Main Activities and Income Sources
Agro-climatic conditions largely influence income diversification of the households. Rural households in Cambodia depend on multiple sources of income for their livelihoods, but they differ according to the agro-climatic conditions. The majority of rural residents still live in traditional ways, primarily cultivating rice and collecting natural resources from water bodies and forests. Agriculture - defined here as including crop and livestock production, forestry and fishing - remains the primary occupation for 72 percent of households, yet accounts for only 31 percent of GDP. The importance of off-farm income is growing rapidly, like remittances, wage labour and non-agricultural self employment.
According to CSES 2004, 30 percent of the poor’s income is sourced from crop cultivation against 10 percent for livestock rearing and 25 percent for common property resources, such as forestry and fisheries. The remaining income is sourced from non-agricultural activities, wage employment, remittances and transfers. Among wealthier households, the dependence on agriculture declines and the significance of non-agricultural activities and wage employment increases.
In terms of employment, the agricultural sector employs almost 60 percent of the people over the age of ten (Table 3.3). The CSES 2004 data shows the dominance of agricultural sector in all provinces except in Phnom Penh. The industrial sector is most vibrant in Phnom Penh, Kaoh Kong, Krong Preah Sihanouk and Kandal. The services sector employs as much as 70 percent in Phnom Penh. Other provinces with considerably high proportion of employment in the tertiary sector are Kaoh Kong, Krong Preah Sihanouk, Kandal, Bat Dambang, Krong Pailin, Banteay Mean Chey, Otdar Mean Chey and Kampong Cham.
Approximately 69 percent of Cambodian population are engaged in crop production. A major constraint on many households is inadequate means of food production. Most Cambodian farmers rely heavily on draught animals to cultivate their land. Buffalo are usually used in pairs for ploughing. Cattle (and horses) are preferred for pulling carts. The level of farm mechanization is very low and most forms of mechanization are uneconomical for many producers. The total number of draught animals available for the rice cultivation is considered to be low, despite the continued increase of draught cattle. Most of the provinces have insufficient number of cattle per hectare of paddy field cultivated, especially in the major rice production regions, such as the Tonle Sap and the plains. Key informant discussions with IPC mission in Kampong Chhnang province suggest that the majority of small farmers do not have a pair of draught animals and have to share with neighbors if they have only one, as they do not have access to sufficient credit to purchase them.
Besides constraints on farming households, insufficient numbers of draught animals put small farmers at risk of vulnerability. If a household loses its draught animals through accident, theft, landmine, disease or financial difficulties, they may have difficulty in accumulating sufficient funds for replacement animals. With high hiring costs, this can lead households into longer-term food insecurity.
A large proportion of poor depend heavily on forestry and fisheries as their sources of income, especially during periods of adversity. The Tonle Sap and Mekong River provide abundant fish stocks. CSES 2004 data reveal that approximately 16 percent of the poor derive more than 50 percent of their income from forestry and fisheries.
Child involvement in economic activity is widespread in Cambodia and considered as a key obstacle to achieving universal primary education and other Millennium Development Goals (ILO, UNICEF, World Bank, 2006). In total, an estimated 52 percent of 7-14 year-olds, over 1.4 million children in absolute terms, were economically active in the 2001 reference year, reaching a high of 80 percent in some provinces, such as Kampong Speu. While child participation in economic activities can be seen as a means for households to meet basic needs requirements, the long term impact of this phenomenon is harmful to the welfare of individual children and limits the pace of broader national poverty reduction and development efforts
Table 3.3. Provincial Distribution of Employment by Sector
Source: CIPS 2004
Some of the common income-sourcing activities are as follows:
Own production: Faced with few employment prospects and low agricultural productivity, poor rural households in Cambodia practice subsistence agriculture. The households own production consists of rice sold, buffalos, vegetables and fruits from the gardens, pigs produced on the farm and chickens. For the better off and middle households most of the income in this category comes from sale of rice, pigs, chicken/ducks (few poor households are able to rear pigs for sale), some fruits and few vegetables in a typical year. Excess vegetables can be sold for a period of 2 months in a year. In a bad year only the better off are able to sell some rice while the middle and poor households consume all the harvest and store the rest for seed (OXFAM, 2007).
