Hybrid rice in Cambodia

Winners and losers

2012-01-14T00:50:00.005+07:00

Losing out
Far from a happy new year, Thailand's rice exporters are expecting tough times. The Bangkok Post reported on the the third of January how the nation will be facing increased competition from none other than Vietnam and Cambodia:

'He [Chookiat Ophaswongse, honorary president of the Thai Exporters Association (TREA)] said Hom Mali rice also faced competition from Cambodian fragrant rice, which is sold at over $800 a tonne [as opposed to $1100 for Hom Mali]. The Cambodian rice has a comparable quality to Thai rice in terms of aroma and appearance'.

Adding to their woes, Thailand has 'lost' a couple of million tonnes of rice. The Bangkok Post (6 January 2012) reports that the Thai government is short of 5 million tonnes which they had expected to be part of the 10 million tonnes mortgage scheme. As exporters and millers are also reporting low stocks, the question is where is all the rice? Supposedly intelligent answers can be forwarded to the Thai government.

And on the horizon, possible lower prices? An indication that high commodity prices may not sustain is given by Bloomberg (12-01-2011) which reports on dropping global prices for corn, wheat and soy. Will rice follow? Logic says yes, as farmers respond positively to price incentives, demand stagnates and governments worldwide announce increased stocks. With the exception of Thailand that is ...

Winners?
Cambodia on the other hand seems to churning out major strides in both production as well as export.
Rice output from Cambodia has increased despite wide-spread flooding. An upturn of 2% is on the cards according to the Phnom Penh Post (26-12-2011). The same publication (13 January 2012) reported rising milled rice exports from 40,000 tonnes in 2010 to 100,000 in 2011.
An example? TTY Corporation which has long been an investor in Cambodia's rural sector, seems to have cornered the China-Cambodia rice trade after receiving permission to export up to 200,000 tonnes during 2012. So states the Phnom Penh Post (30-12-2011). In the age of free trade when one nation is seeking to access virtually every natural resource available, why ponder about such tedious things as official approval?

And more is in the pipeline. In the Phnom Penh Post (2 January 2011) a report that Hainan Agpro Inc intends to invest

'$500 million in Cambodia's agriculture sector'.

Though these intentions seem to be limited to revving up the rice export potential of Cambodia, the company 'supported' by the local government of Hainan own expertise seems to be limited to tropical fruits.

Business as usual
Short of reporters, Thailand's Nation (27-12-2011) gives up space for Bayer CropScience to comment on the recent floods whereby they expect their fungicides to sell better. It also wants to help out: '

The company has offered a programme in the Central area whereby it recommends a certain chemical spraying method, which has been proved to increase yield by at least 10 per cent. The programme will encourage farmers to use the right quantity of chemical spray at the right time'.

But will they make a profit? Tying in with their cooperation, but not related to recent floods the company hopes to produce new hybrids with aasistance by the IRRI.

'The aim of the programme is to improve rice quality and yield'.

And is not to make a profit?

Payback? Commercial success for Philippines premier hybrid rice company, SL Agritech, could see it list on Manila's bourse. Businessworldonline notes the cash reaped will retire debts and assist foreign expansion. Hopefully they can count on the Philippine's continued subsidies, it certainly enhances their business model. Note how they count on Cambodia as a promising breeding ground ground for their venture ...

Just another note of caution. Lays, globally known for it's range of potato chips, is being sued by the brave Julie Gengo as lays seem to be claiming all their ingredients are 'natural' which in their belief includes GM soy and corn. Are rice hybrids natural?

Market-time

2011-12-21T01:20:00.004+07:00

Prices are going down. Reuters (14 December 2011) quotes the FAO which rejoices the relief the price falls mean to the consumers. Both India and Vietnam are undercutting Thailand as their weaker currencies and huge stockpiles allow them to sell more for less. Both countries are also expecting better crops and are intent on easing their stockpilings. Thailand is feeling the pressure as even it's exporters are now buying up foreign crops to sell rather than supplying Thai rice. With the world economy in the doldrums, prices will not be likely to sustain themselves and an end in the boom times for rice farmers will end ...

Adding to the woes of the Thai, despite the floods in Cambodia, rice production is also up in Cambodia. The Phnom Penh Post (9 December 2011) quotes the Khmer Minister of Agriculture claiming that this years crop will equal or surpass last years even though 10% of the crop had been inundated. Sounds too good to be true.

The Global Post are highlighting rice's role as the most essential crop on our planet. On November 28 it had a feature on Thailand. It stresses how the thai governments objective is to give a fair return to it's farmers while highlighting that the policy has driven prices up but ultimately will lead to demise of the Thai rice exports / domination of the global rice trade.
'But while shoring up appeal in upcountry Thailand, Yingluck may also be winning fans among Vietnamese rice exporters. Her scheme, according to US Department of Agriculture predictions, could cause Thai exports to drop by 20 percent next year — and potentially cede the world’s top exporter crown to Vietnam'.

Amongst keeping tabs on hybrid rice corporations GRAIN heralds the rights of small farmers world-wide. For their consistence efforts GRAIN received the Right Livelihood Award, an alternative Nobel prize.

Finally, Bangkok Post (19-12-2011) adds it's economics reader the following notes on rice futur with the quote
'Rice strains that can better resist rising temperature, disease and floods are on the way ...'.
Great! It then goes on how hybrids are the future and how good-hearted CP are in denoting their hybrid rices to 99 farmers, yea! CP
'... called the scheme an opportunity for farmers to improve their crop management and place more emphasis on post-harvest work such as soil analysis and fertiliser preparation'.
And not a case to promote it's business model at the expense of farmers independence.

Sector development

2011-12-08T02:34:00.005+07:00

Developing the sector
Despite all the hype about encouraging rice exports from Cambodia, the first 10 months of the year saw the increase limited to more than 7 percent according to the Phnom Penh Post (18 November 2011). A trader is quoted as the increase attributed

'... to a decrease in corruption'.

Again the Phnom Penh Post (23 November 2011) reports that banks are willing to invest hundreds of millions into the rice sector. The catch?

'In fact, I’d be happy to make $100 million available today for millers with the right credit quality,” CEO [of ANZ Royal] Stephen Higgins said'.

And it is the lack of credit worthiness that is a major factor in traders having insufficient access to the funds, so not so newsworthy. Possibly the government could step in as guarantor?

