Sustainable Agriculture Solutions to Improve Farm Productivity
Sustainable Agriculture Solutions to Improve Farm Productivity
Business Model Description
Invest in provision (selling or renting/leasing) of equipment and information services to increase the agricultural productivity in a climate resilient manner using modern sustainable methods of regenerative systems, irrigation, greenhouse and solar technology for productive use and quality inputs.
Smart Agro, founded in 2018, works with a worldwide network of agronomists and scientists to develop solutions that help agricultural producers maximize opportunities and reduce production costs and risks while increasing the sustainability of their operations.
Agri-Sambathkhmer Co., Ltd. (ASK), founded in 2017, is a leading greenhouse company that aims to develop AgriTech vegetable farming with soilless solutions (greenhouse technologies). ASK invested >USD 10 mn in Greenhouse and Mushroom farming, with >42 hectare of agricultural land to date.
Expected Impact
Improve crop yield, farmers' income and quality of life of rural communities; ensuring reduction in carbon emissions and reversal of climate change.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
Sector Classification
Food and Beverage
Cambodia is highly vulnerable to climate change (ranked 12/181 in Global Climate Risk Index (1999-2018); 17/180 in World Risk Index in 2019.(1) Agriculture is the 2nd highest emitter (36.4%) (rice cultivation and enteric fermentation from livestock contributing 74% of agriculture emissions). (1) Without addressing such effects, Cambodia is projected to lose ~10% of GDP by 2050.(2)
National Strategic Development Plan, 2019-2023
includes targets for enhancing the infrastructure for agricultural research, supporting strengthening agricultural cooperatives and developing agribusiness networks as well as pre- and postharvest technology development. Promoting agriculture sector is a priority to induce inclusive and sustainable development (RSIV). (3)
Agriculture sector represents ~32% of total GDP as of 2020. (3) As agriculture is particularly vulnerable to climate change, related disasters have the potential to impact 54% of the population engaged in agriculture (3) with 77% of rural households engaged in agriculture and related areas (4); 79% of total population residing in rural areas (5)].
Floods and droughts can seriously hamper agricultural productivity and damage crops extensively. Pests and diseases such as avian influenza and swine flu can reduce food production and bring economic losses to farmers. (2)
Moreover, women tend to be more vulnerable to disasters by virtue of their lower economic, social, and political status. Women's high rate of poverty as well as cultural constraints on their activities in most societies means they are more likely to suffer losses of life and property in the face of natural disasters. (6)
In a study of Women’s Resilience Index (WRI) (score of 0-1), communities in Cambodia scored 0.58, with males scoring 0.59 and females scoring 0.56, demonstrating that Cambodia’s overall resilience level is low, with a difference of 3% in socio-economic resilience between genders. (7)
~77% of rural households rely on agriculture, fisheries, and forestry for their livelihood. (4) In 2020, agriculture sector contributed 22.38% towards Cambodia's gross domestic product (GDP). (8)
Behavioral shifts aside, there is little know-how and capacity to service climate friendly technology in agriculture.
Food and Agriculture
Despite the improvements in agriculture sector, Cambodia suffers with low yields and productivity. The yield of wet season rice is almost twice as high in Vietnam as it is in Cambodia (2.2tons(t)/hectare(ha) compared to 4.3t/ha).(9) Productivity is also affected by high climate vulnerability, as Cambodia is ranked 55/191 in terms of flood exposure.(10)
The Rectangular Strategy Phase IV highlights the need to improve productivity and quality of agriculture production through the promotion of smart technology and the improvement of small-scale irrigation systems.
The agriculture sector is dominated by micro, small and medium enterprises (MSMEs) and small landholders, that are likely to be severely affected by the economic impact of natural disasters while also recovering from Covid-19 impact.
Investing in agriculture value chains, natural resources management, and climate change and disaster risk management can deliver strong gender benefits. Gender mainstreaming needs to be emphasized to help the government achieve its gender targets.
Both women and men should be involved in agriculture processes involving project design, implementation, and decision-making (e.g., in community groups for irrigation and other rural services provision management), and more credit, knowledge, and technology activities should be provided for women and vulnerable sections. (2)
Productivity levels can be largely improved through increased mechanisation, improved irrigation, as well as through the introduction of nature-based solutions to improve climate resilience of the sector.
The sector is impeded by a lack of structured of value chains, prevalence of subsistence agriculture, high logistic costs, and lack of equipment and skills.
Agricultural Products
Pipeline Opportunity
Sustainable Agriculture Solutions to Improve Farm Productivity
Invest in provision (selling or renting/leasing) of equipment and information services to increase the agricultural productivity in a climate resilient manner using modern sustainable methods of regenerative systems, irrigation, greenhouse and solar technology for productive use and quality inputs.