Temporally employment/casual labour: This is the major income source for the poor households. Usually these households will provide labour to the better off households during rice production and are paid in cash. On average a household will have 1-2 persons engaged in temporally labor (CIPS, 2004). The middle and poor households may access labour opportunities in nearby large towns in construction and textile industries. Some households seek labour in neighboring Vietnam. Young (15-40 years) members of the households go to search for labor mainly from February and return in April time for the planting season.
Permanent employment: Permanent jobs in the commune are mainly to be found in government departments, security forces, teaching and administration. These positions are largely the domain of better off households and to a lesser extent the middle group.
Petty trade: Households from the better off quintile usually have small shops. The middle group and some poor households are engaged in petty trading. Middlemen purchase goods from Vietnam and sell them at wholesale prices to some households who operate small shops/displays within their homes. Salt is a preferred item among the middlemen. Some petty traders are engaged in selling of petrol/gasoline. The poor households sell palm wine.
Remittance: A small (but growing) percentage of households receive support from their children who are employed in factories and construction jobs in Phnom Penh, Thailand, Vietnam and other provincial centers.
Main Sources of Vulnerability in Cambodia
Food Insecurity: With the majority of the population engaged in subsistence agriculture, food insecurity is a dominant feature of poverty and vulnerability in Cambodia. Although overall food and rice availability has improved in recent years, chronic food insecurity is faced by subsistence farmers, the landless or marginal land holders, the urban poor, and other vulnerable groups. A recent WFP study shows that even within large rice-producing provinces, 30 percent of communes face chronic food shortages, and an estimated one in five rural inhabitants is unable to secure enough food to meet the nutritional norm of 2,100 calories per day. As a consequence, malnutrition is widespread.
Lack of assets: The poor and vulnerable do not have the assets necessary to generate stable incomes and maintain quality of life. The collective system of agriculture, the protracted civil war, and land grabbing have limited the access to land. A 2004 Oxfam study estimates that landlessness, which affected 20 percent of rural households in 2004, has been rising by 2 percent per year. Even those households who do have land often do not have enough to sustain themselves; around 25 percent of households have 0.5 hectares or less of land. As many as 80 percent of rural households who owned land in 2004 did not have land titles (WB, 2006). In addition, the poor lack or have very few basic assets such as draft animals or adequate housing. These assets are important not only for ensuring flow of income but also for serving as collateral to gain access to credit. Lack of assets also means that the poor have few instruments to cope with shocks to consumption or income.
The non-diversification of household economies: Most rural households rely on subsistence agriculture for their livelihood. The heavy reliance on rice cultivation—which accounts for 90 percent of total cultivated area and 80 percent of agricultural labor input—increases the vulnerability of the rural population, as rice farming does not provide a stable income. Particularly as a result of Cambodia’s irregular climatic conditions, rice production can fluctuate significantly from year to year. Rice yields remain among the lowest in the region due to limited and poor use of improved seeds, fertilizer, tillage, and water management. Because productive off-farm opportunities are virtually nonexistent, rural households lack alternatives that would allow them to maintain stable incomes or cope in times of poor harvest (WB, 2006).
High Prevalence of Shocks: An important characteristic of Cambodian rural households is the high prevalence of shocks (crises) causing major income loss or increased expenditures. The prevalence of shocks among households each year include illness (around 50% of households), rice crop damage or failure (around 40%), and death of large livestock, mainly pigs (around 30%) (CDS, 2003). The Government 2003 paper on the National Poverty Reduction Strategy estimated that 90 percent of households were affected by at least one such shock of any type within one year. The same study found that the cost of incident shocks or crises within a year averaged 30 percent of total household annual cash income. The incidence of stress in the form of declining availability of fisheries and forestry products is reported by around half the households utilizing these resources.