Rice reforms are another issue required says Cambodian PM according to a Phnom Penh Post report on November 24 2011.

'During his speech at the 16th Government-Private Sector Forum at the Council of Ministers, Hun Sen urged ministers to open a “one-stop window” to streamline the export process while also calling for the creation of a rice exporter’s association'.

However there already exists a Cambodian Rice Exporter Association! But with little publicity ... Compare with say the Thai Rice Exporters Association.

Transparency? A Japanese energy company with the inventive name of New Energy and Industrial Technology Development Organization (NEDO) signs an MoU with the Cambodia's Ministry of Industry, Mines and Energy to generate energy while milling rice (Phnom Penh Post, 23 November 2011). But where is the private sector involved? NEDO is actually a Japanese government organisation so that explains the MoU. But what will become of the rice mill? Competition for the private sector?

Hybrid news
As always when disasters happen, the vultures are always near. The Bangkok Post (1 December 2011) reports how CP has teamed up with Thailand's state run rural bank BAAC to help farmers ... get addicted to hybrid rice.

'Rice farmers who obtained career rehabilitation loans from BAAC have the option of entering the programme, in which farm management, technologies and hybrid rice seeds are essential. ... The company will buy back paddy at fair prices or help farmers to improve and distribute paddy to the market'.

Of course this will be a boon for farmers, productivity rates are great blah, blah. But wait, what will be the price for the produce? Lower than normal and CP is promising a fair price, which translates in an even lower price. Risks? Who will be paying? The taxman?

Interesting? Farmers in Ranchi, India are happy with their bumper harvests of rice this year (Times of India, December 4, 2011) due to the use of hybrid seeds and SRI! Opposing ends?

Food for thought
Finally an interesting article from the New Mandala (December 8, 2011) concerning research on Cambodia. The author, Maylee Thavant, highlights his/her research findings concerning the exploration of authentic and/or traditional cultivation of rice in Cambodia. The conclusions are that sustainable agriculture and organic agriculture promotion

'may impose First World consumer ideals and tastes'

with little to offer the broader development of agriculture in Cambodia. Rises in productivity are not coming from emphasis on traditional practices but are the result of increasing returns from higher investment in processes, cultivation and production means. Just a pity that the original document itself is not publicly available, more imposition of traditional means of science publication imposed on the non-scientific?

Anyway I believe that heaping organic with sustainable is not the same. There is a lot to learn from seeking organic markets if only the lessons learnt from seeking more sophisticated markets.
Sustainable though seeks to dissuade farmers from taking up more modern but often more self-destructive methods without any short term financial rewards other than a good feeling for farmers and development organisation. Possibly farmers are better served in this case by informing farmers of better ways of modern farming which ensures better financial rewards.

2011-11-18T01:40:00.004+07:00

Will prices rise or fall?
Nothing beats predicting the future. If only we knew that banks would keel over. If only we knew the Greek predicament. If only we knew about global warming. just a few of predictions which might have made life more pleasing if we had known them on forehand.

Now at the end of Southeast Asia's rice growing season we want to know whether to buy now, sell later or to hedge future sales at lower prices.

Flooding has compounded production: Hun Sen has stated publicly (in the Phnom Penh Post, 10 November 2011), that 10% of Cambodia's wet season rice crop was destroyed. Now to see if the remainder can make up for the shortfall.
Continuing floods in Thailand will in the short term harm production and thus exports, but has the mortgage scheme already sucked in neighbours rice? Or encouraged higher outputs?

Meanwhile, Vietnam News Agency (October 29) reports Mekong rice productivity up by nearly 10%, which will put rice the nation's output up by nearly 5%.

Less rice / more rice? The FAO are awakening on the prediction. According to a report in the Nation (12 November), international prices for rice will drop slightly next year because of weakening demand and less export by Thailand.
Don't quite understand. Demand will remain at worst constant and with an immediate shortfall due to floods, it looks like prices may well increase until the latter part of next year, at least that's what I would expect.

If the prices do go down, the Thai government will be in trouble ...

Leakage

Will Cambodia become an alternative for rice exports. the government thinks so and is very vexed by a report from the World Bank which has it's doubts about the attainability of Cambodia's 2015 goal:

'The report – dated July 12 but leaked [was it a secret?] last week – said uncompetitive prices and logistics bottlenecks would make even 500,000 tonnes of milled-rice exports virtually unattainable within the intended deadline'.

The Cambodia government thinks the report is bogus and the World Bank is being anti-development. All based on an article by the Phnom Penh Post (24 October). Blame the messenger?

Possibly to step up it's efforts the government has decided to forgo on a 1% tax. Nobody according to Phnom Penh Post (24 October) really knows the significance nor the implications of the tax break.

Then the private sector and their on-goings. The Phnom Penh Post (15 November) reports on the problems with rice trade deals. Mostly the deals call for high quality processed rice while Cambodia can only deliver low quality unprocessed. Dilemma.

The wider picture

The Philippines are breeding for more 'tougher' rice. The problem to solve?

'Despite the good harvest attained in said provinces, adaptability trials in some areas revealed that inbred varieties could perform equally or better than the hybrid rice'.

If only the farmers had known before they bought the seeds.

An odd movement in Nepal where an anti movement seems to be upset by Us donor funds being used to promote private corn hybrids. The Nepali Times (4 November) has an in-depth article:

'In a USAID press release last month announcing a partnership between the Ministry of Agriculture and Cooperatives and Monsanto on a pilot maize production project in Nepal, we heard the same tired arguments of more nutritious food, increased yields and food security, and the requirement of less chemicals'.

It concludes:

'The majority of the people of Nepal will not be better off, in fact, their lives and livelihoods will be made more difficult'.

Having worked in Nepal before, local breeding of corn was pathetic and supplies of good seed were non-existent. Already back then (mid nineties) local farmers were using corn hybrids, which despite their lack of adaptability and high price were often better producing than the local open-pollinated varieties on farmers fields. Seed production of corn on a world scale is nearly exclusively hybrid so it seems logical that any development company would do the same. But why of all companies Monsanto? If puzzled, you can sign a petition.

2011-10-25T22:58:00.002+07:00

Major focus internationally remains Thailand's bet on continued price rises for rice produce. And all skeptics may well be left stranded, especially as flooding will at least ensure higher prices in the short term.

