Alarm

As could be expected rice prices dropping tend to affect the rice industry itself rather than farmers directly. At least initially. And the current slump in prices is no difference, not in Cambodia.:

Disturbing news. Phnom Penh Post gives voices to the not so satisfied rice industry (Mar. 3):

'A newly formed coalition of rice millers and exporters has raised alarm bells, forecasting the imminent “collapse” of the nation’s rice sector within two years and blaming in part “governance failure” by the industry’s apex body'.

Infighting?

Not for long though. The Cambodian Rice Federation has got the message (Phnom Penh Post, Mar. 10):

'Responding to criticism, Cambodia’s apex rice industry body announced yesterday that it would submit a plan to Prime Minister Hun Sen that addresses two of the major challenges facing the Kingdom’s rice sector – competition from rice imports and access to finance for millers.

The Cambodia Rice Federation (CRF), which has come under fire from members critical of the direction in which the nation’s rice industry is being steered, will ask the government to make it mandatory for rice importers to have licences, and ask for its help in facilitating low-interest loans for millers, the federation revealed at a press conference yesterday'.

The Khmertimes (Mar. 17) has a similar article on the problems the Cambodian Rice Federation will put to the government:

'Two main issues will be put to the government when it holds an urgent meeting with the Cambodia Rice Federation (CRF) next week – a special fund package to help millers and exporters and a ban on imported rice from neighboring countries.
...
The special meeting was set up after complaints from the CRF outlined problems with a lack of funds to support production, imported rice from neighboring countries, the high cost of production, the high cost of logistics, the high cost of electricity, a lack of water, finding good seed stock, a lack of farm labor due to immigration and limited infrastructure and port storage facilities. The CRF claims that about 40 percent of the small- and medium-sized rice millers and exporters are close to stopping production and going bankrupt'.

The response of the government (Phnom Penh Post, Mar. 18):

'The Commerce Ministry has created a special taskforce to study challenges threatening the sustainability of the nation’s rice industry and will report its findings within two weeks, a ministry official said yesterday'.

Let's see what the government can come up with ...

Piloting

Besides the above (the main newsworthy items on rice production in Cambodia) what else topical has made the press? 
 

The Phnom Penh Post (Mar. 1) looks at the findings of an insurance programme on rice crops:

'A pilot project that offers micro-insurance to help rice farmers cope with the risks of flooding and drought is looking to build on the success of its first season by scaling up beyond three existing provinces. The Cambodia Micro Agriculture Insurance Scheme (CAMAIS), launched in the second half of 2015, aims to support local smallholder farmers by providing insurance payouts to those affected by severe weather-related events attributed to climate change. Rice farmers who join the scheme pay an insurance fee at the start of the growing season based on the size of their farm, type of paddy grown and technical tools used. In return, they receive consultation on farming techniques and get an insurance payout if their crop is damaged either by flood or drought.

...

According to Youssey [project manager of CAMAIS], 153 agricultural families joined the micro-insurance scheme during its first season, paying a total premium of $1,230 to insure 136 hectares of rice farms. At the end of the season, roughly 80 per cent of this collected capital was used to settle farmers’ claims, with the rest used to cover operational expenses and commissions for agents.

Around half of the rice farmers that purchased the crop insurance made compensation claims based on varying amounts of crop damage; however, only 52 of these claims met the criteria for receiving compensation, Youssey said'.

A lesson for all.

The Phnom Penh Post (Mar. 1) looks at the business of groundwater pumping. It's an increasing practice, exacerbating problems now the rains have been so poor.

'Extensive groundwater irrigation jeopardises access for shallow domestic water supply wells, raises the costs of pumping for all groundwater users, and may exacerbate arsenic contamination and land subsidence that are already widespread hazards in the regio, ...'.

On a sideline the Bangkok Post (Mar. 2) has one answer to the Thailand's water shortages: include local say of water management. 

 

Tractor politics as presented by Phnom Penh Post (Mar. 16):

'Local tractor dealers have reported strong sales of new equipment. Ngorn Saing, CEO for RMA (Cambodia) Co Ltd, exclusive local distributor of John Deere tractors, said his company sold about 300 tractors last year, a 30 per cent year-on-year increase. He projects similar growth in the coming year as farmers increasingly turn to mechanised farm help'.