Smart Agro, founded in 2018, works with a worldwide network of agronomists and scientists to develop solutions that help agricultural producers maximize opportunities and reduce production costs and risks while increasing the sustainability of their operations.
Agri-Sambathkhmer Co., Ltd. (ASK), founded in 2017, is a leading greenhouse company that aims to develop AgriTech vegetable farming with soilless solutions (greenhouse technologies). ASK invested >USD 10 mn in Greenhouse and Mushroom farming, with >42 hectare of agricultural land to date.
Business Case
Market Size and Environment
> USD 1 billion
< 5%
10% of GDP could be lost by 2050 without adaptation to climate change (2)
World Bank Data Study from 2021 showed that the agriculture market represents USD 36 bn in Cambodia. Majority of the production suffers from low productivity and low climate resilience, and would benefit from climate smart technologies with equipment to support. (12)
Over the medium term, agricultural machinery market is expected to grow on account of increasing focus of famers on sustainable agricultural mechanization, rising public private partnerships and improvement in access to financial services. (11)
Ministry of Agriculture (Cambodia) with Korea International Cooperation Agency (KOICA) will invest USD 7 mn over 5years to develop mobile apps disseminating information to farmers, agricultural communities, processors, and outreach agencies about new developments in agriculture technology.(13)
Indicative Return
> 25%
Profitability in Cambodian farming has remained modest due to prevailing low wet-season rice yield (average yield increase was ~2.6% between 2010-2018; 30% less than that of Thailand’s). Changing from rainfed to irrigated cultivation in Cambodia could result in annual production increase of ~40%.(2)
The greenhouse project aims to open >10,000 greenhouses until 2030 across several provinces.
Investment Timeframe
Medium Term (5–10 years)
As per expert consultations, expected gestation period is ~5-10 years, depending upon the type of technology implemented. Greenhouse infrastructure is technology oriented, and return generation depends on the availability of equipment, while regenerative systems and techniques may take longer.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - Requires Subsidy
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Use of machinery in large- and small-scale farms can help increase productivity and address the issue of growing labor shortage and increasing costs of manual labor. (13) Cambodia's agriculture productivity and its farmers' income is low in comparison to that of peer countries.
Sustainable agriculture techniques can help reduce climate-related disasters (such as floods, droughts, pests and spread of diseases like avian influenza and swine flu) which hamper agricultural productivity and damage crops extensively, thereby impacting farmers' income. (2)
Integrating no-till agriculture and cover crops into cropping systems can help in the process of transition to an environmentally friendly production system that can provide solutions to impact of environment degradation and climate change.(14)
Gender & Marginalisation
As agriculture is particularly vulnerable to climate change, related disasters have the potential to impact 54% population engaged in agriculture. (3) In 2019, 56.5% women and 53% men worked in the agriculture sector. (15)
Lack of gender mainstreaming deepens gender disparities, rendering women highly vulnerable to economic calamities or climate related disasters. This can be addressed by involving women in decision-making roles and providing them access to credit, knowledge, and technology.(2)
Sustainable agriculture helps reduce farmers' vulnerability to droughts, which are getting longer and frequent. Of the 2,525 existing irrigation schemes, ~6% function well, ~32% function partially and ~62% do not function as intended.(16)
Expected Development Outcome
Investments in this opportunity can lead to an improvement in agricultural productivity in a climate resilient and sustainable way by the uptake of sustainable agriculture equipment and technologies.
Investments in this opportunity can lead to an improvement in the access to smart irrigation facilities and practices to ensure higher cost savings and crop production, and reduction in the risk of crop spoilage due to pests, diseases or abrupt weather changes.
Promotion of farm mechanization to produce higher quality agricultural harvest and to boost production. (11)
Gender & Marginalisation
Increase environmental health and ultimately human health by supporting agribusinesses in producing high quality produce in a sustainable way with direct implications on the level of food security in the country, specifically for the vulnerable communities and generally for the domestic population.(17)
Uptake of climate resilient and sustainable agriculture to increase agricultural productivity and smallholder farmers' (including women farmers) income, thereby reducing their economic and climate vulnerability.
Adopt equipment for greenhouse or irrigation to reduce labour drudgery and enable agriculture workers (particularly women) to enhance their technical knowledge and performance.
Primary SDGs addressed
2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
The baseline value of agricultural production per unit of labor engaged in agriculture (farming, animal husbandry and fisheries) is USD 1,556/farmer in 2015 (18) The baseline sustainable agricultural land productivity is USD 1,548/ha in 2016. (18)
The target of agricultural production per unit of labor engaged in agriculture (farming, animal husbandry and fisheries) is USD 3,755/farmer by 2030 (20) The target sustainable agricultural land productivity is USD 2,645/ha by 2030. (20)
13.2.2 Total greenhouse gas emissions per year
37.46% in 2018 (19)
Information not available as of May-22
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Aquifers, river systems and downstream groundwater depletion may be under risk due to increased water extraction as a consequence of irrigation activities.
