After two promising months, Cambodia’s rice exports fell by 14 per cent year-on-year in March, according to new data by Ministry of Agriculture, sparking fears amongst rice millers that export shipments would further decline without adequate financial backing.
January and February rice export totals saw double-digit year-on-year growth, but March exports fell to 66,275 tonnes, compared to 75,867 tonnes in March 2015, the data shows.
Rice millers said yesterday that the drop was evidence that the industry is struggling with the cost of production, high electricity bills and a lack of finance to purchase and store paddy rice.
Taing Chhung Ngy, director of market promotion at rice exporter LBN Angkar (Kampuchea), said that March’s sub-par performance was just the first indicator that the sector’s growth was decelerating.
“The decreasing amount of rice exports in March shows that the issues that rice millers and exporters have recently brought up are real challenges,” he said, referring to an action plan submitted by the CRISIS (Cambodian Rice Industry Survival Implementation Strategy) group last month.
In its nine-point plan, the group proposed solutions to tackle issues that threaten the future of Cambodia’s rice sector, specifically a 100,000-tonne limit on rice imports from neighbouring countries and access for miller to $250 million in soft loans to support their operations.
“[Rice exports] will keep decreasing if the issues are not resolved,” said Ngy, adding that exporters are cash-strapped and unable to compete with their regional peers.
Chray Son, deputy director general of Capital Foods and a member of the CRISIS group, said that millers and exporters are also feeling the implications of drought and delayed rains.
“We do not have enough money to buy the paddy rice to stock in the warehouse, so it is a challenge for us to compete,” he said.
“The government should provide money to buy paddy rice and stock it in order to sell it to the rice miller.”
While last Thursday the government agreed to cut the value added tax (VAT) on imports of rice milling machinery and step up border patrols to crack down on illegal rice imports, there has been no agreement on the facilitation of $250 million in soft loans to proposed by the CRISIS group to ease the financial burden on millers.