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$70M ADB loan to boost agriculture, food safety

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ADB’s project will support initiatives to strengthen food safety and quality across the value chains for agricultural products such as cassava. Heng Chivoan

$70M ADB loan to boost agriculture, food safety

The Japanese-led multilateral lender Asian Development Bank (ADB) has approved a $70 million loan to improve the capacity of agribusinesses in six provinces across Cambodia to process key agricultural products, it said in a press release on November 27.

The Agricultural Value Chain Competitiveness and Safety Enhancement Project aims to benefit about 230 agricultural cooperatives (about 27,000 households) and 50 agribusinesses in Kampong Cham, Kampong Thom, Oddar Meanchey, Preah Vihear, Siem Reap and Tbong Khmum provinces, ADB said.

ADB principal natural resources and agriculture economist Takeshi Ueda said agriculture can contribute to the Kingdom’s economic growth and diversification if local small and medium-sized agribusinesses can improve their abilities to process high-value agricultural products and market them domestically and overseas.

“Private investment in agriculture, along with better access to credit and high-quality raw materials, will help Cambodian agribusinesses unleash their growth potential, create jobs and improve rural livelihoods,” he said.

With 76 per cent of Cambodia’s population living in rural areas, agriculture accounted for 20.7 per cent of gross domestic product (GDP) and 31.2 per cent of total employment last year, he said.

ADB said the industry grew an average of 1.7 per cent annually from 2010 to last year, but processed agro-based goods now account for just 4.0 per cent of GDP, due to a lack of diverse, value-added products.

The Covid-19 pandemic has disrupted supply chains and has reduced incomes and market opportunities for farmers and agribusinesses, the Manila-based lender said.

It said the project will enhance access to credit for the industries, which currently draw in some 10 per cent of total formal financing. The project will implement mutually reinforcing financial schemes, including credit lines and guarantees.

Additionally, it will support initiatives to strengthen food safety and quality across the value chains for cassava, cashew nuts, mangoes, vegetables and free-range poultry, which the ADB has flagged as the Kingdom’s key agricultural products.

ADB said it will work with agricultural cooperatives to adopt good practices and upgrade food-safety testing laboratories to international accreditation.

Support for research and development of crop varieties will help agricultural cooperatives access high-yield, drought and disease-resistant seeds, it said. Infrastructure projects will revamp 110km of rural roads, helping connect producers to markets.

It said the project will pilot a green financing mechanism, supported by a $5 million loan from the ASEAN Infrastructure Fund. ADB will also manage a $25 million loan from French government agency Agence Francaise de Developpement and a $3 million grant from the Japan Fund for Poverty Reduction.

ADB said its efforts to eradicate extreme poverty are part of an ongoing commitment to achieving an inclusive and sustainable prosperity in the Asia-Pacific region.


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