Friday, October 7, 2016


A reference to an article by The Guardian (Sep. 14) on the Monsanto - Bayer deal kicks off this posting. The relevance is Monsanto leading the GMO production and leading the debate on GMO's with a hawkish view:
'Werner Baumann, chief executive of Bayer, which is most famous for developing aspirin, said “the combination of our two great organizations [will] deliver substantial value to shareholders, our customers, employees and society at large”.
But farmers and environmentalists warned the deal could lead to a reduction in seed variety, an increase in genetically modified crops and higher seed costs and therefore crop and food prices.
The proposed takeover is likely to face intense regulatory scrutiny in the US and Europe, particularly as it quickly follows two other mega-deals in the agriculture industry and would leave control of almost two-thirds of the world’s seeds and pesticides in the hands of three firms.
Hugh Grant, Monsanto’s Scottish chief executive, hit out at environmentalists saying their concern about GM crops “drives me a little bit nuts” and said they should be more worried about how to feed a fast-growing global population while using less water as global temperatures rise'.
Well, it seems that the formation of an agro-industrial behemoth seems to be of more importance to those taking a dim view of the merger. 
The companies involved would do better to address the legitimate fears, though with Monsanto, one of the globes most feared companies, it's quite unlikely to happen. 
And no doubt it's not the need to feed the world that lies at the heart of the merger, rather a complex financial deal ensuring shareholders and management an outrageous return.

Bloomberg (Sep. 19) takes a look at the logics of the merger and has difficulties at seeing the positives. 
'It appears that some of the opposition to the deal can be traced to a dislike of the companies involved, especially Monsanto'. 
The article notes that there's not much overlap between the companies, Bayer certainly is not involved in GMO, well far behind Monsanto. So the emerging company would have no monopoly power in GMO. 
It also concludes that it may well be management that stands to profit and also notes that the widespread dislike of Monsanto should not be the guiding principle into decisions concerning government regulation on mega deals. If the deal does fall through it would be Bayer shareholders who would end up the better.

