Acknowledging

Forthcoming for the rice market is the political crisis looming in Thailand. Events being played out seem to suggest that a political status quo is not on the offering and any change will most likely see the rice pledging scheme shelved or changed dramatically.

What will occur is a downward push on global prices. Thai rice exports will restart on market conditions leading to an overall price drop; there's simply too much rice stocked at the moment and the malfunctioning of the Thai exports has made many a country see their own possibilities in exporting rice. 

And buyers can safely turn to other countries to satisfy their demands.

The Nation (Dec. 2), nearly a month ago has it's idea's on the future ahead for the rice pledge scheme: 

'There were signs the government wanted to back away from the policy, or at least scale it down. But politics came into play and the most ambitious pledges to the farmers were maintained.' 

So they suggest taking it off the agenda and letting experts suggest improvements.

Cambodia's mixed bags

Let's leave the Thai politics aside and concentrate on Cambodia. Their rice exports in particular.

Cambodian nascent rice exports to Europe are in hot water. Claims are made that up to 30% of the exports are in fact of Vietnamese origin (Oryzae, Dec. 19). 

Provenance, such an important aspect of the global trade rules affects many an agricultural item in the lower Mekong where age old trading routes don't necessarily follow modern day borders. Many an agriculture item moves over the border  especially to Thailand with it's higher prices and to Vietnam with it's more aggressive exporting strategy. 

So it's no surprise that cheaper Vietnamese rice might make it s way towards Vietnam, likewise Cambodian rice heads to Thailand.

But Cambodian exporters are refuting the claims (Cambodia Daily, Dec. 23): 

'Van Vichet, the deputy secretary of ARPC (Alliance of Rice Producers and Exporters of Cambodia) , said that while the association had agreed to create a code of conduct, it denied Cambodian rice was being contaminated before being exported to Europe.

He said that the accusation was the political result of recession-stricken rice farmers from European countries lobbying E.U. officials to reintroduce tariffs for rice imported into Europe'. 

Deny, shift the blame (link to Oryzae article, Dec. 17, with some European nations complaining about imports but with no substantiation).

And: 

'Commerce Ministry spokesperson Kong Putheara agreed with Mr. Vichet’s rejection and said that any tests of Cambodian rice exports to the E.U. would confirm that the rice is all grown locally.

“What factors have the E.U. based this claim on that 30 percent of rice exports from Cambodia contain rice from Vietnam? Have they looked at the DNA or have they looked at other factors?” he asked.

Mr. Putheara acknowledged, however, that exported Cambodian rice is often sent to Vietnam, where it is milled, before being exported'. 

Officials know little ...

The EU responds. The Phnom Penh Post reports (25 Dec.): 

'While the European Union Trade Commissioner Karel De Gucht never told the Ministry of Commerce that Cambodian rice was “30 per cent” mixed with the same product from Vietnam, he did say Cambodia had to better ensure that its harvest was homegrown and not from another country, a spokesman for the commissioner said yesterday'. 

The measured response would be as such:

'In response to the trade commissioner’s concerns, the Alliance of Rice Producers and Exporters of Cambodia (ARPEC) will form a Code of Conduct in a bid to protect the country’s rice exports.

ARPEC said in a statement released yesterday that all Cambodian rice exporters had taken note of the views and would sign the Code of Conduct with the Ministry of Commerce to self-regulate exports'. 

But when do you need to stop?

'ARPEC deputy secretary David Van said the issues raised in the Oryza article were informal and emanated from rumours within “EU circles”.

“As far as the rice exporters are concerned, we maintain that until clear evidence is produced by the EU, we do not condone their claims,” he said.

In response to suggestions that some Cambodian rice could be contaminated during transit to Vietnam-based milling facilities, Van said the external process does not mean the two rice origins are mixed. He added that the low supply of Cambodian milling facilities producing the country’s rapidly increasing harvest forces farmers to send their rice to Vietnam for milling.

“But all rice grown, harvested, milled and exported in Cambodia is 100 per cent our product,” Van said'. 

Collecting evidence need not be such a problem ... Ah but wait for it, a correction (Cambodian Daily, Dec. 26):

'In the story “Rice-Exports Alliance Rejects EU Accusations” (December 23), I was quoted as saying that “some of our rice millers take rice and hire Vietnamese millers to mill it and then bring it back to Cambodia for export.”

I would like to clarify that the rice exported to the European Union. is 100 percent made in Cambodia.

All aspects of the rice production are completed in Cambodia; moreover, the rice is also checked and issued a certificate of origin before being exported from Cambodia.

Kong Putheara, spokesman, Ministry of Commerce'. 

Oops.

