Cambodia needs to build up its processing investment in agro-industry to keep the sector alive within the next 10 years as labour costs rise. The issue has been raised by the private sector and farmers.
Minister of Agriculture,Forestry and Fisheries (MAFF) Veng Sakhon warned that some agro-products such as rubber may not survive if added-value is not created to adjust to a rise inworkers’ pay.
“What I have predicted since I took office in 2016 is that labour costs will be hiked around $500 per month by 2030. It will be impossible for rubber cultivation to survive if there are no processing plants for final products,” he said. “So we need to boost investment or change crops. For example, some rubber plantations will be shifting to fast-growing crops such as bananas and mangoes and production of palm oil will increase in the future.”
Cambodian farmers usually change their crops according to the market price by cutting down rubber trees, for example, when the price falls and replacing them with other crops such as peppers or cashews.
Sakhon said pepper, rubber, cashew and cassava are the crops that people always switch depending on market prices.
“Most farmers’ land is small, so they can easily turn to other crops that are more profitable,” he said. “Before, farmers earning $200 monthly was deemed enough, but now they need to earn $1,500 to $2,000, so they have to change the cultivation of crops that provide profit and satisfy market demand.”
He said that having more processing plants will add value and then create jobs. He said a problem is the high processing costs and that’s why farmers transport raw materials to neighbouring countries.
The minister said Cambodia currently has only a few rubber processing companies for export and some of them are not fully operational.
Plouk Botum Bopha, whose family owns 100 hectares of rubber plantation in Ratanakiri province’s Bokeo district, said that farmers here have not received any instructions or guidelines from the Ministry of Agriculture and they just operate according to market trends.
She said when the price goes down some of them who borrow from banks and microfinance industries give up.
“I started a rubber plantation when the price was higher, reaching 4,000 riels per kilogramme but, after many farmers here changed from other crops to rubber, the price went down because we don’t have a stable market for prices,” she said, adding that her family still earns $20,000 to $30,000 a year in net profit.
“Because the labour cost is still low, I offered $175 a month for a worker but I could not ensure my business would stay alive when the labour cost increases to more than $200 and the business will close or I may sell off the plantation,” she said.
Bopha, who currently employs 77 workers, said that most farmers are selling their dry latex to brokers for export to Vietnam because local rubber processing companies offer a higher price. “They told me that they could not make a profit when processing it into rubber because of the high cost of production,” she said. “Now many smallholders in the province have already given up the crop.”
The price of latex currently stands between 2,500 riels and 2,600 riels per kilogramme, a decline from between 2,800 riels and 2,900 riels last year.
MAFF’s data shows that Cambodia exported 179,621 tonnes of rubber in the first nine months of 2020, an increase of 3.78 percent from the same period last year. The average price was $1,288 per tonne, down from $1,339 year-on-year. Rubber plantations in Cambodia account for a total of 403,195 hectares.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.