After more than a year of speculation on Cambodian rice exports to China, a rice exporter this week said China has granted the Kingdom permission to ship milled rice northward.
Despite a growing stack of quasi-agreements for exports, regulatory issues have plagued the prospects of tapping one of the region’s biggest markets for rice.
A green light for exports to China would be a boon for a sector that has heard little positive news this year.
“All the administrative problems are removed. It is really good news,” Sok Hach, president of Golden Rice (Cambodia) Co Ltd, said in an email.
He declined to say how the agreement was met or when exports would start.
The company sent 48 tonnes of rice to China earlier this year but the shipment was turned away at the southern China port of Shenzhen, Sok Hach had told the Post.
The rejection was a “paperwork problem on the Chinese side” and not a problem with the quality of Cambodian rice.
Deals with China and the Philippines were quickly appearing to be a last resort to the European market, which bought a majority of Cambodia’s milled rice last year.
A flood of Indian rice onto the global market in early 2012, followed by falling prices in Thailand and Vietnam, were a shot to Cambodian millers, with insiders citing large decreases in forward orders for Cambodian rice.
The price of shipping rice to Europe climbed by 50 per cent between February and April, the Post reported last week.
A continued increase in oil prices presaged no end to further jumps in logistics costs.
Regulatory issues aside, Sok Hach said Cambodia still faced tough price competition.
Even if the Kingdom’s processing and logistics costs were on par with exporting giants such as Vietnam and Thailand, China would probably import no more than 100,000 tonnes from Cambodia this year, he said.
A Chinese delegation last week signed a memorandum of understanding with Cambodia’s Power Partner Profit Group for 500,000 tonnes of milled rice, or half of Prime Minister Hun Sen’s 2015 export goal.
The MoU was one of several such informal agreements, none of which have yet to yield true exports.
Experts agreed that China’s market had huge potential for Cambodian rice exports.
“China is the long-term market for Cambodian rice to aim at, despite the fact we would still need to work harder on rendering our competitiveness in pricing,” David Van, senior manager of business development at Mekong Oryza Trading Co Ltd, said this week.
Van gave a grim outlook for the sector last week and maintained “strong reservations” about the government-set target for 2012, some 400,000 tonnes, given the prevailing prices on the global rice market.
To contact the reporter on this story: Don Weinland at [email protected]