Logo of Phnom Penh Post newspaper Phnom Penh Post - Slow outlook for 2012 rice exports

Slow outlook for 2012 rice exports

Slow outlook for 2012 rice exports


Rice being milled in Cambodia in 2009. The high cost of milling is one factor experts say that is holding back the industry. Photograph: Sovan Philong/Phnom Penh Post

Rapidly increasing logistics costs and low regional rice prices would hinder Cambodia’s rice-export target this year, with one expert saying that milled-rice exports could fall to half of last year’s shipments.

The cost of shipping rice to Europe climbed by more than 50 per cent between February and April, and have continued to rise, experts said.

While logistics costs for regional rice producers have also increased on rising fuel prices, Cambodian rice reached Europe this month at a US$200 markup per shipping container over those from Thailand and Vietnam.

Coupled with rice prices that are up to $50 higher per tonne than the two neighbours, Cambodia’s prospects for meeting government-led export goals this year could fall flat.

“Honestly, when I see the agriculture minister claiming that Cambodia will export 400,000 tonnes of rice this year, I just laugh,” David Van, senior manager of business development at Mekong Oryza Trading Co Ltd, said yesterday.

“If the current conditions continue, we would be lucky to export slightly half of what we exported in 2011,” he said.

Official figures put last year’s exports at about 173,000 tonnes, the vast majority of which went to Europe.

In early April, Minister of Agriculture, Forestry and Fisheries Chan Sarun said Cambodia would more than double its milled-rice exports to 400,000 tonnes this year.

Regional exporters once viewed Thailand and Vietnam as primary competitors for the European market.

But as oil prices rise, euro zone buyers are looking into their own backyards.

Even with tax-free treatment, Cambodian rice was more expensive this month than rice from Italy, Europe’s biggest rice producer, Khmer Foods Co general director Kim Savuth said yesterday.

Adding to the fuel cost was the end of a pricing war between shipping companies in the region, Kim Savuth added.

Fierce pricing competition last year had greatly reduced logistics costs, he said.

Khmer Foods rice shipments between March and the time of reporting had fallen compared to the same period last year, Kim Savith said.

The company saw year-on-year growth in rice exports between January and March.

Several other factors will keep European rice buyers domestic, Van said.

Unfavourable exchange rates between euros and dollars, quick transportation time and a 30 to 90 day credit term would make purchases from Italy, Spain and Greece a preference, he said.

Although Europe’s tariff-free treatment for Cambodian milled-rice has help boost trade, Van said some Europe buyers found the documentation process difficult.

Logistics cost would continue to hamper Cambodia’s rice trade in 2012, Van said.

“The prices have gone sky high, and I believe the price will continue to rise this year. Shipping companies are hedging their bets on the assumption that oil prices will continue to rise,” he said.

Cambodian exporters haven’t put all their money on Europe.

Official talks with the Philippines and China were hoped to offer an alternative to the distant European market, exporters said this year. In March, rice exporter Mega Green Imex Cambodia said it had received a 50,000-tonne order that had been brokered by the Philippine government.

“Cambodia should understand that the biggest market for rice is in the Philippines and Indonesia,” the company’s Outh Renne told the Post at the time.

Other experts agreed. But Sok Moniroth, an agricultural business advisor at Agricultural Development International, said rice exports to the Philippines were still “far off”.

“The Philippines has the largest potential for Cambodian rice but until now there have been no agreements because the price is still too high,” he said.

Shipments to China last year seemed close after the announcement of several memoranda of understanding between Cambodian millers and Chinese companies.

Actual exports, however, have yet to materialise.

Cambodia’s first rice exports to China failed to pass Chinese inspections earlier this year, the Post reported.

Golden Rice Co Ltd Sok Hach said paperwork problems had held up the 48-tonne shipment, but that Cambodian rice would soon “flood the Chinese market”.

Experts, officials and insiders have long held that the high price of milling rice, along with logistical bottlenecks, would hold back Cambodia’s agriculture sector.

To contact the reporter on this story: Don Weinland at [email protected]


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