Cambodia’s beleaguered rice sector has convened an emergency meeting to tackle falling rice exports and help rice millers currently in financial doldrums due to severe shortage of funds to buy harvested rice from farmers to be milled for export.
Hean Vanhan, deputy general director of the Agriculture Department, told the Khmer Times that the top agenda in the emergency meeting was the issue of falling rice exports.
While not going into details, Vanhan said rice production was down due to the drought earlier this year and this contributed to the shortfall of paddy rice supply for millers to process for export.
Vanhan also blamed the slowdown in international markets and added: “The flow of cheaper priced rice imported from Vietnam and Thailand made problems bigger.”
“The meeting focused on strengthening the CRF [Cambodia Rice Federation] and drew up an action plan on how we can work together to tackle this crisis,” he said.
The country’s rice exports fell by 6.9% from 312,317 tonnes in the first seven months last year to 292,277 tonnes in the same period this year, according to a report from the Secretariat of One Window Service for Rice Export Formality.
In June, the government agreed to make out loans of between $20 million and $30 million to help rice millers purchase rice from farmers after the harvest this November to store in warehouses and process them for export. But two months later, none of the loans have been made and rice millers are becoming very anxious.
Hun Lak, CRF’s vice-president, told the Khmer Times the current crisis in Cambodia’s rice sector was caused by domestic and external market factors.
“We spent the whole morning talking about this with the Agriculture Ministry. The external factors are falling international markets for rice and the flooding of cheaper priced rice from neighbouring countries. The domestic factors involve lowering rice production costs, amidst lower supply of paddy rice for milling,” said Lak.
Lak pointed out that high electricity rates were eating significantly into the production costs of rice millers.
“We are trying to find ways to lower the cost of electricity. We want the electricity rate to be reduced to less than 400.60 riel (10 cents) per kilowatt hour for the agricultural sector,” he said.
Residents in rural areas pay higher electricity rates than those living in town, who pay 20 cents per kilowatt hour. In comparison, farmers in Vietnam pay about 10 cents per kilowatt hour.
Lak said Cambodia needed to learn from its neighbours on how to lower rice production costs, despite falling exports.
“When we look at Vietnam and Thailand, we see that they have lower production costs than us. They can lower the price of their rice, when global prices are depressed, and still survive. We, however, seem to have a problem with that,” he said.
Lak said the meeting also wanted to see better inter-ministerial cooperation to tackle the country’s rice sector crisis.
“We [CRF] want all the ministries from agriculture, mines and energy, commerce, water resources and public works to be involved. Let’s all work together,” he said.
In March, rice millers and exporters wrote to the government urging intervention to prevent Vietnamese companies from snapping up high-quality Cambodian rice and flooding the Cambodian market with low-grade grain.