Fairy land

The mythical world

Prominent news the past few weeks is a nondescript article in IRRI's Rice Today.

IRRI is feeling the heat (Rice Today, Oct. 8) and responds to it's critics of the development of Golden Rice (GR). 

GR essentially implies adding genes to traditional varieties giving them higher vit. A traits. 

The myths of GR:  

'First is the notion that Golden Rice is some sort of unnatural, monster rice. 
...
Second is the idea that genetically modified organisms (GMOs) are unsafe, cause cancer or other major health risks, or pose serious environmental problems. 
... 
Finally, there is the idea that Golden Rice is being developed to be sold by big biotechnology companies to profit from poor farmers'.

But in reality it does nothing to allay these fears. See here:

- Approving GR is just a way to soften up resistance to hybrid and GM rice. 

- If GMOs are safe why is there so much public resistance? Why not approve labelling then, is this not a win-win solution?

- Well, big companies are all well versed in PR. Give a crumb here, reap the world there. Syngenta's involvement gives them some pay-back elsewhere with IRRI, for sure ...

Still, kudo's for IRRI facing the music.

Just an afternote: too close for comfort Bayer Cropscience has a big do in Delhi, India called ricefutureforum with IRRI as co-host and has also managed to get Germany's public development agency Giz on board ...

The future according to Bayer is a hybrid one. Yeah, right.

Oh and this. An interesting article from farmanddairy (Oct. 10) highlights recent research which focuses how herbicide resistance can pass from the GM crop to similar weeds: 

'Rice containing an overactive gene that makes it resistant to a common herbicide can pass that genetic trait to weedy rice, prompting powerful growth even without a weed-killer to trigger the modification benefit, new research shows'. 

Though this does not imply that it will happen obviously there may be more risks than we think.

Domestic and global affairs

There's surprisingly little to report on, in Cambodia.

Despite export figures up by 100%, it still falls way behind what the government would like to see (PPP, Oct. 9). Reality check.

Production will remain the same. Is this despite of the floods? Or because of the floods? Source is the Cambodian Herald (Oct. 4).

The Strait Times (Oct. 12) notes how India is becoming Singapore´s source of rice, leaving Thailand behind. No reasons given, is it the price? Consumer preference for Basmati? A miracle?

Some good news for Thai government. The Wall Street Journal (Oct. 14) highlights China's lower than expected rice production. Partly brought on by drought/heat conditions earlier this year it also delves up info on productivity which also is slipping: 

'Analysts cite a shift in land use toward industrial and residential by farmers in the humid southern regions where rice grows best. Production has increasingly moved to more arid northern regions where big yields are harder to get, said Rabobank agriculture analyst Chenjun Pan.

Ms. Pan and other analysts say the rice-yield plateau shows that affordable technological innovations to increase yields may have also reached their limits. Chinese academics have developed a strain of "super rice," capable of doubling the yield to 13.5 tons a hectare, but the hybrid grain remains financially out of reach for most farmers.

A trend of lower Chinese rice production, if sustained, would afford further opportunities to global rice exporters in what is becoming an increasingly attractive market. Overall grain imports are rising along with domestic wealth and worries over illegal levels of toxicity in many kinds of Chinese-produced food'.

More significant I found this snippet: 

'Grain imports in China are a politically sensitive issue. China's military has weighed in publicly against rising corn imports in recent months, with a major general from the People's Liberation Army publishing an essay in a popular newspaper in August arguing that genetically modified corn imports may be a way for the U.S. to threaten China's food security'. 

Well, if this is the view then the expansion of global hybrid rice fuelled in part by Chinese interests might well imply that the intentions need not be humanitarian, nor economic. But a way to strategically gain leverage? Hidden agenda?

The FAO put out another of their quarterly overviews of the world's cereal markets (Oct. 3). It notes the continuing fall of rice prices and the slow expansion of production. The immediate future sees prices going lower yet, not really encouraging for any producers.

And the saga continues

The Nation (Oct. 1) mentions that maybe the Thai rice pledge will continue indefinitely as losses are nowhere near what everybody thinks.

The institutionalizing of the programme has required a need for more storage capacity. The Bangkok Post (Oct. 1) reports on how the Thai state Public Warehousing Organisation hopes to be able to expand compensation. 

However they are up against fraud suspicions as in their previous attempt to expand, the bid winner was announced before the tender process started ...!

