1. Historical background
After the fall of the Pol Pot regime in 1979, the retreating Khmer Rouge divisions led by Ieng Sary settled in a forested area infested by malaria in Banteay Meanchey Province along the Cambodian-Thai border now know as Malai. The area had become a battlefield between the Khmer Rouge and the People’s Republic of Kampuchea. On 22 June 1982 the Coalition Government of Democratic Kampuchea (CGDK) was formed in Kuala Lumpur by three Cambodian warring factions: the Khmer Rouge, FUNCINPEC and the Khmer People’s National Liberation Front (KPNLF). The Khmer Rouge was the main military force of the coalition government.
In 1985 the Khmer Rouge had to abandon Malai in the face of the assault led by the army of the People’s Republic of Kampuchea. They came back again in 1990s to settle down in the area in order to prepare for the peaceful settlement of the Cambodian problem.
After the 1993 elections, the Khmer Rouge decentralized their command structures as follows: Pol Pot was responsible for the area of Phnom Chhat; Ieng Sary – Pailin and Malai; Ta Mok – Anlong Veng; and Son Sen – Samlot. By mid-1990s, the Royal Cambodian Armed Forces (RCAF) launched an assault and took control of Phnom Chhat in Banteay Meanchey. Pol Pot fled the area and settled in Anlong Veng.
However, by mid-1990s there was a schism in the Khmer Rouge movement. Some Khmer Rouge leaders believed that it would not be possible to win the war against the Royal Government of Cambodia. The Khmer Rouge had to adopt a tactics of fighting, while pursuing negotiations with the government. This group was led by Ieng Sary. However, the group led by Pol Pot and Ta Mok believed that the Khmer Rouge should continue the war, as Cambodia was still occupied by the Vietnamese. Any attempt to negotiate a peaceful solution would not lead to a lasting solution. The flame of war would engulf Cambodia again, if a lasting solution cannot be reached. They opted for a military solution to the Cambodian problem.
On 28 August 1996, the United National Democratic Movement was formed at the initiative of Ieng Sary with the support of Y Chhien and Sok Pheap, respectively commanders of the 415 and 450 divisions of the Armed Forces of the Democratic Kampuchea (AFDK), stationed in Pailin and Malai.
Son Sen and Ta Mok convened a meeting in order to try to mediate a solution with Ieng Sary. The schism of Khmer Rouge leadership widened. The dispute resulted in the killing of Son Sen and his family by Ta Mok’s bodyguards. Ta Mok also organized a trial of Pol Pot in Anlong Veng. Pol Pot subsequently died in 1997.
Prime Minister Hun Sen initiated a win-win policy in order to put an end to the Cambodian problem and bring the remnants of the Khmer Rouge into the national folds. This policy is also known as DIFID (destroy, integrate, develop), which led to the dismantling of the political and military organization of the Khmer Rouge.
2. Agrarian Reform
Socio-economic development of Malai started since 1999. After the integration into the mainstreams of the Cambodian society, each household received 5 ha of land from the government. The forests of Malai, previously infested with landmines, were gradually transformed into agricultural farms. Land distribution allowed all members of the Khmer Rouge armed forces to have land for cultivation. Malai was led by a former Khmer Rouge cadre Tep Khunnal.
Graduated engineer of public works, Tep Khunnal left Cambodia for France in 1973 for a further study in Toulouse. Responding to the appeal of Ieng Sary, he returned to Cambodia in 1977 in order to help rebuild the country. However, he ended up at the ‘reeducation camp’, like other returnees from abroad. After spending one year in the ‘reeducation camp’ to do the manual work, he was selected to work at the Department of Engineering of the Phnom Penh Institute of Science and Technology led by Thiounn Mumm. After the fall of the Khmer Rouge, Tep Khunnal fled to the Cambodian-Thai border. Between 1980 and 1993 he served at the Cambodian Mission to the United Nations in New York. In September 1998 Tep Khunnal joined the RGC.
Malai district is located 85 km from Svay Sisophon, the Banteay Meanchey provincial town. It is made up by 6 communes, consisting of 41 villages. There are about 7,000 households of 36,000 inhabitants. Among the six communes, one is known for rice production, while five others concentrated on the production of maize, sesame, tapioca and mung bean. Now some farmers commenced mango plantations. As a result of the agrarian reform, each household has on average 7-9 ha of land.
Weather conditions have had considerable impact on agricultural productivity. In the dry season, the problem for the population is to decide what to plant: maize, bean or cassava by taking into account the market demand, the prices and the expected rainfalls during the year. For example, the productivity and the market conditions for maize were good in 2006, due to adequate rainfalls, but less favorable for mung bean and soy bean (which can fetch 3 Bath or 330 riel a kilo.
