Small Business Model in Agri-Business “Value-Chain”

PDAO is Currently Looking for Financial Support to Expand the Following Project named: “A business model of smallholders’ farmers in agri-business on value chain of vegetable and livestock”

Location: Takeo and Kampot province

Around 80% of the 14.7 million population of Cambodia live in the rural areas and most of them depend on agricultural production, mostly rice farming, and natural resource extraction for their livelihood. The majority of the farmers conduct rice farming, secondary crops (vegetable) and livestock raising under increasingly challenging natural conditions caused by climate change. They also have limited access to proper technical training and appropriate information, especially information relating to demand in the market to sale out their harvested products and as well as inputs supplies. Most of the target famers produce surplus for certain products for sale but most of those products are of low quality and produced using expensive chemical fertilizer and pesticide and/or herbicide and well as the commercial food for their animal or livestock and which in turn reduces the demand for these products in the markets. Poor cropping techniques and planning result in low prices and prices are controlled by middlemen leaving little value for the farmers.

Most farmers are facing problems including land degradation (poor soil fertility due to highly usage of chemical fertilizer and pesticide), insufficient water sources for rice production, poor irrigation systems, poor seed selection techniques, improper use of chemical fertilizers and pesticides, lack of skill and techniques for post-harvest management of products, no processing for the small scale farmer, lack of capital as input for agriculture productivities, limited access to finance with acceptable interest (interest is too high). As a result, they produce a limited surplus of low quality products which fetch a low price on local markets. In addition, they lack information about the broader market and the potential for producing higher quality products to meet market demand. There is currently little understanding of the potential benefits from taking a cooperative approach to marketing products. There is also a limited capacity for farm management and planning, including debt and broader financial management. They need appropriate techniques and practical knowledge on good agriculture practices which being combined business ideas on self-mobilization of inputs supplies for their own productivities.

On the other hand, middlemen, consumer and buyers always require a quality product delivered in a timely manner. Individual farmers rarely have the information necessary to meet the requirements of the market and are forced to accept low prices. Individual farmers also lack the market power in their dealings with middlemen and rarely have the skills, knowledge and tools to join together and market their products as a cooperative.

The farmer producer groups urgently need better leadership and role models on businesses that can mobilize stronger community involvement toward agricultural cooperatives in agri-business and social reforms beyond the life of the project. They need support to empower and motivate through training in business planning, negotiation skills, communication and facilitation skills and marketing techniques.

Gender inequality defines women and men in different roles and power relations at the household and community levels, and in value chain process. Women are generally subordinated in decision making and controlling over resources. Women likely increased participation in the income generation but they were not recognized their role in controlling and decision over the production and market price as well as advocacy with the traders/middleman. Men have gendered expectations and often put pressure women to conform to destructive patterns of behaviour.

Traditional beliefs about gender roles are still strong in the surveyed districts, even among women themselves. Almost a third of husbands 31% have tried to stop their wives from participating in activities that provide them with money, another 9% have stopped their wives from meeting with female friends. A large proportion of women need their husbands’ permission when they go out within the village 73% or to another village 95%.

This project’s ideas have been developed through various discussions amongst PDAO and Association and Peace and Progress of Farmers in Kampot (AFPPKP) with villagers, village authority’s representatives and the commune councillors at Tromeng, Tropiang Pliang, and Takien commune. It is also referencing from our previous experience where PDAO accessed to those villages and the neighbouring villages through other projects related to livelihood and renewable energy model. The designed project ideas are the basis came from the situation of the three different location, the identified villages, where three new business model are come-up to tackle the real situation which consequently facing by those community people living in the areas.

This major action will address these problems by enabling farmers to increase their food production and diversify incomes through improved use of organic agricultural techniques which improve quality and reduce costs of production. On the other hand, for those farmers producers whom are highly practice or using the chemical fertilizers consistently, the project will introduce and mobilize them for the new concept so-called Good Agriculture Practice (GAP), which leading them to be more knowledgeable on appropriate techniques and proper methods on the application of the chemical fertilizers or pesticide and as well as the livestock producers farmers they will be enable with new business ideas by forming as cooperative and to become self-inputs supplier instead buying inputs supply from local traders which to be said too costly. The project will provide farmers with an understanding of the value chain concept, and skills to participate more effectively in the agri­business market. In particular smallholder farmers will be empowered to sell their products to local and external markets including organic and super markets in Phnom Penh.

The project will mobilize, strengthen, and build the technical capacity and skills of farmer/producer groups to become Self-Help Group (SHG) and AC’s members. They will receive specific training, opportunity to undertake and see the demonstration activities, and through coaching and mentoring will practicing their new knowledge learned. Moreover, the project will focus on effectively in marketing community agricultural products to the existing markets, both local and external, especially organic markets in part by promoting access to current market information.