Logo of Phnom Penh Post newspaper Phnom Penh Post - Increased rice stockpiles won't boost food security: analysts

Increased rice stockpiles won't boost food security: analysts

Increased rice stockpiles won't boost food security: analysts

7-rice.jpg
7-rice.jpg

TANG CHHIN SOTHY/ AFP

Sacks of rice are being added to Cambodia’s stockpiles, but the government-supported buy-up is unlikely to be enough to ensure generous subsidies in the case of soaring global rice prices, analysts say.

T

he government’s $10-million rice buy-up announced last month in a bid to boost stockpiles of Cambodia’s staple food will help curb wild price fluctuations like those experienced by the market earlier this year, when rice spiraled to more than $1 a kilogram, according to analysts and economists.

But the measure will do little to ensure long-term food security, they say, adding that the amount will not be enough to pay to keep Cambodia’s rice farmers from selling their harvest to overseas markets instead of local millers.

A total of $8 million has been loaned to the state-owned agricultural company Green Trade and the National Cambodian Rice Millers Association (NCRMA). Each received loans of $4 million in April, with an additional $2 million available to the rice millers on request, said Hang Chuon Naron, secretary general of the Ministry of Economy and Finance.

The figures represent an increase from the $6 million put aside last year for rice stockpiles, which played a crucial role during price spikes earlier this year as the government released surplus grain to the market at subsidized prices.

A ban on rice exports ordered by Prime Minister Hun Sen in late March is set to expire at the end of this month, further testing government efforts to keep local rice prices stable.

The measure was put in place as rice selling for some $500 a ton – twice the price during the same period last year – was flowing into markets in Cambodia’s neighbors Vietnam and Thailand.

The money will be used to buy rice and build warehouses that will allow for rice to be kept in storage across the country, said NCRMA chairman Pu Puy.

But some say the amount will not prevent the loss of rice to overseas markets.

The money was “a small amount – not enough,” said Yang Saing Koma, president of the Cambodian Center for Study and Development in Agriculture.

“The dry season harvest, according to data from the government, will be more than one million tons. So that comes to more than $200 million,” Koma said, adding that while the government spent just $6 million on stockpiling rice in 2007, rice prices more than doubled during the same period, contributing to the outflow of rice stocks to foreign markets.

Following the demise earlier this month of major rice exporter Thailand’s proposal to create an international rice cartel, the Organization of Rice Exporting Countries (OREC), Koma said small, impoverished countries like Cambodia needed to look inward rather than abroad to fulfill their food security needs.

“The economic benefits [of OREC] were not clear to me. Maybe they just wanted to have some power, to control the rice market,” he said.

“It would have interfered in the system of the free market economy,” he said, adding that the cartel would only benefit the major exporters.

Another analyst, Kang Chandararot, head of the economics unit at the NGO Cambodia Institute of Development Study, said he supported a continued ban on rice exports.

“This policy could keep the price of rice stable,” he said, but added that he did not know whether the proposed financial increase for rice stocks would aid in medium-term food security.

“Whether this is a sufficient amount, I cannot say,” he said.

Cambodia produced an estimated 3.6 million tons of milled rice in 2007, according to government figures, about two million of which was needed for domestic consumption.

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