Monday, December 13, 2010

Cambodia Daily: Challenges Confront Growth of the Rice Sector.

Mr. Chieu gave interview to Cambodia Daily reporters

Cambodia Daily
December 2nd, 2010

In August, the government released a new policy aiming to increase rice exports in Cambodia to 1 million tons a year by 2015, up from less than 40,000 tons currently. Despite rising interest from foreign buyers, experts agree that reaching that target will be a challenge due to a combination of high energy costs, Poor irrigation and limited credit availability for farmers and millers to expand.

In an interview with Cambodia Daily reporter Hul Reaksmey and Simon Marks yesterday, Chieu Hieng, chairmen of Angkor Kasekam Roongroeung, Cambodia’s largest exporter of fragrant rice, said the rice sector would only reach its potential if capital investment in the sector experiences a major boost in the coming years and farmers can be convinced to sell to dedicated brokers that ensure a regular supply of high-quality paddy.

Q: Do you believe that Cambodia’s rice sector is capable of reaching exports of 1 million tons a year by 2015?

A: We can reach the target, but we have to prepare from now ….If you ask me how much we can export in the future, I am unable to say. In Cambodia, we lack standardized rice mills. Therefore, if we want to export millions of tons, we need to have exemplar rice in order to meet market demand. If we achieve these twothings, we will be able to export a lot of rice.

Q: What are the major constraints on the expansion of the rice sector?

The biggest burden is capital constraints. It’s the biggest issue affecting the sector…….. [The banks] are strict and the interest rates are high. The second issue is related to trading regulation across borders. We do not control the border seriously enough. When rice becomes expensive, neighboring countries will challenge and buy rice paddy from us. If the price drops, the buying stops. This is an irregularity that makes those who have rice mills for export face difficulties.

Q: Is the rice sector capable of convincing banks and microfinance institutions to lend it money in order to fuel its growth?

A: If the government has a policy working on this matter, I think there will be quick progress….. The government should encourage the use of quality seeds …. and stop farmers from growing rice at random and buyer from purchasing rice in an unorganized fashion. If we have a good arrangement to classify the standard of rice, we will sell at a higher price and the market will rise.

Q: Where do you believe most foreign demand for Cambodian rice will come from?

A: The main market will be countries in Asean such as Indonesia, the Philippines and Malaysia. Besides that,we think that demand will come from Eastern Europe and some African countries.

Q: How do you convince buyers from abroad to purchase rice from Cambodia as opposed to the Philippines, Vietnam and Thailand?

A: If standards rice mills increase in number to [as many as 300] in the future, Asean countries comprising the Philippines, Indonesia and Malaysia will come and buy from us. They will have a dependable market. If we don’t have these rice mills, they will not come and buy. They will turn to look for rice in Vietnam and Thailand. More importantly, we have to maintain quality standards.

Q: What is your company doing to ensure that rice quality is always of a high standard when it arrives in paddy from at the factory?

A: We have created an association to distribute seeds in four provinces ( Kandal, Kompong Speu, Takeo and Kampot). In these four provinces, we have between 60,000 and 70,000 families. We have been buying expensive seeds to ensure good quality for nearly 10 years. Sometimes people sell the paddy to other brokers, who bring it to Vietnam and Thailand. These are the circumstances our company faces.

Q: How do you make sure that rice farmers consistently sell to formal Brokers that deliver a reliable supply to your milling company?

A: We cannot do that…Farmers will sell their paddy rice wherever there is a high price.

Q: Do you have any recommendations on how rice exports though Sihanoulville Autonomous Port can be facilitative?

A: In other countries they manage [rice exports] by not allowing shipping companies from increasing and decreasing fees arbitrarily. They have a fixed fee. This is the first thing our country does not yet do. Secondly, we have to select a good container. We will not take any old container before we put our rice in it.