With Cambodia cozying up to China, it's no surprise that China is sort of looking at acquiring Cambodian produce. Do note that even though there's substantial talk about a deal here and there, quite often they fail to fruit. After all the exported produce still needs to be sold to a consumer in China and they are increasingly becoming picky. 
So let's start with this from what Mekongoryza (Sep. 9) reports:
'Cambodia’s Prime Minister Samdech Akka Moha Sena Padei Techo Hun Sen held a short, but fruitful bilateral talk yesterday evening with his Chinese counterpart H.E. Li Keqiang, on the sidelines of the ASEAN Summits and Related Summits in Vientiane, Lao PDR.
According to the National Television of Cambodia (TVK)’s report, the talk focused on rice trade and China’s development assistance to Cambodia, as well as scholarship programme for Cambodian students.
H.E. Li Keqiang affirmed to increase the purchase of Cambodian rice from 100,000 tons this year to 200,000 tons next year, ...'.
Even the Bangkok Post (Sep. 9)  notices that Cambodia's Foreign Affairs stance is paying off.
'The Chinese government will import 200,000 tonnes of rice annually from Cambodia from next year, double the current amount, ...'.
Oddly, Laos is moving the other way.  Laos cuts rice exports to China so headlines the Vientiane Times (Sep. 17). It seems to contradict all rice export logic:
'Laos is reducing the amount of rice it exports to China after failing to fulfil an order for 8 tonnes placed by the country this year.
Director General of the Trade and Product Promotion Department under the Ministry of Industry and Commerce, Mr Somvang Ninthavong, told Vientiane Times on Friday that Laos had only been able to supply 2.5 tonnes of rice so far.
Mr Somvang said there was no policy to compete with China, Vietnam and Thailand in the rice market because Laos was a small producer. Instead, the department emphasises the high quality of the rice grown in Laos, focusing on this niche aspect rather than quantity.
The middlemen who buy rice in Champassak province would like farmers to grow a lot more rice that smells and tastes good, but farmers are unwilling to do so because the brokers aren't prepared to pay a higher price.
Farmers are growing plenty of rice but not the higher-grade varieties that middlemen want.
The kind of rice they seek yields about 2 or 2.5 tonnes per hectare and costs about 2,500 kip per kilogramme. But few farmers grow this kind o f rice because buyers won't pay a fair price'.
Market chills
Meanwhile it's domestic prices to the fore in Cambodia. Especially with the harvest near and the prices low, certainly lower than expected. But before we head there, let's look at this article in the New Mandala (Sep. 8):
'A four centuries long downward trend means grain prices aren’t set to soar any time soon, writes Jim Plamondon.
A decade ago, when grain prices spiked sharply upwards, many were convinced that rising grain prices were the ‘new normal.’
Influenced by new factors such as the economic emergence of China, global climate change, population growth, water shortages, and more, surely the price of grain (and especially rice) would continue to rise… right?
Clearly, the historical trend has been downward for more than 400 years. One might agree that this was true, and yet argue that “this time it’s different,” perhaps due to global climate change, population increases, changing dietary habits, the end of the Green Revolution’s productivity gains, water shortages, and the economic rise of rice-loving Asians, among many factors.
Their July 2016 publication, the OECD-FAO Agricultural Outlook 2016-2025, states that grain prices are likely to fall, and includes Figure 5 below (for rice, see the right-most chart in Figure 5). Notice that the real (that is, inflation-adjusted) price of rice is expected to fall more steeply than the other grains'.
The article then concludes that it is probably much better to invest public money away from that supporting grain production. 
In a further comment the articles author, Jim Plamondon, adds a possible surprisingly solution: don't produce grain, produce a product:
'But the thing that makes it [Cambodian Jasmine Rice] the best — its higher concentration of 2-acetyl-1-pyrroline, its main aromatic component — evaporates long before it reaches the high-value consumer. By chilling the best Cambodian Jasmine Rice ASAP after harvest and milling, and keeping it chilled until it reaches the consumer’s home, Cambodia can establish a new, de-commoditized, gourmet rice product'. 
Well, not surprisingly this lesson has not come too mind in the past month in Cambodia. Starting off with the Khmer Times (Sep. 16): 
'The Cambodia Rice Bank (CRB) will intervene to prevent the price of fragrant rice from falling further by offering to buy the staple grain directly from farmers at the market price of 840 riel (21 cents) a kilogram. The CRB also called on farmers to stop selling fragrant paddy rice to millers at below market price, according to a statement released yesterday.
Srey Chanthy, a rice expert told Khmer Times that many farmers could be made bankrupt if the price per kilogram of fragrant rice stays around 700 riel, from 1,200 riel previously.
“These farmers have debts to pay to microfinance institutions, fertilizer companies and mechanical harvester owners. On top of that they have no proper place to store their harvested paddy rice and no access to silos during the rainy season,” he said.
Mr. Chanthy said the only way out of this quagmire was for the government to disburse the promised emergency loans, through the Cambodia Rice Federation or RDB, of between $20 million to $30 million to rice millers and exporter to purchase rice for processing.
In a statement on Monday, the Ministry of Agriculture ordered all provincial agricultural departments to take action against rice millers who exploit farmers due to their inability to command a fair price for their paddy harvest because of a lack of bargaining power.
The ministerial order bans rice millers from block-buying the whole rice crop from farmers, just before harvest, and offering them a below market price for the exclusive purchase'.
Well, it's not known whether this measure will have a lasting effect, it did serve as a prelude to more ruffling of the rice feathers. 
The Phnom Penh Post (Sep. 19) reports a few days later how farmers are taking to the streets. Albeit unpaved country lanes ... :
'Attempting to call attention to the havoc low rice prices are wreaking on their livelihoods, hundreds of farmers in Battambang’s Sangke district took to the streets yesterday, symbolically pouring rice onto National Road 5.  
Some have blamed the dip in prices on an upsurge in the amount of rice imported from Vietnam. “Vietnam produces far cheaper rice than we do, so it is very appealing to the traders to buy Vietnamese rice and distribute domestically,” said Khem Bunlen, executive director of the Cambodian Farmer Rice company'.
The Phnom Penh Post (Sep. 19) does note some hope:
'Rice millers said yesterday they welcomed the prime minister’s announcement that the government would make over $20 million in funds available shortly to support cash-strapped millers and prop up falling paddy prices.
“We’ve been waiting for these loans for a long time like fish waiting to be fed,” said Phon Nary, director-general of Heng Huch Rice Mill in Battambang province. “I hope to receive the loans soon so that we can survive.”
Cambodia’s rice industry is facing a crisis as two consecutive years of drought take their toll on farmers and millers struggle to stay afloat.
Song Saran, CEO of Amru Rice, said he welcomed the prime minister’s announcement, but he felt the government’s commitment to the rice sector was long overdue and the loan package would only cover about 10 percent of the capital needed by millers to buy rice from farmers at a fair price. He estimated that an additional $50 million would be needed to ensure that prices remained stable'.
As does the Cambodia Daily (Sep. 20). Note how the press are skeptical in whether or not the policy will have any effect.
'In the latest effort to mitigate the impact of plummeting rice prices, Prime Minister Hun Sen said on Monday that the government was seeking $300 million from China to boost the capacity of rice millers and provide funds to them for purchasing paddy from farmers.
The announcement, made during a graduation ceremony in Phnom Penh, came just days after the premier approved a $27 million grant to rice millers for purchasing paddy—$20 million from the government and $7 from the Rural Development Bank. The average price per ton of paddy dropped from $250 in mid-August to $193 last week.
Miguel Chanco, lead regional analyst for Economist Intelligence Unit, said the government’s financial intervention was no surprise, as it “could benefit the ruling party politically at the coming commune elections” set for June next year.
“However, if we were looking at a longer time horizon, I wouldn’t say that it’s a sector that I would put all my cards on as rice prices are unlikely to return to the heights seen in the late 2000s,” Mr. Chanco added.
“Public funds would be better spent on long-term measures to wean more people off rice farming, thereby reducing Cambodia’s vulnerability to the ebb and flow of global commodity prices.”
Then come unorthodox measures. The Phnom Penh Post (Sep. 21):
A day after a state bank called on Cambodians to buy domestically milled rice to help a government scheme to stabilise prices in the sector, multiple ruling party officials were reaching into their own pockets to do just that.
The Rural Development Bank – tasked with distributing $27 million in emergency grants to millers so they can raise their price for paddy rice – yesterday featured a list of officials and businessmen on its Facebook page who had heeded their call on Monday to buy local product.
Noting some of the buyers were members of Cambodian People’s Party working groups, the post said the group had bought more than 100 tonnes from Battambang miller FedRice.
Undersecretary of Finance Ros Seilava, among those to order from the Battambang firm, echoed Rith’s remarks. “I do not think it is about political affiliation,” he said. “The government intends to solve the problem.”
The government’s loan package aims to stabilise the price of paddy rice, which has fallen precipitously from $240 per tonne to $192 per tonne over the past month, leading to protests by rice farmers over the weekend in Battambang.
Millers will be offered loans at 8 percent annual interest on the condition they purchase rice paddy from farmers for no less than $218 per tonne – a price that ensures farmers make a profit on their crop.
Reached yesterday, FedRice stock controller Chi Vaon said the company was selling their product at between $530 and $540 per tonne, which included transportation to Phnom Penh.
Vaon welcomed the demand in the wake of the bank’s call, but called for more government measures to improve exports.
Political analyst Ou Virak yesterday said that the mobilisation of the CPP’s patronage network to “rescue” farmers might bring short-term relief for some, but did nothing to address the need for long-term reforms.
“The problem with the patronage system [is that it] kind of works in a way, but it’s limited to crisis response,” Virak said.
“It’s also part of the reason why there’s no systematic or institutional way of dealing with or preventing these crises.”
Meanwhile, Miguel Chanco, lead ASEAN analyst for the Economist Intelligence Unit, said he wasn’t surprised to hear of CPP working groups moving in to help create demand, particularly with commune elections approaching.
“I think short term, there’s no question it is going to provide some relief to rice prices, but at the end of the day, Cambodia is still very much out-priced in the global rice market, which is at the moment oversupplied,” he said.
