The story over the past month has of course been how the Covid-19 pandemic is influencing rice markets, mostly on the consumer side.
From IRRI, an article by Valera, H.G.A., J. Balié, and V.O. Pede which seeks to look at the wider implications:
'The impact of the COVID-19 crisis on rice-based agri-food systems is expected to be much more serious and deeper than the 2008-2009 GFC. Containment efforts to address the pandemic have already severely disrupted farm supplies such as seed, fertilizer, and other agro-inputs. The lockdowns imposed in countries heavily impacted by the COVID-19 pandemic have also created important labor shortage and migration within countries (e.g. India). This could result in a higher rural wage rate if limited labor availability continues.So what I read is that consumption might inch up, though most probably for lower grade rice, but as the past has revealed, if an exporter decides to cut back for domestic policies, then anything can happen.
The lockdowns are also changing the behavior of consumers. They have been stockpiling food and other essential items. Consumers have also tended to change their spending expectations, anticipating a much longer negative financial impact of the crisis. According to a recently published McKinsey & Company article, the outlook of consumer spending is gloomy for most European countries, while for countries like Brazil and Japan the spending propensity would be impacted less.
We argue that the COVID-19 pandemic could also impact food access, and more particularly rice demand, for three main reasons. First, the traditional distribution (retail, restaurants, and food stores) and logistic (ground, air and maritime transportation, as well as processing) channels have been disrupted. Second, employment has declined and incomes have been suppressed, especially for wage earners. Third, food prices have already been negatively impacted in many countries. The price of rice has increased in many Southeast sian countries between early March and mid-April 2020 as reported by Reuters.
The combined effect of these forces could lead to a shift in rice demand. As the income of families will decline substantially, households will spend less on relatively more expensive food items like meat, milk, vegetables, and fruits. Hence, in most Asian countries where rice consumption per capita is already high, we could see both a moderate increase in rice consumption per capita and an overall increase in rice consumption due to the fact that more people will have fallen below the poverty line. For them, the only affordable food is likely to be rice. However, these poor consumers are already negatively affected by the price spikes for rice, which further compounds their purchasing power (see real price levels in Figure 3). These two mechanisms (contraction of incomes and higher rice prices) have the potential to worsen the food insecurity situation of the most vulnerable and poorest segments of the population'.
More in-depth. The Diplomat (May 7):
'Much of the reason for rice’s stellar and almost unique performance in the commodities space is attributable to governments’ coronavirus lockdown measures across Asia. This resulted in most of the world’s largest rice net exporters, namely India, China, and Vietnam, as well as major up-and-coming net exporters like Cambodia and Myanmar, freezing their overseas shipments to ensure sufficient stocks of rice for domestic consumption. Thailand stands out as the one significant rice exporting country continuing to supply the region’s heightened rice-consumption needs throughout the pandemic.
...
China’s surging demand for rice at the beginning of the year was arguably the principal driver in boosting global prices for the agricultural commodity. In the first quarter of 2020, according to China’s Customs Statistics, the value of rice imports rose by 60.3 percent while the value of overall agricultural imports increased by 17.4 percent for the period.
...
Vietnam, currently the world’s fourth largest rice exporter, behind India, Thailand, and the United States, managed $1.4 billion in exports, last year, which accounted for roughly 5 percent of international rice exports. Even so, Vietnam restricted export volumes for April and May to ensure ample reserves for domestic use. For the sake of maintaining cooperative relations with neighboring countries and within the Association for Southeast Asian Nations (ASEAN) framework, Vietnam’s government has been conducting bilateral negotiations with the region’s net rice importers to secure special government-supply agreements.
According to Vietnam’s deputy minister for agriculture and development, the Philippines, which imports 90 percent of its rice from the country, will be one of the first to be informed of the exception to this temporary restriction as Manila awaits delivery of about 1.2 million metric tonnes of rice. Other regional net exporters that have imposed such export restrictions, including Myanmar and Cambodia as top-ten global rice exporters, are similarly negotiating such agreements with the region’s net importers.
Thailand, the world’s second largest rice exporter, on the other hand, remains open for new business as its regional competitors close down international rice sales. The Thai government announced that sufficient rice was cultivated to meet its annual export target, normally around 10 million tonnes yearly, on top of its domestic consumption of a similar quantity, even in the face of a debilitating drought that’s lasted since November last year. The price of Thai white rice 5 percent broken, which is an Asian export benchmark, has risen over 25 percent this year, even reaching a seven-year high, as India and other exporters imposed export controls. At the beginning of the year, Thailand’s rice export prospects were relatively gloomy, but a complete about-turn materialized when the coronavirus outbreak arose'.
