Indonesia Needs Cheaper Rice

KHMER TIMES
SOK CHAN

Indonesian port workers unload sacks of rice from a ship onto a truck. Indonesia is keen to buy low-grade rice from Cambodia. Reuters

Indonesia would consider buying more rice from Cambodia if the price was more competitive, the Indonesian ambassador to Cambodia told reporters after the Indonesian Trade and Tourism Promotion 2016 expo in Phnom Penh on Friday.

Ambassador Pitono Purnomo said that Cambodia and Indonesia signed a memorandum of understanding in 2012 for the annual export of about 100,000 tons of milled rice and have been in continuous talks since.

He added that so far, negotiations had yet to provide enough incentive to increase imports as the price of Cambodian rice was too high. He said Indonesia was one of the world’s biggest rice consumers and needed rice not only for consumption but also for stock stabilization.

“The price of Cambodian rice is high, you have to make it lower to compare with your competitors like Thailand and Vietnam. Indonesia is one of the biggest rice consumers,” Mr. Purnomo said.

“If you make the price more competitive compared to Vietnam and Thailand, Indonesia will of course consider Cambodian rice. We are not going to import premium rice as we are importing it for the average citizen. We don’t need high grade as we also want to use it for stock purposes,” he added.

Mr. Purnomo said the ball was now in Cambodia’s court, adding that if the price was reduced, Indonesia would make appropriate considerations. “As far as I know, we’re only stuck on the price. I understand the price is a bit higher since you have higher-quality rice and logistics are high.”

Commerce Minister Pan Sorasak said at the rice purchasing and export workshop that Indonesia has been working with the Ministry of Commerce to purchase about 400,000 tons of rice and just needed to agree on the price and type of rice.

“Indonesia demands white rice with more than 15 percent broken rice to deliver to average people. It is not a premium rice. Indonesia wants to purchase low-grade rice,” he said. “We are now working with Indonesia, but we want our rice exporters to consider low-quality rice for export.”

Song Saron, president of Amru Rice of Cambodia, told Khmer Times that his company had yet to export to Indonesia because the price for logistics was higher than neighboring countries and added that Indonesia’s market was for white rice.

“In my opinion, we cannot talk about export [to Indonesia] at the moment. We must first make our price more competitive,” he said.

Mr. Saron added that Cambodian rice would be more competitive if electricity, logistics and port costs were reduced as well as other administrative procedures for rice millers and exporters. He said Cambodian white rice costs about $425 per ton while that in Thailand and Vietnam was $380 and $360 respectively, about $40 to $65 higher per ton.

“Production costs should be under $30 per ton. Generally, our production costs are about $100 from rice paddy. If it is $40 to $60 per ton we could do it,” Mr. Saron said. “If logistics, electricity, and port costs are high, how can we compete with neighboring countries?”

In 2015, according to figures from the Indonesian embassy, Indonesia exported $435 million in goods to the Kingdom while Cambodia exported only $15 million to Indonesia. Indonesia’s exports included garments, spare parts, chemicals, medicine and tobacco while Cambodia mostly exported garments and food.