“So regardless of what the government does in the short term, international price trends will still remain very weak going forward.”
More short term stop gap measures ...
And who is to blame? Cambodia Daily (Sep. 22):
'With the government scrambling to protect farmers from rapidly falling rice prices, Agriculture Minister Veng Sakhon on Wednesday poured blame on the private sector for boosting competing countries at the expense of Cambodia by importing products that could be sourced locally.
During a news conference at the Agriculture Ministry’s headquarters in Phnom Penh on Wednesday, Mr. Sakhon said Cambodia’s general failure to compete with its neighbors in rice sales was due to a lack of innovation and research by local businesspeople.
“Regarding the private sector, they are careless and not smart about competing in business,” he said. “They are not smart enough to compete regionally.”
Both Vietnam and Thailand have gradually lowered the price of their exported rice since 2012 in order to compete internationally, Mr. Sakhon said.
Cambodian businesspeople “should study the market prices and what our friends around us are doing—what they are able to do and what we are not able to do. Because it is very unfortunate that although we have customers, we make a loss,” he said.
Lay Chhun Hour, CEO of City Rice Mill in Battambang province, said basic utility costs were already stretching the private sector, and that the government needed to come up with a plan to support long-term efforts to strengthen the country’s rice sector.
“How can we be smart if the cost of electricity—an important factor of production—is high?” he asked, citing significantly lower costs in neighboring countries'.
It may well be, that these measures have effect. The Cambodia Daily (Sep. 26):
'The government’s injection of funds into the rice sector and call for officials and wealthy friends to purchase paddy has put the domestic market back into motion after a sudden plunge in prices, according to the Rural Development Bank (RDB).
Ser Lalen, general manager of Hakser Rice Mill in Kompong Cham province, said he had seen a drastic increase in sales since the government’s campaign began about a week ago. Because of this, sales for this month and last month increased by 30 percent compared to last year, to 45 tons of milled rice.
He said the government stimulus had driven the increase.
“As we have support from the market, we decided to buy much more paddy from farmers,” he said, explaining that the mill’s intake had doubled from 50 tons during this period last year to 100 tons this year.
But according to Sam Arth Veasna, vice president at Federation of Cambodia Farmer Organizations for Development, many farmers have still been left out.
“The government has spoken out about the falling paddy price, but I see that implementers—rice mills, traders—do not listen,” he said, adding that farmers in Battambang province were still being offered well below normal prices despite blocking a highway in protest last week'.
More measures. Phnom Penh Post (Sep. 27):
'The state-owned bank entrusted with extending $27 million in emergency loans to millers to purchase rice paddy has marginally lowered the interest rate on these conditional loans in an effort to shorten some of the strings attached.
The Rural Development Bank (RDB) announced late on Sunday that it would lower the annual interest rate on loans to rice millers to 7 percent, from 8 percent.
Under the terms of the lending package announced last week, millers who accept the loans are required to purchase paddy rice from farmers at $210 per tonne at the farm gate or $225 per tonne at their warehouse'.
But alas. The Cambodia Daily (Sep. 30):
'Rice paddy prices have taken a new dive to less than $150 per ton ahead of the Pchum Ben holiday in an ongoing crisis that has only deepened despite government intervention earlier this month.
Sinking from $250 per ton in the middle of last month to $192 earlier this month, the government approved $27 million in subsidies to help mills purchase paddy from farmers and appealed to officials and friends of the CPP to buy paddy and dry it themselves, making room for more at mills.
With international paddy prices continuing to fall, Hun Lak, vice president of the rice federation, said the current crisis is likely to carry into the country’s main harvest season in November unless the government intervenes again.
At that point in time, the issue would become “bigger than now,” he said.
Chan Sophal, director of the Center for Policy Studies for Cambodian Development, agreed that there is little that could be done to help farmers through this struggle, except by continuing to pour money into the sector.
“I don’t expect the government to have enough cash to help every farmer,” he said.
“It’s not looking good for the coming harvest in November and December.”'
If anything, a lesson learnt (though it was known before the lesson was started). Governments simply can not intervene in rice markets, other than becoming a major player one self. Throwing money at problems concerning rice pricing does not work.
The AECnewstoday (Oct. 5) tries to conclude the speed bumps, but adds:
'According to Reuters, the Cambodia rice sector have a hard time competing with other Asean rice exporters such as Thailand and Vietnam because of expensive transport and higher electricity prices.
Kenn Kunthy, chief executive of rice miller Battambang Rice Investment Co, told Reuters that falling rice prices were a global trend and the Cambodia rice sector faces fierce international competition. ‘”There have been no orders from abroad so millers couldn’t buy rice from farmers”,’ Mr Kann said.
Prices being offered by mills affiliated with the rice federation had fallen to about $150 per ton for paddy on October 5, despite the stimulus subsidies'.
Some sideline news from Cambodia. The Cambodia Daily (Sep. 29):
'In an effort to stir national pride and bolster the faltering rice sector, the Cambodian Rice Federation has created a seal emblazoned with the federation’s logo to identify rice that has been grown and milled in Cambodia.
And if the carrot doesn’t work, they are also prepared to use a stick: more vigorous enforcement of laws that punish those who sell imported rice falsely claiming that it is 100 percent Cambodian grown.
Var Roth San, an adviser to the Commerce Ministry, said that those selling “fraudulent rice” would be jailed for a year and have their business closed. Those who used the federation’s seal fraudulently would be jailed for five years.
The moves come as sluggish global demand for rice has hit markets across Southeast Asia, driving down prices and bringing Cambodian rice into steeper competition with its neighbors. The government has pumped money into the rice sector over the past two weeks to prevent farmers from going bankrupt.
Challenges also come from further afield. Nigeria, once the world’s second-largest importer of rice at 3 million tons per year behind China, which imports 4 million tons annually, started self-sustainability measures last year and for months at a time has completely frozen rice imports. Other West African nations are following suit, Mr. Bassett said.
Thailand, meanwhile, is trying to rid itself of a nearly 10 million ton rice surplus and Vietnam, with its more cost-efficient production, is able to maintain a significantly lower price point for its crops, which frequently cross its porous border with Cambodia'.
Then the concept of niche marketing. The Phnom Penh Post (Sep. 16):
'GIZ Cambodia, a branch of Germany’s international development agency, signed an agreement yesterday with local organic food retailer Khmer Organic Cooperative to provide technical support to develop organic vegetable production and to assist the firm in obtaining certification for its products.
The agreement calls for the establishment of two demonstration farms for organic fruits and vegetables that will later be used as a national organic training centre. It also aims to strengthen regional market linkages, establish local organic supply networks and raise consumer awareness'.
Fair and square
How to deal with political opposition? Get them financially.
Despite Thailand continuing to thrive on corruption and nepotism, the junta sees fit to persue legal challenges (from biased courts) so as to discredit previous democractic governemnts. And the stick used is the previous governments extravagant rice buying scheme which left precious little room for the role of the purchaser.
What follows are a couple of sound bytes:
Bangkok Post (Sep. 9):
'The Anti-Money Laundering Office (Amlo) is preparing to seize assets from two companies including Siam Indica in relation to allegedly fake government-to-government rice deals'.
Bangkok Post (Sep. 19):
'Former commerce minister Boonsong Teriyapirom and five ex-ministerial officials involved in the fraudulent government-to-government (G2G) rice sales have been ordered to pay 20 billion baht in compensation.
Commerce Minister Apiradi Tantraporn authorised the ministry's permanent secretary Chutima Bunyapraphasara to sign an administrative order demanding the payment.
But doubt has been cast over whether Ms Chutima is willing to sign the order and her expected successor, Wiboonlasana Ruamraksa, has also expressed doubt'.
Bangkok Post (Sep. 19):
'After much-publicised reluctance, Commerce Minister Apiradi Tantraporn on Monday signed an order demanding 20 billion baht in compensation from former commerce minister Boonsong Teriyapirom and five ex-ministerial officials for false government-to-government (G2G) rice deals. Two people signed the order but neither of them did it in their capacities. Mrs Apiradi signed it on behalf of Prime Minister Prayut Chan-o-cha while commerce permanent secretary Chutima Bunyapraphasara signed it on Mrs Apiradi's behalf'.
Bangkok Post (Sep. 19):
'Government debt worth 510 billion baht, borrowed from the Bank for Agriculture and Agricultural Cooperatives (BAAC) to fund the last administration's loss-making rice-pledging scheme, will take an estimated 16 years to be paid off. Luck Wajananawat, president of the state-backed bank, said if the loan repayment amount remains unchanged, the government will take around 16 years to pay off the debt'.
Bangkok Post (Sep. 24):
'A government committee has concluded that Yingluck Shinawatra must pay 35.7 billion baht in compensation for losses from her rice-pledging programme from 2012-14'.
The Bangkok Post (Sep. 25):
'Former prime minister Yingluck Shinawatra has asked Prime Minister Prayut Chan-o-cha to treat her as fairly as he does with his younger brother and permanent secretary for defence Preecha Chan-o-cha.
Ms Yingluck's comment was a reference to insinuations made against Gen Prayut's brother Pol Gen Preecha. A company, of which Gen Preecha's son was a shareholder, is suspected of having been awarded seven projects from the 3rd Army Region between December 2014 and April this year worth a combined 97 million baht'.
Bangkok Post (Oct. 2):
'The Public Sector Anti-Corruption Commission aims to start its investigation into allegations of state graft under the Yingluck Shinawatra government's rice-pledging scheme this week. PACC secretary-general
Prayong Priyajit said the agency has received 853 complaints of malfeasance perpetrated by officials at the Marketing Organisation for Farmers, the Public Warehouse Organisation and the Bank for Agriculture 
and Agricultural Cooperatives'.
So basically all shit is being shoved in the same direction.
Let's see what else is there to report? It's mostly data crunching
The Bangkok Post (Sep. 30):
'Thailand remained the world's second-largest rice exporter after India in the first eight months of this year, with exports down almost 11% last month, according to exporters. From January to August, Thailand shipped 6.06 million tonnes of rice worth 96.23 billion, up 2.9% year-on-year by volume and 1.4% by value'.
Most exports were destined for Africa. 