The Bangkok Post (15-10-2011) already commented on how the government is expecting 6-7 million tonnes less production.

Other countries in Southeast Asia have similar tidings.

Cambodia already has a response, releasing state controlled stocks of lower grade rice. This lead to lower prices though the wisdom of such releases is questionable, as Cambodia's stockpile will not last long, whereas the contribution to the nation of not releasing the stock piles may well have better returns in the light of increasing rice prices.

With all the political hoopla on Thailand's mortgage scheme, an article in the New Mandala (16-10-2011) comes as a welcome balanced approach. It emphasizes the expectations concerning corruption (the need to learn from lessons in the past) and the realism that such a scheme will only work if prices rise, which at least for the foreseeable future seems to be the case.

Marketwatch.com adds that Cambodia, Laos and Burma expect to profit from the same mortgage scheme, at least in the short term as the rice harvest will head to Thailand with higher prices ensured.
'There is a large price differential between Thai and Cambodian rice, even though the quality is similar and many traders are now trying to bring in rice from across the border, said Christophe Cousin, managing director, Prasert and Sons, a Pathumthani-based international rice brokerage in Thailand. It is usual for around 1.0 million tons of Cambodian rice to be transported across the Thai border every year for more remunerative export prices, and now with the government offering even better rates, the trans-border movement will at least double in volume, said Chookiat Ophaswongse, former president of Thai Rice Exporters Association'.
Interestingly, it also highlights that not only will neighbours piggyback on the scheme but that last years harvests may will end up mortgaged as well ...

Process

2011-10-19T22:52:00.004+07:00

High output
A curious message in the Phnom Penh Post (18-10-2011) announces the intention of one of Cambodia's largest companies to establish a

'high-output rice seed factory'

Unfortunately the article fails to explain what actually the intentions of the investors are. Of course to earn money, but how can a factory produce rice seed? Will the rice seed be produced at a high-output or is meant that the marketed rice seed ensure higher production?

The article tends to the former. But alas, as most main-stream press reports, it believes that higher productivity is an end, rather than a possible way to an end. More importantly are higher returns to farmers. Especially in the case of hybrid seed, higher productivity is off-set by higher costs and lower prices for inferior produce.

Lifting the veil
The Singapore investor mentioned in the article, Smah Prum Royal International Pte Ltd, is a rather unknown identity. It seems to be a rather recently established company with sole focus of investing in Cambodia's rice mill sector, which seems at odds with the announced seed factory.

A press release obtained from PSC Corporation Ltd reveals that it has a stake of 25% in Smah Prum, as do Leap Forward, while Meng Tai will have a 22.5% share.

Meng Tai, a Thai company based in Ubon Ratchathani has considerable experience in rice milling and seems a solid partner. PSC looks more like an investor group (PSC has previously invested in a lottery in Cambodia ...). Leap Forward seems an unknown identity.

And the remaining shares? They are owned by none other than Singapore Agritech Investment Holdings, which has a sleek web page ('sowing seeds of change') packed with good intentions:

'We help farmers or corporates that venture into the upstream in farming to implements sustainable and healthy foods, while making our world green'.

CEO is Loius Kek, who was also the director of Malaynesia Resources (now defunct?) which together with Sunland Agritech (sounds similar?) sought to bring hybrid rice to Cambodia in 2008 (see report from side column or pages from GRAIN and CAAI News). The site also seems to have no access to reports or company information .... To be continued?

A final last minute note, today (19-10-2011) PSC notes that it has terminated it's investment in Smah Prum due to a lack of a definitive agreement in Cambodia! Weird?

Mortgage

2011-10-06T00:33:00.005+07:00

With flood levels rising, it appears that expectations concerning Southeast Asia's harvests are dampening, probably resulting in a short term increase in prices.

On top of that comes the possibly ill-conceived Thai rice mortgage plan which hopes to increase international prices while safeguarding local prices and enriching farmers in the meantime.
The plan is the hottest issue concerning rice at this moment.

Phnom Penh Post chips in (on 29-09-2011) with an interview with CEDAC's president Yang Saing Koma. Unfortunately he does not give much regard to the Thai plan which I would believe will raise domestic prices for Cambodian rice and could well impede Cambodia's own plans to increase exports independent of Thai trade.

Among the many problems are those involved with increased corruption. Just today the Bangkok Post reported on a poll among economists:

'... that most economists polled recently believed there would definitely be corruption in the government's rice mortgage scheme.
...
The pollsters reported that 82 per cent of the respondents believed corruption would definitely taint the scheme, and 86 per cent felt that rice millers and silos would gain the most benefit, not farmers.
A total of 74 per cent of the economists thought that consumers would be the biggest losers, and 60 per cent said the farm income guarantee programme of the Democrats was better, according to the pollsters'.

Other skeptics include the Thai Farmers Association again reported in the Bangkok Post (30-09-2011):

'Wichean Puanglamchiak, vice-president of Thai Farmers Association, said the government's idea to mortgage all paddy sounds good on the surface. But it will backfire in a matter of months. "Most farmers do not have any farmland of their own and rent land for farming. "And chances are that when the next season comes, land owners will take their land back and hire farmers to work on their farms," he said'.

The Nation (22-09-2011) gives air for Narongchai Akrasanee, former minister and economist:

'... we are worried about the rice-pledging scheme, as we don't know how much it will cost ...'.

Others skeptics:

'its opponents, including former deputy prime minister MR Pridiyathorn Devakula and renowned economist Ammar Siamwalla from the Thailand Development Research Institute.
...
MR Pridiyathorn said taxpayers could be hit with a 250-billion-baht bill under the government's return to what he called a "loophole-ridden" rice mortgage subsidy programme. The programme could also result in Thailand losing its status as the world's top rice-exporting nation, he said'.

Again printed by Bangkok Post (27-09-2011).

The Nation on September 5 2011 heads a warning by Thai Development Research Institute (TDRI):

'While consumers and taxpayers will suffer from the government's controversial rice policy, Vietnam will substantially gain, the Thailand Development Research Institute (TDRI) has warned.
...
He [Ammar Siamwalla of TDRI] said farmers would ignore developing grain quality as the government had set up a high pledging price without regard to rice quality.The pledging project would draw a flood of rice from Cambodia and Burma. The market mechanism would be destroyed and only millers and a few exporters who joined the pledging scheme would survive, as the state would monopolise rice trading'.

