Agricultural sector insiders said relying on neighbouring markets to source raw materials for Cambodia’s agriculture products is a short-term strategy that needs to be managed.
During a discussion, last week with Vu Quang Minh, Vietnamese ambassador to Cambodia, Minister of Agriculture, Forestry and Fisheries Veng Sakhon asked that country’s help to buy paddy from Cambodian farmers in line with market prices in Vietnam.
Following the discussion, Vietnam said it will hold an emergency meeting with relevant businessmen and then submit a detailed report to the Vietnamese prime minister to encourage them to buy paddy from Cambodia at a reasonable price.
Minh said the state-owned Bank for Agriculture and Rural Development (Agribank) will review the possibilities and adjust various forms to provide credit to Vietnamese businessmen to buy paddy during harvest season and support credit loans to Cambodian businesses that lacked the capital to purchase agricultural products.
The two sides will continue to strengthen and expand comprehensive and effective contract farming practices to maintain the sustainability of partnership between producers and buyers of the two countries.
Cambodia Rice Federation vice-president Hun Lak on Sunday said the request for Vietnam to help buy paddy is positive, as the ability to buy it from local traders, drying silos and warehouses in Cambodia is still limited, leaving farmers with many challenges during harvest season.
However, he said, while the suggestion will help address the impact to Cambodian farmers from falling prices, it is only a one-time solution.
“For me, a short period of time is good because it can help solve some of the hurdles for a while, but as a long-term strategy, it is not so good."
“Cambodia should have its own specific plan by setting up a mechanism for stockpiling a great deal of paddy rice domestically to ensure the supply of milled rice processing for export after the harvest season,” he said.
According to Lak, in 2017 and last year, the private sector had invested in three large drying silos and paddy warehouses in Battambang, Kampong Thom and Prey Veng provinces.
However, he said “Drying silos and warehouses in Cambodia have yet to respond to the amount of rice production in Cambodia, and it still flows out to neighbouring countries. That is the time to help farmers sell their paddy – during the harvest season,” he said.
Currently, the price of paddy across the country stands at about 700 riel ($0.17) per kg, said Lak. He said the price fall was not exclusive to Cambodia.
Centre for Policy Studies director Chan Sophal said Vietnam is ranked second in mill rice exporters to the world market after Thailand. Vietnamese traders often buy paddy from Cambodia to mill to export abroad.
He said Vietnam is a big country with many trading partners and has a bigger market than Cambodia. Processing costs are lower, so the Vietnamese come and buy rice from Cambodians to process and package to sell in the international market.
“If Vietnam helps buy paddy [from Cambodia], that would be good, but Cambodia needs to improve itself through hard work in processing to reduce costs,” he said.
Minister of Agriculture, Forestry and Fisheries Veng Sakhon could not be reached for comment.
However, he said on the ministry’s Facebook page on Saturday that paddy prices would recover after the Chinese-Vietnamese New Year.
He stressed his belief that paddy rice prices are currently falling due to Vietnamese traders not coming to the Kingdom to make their purchases and the Kingdom lacking stockpiles and drying silos.
According to government data, Cambodia last year shipped a total of 626,225 tonnes of milled rice – down 1.5 per cent from 2017. The EU market received the largest amount at 269,127 tonnes and China 170,154 tonnes.
The EU decided to impose rice import tariffs on Cambodia and Myanmar on complaints from Italy and Spain – leaving Cambodia’s rice export sector facing more competition.
However, during a visit to China, Prime Minister Hun Sen said China has agreed to increase its quota of rice imports from Cambodia by a further 100,000 tonnes.
He said this would enable Cambodia to export rice to the Chinese market to fulfil the 400,000-tonne quota, accounting for more than 60 per cent of Cambodia’s total exports in last year.