Even though exports have dropped since the start of the rice pledging scheme, the Thai government is still comfortable with the ability to export 8-10 million tonnes. So mentions the Nation (Oct. 9).

Funny, to date export volumes for 2013 are nearly 2.5 million tonnes, down more than 30% on the 2012 figures. Let's see where the 8 million come from.

Accounting for losses means that the government hopes to not include humanitarian assistance in it's books, i.e. this should be a write off at full purchase price, rather than the world market price. Who cares? The Nation, Oct. 10.

The accounting section was also at a loss to find out that they had actually bought more rice in the past 2012-2013 season than intended and need another 9 billion Thai Baht (nearly 0.3 billion $US), so reports the Bangkok Post (Oct. 10). Why not?

A blog entry by the Wall Street Journal. Posted on Oct. 7 it gives a good introduction to current issues on the rice pledging scheme. However it also mentions to instil it's own philosophies. For instance it mentions that continuation of current government policies is ill-advised and will lead to increased dissatisfaction with the government. Me thinks the opposite.

Spin doctoring at it's best. A Thai government official notes that food insecurity issues are driving those affected countries into Thai arms and will receive nice quantities of rice imports if they ask politely. 

Or so it seems. 

Reported in the Nation (Oct. 14) it implies that storing most of the globe's exports will result in positive paybacks for the service offered. But what if over-priced in a climate where prices are trending downwards?

The Bangkok Post provides us with news: rice pledging leads to lower global prices (Oct. 15). Nothing new. Stocks in Thailand will increase, by 24% so estimates the USDA. Global prices will drop by 10% by April next year. In the article it refers to Bloomberg's article of 15 Oct. 2013.

Thailand's BAAC needs another 140 billion bath ($4,.5 billion US$) to finance next years pledges, so reports Bangkok Post (Oct. 21). Hope somebody is adding all this up.

 

Bangkok Post (Oct. 11) repeats Thai government assertions that it will be able to sell 1 million tonnes of rice to China. Spread over 5 years ... And bought from private traders not the government. And the same article notes that previous government claims appear to be wishful thinking.

The deal with China is preliminary, concedes Thai PM (Bangkok Post, Oct. 16). Apparently it's just an intention. Salient detail: there might be swap, rice for high speed trains! 

The Nations mentions that exporters are in no mood for cheering (Oct. 15) despite announcements of deals with China. It also notes that the Thai PM is vague on details (Oct. 16). While a day later the Bangkok Post emphasizes the PM implied the agreement was an informal one, i.e. no deal at all. Opposition were making hay with implying the government were imagining deals.

At a loss

Coming from another corner, a former Deputy PM (Pridiyadhorn Devakula) advises the government to hand out the cash directly to the farmers rather than establishing an intricate and fraud-fraught system based on producing rice (Bangkok Post, Oct. 15). 

On the face of it, it does seem more just, but in the end the only thing that ties recipients into the slower growing areas is the production of rice. Fail to reward agricultural production would result in everyone moving into Bangkok and using proxies to earn their share of the pie. Now at least there is some multiplier effect and if the scheme had been introduced before the height of rice prices it would have produced quite an effect. However now the scheme is draining public funds, encouraging fraud while it may well be never-ending.

Bite:

'He [Pridiyadhorn Devakula] cited figures showing that in the two years since implementing the programme, with a total of 48 million tonnes of paddy involved, the government had lost at least 425 billion baht, but rice farmers gained benefits amounting to only 210 billion baht.

More importantly, those who were not farmers gained more than 115 billion baht in benefits, showing that the government had failed to prevent corruption in the rice scheme, he said'. 

High in pointing out current short-comings there seems to be little thought of over how an alternative plan would work, nor how fraud might be avoided. 

As always the Nation chimes in likewise. Or is it vice-versa?

Government refutes Pridiyadhorn Devakula claims. The Nation (Oct. 17) gives air to government rebuttals: nobody knows what the losses are! Not even the government!

Despite assurances to the contrary, former deputy PM / Finance minister (Pridiyadhorn Devakula) sees losses only going up (Bangkok Post, 22 Oct.). The neat sum of losses would be 466 billion baht or nearly 15 billion $US since it's induction.

