Lagging demand from foreign buyers has led to Cambodian rice being stockpiled at the country’s mills, according to the head of the country’s peak rice body.
Sok Puthyvuth, president of the Cambodia Rice Federation (CRF), said that with exporters receiving fewer orders, the country’s larger rice millers have been able to sell only 20 per cent of stock produced during the most recent harvest season.
“[Orders] have fallen sharply in recent times. Exports this year are proving very difficult for our members,” he said, adding that this time last year, at least 70 per cent of stock had been sold by the bigger companies for export.
Puthyvuth said the slump in Cambodian rice orders was due to deflated prices in Vietnam and in Thailand, where a recent rice surplus sell-off saw 12.8 million tonnes – equal to about a third of the world’s total export market – flood the market from January.
Cambodian rice currently trades at $440 per tonne. Meanwhile, rice in Thailand and Vietnam is selling for $385 per tonne and $405 per tonne respectively.
With the next harvest season due to begin in just three months, Lim Bun Heng, chairman of rice export firm Loran Group, said that millers had been pressuring his company to find buyers for Cambodian grain.
“They are concerned and are asking us to find a way to export the rice stocks as soon as possible,” he said.
“Most of them borrow money from banks to buy the rice from the farmers in the first place, so they need to start repayment.”
In addition, the informal export of raw paddy, which is often traded over the border, has also slowed, making collection easier for local millers.
However, as demand for exports of Cambodian milled rice weakens, a bottleneck is resulting, which itself results in increasing stockpiles, Heng added.
A rice mill owner, who asked not to be named for fear of damaging his business’s reputation, said that he had more than 2,000 tonnes of rice waiting for a buyer in Battambang province.
The mill owner added that he had accrued over $400,000 worth of bank loans to buy the rice off local farmers in the hope of selling it on to exporters for overseas markets.
“To pay back the bank only, I am forced to sell the paddy off at a lower price than what I bought it for,” he said.
Independent agricultural analyst Srey Chanthy said Cambodia must lower both paddy and milled rice prices to maintain sustainable competition with regional producers.
“Our rice quality is already good, so what we need to do is focus on price,” he said.
“If we can produce and sell at a similar price as others, we will be able to enter many other markets.”