
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)
Summary
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