The main agricultural work relies on mechanization. Tractors and agricultural equipment are extensively used to labor the land and transport agricultural products. Therefore, oil prices have had considerable impact on the competitiveness of the farmers. All petroleum products are imported from neighboring Thailand. To benefit from the economies of scales, the farmers are conscious of promoting family-based, large-scale agricultural production in order to increase productivity through improvement in agricultural techniques and create a critical mass for marketing the products.
Our study focused on Boeung Beng commune of Malai district. Boeung Beng is bordered with Sampeov Loun district of Battambang Province and Khlong Hat district of Sras Keo Province, Thailand. The population growth in Boeung Beng is high, due to increased immigration in search for new land for farming and business opportunities.
3. Microfinance
In 1999, Prime Minister Hun Sen sent a microfinance team of the Rural Development Bank (RDB) to Malai to help the people integrate into the mainstreams of the Cambodian economy. At present, the loan portfolio in Malai reached US$1.5 million, provided through the Aid Farmers Association (AFA) and Seila Nithi. Before the launch of microfinance program, the interest rate was as high as 120 percent per annum. At present, the increase in loan portfolio has brought interest rate down to 30 percent for the AFA and 36 percent for Seila Nithi. The RDB also launched a direct credit program with the total amount of $40,000, while interest rate was brought down further to 16 percent.
Access to microfinance has had tremendous impact on the livelihoods of the people living along the border areas in Malai district. However, the people living in Komrieng, Phnom Proek, Sampoev Loun and Anlong Veng do not have similar access to microfinance, reflected in their lower level of livelihoods.
4. Market Access and Trade
Malai district capital is located right on the border with Thailand. The district is connected to Thailand through a regional checkpoint. Trade with Thailand plays a crucial role in agricultural production in Malai. Maize is subject to a zero-tariff rate under the ASEAN Integration System of Preferences (ASIP). Tapioca is subject to a 5-percent tariff rate. However, tapioca is exported to Thailand through unofficial checkpoints (chrok robieng).
The experience of Malai suggested that microfinance can work best if combined with the development of processing facility, i.e. by promoting the development of SMEs. For example, the establishment of a drying factory in Malai has had considerable impact on the prices of agricultural products. The RDB granted $400,000 to the AFA to build a drying facility, which purchase maize from the local farmers. The factory runs on the heat produced by burning the straw of maize. Before the establishment of the factory, farmers had to sell their products on credit to Thai traders. Now they can get cash immediately in exchange for the agricultural products that they sell to the association. This provides them with funding to grow other crops such as mung beans and other agricultural cash crops. The factory also creates jobs for some 50-60 people, who previously had to migrate to Thailand for work.
The drying factory sells good quality seeds that they buy from the CP Group, Thailand. Farming policy is important to create a critical mass for exports of agricultural products by taking into account the fluctuations of market prices. For that reason, the introduction of a contract farming system could transfer the risk from the farmers to the association, which should be able to take risk and to share, on a more equitable basis, the profit between producers and processors.
In order to expand production, the drying facilities need more investment in warehouse and credit to buy more maize to increase stocks; The additional investment is estimated at $500,000.
Cost structure for maize production
Cambodia enjoys some competitiveness with Thailand in the production of maize, due to the new fertile soil. In Thailand farmers have to use fertilizers to boost productivity. However, the Thai farmers have benefited from lower prices of petroleum products, electricity and better road infrastructure.
In Cambodia, maize has to take only grain, weighed and loaded on the tractors, transported to the main roads by tractors; from the main roads trucked to the drying facilities. There are more opportunities for the middlemen to get involved in the marketing process. Trade facilitation fee for getting the products through the Thai border authorities is 1,000 baht per truck.
The drying facilities buy 3 baht per kg from the farmers; from snol – 22%; grain is 64%;
The farmer pays 280 Bath per rai (40×40 m) for plowing the land and/or 120 Bath for re-plowing; and 120 Baht for planting.
Seeds: 14 kg used for 4 rai; one rai use 3.<<Kg; seeds: 1,300 baht per kg;
No fertilizers;
Harvesting: 1 rai farmer get 12 bags; 25 baht for harvesting per bag to storage facility; then sell to middleman: if 30% of samnoeum – 3 baht (sras);
if dried to 15% – only grain 500 riel or almost 5 baht ; if only grain;
22 baht – the cost of degraining per bag; transporting from storage to road 15 baht;
Costs: one ha – 158 dollars per ha for the costs; sales – 8 tons per ha; average 6 tons per ha; one tons – 4,500 baht – more than 100$; the profit is $200-$300 per ha.
Compared to other provinces of Cambodia, Malai does not have to pay unofficial transportation fee, which can be substantial to the extent that undermines the competitiveness of Cambodia’s agricultural products.