In other rice news from Thailand, the Bangkok Post (Sep. 8):
'The government yesterday approved the sale of 755,000 tonnes of rice stocks to 11 winning bidders for a combined 7.2 billion baht. According to Duangporn Rodphaya, director-general of the Foreign TradeTrade Department, Prime Minister Prayut Chan-o-cha approved the amount in his capacity as chairman of the National Rice Policy and Management Committee'. 
Bangkok Post (Sep. 9):
'Authorities are speeding up measures to keep rice prices steady after forecasting 83% of all paddy in the main crop will be harvested between October and December this year. The Agriculture and Agricultural Cooperative Ministry has projected a total of 24 million tonnes of paddy from the 2016/17 main crop, which runs from around April this year to February next year. Of the total, 20 million tonnes will be harvested in the last three months of this year'.
The Bangkok Post (Sep. 12) reports on the sugar sector:
'Last week, the government announced a policy to expand the sugar industry. The strategy, initially, sounds good, because it will catapult the Thai agriculture sector from a raw material supplier to a high value industry. FarmVille version 4.0, if you will. 
In the upgraded version, the Office of the Cane and Sugar Board (OCSB) reportedly has approved licences for investors to develop 25 more sugar factories, , adding to the existing 54 plants, over the next five years. That means the country's sugar cane industry aims to raise sugar plantations from 10 million to 16 million rai by 2026. Six million rai of of plantations will involve crop-switching as the government encourages rice farmers to switch to more lucrative and higher value crops such as sugar cane. 
Personally, I like this policy. Yet, I cannot help but worry it might worsen pollution caused by sugar harvesting.
Everything seems to be going well, except the worsening air pollution and environmental degradation caused by pre-harvest sugarcane burning, which precedes cutting.
Such a practice takes place in other sugar-harvesting nations. In the US state of Florida, the law still permits pre-harvest burning (which the Sierra Club, a conservation group, has tried to stop).Brazil and Australia have passed laws to ban sugarcane burning. Now Thailand needs to tackle the problem. 
But the practice has changed due to the growth of the industry. Thailand has become a major sugar exporter. Plantations have been expanded to meet higher demand. Yet skilled harvesters have diminished in number, either retiring or shifting to lighter work.
The sugar industry upgrade might sound appealing. But if pre-harvest burning rages on, we might find the taste of sugar not so sweet after all'. 
This preludes calls to upgrade. The Bangkok Post (Sep. 19):
'Thailand, the world's second largest sugar exporter after Brazil, is to overhaul its sugar production and distribution systems for the first time in more than three decades in order to avoid being challenged by Brazil at the World Trade Organization (WTO). 
According to the Office of Cane and Sugar Board (OCSB), Thailand will have to revoke its current 70:30 profit-sharing system, in place since 1984, which will require cancelling its quota system and floating domestic sugar prices.
Brazil is challenging Thailand over "subsidies" for sugar producers that it says have dragged down global prices and allow Thailand to win a larger market share at the expense of Brazilian producers, conduct that is not in line with international trade agreements. 
To keep food prices and inflation rate under control, the government has been maintaining a price ceiling for sugar, with the retail price fixed at 23.50 baht per kilogramme by the Commerce Ministry. 
The price ceiling occasionally results in sugar shortages as profiteers normally smuggle domestic sugar to sell in neighbouring countries, especially when global sugar prices rise above the fixed domestic retail price'.

