Agriculture minister Dith Tina (centre), and Kao Thach, director of the board of directors of the Agricultural and Rural Development Bank (ARDB), address a January 15 press conference on current rice market conditions at the Council of Ministers. Agriculture ministry
To support rice farmers who have been affected by a drop in wholesale prices, the government has released an additional $30 million to invest in rice mills, which buy rice from farmers. This brings the total amount allocated to the rice sector to over $200 million.
Kao Thach, director of the board of directors of the Agricultural and Rural Development Bank (ARDB), and Minister of Agriculture, Forestry and Fisheries Dith Tina addressed a January 15 press conference on the “Rice Price Situation and the Rice Harvest” at the Council of Ministers.
Thach explained that since 2010, the government has spent a total of more than $208 million on the fund which aims to support the entire rice sector and stabilise prices.
The ARDB is tasked with using the funding to develop the sector and maintain the stability of Cambodia's rice prices.
“Due to unstable rice prices, today, the government decided to release an additional $30 million. This money will go directly to the ARDB and be disbursed for rice purchases. This is part of the government's continuous intervention efforts,” said Thach.
He added that the funding is in line with the government’s policy to promote rice production and rice exports, which has been in place since 2010. The agricultural sector, particularly rice, has received high attention from both previous and current administrations because of its importance to food security and commerce.
“Before 2010, our country was a recipient of rice aid, but after 2010, we became a rice exporter, even if at a small scale. Now, we are able to export milled rice, reaching up to 600,000 tonnes in some years. This does not even include paddy exports,” he explained.
Tina noted that in general, the government itself cannot buy rice, but the focus should be on increasing and strengthening domestic markets in collaboration with rice mills.
He explained that rice mills want to buy more rice, but they are running out of funding. Therefore, they are guaranteed loans to increase the amount they can purchase.
“This guarantee mechanism is effective and sustainable, so we are not just buying rice and letting it spoil. If wet rice is bought but there is no place to store it, it will spoil, and all the investment will be lost. The money will be wasted, and next year, where will we find money to buy more?” he asked.
After stabilising rice prices, another measure is to reduce production costs through farmers’ involvement in forming modern agricultural communities rather than farming on a household level.
He explained that farming in large-scale community groups of thousands of hectares reduces costs when compared with small one or two hectare farms, which can cost around 3.3 million riel (around $820) per hectare to farm.
“When we farm one, two or even five thousand hectares as a cooperative, costs drop. Fertiliser prices decrease, and do the costs of harvesting. We calculate that costs can fall by up to 20 per cent,” he added.
He added that rice production in these modern agricultural communities follows standardised practices such as the use of fertilisers and pesticides, which ensure consistent quality, quantity and price through contracts with rice mills.
He also mentioned that many rice mills today are looking for producers who can supply rice for export to Europe, where standards are strict.
“They want rice that doesn’t have excessive pesticide residues. When we have a specific market, we can produce rice with consistent quality to meet those standards,” suggested Tina.
For rice exports to Europe, the requirement is that rice contains no more than 0.01 grammes of pesticides per kilogram, compared to other countries where the limit can be up to 1 gramme per kilogramme.
Senate president Hun Sen, noted on January 14 that the current rice price crisis is a result of India releasing rice into the international market after a 14-month export ban, while Indonesia has reduced its rice imports to promote local production.
“We, Vietnam and Thailand are all facing the same issues, and this year, we expect to have an excess of about 7 million tonnes for export. Good-quality rice is still being exported to the European market,” he added.
