From an insignificant tonnage of milled rice officially exported for the first time in 2008 to 60,000 tonnes in 2010 and growing exponentially to 170,000 tonnes in 2011, Cambodia at a first glance seemed to be back on the world stage of the global rice trade.
The Royal Government of Cambodia’s Rice Policy – launched in August, 2010, followed by a progress report undertaken at the end of 2011 for further recommendations – has certainly encouraged more foreign and local investments in the milling sector to enhance in-country capacity as an attempt to retain added value domestically.
One should be heartened by the increased export figures for 2011, as the growth in Cambodia’s rice exports was mainly due to circumstances under which the European Union and Russia granted tax-free status for rice of Cambodian origin.
Cambodian milled rice surely has room to improve in competitiveness compared with Thailand and Vietnam, its neighbouring giant rice producers and competitors, in the following areas:
- By working on the ability of Cambodian rice exporters to single-handedly take on substantial shipments of 20,000 tonnes with better financial ability, better port infrastructure and making use of the under-utilised waterways in this country;
- By improving corporate management of the mills to tackle, and control, actual cost at every step of the milling process and reduce substantial wastage resulting from the inadequate, antique equipment still in use across the country through the modernisation of machinery;
- By working with the relevant public institutions to rapidly create a national standard. At the moment, Cambodian rice is deprived of the ability to command better prices because the majority of overseas buyers are still wary of inconsistency in both supply and quality; and
- By entering into partnerships to raise financial resources for the procurement of all paddy rice produced every single year in Cambodia. This would avoid farmers having to sell their paddy to traders/collectors who re-export it informally to Thailand and Vietnam, resulting in a loss of added value captured in-country and leading to speculation that makes paddy prices uncontrollable.
The Royal Government of Cambodia’s latest progress report points to the need for the private sector to improve in the area of corporate management and governance.
Although local commercial banks have eased their requirements for loans to millers and exporters a little, it’s still insufficient to allow the rice sector to shift to a higher gear.
Cambodian millers and exporters must embrace a new mindset of mutual collaboration to overcome the current fragmented supply chain.
The formation of clusters, co-operatives or associations (whether informal or formal) would increase their ability to pool resources to tackle serious tonnage for shipments and learn better management techniques to control cost, thus narrowing the huge price disparity with neighbouring countries.
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