Smallholder Farmer Empowerment Through Inclusive Business in Preah Vihear
“Middleman rice traders used to dictate their prices and we didn’t have a say,” said Ms. Kong Sophin, vice-chairwoman of the Ronakse Preah Khan Aphiwat Agricultural Cooperative (AC Ronakse). “But not anymore,” she stated with a beaming smile to a group of 26 visitors from the Gender-transformative and Responsible Agribusiness Investment in Southeast Asia program (GRAISEA 2).
The group, consisting of country teams, partners, the management team and donors of GRAISEA 2, traveled to Ta Seng village in Ronakse commune on September 9, 2019 to meet with a group of 20 farmers and committee members of three agricultural cooperatives (ACs) that are supported by GRAISEA 2 in Sangkum Thmey District, Preah Vihear Province.
In a two-hour exchange, the people we worked with shared a great deal of information, from the situation of women members of the AC to the benefits of growing rice naturally.
But what stood out was the improvement in their livelihood and power within the market once they entered into contract farming with companies that strive to be inclusive. Prior to being supported by GRAISEA’s Cambodia program, the three ACs were selling natural paddy rice to middleman rice traders who imposed their prices, which were typically low.
In 2017, with the support of Development and Partnership in Action (DPA), a GRAISEA implementing partner, the three ACs entered into contracts with Amru Rice, a leading Cambodian rice milling company and exporter. For the first time, the farmers through their AC leadership were able to negotiate prices, terms and conditions in contracts and, if certified organic, their paddy could fetch a premium, increasing their revenue by 10 to 30%.
While farmers have expressed satisfaction with the set prices, the implementation of contracts comes with challenges. Various factors, including adverse weather conditions and lack of proper infrastructure, hinder the ability of farmers to meet both the volume and quality criteria specified in the contracts, whereas late payment from the company risks affecting farmers’ cash flow and confidence.
However, the AC leadership firmly believe that a contractual relationship with companies, based on mutual trust and commitment, will provide more benefits in the long term.