Sunday, September 4, 2016


The Phnom Penh Post on August 15 reports:
'Smallholder farmers have a crucial role to play in tempering the growing pains of Cambodia’s transition to an industrialised economy, but unless something is done, they will face a land shortage in the coming years, according to the authors of a new report.
They will need land!, a report commissioned by the NGO Mekong Region Land Governance, predicts that by 2030, the amount of land required to sustain Cambodia’s smallholder farmer population will have increased by anywhere from 10 to 64 per cent of 2015 levels, or 320,600 to 1,962,400 hectares. The lead author of the report, Jean-Christophe Diepart, yesterday stressed smallholders’ importance in Cambodia'.
Now there's no doubt that the need to support smallholders is required. However, how to scientifically prove this? By thorough research.

The research cited above, surely does go out of it's way to predict land hunger needs for small holders. Besides demographic models there are also economic growth models which suggest that urbanisation will temper demographic growth in rural areas.

However one is limited in the fact that prior research references are patchy and not relevant as any research pre-2007-2008 has more to do with previous situation of conflict.
What I did miss is the possible assumption that much of the urbanisation is due to the influx of exactly those that are the focus of this report, the smallholders. 
On the other hand f.i. the opportunity cost of growing rice is neglected. While exactly the availablity of rice land is the overall factor in having sufficient / insufficient land.