One aspect of the plan is that it might well erode Thailand's pivotal position in the international rice trade. Previous years have seen others gain on Thailand. The Golbeandmail (26-09-2011) reports on India and Vietnam releasing larger amounts of stockpiles, while it reports that China is concerned even though it has higher than required stock piles. It also briefly states that China may well rely on science to provide the answer.

That said, the Asia Sentinel (23 September 2011) posts huge questions concerning China's potential to drastically improve productivity as prominently featured in Chinese press (see for example China Daily 19 September 2011: 'China sets new world record with hybrid rice yield'; as high as 14.5 ton/ha) . It's a very interesting article. It focuses on levels of nitrogen required which would need to rise to 250 kg/ha, which in turn could lead to increased soil acidity and depletion threatening China's own ability to produce.

Smaller issues:

Further afield, despite previous reported problems with their American operations, Bayer CropScience continues on with their objective of market domination by getting an exclusive deal in Brazil.

Interestingly, the ACIAR has calculated what financial returns were due to breeding efforts. Despite all the hoopla there's little to suggest that actually the increased financial rewards were due to higher current prices vs past prices, which in part is being blamed on the lack of breeding! It also stresses that the increased returns were earned by farmers, which is highly doubtful. Quick review of the study takes into account that the stated averages are higher than those observed in reality.

In a what could be possibly a related hybrid rice issue, China has announced that they will not continue with the Confucius Peace Prize; China's most famous hybrid rice scientist

2011-09-04T19:10:00.006+07:00

Trade
Again, quite a bit of newsfeed concerning trade and investment in rice in Cambodia. For instance:

Chinese firm seeks rice from the Kingdom (Phnom Penh Post, July 14, 2011). Slight problem, the company is seeking rice to supply it's Guangdong mills, whereas Cambodia would prefer to export milled rice.

A month later, a deal later. This time, Chinese company COFCO will import 1,000 tons (Phnom Penh Post, 25 August 2011). The same article also notes that for exports to China to be a success the Cambodian government reaction is required:
'Plans for a Cambodian rice-testing laboratory, required by Chinese inspectors to allow Cambodian imports, are also under way.Agriculture, Forestry and Fisheries Minister Chan Sarun and Chinese Commerce Minister Chen Jian signed a memorandum of understanding last Saturday confirming the two nations’ co-operation on a testing laboratory'.
The Cambodian "conglomerate" Canadia is building a $8 million processing plant (Phnom Penh Post, 26 July 2011) .

World prices for rice are continuing to gain
Bloomberg puts it down to Thailand's polls which brought a rural friendly government in the saddle which promises to give price guarantees for rice to farmers, thereby bringing all sales to a hold as millers and storers hope to see price guarantee rewards.
Thailand is counting on it's higher quality to be able to sell, whatever the price. That might seem folly, price elasticity would determine that higher prices lead to lower demand. Additionally there will be undercutting from other producers as well as promoting other nations rice programmes as well as encouraging illegal rice imports from Burma, Lao and Cambodia.
Already I read that in north Lao, farmers are shifting their cash crops from maize to rice. Then in the Phnom Penh Post (August 3, 2011) an article implies that Thailand's policy will undercut Cambodia's own policy of exporting processed rice.

An even more recent article in the Phnom Penh Post (26 August 2011) suggests the Thai rice industry is actually interested in investing in Cambodia's rice sector. So as to undercut their own position.

Enter the carabao
Then on the subject of hybrid rice, SL Agritech, one of Southeast Asia's hybrid rice leaders, seems to be contemplating entering Cambodia:

'“We are looking at starting the shipment of seeds to Cambodia and to start planting there in the fourth quarter,” SL Agritech President Henry Lim Bon Liong said in a telephone interview.
Under the joint venture, he said seeds will be given by SL Agritech to be used for the plantation, while its partner firm will provide the labor and land in Cambodia.
He said that for every produce sold there, SL Agritech will be paid with royalties'.

Oddly they seem to ignore current market conditions which hardly give any space for hybrid rice.

2011-07-12T14:53:00.004+07:00

Hardly a day goes by in Cambodia in which the local press are not dedicating their local business news sections to the increasing production and export of agricultural products.
Take for instance Phnom Penh Posts:

July 8: Exports of rice quadruple. The officially reported quantities that is, the leakage over the border has probably remained the same. But still the added value is accruing to Cambodia, which is good for the country and the rice sector in general.
July 6: Vietnam's deep-water links spur Phnom Penh Port growth. Shipping via Ho-Chi-Minh is cheaper. Khmer Rice has exported more than 10,000 tonnes this year.
June 28: KOGID begins rice shipment. The South Korean owned firm is starting to send rice to the United Arab Emirates. They would also like to see the export of corn, cassava and (soy?)beans.
June 27: Corn exports earmarked. Producers are increasingly switching from cassava to corn production due to the increasing prices. KOGID again and CP Cambodia are fueling demand both domestically and through export. Official statistics point to a 50% increase in export.
June 24: Farmers flock to cassava. A bit contradictory to the June 27 article, it mainly points out that cassava trumps cotton which seems logic. Official statistics report exports of cassava are up by 74%.
June 22: Millers get export orders from mainland. LORAN and Golden Rice both report orders from China for fragrant rice.
June 20: Growing taste for cassava as exports rise by 74%. Prospects are good.
June 13: Boost in paddy purchase. Rice millers have purchased 10% more in the past seven months over the same period. Acleda Bank is quoted as saying loans for rice millers increased by 15-20%.

So at least on the above evidence one is lead to believe that hybrid rice production in Cambodia will be at best a marginal activity. The official exports of rice are increasingly going to sophisticated markets with a preference for traditional fragrant varieties.

Vietnews reports (3 July 2011) on a strange phenomena: cooperative rice farms under the guidance of profit seeking companies:

'It brought together 458 farming households whose fields were located near each other. They planted their rice on the same day and tended to their fields with production techniques provided by company officials.
The company supplied the rice seeds, fertilisers and other inputs in advance to the farmers without any interest rate, and bought all harvested paddy'.

Though the article quotes company claims that farmers earned profits of 150%, it fails to state compared to what nor whether the farmers actually received the extra profits.