'Last week, MR Pridiyathorn, also known by his nickname of Mom Oui, gave a press conference in which he called the government's rice-pledging scheme the biggest loss-incurring project ever conceived. At the time, he estimated that if the government could sell all of the pledged rice stockpiles by 2015, it would make losses of at least 425 billion baht _ 205 billion baht from the 2011/2012 crop and 220 billion from the 2012/2013 crop. MR Pridiyathorn's comments prompted government ministers to defend the project. Finance Minister Kittiratt Na-Ranong said MR Pridiyathorn, also a former governor of the Bank of Thailand, does not understand the programme's accounting system. Deputy Prime Minister Niwatthamrong Boonsongpaisan, who is also commerce minister, said actual losses from the scheme as of January were only about 100 billion baht. In response to MR Pridiyathorn's latest estimates, Deputy Commerce Minister Yanyong Phuangrach yesterday said it was impossible for the rice scheme to cause as much as 466 billion baht in losses. He said the government has spent about 600 billion baht on the project. It expected to earn 200 billion baht from rice sales by the end of this year. "That means there is a gap of 400 billion baht. But we have more than 10 million tonnes of rice in stock. Even if we sell the rice at half price, we would still earn about 200 billion baht," Mr Yanyong

insisted. He added that his calculation means the government will be only about 200 billion baht short, which amounts to a loss of about 100 billion baht a year. MR Pridiyathorn insisted yesterday that number was impossible based on the rice release information from the ministry itself. "It's clear the ministry's argument is completely wrong. The issue is whether the ministry understands the issue but conceals the loss figures, or if it does not understand anything," MR Pridiyathorn said'.

Alt

Some rice not going into the rice pledge scheme is organic rice. The Bangkok Post (Oct. 14) reports on how a Singaporean entrepreneur is importing into Singapore as well as exporting to other markets northern Thai organic rice priced at 10% above the governments pledging prices. Business is expanding by 10% per annum with current exported quantities heading towards the 1,000 tonnes. 

The Nation carries the same story.

The Nation (Oct. 21) concludes that organic rice is better than feeding off the national rice pledge scheme. Another feel good story about how organic rice has the potential to avoid pitfalls of the industrial lead rice schemes, i.e. by avoiding taking on debt. Pity the story from Thailand's Khon Kaen is scarce on economics.

Re-cap

Rice news during the past year has been dominated by Thai efforts to support it's farmers and rural areas by buying up all the nations rice at above market levels and storing it for future sales. Though initially rosy, the plan has backfired. Sales are near non-existent, world market prices have dropped rendering potential huge losses and the large amount of fraud has resulted in national political liability for the ruling party. 

And all of it could have been expected.

And has anything changed the last few weeks? well, there's certainly been a fair share or reporting.

Sales or not?

An MoU was signed between Thailand and China concerning the purchase of more than a quarter million tons (Nation, 22 Nov.). 

A day earlier the same source reported the possibility of 5 million tons moving northwards. But spread over 3 years. The bad news: 

'However, Thai rice exports to China dropped 57.8 per cent in the first 10 months of the year, to 91,460 tonnes'. 

Another day later, context comes in. The Nation:

'It has been remarked that this week's MoU is totally different from previous government statements that China would purchase 5 million tonnes of rice from Thailand in three years. There was no such fixed figure in the MoU but only a statement, without any firm commitment, that China would import high volumes of Thai rice and that Thailand would supply the rice as required by China. In addition, the price will be negotiated based on the market price at the time of any future transaction'. 

On the 24th the Bangkok Post has more insight on the potential losses:

'Mr Paibul also cited a warning from the Thailand Development Research Institute (TDRI) that the rice scheme could saddle the country with huge debts.

"The TDRI estimated losses from the rice scheme would be around 6,000-7,000 baht per tonne of paddy. This amounts to nearly 200 billion baht of losses per year or 800 billion baht during the four-year term of this government," he said.

As it is only a memorandum of understanding, either partner can cancel it at any time. In this case, Thailand needs China to import rice to help its dispose of its huge stockpile of about 6 million tonnes accumulated under its high-priced pledging scheme. Unfortunately, there is no G2G deal at all now'. 

And a few days later, apparently the Chinese ambassador to Thailand has said there is no deal at all (Bangkok Post, 2 Dec.): 

'The Democrat Party has demanded the government present documents to prove it has sealed a rice export deal with Beijing, after the Chinese ambassador to Thailand said the agreement had only been reached in principle'.

