Combodia Govt eyes million-tonne rice quota deal with Indonesia

Cambodia is close to signing an ambitious agreement with the Indonesian government that would pave the way for the Kingdom’s rice producers to export 1 million tonnes of rice under a new quota scheme, a state official said (Read full news)

Soeng Sophary, spokesperson for the Ministry of Commerce, said a memorandum of understanding (MoU) between Cambodia and Indonesia has already been finalised and is ready for ink. “Everything is agreed upon between the two governments already,” she said. “We are just waiting for the right time to sign the MoU and then the private sector will be engaged in the process.” She added that the new quota scheme presented a valuable opportunity for Cambodia’s rice sector. “This would bring a new market for the country’s rice producers and would provide the private sector with fair market value,” she said, adding that the quota scheme was in line with the government’s elusive target of exporting 1 million tonnes of rice a year by 2015, which it fell well short of achieving.

According to Ministry of Commerce estimates, Cambodia has a current rice production capacity of 3 million tonnes providing the grain is properly harvested and stored. Sophary added that local media had erroneously reported last week that the ministry was negotiating a deal to export 1 million tonnes of rice to Malaysia. She said that the only major rice deal on the table was with the Indonesian government.

Hean Vanhan, undersecretary of state at the Ministry of Agriculture, said that even if an MoU were signed, it would not guarantee the sale of rice to Indonesia as Cambodia must still compete on price and quality with rival suppliers, such as Thailand and Vietnam. “The intention to export 1 million tonnes of rice has always been part of the government’s strategy, but whether it is a reality or not depends on if we can compete in the market,” he said. Cambodia only managed to export around 500,000 tonnes last year.

According to Vanhan, the main obstacles that have prevented the Kingdom from achieving its 1 million tonne export target were millers’ capital shortages, inefficient logistical capacity, insufficient storage capacity, and the high cost of electricity. He added, however, that capacity for exports was not an issue.Hun Lak, vice president of the Cambodia Rice Federation (CRF), said that the Commerce Ministry’s plan was overly ambitious and the Kingdom was years away from being able to export 1 million tonnes annually. “The industry is not yet ready for a 1 million tonne agreement, and we would need at least two to three years before it would be possible to reach that level of export,” he said. “Rice millers still do not have enough capital to buy paddy rice, pay for storage and transportation.”

Cambodia signed an MoU with the Indonesian government back in 2012 which outlined a more modest goal of exporting 100,000 tonnes of rice a year. Sophary could not comment on whether the target of the agreement was ever achieved.