Agriculture is also the most important sector for employment, employing more than half of the country’s total labor force. Agriculture is more important for the rural poor as it provides their most important source of income (World Bank 2009). According to Knowles (2006), the poorest 10 percent of the Cambodian population are rural households, mostly depending on agriculture for their livelihood. Rice is the dominant crop in Cambodian agriculture and a rice-based farming system has existed in the country for more than 2,000 years (Nesbitt 1997). As a low-income country, Cambodia is dependent on rice as a strategic commodity for income growth, poverty reduction, and national and household food security. For this reason, we focus on the role of the rice sector in Cambodian agriculture strategy in this paper. In the next section, we first highlight the importance of the rice sector in the current economy and then review the recent government policies and interventions in rice promotion. Section 3 provides a brief description of the recent performance of the rice sector. Section 4 focuses on the potential and constraints for future development of the rice sector. Against the background of a broad agricultural strategy, in Section 5 we explore the options and possible development path for rice in the future by comparing the current situation in Cambodia with its two neighbors, Thailand and Vietnam, in their early development stages. Although both Thailand and Vietnam are rice growing and exporting countries, they have quite different rice development strategies. Section 6 concludes the paper with a set of further research topics in which we emphasize Cambodia’s comparative advantage, and propose a comparison study of different development paths in rice development and agricultural diversification. Such comparisons may provide more options to inform Cambodia’s agricultural development strategy in the future.

While rice will continue to play an important role in Cambodia’s future agricultural growth, it is necessary to put the rice sector in a broad development context to identify better options for its further development. Rice played a similar important role in the economic development process in Thailand in the early 1960s and 1970s and Vietnam in the 1990s as it does in Cambodia today. A comparison between Cambodia’s present conditions and a similar development stage in Thailand’s and Vietnam’s past seems to be helpful in recognizing practical options for Cambodia’s rice sector. 12 A Policy Discussion Paper Agriculture in Economic Transformation We chose 1997 as an initial year for Cambodia and then chose the years in which Thailand and Vietnam had a similar level of per capita income as that in Cambodia in 1997 for comparison. The year for Vietnam is 1991, when its per capita income, measured by constant 2000 US dollars, was close to that in Cambodia in 1997. Data to show a similar level of per capita income in Thailand is not available, so we chose the earliest year (1960) in which Thailand’s income data is available in the World Development Indicator. In this year (1960) Thailand’s per capita income already reached $317, a level that Cambodia reached in 2002. Figure 5 presents the per capita GDP comparison among these three countries. For comparison purpose, the first year in the figure represents 1997 for Cambodia and 1991 for Vietnam, while the graph for Thailand starts at the 6th year, which represents 2002 for Cambodia and 1960 for Thailand. As shown in Figure 5, ignoring the global recession effect in 2009, Cambodia’s recent growth, measured by per capita income, has been more rapid than that of both Thailand and Vietnam when they started at a similar income level in the past. Starting at per capita income of $239 in constant 2000 US dollar in 1997, Cambodia reached per capita income of $370 in 2004 (in 7 years) and $511 in 2008 (in 11 years). It took a similar time period for Vietnam to increase its per capita income from $235 in 1991 to $364 in 1998, while it took more time (13 years, until 2004) for the country to achieve a per capita income level of more than $500, which Cambodia took 11 years to achieve. Obviously, without the recent global recession, along its recent growth trends Cambodia would have achieved more rapid growth than Thailand in the 1960s and in Vietnam in the 1990s and early 2000s. While the speed of the growth recovery in Cambodia after 2009 is unknown, it is generally agreed that the country’s economy will soon come back to its pre-crisis growth momentum. ADB (2010) forecasts a GDP growth rate of 5 percent for 2010 and 6 percent for 2011. If such growth recovery occurs soon, then the gap in per capita GDP between Cambodia and Vietnam would likely decrease in the next decade. While the growth recovery in Cambodia may not rely heavily on rice— which has been less affected by the global recession than the Cambodian garment and tourist sectors—agriculture, particularly rice, is still important in its future growth in many respects. To help understand the role of agriculture in the future, we also conduct a comparison between Cambodia and its neighboring countries in terms of economic structural transformation.