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Rice mills get in on contract farming

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Farmers harvest their rice manually in southeastern Kampot province’s Kampong Trach district at end-2019. Hong Menea

Rice mills get in on contract farming

Representative of at least 41 rice millers have expressed willingness to enter into contract-farming arrangements with agricultural cooperatives to ensure ample supplies of responsibly-sourced grains of desired varieties, as pundits voice strong support for the practice as a catalyst to unleash the export potential of the staple cereal.

“Contract farming” refers to entry into pre-harvest agreements between buyers and farmers on agricultural production with established conditions, generally regarding product types, prices, quantities, quality and other standards.

Recently-appointed Ministry of Agriculture, Forestry and Fisheries secretary of state Yang Saing Koma told BTV on February 13 that a ministry working group is on the job to determine the exact number of cooperatives that produce “seed rice” – used specifically for planting as opposed to consumption – in quantities deemed to be significant, stressing that these farmer organisations need to be strengthened and expanded.

During his visits across the country in recent months, representatives of 41 mills demonstrated their keenness to strike contracts with farmers to buy paddy originating from clear and reliable sources, Saing Koma revealed.

“The formation of a seed-rice production and distribution system is moving forward, and that will ensure that good producers have a market for farmers, which will be an important part of the rice production chain and market,” he said.

The Post could not reach Saing Koma by press time.

Chan Sokheang, president of the Cambodia Rice Federation (CRF), the Kingdom’s apex rice industry body, commented to The Post on February 14 that contract farming would by and large have “positive effects” for farmers and growers, mill owners, processors, exporters and other stakeholders.

The underlying agreements enable mills, processors and other buyers to obtain pure, top-notch rice of a range of varieties, with clear and dependable origins, as well as guarantee that farmers are able to sell their stock at reasonable prices, and possibly support technological and procedural innovation as well as the production of certain varieties, he contended.

Although highlighting the usefulness of specifying certain varieties and volumes in contract-farming agreements, Sokheang lamented that such deals between rice-growing cooperatives and local processors are still few and far in between.

Contract farming will push Cambodia’s milled-rice export visions forward, putting considerably greater volumes of clearly and reliably-sourced quality and otherwise up-to-par grains in the hands of millers and exporters, allowing for increased exports, he claimed.

“Having the information concerning the type of milled rice as well as quality assurance makes advertising to the international market easier,” he said, although noting that dynamic shifts in market demand can prompt changes in purchase orders, particularly sub-orders, posing challenges for rice millers.

The CRF chief shared that just “four or five” enterprises are considered to be “very active” in rice-oriented contract farming with agricultural cooperatives, adding that the federation is working to convince others to jump on the bandwagon.

“Through CRF coordination, there are currently about 40 mills that have signed – or are ready to sign – contract farming deals with rice cooperatives aiming to buy more than 100,000 tonnes of paddy,” he confirmed.

The CRF has set full-year milled-rice export targets for the Kingdom at 750,000 tonnes in 2023 and one million tonnes in 2025, which would constitute 17.7 per cent and 57.0 per cent increases from the 637,004 tonnes – valued at $414.29 million – recorded in 2022, which had risen by 3.23 per cent from a year earlier.

Last year, a total of 61 exporters shipped the grains to 59 jurisdictions – 288,830 tonnes to mainland China, Hong Kong and Macau; 221,504 tonnes to 25 EU destinations; 64,733 tonnes to four ASEAN countries; and 61,937 tonnes to 27 markets elsewhere.

Broken down by variety, premium aromatic rice represented the lion’s share at 277,739 tonnes, followed by Sen Kra’op fragrant (179,070 tonnes), white (153,428 tonnes), parboiled (15,781 tonnes), organic (10,963 tonnes) and glutinous (23 tonnes).


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