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Rice competitiveness a worry

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An employee points out a stack of rice for an order at a rice warehouse in Phnom Penh. Eli Meixler

Rice competitiveness a worry

The executive committee of the Cambodia Rice Federation (CRF) will meet with two ministries today to explore the possibility of reducing the logistical and energy costs of transporting rice, a key factor to keeping Cambodian rice exports competitive compared to neighbouring countries, a CRF official said.

The meeting is being held with the Ministry of Public Works and Transport and the Ministry of Mines and Energy, said Kim Savuth, head of the CRF’s cost competitiveness executive committee. Savuth added that high energy and logistics costs were some of the main reasons why Cambodian rice remained more expensive than that of its neighbours.

“Buyers like to say that rice from Vietnam is cheaper than rice from Cambodia. That is why we ask why Cambodian rice becomes more expensive after milling when the paddy rice is cheap,” Savuth said.

“Besides the higher cost of transportation, the cost of goods transferring at the port is also higher comparing to neighbouring countries. We have sent a request to the Ministry of Public Works and Transport for intervention to cut prices at the port and for some transporting companies to at least [have prices] comparable to neighbouring countries,” he said.

During the meeting with the Ministry of Mines and Energy, the possibilities of buying power at a wholesale price will also be discussed, added Savuth.

After the founding of the CRF in May 2014, four executive committees working on financial access, increasing rice productivity, cost competitiveness and marketing were created to get rid of trade barriers and help make Cambodia’s rice industry more competitive.

Vasim Sorya, director general of administration at the Ministry of Public Works and Transportation, said yesterday that intervention on rice prices is outside the ministry’s authority, although he said the government was still looking at ways to keep the country’s economy competitive.

“To intervene in prices is out of the ministry’s authority and power. In the case of private companies, what we can do is send a request for them to consider [cutting prices],” he said.

“In the case of a state company, such as the port, there is a department which holds the authority on setting prices, but they are also responsible for generating income to support national budget.”

Ty Thany, executive director at the Electricity Authority of Cambodia, said the government already has a strategic plan to reduce energy costs step-by-step, although it will take more time than what the private sector has requested.

“For example, the government has planned to subsidise electricity costs for farmers who need to pump water into their rice field by the year 2018,” he said.

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