Of prices & exports

The Bangkok Post (Dec. 4) quotes the UN's agricultural arm, the F.A.O.: 

'Thailand will see a 17% jump in its rice stockpiles to a record level next year as it pursues a policy of buying from farmers at above market rates, the Food and Agriculture Organisation (FAO) said on Wednesday'. 

So that spells more bad news for lower pricing in the future. It also notes: 

'The expansion of Thai stockpiles will help global milled reserves gain 2.6% to 179 million tonnes in 2013-2014, rising for a ninth year, said the FAO. World rough-rice production will expand 1.1% to a record 741.1 million tonnes, with Thai output rising 3.9% to 38 million tonnes.

"Greater competition resulting from an increase in Thai supplies in the world markets is expected to come to the detriment of a number of suppliers,'' said the FAO, citing India as the most at risk'.

The Thailand Development Research Institute (TDRI) had a recent forum on the future of global rice. So reports the Nation (Dec. 17).  The bad news: increasing incomes means an evening off of consumption with possible drops by 2050 while at the same time a shift to more quality rice. The good news: there isn't any! Recommended is for Thai farmers to increase efficiency.

The Bangkok Post (Dec. 17) quotes sources from Thailand's rice exporting association: 

'Rice buyers remain reluctant to purchase Thai rice even though prices are now competitive with Vietnamese grain. "This is unusual, as Thai rice prices are now quoted at about the same price as Vietnamese rice," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association. "The free-on-board prices of 5% white rice, for instance, are only US$420 per tonne, but we still can't find buyers. This has never happened in Thai rice trading."'

Are buyers waiting for prices to drop more?

The year that was. For Thai exports: wilting ... (Bangkok Post, Dec. 27):

'The government acknowledged for the first time rice exports in 2013 will reach a mere 6.68 million tonnes worth US$4.38 billion, down by 3.9% and 7.9%, respectively'.

But are they correct?

'"If the government's rice stock sales made up 60% of the country's overall rice shipments, this is tantamount to the government selling as much as 3-4 million tonnes and the private exporters selling only only 2 million tonnes," said Mr Chookiat [honorary president of the Thai Rice Exporters Association ]. "This is impossible. Parboiled rice, which is sold only by exporters, is equal to 2 million tonnes this year. That would mean the exporters sold hardly any white rice".' 

It also notes that the anti-corruption committee will look into government-to-government trades.

Sector news

Mekong Oryza will export CEDAC's organic rice, so reports the Phnom Penh Post (Dec. 13).

What Cambodian exporters are up against? The Cambodian Daily (Dec. 24) goes into details of a truck carrying rice that has been impounded by police as it was above the maximum weight. Not so surprising, but the owner claims foul. Faulty scales. Will be continued.

More about winning the globe's best rice prize. The Phnom Penh Post has a nice article (Dec. 20) with the views of what may lie ahead. Challenges are funding, lower energy prices, poor logistics, high transportation costs and poor pr.

  

The Vientiane Times (Dec. 20) notes that Europe certifies rice from the province of Savannakhet: 

'Savannakhet has exported its first shipment of rice to European markets after attempting to enter one of the largest agricultural markets in the world for several years.

This year the province exported almost 2,000 tonnes of rice worth US$1.2 million in total, after European countries certified the standard of product as fit for sale in their markets, according to the Industry and Commerce Department'. 

FAO call for a pan-Asian rice strategy. Why? To avoid price crisis? It calls for increased efficiency. The nation (Dec. 1) has more background. Seems futile.
 

Vietnamnews (Dec. 25) mentions that Vietnamese rice is now regarded as the most expensive Asian rice. interestingly it notes that one of the reasons is that Thailand is selling older rice, thus Vietnamese rice is fresher and gets a better price. noteworthy is also that if price disparity continues Vietnam might buy Thai rice to market domestically freeing up domestic produce for export!

Unapproved

When is a GMO a GMO? We've seen this discussion before. China are hardly known for their anti-GMO stance. In fact they are one of the staunchest proponents. So it's a bit strange to see that they have rejected U.S. corn product imports because the imports were of GMO's whereby a strain had not been approved yet! Sourced from Reuters (Dec. 26):

'China has turned away about 2,000 tonnes of U.S. dried distillers grains (DDGs), a corn by-product, and more rejections are expected in coming weeks as Beijing imposes strict checks over an unapproved genetically-modified (GMO) strain, traders said on Thursday.
The move follows the rejection of more than half a million tonnes of U.S. corn after authorities detected the presence of MIR 162, a GMO variety developed by Syngenta AG and not approved for import by China's agriculture ministry'.

More on the background:

'Strict testing for MIR 162 comes as Beijing seeks to curb cheap corn imports and support domestic prices for the grain, industry sources have said.
The U.S. has urged China to act promptly to approve the strain'.

Seems that this is picking hairs.