With most local agricultural exports consisting of raw materials, the Asian Development Bank (ADB) is now designing a multimillion project to increase the value of the agriculture industry.
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With a budget of $70 million – $2.17 million of which will be disbursed as a grant and the rest as a concessional loan – ADB’s Agricultural Value Chain Infrastructure Improvement Project seeks to help the Kingdom climb up regional value chains while increasing the quality of local produce, the development bank said in a report.
“This project will enhance the value of agriculture products, reduce the number of middlemen in the sector, expand and strengthen processing and packaging capabilities, build more warehouses and cooling facilities, and improve transportation.
“It will boost the quality and safety of local products and help them meet sanitary and phytosanitary requirements for export,” ADB said.
It will tackle a wide range of issues and areas, including rural development, agricultural policy, institutional development, capacity development, marketing, market infrastructure, and transportation, ADB said.
The bank added that the programme will help reduce the proportion of raw products that are exported, particularly for cassava, paddy rice, mango and cashew nuts.
Takeshi Ueda, ADB agricultural economist, told Khmer Times that most exported Cambodian agricultural products leave the country in raw form.
The proposed project will help rectify the situation by promoting the creation of the facilities that the country needs to process these products. This means actors in the industry will benefit from greater incomes, he said.
Mr Ueda added that the project will get underway in early 2021, running until 2027. The Ministry of Agriculture will be the executing agency, with the ministries of Economy and Finance, and Rural Development also expected to participate.
In its report, ADB said that agriculture remains a crucial sector for the Cambodian economy, accounting for 33.7 percent of GDP.
Agricultural products are Cambodia’s second largest export, after textiles and garments. In 2016, exports of agriculture products were worth $533 million – 5.2 percent of the value of total exports. However, most of these products are in raw form, with processing and other activities that add value taking place in third countries, ADB stressed.
“To capture this forgone economic opportunity and diversify the economy, it is important to strengthen the value chains of agricultural products,” ADB says.
Srey Vuthy, spokesman at the Ministry of Agriculture, told Khmer Times the project is now being designed as a collaboration of ADB consultants and officials from the Ministry of Agriculture.
“This is a big project with many stakeholders,” Mr Vuthy said, adding that it will prioritise cashew nuts, cassava, mango, vegetables, and poultry.
On Thursday, ADB’s Mr Ueda discussed the project in a meeting with Agriculture Minister Veng Sakhon.
“Post-harvest and logistics facilities will be improved, alongside service infrastructure and rural connectivity,” Mr Ueda told the minister.
“Agricultural production will be boosted and business partnerships among value chain stakeholders will be promoted,” he added.
Agriculture Minister Veng Sakhon, welcomed the project and promised the ministry’s full collaboration. He asked ADB to include corn and cattle farming in the programme.