FAO rice price update for May 2020 sort of agrees. More sales at higher prices:
'The FAO All Rice Price Index (2002-2004=100) increased by 15.9 points (7 percent) in April 2020 to reach 248.2 points, it’s highest level since December 2011.Agreed
...
Asian markets were still reeling from the impact of sudden surges in domestic demand spurred by concerns over the COVID-19 pandemic, when the late March suspension of new export contracts in Viet Nam was followed by news of Cambodia prohibiting Indica and paddy exports and of Myanmar temporarily halting the issuance of new export licenses. Logistical constraints linked to quarantine measures, particularly in India, compounded on the uncertain export policy environment, driving prices up across most Asian origins and qualities. Asian quotations began receding only mid-way through April, when Viet Nam instated an export quota, successively expanding it and ultimately deciding to repeal all export restrictions as of 1 May, and when Indian exports regained momentum as bottlenecks began to clear'.
Back to some of the related action. The Bangkok Post (Apr. 23) reports on domestic actions:
'Packaged rice manufacturers and distributors yesterday agreed to cut their prices by as much as 50%, as requested by the Commerce Ministry'.
But the threat of a sellers market, seems to have ebbed away. The Phnom Penh Post (Apr. 30) on Vietnam:
'Vietnamese Prime Minister Nguyen Xuan Phuc on Tuesday agreed with the Ministry of Industry and Trade’s (MoIT’s) proposal to resume rice export from May 1, in accordance with Decree 107/2018/ND-CP on rice export business'.
Two weeks later, Cambodia follows suit. The Phnom Penh Post (May 13):
'The government has decided to allow the rice industry to resume exports of white rice to global markets after a ban was issued in March.
The lifting of the ban comes as the Philippines seeks to import an additional 300,000 tonnes of milled rice from major producers in Southeast Asia.
The decision is in response to a request by the Cambodia Rice Federation (CRF) to gradually resume white rice exports from May 20, said a letter sent from the Ministry of Economy and Finance to the CRF on Wednesday and signed by Minister Aun Pornmoniroth.
In March, Prime Minister Hun Sen ordered a temporary suspension of white rice and paddy exports to ensure adequate domestic supply, food security and price stability in the Kingdom during the Covid-19 pandemic'.
So are we now back where we started?
Edge
Meanwhile the non-Covid related news on rice and Cambodia.
Phnom Penh Post (May 3) notes how the rice related statistics are on the up:
'Cambodia exported 300,252 tonnes of rice to the international market in the first four months of this year – equivalent to $210 million – the highest export volume in the past decade, the Cambodia Rice Federation (CRF) said in a report.
The export volume is 40.46 per cent over the 213,763 tonnes reported in the same period last year, it said.
China accounted for 41 per cent of exports or 122,094 tonnes, the EU and the UK 32 per cent or 97,337 tonnes, ASEAN countries 13 per cent or 37,428 tonnes and other countries 14 per cent or 43,339 tonnes.
CRF secretary-general Lun Yeng told The Post on Sunday that rice exports have reached 48.41 per cent of last year’s total exports. The spread of Covid-19 has led to a higher demand for food and storage in all countries, he said'.
Reports galore, hopefully not all following concern the same. The Phnom Penh Post (May 12):
'The government and the private sector are jointly studying the feasibility of lowering paddy production costs and refining milled rice export plans to increase the competitiveness of Cambodia’s market.
Ministry of Commerce secretary of state Sok Sopheak on Monday said ongoing discussions are aimed at identifying the challenges and giving the Kingdom’s rice sector a competitive edge'.
The Khmer Times (May 13) runs an article
'The Ministry of Commerce and development partner – CAVAC (Cambodia Agriculture Value Chain Programme) – have reviewed a study on rice export cost, aiming to enhance the competitiveness of Cambodia’s rice export'.
But not yet published.
Oh yes, same source, same day even, but different article:
'The Ministry of Commerce and Cambodia Rice Federation (CRF) are continuing working to solve the long-running challenges of the Kingdom’s high cost of electricity and transportation in order to boost the country’s rice industry.
...
The Ministry said that the main challenges for Cambodia rice exports include the high cost of electricity, the high cost of transportation, fee costs at ports and the cost of shipping from ports to the destinations'.
Pity to have spent money researching this. It's been this case like since always.
Strict
Cassave remains on the up. The Phnom Penh Post (Apr. 29):
'Cambodia exported 1,115,365 tonnes of cassava to the international market in the first three months of this year, inching up around 1.6 per cent from 1,097,803 in the year-ago period, said a report from the Ministry of Agriculture, Forestry and Fisheries'.Khmer Times (May 7) on cashew:
'Cambodia exported 186,205 tonnes of cashew nut to foreign markets in the first four months of this year, according to a report from the Ministry of Agriculture, Forestry and Fisheries'.Rubber acts as expected, a downwards spiral. The Phnom Penh Post (April 16):
'Rubber exports in the first three months of this year declined sharply as a result of tightened measures at border checkpoints to prevent the outbreak of the Covid-19 disease, plantation owners and exporters have said.
