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Oversupply hits sugar cane

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A sugar cane field in Kandal province’s Saang district last week. Farmers and buyers are blaming the low prices this year on excess supply. Photo by: Heng Chivoan

Kandal Province
AN excess supply of sugar cane is depressing profitability this year following a strong 2010, according to farmers and buyers in Kandal province.

Prices for a 12 stalk bundle of the best sugar cane last year fetched 22,000 riel, though this year the same quantity is worth just 2,000 riel, said Soy Samrith, a farmer in Kandal’s Saang district.

He added prices were at the lowest he had seen in his 20 years a farmer.

“I’m very worried about sugar cane being so cheap because I spend 2 million riel (US$497) to grow it, but right now I’m taking in only 1 million riel from selling it,” he said.

Another Saang district farmer, Tea Kemakara, said that high prices last year had led to a glut of the crop being planted.

He said that of the 30,000 stalks of sugar cane he grew this year, just 30 percent of it has sold – down from 70 percent in the same period last year.

“There’s so much sugar cane being grown right now that supply is up and prices are down,” he said.

Tea Kemakara added that the area under plantation will likely drop next year given how much stock sugar-cane farmers still had on hand.

Noun Simona, director of the Department of Agriculture, Forestry and Fisheries in Kandal province, said that Saang grows more sugar cane than any other district in the province.

As a result, he is “very worried because farmers depend on selling sugar cane to support their families. And the low price can affect their standard of living.”

Still, he doubted many farmers would give up growing sugar cane, as it is their primary means of making money.

The losses extend up the supply chain past farmers as well.

Song Tech, a buyer in Saang district who distributes sugar cane at Deumkor market, said the overabundance has cost his business US$3,000 so far this year. “As far as I’ve seen, all buyers are losing out,” he said.

He blamed the high prices of 2010 for attracting too many farmers to the crop, which in turn affected this year’s supplies and price level.

Hor Eng was one of those people drawn to sugar cane farming, following last year’s prices.

“I saw that last year sugar cane prices were high, so I decided to grow it. But now the price is low and I have yet to sell my entire crop,” she said.

Yang Saing Koma, President of the Cambodian Centre for Study and Development in Agriculture, said that sugar cane has proven to be a popular crop in Prey Veng and Kampong Cham provinces as well as Kandal.

That has contributed to an overall glut of supply across the country, further hurting prices.

He also said that atypical weather for the Kingdom has weighed on demand.

“This year the weather wasn’t that hot, with it raining in the early season, so demand for sugar-cane juice went down,” he said.

According to Yang Saing Koma, the government has pushed for the building of a sugar cane processing factory in order to create a market for the product and reduce imports from overseas, as a way to help farmers.

Meanwhile, international sugar prices have slumped 34 percent this year, as concern eased that global supply will fail to keep pace with demand.

Raw sugar for July delivery slipped 3.2 percent to 21.35 cents a pound in trading last week on ICE Futures US in New York.

On February 2, the price had reached 36.08 cents, the highest price seen since 1980. ADDITIONAL REPORTING BY BLOOMBERG

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