Over the past year, we have repeatedly heard some European countries – particularly Spain and Italy, who are leading the pack – express concern over a sudden increase of Cambodian rice imports into the European Union. This surge, they say, has distorted the market, creating unfair conditions for those countries exporting rice within the EU.
More recently, Italy returned to the forefront, making noise and pleading for the EU to remove Cambodia from the Everything But Arms scheme, under which all imports to the EU from states on the UN’s list of least-developed countries are duty-free. Italy’s concern has been picked up by the media, despite the fact that the country has yet to officially lodge a complaint with the EU.
It would be good for all parties, especially the EU, to have the facts stated clearly.
1. General rice imports into the EU from Cambodia have not increased as much as statistics for the full year of 2013 might suggest. While the amount of rice from Cambodia did see an increase, imports from elsewhere, such as Thailand, decreased, thereby enlarging Cambodia’s presence. Cambodian rice hardly distorted the market as certain southern European countries claimed.
2. There are some varieties of rice that cannot be grown in Europe, such as jasmine rice. I believe such varieties should not be included in any complaint that suggests Cambodian rice is hurting Italian growers and millers. The only “jasmine” type grown in Italy produces a small crop of a few hundred tonnes a year, which is negligible.
3. The managing director of Italy’s National Agency for Rice (NAR) reportedly criticised the new Common Agricultural Policy (CAP) for European Union member states, saying that it has failed to protect Italian and other European rice farmers from foreign competitors. The NAR managing director said the new CAP sets the intervention price – the price at which the European Commission purchases paddy rice from farmers – at €150 ($205) per tonne. This, he said, is very low and does not cover production costs, which are about €320-€330 per tonne. He also said that, since its introduction, the intervention price has never been set at an appropriate level. Also, the European Commission has specified that it may increase the intervention price if the quality of rice received is different from the specified quality.
I imagine that the resistance Cambodian rice is receiving from the Italian rice industry can be traced to CAP. Its reform is changing the structure of EU support for farmers. In the case of Italian rice farmers, this means they will receive less funds per hectare than previously. This makes Cambodian long-grain rice more competitive, which makes Italian rice producers nervous.
4. That the Italian rice industry lobbies to prevent Cambodian access to the EU market is highly unfair in light of the fact that Italian rice farmers receive substantial subsidies. The EU provides hundreds of euros per hectare annually to Italian rice farmers for keeping the production of paddy and rice fields in operation. These are the very farmers lobbying against Cambodian rice, which is not subsidised in any way by the Cambodian government. The government here does not provide a yearly cash boon to rice farmers, it does not subsidise in any way the credit system that finances new crops and it does not provide subsidies for the cost of agricultural machinery and equipment.
To its credit, the Cambodian government has only intervened to ease some logistical and documentation costs to increase local farmers’ competitiveness within the regional rice industry.
5. Italian farmers are complaining about one product that they say they cannot compete against: Cambodia’s long-grain white rice. It is worth noting that Italian farmers have been quiet about other rice varieties that have been successful in EU markets: arborio, medium-grain varieties and round grain varieties (in general, japonica). This is because Cambodia offers no competitive threat for these types of rice. (However, soon – say in one to three years – Myanmar will start to export more japonica varieties to the European Union, and then Italians will surely raise a fuss again).
6. According to a World Bank report, in 2013 paddy occupied 75 per cent of cultivated land in the Kingdom. Rice production, processing and marketing were estimated to employ three million people, about a fifth of the country’s population. In the past decade, Cambodia’s poverty rate has dropped sharply, from 53.2 per cent in 2004 to 19.5 per cent in 2013. Half of this amazing reduction has been attributed to the increase of rice production, higher rice prices and higher farm wages. That is exactly the purpose of the EBA status granted by the EU – eradicating poverty and improving farmers’ standard of living.
Cambodia has always strictly adhered to the terms and conditions of the EBA agreement and expects the EU to continue to reciprocate so long as the Kingdom is still considered a least-developed country.
David Van is acting secretary-general of the Cambodia Rice Federation.