Feast or famine for rice farmers?

HENG CHIVOAN; Yen Bunlung, 10, stands in his parents’ parched rice field in Takeo province.

The Phnom Penh Post

Written by Vong Sokheng and Brendan Brady
Friday, 12 September 2008

Despite requesting a $38 million emergency food aid package, the government is confident it will meet its rice export quotas as the global price of the commodity continues to rise

WELL before rainfall shortages struck this year, the Kingdom was preparing to reap the windfall of sky-high global rice prices through lucrative export deals with foreign governments.

But as harvest time draws near, the government is sending mixed messages about the country's anticipated food stocks - or lack thereof.

Despite last week's request for a US$38 million food security aid package from the Asian Development Bank, the government maintains it has the food security situation under control and will go ahead with its rice export plans.

Even as drought grips large swaths of the country, the Agriculture Ministry optimistically expects nationwide rice production to reach seven million tonnes this year, a slight increase from the 6.7 million tonnes it reported last year.

"Some areas are facing drought, but we are optimistic that our export deals signed by the government will not affect our ability to meet local demand," Agriculture Minister Chan Sarun told the Post.

"I am not concerned about having a food shortage this coming year even if the government increases its volume of rice exports because these contracts are signed only after a thorough evaluation of domestic surplus.

"This year's harvest is expected to yield a surplus of one million tonnes, according to Phou Puy, president of the Cambodian Rice Millers Association.

With such overflowing stores, the government's request to the ADB for emergency food assistance served only to secure a safeguard against sudden, unexpected shocks, such as those brought about by natural disaster, Chan Sarun said.

" We are optimistic that our export deals ... will not affect our ability to meet local demand. "

Blame the futures market

The global commodities crisis that has lifted the price of everything from petrol to gold didn't spare rice - the staple food for half of the world - also created new opportunities and problems related to the grain's trade.

Rising rice prices create a potential boon for farmers and investors, and have attracted nontraditional players, such as hedge funds, into the market.

But they have also raised humanitarian concern over the diminished purchasing power of poor consumers.

Cambodia has gained a host of new suitors this year eyeing the fruits of its fertile farmland.

The Gulf states Kuwait and Qatar initiated plans to lease Cambodian farmland to secure rights to its produce, while the government inked a deal to export 120,000 tonnes of rice to Guinea. Other West African countries have followed suit, with Senegal, for example, ordering 6,000 tonnes of broken rice, the low-quality residue from successive sortings between broken and intact rice grains.

Mao Thara, undersecretary of state at the Ministry of Commerce, told the Post that the government has not yet calculated its anticipated volumes of rice exports. He said contracts were still being negotiated, adding that a team was headed to Senegal on October 20 to discuss a new deal with the West African country.

A contradiction in terms?

The government stands by its plan to ink major agriculture export deals with foreign governments, despite the ADB's announcement last week of a proposed US$38 emergency food assistance project to address what its country manager described as "an unprecedented emergency" in Cambodia's food security.

"The food security concern in Cambodia is not whether the country is capable of producing sufficient food to feed its own population, which it is capable of for many years already, but whether basic food commodities would remain accessible to the rural and urban poor under the current environment of unprecedented global increase of food and fuel prices," Arjun Goswami, the bank's country director, told the Post.

Worldwide price hikes for food and fuel have pushed traders to sell their rice to neighbouring countries, thus driving supply down and prices up, he explained.

Long Vou Piseth, the ADB officer in charge of the food project's implementation, said it would address the needs of both suppliers and consumers, distributing food rations to those most in need and selling seeds and fertilisers to farmers at a subsidised rate.

According to Kang Chandararot, head economist at the research institute Cambodia Institute of Development Study, the price of rice at markets in Phnom Penh has risen by around 50 percent since the beginning of the year, a dramatic price hike that he attribute largely to inflationary pressures caused by rising world demand and higher input costs.

"Helping out Cambodia's farmers to boost their output could stabilise the supply and price of rice in the region," he said, referring to why the ABD would want to plough millions of dollars of food aid into a country that is exporting rice commercially.