Much is made of how tractors are assisting rice production. However it's probably cassava growing that's really pushing the sales. After all besides harvesting, there's very little use for tractors in small rice fields.

Sparks

Italians are afraid that Vietnamese interests will seek to grow and export rice from Cambodia bound for Europe using Cambodia's easy (and less costlier) access to the EU (Risoitaliano, Mar. 19). 

The article somehow makes a connection with what's coming from the Vietnamese press. Vietnamnetbridge (Mar. 10):

'However, Cambodian exporters can sell rice to the European market. The EU is the biggest consumer of Cambodian rice.
Why can Cambodia sell rice to the EU, while Vietnam, the second largest rice exporter in the world, cannot?
According to the Commercial Affairs Division of the Vietnamese Embassy in Cambodia, Cambodian businessmen can export rice to the EU because they can enjoy preferences'.

That said, the same source, 4 days later, warns of the threat posed by Cambodia as it gets better access to China. Though hardly having an impact on Vietnam's ability to export. So maybe not such a good source of info ...

The Mekongcommons (Mar. 17) has an extensive article on organic rice farmers in Surin, Thailand. Touching on the System of Rice Intensification and coping with climate change, it's a very read worthy article on pressures faced by rice farmers in the region and how to cope with these pressures.

The Bangkok Post (Feb. 27) notes that the recent auctions of rice are doing well.

And again, the Bangkok Post (Mar. 11) looks at the government programme of weaning Thai farmers off rice:

'Ms Prapatpon, 48, returned to school last month for a state-funded training programme designed to wean farmers off water-intensive rice and teach them how to grow other crops.

....

Going back to school was meant to give farmer ms Prapatpon fresh ideas and new strategies for survival on her farm in Chai Nat province. Instead, she said: "I can't apply any of this."

....

For farmer-turned-student Chaiyapoj Phak-on, the past two years have been a harsh contrast to the heady days of the previous government's income-propping rice-buying programme, which he called "the best time of my life." 

As usual there's more to be reported on politics and rice growing in Thailand. The Thai junta is in favour of an open society. As long as it toes the junta's line. From the Asian Correspondent (Feb. 24), this is the full article:

'THAI Prime Minister and junta head Prayuth Chan-ocha lost his temper at a Reuters journalist at Government House today, apparently over the news agency’s recent interview with former Thai Prime Minister Thaksin Shinawatra.

The reporter asked Prayuth about the cost of the damage of the rice-pledging scheme, which was implemented by the previous government under ousted Prime Minister Yingluck Shinawatra – Thaksin’s sister.

Prayuth said the number had not been finalized yet and would be announced later.

Then sparks flew.

“Why? You really want it now? You must tell Reuters to say [write] better yesterday [Tuesday],” he snapped, according to The Nation.

He then abruptly left the podium for his upstairs office'.

In similar vein: trying the tried. The Bangkok Post (Feb. 26) has a wide article exploring all what's wrong with Thai agriculture and trying to put the blame with one person. 
Oddly it's the Thai Rice Exporters Association which is assisting with the accusations that the previous government sold rice to China at lower prices than pledged, then stocked the rice and re-pledged it again to itself. 
Surely those accountable would be brought to court, why than use it to blame just one person?

Something different. Riceberry? That's the name given to (mostly organic) dark rice. Thailand rice exporters:

'Rice Berry is a cross-bred unmilled rice possessing dark violet grain, which is a combination of Hom Nin Rice, with well-known antioxidant properties, and Thai Hom Mali Rice, also known as Thai Jasmine/ Fragrant Rice or KhaoDawk Mali 105. Rice Berry contains three times more iron than other varieties. And not only does it contain a high level of antioxidants such as beta-carotene, gamma oryzanol, vitamin E and folic acid (folate) in itself, it also becomes soft and is aromatic when itโ€™s cooked, which is the outstanding trait of Thai Hom Mali Rice'. 

