Rice deals
With international prices for rice dropping, it is to be expected that the major importers are holding off on the orders already agreed on, while the importers seek to find better and more importantly cheaper deals.
Especially Cambodia, with little to offer other than cheap quantities, is likely to squeezed. On the one hand, importers of Cambodian rice have little to loose in the sense of loss of long term business relations, there are none. Business acumen means that Cambodia is being undercut, while Cambodia produce itself faces poor quality, higher costs in export processes and (due to capital constraints) higher financing costs, thus meaning the space to renegotiate prior deals is lacking.
So, it comes as no surprise that the Phnom Penh Post reports (3 April 2012) that China is stalling on Cambodian rice imports. Officially it is that the paperwork hasn't met the standards set. But this notorious Chinese deal breaker should be a known identity and it seems to be less of a factor if the importing party (i.e. the Chinese business) is really motivated in receiving the importing goods.
Whereas exporting to the U.S. / Europe is more transparent, breaking the Asian markets are more difficult as significant inter political and business networks are required. Let´s hope Cambodia learns from it´s mistakes.
Different
Rather than the traditional rice exporting business, Vietnam seems intent on replicating it´s own model of business.
Having gained considerable success in cornering the global cashew market through control of the export chain (having a chunk of the import market and investing in Africa), it now seems to acknowledge the possible consequences Cambodia's rice exports might have both on Vietnam's ability to source higher quality produce as well as possibly threatening it´s own exports.
So invest it will and especially in post harvest operations. If you control the Cambodian rice mill market you control the export market and thus the ability to divert produce to Vietnam for re-export.
The investor has another couple of hints:
Exports
Elsewhere, Cambodia hopes to be able to export to Indonesia. The exporter is cited:
Indonesia also seems intent on learning from Vietnam:
Other markets mentioned for cambodian outflows of rice produce, are the Philippines according to the Phnom Penh Post (16 March 2012:
Investment
Surprising statistics. Cambodia's agro investments are mostly in rubber. According to Council for Development of Cambodia $674 million was earmarked for rubber investments versus $19 million for rice processing.
Though much of Cambodian farmers are dependent on rice farming, private investors are shunning this sector in favour of rubber, possibly because of the underlying value of land involved. Because of all the rubber dollars pouring in, not much of this is destined to rubber processing...
Other developments. Trying to remain in front of the pack, Thailand hopes it´s Khao Hom Mali rice will receive Geographical Indication status from the EU. How they hope to maintain some kind of restriction on this remains a doubt.
Back in time
Older news: the Cambodian government wants to guarantee rice loans (by earmarking $25 million) according to the Phnom Penh Post of 15 February 2012. Comment from the millers: not enough!
Thailand's the Nation (January 17 2012) laments the disappearing Thai dominance of the rice market:
Hybrid
Finally an interesting article on where the rice is heading. It notes increasing amounts of exports are coming from Latin America and how the Thai rice mortgage scheme will help prices initially but long term will keep prices from rising by much.
It then gives an honest US account of hybrids:
With international prices for rice dropping, it is to be expected that the major importers are holding off on the orders already agreed on, while the importers seek to find better and more importantly cheaper deals.
Especially Cambodia, with little to offer other than cheap quantities, is likely to squeezed. On the one hand, importers of Cambodian rice have little to loose in the sense of loss of long term business relations, there are none. Business acumen means that Cambodia is being undercut, while Cambodia produce itself faces poor quality, higher costs in export processes and (due to capital constraints) higher financing costs, thus meaning the space to renegotiate prior deals is lacking.
So, it comes as no surprise that the Phnom Penh Post reports (3 April 2012) that China is stalling on Cambodian rice imports. Officially it is that the paperwork hasn't met the standards set. But this notorious Chinese deal breaker should be a known identity and it seems to be less of a factor if the importing party (i.e. the Chinese business) is really motivated in receiving the importing goods.
Whereas exporting to the U.S. / Europe is more transparent, breaking the Asian markets are more difficult as significant inter political and business networks are required. Let´s hope Cambodia learns from it´s mistakes.
Different
Rather than the traditional rice exporting business, Vietnam seems intent on replicating it´s own model of business.
Having gained considerable success in cornering the global cashew market through control of the export chain (having a chunk of the import market and investing in Africa), it now seems to acknowledge the possible consequences Cambodia's rice exports might have both on Vietnam's ability to source higher quality produce as well as possibly threatening it´s own exports.