Pledge sidelines

Nigeria mentions receiving 10 year old Thai rice (Nation, 20 Nov.). With the Thai government hoarding it's own nations surpluses this could become more commonplace. Same publication, same day notes that already 100 cases are being researched by the Thai anti-graft agency.

The Thai Finance Minister though sees a positive future (Bangkok Post, 23 Nov.): 

'He [Fin. Min.] said the rice pledging scheme, which pays 15,000 baht per tonne for white rice paddy, might incur some losses, but the figure would not reach 300 billion baht'.

Hongkong reports that Thai rice is losing flavour in the local market: 

'"Hong Kong consumer behaviour has changed to lower-quality rice because of high prices of Thai rice and slowing economic growth. The Thai government should set a competitive price for rice, which should be lower than the current price by $100 a tonne in order to narrow the gap between Thai [rice] and its rivals," Chan [chairman of the Rice Merchants Association of Hong Kong and vice chairman of the Hong Kong Rice Suppliers Association] said'.  

Report from the Bangkok Post (19 Dec.).

The Nation (18 Nov.) notes: 

'The high price of Thai rice has resulted in the Kingdom losing about 50 per cent of its export customers as countries switch to importing more rice from India and Vietnam, which offer more attractive prices'.

And then the hard talk

Another commentary from the Bangkok Post (13 Dec.) applauds efforts to redistribute wealth between the wealthy Bangkok and the poorer rural areas, but questions the rice-pledging scheme as the main driver: 

'So far, the government has not taken any steps to deal with graft allegations. Actually, the Pheu Thai Party failed from the start in not being able to explain why the rice pledging price was set at 15,000 baht per tonne. It's unlikely that the sum is based on rational calculation.

Moreover, it failed to specify measures to handle the existing stock and the glut of incoming stock to prevent a decline in the quality of rice and also to recoup the sum it invested'.

Adding more content is this commentary by the Bangkok Post (5 Dec.) It first mentions the main points which have been repeated oft enough: the discrepancy between the government has bought the rice and the likely huge losses stemming from the sales. The other is the system which encourages fraud. Significant other non-intended consequences lie ahead such as farmers now intentionally seeking less favourable environs for their rice fields: if all fails they are confident they will receive government hand-out. More mono-cropping. The trading system is whithering away. And it finally notes the political undercurrent: the farmers are now the recipients and are relied upon to vote and empower their leaders ...

And over the horizon is more bad news for Thailand. FAO reports (19 Nov.) that production is growing faster than consumption: 

'Global rice production for 2012 is forecast to outpace consumption in 2012/13, resulting in an upward revision of 5 million tonnes in 2013 closing inventories, according to a new forecast by FAO's Rice Market Monitor (RMM) issued today'. 

More inventory ultimately means  lower prices in the long term.

 

Cambodia

In Cambodia much promise was made of the potential to export even larger amounts. Not happening.

The FAO have once again assessed Cambodia's productivity and expects it to drop (Phnom Penh Post (PPP), 22 Nov.). It's a bit unclear by how much.

Cambodia needs a loan of $200 million to make exports happen What's that? No show, well then we need um .. $50 million. So reports the PPP (27 Nov.): 

'Son Kuthor, president of the state-run Rural Development Bank (RDB), said last week that previous negotiations for a loan of $200 million stalled because of differences between the parties in how the loan should be used.
“We don’t hope for $200 million because of the conditions the bank imposed,” he said.
“We now hope to receive a pilot loan to buy paddy rice. We’ve so far suggest $20 to 50 million,” he added'. 

Cambodia's rice sector is reorganising itself by initiating a sole organisation which can deal with the Ministry of Economy and Finance (PPP, 17 Dec.). Name: Federation of Cambodian Rice Exporters (FCRE). 

'Cambodia’s Minister of Commerce Cham Prasidh, who presided over the launch ceremony, said the federation will gain the full support of the government and will work with it to deal with all issues over the export of milled rice.

“The FCRE is the only partner in the rice industry authorised to discuss issues with the government,” he said.

Cambodia has a number of milled rice associations, leading to inter-association disputes. However, Cham Prasidh said all of the organisations will maintain their authorisation to export milled rice.

He also warned that associations which do not become members of the FCRE will lose their right to talk to the government on export issues'.  

Bodes well?