Long Sreng International Co Ltd general manager Heng Sreng told The Post on Monday that his company exported a very small amount of rubber in the first three months of the year due to restrictions on the Cambodian border with Vietnam.
Long Sreng International owns the Boeung Ket Rubber Plantation in Stung Trang district’s Prek Kak commune in Kampong Cham province.
Over the past three months, the company has exported 50 tonnes of rubber to the international market, down from the year-ago figures of between 250 and 300 tonnes, he said'.
Novelty. The Khmer Times (May 7):
'A local investor has created a large-scale dragon farm community in Preah Vihear province in response to local and export demand.
Cambodian agronomist Yang Siang Koma and local partners are planning to grow 1 million dragon fruit trees covering 1,000 hectares of land in Sambor Neak community.
“We expect ultimately to create 3,000 to 10,000 jobs for residents,” he said, adding that the fruit has great potential in the market, noting that Vietnam exported $1 billion of the fruit to international markets last year'.
Not all fruits are on the up. The Khmer Times (May 1) reports on difficulties with exporting mango, though not really naming what the problem is:
'Mong Reththy Group (MRG), the largest local agribusiness company, and Korean mango exporter Hyundai Agro are discussing ways to seek a solution for mango exports.
Chang-Hoon Lee, managing director of Hyundai Agro, told Khmer Times yesterday that both sides have discussed the current situation of the local mango market.
“We agreed to exchange skills, techniques and know- how to each other. We [Hyundai] will support MRG to follow the guidelines to meet South Korea’s regulations because the Korea market is very strict with chemicals and records, plus worm and disease control when it comes to such fruit exports,” he said'.
Pepper received quite some newsprint. Phnom Penh Post (May 11):
'April marked 10 years since Kampot pepper became the first product to receive Geographical Indication (GI) status by the Ministry of Commerce.
Due to its high price and market favour resulting from its GI label, local farmers and investors are engaged in cultivating pepper in provinces across the Kingdom.
But market demand is very uncertain as the price of pepper not from Kampot or Kep, the two provinces recognised as legitimate areas to grow Kampot pepper, has plummeted, frustrating farmers.
Data from the Kampot Pepper Promotion Association (KPPA) shows that membership has increased to 455 families from 118 in 2010.
The number of wooden stakes, which farmers anchor into the ground for the pepper plants to grow around, used by its members has increased from 27,012 in 2010 to 727,317 this year.
Land designated for Kampot pepper cultivation has increased from 1ha in 2010 to 251ha today – exclusively in Kampot and Kep – and more than 100 tonnes of the prized pepper was produced last year.
The data also indicated that prices have increased significantly. Black pepper cost $5.75 per kg in 2010, while red pepper was priced at $10 per kg and white pepper cost $12 per kg.
The prices currently stand at $15 per kg for black pepper, $25 per kg for red pepper and $28 per kg for white pepper'.
Trust
Then that final paragraph in which we pull all that unrelated together. But maybe not so today.
First some Khmer related news. The Khmer Times (Apr. 28) notes that the government sees some interest in the organic growing sides of things:
'The government has announced it will launch rules and a special logo to certify food is organic.
...
Chan Pich, general manager of Signature of Asia, welcomed the move. He said currently only the private sector certifies organic standards for agricultural products in Cambodia. However, having a national organic standard is good because Cambodia wants to work within ASEAN organic standards, to have a proper logo for local products and have proper guidelines to build trust among producers and consumers'.
That said, the Phnom Penh Post (May 5) states that the kingdom is importing more and more of the non-organic:
'Cambodia imported more than 1.2 million tonnes of agricultural fertilisers and chemical pesticides in 2019, up more than nine per cent from 1.1 million tonnes in 2018, said a report from the Ministry of Agriculture, Forestry and Fisheries.
Of that, more than 1.14 million tonnes were fertilisers and 81,097 tonnes were chemical pesticides, it said.
The Kingdom imports more than 90,000 tonnes per month of about 2,600 types of fertilisers and pesticides to serve the agricultural sector'.
Then bringing into mind that we are a blog on hybrid rice and all it entails. The past we have had the opportunity to target Monsanto and it's new parent company Bayer. Responsibletechnology (Apr. 29) foresees doom:
'For Bayer’s Annual General Meeting yesterday, Monsanto investigator Jeffrey Smith predicted that Bayer will face possible bankruptcy from a new wave of lawsuits linking Roundup herbicide to numerous diseases, and that the current expected payout of up to $12 billion to more than 50,000 plaintiffs with Non-Hodgkin’s lymphoma (NHL) is only the beginning'.
