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Despite loss of duty-free status, Kingdom’s rice exports see 6% increase

Content image - Phnom Penh Post
A worker drags at a bag of rice inside a rice mill in Phnom Penh. Hong Menea

Despite loss of duty-free status, Kingdom’s rice exports see 6% increase

Despite losing its duty-free export status in the EU, the Kingdom’s rice exports saw a six per cent increase in the first quarter of this year compared to the same period last year, according to figures released by the Secretariat of One Window Service for Rice Export Formality.

Industry insiders said the increase is due to a rise in exports to China which offset the dip in EU sales.

The Secretariat’s report showed that rice exports in the first three months of 2019 reached 170,821 tonnes, a six per cent increase on the 161,115 tonnes exported in the same period last year.

Cambodia Rice Federation vice-president Hun Lak attributed the rise to new quotas implemented by the Chinese government that allowed the importing of up to 400,000 tonnes of tariff-free rice from Cambodia.

“The rise of exports is a result of China’s increased quotas, which encourage exporters to focus on the Chinese market,” Lak said.

Prime Minister Hun Sen met with Chinese President Xi Jinping during a four-day visit to Beijing in January, saying Xi had agreed to import 400,000 tonnes of rice from Cambodia this year as part of the plan to increase bilateral trade between the two countries to $10 billion by 2023.

Content image - Phnom Penh Post
Chinese traders looking at Cambodian rice at an expo in Nanning, Guangxi Zhuang autonomous region. CHINA DAILY

However, Hun Lak said the EU market remains stable because there is still consumer demand for Cambodian rice, even if exports to the EU do not actually increase in the near future.

Cambodia’s rice exports had decreased for nearly two years despite the EU not imposing the duty, and insiders suggested this was due to fierce completion in the international market.

The Cambodian rice sector lost its duty-free export status to the EU on January 17 this year.

Customs duty to the EU for this year stands at €175 ($198) per tonne. This will be reduced to €150 next year and to €125 in 2021.

As a result, the sector will be forced to pay about $53 million this year, based on the amount of rice the Kingdom exported to the EU last year.

However, Amru Rice (Cambodia) Co Ltd chairman and CEO Song Saran said the Kingdom’s rice exports to the EU may even increase.

“The increase in exports is because of the Chinese market. But, if we can retain the EU market, the rate could increase by more than 10 per cent. We are grateful for the Chinese market, as it helps keep the price of paddy stable for farmers,” he said.

China imports more Cambodian rice than any other country and is the second largest buyer after the European bloc.

Last year, Cambodia exported 170,154 tonnes of rice to China, while exports to the EU totalled 269,127 tonnes. The Kingdom exported 626,225 tonnes of rice last year, down slightly from 635,679 tonnes in 2017.

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