The same source, a week earlier highlights one other organisation:

'The Alliance of Rice Producers and Exporters of Cambodia (ARPEC) will release US$2 million after December 15 to its members in nine provinces so they can buy paddy rice before the harvest season ends and stocks have been depleted.

Hann Khieng, director of ARPEC which was formed in May this year, said an internal meeting between the alliance’s management teams and members last week agreed to disburse about $2 million to its members'.

Back

Finally back on subject, hybrids. Hybrids are the panacea for our future, still so it seems, despite little proof forthcoming this year on whether or not anything tangible (more financial returns?) might arise. An interesting article from the South China Morning Post (28 Nov.) as even they are raising question marks as to whether the grail of achieving more is sustainable? 

'A farming pioneer's ambitious goal to increase the yield of hybrid rice by 11 per cent in the next three years risks making the staple more vulnerable to weather, disease and pests, agriculture experts have warned. 

...

China's rice fields, including both hybrid and normal rice, already yield 6.7 tonnes a hectare annually. That was not far behind the 7.5-tonne yields in developed countries where the most advanced farming technologies are used, such as Australia and the United States.

Several scientists, however, said the 15-tonne target was impractical because the costs of growing such rice, in terms of fertiliser and land management, would be enormous. Moreover, they warned that focus on field yield could sacrifice the crop's resistance to weather and pests'. 

A good read.

Crisis?

If only ...
Since the last update 3 weeks back the Pandora box of disassociations concerning the Thai rice pledging system has fully opened. It would require a  taking on as a day job all the links and reports that have popped up since then; so what follows is just a recap:

• 28-7 This years programme may set a ceiling on the pledges per farmer (BP; note 20+ comments!).
• 30-7 TDRI report in the Nation that exports from Thailand have halved; shelve the current pledging system. BP highlights the fact that maybe more than 1 million tonnes pledged are actually from neighbouring countries, while 2 million+ may well have been double pledged:

  'He [Nipon Poapongsakorn, president of the Thailand Research and Development Institute (TDRI)] suspected that about 1 million tonnes of the discrepancy might have been smuggled from neighbouring countries by local traders to take advantage of the high prices offered by the pledging programme'.

  Again huge amounts of comments.
• 2-8 Nation is alarmed by Thailand losing it's position as the globe's no. 1 exporter. It quotes the Thai Commerce Minister as saying that farmers are satisfied, we don't care about the no. 1 position. The article which seeks farmers who profit does throw in a political angle: losing the no. 1 position might hurt the political position of the government of Phue Thai party.
• 2-8 BP mentions there will no lower limits to bids for exports. It is hoping for $700 a tonne!
• 4-8 BP focuses on government anti-corruption plans. High on the list are the rice pledging scheme.  Quote from the PM: She is concerned.
• 7-8 The BP has done the work, or better has found out that the government already knows. It points to millers / warehouses which use all kinds of fraudulent measuring equipment and use fake certificates. It also alleges that public organisations are involved. Even more comments.
• 7-8 The Nation declares the government policy is driving foreign ownership of rice lands. At least so the title makes believe. But then the article declares the oppoisite. Or not?

  'An investigation by The Nation, however, has found little support for such charges in the prime rice-growing Central region. Still, farmers, millers and exporters all say the government is losing control of the agricultural sector because farmers are being lured into selling their land to rich people, who are now growing rice to enjoy higher returns'.

  Running in the same issue it contradicts its own claims by giving voice to 'farmers and trade bodies' who claim that government policies

  '... is distorting prices, benefiting the rich as well as foreign investors, damaging the Kingdom's competitiveness and discouraging the long-term development of Thai rice'.

• 8-8 The BP echoes the former report:

  'Ammar Siamwalla, honorary economist at the Thailand Development Research Institute (TDRI), said the rice pledging scheme was "pro-rich and anti-poor", with high pledging prices raising the cost of living for the entire public'.

  Again 30+ reactions.
• 10-8 The government also claims the rice-pledging system promotes frauds according to the BP, so nothing new? One aspect which might be overlooked is to how to end this scheme. There are certainly no takers!
• Continuing it has the whole pro's and cons as it's highlight of the week.

  'Mr Korn [former finance minister of the Democrat Party] harshly criticised the scheme as a big waste for the taxpayers’ money while benefiting rice millers, landlords who lease their land to farmers, corrupt politicians and only a minority of farmers. But Mr Kittirat  [Deputy Prime Minister] defended the scheme as being beneficial to the majority of farmers and said it will not be dropped or reviewed'.

