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A man stacks bags at a rice warehouse in Phnom Penh late last year. Rice industry experts say transportation a
A man stacks bags at a rice warehouse in Phnom Penh late last year. Rice industry experts say transportation and logistics costs are one reason why Cambodia’s rice export industry remains uncompetitive. Eli Meixler

Costs thwart potential exports

Following Cambodia’s loss of a hefty Filipino rice tender to Vietnam last week, industry insiders say logistics and production costs are hampering the competitiveness of the Kingdom’s rice exports.

Cambodia lost a 100,000-tonne tender for the fourth time running after its final price of $455.50 per tonne came in way higher than the Vietnamese company’s final $416.85 per tonne deal, itself only marginally lower than Thailand’s $417.

The higher prices begin at the local level, said Khan Kunthy, head of BRICO, a rice miller established in 2013.

Gathering the rice still requires manually loading rice bags into trucks, while there often aren’t enough warehouses to store all the rice collected during the peak harvesting season from November to January, he said.

“It’s more labour intensive – we have to pay for the cost of the bag, the labour. So productivity is very low,” he said.

Poor road quality makes transportation to warehouses and eventually to port significantly slower, he added, while high energy costs push prices up further during the initial milling process.

“We don’t have very good infrastructure,” he added.

But the increased costs don’t end there. Corruption and red tape in the process to get exports approved remain a problem, said Nuon Ratana, sales and marketing manager at RDL Logistics.

“Some officials in the government charge under the table to accelerate the process,” said Ratana. “If we don’t pay extra money, the government official will delay the process.”

A lack of logistical inventory also weighs down the supply chain.

Song Saran, president of Amru Rice and board member at the Cambodia Rice Federation, said obtaining empty containers to ship the rice can occasionally be problematic.

When the Sihanoukville Autonomous Port – from where Cambodia’s rice is exported – doesn’t have enough containers, it sometimes brings in some from the Phnom Penh Autonomous Port and charges rice exporters for two containers instead of one, Saran said.

“If it’s only one container, why charge two times?”

Saran said the Sihanoukville port agreed to end the double-charging last week, and that the issue only affected a “small percentage” of containers.

Nevertheless, the container problem added on to a bevy of other costs, such as terminal entrance fees which stand at $130 per container in Cambodia compared to around $80 in Thailand or Vietnam, Saran added.

Mey Kalyan, senior adviser to the Supreme National Economic Council, said the government was working on improving transport and further “rationalising” the rice sector by focusing on higher-margin varieties, such as jasmine rice.

Although agreeing that export costs were high compared to region, Kalyan said the loss of the Filipino rice tender was in large part due to the Phillippine’s traditional reliance on Vietnam for large quantities of cheap rice.

Kalyan added that stubborn global rice prices – which have not budged significantly since the global commodity boom ended in 2008 – further held back profitability.

“The prices are stable, but the cost is higher.”



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Par's picture

Solution for rice logistics in Cambodia had been address to Ministry and Rice Association by World bank. For every tons of Rice export out of cambodia will subject to USD$40-60/tons Logistics cost. ie.
Truck 20'container from Dry port in Phnom Penh to Sihanoukville is approximate $300/20'container which is $15/tons. Exray container charges $80/cont. is $4.00/tons. Other formalities by authority ect. which will be add on to FOB price.

Follow the guide line from World bank seminar and implement will help resolve the problems. Every country VN, TH will have rice in their storage warehouse ready for sales and inspection. None of Rice exporter in Cambodia have Rice in stock for sales
Logistics transport rice 100000Mt. will need 5000 20'container (20tons/cont) or 4000-5000 truck to transport via road. You need storage whse right by the river where you can shipped goods out country. Solution had been address please implement.

vandavid's picture

I couldn't concur more to what is being said here and found very amusing such statement from our CRF saying "we know we are more expensive" but then again inadvertently, by participating in a lost in advance tender and to the detriment of our own reputation, CRF has simply helped to push up VN bid to clinch the deal. One does not need to "physically" go to Philippines to learn the mechanism of such tender as it's been on every year and studying carefully all past tender documents would already tell you that Cambodia logistics is not up to int'l norm to compete in such tenders only meant for "Big League" which we are far from being right now. Strengthening our own capacity in-country before we go out to compete should be the focus. We are barely crawling and here we want to gallop in a horse racing event...

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