Lack of opportunity: More than 70 percent of Cambodia’s population are employed in agricultural production. The overwhelming majority of the poor are those with household heads employed in the agricultural sector. Employment opportunities in secondary and tertiary sectors are still limited which means that the agricultural sector, which is faced with low productivity, will continue to absorb the prospective labor force until the secondary and tertiary sectors become expanded and decentralized. Thus at present the agricultural sector suffers from low productivity; the industrial sector though expanding utilizes less than 10 percent of the work force and other sectors are still nascent.
People in Cambodia are exposed to a variety of risks that could cause relatively wealthy households to become poorer and drive the poor into destitution (World Bank, 2005). Idiosyncratic shocks such as illness, field or farmer specific crop failure, loss of livestock, theft or violence expose the vulnerability of the poor. Mines/UXOs cause death or injury to family member – the “breadwinner”, the caregiver (mother), or children. They can also cause loss of livelihood assets – death or injury to draft animals. The presence of UXO / landmines or even the fear of presence constrains farmers’ ability to open new land for cultivation.
The extra safeguards provided by the USA and the EU through 2008, after the expiry of Multi-Fiber Agreement (MFA) in 2005, helped the Cambodian garment industry to continue recording impressive growth. If it is not replaced by another protection measure after 2008, many people will face the prospect of unemployment. With the approval of Viet Nam’s membership by the General Council of WTO on 7 November 2006, the Cambodian garment industry will face increasing competition in the near future.
As shown in previous sections, vulnerability to these shocks is heightened by the following factors: (i) limited asset base, (ii) underdeveloped basic services; (iii) lack of economic diversification among rural poor households; (iv) over-dependence on common property resources, especially when these are declining; (v) insufficient access to cultivable land, mainly for the poor, and (vi) unstable weather conditions with persistent drought in some parts of the country.
In response to these shocks and stresses, rural households adopt a range of coping strategies, which themselves contain inherent risks.
Common Coping Strategies Employed:
The types of coping strategies employed in Cambodia differ between urban and rural areas.
Selling of Assets: Research by Oxfam and the Cambodia Development Research Institute indicate that around half of farmers who had to sell their land did so to pay for health care expenses, and another study found that illness was the number one reason for land sales. Due to the urgent need to pay medical bills, households forced to sell assets quickly may resort to selling at unfavorable, below market prices. Although such sales of assets provide fast access to cash, they may leave households impoverished for the longer term. In other words the selling of assets is a short-term unsustainable coping strategy.
Increased dependence on Natural Resources: Access to common property provides an important safety net for the rural poor in bad harvest years. The World Bank 2006 Poverty Assessment found that one-quarter of the poor depended on only fishery and forest products for over half their income in 2004, and on average, fishery and forest products accounted for 25 percent of household income among the poor. However, access to this common property is becoming increasingly limited. This coping mechanism too is unsustainable over the long-term as increased dependence on natural resources gradually strips the surrounding areas of resources and also leads to environmental degradation.
Borrowing: Households fall into heavy indebtedness as a result of borrowing from rice lenders at very high interest rates—over 100% in some cases— which require large repayments in rice against current crop production. In some cases, this practice has evolved from a short-term coping strategy into longer-term borrowing, perpetuating a cycle of poverty. Illness and injury are one of the most common reasons for taking out a loan, accounting for 13 percent of all loans (WB, 2006). Borrowing generates temporary capital for the household not an income. Keeping in mind the dearth of formal lending institutions, households most probably borrow from moneylenders. This would almost certainly mean a higher than normal rate of interest. Hence households that depend on borrowing as their main income source have to now source the same amount of money plus the interest rate albeit over time.