Insufficient training on the use of the equipment and practices can result in decreased productivity, in turn negatively impact farmers' trust in the technologies.
High maintenance cost and reliance on traditional methods due to lack of education or money for most of the small-scale farmers would restrain market growth of businesses in this space. (11)
Gender inequality and/or marginalization risk: Exclusion of women from production activities can be observed in some cultures when technologies are assumed as not suitable for use by women.
Impact Risks
Lack of recycling channels for material waste from greenhouses, solar photo voltaic systems, irrigation systems, can give rise to newer issues of land pollution.
Lack of technical know-how and expertise would lead to inefficiencies and low impact, thereby hampering the successful functioning of businesses.
Unavailability of formal modes of lending for farmers can limit their ability to afford sustainable agriculture based products and services.
Gender inequality and/or marginalization risk: Lack of initiative to uplift the agriculture sector that provides employment to a vast majority of the population, will deepen the regional and income disparities in the country.
Impact Classification
What
Adoption of sustainable methods of agriculture to ensure improved agricultural yield, while also limiting environmental degradation.
Risk
High maintenance cost and reliance on traditional methods due to lack of education or money for most of the small-scale farmers would restrain the market growth. (11)
Contribution
ASK invested >USD 10 mn in Greenhouse and Mushroom farming, with >42 hectare of agricultural land to date.
Impact Thesis
Improve crop yield, farmers' income and quality of life of rural communities; ensuring reduction in carbon emissions and reversal of climate change.
Enabling Environment
Policy Environment
Agricultural Sector Master Plan 2030 envisages Cambodia's agriculture will be a modern Agriculture Sector which is competitive, inclusive, resilient and sustainable leaded to increase farmers’ income as well as the prosperity and wellbeing of the Cambodian people (21)
Agricultural Sector Master Plan 2030 aims to increase competitive and inclusive agricultural growth, high quality, safety & nutrition products and taking into account the sustainable use of land and ensuring sustainable fisheries and forestry resource management (21)
Financial Environment
Investment Law: industries supporting agriculture, manufacturing, environmental management and protection, and biodiversity conservation and the circular economy are eligible to get Qualified Investment Project (QIP). (23)
Investment Law: Under article 24, this sector is entitled to investment incentives described under article 26 such as income tax exemption for 3 to 9 years, prepayment tax exemption and minimum tax exemption. (23)
Investment Law: Under article 27, besides the basic incentives above, QIP will receive additional incentives such as VAT exemption for the purchase of locally made inputs, deduction of 150 % from tax base for activities such as research development and innovation. (23)
Regulatory Environment
Law on Agricultural Cooperative 2013: regulates the establishment, functioning and management of agricultural cooperatives, agricultural cooperative unions, and Cambodian agricultural cooperative alliance, as well as provides for related supportive mechanisms (22)
Marketplace Participants
Private Sector
Corporates: Smart Agro, Agri-Sambathkhmer Co., Ltd., Yamoto Green, SOGE, IMB, GreenLeader
Government
Ministry of Rural Development, Ministry of Agriculture Forestry and Fisheries, Ministry of Commerce
Multilaterals
United States Agency for International Development, SWITCH to Solar Project, United Nations Development Programme, Swisscontact, CASIC (Conservation Agriculture and Sustainable Intensification Consortium)
Non-Profit
Irrigation Service Centre, Conservation Agriculture Service Centre, Agri-Smart, Farmer Livelihood development, Sustainable Cambodia, Cambodian Farmer Federation Association of Agricultural Producers
Public-Private Partnership
Cambodia Partnership for Sustainable Agriculture, Innovation for Sustainable Agriculture (Swisscontact), Conservation Agriculture and Sustainable Intensification Consortium
Target Locations
Cambodia: Kandal
Cambodia: Pursat
References
- (1) Climate Links. (2017). Greenhouse Gas Emissions Factsheet: Cambodia. https://www.climatelinks.org/resources/greenhouse-gas-emissions-factsheet-cambodia
- (2) Asian Development Bank. (2021). Cambodia Agriculture, Natural Resources, and Rural Development Sector Assessment, Strategy, and Road Map. https://www.adb.org/sites/default/files/publication/718806/cambodia-agriculture-rural-development-road-map.pdf
- (3) Royal Government of Cambodia. (2018). National Strategic Development Plan (NSDP) 2019-2023. https://www.mop.gov.kh/en-us/Home/Download/def33e18-289c-45b1-b6e3-fb357435c019
- (4) USAID. (2022). Agriculture and Food Security. https://www.usaid.gov/cambodia/agriculture-and-food-security
- (5) Gillispie, A. (2018). The Borgen Project. Girls’ Education in Cambodia Fights Inequality and Rural Isolation website: https://borgenproject.org/girls-education-in-cambodia/#:~:text=Gender%20Disparities%20Still%20an%20Obstacle%20in%20Cambodia&text=Data%20collected%20by%20various%20international,students%20increases%20with%20each%20grade.
