The Unexpected Winners In The Oil And Food Crunch

High oil and food prices are a double blow no nation can dodge entirely. Even oil states like Iran are seeing food-price protests. But there's a small class of farm-and-gas exporters for whom the dual spike is more opportunity than threat. Canada, Brazil, Vietnam and Thailand are all enjoying the windfalls, and even war-tattered Cambodia is now reimagining its future. It's "the only country in the world that has oil and gas reserves that are still untapped, as well as land available for agriculture," says Marvin Yeo, who left the Asian Development Bank to start one of Cambodia's first venture-capital firms.

Cambodia's hard-to-access oil and gas fields had been isolated for decades by low petroleum prices and the posttraumatic stress of the Indochina wars. But with oil at $125 a barrel, few fields are too risky, and Chevron, Cnooc, China Petrotech and Total are scrambling to negotiate exploration contracts—even though no one is quite sure yet how big the fields are. In March, the Cambodian National Petroleum Authority estimated the size of Chevron's field, which covers part of one of the country's six promising oil basins, at 500 million barrels and said the oil could flow as early as 2011.

The IMF estimates that Cambodia, with a GDP of only $8.4 billion last year, could be earning $1.7 billion in energy revenue by 2021.

Of course, oilfields pump out lots of cash but few jobs, and can be a development curse. So Cambodia's farm potential gives it an advantage over other emerging petrostates like East Timor and Papua New Guinea, and Commerce Minister Cham Prasidh wants to triple exports of milled rice to 5 million metric tons in the coming years. In a nation where 60 percent of the land is still forested, and most farms have neither irrigation nor electricity, the potential to raise both output and yield per hectare is huge. "Now we see rice as gold," says Cham. "We have to revisit our strategy."

All Cambodia needs is money to invest, and that's coming. Foreign direct investment, led by China and South Korea, reached a record high of $2.6 million in 2006, with 20 percent slated for agriculture. KFC just became the first fast-food chain to debut in Phnom Penh, where the first skyscrapers are under construction and where officials plan to open a stock market next year. Contrarian investor Marc Farber says Cambodia is finally poised for "relatively strong growth" after "20 horrible years." But with foreign currency pouring in, the government was recently forced to tighten the money supply to control rising prices. The big threat for nations poised to exploit global commodity price inflation is, ironically, local inflation.