Pulling Children Out of School: Extensive child involvement in work is a key factor behind Cambodia’s education challenges of late school entry and substantial dropout rates starting in upper primary school. For every three out of four working children, family poverty or the need to supplement family income are given as the primary motives for pulling children out of school to work. Almost 90 percent of economically active children work as unpaid family labor. Children earn an average amount of $1 per day, accounting for 28 percent of total household labor income—a major opportunity cost barrier for the schooling of poor children (WB, 2006).
Eating less: The households have adapted to a routine of consuming less rice immediately after harvest and eating more rice rations during cultivation time (April/May).
The coping strategies of rural households concern the re-allocation of resources at their disposal to try to continue to meet basic needs. A literature review carried out by Helmers, Gibson and Wallgren in 2004, summarizes the ways in which households cope with food insecurity. Recent assessments conducted by OXFAM in 2005 and 2007 suggest that coping strategies remain unchanged over time and space. All these reports converge on the fact that coping strategies for the poorest households consist of re-allocating labour (including child labour) and reducing consumption. For wealthier households, a wider range of coping strategies are available, as shown in table 3.4 below. Common coping strategies related to activities among rural households include the use of savings, reducing consumption, borrowing money or rice and fishing.
Less common coping strategies include exploiting forest resources, a household member engaging in long-term migration for work, or gaining various forms of external assistance. Economic migration is reported to be the third reason to move to another province, following family movement and marriage (CIPS, 2004). The proportion of economic migrants in search of employment is relatively high in some provinces (e.g. 14.9 percent in Kaoh Kong and Krong Preah Sihanouk, 9.6 percent in Phnom Penh and 8 percent in Bat Dambang). Concerning external assistance, it is noteworthy that only 11-20 percent of households are able to gain help from friends and relatives in coping with crises.
Coping strategies related to asset disposal are less prevalent but are a more drastic means to cope. The distress sale of agricultural land is a classic example of a rural coping strategy. Between 2 and 6 percent of households sell land in response to crises per year, which contributes to the rapid escalation in rates of landlessness in rural communities. The sale of cattle or buffalo to meet consumption requirements increases the vulnerability of poor households by depleting their agricultural draught power and asset base.
Table 3.4. Prevalence of Coping Strategies Among Households During Preceding Year (% of HHs)
Source: Kent Helmers, John Gibson and Pia Wallgren (2004): Rural Sources of Income and Livelihood Strategies Study
Vulnerable Household’s Livelihoods
As growth has lifted living standards first and foremost in urban centers, poverty in Cambodia is becoming an increasingly rural problem. In 2004, 91 percent of the country’s poor lived in rural areas. Agriculture remains the primary occupation for 72 percent of heads of households, but contributes only 30.1 per cent to GDP. Growth is erratic, with several years of negative growth over the last decade. Lack of water control infrastructure (flood control and irrigation) creates a high level o f production risk for smallholder farmers. Crop yields, including for the food staple, rice, remain amongst the lowest in the region. Rice dominates production in all regions of the country (World Bank, 2006).
The poor are the most heavily dependent on agriculture and on the natural resource base. This dependence is declining slowly as non-agricultural activities and wage labor become more important. Nonetheless, it remains high, and for the short to medium-term progress in poverty reduction will require significant improvements in the productivity and profitability of family-based agriculture, with a managed transition to a more diversified, commodified form of smallholder production (World Bank, 2006).
According to CSES 2004, agriculture, defined here as including crop and livestock production, forestry and fishing remains the primary occupation for 72 percent of households in Cambodia, yet contributes only 30.1 percent of GDP. The importance of off-farm income (remittances, wage labor and non-agricultural self employment) has grown steadily, constituting substantial income shares (World Bank, 2006).
In 2004, about 30 percent of the poor’s total income was from crop cultivation; 10 percent from livestock rearing; 25 percent from common property resources (i.e., fishery and forestry); and the last third from non-agricultural activities (10 percent); wage (possibly farm) employment (20 percent); and “other” sources (e.g., remittances and transfers). As one moves from the poorer to the richer end of the distribution, the reliance on agriculture (i.e., crop cultivation, livestock, and common property resources) declines, while non-agriculture and wage employment becomes important (World Bank, 2006).