A different plan for profit sharing has been devised in Laos. The Vientiane Times (21 June) reports that the Lao Agriculture Development Corp Company will launch an organic rice project in the province of Xieng Khouan. Farmers will receive bio-fertilizer and advice 'free' but be forced to sell the surplus production to the company at prices 40% below market price.
Now I doubt whether this will be a success, price is the number 1 incentive for almost all producers all over the world, Laos included. Take away the price and producers will look to satisfy their own needs. sod the rest. Or seek to 'smuggle' out their over production so as to pocket the 40% themselves. Wish the Corp Company success with that.

Back to hybrid rice. Bayer has settled with farmers in the US for just $750 million! That's a big mistake, showing how sensitive companies should be when introducing hybrid rice.
One problem for farmers in Southeast Asia is the lack of transparency between governments and companies as well as the lack of justice after complaints.
Surely Thai authorities will try to build in safeguards while pursuing popularizing hybrid rice? If export values drop for Thai rice because of hybrid contamination, what then?
Looking at more detail it's in the Philippines where there is little or no export of rice and north Vietnam with the same position where hybrid rice is 'popular', though again without government intervention, this may not be the case. Surprisingly Bayer Cropscience itself is very quiet on this deal ...

Climate Change and Rice Production in Cambodia

2011-06-16T11:24:00.003+07:00

I just recently took part in a study on climate change and it's possible consequences on rice production in Cambodia. Via this link you'll get to a recent version of the literature review.

Surprisingly, not much is known about whether or not climate change events will take place in Cambodia. Some point to more rain and thus flooding, others to less rain (but not necessarily to less floods) whereas others just say that Cambodian weather patterns may become more erratic. But all are convinced of the mostly negative aspects. Some do point out that flooding has positives but overall it's looking bleak.

Somehow though, Cambodia is still able to increase it's production of rice in recent years, so possibly it's not that negative. Or the link between climate and production levels not significant enough.

Surely droughts will influence production but these haven't been witnessed in the last 5 years.

What is sure, is that despite all the efforts mentioned (f.i. back in 2002) the local population remains highly vulnerable to weather events. More focus?

Rice exports

2011-06-10T11:17:00.005+07:00

Phnom Penh Post, this week, had an interesting article on how rice exports had doubled since last year:

'Cambodia’s total rice exports reached 42,669 tonnes worth US$24,437,959 from January to April 2011, compared to 21,322 tonnes worth $12,178,797 in the same period last year'.

It does also show that prices for Cambodian rice are not increasing, well just by $1. If Thailands elections pan out well, these will result in higher prices and increased demand for Cambodian rice. Interestingly Mega Green announced that they will sale 50,000 tonnes themselves but mentions prices starting at $385. Doesn't seem to add up ...

The same article on Mega Green, mentions FAO bumping up production numbers from 8 to 8.3 million tonnes for Cambodia last year. As always there's not much scientific analysis involved, though FAO already know

'It [FAO] said Cambodia’s 2011 rice crop could hit 8.5 million tonnes, though it noted the main crop was planted in June'.

So why? Better rains expected? No floods? I always read that the elasticity of rice is low, but heh since prices went up, so did the rice production ....

Elsewhere there were good signs on potential exports to the Philippines.

Suagr not honey yet

Other exports, f.i. palm sugar. Palm sugar will get Geographical Indicator (for Kampong Speu province) status which will enable local NGO to export plam sugar to Singapore (source).

Then the EU has discovered that it's policy of Everything but Arms Trade deal which diminishes tariffs for most products is having adverse effects in Cambodia. An Euro-parliamentarian concluded that allowing Cambodia sugar duty-free access is fueling a land war between a company run by a Cambodian parliamentarian and villagers who see themselves having to shift or losing their communal grounds (source).
'The objectives of the EBA trade preferences include “the promotion of sustainable development and good governance in the developing countries”, according to EU regulations. Preferences can be temporarily withdrawn if there are “serious and systematic violations” of international conventions on human and labour rights, the environment or good governance. Wikström [the Euro-parliamentarian] said she would pursue the issue in parliament when she returns to the EU'.
But she also mentioned it would be difficult. And the company (companies actually; many companies make sure they don't get lease deals over the legal limit of 10,000 ha, though the owners are the same as are company spokesperson!):
'allegations that the companies were involved in human rights abuses an “injustice against the company”'.

Hi! brid

Hybrid news? Bayer will support
'sustainable crop management solutions'
in Vietnam's Mekong Delta with help of development aid.
'As part of the collaboration, the institute will conduct extensive research of Bayer’s crop protection compounds and hybrid rice varieties to help the company adapt their products effectively in Vietnam'.
So as of yet there are no hybrids fit for production for that area. Does not look sustainable. And it does look like that they are pursuing their own interests.

Better to help farmers pursue higher returns. An interesting article in the Bangkok Post explains how in north Thailand farmers are successfully grown japonica rice, for internal consumption as well as export. Prices are higher, no news on yields though, but in these parts of Thailand, cold tolerance is welcomed ...

Other hybrid news, Chinese varieties don't function well in Bangladesh (source).

Logistics barrier to rice exports, certifier says

2011-04-08T13:50:00.014+07:00

More from the Phnom Penh Post (April 7 2011) on rice:

'CAMBODIA’S logistics are more expensive than in neighbouring countries, hindering its plans to export 1 million tonnes of milled rice by 2015, according to Saksit Srisuksai, General Director of Intertek Testing Service Company.
Thailand faced similar logsitics challenges years ago, which had since proved surmountable. “At the moment, I believe that the cost of transportation and logistics in [Cambodia] is still higher than in Thailand or Vietnam, even Burma,” he said.
“I believe [Cambodia’s] exports must be less than forecast, because the logistics are not in a good position yet. Other countries can export by large ships,” he said.
He highlighted storage facilities, roads, and vehicles as well as ships as areas that needed improvement.
Intertek is responsible for certifying the quality of much of Cambodia’s rice exports, particularly shipments to Europe, he said yesterday on the sidelines of the Rice Export Service and Market Requirement workshop in Phnom Penh.
Saksit Srisuksai called the rice export target “achievable”. “Cambodia can have good logistics, roads, transportation, and facilities,” he said.
However, Kim Savuth, Director of rice exporter Khmer Food, agreed Cambodia was facing transportation challenges, but added he thought the cost of logistics was not as large a barrier as claimed by some
“I don’t think our logistics cost is higher than Thailand or Vietnam – it is the same right now.
“They [Intertek] are surveyors. They don’t know [the situation] clearly like us exporters.”
His firm has exported 4,700 tonnes of milled rice to Europe during the first two months of the year, from 7,600 tonnes to the continent during all of 2010, he said.
Speaking at the conference yesterday, Minister of Commerce Cham Prasidh said the country has strong potential with its rice production, which the government aimed to increase.
“The rice policy is Cambodia wants to become … one of the main rice export countries at the global market,” he said. “Firstly, we better know what the market requires of us.”
Last August, Prime Minister Hun Sen announced a policy to increase rice exports to 1 million tonnes by 2015. Statistics show Cambodia exported just over 100,000 tonnes in 2010'.

