Ban on rice exports no cure all

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

Written by SEBASTIAN STRANGIO
Friday, 04 April 2008
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.”