  It also adds:

  'Meanwhile, the United States Agriculture Department will send its experts to Thailand to study the rice pledging scheme to determine whether the government is distorting market prices'.

• 11-08 The BP now somehow has more news:

  'Huge losses loom in government rice sell-off - Mills overloaded with pledge scheme stocks.

  Somehow this is not news ...
• 13-08 The Nation reports how a parliament panel inspected a couple of mills in central Thailand and found them lacking, i.e. easy to defraud the scheme.
• 14-08 Despite the misgivings, the wheels are being set in motion to pledge the upcoming crop. Over 260 billion Thai baht is required according to the BP, roughly 8 billion $US. One can just imagine how much can be lost to fraud and poor trade policies. The same day, the same newsreel announces that a solution to the warehouse problems is to build more storage capacity. No price tag though ...
• 16-08 BP announces tinkering the scheme will take place so as to placate opponents.

Clearly the last word on the pro's and con's has not been said yet. For the global consumers the huge amounts of rice stocked will need to be marketed some day. The apparent gamble on prices going up seems not to have paid off. At best prices have stabilised. The lonnger term outlook remains unclear according to FAO. This compares to maize prices going to record heights, closely mirrored by wheat prices. For an article on recent developments the Financial Times ( 31-07-2012).

Other export news, Vietnam wants to limit the number of export companies, so as to increase quality, so it seems. Possibly more bad news for Thailand (source). This is echoed in the Businesstimes.vn.

IRRI is still focussed on feeding the needy and seems to only be able to answer their mission with hybrid rice. It notes that more and more research is undertaken in more 'tropical countries'. They also have an interview with Longping Yuan. In the process they manage to downgrade the expectations of increased hybrid yields from 30 to 20%. He also mentions poor suitability to tropical countries. Most of the advantages he mentions only apply to China.

Odd, Thai exporters are sourcing Cambodian and Vietnam rice to supply to African countries as their own rice is unavailable! (source)

On a side line, cashew exports seem to have increased 10-fold according to Phnom Penh Post (31 July 2012). Or have the statistics just changed?

What goes up ...

Prices down?

Indications are that rice prices are continuing to drop. The FAO suggests prices have dropped by 5-20% in the first half of this year on an annual basis. 

The only exception is Thailand's export rice prices which went up, though it is definitely certain that the Thai exports prices lead the market. More players in the market as well as higher global stocks have lead to the lessening of the significance of Thai rice.

Despite this, Bloomberg (June 5, 2012) do expect Thailand to regain it's position of major exporter, if only because the next harvests spurred on by the higher domestic prices will result in record output; the government will have to take a hit and sell it's stock if only to ensure the ability to buy and store the future crop. 

In a by-line it also quotes USDA as mentioning that 

'Cambodia's shipments' 

may reach 950,000 ton, up 19%. 

This may come as a surprise, as the Cambodian premier has wished that by 2015 1 million tonnes may be exported, a wish many believe will not materialize ... 

Puts some perspectives on all statistics mentioned ...

Long-term

Despite this consumer rosy outlook, Yuan Longping expects rice breeding to ensure even higher outputs. In a recent speech he predicted that productivity from hybrids could still go up by another 10%. He also mentioned

'“To cope with the food problems, the country [China] must carry out proper land policies, introduce preferential policies for farmers, provide technology support and solve the issue of grain prices,” he added'.

I don't know what the issue of grain prices is, but in the neverending clogwheel of forcing farmers to accept lower prices for higher outputs, hybrid rice will continue to force smaller producers out, favouring the cash-richer farmers. Solving this issue can only take place if accepting that ceilings in productivity have been reached...

Cambodian challenges

Rice exporters face challenges seems to be newsworthy to the Phnom Penh Post (5 July 2012): 

'Pou Puy, president of the Cambodian Rice Millers Association, said that the export of Cambodia’s white rice faces challenges in terms of both quantity and competitive pricing, as exports of milled rice dropped about 35 per cent for the first half of 2012 compared to the same period in 2011'. 

Quantity, there's only that much that one can do, but competitive pricing? How can this be a challenge?

