1. Theng Vuthy CDRI Development of Fertiliser Industry in Cambodia: Trends in Fertiliser Use, Market Structure, Challenges and Opportunities The views expressed in this presentation are the responsibility of the presenter and do not necessarily reflect the views of CDRI or its partners International Conference on Agricultural Transformation in Asia: Policy Options for Food and Nutrition Security 25-26 Sept 2013, Siem Reap, Cambodia

2. Development of fertiliser sector in Cambodia Trends in fertiliser use Structure of fertiliser market and related supply issues Cross-border trade Pricing environment Policy options/way forward 2 3. 1979-93: imported by state-owned company (AIC) - 1980-89: 35-40,000 tonnes per year imported from Vietnam 1991-96: FAO, Japan and ADB donated about 92,966 tonnes mainly used for rice production From 1993: economy privatised, private companies emerged From 1996: private sector mostly responsible for fertiliser import increasing market efficiencies in fertiliser quantities, types, prices and availability 2012: about 20 private firms, five are very active and distribute almost countrywide 3 4. 4 Fertiliser import increased Discrepancy in amounts imported from different sources Fertiliser consumption shows increased trend Fertiliser consumption is greater than recorded fertiliser import Large amount unrecorded huge smuggling into country 5. Agri. crops share increased to more than 50% of agri. GDP Paddy accounts for more than 50% of agri. crops value-added Paddy production increased 4-fold over last 20 years due to higher yield (4.2% per year) and rise in cultivated land area (2.6% per year) Milled rice export rose rapidly in last 3 years 5 0 5 10 15 20 25 30 35 0 20 40 60 80 100 120 Percentage Distribution of Agricultural GDP (2000=100) Forestry Fisheries Livestock Agri. crops Paddy (right) 6. 6 Quantity of Fertiliser Use by Crops (kg/ha, CSES) 7. 7 Nutrient use efficiency: AE from research stations AE from 4-15 kg grain/kg nutrient (global 22 kg grain/kg nutrient) PFP from 10-36 kg grain/kg nutrient (global 62 kg grain/kg nutrient) 8. 8 High prices Credit access Quality issues Inadequate extension services Inadequate irrigation Monthly Retail Prices for Urea and DAP in Cambodia and International fob Bulk Prices (USD/MT) 9. 9 Fertiliser industrial structure: Net importer until late 2012 about 20 importers, five are very active A local fertiliser plant started in late 2012 NPK 350,000-500,000 tonnes a year A free-market, led by private sector No protection policy to favour local fertiliser production plant International producers and traders China, Russia, Uzbekistan, Philippines, Middle East, Indonesia, USA, EU Thai producers and traders Vietnamese producers and traders Licensed Cambodianimporters Distributors Provincial retailers District and village retailers Seasonal village distributors Smallholder farming households Credit sales Cash sales 10. 10 11. 11 Trade and tariffs: Import license: issued under MAFF, obtained within 12 weeks, valid for one year Limited to 30,000 tonnes per license No import tax, including on pesticides and agri. machinery A local production plant 12. Sources of supply major suppliers Thailand 35 percent, mostly with acceptable quality index Vietnam 61 percent, low quality products (below acceptable quality index) Distribution channels 12 13. Regulatory systems restraining fertiliser market development Licensing process is not transparent and creates rent seeking and stimulates illegal imports Restrictions on import tonnage by MAFF draw back market principles and force import from neighbouring countries Poor quality control and inspection at border due to unclear line of responsibility means below standard products get imported Limited regulation of fertiliser operators causes fertiliser quality problems in the market about 10% of fertiliser sold on the market is either adulterated or mis-sold, where inferior quality fertiliser is re-bagged in sacks with superior quality brand labels 13 14. 14 15. Reform and simplify import licensing procedures and regulations Remove tonnage restrictions and allow importers to import unlimited amounts of suitable registered products based on market risk assessment Label imported products with sources of origin to identify sub-standard fertilisers Expand scientific research and public extension services to improve fertiliser use efficiency through increased public funding for agricultural research and development 15 16. 16