Figure 3.11: Distribution of Income Source by Quintile
Source: CSES 2004
Household Food Consumption Profiles
Common Items of Household Food Production: The community consumes rice, coconut, vegetables including cassava leaves, taro, banana stems, bamboo shoot, tamarind, squash and fruits such as guava and mango. The vegetables are grown in small gardens in the compounds. In dry seasons the households try to irrigate these plots using water from ponds and sometimes from the boreholes. The fruits are also obtained from a few trees grown around the household. For the better off and middle households most of the income in this category comes from sale of rice, pigs and piglets, chicken/ducks, some fruits and few vegetables in a typical year. Excess vegetables can be sold for a period of 2 months in a year. In a bad year only the better off are able to sell some rice while the middle and poor households consume all the harvest and store the rest for seed.
Common Items of Purchase: Items mostly purchased by households are oil, sugar, rice, pork, spices, mung beans, oranges, sugar cane, cucumber, onions, watermelon, salt, tomatoes, okra, cabbage and several varieties of vegetables. Vegetables are purchased mainly from February to June. Households purchase fish from December to July/August when they start accessing fish from the rice fields.
Food Consumption and Dietary Diversity
The household socio-economic survey of 2004 indicates a significant reduction in poverty, falling from 47 percent to 35 percent since 1994. Based on a comparable sample frame, the poverty in both rural and urban areas has fallen. However, 91 percent of the poor live in rural areas. Per capita consumption also increased across all expenditure groups. Within a geographically comparable sample frame, the real per capita household consumption increased by 32 percent between 1994 and 2004. However, the increase was lower in rural areas, at 24 percent, than it was in urban areas. Rising living standards were also reflected through an increased proportion of expenditure on non-food items.
While overall consumption improved for all quintiles between 1994 and 2004 (Figure 3.15), this growth has not been evenly distributed. Consumption in rural areas grew at a slower pace than it did in urban areas, indicating continued higher levels of poverty. In 1994, real consumption in rural areas was 67 percent compared to other urban areas. This fell to 61 percent in 2004. Similarly, the growth in consumption has not been uniform across consumption quintile groups. While real per capita consumption increased significantly in all quintile groups between 1994 and 2004, the relative gains were inversely related to the initial level of average per capita consumption. Real per capita consumption in the poorest quintile increased by only 8 percent, whereas, for the richest quintile, it rose by 45 percent. These data suggest that the share of total consumption for the poor fell between 1994 and 2004. As reflected in figure 3.15, the average consumption of the bottom two quintiles is extremely low, indicating chronic energy deficiency among these groups.
Figure 3.15: Average Energy Consumption of the quintiles – 1994 and 2004
Source: CSES 2004
A statistical report prepared by National Institute of Statistics and FAO, using CSES 2004, suggests low dietary diversity, especially in rural areas. The ratio of calorie per Riel spent in rural areas is lower than in Phnom Penh, except for rice. For fish and seafood, the ratio is 1.31 in Phnom Penh and 0.31 in rural areas. For meat and poultry, this ratio stands at 0.57 in Phnom Penh, against 0.36 in rural areas. According to these figures, rural households would allocate more food expenditure to other food items than to protein sources to meet their calorie requirement. Rice and fish cover respectively 69 percent and 6 percent of calorie needs, in rural areas. With the predominance of rice in their diet, rural households can be vulnerable to food insecurity due to fluctuations of rice prices and production levels.
Seasonal variations in food consumption in rural areas closely follow seasonal variations in local food supply, particularly among poorer families or in more remote areas where the community is less integrated into wider markets. Some of the most food-insecure farming households often only have rice stocks sufficient to last three to six months of the year. Accordingly, the more food-insecure households may start being short of rice from March onwards, till the next harvest in December. Many rural households are short of food from May to August, but September to November is usually the period in which food stocks are the lowest. Inland fish is more abundant between November and early February, but processing of fish by traditional methods provides some continued fish protein throughout the year.
