Cambodia seeks investors to boost milled rice exports

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via Khmer NZ

Published: 04 Aug 2010

PHNOM PENH/BANGKOK, Aug 4 - Cambodia is looking for foreign investors to boost its fledgling rice milling sector so that it can reap higher dividends from its grain crop, much of which is currently sent to Vietnam to be milled and re-exported.

Its short-term goals are modest: it has exported 15,000 tonnes of milled rice this year and is aiming for 20,000, said Commerce Secretary of State Mao Thura.

That is an increase on last year, he said. "This is because we have more decent-standard rice millers. Before we had none."

But the government knows it must find foreign investors to have any hope of getting into the same league as neighbours Thailand and Vietnam, respectively the world's biggest and second-biggest rice exporters.

Thailand aims to export at least 8.5 million tonnes of rice this year and Vietnam is targeting 6.1 million.

"We have good rice but we don't have the quality millers or warehouses to produce milled rice for exports" Cambodian Prime Minister Hun Sen told students in Phnom Penh on Wednesday.

Indeed, it has plenty of rice, ranking as the world's 15th biggest producer with around 7 million tonnes of paddy each year. Of that, around 3 million tonnes is for domestic consumption and the rest for export, according to the United Nation's Food and Agriculture Organisation (FAO).

After decades of political turbulence, including civil war and the deadly Khmer Rouge years, its economy was in tatters by the end of the 1980s. In some years it has had to import low-quality rice from Thailand.

With renewed stability, it has made great strides in the past decade and exported 500,000 tonnes of unmilled rice under its own brand in 2009, according to United States Department of Agriculture data.

But the bulk of its crop transits via Vietnam.

"Nowaday, there are only a few good-quality millers in the capital," said a Thai commercial diplomat in Phnom Penh. "That's why we always see Vietnamese rice traders come to buy rice directly from the fields in Cambodia to be milled, packed and re-exported in Vietnamese sacks."

MARKETS

Exporters hope to find more buyers in the European Union as the European market has been duty-free for Cambodian rice since last September under the EU's "Everything But Arms" initiative aimed at supporting exports from poor countries.

"Since our equipment is getting more modern, more people are coming and we're exporting to places like Russia, Europe and the United States," said Phou Puy, president of the Cambodian Rice Millers Association

But Cambodia needs money to invest in milling and irrigation systems to help boost production and rice quality, said premier Hun Sen, adding he had discussed this recently with Malaysian Prime Minister Najib Razak.

He said he also planned to talk to new Philippine President Benigno Aquino. The Philippines is the world's top rice importer.

A panic over food scarcity that pushed up the price of rice and other commodities in 2007/08 has already encouraged investors from Gulf countries to invest in rice fields and irrigation systems in Cambodia, in the interests food security.