Other challenges? Increased funding. Why? Phnom Penh Post (28 June 2012) cites:

'"Baitong will increase its capital to purchase up to 140,000 tonnes of fragrant unmilled rice, compared to last year’s 70,000 tonnes said Phou Puy, president of the Federation of Rice Millers Associations and the Baitong Rice Export Company.
Working capital would increase from US$28 million to $50 million this year as fragrant unmilled rice cost $450 per tonne, an increase from $400 per tonne he said'. 

Well, at least somebody is expecting prices to rise ....

Phnom Penh Post, 11 June 2012 names another two challenges:

 'Milled-rice exporters have called on the government to continue its efforts in reducing electricity and transportation costs, two of the main obstacles facing the government’s goal of exporting 1 million tonnes of milled rice by 2015'.

Government needs to work on this .... 

The article also mentions: 

'Although the government said the country would more than double its rice exports to 400,000 tonnes this year, experts have expressed misgivings about the figure as exports to Europe, Cambodia’s primary buyer, declined at the beginning of the year'.

The Alliance of Rice Producers and Exporters of Cambodia (ARPEC) has been formed (PPP, May 28 2012), a step in the right direction. However government involvement seems major, whereas an association should be independent especially as it needs to pressurize the government to make trade internationally more competitive ...

Other Thai issues
ASEAN integration means non-Thai entities are starting up business in Thailand and taking a slice of the Thai rice pie. The article in the Nation (june 15, 2012) is a bit odd, in that it fails to mention why this could be a problem, other than undercutting Thai government / Thai business interests:

'Although rice farming and trading are limited to Thais under the Foreign Business Act, many foreigners can easily rent or own land for raising rice and conducting a rice-trading business in the Kingdom," a rice trader said yesterday. At a Commerce Ministry seminar on creating a strategy linking local and global businesses, Thai rice exporters urged the government to protect Thai rice-cultivating areas and the trading business from alien residents by urgently checking the ownership of rice plantations and the certificates for running a trading business.
...
Korbsook Iamsuri, president of the Thai Rice Exporters Association, said some Thai rice exporters are now not Thai, while some foreign rice exporters want to join the association as members. She said Asean integration was a two-edged sword for the Thai rice industry, as it has encouraged Thai exporters to expand to other Asean nations, while foreign traders can easily penetrate the market here'.

Export news

• One hundred thousand tonnes destined for Indonesia (PPP, 28 June 2012).
• Phnom Penh Port will buy polishing equipment (PPP, 8 June 2012). 
• A rice mill for Takeo province, owned and operated by Canadia Bank (PPP, May 31, 2012).  A by line to a possible export deal with Guinea (PPP, May 2012):

  'An agreement for agricultural co-operation between Cambodia and Guinea was never followed through on, but the visit was hoped to expedite the co-operation. “[Our] two countries signed an agreement in 2008 for co-operation, especially on agricultural cooperation.
  But Guinea has not implemented it. This visit will encourage even more firm and active cooperation [firmer and more active than nothing?] on agricultural issues. It will be win-win for both countries,” Eang Sophallet said'.

The China trade
The Phnom Penh Post on June 7 notes:

'A 144-tonne shipment of Cambodian fragrant rice will leave Phnom Penh for Fuzhou, China on Saturday, the first Chinese order for the Kingdom’s milled rice after a recent government agreement was reached on Chinese regulation.
...
Reported regulatory issues have held back Cambodian rice shipments to China for more than a year, experts have said, some of whom maintained that the problem was Chinese red tape, not rice quality.
Rice millers have collected a stack of memoranda of understanding but the pseudo-agreements failed to translate into real trade.
...
Golden Rice president Sok Hach said his company sent a 48-tonne test run earlier in the year but failed to pass regulatory tests in the southern Chinese port of Shenzhen'.

On the same subject, PPP reported on June 1 2012:

'The Post reported last week that China approved local rice miller Golden Rice to export milled rice to China. A trial run the company sent to China earlier this year was refused by the Chinese government upon arrival in the southern port of Shenzhen.
Chan Tong Yves, secretary of state at the Ministry of Agriculture, said the ministry also has a quality testing laboratory, but it does not comply with the standards for exporting milled rice' [!]. 

On a final note, Cambodia needs Chinese cash for the rice trade: PPP (May 30, 2012):

'Cambodian government officials and private sector leaders have met with Chinese officials to negotiate a US$200 million loan for the development of Cambodia’s rice sector, an official said on Tuesday'.

Market News

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.