Transcript Agricultural Investment, Agricultural Productivity and

Rural Poverty, Smallholders and Markets in
Cambodia
Raghav Gaiha,
University of Delhi
Based on a collaborative study with Md. Azam -sponsored by APR,
IFAD and carried out in consultation with SNEC
Objectives
• Agriculture’s potential for GDP growth acceleration
▫ Two routes: (i) higher productivity, and (ii) participation in high
value chains
▫ Policy influences (e.g. public and private investment, FDI, trade
expansion) on both intensification and diversification of
agriculture
▫ Relationships between agricultural growth, GDP growth and
poverty reduction
• Risks, Poverty and Vulnerability
• Switches between production for self-consumption and market
sales and between food crops and cash crops among smallholders
• Policy challenges
Data
• Analysis based on FAOSTAT, WDI, CSES 2007.
• Today’s presentation based on analyses carried out with
CSES, 2007
Risks, Poverty and Vulnerability
(CSES 2007)
• Khmer households much less likely to be poor
• Education reduces poverty
• Small farmers more poverty prone than large farmers
• Security of land title reduces poverty
• Diversified sources of income, cushion against shocks, reduce
poverty
• Irrigation reduces poverty
• Access to electricity reduces poverty
• All weather roads substantially reduce poverty
• Natural catastrophes (floods, droughts) enhance risk of poverty
Switches between Self-Consumption and
Market Sales, by Commodity & Size of Farm
• Vast majority of smallholders dependent on subsistence
farming
• Integration into markets, higher living standards and reduced
vulnerability
• Analysis based on CSES 2007
• Switching regression procedure (Maddala, 1983) –sales of
agricultural output as well as choice between selfconsumption and selling regime determined jointly
• Total sales (all crops), food crops, and cash crops
• Aggregate sample, small and large landholders analysed
separately
Switches between Self-Consumption and
Market Sales, by Commodity & Size of Farm
(contd)
• Supply responses likely to differ between small and large
farmers
▫ Reasons include lack of assets, technologies and incentives
▫ Behavioural traits such as risk aversion
Results (1)
• Price of paddy, rice yield (proxy for technology), farm size and
ownership of agricultural equipment have positive and
significant effects on market sales
▫ Significant differences between small and large landholders.
▫ Reasons include lack of endowments (e.g. land, skills), and
behavioural traits (risk aversion)
• Rice yield and not price of paddy (technology) has highest
marginal effect among smallholders
• Ownership of agricultural implements more important too.
Results (2)
• Supply responses lower in villages prone to floods, droughts
▫ Catastrophic risks greater for large farmers
• Transaction costs main barrier to marketing of food crops
(distance to markets, bus stop, ownership of transport
equipment) among smallholders
▫ Developing rural infrastructure-roads, information networkshigher payoffs to smallholders
• Secure landownership facilitates market integration of
subsistence farmers
• More diversified income sources free smallholders from the
obligation to sell and produce for self-consumption
Policy challenges (1)
• Remarks confined to policy interventions designed to help
smallholders integrate into markets and enhance living
standards and reduce vulnerability
• Enlargement of farm size
• Evidence on beneficial effects of land concessions to poor mixed
• Whether grant of small plots with access to technology and
credit better option?
• Security of land title
• Catastrophic risks and resilience against them
• Access to extension and technology
Policy challenges (2)
• Rural infrastructure, transaction costs and commercialisation
of smallholders
• Strengthening of rural and market information networks
• Diversification of income sources of smallholders
• In short, challenge is accelerated agricultural growth and
mainstreaming of smallholders in this process