5. Farmer Organization
This association established by a Royal Decree is still young and new. The production of fertilizers; revenue management. I thing that we still have more work to do to develop the Boeung Beng commune. The Aid Farmer Association (AFA) is led by Mr. Som Yen, a 51– year-old former Khmer Rouge cadre from Ksach Kandal District, Kandal Province, some 50 km from Phnom Penh. Mr. Som Yen joined the revolution in early 1970s. He is a native of Vihear Suor Commune of Ksach Kandal and used to live in Rokar Chroloeung Commune during the famous assault in 1973. The battle for Vihear Suor was decisive during the war, which led to the downfall of the Lon Nol regime. Assisted by the Vietnamese communists, the Khmer Rouge launched a decisive attack on the Vihear Suor front, which protracted for about three years. During the Khmer Rouge regime, Mr. Som Yin served in the River Transportation Unit at Prek Phnoev, Russei Keo District, Phnom Penh. He fled with the Khmer Rouge and settled down in Malai in 1979. For that reason, another case study on Rokar Chroloeung Commune was conducted to compare the development patterns in both communities.
6. The Production of Asparagus
A pilot project has been implemented by the association for the production of asparagus on 1.5 rai of land in Boeung Beng Commune, Malai District. The asparagus is sold at Lucky Market (15 kg every two days; US$2 a kilo) and in Siem Reap – US$1.5 a kilo; and 10 kg every two days).
The initial investment required was 200,000 Bath for the project which can runs for 5 years. So far there is no profit from the project. Hiring a couple – 6,000 bath to monitor the production. Asparagus plantation relies on irrigation.
7. Socio-economic conditions
The annual income is estimated at US$1,000 to US$2,000 on average per household. The ability to produce more than one crops per year and high price of agricultural products was an important factor of generating high income.
8. Key Issues
1. Infrastructure development – road infrastructure plays an important role in connecting Malai to other districts of Banteay Meanchey and Battambang. Rural road network in Malai district is not well-developed. The reconstruction of a 57-km Route is critical to link Malai to Svay Sisophon, the Banteay Meanchey provincial town. Safe potable water and electricity are also critical for the development of the district.
2. Markets for agricultural products – the livelihoods of the people in Malai district depend on the markets and prices of agricultural products.
3. Irrigation facilities – there is no irrigation facilities in Malai. Agricultural production depends on rainfalls. A plan has been developed to build the O Sampor reservoir with the capacity of 2 million cubic meters and capable of irrigating 4,200 ha. Weather vulnerability has had adverse impact on farmer’s livelihoods. Some families have incurred loss, due to inadequate rainfalls. The ability to plant the cash crops to meet the rainfall conditions of the year is important. Mung bean, for example, requires adequate rainfalls, while tapioca requires less rainfall. In this regard, providing regular meteorological forecasts to the population can make a tremendous impact on the people’s livelihoods;
4. Microfinance – the current interest rate is still high. At present, the loan portfolio amounted to US$1.5 million (including US$400,000 – for the drying facility. The demand for microfinance is estimated at US$3 million more for Malai and other former KR strongholds, such as Sampoev Loun, Phnom Proek and Komrieng districts;
5. Human Resource Development – There are four high schools in four of the six communes: Takong, Beong Beng, Malai and Pong Ror. Two more high schools are being established in the other two communes: O Sampor and Tuol Pongror. The decision to establish a new university in Banteay Meanchey is very much welcomed by the people of Malai. Now only a limited number of people can send their children to get tertiary education in Phnom Penh or Battambang. In this regard, a regional training policy should be developed in order to ensure that after finishing their studies, the new graduates come to work in Malai. For this reason, it is important to recruit, through a quota-based allotment of recruitment, students from Malai to study at the University of Medical Sciences, the Royal University of Agriculture, the University of Law and Economics, the University of Phnom Penh so that they would return to work in Malai after graduation.
6. Seeds – the people in Malai have benefited from better market infrastructure in Thailand. They buy seeds from the CP group, which produce good-quality, high-yielded seeds that play an important role in boosting agricultural productivity.
7. Extension services – Modernizing production process through improvement in agricultural techniques can have a far-reaching impact on both productivity and diversification. In this regard, the local authorities have promoted the dissemination of agricultural extension in order to increase productivity, to reduce logging and to plant trees.
8. Diversification – the policy of diversification should take into account the cost structures and market conditions of specific agricultural products. For example, in 2006 the local farmers have decided to expand tapioca plantation to 1,500 ha, due to higher demand. Compared to maize production, tapioca needs only one-fourth of the rainfalls. However, the negative side of tapioca plantation is that there is no market for tapioca. Moreover, tapioca is also subjected to higher tariff rates, compared to the zero-tariff for maize (AISP). Fresh tapioca is subjected to a 5-percent import tariff, while dried tapioca is subject to 30 percent of import duties. The farm gate price for fresh tapioca is 550 – 600 Bath per ton. In terms of profitability, from one rai of maize production the farmer can obtain 6,400 Bath for the period of 4 months, while they can get 5,200 Bath for the plantation of tapioca during10-11 months. In this regard, the farmers must weigh carefully a number of factors: rainfalls, time, prices and seeds. Other areas for diversification are: acquaculture, poultry and livestock breeding.