It's exactly this kind of modelling that limits the findings and conclusions. 
There is another recent example on which the Phnom Penh Post (Sep. 2) reports:
Climate change is threatening the Cambodian rice industry, and it is marginalised communities that will be worst affected unless the government takes action, according to a new study.
The study’s authors, Sokuntheavy Hong and Jun Furuya, took historical climatic, socioeconomic and rice-yield data as their benchmark, and used economic and climate forecasts to estimate future rice crops and prices through 2030.
Looking at both moderate and extreme economic and climate change scenarios, they found that it is not a matter of whether rice prices will go up in coming years, but by how much. In the worst-case scenario, the authors predict that by 2030, rice prices will have increased by as much as 1.52 million riel ($370) per tonne – or 88 per cent above the price of $420 a tonne, reported in December.
It seems that pure economics contradict this. If prices will go up, more land will be brought under rice, if not in Cambodia but certainly worldwide, easing prices. 

Somehow the model created fails to take future development into consideration, seeing Cambodia as a separate entity with no means to exchange with the wider world.

Continuing on the climate change subject, there's this snippet from the Phnom Penh Post (Aug. 26):
'About 40,000 Battambang rice-farming families already suffering steep losses from a severe drought are at risk of seeing their crops wiped out entirely by devastating floods as late seasonal rains start to kick in'.
It illustrates how Cambodia's future will be determined by climate changes: there will be winners and losers, with hopefully more winners than losers.
More marginal news. The Khmer Times (Aug. 22):
'Rice millers and exporters were strongly urged by the Cambodian Rice Federation (CRF) on Friday to adhere to a code of ethics, to ensure that consumers of the Kingdom’s staple grain sold in domestic and overseas markets were not cheated by unscrupulous traders mixing supplies with lower quality rice to maximize profits.
Cambodia’s rice exports fell by 6.9 percent from the 283,825 tons in the first six months of last year to about 268,190 tons in same period this year, according to a report released by the General Department of Agriculture last fortnight.
Hean Vanhan, the deputy director of the General Department of Agriculture, told Khmer Times the drop in the volume of rice exports was partly due to millers and exporters not having enough capital to buy rice in the harvest season to store in warehouses for processing and export, as well as the flow of rice imported from Vietnam, while Thailand was releasing its rice to the market at a lower price'.
While the CRF also points to the Ministry of Commerce. The Phnom Penh Post (Aug. 15):
'The Ministry of Commerce set up a new taskforce on Friday to address challenges faced by the Kingdom’s struggling rice industry and assess demands made by members of the Cambodia Rice Federation (CRF), who have decried the ineffectiveness of an earlier taskforce set up by the ministry.
Tang Chhong Ngy, marketing manager of rice miller LBN Angkor (Kampuchea), said the first taskforce had been highly ineffective and the second working group was created after the same issues were raised again by the CRF.
“We saw many procedures at the national level but none that actually went into operation,” he said'.
Clouds ahead
News from Vietnam which as of yet fails to register outside of Vietnam. Ongoing trade negotiations with the EU will ease access for rice imports and there's a hunch who might be on the losing hand. The news as reported by (Aug. 25):
'Vietnam's rice exports will enjoy a zero percent tariff to the European Union from 2018. 
The free trade agreement between Vietnam and the E.U. (EVFTA), which comes into effect in 2018, will allow the country to export 100,000 tons of rice each year to the E.U., quadruple the current figure.
In 2013, Vietnam accounted for 3 percent of the E.U. rice market, while Thailand made up about 18 percent, Cambodia 22 percent and India 24 percent'. (Aug. 31) adds:
'Professor Võ Tòng Xuân, a leading rice expert, said it was hard for Việt Nam to share the same rank as Thailand, but the country could learn from the experience of Cambodia, which has been emerging thanks to its rice winning the world’s ‘best rice’ title for three consecutive years'.
Bangkok Post (Aug. 4) predicts rice pricing for the immediate future:
'Thailand's rice market is expected to face a price war next year as a result of oversupply that will lower prices in both domestic and export markets, while the stronger baht could hurt the competitiveness of rice shipments, exporters warn'.
Crop output would be 10-20% up as more farmers expand rain-fed rice fields. Which in a way addresses some issues raised by the second model presented above: higher rainfall creates floods for some, but more irrigation possibilities for others.

Meanwhile the Thai junta hopes to encourage farmers to choose other crops. The Bangkok Post (Aug. 20):
'About 110,000 rice-growing families whose land is not well-suited for the grain have signed up to a programme to help them switch to other crops or raising animals, Agriculture Department director-general Olarn Pithak said'.
The incentives were cash hand-outs and soft loans ...
A video on farmers rice seed research in north Thailand (Bangkok Post, Aug. 14):

Of elephants
Away from rice there's not much to mention. The Phnom Penh Post (Aug. 8) exemplifies just how difficult developing the farming sector may well be:
'Just three months since starting production, Cambodia’s largest sugar mill is sitting idle due to a shortage of its primary input sugarcane, a provincial Agriculture Ministry official said yesterday.
Rui Feng claims its mammoth factory, which opened in April, is capable of processing 20,000 tonnes of sugarcane per day, turning it into 2,000 tonnes of refined sugar for buyers in the EU, China and India.
However, Trida said the mill had not operated at capacity and estimated that it processed just 10,000 tonnes of sugarcane before shutting down its production line in June'.
Still, thinking big is the way forward. It seems. The Vientiane Times (Aug. 23):
'Champassak province farmers will be supported in planting thousands of hectares of cashew nut trees after the provincial Administration Office gave the go ahead for a US$9 million Korean project.
D eputy Director of the pro vincial Agriculture and Forestry Department, MrViengsaySipraphone, told Vientiane Times on Monday afternoon that G Farm Company from the Republic of Korea will spend US$6m to construct a cashew nut processing plant and other infrastructure on an area of 150 ha with an adjacent 47 ha plot for seedlings'.

