Contract farming of high-quality rice in Kampong Speu

Abstract

Contract farming is seen as one of the policies to overcome current impediments to commercialisation in the Cambodian rice sector. The Angkor Kasekam Roongroeung Co. Ltd. (AKR) was the first agribusiness firm to implement contract farming of rice and currently claims to have over 50,000 contracted farmers in four provinces. The approach was later adopted by other development organisations. Little is known about rice contract farming in Cambodia in terms of its contractual arrangements, inclusiveness, benefits, and challenges. This study examined the inclusion of smallholder farmers and the nature of contractual arrangements, the benefits of contract farming for farmers, and the challenges faced by farmers and agribusiness firms. AKR was selected as a case study because the company operates the largest scale of rice contract farming in Cambodia. The study found that the rice contract farming scheme of AKR was inclusive of poor farmers with small farms, even those with less than one hectare. With access to the benefits of the scheme, contract farmers were able to increase their returns from rice farming. However, some flaws in the contractual arrangements and the requirement to deliver high-quality rice for the export market posed a number of challenges to both AKR and the participating farmers, some of which could be addressed through policy interventions. Overcoming these challenges will enhance the benefits of contract farming for both farmers and agribusiness firms and thus contribute to further commercialisation of the rice sector and rural poverty reduction.