IA03: GMOs and the Cost of Agricultural Regulation in Cambodia

Factories might be the boom industry, but food is still big business in Cambodia.

According to the Food and Agriculture Organisation of the United Nations (FAO), the Cambodian agriculture industry contributes 37 percent of GDP, and employs 67 percent of the workforce, with 3/4 of cultivated land dedicated to growing rice.

So when the FAO and the Cambodian Ministry of Commerce start coordinating with industry and civil society groups to plan new regulations (as they have lately) the proposed changes have the potential to impact on millions of lives. Before any new regulations are introduced it is vital that policy makers understand the consequences for the average farmer and consumer.

The new regulations relate to genetically modified organisms (GMOs). Until now Cambodia has not had any GMO regulations. Though even without government restrictions, the Cambodian Rice Federation boasts that Cambodian rice is not genetically modified and that it uses minimal fertilisers. Most farmers use organic seeds, with the exception of some Chinese-owned farms.

Cambodia has a comparative advantage in rice production.

Thanks to rich soils and skilled farmers, as well as the least developed country (LDC) tariff-free status which the country enjoys, Cambodia has produced surpluses which are being exported all over the world, including to markets in the European Union. Over the past ten years farm production has grown steadily at 4-5 percent, and in 2014 almost 400,000 tonnes of rice were exported by Cambodia. That figure is set to increase further in 2015.

The increase in exports of rice is a positive trend for the Cambodian economy. Unfortunately, despite growing food production, poverty and malnutrition persist among the rural population. One solution is the use of GMO crops, which has the potential to help further boost food production. However, international pressure and scaremongering, and limited capital for investment, has prevented the uptake of GMO crops in Cambodia, which holds back the potential rice yields of farmers and the efficiency of production.

The debate around using GMO crops has raged on for decades, diluting understanding of the value of genetic modification in producing higher yeilds and more efficient crops. GMO crops use less space to produce more rice, which increases income for rice growers, while also bringing down the price of food for other Cambodians. Most commentators support new investment in machinery to increase the productivity of the agricultural sector, and by the same logic it makes sense to also support the increase in productivity caused by growing more efficient crops.

The health and safety of GMOs has been extensively studied, and in polls of scientists about the public safety of genetically modified foods an overwhelming majority insist that GMOs are safe for human consumption. Most of the food that is consumed in OECD countries such as the United States and Australia is genetically modified, and many ‘organic’ foods that are consumed today have been modified over decades by farmers combining different crops, including wheat and barley.

Foreign and local investment into capital and genetically modified rice crops should be welcomed as a way to further increase agricultural output. As rice production becomes more efficient, prices will reduce, and some rice farmers may move towards growing different vegetable crops and rearing livestock in order to increase food diversity. Lower food prices for consumers will reduce poverty and malnourishment amoungst rural Cambodians.

Many NGOs and lobby groups argue that regulation of GMO crops is a good thing, but their analysis only considers half of the equation. The main winners from stricter agricultural regulation will be large producers that are more easily able to deal with regulations and will see prices for their product kept artificially high, but there are significant costs to also consider.

GMOs are a fledeling industry in Cambodia, which will struggle to deal with new restrictions. The proposed regulation will increase barriers to entry for business, slow the expansion of the agricultural sector in Cambodia, and prevent some small scale subsistence farms from growing into more economically viable medium to large scale farms. And the higher prices directly hurt the poorest element of society who are forced to pay more for the necessitites of life.

If strict GMO regulation is introduced, the large organic farms will loudly applaud the benefit they receive. But small businesses, entrepreneurs with new ideas, and consumers will pay a heavy price, and most likely will suffer in silence since they are often overlooked by NGOs.

There will inevitably remain a demand for non-GMO rice, especially for export, but that doesn't justify the introduction of new regulation. The technology to increase production and lower food prices already exists, and it is incumbant on the Cambodian government to allow the industry to explore all new opportunities -- including GMO -- without the burden of government restrictions. Pandering to misguided and ill-informed anti-GMO protesters will hurt the Cambodian agriculture industry and punish the poorest 15 percent of Cambodia who continue to suffer from malnutrition.

Gabrielle Ward is the Research Director and John Humphreys is the Executive Director at the Professional Research Institute for Management and Economics (PRIME).

* IA03 = Issue Analysis 03 - This article was later published by the Khmer Times on the 9th of September 2015 - http://www.khmertimeskh.com/news/15487/gmos--cheaper-food-and-higher-farm-incomes-for-cambodia-/

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