Sunday, August 7, 2016

Safety first

To start off this update, we need to move away from Cambodia, away from Asia. It's the U.S.A. where a precedent is being set, which is another nail in the coffin of those banking on consumer power.

Initially it looked like a gain for campaigners, who have been able to force the U.S. government to label food from GMO sources. The bad news: the label doesn't actually have to be readable to the consumer!
Al Jazeera (Aug. 5):
'Food safety organisations in the US have condemned a new law they say will allow food producers to obscure the labeling of genetically modified ingredients in their products, despite widespread health concerns over the effects of GMOs and the pesticides associated with them.
Signed into law on Friday by President Barack Obama, the legislation permits manufacturers to inform consumers of GMO content through the use of Quick Response or QR codes, which require a device - such as a smartphone - to read.
The law was passed despite opposition from environmental and food safety groups, as well as national polls which show that some 90 percent of Americans surveyed favoured clear labeling.
Paul said that more than 300 food and pesticide makers spent nearly $400m over the last four years in lobbying efforts to defeat the mandatory labeling of GMOs.
"We failed not because of lack of support from consumers - but because of the enormous amounts of money thrown by the industry," Paul [Katherine Paul, an associate director of the Organic Consumers Association] said, adding that she was disappointed by Obama, who once vowed to enforce clear GMO labeling'.
The law also fails to stipulate penalties if found in breach of the law.  
Let's hope that the most probable outcome will be the opposite: food without GMO sourcing will be labelled clearly GMO-free! 

More or less on the same subject, the Ground Reality blog takes a pot shot at the conclusion arrived by Nobel laureates that we all should swallow the GMO pill. 
From (Jun. 23):
'On the subject of genetically engineered foods, this rings true. After years of debate, the prestigious National Academies of Sciences, Engineering, and Medicine has released its verdict: there is no substantiated evidence that food from genetically engineered (GE) crops were less safe than food from non-GE crops'.
Then the Ground Reallity response (Jul. 17):
'But first let’s look at the usual scientific rhetoric that I find is repeated worldwide ad nauseam: “Opposition based on emotion and dogma contradicted by data must be stopped.” Whose data? The data produced by GM companies or the data produced based on the research funded by biotech giants? 
To say that scientific and regulatory agencies around the world, which find GM crops as safe as, if not safer than those derived from any other method of production, is a clever ploy to hoodwink public opinion and thereby push harmful and risky crop production technologies.
What has to be accepted is that the food crisis the world witness is not because of any shortfall in production. The problem is because of the absence of food justice, which in other words means access and distribution'.
Gold rush no more
The bigger picture is that like many exporting countries, Cambodia is struggling in it's ambitions to gain more market share as the overall world market gives mostly purchasers the power to bargain.
The Phnom Penh Post (Jul. 8) kicks off the concerns:
'Cambodian rice exports decreased nearly 6 per cent year-on-year during the first semester, reinforcing concerns about the future of the rice industry, the Kingdom’s most important agricultural sector.
Rice industry experts say the sector is suffering from a number of issues, including competition from low-cost Vietnamese imports, high production costs, and millers’ lack of finance.
According to CRF president Sok Puthyvuth, who was re-elected for a second term last Saturday, the issues have already resulted in between 10 and 20 per cent of the nation’s rice millers declaring bankruptcy'.
The Khmer Times (Jul. 18) chimes in:
'Cambodia’s rice industry has been advised by the European Union (EU) to seek other markets and not just concentrate its exports to Europe, as it moves from a low-income country in its least developed country (LDC) status to a lower-middle income nation, amid calls to cut its EU tariff-free export quotas.
According to Oryza, the daily online markets newsletter, Italy is pushing the EU to cut LDC rice imports from Asia to protect the Italian rice market that seems to be getting bigger'.
One way round trade issues is reported by Phnom Penh Post (Aug. 3). Cambodia has asked China to double it's rice imports which as Cambodia is the only country to support China in the South Chinese Sea. Anyway:
'China will also consider increasing the export quota on Cambodian rice to 200,000 tonnes starting in 2017, as well as continuing to negotiate on the exports of broken rice, banana, mango, longan, cashew nut, pepper, coffee and soybean. The current export quota on rice to China is 100,000 tonnes per year.
Ministry spokesperson Soeng Sophary stressed that while the talks were fruitful, no official decisions were made'.
Future for Cambodia's rice not bright? Phnom Penh Post (Aug. 3):
'An industry analyst has issued a dire forecast for Cambodia’s rice sector, claiming the long-grain “white gold” that has been credited with lifting millions of Cambodia’s farmers out of abject poverty, and which seems a natural fit for the Kingdom’s agrarian workforce, is on a downward trajectory.
Jim Plamondon, a former technical evangelist for Microsoft who is developing new marketing strategies for Cambodian rice varieties, says the Kingdom’s rice industry – the lifeblood of its agricultural economy – is headed for a brutal and imminent consolidation'.
Basically lots of policies on rice import and export are based on the once in a lifetime price spike of 7 years ago, something that will not happen in the near future. With prices sluggish or dropping it's traders and millers who most probably have bought at too expensive terms and are facing losses.

