A newly formed coalition of rice millers and exporters has raised alarm bells, forecasting the imminent “collapse” of the nation’s rice sector within two years and blaming in part “governance failure” by the industry’s apex body.
The 18-member group, whose initiative is called the Rice Industry Strategic Key Solution (RISKS), met Commerce Minister Sun Chanthol earlier this week to make a case that governance of the Cambodia Rice Federation’s (CRF) “had broken down” and the industry body was wrongly focused on long-term initiatives rather than formulating an emergency plan to protect struggling millers and exporters.
In a presentation, the group claimed that the recently signed Vietnam-EU free trade agreement, cheap rice imports from Vietnam and the ineffectual leadership of the CRF have led the industry to a breakingpoint.
It called for the Ministry of Commerce’s assistance in arranging an extraordinary general meeting of the CRF to vote on amending the organisation’s charter and bylaws “so as to salvage the sinking ship.”
The group also asked the industry body to make a detailed presentation of its expenses ahead of planned CRF elections in May.
Song Saran, CEO of Amru Rice and a member of the RISKS initiative, said the CRF was caught up in formulating long-term plans, while taking no action to address the immediate concerns of its members.
“We are trying to push for actions [to ensure] the survival of millers and exporters,” he said, “The CRF has to take action within a specific timeframe rather than only make plans.”
He acknowledged the CRF’s work since its formation in 2014, but said its accomplishments were limited and some members were deeply dissatisfied.
CRF president Sok Puthyvuth told the Post yesterday he understood the “pain” felt by some of the industry body’s members, but said cohesion and unity were needed in order to address the sector’s structural issues.
“When things are tough you’re pointing fingers, but we have a platform and a federation, and if you have concerns bring them up and we can work on them together,” he said.
One of the demands of the RISKS initiative is access to cheaper financing options. Members have requested that the government facilitate access to $500 million in soft loans at 4 per cent interest per annum.
Puthyvuth suggested that some millers and exporters were feeling the pressure from banks, which might be holding back loans, but insisted that was out of the federation’s control.
He also disputed the group’s claim that “the number of [rice] millers and exporters was reduced by half in 2015,” claiming this was not the “correct picture” and that there were in fact some millers who reported a solid financial performance last year.
“I know big rice mills that will continue to survive and there are some that are doing very well,” he said. “I don’t think it is going to happen that in two years all millers will go bankrupt.”
Another contentious issue brought up during the presentation was the import of cheaper rice from Vietnam, which the group claims prohibits local millers from competing in the market.
During its presentation, it asked the government to introduce protectionist measures, like higher duties, or place a six-month moratorium on imports.
Puthyvuth said while the CRF was working with the government to monitor these imports, it needed to ensure that local importers pay the relevant duties and taxes, evasion of which can provide a cost advantage to importers. He added a ban on imports was not the right solution in this situation.
“That’s not going to work and I don’t endorse that. There are other ways to do it, but not that,” he added, without giving any further details.
Following the meeting, Chanthol asked the RISKS initiative to provide a detailed report with evidence to back their claims, which he said would be presented to Prime Minister Hun Sen for further action.
Mey Kalyan, senior adviser to the Supreme National Economic Council and architect of the country’s rice policy, said that while times were tough for the rice sector, given the low margins and price pressures, millers focused on producing fragrant rice were able to turn a profit.
He added that Cambodian rice firms were in part responsible for bringing down prices, given that they were competing with each other instead of working together.
“They compete among themselves with the price,” he said. “This competition is bringing down the price and in the end it’s a loss for them.”
Yang Saing Koma, former president of agriculture organisation CEDAC, said the problems in the sector extend beyond millers and exporters to smallholder farmers.
“It’s an injustice for farmers in this competitive market, where they do not get fair loans and don’t have much involvement with the market,” he said.
Koma added that it was important for farmers to build a strong association so their issues could be heard on a governmental and industry level.
“It has almost turned normal for no one to pay any attention to them,” he added.