So invest it will and especially in post harvest operations. If you control the Cambodian rice mill market you control the export market and thus the ability to divert produce to Vietnam for re-export.
The investor has another couple of hints:
'BIDC director Tran Bac Ha, who also serves as president of the Association of Vietnamese Investors in Cambodia, said the high price of Cambodian rice was an impediment to the country competing in global markets.Streamline the bureaucracy thus?
To export a million tonnes of milled rice, the Kingdom would need to decrease electricity and transportation costs, as well as streamline the bureaucracy involved with the export process, he said'.
Exports
Elsewhere, Cambodia hopes to be able to export to Indonesia. The exporter is cited:
'“Actually, they ordered about 200,000 tonnes, but I couldn't accept because it is very big,” he said'.Considering the price of only $400-ton, the exporter might count himself lucky that he will be able to limit his losses ...
Indonesia also seems intent on learning from Vietnam:
'Indonesia is ready to cooperate with Vietnam in researching and developing some hybrid rice varieties, Suswono said, adding that Vietnam has great potential and rich experience in agriculture, highlighting its position among top world rice exporters'.Hopefully the minister has been briefed correctly. He might need to nationalize the natiuon's rice industry and invest in non-hybrid rice growing ...
Other markets mentioned for cambodian outflows of rice produce, are the Philippines according to the Phnom Penh Post (16 March 2012:
'“Cambodia should understand that the biggest market for rice is in the Philippines and Indonesia,” he said, adding that the government-brokered deal was an attempt on the part of the Philippines’ National Food Authority to diversify its imports.Very odd indeed that despite the biggest import markets on Cambodia´s doorstep, that the past has seen exports only to those beyond the vicinity. Prices? Transparency?
Cambodia exported about 173,000 tonnes of milled-rice last year, a 226 per cent increase on the year before, according to Ministry of Commerce figures.
The majority of the shipments went to the European Union'.
Investment
Surprising statistics. Cambodia's agro investments are mostly in rubber. According to Council for Development of Cambodia $674 million was earmarked for rubber investments versus $19 million for rice processing.
Though much of Cambodian farmers are dependent on rice farming, private investors are shunning this sector in favour of rubber, possibly because of the underlying value of land involved. Because of all the rubber dollars pouring in, not much of this is destined to rubber processing...
Other developments. Trying to remain in front of the pack, Thailand hopes it´s Khao Hom Mali rice will receive Geographical Indication status from the EU. How they hope to maintain some kind of restriction on this remains a doubt.
Back in time
Older news: the Cambodian government wants to guarantee rice loans (by earmarking $25 million) according to the Phnom Penh Post of 15 February 2012. Comment from the millers: not enough!
Thailand's the Nation (January 17 2012) laments the disappearing Thai dominance of the rice market:
'Vietnam will eclipse Thailand as the world's biggest rice exporter this year as the government's pledging scheme artificially inflates Thai prices, exporters predicted ... Other negative factors facing Thai rice exports include an expected increase in shipments from India as export quotas there expire in February; Vietnam's announcement that it would double jasmine rice exports to 800,000 tonnes this year; an increase in the number of countries exporting rice, including Brazil and Uruguay; Cambodia's projection that it will export 1 million tonnes this year; and an acceleration in exports from Burma, particularly of parboiled rice'.The Bangkok Post on fourth of January chimes in with criticism as it explains that current domestic rice policies are resulting in higher inflation mainly attributed to rising rice prices.
Hybrid
Finally an interesting article on where the rice is heading. It notes increasing amounts of exports are coming from Latin America and how the Thai rice mortgage scheme will help prices initially but long term will keep prices from rising by much.
It then gives an honest US account of hybrids:
'When asked about concern over the quality of hybrid rice, Brothers said, “We’re not saying they’re perfect, but neither is conventional rice. We seem to be up against the wall with our conventional varieties. We don’t know quite where to go to get greater yields. We think the hybrids are the best way to bring new varieties to the marketplace.”'One thing for sure, other than farmer to farmer exchange, companies disseminating hybrid rice seeds do know how to get seeds to the farmers. Produce wise, I doubt whether the product stands up to conventional higher priced varieties. In terms of markets and economy-wise. Then again there will always be a market for lower quality grains ...
