20,000 tonnes of rice left unsold as prices drop

Rice for sale in Phnom Penh. The rice market in Cambodia has turned from shortage to glut, with thousands of tonnes left unsold. (Photo by: Tracey Shelton)

Tuesday, 25 November 2008
Written by THET SAMBATH
The Phnom Penh Post

Large stockpiles of rice are left in limbo and may be sold for losses following decreases in commodity prices, with millers blaming a government export ban

OFFICIALS in Battambang and Banteay Meanchey provinces said Wednesday that declining rice prices and the arrival of a new harvest season have left thousands of tonnes of rice sitting idle in storage mills. If the rice is not sold soon, it may deteriorate and have to be sold at fire-sale prices, millers warn.

"More than 20,000 tonnes of husk rice are still being stored in Banteay Meanchey and Battambang provinces because prices have dropped since earlier this month," said Song Hong, president of Battambang's Rice Millers Association.

"They couldn't sell it earlier, when the price was higher. Now, prices have dropped and the [new] harvest is arriving," he added.

Some millers have blamed the government for restricting rice exports and creating a backlog of rice stores.

Prime Minister Hun Sen on March 26 slapped a two-month ban on all rice exports - particularly to neighbouring Thailand and Vietnam - in an effort to slow rising domestic prices.

While the ban was lifted in May, rice stockpiled during the period continues to sit unsold.

The price of milled rice hit US$585 per tonne in October, Song Hong said, but has since dropped to $450, leaving mills unable to offload excess stores at a profit. "They can't sell them at a good price on the international market because the value has dropped there as well, and there is not as much demand," he said.

"They are now trying to sell in small parcels to businessmen who want to export to Vietnam," he said.

Heng Bunhor, director of Banteay Meanchey's provincial Agriculture Department, said the stockpiles are unusual for this time of year. "Millers have usually sold all their rice before November, when the new harvest comes and prices drop," he said.

Government ban

The March temporary ban was imposed "to guarantee food security for Cambodia", Hun Sen said at the time as prices rose amid fears of shortages.

A rice miller in Battambang who requested anonymity blamed government interference for the overstocks.

"We are not happy with the drop in rice prices," the miller said. "It is the government's fault ... for banning rice sales overseas when prices were good. We are businessmen. We do not care about politics. By the time we were allowed to export, prices were down."

Tes Ethda, president of the National Rice Millers Association, said he understood the need to sell at higher prices, but denied that the government was to blame.

"They can't blame the government for banning exports overseas. Every country has the right to do this in order to maintain food security and national stability," he said.

Ban on rice exports no cure all

People buy discount rice that had been released from government stockpiles, in Phnom Penh on March 27 (Photo: TANG CHHIN SOTHY/ AFP)

Friday, 04 April 2008
Written by SEBASTIAN STRANGIO
The Phnom Penh Post

As fears about rising food prices continue to mount, the two-month ban on rice exports announced by the government last week seemed unlikely to have much effect, analysts and politicians said.

Rice vendors on Street 108 in Phnom Penh said the retail price of rice rose from 1,700-2,500 riel per kilogram three months ago to 2,400-3,600 riel in early April as a result of local rice shortages.

The government on March 26 announced a two-month ban on rice exports and state-owned agricultural firm Green Trade flooded the market with cheap surplus grain to alleviate rising costs.

“To ensure food security for Cambodia, Cambodia will stop exporting for two months,” Prime Minister Hun Sen said during a speech in Pailin. “After two months we will reconsider and look at the rice market’s security.”

Five kilograms of cheap Green Trade rice were made available to each buyer in late March.

The ban came after Egypt, a major global rice supplier, announced a six-month halt of rice exports. Vietnam also announced it will limit its 2008 exports to 3.5 million tons – down from an expected total of five million tons.

Opposition members, meanwhile, criticized Cambodia’s export ban, pointing to the government’s poor record of combating inflation. “It shows very poor planning from the government,” said Mu Sochua, deputy secretary-general of the Sam Rainsy Party.

“If they had done any sort of projections, they would have detected these soaring prices way ahead of time.

“[A ban] is a good thing only if it is part of a plan,” she said. “But it’s way too late. I don’t think there are enough [rice] stocks to maintain the price. That is why the government can only make the promise for two months.”

Kang Chandararot, from the Cambodia Institute of Development Study, said the export ban made sense in theory, but might be difficult to implement.

“How many border crossings do we have with other countries? And how much domestic pressure is there to continue exports? I am skeptical it will be a real success,” he said.

One leading agricultural analyst, who declined to be named, said rice prices are set in a regional economic context. The analyst noted that Vietnam’s price controls have prompted wholesalers there to search out more affordable rice in Cambodia, driving up the price of paddy here.

While Cambodia produces a large surplus of milled rice – some 1.4 million tons in 2007, according to the Ministry of Agriculture, Forestry & Fisheries – the lack of suitable storage facilities is forcing farmers to export excess unhusked paddy, often illegally.

“Many Vietnamese merchants come to Cambodia to buy paddy rice,” said Mu Sochua. “There is an official trade, but mainly it is unofficial.”

Yang Saing Kuma, president of the Cambodian Centre for Study and Development in Agriculture, said government actions have contributed to price stability but added that he was unsure how long it would last.

“The prices are not going up anymore,” he said. “But how long it will continue like this is a big question… You cannot enforce [a total ban] on cross-border trade.”

Kuma said Cambodia needs a long-term plan to build up emergency food supplies.