The Bangkok Post (Mar. 1) has a recent vdo on growing and market possibilities of riceberry. 

Silde

It may be marginal news, but it's impacts are to be huge. We are talking about the Regional Comprehensive Economic Partnership (RCEP).

What is the RCEP?  It supposed to be Asia's answer to the US-lead TPP. Does it serve the interests of Asian farmers? Grain.org (Mar. 17):

'Hot on the heels of the TPP, it is clear that RCEP will restrict seed saving and seed exchange at a time when, under the extreme pressures of climate change, farmers need more diversity in their fields, not less. Furthermore, it could increase their dependence on external inputs and raise their costs of production. Opponents of RCEP say that the trade deal could triple the current price for seeds.[iii] Trade agreements like RCEP should not give corporations monopoly rights over seeds, prevent farmers from saving seeds or promote GMOs—but that is what they do. These agreements are inherently biased towards the interests of corporate and political elites'.

That does not bode well for the future of small and sustainable (rice) farmers in the region.

Sam Mohanty on IRRI.org discusses rice prices and the dwindling of global rice stocks (Feb. 22):

'Despite the current stability in the rice market, there are reasons for concern about the direction of the market in the medium term (mid- to late 2016). The rice stocks of five major exporters (India, Thailand, Vietnam, Pakistan, and the United States) continue to slide since reaching a peak of nearly 41 million tons in 2013 (Fig. 1). According to USDA data, the biggest drawdown of stocks in these countries is underway this year, with a 40% drop from last year, to reach 19 million tons by late 2016'. 

A lot of this stock selling has come from Thailand which, in hindsight, has been providing the global market with a hoard of rice enabling prices to stabilize: public goods used for the good of the public. 

Naturally, the Thai government has seen little return on their stocks and it could be expected that they would dwindle away. Has any other entity stepped forward to possibly avert a rice price explosion? No. 

He concludes:

'With limited Thai rice stocks in the warehouse, it remains to be seen how major exporting and importing countries react to such uncertainty [causes of climate change and/or El Niño]'. 

One worrying impact for the immediate future: farmers in Southeast Asia will not be able to step up to the plate if prices rise due to drought. The lack of water impedes any potential to expand production.

So what about farmers elsewhere? 

But looking at this in the longer term, things look better than before the 2007 rice price explosion. The market is not dictated by Thailand (Vietnam and India have a substantial role), there are more upcoming exporters (Cambodia / Burma) and major importing nations such as Indonesia and the Philippines have better domestic responses.

Cuts

Phnom Penh Post (Mar. 15) has been tallying sugar exports and reveals that in line with expectations, Cambodia's exports to Europe will disappear:

'New figures show that Cambodia’s sugar exports to the European Union fell by 94.8 per cent between 2013 and 2015, amid accusations of rights abuses and land grabbing in the Kingdom’s industry.

...

Meanwhile, Am Sokha, case coordinator at the Community Legal Education Centre, which is also a member of the NGO coalition, said the trade decline sent a clear message to the Cambodian industry to clean up its act'.  

On the plus side. The drought in Southeast Asia is pushing global sugar prices higher (Bangkok Post, Mar. 10). That said with the drought there's little opportunity to raise output to take advantage of higher prices.

The Bangkok Post (Feb. 29) on rubber: 

'Thailand is seeking to boost sales after prices tumbled to an almost seven year low in January as slowing economic growth in China weakened demand from the biggest consumer. Along with Indonesia and Malaysia, Thailand agreed this month to cut shipments of natural rubber. Thailand has also agreed to buy rubber from growers at above-market prices'.

So with this concerted effort to protect rubber producers, it comes as no wonder that rubber exporters in Cambodia also receive assistance. 
Wrong.

The Phnom Penh Post (Mar. 7):

'Rubber producers said yesterday the government’s decision to amend the export tax scheme on natural rubber fell short of expectations and would do little to stem the losses of farmers as rubber prices hover near a six-year low'. 

At current prices, the tax amounts to a 5% levy, thus leading to pricing out of Cambodia's market.