Though some truth in the counter arguments above, efficiencies within the chain would dictate that the most efficient exporter can offer the best price to the farmer and importer. And Cambodia is not the most efficient.
That's not to say that for instance with exports to Europe certain efficiencies within the chain are less important, though quality assurance is. It's just that possibly the competition find out the same and will cut in by either offering the farmers better prices or (most likely) offering cheaper prices. Hmmmm, ....

Mill capacity key to growing rice exports

2011-04-05T14:53:00.001+07:00

By Steve Finch, Phnom Penh Post, 04 April 2011

Cambodia's target of 1 million tonnes in rice shipments by 2015 would place the Kingdom behind China, or in seventh position in the world pecking order of rice exporters based on current volumes.

To achieve this goal Cambodia need not drastically raise its level of production. Domestic rice output was expected to outstrip supply by 3.9 million tonnes this year. And export levels are growing at a staggering pace, some 2,356 percent in the first half of last year compared to a year earlier. Which meant Cambodia overtook Burma and Uruguay among mid-level world exporters, according to data from the United States Department of Agriculture.

The problem remains milling because farmers simply cannot get the necessary credit to raise capacity. After milling more than 107,000 tonnes in the first half of last year, Cambodia is already hitting its annual capacity of 200,000 tonnes per year.

To meet its stated goal of 1 million tonnes of rice exports by 2015, Cambodia therefore has to raise milling capacity by five times in four years which according to the Ministry of Economy and Finance will require US$150 million in investment over the same period. If it does not, paddy will continue to spill over the country’s borders to Thailand and Vietnam, the two largest exporters in the world where processing capacity is much greater.

In Channy, general manager of ACLEDA Bank, by far the biggest lender to the agricultural sector in Cambodia, said yesterday credit remained the major problem. “This is the most difficult part for entrepreneurs in Cambodia,” he said.

Medium-sized companies seeking to borrow between $10,000 and $1 million from ACLEDA must supply financial information going back three years, he added. Credit worthiness is determined through interviews with friends and local officials which overall leads to a system which is time-consuming and hugely inefficient. Often, companies simply do not hold the required accounting history, said In Channy.

The Government’s recent promise to guarantee 50 percent of loans by commercial banks to the agricultural sector will surely help raise financing to the sector, but the real key could be the establishment of the country’s first credit bureau either by year’s end or early 2012.

The Association of Banks in Cambodia will set up the new service with the help of Singapore’s Veda Advantage, according to In Channy, which ought to make borrowing much simpler. Banks will be able to share credit information, reducing the work and risk required, which should in turn raise lending appetite.

If Cambodia reaches its target of 1 million tonnes in rice exports by 2015, that would bring in more than $125 million at 2010 prices. The industry won’t compare to the $3-billion garment sector, but with the necessary financing Cambodia would at last have a vital second major export industry.

Costs

2011-04-01T15:32:00.002+07:00

A recent article in the Phnom Penh Post (31 march 2011) quotes a Cambodia 'official' of the Ministry of Economy and Finance describing that 350 $ million was needed to help reach the governments rice export target of 1 million ton in 2015. The maths part includes $150 million for investment and $200 million for financing.
Which doesn't seem like a lot. Based on current prices, financing alone would be a shortfall of $400 million of bridging the shortfall in rice export (800,000 ton).
Furthermore it highlighted the gap in knowledge, surely there are more intelligent ways to finance the financing? And in the end it's a revolving fund, you get your money back and most probably won't cost you much. If the government puts it's act together the cost of lending as well as the risk would drop and this way you would be able to compete better.
Surprisingly it also mentions that production is already outstripping demand by more than 3 million tonnes. Which is thus lost? Or exported?

Khmerweekly site is another website which copies freely from the to be paid press in Cambodia. This link gives an interview from the Phnom Penh Post, not really good, but just underlines the need for capital. The exporter would also like to see a tax waiver ...

KI Media (24 February 2011) refers to a VOA article on the 'dire' situation in Cambodia's rice seed sector. It stresses first that better seed can increase production according to the interviewed farmer by a ton per hectare. It the points out that Cambodia's productivity is lower than it's neighbours (not Thailand!) but fails to mention economic returns. Thailand knows that lower productivity often results in higher returns.
It then quotes the Cambodian Economic Institute which claims the seed sector is "backward" and "afraid to modernize". However in my experience, it seems the rice seed sector is on par with those of other developing nations not relying on hybrid rice seed.
It then seems to link this critique with the governments 49% share in the only company producing improved rice seed and assumes that this monopoly is the root cause.
It's not. With a few exceptions, rice seed is of little interest to seed companies globally and if the public sector would not be trying to produce seed there would be none at all.

Other recent articles are from the Thai press (BKK Post, 9 March 2011) where the local seed association is hoping to be able to import hybrid seeds which seems a tactic from the major producers of hybrid seeds to catch up with CP. To sell the deal to policy makers they compare the achievements of maize with the potential for rice. Poor comparison. Animal fodder versus human food.

Market News

2010-12-09T08:58:00.005+07:00

Estimating the estimates
Despite all the talk about droughts and floods, Cambodia rice production will rise. So reports the Phnom Penh Post (7 December 2010). Previous government estimates put the production at 7.3 million tonnes, while new estimates put production at 7.99 million tonnes. Why not 8?

'Agriculture Minister Chan Sarun said yesterday the gain in production was due to good rice seeds, an increase in dry season farming, a greater amount of farmed land and better understanding of farming techniques'.

