Cambodia may find new rice market in Manila

A local vendor sells rice. Photo by Pha Lina

Don Weinland and Rann Reuy with additional reporting from Bloomberg
Friday, 16 March 2012
Phnom Penh Post

Low international rice prices have further stymied Cambodia’s milled-rice exports, millers reported yesterday, but large orders – reportedly the first ever – from the Philippines have encouraged at least one of the Kingdom’s biggest rice exporters.

Mega Green Imex Cambodia this year to date has received orders for 50,000 tonnes of milled rice from the Philippines, Managing Director Outh Renne said yesterday.

That’s 13,000 tonnes more than Mega Green’s total orders from the European Union last year, he said.

The orders, the first ever from the Philippines and during a time when Cambodian rice prices are higher than other regional exporters, represented a shift in Cambodian rice trade from Western markets to buyers in its own backyard, Outh Renne said.

“Cambodia should understand that the biggest market for rice is in the Philippines and Indonesia,” he said, adding that the government-brokered deal was an attempt on the part of the Philippines’ National Food Authority to diversify its imports.

Cambodia exported about 173,000 tonnes of milled-rice last year, a 226 per cent increase on the year before, according to Ministry of Commerce figures.

The majority of the shipments went to the European Union.

The Philippines and Indonesia are expected to import an annual 4 million tonnes of rice a piece, Outh Renne said, markets well suited for the 1 million-tonne export goal Prime Minister Hun Sen set for milled rice in 2010.

The Philippines may buy a fourth of this year’s planned rice imports from either Vietnam or Cambodia through a government-to-government deal, Agriculture Secretary Proceso Alcala said in Manila on Wednesday.

The Southeast Asian nation plans to import 500,000 tonnes of rice this year, with 380,000 tonnes to be secured by private companies and farmer groups.

The remaining 120,000 tonnes will be purchased by the government, Alcala said.

Cambodia has lobbied the Philippines for rice trade agreements since 2010.

Mey Kalyan, a senior advisor to Cambodia’s Supreme National Economic Council, said he travelled to the Philippines to promote rice trade at the time.

“We were working very hard on this. This would be a great thing for Cambodia’s rice trade,” he said, although he said he was unaware of the recent orders at Mega Green.

International rice prices would continue to go down for some time, Mey Kalyan said, a trend that stalled new orders of milled rice during the first two months of the year.

The high price of milling and transportation, among other factors, led a significant slowdown of forward orders at four of the Kingdom’s biggest exporters as rice prices in India, Pakistan and Vietnam fell in January and February, the Post reported.

Rice millers and exporters yesterday said falling rice prices abroad continued to delay orders this year, and confidence in trade with the Philippines was low.

Lim Bun Heng, president of Loran Import-Export Company, confirmed that orders had been delayed.

The company has exported 2,000 tonnes of milled-rice this year to Europe and Russia, he said, although he declined to give a figure on forward orders.

Unstable rice prices in the Kingdom had kept an otherwise interested Philippines from signing contracts with Loran, Lim Bun Heng said.

“[The Philippines] asked for a one-year contract, but we wanted a one- or two-month contract. We were afraid of signing a one-year contract because the price of rice changes so quickly in Cambodia,” he said.

Phou Puy, president of the Federation of Rice Millers Associations and the Baitong Rice Export Company, said Cambodia’s high rice prices should prevent rice exports to the Philippines this year.

“There is no export at all from Cambodia to the Philippines,” he said yesterday.