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Million-tonne goal still a challenge

Million-tonne goal still a challenge

An artist’s impression of Phnom Penh’s new river port . Graphic supplied by Pan Continental

It HAS been more than two years since the Cambodian government issued a rice export policy in June 2010, aiming to export a million tonnes of milled rice by 2015. However, a shortage of capital to buy unmilled rice, known as “paddy”, together with high electricity and transportation costs, still challenge the government in achieving that goal.

Cambodia’s Commerce Minister, Cham Prasidh, said at the national assembly on rice policy in August that it required between US$700 million and $1 billion a year to buy the paddy-rice surplus from the farmers and prepare the milled rice for export. He said some paddy-rice surplus had been illegally exported to Thailand and Vietnam for milling, causing Cambodia to lose out on the work being done in-country.

Cham Prasidh said Cambodia has had more than two million surplus tonnes of milled rice ready to export each year.  “Most of our paddy rice had been unofficially exported,” he said.

“We target to export a million tonnes of milled rice. But, if we look at the figures, it is very far from the target, so we should take action against the outflow of paddy rice. Sometimes our domestic rice millers cannot find enough for their mills — that’s a difficult point which I want to mention,” he added.

In 2011, the Cambodian government set up a $25 million loan guarantee scheme to offer loans for local rice millers. Nat-ional Bank of Cambodia data shows that by the end of June this year, the Kingdom’s 32 commercial banks had lent a total of $4.92 billion, 10 per cent of which went to the agricultural sector.  

ACLEDA Bank loaned $166 million to 116,645 customers in 2011, representing 16.51 per cent of the loan portfolio, up from about 15 per cent in 2010.

A group of local rice millers said the country’s high electricity and transportat-ion costs, and fluctuating oil prices, caused Cambodia to lose its competitiveness compared to neighbouring Vietnam or Thailand. A main challenge is that Cambodia’s milled rice remains uncompetitive in global markets and is running behind the government’s export target of a million tonnes by 2015

Lim Bun Heng, chairman of the Ninth Working-Group Committee on Milled Rice Exports and chairman of Lor Rang Im-Export, said domestic oil prices and electricity costs were still high and placed a high production-cost burden on Cambodia’s rice exports.

“Our transportation costs are higher than in neighbouring countries, ranging between $50 and $60 per container,” he said. “What we want is just to be as same as our neighbours so that we don’t get any complaints from buyers and can compete in the global markets.  

“As exporters, we definitely want to meet the government’s goal.”

Kim Savuth, the managing director of Khmer Food, raised the same issue. “I want our production costs to decrease, but we can be much more competitive and still make a profit. If the government cannot help to reduce the electricity price, we still face high production costs.

Electricite du Cambodge [EdC] should consider helping local producers; they should not only make their own profit.”

Kim Savuth said 25 per cent of broken milled rice in Vietnam was sold FOB at $385 a tonne this week, while Cambodia sold at $440.

Phouy Puy, president of Cambodia Miller Associations and president of Baitong Company, said tht although the government had helped milled-rice exporters a lot in terms of export facilitation, reducing unnecessary fees and speeding up paperwork, all those issues still constrained Cambodia’s exports.

He called for all exporters to co-operate in strengthening production capacity on producing high-quality goods to meet the market needs, and also called for any help to farmers on providing technical assist-ance with their farming.  

In June of this year, the minister of commerce set up the federation of Cambodia’s milled-rice exporters, ostensibly to curb disagreements among domestic rice millers, which he said could  be a big challenge for the accomplishment of the government’s goal.

He said the establishment of the federat-ion would spur the industry to get even more harmonisation to increase their production as well as farming activities.

“We have tried to combine all of them to come together to be one association, and we succeeded. The Ministry of Commerce held a meeting to set up the Federation of Cambodian Rice Millers Export which is the single partner with the government,’ Phouy Pey said.

“This one is very different from what they used to be, because the newly established federation comprises all rice millers, exporters, paddy-rice producers, fertiliser importers, transportation companies and financial providers, as well as small rice sellers.”  

Kim Savuth, newly elected chairman of the Federation of Cambodia Milled Rice Exporters, agreed that the federation will play a crucial role in building the country’s capacity to export large amounts of milled rice abroad.  He said that he will try his best to improve the industry and to avoid disagreements among the domestic rice millers. “Now, we are preparing our international regulations to make the federation more successful—so that we can accomplish the government’s goal.”

Lim Bun Heng, the chairman of Lor Rang Im-Export, is also pleased with the newly established of federation, saying that it will  help improve the country’s milled capacity. 

In late August, Cambodia signed an agreement with Indonesia to export 100,000 tonnes of milled rice. At the same time, China agreed to import 300,000 tonnes a year from Cambodia. Cham Prasidh says he is in talks with the Phillipines on export possibilities.

Cham Prasidh says Cambodia’s status as a Least Developed Country among 49 enabled it to receive duty-free and quota-free exports from the European Union and the US.

This means  both domestic and foreign- owned companies investing in rice milling can enjoy $250 a tonne on their exports of milled rice to European markets duty free, whereas if they exported
to Thailand and Vietnam they would have to pay the $250 a tonne.

Cambodia’s exports of milled rice  dropped about 35 per cent in the first half of this year to 78,000 tonnes, compared with 120,000 tonnes during the corres-ponding period of 2011, according to the Ministry of Agriculture.

Data from the agriculture, forestry and fisheries ministry shows that in 2011, Cambodia could produce about 7.8 million tonnes of paddy rice and with a surplus of 4.34 million tonnes of paddy rice, which is equal to 2.78 million tonnes of milled rice.

To contact the reporter on this story: May Kunmakara at [email protected]


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