Agriculture officials and struggling smallholder tobacco farmers are cautiously hopeful that tariff exemptions granted under a new trade agreement with Vietnam will lift sagging demand for their crops.

Khann Samban, director of industrial crops at the Ministry of Agriculture, said that the market for tobacco has dried up in recent years, though he could not say whether this was a sign of successful anti-smoking campaigns.

“The yield of tobacco has decreased because farmers are giving up as the crop has no market, and as such they prefer to grow other crops with higher market demand,” he said.

Annual tobacco yields plummeted to 2,000 tonnes last season, about a fifth of the previous season’s total, according to Ministry of Agriculture data. The area of cultivation also declined, falling to 10,000 hectares, from 14,000 hectares a year earlier.

Much of the tobacco grown in Cambodia is cultivated and semi-processed before being sold to British American Tobacco Cambodia (BAT) under a “contract farming” system. There are few options for farmers not part of this system.

“For now, the farmers are producing tobacco for just one cigarette company here, and the rest is smuggled into Vietnam.”

However, Samban said a memorandum of understanding signed by Cambodia and Vietnam on October 26 is poised to significantly boost demand for locally grown tobacco.

Under the agreement, Cambodia will provide a special preferential duty on 29 Vietnamese products, allowing them to enter the country duty-free. Vietnam agreed to provide the same preferential treatment for 39 Cambodian products, including 3,000 tonnes of dried tobacco in 2016 and 2017.

According to Soeng Sophary, spokesperson of the Ministry of Commerce, Vietnam intends to exercise its option and has already agreed to purchase 3,000 tonnes of tobacco from Cambodian farmers this year.

“Vietnam has agreed to buy . . . and that’s why we’re appealing to producers and exporters to register at the ministry in order to establish the official price for the exports.”

On Friday, the ministry announced that local tobacco farmers and producers registered under the Generalised System of Preferences (GSP) and having completed their 2016 tax obligations would be eligible for export licences, urging them to complete their applications by a November 11 deadline.

Samban sees a positive outcome for local tobacco producers.

“Since we have our own market, and now one in Vietnam, I believe that tobacco farming will increase next year,” he said. “Farmers will no longer need to be worried about finding a market.”

Chhin Bunthoeurn, a smallholder tobacco farmer in the Kong Meas district of Kampong Cham province, said around 1990 dried tobacco had a big market in rough-and-tumble Cambodia, fetching up to 4,000 riel per kilo. But the market has shrunk considerably, and now he sells the fresh leaves for just 300 to 400 riel per kilo.

“The main issue for us is the market,” he said. “Since there is none, we’ve cut back on growing tobacco and switched instead to rice.”

Buntheoeurn currently grows tobacco on one half of his 2-hectare plot, and rice on the other half.

He said, however, that if the trade agreement with Vietnam creates more demand for tobacco, he would return to growing only tobacco “because it is an easier crop than rice”.