Worse as reports the Phnom Penh Post (Mar. 17): 

'Cambodia's rubber industry’s woes have begun to crystallise after two major rubber plantations announced deep losses yesterday, attributing their downturn to high production costs and a drop in global rubber prices'.

In the meantime the past measures announced by Thailand seem at least in the short term to have pushed prices up, so reports the Bangkok Post (Mar.  7). However the short term gains may well lead to long term losses.

Cassava is leading the way. The Phnom Penh Post (Feb. 23):

'The tonnage of Cambodia’s agricultural exports increased by over 20 per cent last year, led by a surge in shipments of dried cassava chips, according to the latest Ministry of Agriculture data.

Total exports of 66 raw and semi-processed agricultural products – chiefly cassava, rice and rubber – amounted to 4.1 million tonnes in 2015, compared to 48 products with a total of 3.4 million tonnes a year earlier, the ministry said in its annual report on agricultural production.

...

Hun Ly Heu, director of cassava-exporting firm Drycorpkh Cambodia Co Ltd, said the fact that more farmers were selling their cassava despite falling prices was a sign of their desperation.

“Our market depends on orders from neighbouring countries and farmers could not wait for cassava prices to rebound due to their loan commitments,” he said, calling for the government to support farmers by setting a price floor on agricultural products'.

Bust to boom

Land politics in Laos: the case gone banana's. From the Southeast Asian Globe (Feb. 10) which reports on the province of Bokeo: 

'“The Chinese are renting 1,600 square metres of land for the equivalent of between $300 to $600 per year, which is roughly what the farmers would earn from this area if they cultivate the land. So they get the same amount but don’t have to work,” says Sompavong.

However, such deals always have their negative sides. For instance, the concession contracts usually do not specify that the investor has to clean up the land – often rice paddies – and return it to its previous condition after the contract ends'. 

However it's the accompanying massive use of pesticides which is proving a headache.

'Then, at the end of September, the Ministry of Agriculture and Forests warned four Chinese companies for “excessive use of pesticides” and ordered inspections on the types and amounts of chemicals used at some of the banana plantations. The revocation of business licences was threatened if laws continued to be contravened'.

This comes hot on the heels of another China induced crisis in northern Laos: that concerning rubber plantations. These plantations mostly seem to be a proxy for China land acquisition. 
Now with rubber prices hardly worth tapping the trees, banana's are seen as the way forward. But at the same unfair economical advantages such as buyers monopolizing the crop (as the crop can only get imported to China) local government collusion, etc. 
A good starter on what's wrong in the north of Laos needs heed and read the recent study Falling Rubber Prices in Northern Laos: Local Responses and Policy Options.

Quiet

Revising
Literally the hottest issue currently is El Niño and it's accompanying symptoms of drought in the wider Mekong region.

However the consequences need not be too negative. for instance soothsayers predict an equal bounty of rice this year in Cambodia as compared to last year (Phnom Penh Post, Jul. 8):

'Chan Yutha, spokesperson of the Ministry of Water Resource and Meteorology, said a dry spell owing to effects of El Niño wouldn’t have the same impact on the start of Cambodia’s rice planting this year, with rainfall, once it begins this week, expected to extend until September.

“The rainfall is expected to be even better than last year". 

Thailand though expects a 2% drop. According to Bangkok Post (Jul. 2):

'The government expects drought from the El Nino weather phenomenon to shave Thai rice production for this year's main crop by 2% to 26 million tonnes, though this could mean a rise in prices'.

The overall impact globally might well be negligible. The Bangkok Post (Jul. 8):

'The global rice harvest will increase less than previously estimated because of a strengthening El Nino, reducing stockpiles for a second year, the United Nations said.

Milled output will reach 499.3 million tonnes this year, compared with 499.9 million tonnes forecast in April, the UN's Food and Agriculture Organization said Wednesday. That would be higher than a revised 494.7 million tonnes in 2014'.

One aspect that may well change is the price, as Thailand is the bellwether for global rice prices, being the largest exporter in the past decade.