According to CSES 2004 data, other food items account for less than 25 percent of rural household calorie consumption. Livestock products, chickens, ducks and eggs can provide regular food supplies throughout the year but account for only 6 percent of the calorie intake. Fruits and vegetables are harvested at various times of the year in different parts of the country. On average, they make up about 8 percent of the calorie intake at the household level. The main gaps in fruit and vegetable supply are in April/May, and again in September/October. Accordingly, there are two periods in the year when rural food supply from local production can be weak, namely June/early July (the time of transplanting and weeding) and late September/October (just before the main harvest).
Household Food Security Profiling
Household Food Security and Vulnerability Profiles
Widespread poverty and vulnerability in Cambodia, combined with data constraints, make it difficult to measure the extent of vulnerability in Cambodia. Beyond the 35 percent of the population classified as poor, identifying which households are vulnerable is difficult given the lack of data. Based on per capita household consumption, a large share of the population is clustered around the poverty line, as illustrated in figure 3.16. Nearly 7 percent of households fall within a band of 10 percent above the poverty line, so if per capita consumption of these households was to decline by only 10 percent, the poverty rate would increase from 35 percent to 42 percent. Certain geographic characteristics such as living in remote areas or provinces susceptible to natural disasters provide some indication of vulnerability but are not precise enough to assign specific numbers for gauging the extent of vulnerability. In addition, because one member’s vulnerability could affect other members of a household, the number of individuals within a specific group may not capture the full extent of vulnerability. For example, having a head of household who is unemployed or disabled affects not only that individual but also increases the vulnerability of his/her dependents, which is not captured in current statistics. Therefore, only a sense of broad and relative magnitudes of vulnerability in Cambodia can be provided until additional data becomes available (WB, 2006).
Figure 3.16:. Distribution of household consumption and vulnerability, 2004
While a large proportion of the population is vulnerable to impoverishing shocks, poverty and vulnerability are particularly concentrated among specific groups. This section identifies some of the major groups—many Cambodians fall into multiple categories—and the sources of their vulnerability. It should be noted that only some of the easily identifiable vulnerable groups in Cambodia are highlighted below and this is not an exhaustive list, nor does it cover those in the wider population who share similar sources of vulnerability such as landlessness or exposure to natural disasters.
Persons Affected by War and Conflict
a) Internally displaced persons and repatriated refugees
b) People with disabilities
c) Demobilized soldiers.
Children and Youth
a) Children are vulnerable to health and developmental problems as well as to becoming victims of negative coping mechanisms.
b) Among children, orphans and street children are immediately vulnerable and have been increasing in number.
c) Levels of child involvement in work and child labor, which increase longer-term vulnerability and undermine human capital, are extremely high compared to other countries with similar levels of income (WB, 2006).
Vulnerability among the elderly is expected to gain more prominence in the coming years as the current generation of baby boomers ages.
Particularly Female-headed households and widows.
Ethnic minority groups face particular problems related to language skills, remoteness, and low population density.
In urban areas, the homeless and squatter households live in precarious circumstances.
Figure 3.17. Relative degrees of vulnerability for specific sub groups
Source: World Bank, 2006
Geographic Distribution of Food Security
The population estimate is based on a combination of the proportion of households living below poverty line and living in extreme poverty (World Bank, 2006). Out of a total population of 13.1 million in 2004, an estimated 4.6 million live below the poverty line. About 2.6 million live in extreme poverty. Using the poverty line, population estimates indicate there are more chronically food insecure people in the plains region, but the degree of food insecurity is more intense in the plateau region, according to the WFP IPC (Integrated Food Security and Humanitarian Phase Classification) classification.
Table 3.5:. Estimated Population by Province in Chronic Food Insecurity in Cambodia