Cambodia’s rice sector has experienced some setbacks as a result of drought and neighbouring competition this year. As 2015 comes to an end, Cambodia’s rice sector is recovering from these obstacles and is experiencing some improvements. The Post’s Cheng Sokhorng sat down with Song Saran, CEO and president of Amru Rice (Cambodia), to discuss the current condition of the rice sector and its future.
In light of the delayed rainfall and drought experienced in many parts of the country, how do you see this season’s rice harvest shaping up?
Rice farming this year has suffered as a result of the late rain and climate-related issues. This affected mainly two types of paddy, both of which take at least five months to harvest. But as a result of the recent rainfall, I think this year’s rice crops will survive and we could see some gains made in the yield. Although we do not know how much we will harvest by the end of the year, we know that it cannot reach 1 million tonnes of exports.
What is our prospect of achieving this target in the future?
We will still not be able to export the target of 1 million tonnes in 2016 and 2017 if we cannot handle all problems that hinder our ability to compete with other countries. Cambodia has the capacity to produce 2 million tonnes of milled rice for exports, but there is only market demand for low quality and low price, therefore it is difficult to compete with Thailand and Vietnam.
Cambodia was knocked from its top spot as producer of the World’s Best Rice last month by a Californian variety at the annual World Rice Conference last month.
What were your impressions about the contest and results?
Cambodia was runner-up to the US, accompanying Vietnam in the final round. I do not view this as a negative result because a round-grain rice was ranked as number one in the world for 2015 and Cambodia cannot grow this kind of rice. Cambodia has the best quality jasmine rice, which is different from the California rose rice, so I feel as though this result had no impact on Cambodia’s rice market. In the contest we did not use Phka Romduol rice, which is our country’s top-ranked variety. Instead we used fragrant rice, which is number two or three in our country. So we are still proud that our lower-ranked fragrant rice made it to the
Cambodia recently renewed its 100,000-tonne rice contract to supply China. What does the deal mean for the sector, and were you disappointed that the quota was not expanded as requested?
China had an agreement to buy 1 to 2 million tonnes of rice from Thailand for $40 to $50 per tonne cheaper than Cambodia’s rice, so China gets more of its rice from Thailand than Cambodia. However, even though Thailand has a lot of rice in stock, it is lower quality than rice in our country.
China buys our rice not only because of its quality, but because of its [close relationship] with Cambodia. However, I believe that if Cambodia lowered its price of rice a little bit, China will order more than 100,000 tonnes. Exports of 100,000 tonnes of rice will start on January 1.
By the way, our government also signed an MoU with Indonesia in 2012 to supply 100,000 tonnes of rice per year. However, we lost this market opportunity because the price of our rice was higher than other countries, such as Thailand and Vietnam. We will discuss opportunities and prices with Indonesia in 2016. I feel optimistic that with the cooperation of Indonesia and the Philippines we can reach our target of 1 million tonnes of rice exports in the future.
Some rice millers have claimed that access to finance is the biggest obstacle to realising the export target of 1 million tonnes per year. Would you agree?
I recognise that finance is a problem. Some rice millers rely on financial assistance from private banks, but the private banks will not lend them money because they view the rice millers as a risk. As a result, rice millers are only able to receive half of their requested loans after giving their land or other assets as collateral to the banks. For example, to obtain the $6 to $7 million needed to purchase paddy rice, the rice miller must have land or a house that costs at least $14 million.
Rice millers buy enough rice stock for two to three months of milling and then stop milling because they run out of money to buy rice stock. This challenge, as well as transportation fees, port fees and electricity, makes our paddy rice not able to compete with other countries that offer a lower price.
Another problem we faced this year is that rice from Vietnam was often mixed with our rice, which put some of our millers out of work. The government should guarantee loans to any rice miller that has good credit, which offers the possibility to expand their business and increase rice exports.
This interview has been edited for length and clarity.