Logo of Phnom Penh Post newspaper Phnom Penh Post - Thai rice failure hitting Cambodia

Thai rice failure hitting Cambodia

Thai rice failure hitting Cambodia

While last year was full of good news for Cambodian rice exports, which hit a record-breaking 378,800 tons, 2014 is getting off to a much slower start.

Observers say Thailand's disastrous rice scheme is largely to blame.

Thai Prime Minister Yingluck Shinawatra’s controversial pledge to pay farmers above market rates for their rice is coming to an end this month, and it has been wreaking havoc on global markets.

Stockpiles accumulating since the scheme was introduced in 2011 have risen to record levels, and an anticipated fire sale has buyers holding out in anticipation of cheap rice flooding the market. Cambodia and other countries are taking the hit.

In January 2012, Cambodia exported 9,700 tons of rice. A year on and exports for the same period in 2013 jumped to 25,700. But in January this year, the pace has not been maintained, with only 21,500 tons leaving the country.

“Buyers are anxiously waiting to see how Thai prices could deflate further as the Thai government rice scheme is expiring this month," said David Van, deputy secretary general for the Alliance of Rice Producers and Exporters of Cambodia. "And regional exporters are monitoring whether the Thais would dump prices to unload their huge stockpile and that would impact upon the global rice trade."

A public tender last month for the sale of close to 150,000 tons of Thai government-purchased rice fetched bids of between 7 and 19 per cent below market prices, according to a January 28 report from the US Department of Agriculture.

With unrest mounting from farmers owed money, the Thai government plans to sell 1 million tons a month for the first quarter of this year, Bloomberg reported yesterday.

More rice on the market means greater competition and lower prices.

“Before, Thai rice stood at $1,169 per ton, but now, they sell for only $950, the same price as Cambodia's rice, and they tend to sell it even in lower prices to get the overstock of rice out to the market,” said Khan Kunthy, CEO of Battambang Rice Investment, referring to costs for Cambodia’s fragrant rice variety, a strong competitor with Thailand's jasmine rice.

Kuthy expects February to be another slow month for exports. The prospect of meeting Cambodia’s future rice targets, he said, is largely reliant on Thailand’s decision making.

“The growth of our rice exports is now so much dependant on the outside market,” he said.

Mey Kalyan, a senior adviser on the Supreme National Economic Council, says that short term pain is inevitable with such a large supply entering the market.

He added that for Cambodia, increased productivity and greater quality will help support growth in the longer term, once the situation in Thailand settles down.

“If we produce good products, people will buy from us,” he said.

MOST VIEWED

  • With herd immunity likely in 2022, is Cambodia ready to reopen for tourism?

    The government aims to inoculate 80 per cent of the target population by June next year, giving it a head start among regional peers to reboot the sector but first, it has to do a few things to up its game A sign on a glass

  • Quarantine still a must for all arrivals, in next Covid chapter

    Since early May, an average of five to 10 Cambodian people have died from Covid-19 a day with many others testing positive amid the ongoing community outbreak. At the same time, however, hundreds of patients also recovered a day. The first Covid-19 case in Cambodia was

  • US wants 'full access' to Ream Naval Base

    On June 11, the US embassy's Defense Attaché Colonel Marcus M Ferrara visited Ream Nava Base in coordination with Cambodian officials following the recent approval of Prime minister Hun Sen to allay the concerns on Chinese military presence at the base as raised by US Deputy

  • Jab drive heading to 5 provinces

    The government is set to vaccinate more than 1.2 million people in five provinces after finishing with Phnom Penh and neighbouring Kandal in an ongoing campaign administered by the ministries of Health and National Defence. The five provinces are Preah Sihanouk, Kampong Speu, Takeo, Kampong Cham

  • New immigration bill targets illegal foreigners in Kingdom

    General Department of Immigration (GDI) officials are discussing revisions to the new draft law on immigration to prevent foreigners from entering Cambodia illegally and to supervise those living in the Kingdom more effectively. The revisions draw wide support among civil society organisations. GDI director-general Kirth

  • Kingdom set to be a gold producer

    Cambodia will soon join the roster of gold producing countries after the government announced the commencement of commercial gold mining operations in the Okvau area in southwestern Mondulkiri province's Keo Seima district from June 21. Prime Minister Hun Sen on June 10 announced that after 14 years of