“What the government should do is provide more soft loans to rice millers to buy rice from farmers during the harvest season, at the same price offered by [foreign] traders,” he said. “If the government has enough rice stocks then we can ensure some stability in the price.”

Rice Price Still High After Intervention

A vendor, right, hands a plastic bag of rice to a customer at a roadside store in Phnom Penh, Cambodia, Thursday, March 27, 2008. Cambodia's government appealed for calm Thursday as it rushed out a series of economic measures to address soaring food prices. (AP Photo/Heng Sinith)

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
27 March 2008

Rice prices in most markets showed no sign of decrease Thursday, following an emergency ban on exports Wednesday and soothing speeches by Prime Minister Hun Sen this week.

Prices were slightly down in Siem Reap province, vendors said.

A vendor at O'Russei Market in Phnom Penh, who only gave her first name, Sophy, said the rice price remained high on Thursday.

"The price of rice is still high, and now we have not yet heard of any falling prices," she said.

Hundreds of tons of state-sold rice across the country have been sold directly to consumers, but this too had little effect on market prices, albeit after only one day.

Minister of Commerce Cham Prasidh said Thursday that the government can't reduce all the prices across Cambodia in a short amount of time, but the ministry had prepared hundreds of thousands of tons of rice to sell in markets where prices were significantly increasing.

Meanwhile, some rice exporters said Thursday they were concerned with the future of their businesses, following a two-month ban on exports issued Wednesday.

But many said they supported the national export ban, which was ordered by Prime Minister Hun Sen and enacted by the Ministry of Commerce.

Kim Savuth, president of the Khmer Food Import Export Company, in Phnom Penh, said Thursday the government should not ban the export of all kinds of rice.

The highest quality rice enjoys a very high price on the international market, he said, and is a type of rice with little demand among common Cambodians.

"That kind of rice should be allowed for export," he said. "If not, it will reduce the income of exporters."

Cambodian prime minister orders halt on rice exports [-Only small exporters are affected, large exporters are untouched]

Cambodia's Prime Minister Hun Sen speaks during a ground-breaking ceremony in Pailin March 26, 2008 for the repair of the road between Battembang and Pailin province. REUTERS/Chor Sokunthea

Wed, 26 Mar 2008
DPA

Phnom Penh - Cambodian Prime Minister Hun Sen Wednesday ordered all private exports of rice to neighbouring Thailand and Vietnam to cease immediately. Speaking from the former Khmer Rouge stronghold of Pailin on the Thai border in a speech broadcast on state-run media, Hun Sen said the ban would stay in place for two months and was effective from Thursday.

Cambodia faces national elections in July, and with the opposition in disarray, rampant inflation and skyrocketing prices of staples such as rice appear to be the only serious obstacles to a massive victory by Hun Sen's ruling Cambodian People's Party.

"To assure food security, Cambodia decides to prohibit export of rice to Thailand and Vietnam. Finance Minister Keat Chhon will make this decision public today," Hun Sen said.

"Cambodian authorities along the borders must implement this decision immediately."

The decision exempted large commercial exporters, he said.

Cambodians have embraced a free market economy and taken full advantage of the higher prices offered across the borders, with anyone able to hire a truck able and increasingly willing to export their rice harvest.

The Ministry of Commerce has said that because of this it is unable to estimate exactly how much rice Cambodia exports, but the trend has led to the price of a kilo of rice rising from just under 50 cents a year ago to 1.25 dollars at present.

Rice is the staple of the Cambodian diet, and a hike in its price impacts on the entire national economy and the political polls.

Cambodia halts rice exports to curb rising domestic prices

Wednesday, March 26, 2008
The Associated Press

PHNOM PENH, Cambodia: Cambodia's prime minister ordered a ban Wednesday on rice exports to neighboring Thailand and Vietnam in a bid to curb rising domestic prices for the country's staple food.

Prime Minister Hun Sen said Cambodia is halting rice exports for two months to help "ensure the stability of the Cambodian market."

The measure is only temporary "to guarantee food security for Cambodia," he said in a speech at a ceremony marking the repair of a road.

Cambodia is a minor rice exporter, shipping about 450,000 tons of milled rice last year, according to a U.S. Department of Agriculture estimate. Neighboring Thailand, one of the world's top exporters, exported 8.5 million tons, it said in its "Rice Situation and Outlook Yearbook."

Hun Sen said all border agencies must begin implementing the order Thursday at all crossing points along the borders with Thailand and Vietnam. Because of the small-scale of production, most if not all exports would go overland to the two countries.

Since the end of the harvest early this year, farmers living in provinces bordering the two countries have been selling rice in large quantities across the borders, attracted by high prices, said Men Sarun, owner of Men Sarun-Import-Export Co.

He said a ton of rice now sells for about US$500 (€318), twice as much as last year.

The trend, while making some farmers happy about earning greater profits, could also result in food shortages in Cambodia later in the year, he said.

Hun Sen said the rising price of rice is a global problem.

In another speech Tuesday, he blamed "economic saboteurs" for causing the surge in domestic prices. It was not clear whom he was referring to.

Without imposing the ban, Cambodian rice will "keep flowing out, and they (the alleged saboteurs) will keep shaking up the price at home," he said Wednesday.

"So keep the rice here. No more export of it for two months after which the government will see how stable the market is," Hun Sen said.

The government will inject rice from its reserve into the market to help prevent further increase of the price, he said.

Cambodia produced an estimated 3.6 million tons of milled rice last year, according to Cambodian agriculture officials. About 2 million tons was estimated to be needed for domestic consumption this year, leaving a surplus of 1.5 million tons.