Private businesses will be among those supporting a $61.6 million project led by the UN’s International Fund for Agricultural Development (IFAD) to increase the incomes of 75,000 smallholder farmers in Cambodia announced late last month.
The Accelerating Inclusive Markets for Smallholders project aims to help Cambodian farmers improve yields and strengthen connections with local markets and investors by convening periodic meetings and providing training.
The Government of Cambodia is providing an $8.65 million grant to the project and IFAD’s contribution comes in the form of a 20 year, $36.3 million loan with a 0.75 percent annual interest rate and five-year grace period.
IFAD also aims to solicit $8.59 million from private businesses operating in the region’s agricultural sector and $8.12 million from beneficiary farmers themselves to fund the project as it develops.
Benoit Thierry, IFAD country program manager for Cambodia, told Agri Investor that the project will work directly with small and medium-sized farmers to improve yields and increase production of both high-value agricultural products such as longan, pineapples, and fruit juices, as well as staple crops including cassava and rice.
The creation of the ASEAN Economic Community in late 2015 has led to an increase of financial awareness and market activity among small farmers in Cambodia, Thierry noted. He said that the Accelerating Inclusive Markets for Smallholders project aims to help those farmers take advantage of new opportunities.
“The idea of a multi-stakeholder platform is to bring farmers, companies, and processing units together to discuss the value chain and what they would like to do together,” he said.
Cambodia, a nation of 16 million people located in Southeast Asia, has experienced rapid development in recent years, experiencing 8 percent growth in its GDP between 2000 and 2010 and at least 7 percent since 2011, according to the CIA World Fact Book.
Nonetheless, this growth has not yet resulted in major private equity investment into the region. In one example, last February frontier markets-focused private equity firm Leopard Capital wound down its Cambodia Fund after making local investments including in Tangent Foods, Kingdom Breweries and Kulara Water. The fund launched in 2008 with a target of $100 million but ultimately closed after raising just $34 million.
“Cambodia is attracting a lot of strategic investors, but we’re still not seeing many regional PE funds coming here to look for opportunities,” Leopard chief executive officer Douglas Clayton told sister publication Private Equity International at the time. “That reflects that it’s still a small economy, with a limited number of local companies that would match the selection criteria for PE funds.”