Contract Farming Arrangements in Cambodia: The Case of Kampot Pepper (Piper nigrum)

Abstract

Small-farm production often suffers from capital constraints and lack of capacity to adopt new agricultural technologies. Contract farming (CF) is seen as an effective mechanism to overcome these difficulties, and can assist smallholders in shifting from subsistence agriculture to the production of export-orientated, high-value products. This study highlights the nature of contract farming in Cambodia currently implemented by the Kampot Pepper Agricultural Cooperative (KAMPACO) and the Kampot Pepper Promotion Association (KPPA), as well as the roles and responsibilities of the relevant stakeholders and farmers’ benefits. It also identifies key issues encountered in contract farming schemes and seeks solutions to address these challenges. A total of 135 contract and non-contract farmers were interviewed using structured questionnaires; this data was supplemented by focus group discussions and key informant interviews. The results of the study show that the CF scheme improves the livelihoods of smallholder farmers, with contracting farmers having higher revenues than non-contracting farmers. The establishment of KAMPACO and KPPA and use of the scheme in managing pepper production appears to be the best alternative practice for Cambodia in recent years. However, some problems and challenges confront still smallholder farmers and contractors. Four main policy implications are recommended by this study to improve the system.