Did I hear niche markets? The Khmer Times (Jul. 14):
'As the demand for organic rice in European and United States markets keeps growing, many local rice millers and exporters are moving quickly and signing contract farming deals to supply them with the premium product'.
There's ongoing confusion concerning branding Cambodia's rice. The Phnom Penh Post (Jul. 21) looks to bring clarity in this, but it seems this will not clear itself.
'The private sector’s campaign to develop a single recognisable umbrella brand for Cambodia’s premium varieties of fragrant rice looks increasingly tenuous after a government body voiced objections to the name selected, and argued instead that the country should market each variety of rice under its own individual brand name.'
ll, self-explanatory, not only is Cambodia facing a difficult export market. Vietnam's Thanhniennews (Jul. 19):
'Vietnam has reduced its rice export target for the year since demand is falling as many buyers await cheap supply from Thailand’s stock clearance sale.
The Vietnam Food Association (VFA) said it has reduced the export target from 6.5 million tons to 5.65 million tons, Tien Phong newspaper reported'.
The Bangkok Post (Aug. 4):
Thailand's rice market is expected to face a price war next year as a result of oversupply that will lower prices in both domestic and export markets, while the stronger baht could hurt the competitiveness of rice shipments, exporters warn'. 
So no good news for farmers, though the absence of drought would mean better harvests. But with prices set to drop, it's traders who won't be interested in buying as they might face increased losses. So farmers will get stuck.

How should Thailand compete even better? The Bangkok Post (Jul. 27):
'The government is being urged to exercise the powerful Section 44 of the interim charter to cut red tape and speed up sales of state rice stocks'.
Same recipe everywhere ...

Moving on, the Bangkok Post (Jul. 25) has some wider implications of new trade trends:
In 2014, Thailand imported only 593,000 tonnes of wheat.
The figure rose to 3.46 million tonnes in 2015 and will reach an estimated 5 million tonnes this year.
Higher imports have affected domestic prices of maize and tapioca chips in recent years. Wheat imports come at the behest of animal feed producers which are feeding the chicken boom ...
Scape goat
The Bangkok Post (Aug. 2) notes that the nonpolitical trial of the former democratic government by the current junta revolves around the possible loss of what they now estimate as 26 bn Bhat. Though how this figure is arrived at is unsure as previous attempts to pinpoint the exact losses resulted in data that were much higher. 
It also seems that the timing of this is more significant: just a week before a referendum on a new constitution that no political party favours with the outcome that either a new constitution is voted in thereby guaranteeing the junta constitutional influence. Or if not approved by the electorate the junta will also remain; a win-win situation.
Faced with the formal accusations, the former PM responds (Bangkok Post, Aug 5):
'Former prime minister Yingluck Shinawatra told the Supreme Court on Friday that her loss-ridden rice-pledging programme really helped debt-ridden farmers and the national economy.
Ms Yingluck told the court that pledging prices set at 15,000 to 20,000 baht per tonnes were not too high because they were aimed at enabling rice growers to earn equivalent to 300 baht per day -- the same as the daily minimum wage for labourers -- and resolving their chronic indebtedness, she said'.
Seems fair.

Vientiane Times (Jul. 28) notes that coffee is becoming an alternative crop in the northern province of Phongsaly:
'Phongsaly, long renowned for its green tea, is set to be the nation's first coffee producer in the north after around 3,000 hectares of coffee trees were planted in the province'. 
Apparently this has been going on for a couple of years under Chinese guidance.

again, in Cambodia coffee growing is not so positive. The Phnom Penh Post (Aug. 3):
'Samban [director of the Agricultural ministry’s department of industrial crops] attributed the contraction to the impact of recent droughts and the volatility of global coffee prices, as well as a flood of cheap imported coffee into the market.
The shrinking market for locally produced coffee has not discouraged MK Mondulkiri Company, which has found a niche supplying organic Cambodian coffee to the local and international market.
Orn Chanthy, the company’s CEO, said the competition in the coffee retail market was fierce, but many consumers recognise that cheap products are often of inferior quality.
“It is hard to compete on price as coffee can be imported cheaply, though without any assurance of quality,” she said. “There is a lot of fake coffee in the market and some coffee [deceptively] uses the name of our coffee-growing region.”
Chanthy said exports of MK Mondulkiri coffee increased last year, with shipments going to European and Asian buyers, though she declined to provide figures'.
So with China seeking more and more land for banana's, it's no wonder that Cambodia may well be next in line. The Phnom Penh Post (Aug. 2):
'A Chinese agricultural company has agreed to establish a banana plantation in Cambodia, according to a senior government official'.
Info on Mong Reththy Group. Phnom Penh Post (Jul. 18) notes how it will step into the agrofeed mill business:
'Agro-industrial conglomerate Mong Reththy Group is constructing a new $10 million feed mill to supply its own livestock operations as well as the domestic market, the group’s eponymous president and CEO said yesterday'.
While on Jul. 6 the same source focuses on the companies palm oil operations:
'Export of crude palm oil from Mong Reththy Group, the Kingdom’s only active producer, doubled during the first half of the year despite prices showing no indication of improving, a company executive said yesterday'.
Finally the Bangkok Post has put up two video's which highlight award-winning Eastwest Seed business. There's this (Jun. 12) on the business explaining also why they are not so interested in GMO seeds. And this (Jul. 10) about the way that the company is for instance pushing the marigold business.