The Staple of Life

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A RICE FARMER IN BATTAMBANG PROVINCE ABOUT TO PLANT HIS SEEDLINGS

Cambodia’s rice has a global reputation for quality, having scooped consecutive titles as world best. However, as the regional rice war steps up a gear, will the country be able to cash in on its undisputed pedigree?

BY MARISSA CARRUTHERS

Rolling green paddy fields, sacks spilling over with rice and menus crammed full of various rice dishes are a common sight across Cambodia, so it’s little wonder that rice is big business in the Kingdom. But as competition grows fierce from rice rivals across the region, the country is having to up its game in the market to come out top.

With rice being a staple in the Cambodian diet, a vast number of families living in rural parts of the country grow their own rice. Families, particularly those in outlying provinces, rely on agriculture to survive, tending to small paddies to produce their own rice stocks for consumption throughout the year.

In 2014, the country produced 3.5 million tonnes for internal consumption. However, it exported an additional 387,100 tonnes – a 2 percent increase on the tonnage shipped during the previous year, according to figures from the Ministry of Agriculture.

Europe was the country’s largest export destination, with 66 percent of rice landing there. ASEAN countries made up 15 percent, China 13 percent and a variety of other countries the remaining 7 percent. In Europe, France and Poland were the largest buyers while Malaysia made up 80 percent of ASEAN members – a factor put down to the country’s rapid development from agricultural subsistence to corporate hub.

Despite the rise in Cambodia’s rice export, the industry suffered a blow to its profit margins, and concerns have been raised about the knock-on effects yield volumes and pricing in other nearby countries, such as Thailand and Myanmar, have.

The high export rates to Europe are due to a subsidy agreement with Cambodia that offers no tax or quota restrictions. However, since Myanmar opened up, it now enjoys the same privileges, adding to the mounting competition Cambodia faces. Its proximity to China – a country that Cambodia is quickly building rice export ties with – is also seen as a threat.

Thailand scrapping its rice subsidy scheme, which was introduced by the former government in a bid to boost the industry, has had a major impact on the industry. Under the controversial scheme, the government bought rice at high prices to support farmers, but it failed, leaving the government in millions of dollars of debt and with a rice stock of more than 15 million tonnes to shift. In January, Thai authorities impeached former Prime Minister Yingluck Shinawatra over corruption related to the scheme.

This has led to lower fragrant rice prices, which, Lun Yeng, Secretary General of the recently-formed Cambodia Rice Federation, says has “hurt a lot of Cambodia’s farmers hard. It makes it very difficult for us to compete.”

Higher production costs also impact Cambodian farmers, with spiralling electricity prices pushing up milling and other expenses. “This makes it difficult to compete with Thailand and Vietnam,” Lun says. Logistics also pose difficulties, with these countries utilising the waterways and well-maintained rail networks. “We have the waterways, but they are not used adequately,” he adds. “We are still waiting for the railway to be fully operational. Fuel is expensive and the maximum we can load on a truck is 30 tonnes whereas in Thailand it’s 50. All this adds to the cost in Cambodia.”

shutterstock_221352853Other constraints on growing the industry include port restrictions, with the capacity to store rice being limited. “The ports are multi-purpose here and cater mainly for the garment industry,” Lun says. “That makes it difficult for loading big quantities as there is no big storage area or warehouse. That facility needs to be developed to help increase export.”

More financial backing and investment in millers and paddies is also essential to drive the industry forward. “In the current environment, the private sector is finding it difficult to develop further,” Lun says. “They have hit full capacity and are using their collateral so are not making money and don’t want to invest more.”

However, hopes remain high for the Kingdom’s rice industry. An agreement was signed with China in August 2014 to export 100,000 tonnes of rice there this year, which will help bolster export figures. China has also agreed to invest in warehouses and production to help build the Cambodia’s rice stock.

In November, Cambodia’s Romduol rice was jointly awarded the coveted title of the world’s best rice with Thailand’s brown jasmine rice during the sixth World Rice Conference, held in Phnom Penh. For the previous two years, Cambodian rice has walked away with the title, throwing it into the international spotlight.

Speaking of Cambodian rice’s joint win, Sok Puthyvuth, President of the Cambodia Rice Federation, says, “This is another significant milestone for Cambodia’s rice industry. The award clearly reflects our rice’s high quality, and I hope that the reputation of our rice will continue to be better known internationally.”

The launch of Cambodia Rice Federation in May 2014 was also a major step for the industry, consolidating the three former organisations that led the sector. Its aim is to promote the Cambodian product on the international stage and represent those farmers producing the world-class rice.

With the Kingdom’s rice proving its worth, the federation is currently working on producing a ‘Cambodia rice’ brand that will make it recognisable on the shelves of supermarkets worldwide. “We need to create an identity and develop a national brand for Cambodia’s rice so it stands out on the international stage,” Lun says.

And with plans to launch the brand in the first quarter of this year, clearly labelled, top-quality Cambodian rice looks set to soon take its rightful spot in food chains across the globe.

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IBIS RICE

Certified wildlife-friendly Ibis Rice produces white and brown premium jasmine rice variety. The organic rice is grown on ‘frontier farms’ that serve as buffer zones around the rainforests of Cambodia. The country is home to many endangered species, including the Giant Ibis, and these farms provide livelihoods to families through conservation.

USAID-supported Ibis Rice pays farmers growing rice under this scheme 10 to 25 percent more than conventional rice, which has raised premiums in those areas by paying farmers up to 150 riel more per kilogram than other local buyers. The 2013-14 growing season saw farmers record production surplus for the first time in its five years of growth. More than 435 tonnes was grown – a 54 percent increase on the previous year. This has prompted calls for it to be exported.

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