It does seem that in spite of all adversities, the price is still leading the way. That's how economics work.
Many might question the governments estimate, quite rightly. Being on the other side of making estimates in other countries I know they are just a wild guess, at best a hunch.
But intriguing to see that the FAO has re-jigged their estimates as well, from 5.9 to 7.3 million tonnes, nearly 25%! Clearly they must have better strategies at coming to the final numbers ...

Produce offspring
Well, the same FAO will be stimulating private companies in Cambodia to produce rice seed, so reports the Phnom Penh Post (November 14, 2010).

'It is hoped the project, funded by the European Union, will help private firms to provide “pure” rice seed, rather than hybrid types'.

Really? Because the track record of private companies marketing open-pollinated rice seed production globally is sketchy as opposed to hybrid seed. At least the money is disposed of.
Then there is the government itself which has released 10 rice varieties (Phnom Penh Post, 27 September 2010)

Competition in sight
Cambodia has seen a continuing momentum in trying to export it's own rice rather than handing it over to it's neighbours. CAAI reports on a push to penetrate the Philippine market, home of hybrid rice. Despite all Philippine's efforts in promoting rice production, rice production is dropping so it seems. Time to hand over the government subsidies to the farmers themselves rather than the input providers?

Following on, CAM-SIT blog quotes Cambodian Business Review (August 2010)

'Rice from Vietnam and Cambodia now control up to 60 percent of the market'.

It gives a good overview of how Cambodia's rice exports seem to be eating into Thailand's export. Oddly it also includes this quote:

'“The price is not only higher but the quality of the rice is also lower, in terms of fragrance, size of grains and general quality of the milling. Thus, as much as we want to buy Cambodian rice, our efforts are being hampered by unreasonable prices from Cambodian exporters, “the buyer said'.

So that raises the question why buy Cambodian price if both price and quality are adverse? Politics?

Indian investor Amira Group (actually Amira Food) believes Cambodia is the future of global rice production. Paying upwards of 30 million $ for investing in rice processing and 25,000 ha seems a cheap price which the investor hastily agrees to.

'He noted that despite Cambodia’s rice-heavy farming sector, he felt that it lacked structured growth – something Amira would like to provide leadership on'.

Which seems to contradict reality.

Media contacts
In Thailand the government is hoping to join the competition in providing hybrid rice to farmers, according to the Bangkok Post (16 August 2010). The article lacks little substance to the claim of superiority of hybrids over conventinal varieties.

'"We have successfully developed three or four hybrid rice varieties but we need more time to improve the varieties, such as to add genes that have resistance against planthoppers, and/or climate change,"'

Three or four?

'Thailand has done R&D for hybrid varieties for 30 years but public concern over the impact on rice quality, as well as the cost, have impeded the development, she [Orapin Watanesk, a rice R&D specialist with the department] explained.'

Oddly it also cites another government official who doesn't seem to be on the hybrid bandwagon:

'He [Sune Kasisareewong, director of the Rice Seed Bureau] said the improved seeds had strong properties, affordable prices, and more importantly, farmers can use the harvested production or paddy as strain for their next crop'.

As opposed to hybrid rice.
One of it's biggest possible rivals would be CP which has high aims according to The Nation (22 November 2010). It also reports:

'For instance, the launch of CP’s hybrid rice seed CP 304 has allowed farmers to enjoy an average yield of 1,000 kilograms per rai. Production costs are also reduced, and the seeds have a special feature " drought resistance'.

CP also claims:

'Hybrid seeds are more expensive than other popular types, which cost about Bt50 per kilogram and produce an average of 450-500 kilograms per rai. Farmers will be compensated for the higher price of hybrid seeds by their lucrative yield'.

That contradicts reality, as prices for hybrid varieties are lower. CP provides Bangkok Post (11 June 2010) with the economic details on the costs / income but wisely forgets the lower price simply saying the price of the produce whether hybrid variety or Jasmine rice is same, same. But different?

The other market player, Bayer, is having second thoughts. It's GM hybrid Liberty Link is resulting in quite a few headaches. It's quite enjoyable to read the Good News stories (courtesy of Bayer LibertyLink News Room) as opposed to the avalanche of court cases the company is losing in the USA and additional court cases being filed (source).
Significantly Bayer has suspended introduction of GM rice hybrids in Brazil according to foodfirst.org.

The Bad News
GRAIN has 2 significant reports, one mentioning how poor performing Vietnamese hybrids are, the other on how flood aid is being used in Pakistan to push hybrid (wheat) seed.

Elsewhere

2010-05-05T08:45:00.007+07:00

Over the past few months, there is not much to report on Cambodian affairs, it seems that conform market freedom and lack of incentives for companies, not one seems interested.

Vanuatu
That does not mean that outside of Cambodia the story is the same. China is heavily promoting hybrid rice as it seeks to reward it's friends (but neglects Cambodia). One of the strangest is where China announces to set up shop in Vanuatu. Having worked there myself, a long time ago (it must have been more than 20 years ....), it's odd that China would be willing to invest and that Vanuatu willing to receive.
No rice cultivation takes place and consumption takes place in the urban centers. The urban centers profit from a good supply chain from NZ and Australia which ensure relatively cheap imports. However the rural poor are also interested in consuming rice so one would think that being able to produce themselves would solve this problem. However inter-island transportation fees are often more expensive than those from overseas so if there 1 large scale project no doubt this would fail to provide cheap rice for all.
What would be required is getting farmers to grow rice for their own sustainability, thereby eliminating transport fees. But in such a system there's little need for hybrid, if anything the opposite ...

Tripling income for SL Agritech?
The company SL Agritech (from the Philippines) is becoming more aggressive in acquiring market share. Besides going public and reaping cash for further expansion, they have now announced that they will export seeds to Vietnam, distribution to be undertaken by Dai Thanh Agritech. It seems though that this company may well be a subsidiary of SL Agritech (there were until recently no mentions made of this company according to Google), which despite the company SL going public is not transparent in it's operations.
The SL Agritech CEO (Henry Lim) in another article while commenting on the Vietnamese exports, claims:

'It has been proven that farmers planting hybrid seeds will not only double or triple their harvest but will also dramatically increase their income compared to their production when they plant the traditional inbred seeds variety'.

Possibly referring to Philippines as research in Vietnam has disproven both claims ..., but heh, how else can you sell hybrids if not by promising heaven and earth?

