Rice Bound for Indonesia?

KHMER TIMES
CHEA VANNAK

Cambodia plans to export 200,000 tons of milled rice a year to Indonesia. Reuters

The Cambodia Rice Federation (CRF) hopes to export around 200,000 tons of milled rice a year to Indonesia, which is one of the biggest rice markets in Asean. This comes after the CRF announced late last month that it will not join the bid to supply milled rice to the Philippines as it plans to import an additional 750,000 tons of rice to secure the country’s supplies through 2017.

CRF vice president Hun Lak told Khmer Times that both Cambodia and Indonesia had a memorandum of understanding since 2012 for the export of milled rice and both countries had been in continuous talks ever since.

“The negotiations have not expired, though we have yet to work out details on the exact amount that Indonesia wants from us, how we are going to store the rice for export, and sourcing paddy rice from local farmers for milling,” he said.

Though Mr. Luk could not give a precise date of when Cambodia would be exporting rice to Indonesia, he said CRF was prepared to ship between 150,000 to 200,000 tons each year if both sides agreed.

“So, internally, we have to be ready with full cooperation from rice farmers, rice millers and rice exporters. We also need to find a way to bring down our production costs to make Cambodian rice more competitive,” he said.

According to Mr. Lak the price of locally grown Cambodian rice is between $50 to $60 higher per ton compared to rice from neighboring Vietnam and Thailand. Earlier, Mr. Lak told Khmer Times 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.

Late last month, Thailand and Vietnam won deals to supply a total of 250,000 tons of rice to the Philippines at a tender after revising down their offers to just within Manila’s budget. The Philippines, one of the world’s top rice buyers, plans to stockpile rice now ‒ taking advantage of low global prices ‒ to prepare for shortfalls caused by natural disasters like floods and typhoons.

Chray Son, a rice miller and director of Capital Food in Battambang, said he welcomed CRF’s suggestion to export milled rice to Indonesia.

“But we have to be realistic,” he cautioned.

“It is hopeless to grab new markets if our cost of production is still high and we cannot be competitive in the international markets,” said Mr. Son.

“Obviously, Indonesia is going to ask for lower prices ‒ even if our rice is of better quality than others. If we can’t offer lower prices, the Indonesians will get their supply from Vietnam.”