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Technology

Cambodian rice farmers turn to blockchain to gain pricing power

Tech behind bitcoin could show retailers whether growers were fairly paid

Cambodian rice farmers may be getting some new leverage when it comes to selling their harvests.    © Reuters

BANGKOK -- Blockchain, the technology behind bitcoin, has made its way to Cambodia, where rice farmers are using it in the hopes of getting better prices for their grain.

An international nonprofit organization has brought the technology, which usually keeps track of cryptocurrency transactions, to Cambodia's northern province of Preah Vihear to ensure that vulnerable farmers get fair prices.

Blockchain for Livelihoods from Organic Cambodian Rice, or Blocrice, kicked off a pilot project for this year's harvest with 50 organic rice farmers on board. Oxfam, the nonprofit, plans to expand the program across the country.

Blocrice is intended to promote contract farming between farmers' cooperatives and exporters, rice cracker makers and other buyers. Contracts predefine the primary purchase price, trade volume, transportation method and other conditions.

They will be digitized and registered on the blockchain platform. Trade and payment records will be updated accordingly.

Payments to farmers will be made through bank accounts so they can be recorded. Once a cashless payment is made, the blockchain will be updated.

While roughly 60% of Cambodia's workforce toils in agriculture, few of these laborers, especially low-income farmers, have proper contracts with their buyers. Many lack knowledge of market prices. Many also carry high-interest loans and are under intense pressure to sell off their produce to service their debt. Often, these farmers are paid pittances for their harvests.

With Blocrice, though, they could gain collective bargaining power, since agricultural cooperatives will be parties to the contracts, said Solinn Lim, country director of Oxfam in Cambodia. Rice prices will be based on market prices, and transportation costs will be born by buyers.

"The sheer fact of being registered as an actor on the blockchain platform implies that people matter," Lim said. "Blocrice will give them a platform to empower themselves."

The 50 farmers who are part of the pilot project are now registering their profiles and farming data, such as planting areas and expected yields, into the web-based Blocrice system. The project will run through March 2019 to sell rice harvested in the rainy season, the country's major harvesting season. 

If the pilot proves a success, Oxfam is hoping to expand the initiative to other provinces as well as to cassava, cashew nuts, maize and pepper.

Pepper, once one of Cambodia's most important exports, has been making a comeback.

On Aug. 31, Oxfam will hold a Blocrice workshop for other agriculture cooperatives in the region, the provincial government and private sector companies.

"We expect to bring traceability, transparency, financial literacy and best practices [to] contract farming in Cambodia," said Kann Kunthy, managing director of Phnom Penh-based rice exporter AmruRice, which is also joining the pilot.

Promoting fair trade, Kann said, could improve the image of Cambodian rice and help expand exports, especially to Western markets. Foreign retailers will be able to access the Blocrice system to trace where the rice comes from and to monitor whether their trading partners are treating local farmers fairly.

Cambodia's rice exports have been increasing over the past two decades or so, largely due to the European Union's preferential tariff exemption under the Everything But Arms scheme. Of the 8.9 million tons of rice produced in the 2017 harvesting season, 600,000 tons were shipped abroad, with nearly half of that going to the EU. The European Commission, however, has said it may remove Cambodia from the EBA scheme following "worrying" human rights developments in the run-up to the July 29 election, which saw an absolute victory of strongman Prime Minister Hun Sen but was widely criticized as unfair.

Meanwhile, China is also emerging as a major destination of Cambodian rice. Beijing introduced an import quota in 2016 and is set to expand it to an annual 500,000 tons by 2019.

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