Superiority
From China news (uncovered by Greenpeace) that companies promoting hybrid have inadvertently also begun to promote GM hybrids as well, a claim denied.
Even Yuan Longping, China's 'father' of hybrid rice, focuses on caution with GM, as any possible consumer adversity still needs to be tested.

'But Huang Dafang, a member of the bio-safety committee affiliated to the MOA, insists GM crops have proven safety in previous animal testing.
"We are technically advantageous in hybrid rice planting. The genetically-modified technology could ensure China's superiority in food production," said Huang'.

Everyone seems in a hurry.

In a separate article a lawyer is reported to have tried to access info on GM rice trials in China. Naturally the courts blocked the request as the info was a 'state secret' ...; that's until the public find out for themselves (see contaminated milk scandal ...).

There goes the profits ...
GM-ed rice gets Bayer in trouble in the US resulting in it having to pay damages of $48 million, which it will fight. They definitely believe that that the product is what consumers want, so they will give it to them without even notifying the customers ... Power to the company!

Economics Today: no hybrids for tomorrow?

2010-04-08T14:54:00.006+07:00

From the April 2010 issue of Economics Today (title page 'Danger! Hybrid Rice'), two articles which look at hybrid rice in general and it's significance to Cambodia.

The first article entitled

'Hybrid Seed. A Ponzi Scheme for Farmers'

draws on my own experience as well as that of GRAIN, so it's obvious which direction the article takes. Though the title is slightly misleading, the article ends by citing GRAIN's Rivera:

'It's a choice farmers ultimately have to make'.

Even though technology and markets will probably drive farmers the way companies will want them to go. The article itself I've copied and uploaded (PDF version: 1.3 MB).

Furthermore an interview with Winfried (of DED and CEDAC), who is also asked to comment on hybrids. Overall a bit disconcerting if you are a hybrid rice seeder trader. The interview is also available online (PDF: 0.7 MB).

Updates

2010-01-14T08:31:00.004+07:00

A couple of press clippings:

Thailand's Nation newspaper goes overboard this Monday (11 January 2010) to announce that Thailand's dominance in the export market is to end. The culprit: Jazzman. A great name for what US hope's will lead to the aforementioned change. It sounds ever so similar to Jasmine and as it's being developed by Lousiana's State University Agcenter the connection between that and jazz is obvious. And it can outperform Jasmine rice threefold.
Even if that claim would be true (there are no comparative trials), Jazzman is intentionally meant to compete with Jasmine rice, or as the Agcenter says to compete with foreign imports. That would be correctly phrased if the US were not an exporter. Most probably the intention is hack into Thailand's export potential, not now but in the future.
So is Thailand worried?
Not really ('The Rice Department has expressed little concern over the new American aromatic rice called Jazzman developed to compete with the Kingdom's premium grade jasmine rice'), they believe in their own superiority ('Thai agriculturalists say that the new American rice strain is of a lower quality than Thai jasmine rice and in their ability to play the markets.( 'Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said exporters were not worried about the innovative rice in the short term as most consumers still favour Thai jasmine rice, categorised as the highest grade of rice'). But maybe they should be more worried. Yields are triple and consumers will hardly perceive the difference. Rice 1 is expensive, rice 2 is cheap. Which will I choose?

The relevance to Cambodia is that much of what is produced in west Cambodia finds it's way to Thailand. Though with the advent of ASEAN opening it's markets further (resulting in 0% tariffs for Thai exports to selected countries) much has been made of blocking Cambodian rice imports it remains to be seen what this would mean in future. However what if something like Jazzman is grown here?
BTW more discussion on Jasmine and Hom Mali on Thailand Forum. It seems that even what Thailand produces isn't Jasmine.

As ever the press is getting things confused. Or not? Xinhua.net announces that Cambodia's food security will be bolstered by an investment of $21 million to boost rice yields. That's great, but as Cambodia produces a good surplus, I doubt whether food security is an issue which can be resolved by increased rice yields. Furtheron the article mentions that the majority will be used for 'developing' hybrids. Wonder how that will pan out? There's hardly any public research on rice hybrids worldwide so either it's not true (rather the money will be used to purchase seeds) or something other hybrids are meant.

And then I have comments on a study in the Philippines which themselves have been commented by the IRRI. The comments seem too good to be tru,e but good that IRRI at least takes time to respond.

Enter DuPont. Question Mark?

2009-12-04T13:53:00.003+07:00

An article in the Phnom Penh Post (3 December 2009) cites the following:

'Lukatch [president of DuPont Asia Pacific] said hybrid rice seeds were also planned for Cambodia, but did not give details of the specific products or timeline'.

So if there's no timeline nor product, what is the plan?

Interesting though, the article (which mainly focuses on maize) does cite Cambodian government officials saying that higher productivity is the road to poverty reduction.

'...it will help farmers with more income by increasing their productivity, which is directly involved in poverty eradication in rural areas,” Lim Sokun, secretary of state for the Ministry of Agriculture, Forestry and Fisheries, said at the launch'.

That's never the case, higher incomes though do help.

Finally there's the ever so subtle way in promising nothing:

'Lukach and Sakorn Tripetchpisal, the Thailand country manager for Pioneer, predicted that DuPont’s corn seeds could help Cambodia improve its yield from an average of less than 6 tonnes per hectare to levels similar to those in the United States, which is close to 11 tonnes per hectare'.

That 6 tonnes per hectare is often already obtained from the (illegally imported) hybrid seeds, so don't expect higher productivity and certainly nowhere as high as the DuPont official claims.

The start of the end?

2009-11-09T16:17:00.000+07:00

A Filipino publication, Businessworldonline, mentions that SL Agritech will start to grow hybrid rice in Cambodia soon:

' "For our hybrid seeds, we are going to plant them in Cambodia… late this year. We will supply them with seeds," SL Agritech president Henry Lim Bon Liong said in a recent phone interview. ...
"In the future, we can also do contract growing [premium rice] in Cambodia and export it because the cost of production there is lower," Mr. Lim said, adding that producing rice in Cambodia costs half than in the Philippines'.

SL Agritech is essentially a Filipino company with a big share in the nation's hybrid rice (seed) production and distribution. Them mentioning coming to Cambodia is for sure to be taken serious, though ultimately to make things work for them they will need to grease the wheels, find farmers willing to work for them, find land (not so easy) and pay well. My thinking? It's going to be tough.