- (6) Gokhale, V. (2008). Role of women in disaster management: An analytical study with reference to Indian society. In The 14th world conference on earthquake engineering October (pp. 12-17). https://www.iitk.ac.in/nicee/wcee/article/14_10-0049.PDF
- (7) Clingeleffer, K. (2020). Women Through the Women's Resilience Index. https://www.preventionweb.net/news/understanding-experiences-cambodian-women-through-womens-resilience-index
- (8) Statastica. (2022). Share of Economic Sectors in the GDP in Cambodia 2010-2020. https://www.statista.com/statistics/438728/share-of-economic-sectors-in-the-gdp-in-cambodia/
- (9) Asian Development Bank. (2012). Linking the Poor with Rice Value Chains. https://www.adb.org/publications/linking-poor-rice-value-chains
- (10) Asian Development Bank. (2020). Regional: Greater Mekong Subregion Flood and Drought Risk Management and Mitigation Project (CAM). https://www.adb.org/projects/40190-013/main
- (11) Mordor Intelligence. (2021). Cambodia Agricultural Machinery Market--Growth, Trends, COVID-19 Impact, and Forecasts (2022-2027). https://www.mordorintelligence.com/industry-reports/cambodia-agricultural-machinery-market
- (12) World Bank. (2020). Cambodia in the Time of COVID-19. https://pubdocs.worldbank.org/en/357291590674539831/CEU-Report-May2020-Final.pdf
- (13) Firn, M. (2021). Cambodian Farmers to Benefit from Digital Cooperation Deal with South Korea. https://www.khmertimeskh.com/50877014/cambodian-farmers-to-benefit-from-digital-cooperation-deal-with-south-korea/
- (14) Rickard, M. (2020). How a Cambodian Agro Tech Company is Helping Farmers to Reduce CO2 Emissions and Earn a Living as They Do. https://blog.task.io/success/agro-tech-impact
- (15) Ministry of Planning. (2020). General Population Census of the Kingdom of Cambodia 2019. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjI69GCgLn2AhWNOpQKHeYXBt8QFnoECBUQAQ&url=https%3A%2F%2Fwww.nis.gov.kh%2Fnis%2FCensus2019%2FFinal%2520General%2520Population%2520Census%25202019-English.pdf&usg=AOvVaw1ar_gbf395p0WnX4jU53Tu
- (16) Sithirith, M. (2020). Water Security in Cambodia: Between Too Much and Too Little. Journal of Greater Mekong Studies, 41 - 52. https://www.researchgate.net/publication/350063255_Water_Security_in_Cambodia_Between_Too-Much_and_Too-Little
- (17) Smart Agro. (2022). We are a Unique Company that Works with a Worldwide Network of Agronomists and Scientists. https://smart-agro.net/?page_id=14
- (18) Royal Government of Cambodia. (2019). Cambodia's Voluntary National Review 2019. https://sustainabledevelopment.un.org/content/documents/23603Cambodia_VNR_SDPM_Approved.pdf
- (19) World Bank. (2018). Total Greenhouse Gas Emissions (Kt of CO2 Equivalent)--Cambodia. https://data.worldbank.org/indicator/EN.ATM.GHGT.KT.CE?locations=KH
- (20) Royal Government of Cambodia. (2018). Cambodian Sustainable Development Goals (CSDGs) Framework (2016-2030). https://data.opendevelopmentmekong.net/dataset/3aacd312-3b1e-429c-ac1e-33b90949607d/resource/d340c835-e705-40a4-8fb3-66f957670072/download/csdg_framework_2016-2030_english_last_final-1.pdf
- (21) Royal Government of Cambodia. (2015). Industrial Development Policy 2015-2025. https://cdc.gov.kh/industrial-development-policy/
- (22) Food and Agriculture Organanization. (2013). Law on Agricultural Cooperative. https://www.ecolex.org/details/legislation/law-on-agricultural-cooperative-lex-faoc172382/
- (23) Council for the Development of Cambodia. (2021). Law on Investment. https://www.cambodiainvestment.gov.kh/en/law-on-investment-2021.html
- (24) USAID. (2008). Kandal province investment profile. https://pdf.usaid.gov/pdf_docs/PA00HV46.pdf
- (25) USAID. (2010). Pursat province investment profile. https://pdf.usaid.gov/pdf_docs/PA00HV4B.pdf