Strategy to Improve Net Income for Farmers: Guide for Commune Agriculture Officers (CAOs)

1. Introduction

Many farmers are experiencing declining net incomes due to rising production costs and fluctuating paddy prices. Traditionally, farmers focus mainly on trying to achieve higher selling prices. While price is important, it is often beyond their control and highly dependent on market conditions.

A more effective and sustainable strategy is to focus on:

• Reducing production cost per kilogram of paddy
• Improving paddy quality to access premium markets
• Ensuring a consistent supply that meets market demand

This guide provides practical steps for Commune Agriculture Officers (CAOs) to help farmers improve their net income through a market-oriented farming approach.

2. Goal and Strategy

The primary goal is to increase farmers’ net income and competitiveness by:

1. Reducing production cost per kilogram of paddy
2. Securing fair and stable market prices

Target: Help farmers achieve a net income of more than USD 500 per hectare per season.

2.1 Reducing Production Cost Per Kilogram

Formula:
Cost per kg = Total Farming Expenses ÷ Total Yield (kg)

Example:

• Total expenses: 3,000,000 riels/ha
• Yield: 3 tons/ha
• Cost per kg: 1,000 riels

Cost Reduction Targets:

• Regular white rice: <500 riels/kg
• SKO1: <600 riels/kg
• Phka Rumduol (PRD): <700 riels/kg

Key Principles:

• Increase yield without significantly increasing total expenses
• Allow additional expenses only when they lead to proportionally higher income
• Adopt cost-effective and efficient production technologies
• Reduce costs through group procurement of inputs and services

Scenario Examples:

Scenario	Expenses (M Riel)	Yield (Tons)	Cost per kg (Riel)	Outcome
Current	3.0	3	1,000	Baseline
Option 1	3.0	6	500	Cost per kg halved
Option 2	2.5	5	500	Lower cost + expense savings
Option 3	3.5	7	500	Acceptable if profit margin increases

Profit Impact Example:

• Cost per kg = 1,000 riels; selling price = 1,000 riels → No profit
• Cost per kg = 500 riels; selling price = 1,000 riels → Profit = 500 riels/kg
• If selling price drops to 600 riels/kg → Still profit = 100 riels/kg

2.2 Improving Market Access and Product Price

CAOs should guide farmers to focus on:

• Quality: Meet buyer requirements to access premium markets
• Quantity: Produce enough to fulfill contracts
• Reliability: Ensure timely and consistent supply to build long-term trust

Steps to Improve Product Quality:

• Use pure, certified, full-grain seeds
• Harvest at optimal maturity for best grain quality
• Maintain proper moisture levels during harvest and storage
• Minimize pesticide residues to meet food safety and export standards

Steps to Ensure Quantity and Reliability:

• Promote synchronized planting and harvesting
• Coordinate farmer groups for consistent production volumes
• Improve access to collection points to reduce losses and transport costs

Steps to Strengthen Collective Marketing and Contract Farming:

• Link farmer groups with buyers, millers, and exporters for reliable contracts
• Facilitate joint price negotiation to secure fair deals
• Promote group-based marketing to reduce transaction costs and strengthen market relationships

3. Role of CAOs in Supporting Farmers

CAOs are key facilitators in helping farmers transition from subsistence farming to business-oriented farming.

Key Actions

1. a) Promote Farming as a Business Using the 4Ps of Marketing:

• Product: Grow what the market demands in both quality and quantity
• Price: Understand production costs and negotiate fair prices
• Place: Connect farmers with collection points and buyers
• Promotion: Highlight the quality, safety, and reliability of local produce

1. b) Support Farmers to Improve Quantity, Quality, and Efficiency
   Promote the System of Rice Intensification (SRI) / Sre Laar (SRL) principles:

1. Proper land preparation and leveling
2. Making furrows in the rice fields
3. Integrated nutrient management
4. Use of high-quality seeds
5. Optimal seed/seedling spacing
6. Improved water management
7. Integrated pest management

Adopting all seven principles in combination creates synergy, resulting in:

• Higher yields
• Better quality grain
• Lower cost per kilogram of paddy

Key Considerations:

• Land leveling adds initial costs but increases yields in the long run and improves water, fertilizer, and pesticide use efficiency.
• High-quality seeds cost more but require fewer seeds and result in higher yields and better paddy quality.
• Basal application of organic fertilizer may raise expenses slightly but allows a reduction in chemical fertilizers, improves soil health, and produces better grain quality.
• Good water management (e.g., Alternate Wetting and Drying), when combined with proper nutrient management and field preparation, reduces pest problems and lowers pesticide use.

These are the main pillars of the strategy to improve farmers’ net income and build resilience in rice farming.
(Refer to the CAO Guide on SRL and Integrated Nutrient Management.)

1. c) Promote Group Action and Modern Agriculture Communities (MACs):

• Encourage farmers to grow and harvest the same variety at the same time
• Facilitate group procurement of seeds, fertilizers, and machinery to reduce costs
• Strengthening collective bargaining power and market access

1. d) Support Data Collection and Record-Keeping:

• Help farmers track expenses, yields, sales, and cost per kg
• Use data to monitor performance, improve efficiency, and negotiate better prices

4. Implementation Approach

• Start with small-scale demonstrations with volunteer farmers; record baseline net income and production data.
• Form pilot groups for synchronized cultivation, collective marketing, and joint procurement.
• Collaborate with market actors (traders, millers, exporters) to secure reliable contracts and fair prices. MAFF supports CAOs in linking producer groups with partner rice mills.
• Encourage farmers to document and analyze their data for continuous improvement.
• Scale up gradually through farmer-to-farmer learning and peer-to-peer extension.

5. Conclusion

Improving farmers’ net income requires a comprehensive, business-oriented approach that combines:

• Lower production costs through higher yields, efficient resource use, and group procurement
• Better product quality to access premium prices
• Consistent supply to build long-term trust with buyers
• Collective marketing and contract arrangements to stabilize income
• Data-driven decision-making to track performance and make timely adjustments

By applying these strategies, CAOs can help transform farming from a subsistence activity into a competitive, profitable, and market-oriented business — strengthening rural livelihoods and contributing to agricultural growth.

Yang Saing Koma (MAFF), September 2025