However a few weeks later, prospects are more depressing as rains are yet to impact Thailand. The Nation (Jul 16): 

'Amid falling water levels in the Chao Phraya River, water distribution will be halted for the agricultural sector from today, the Royal Irrigation Department said, adding all water will be allocated for domestic use and to sustain the ecology.
...
As a result of the ban on the use of water in the agricultural sector, it was reported that the farmers in Ayutthaya's Lad Bualuang district have to buy water from water trucks to save their rice crop, which will be ready for harvest soon. A local reporter revealed that the price of water per truck was Bt800'.

The Bangkok Post reported two days earlier more or less the same but noted that farmers would receive compensation.

And though for the nation itself there may be less disruption, farmers will be harvesting less, increasing their financial burdens. The Chiang Rai Times (Jul. 9):

'The drought and the critical water shortage in dams have prompted the Agriculture Ministry to ask farmers to hold off on planting their crops. The Office of Agricultural Economics estimated that the delay could cost farmers in Thailand’s central plains alone 60 billion baht ($1.8 billion) in potential losses'.

Risky business
Meanwhile in Thailand the prospect of bleak rains means that buying insurance is becoming a hot item (Bangkok Post, Jul. 14).

'Farmers cultivating 1.33 million rai [200,000 ha] of rice paddy bought crop insurance as of July 8, said Pravej Ongartsittigul, secretary-general of the Office of the Insurance Commission. ... This year's insurance programme divides farmland into five areas depending on risk exposure. Farmers with the lowest risk are required to pay 60 baht a rai while the government contributes 64 baht a rai.
In the highest-risk locations, farmers are required to pay 100 baht a rai while the government contributes 383 baht a rai. Insurers will pay 1,111 baht a rai [$US200/ha] for damaged crops from a natural disaster and 555 baht a rai for damage from pests or diseases'.

It looks like a pay-out may well be on the cards ...

Insurance may also be catching on in Cambodia. The Phnom Penh Post (Jul. 10):

'The Cambodian Agriculture Cooperative Insurance Company (CACIC), an initiative established by the Cambodia Center for Study and Development in Agriculture (CEDAC), yesterday announced the start of an agriculture micro insurance service to help rice farmers better respond to climate change.
Farmers who become a member of CACIC will have to pay an insurance fee of around $10 per hectare each season, although this cost will vary slightly depending on the type of rice variety gown.
In return, they receive consultation on farming techniques, climate change resilience methods and will get an insurance payout when their crop is damaged either by flood or drought, according to Yang Saing Koma, president of CEDAC.
looks like a nice initiative but seems rather expensive for small farmers. It also needs to take off seriously:
'In the last two months, about 60 farmers have signed up with CACIC, registering more than 60 hectares of rice plantation. The fund has generated around 2.7 million riels, or $650'.

The best  advertisement would be farmers receiving a pay-out after being affected, but that's not what we want.

Plastic
Fear the fake. Not.
The Phnom Penh Post (Jul. 15) has a curious article:

'The Cambodian Rice Federation held a press conference yesterday to allay fears drummed up by local media that fake rice is being distributed in the Kingdom.

Rumours began to surface this week when a reporter with local news site Khmerload published a story claiming to have eaten plastic rice'.

A change of subject, but still on fakes. Cambodian coffee is often substituted. This report (Munchies, Jul. 16):

'But it’s a con. Coffee here is cut through with scorched corn, soybeans, and dodgy flavourings. It’s a discovery as bitter as the filtered dregs thrown into Phnom Penh gutters. angus-pouring-his-own-blendPhnom Penh coffee roaster Angus Whelan pours a cup of his own blend'.

Waste
How does Thailand rid itself of rice stocks? 

'The Energy Ministry has been assigned by the government to help off-load around 5.89 million tonnes of deteriorated rice held in stockpiles with the plan at the first stage to convert around 1.3 million tonnes of the rice into ethanol fuel and the rest into biochar (bio-charcoal)'.

Reported in the Nation (Jul.3).

However not everybody agrees on this solution. Same source (Jul. 13):

'Rice traders have urged the government to rush to hold an auction for 1.29 million tonnes of rotten rice from its stockpiles while demand in the market is high during the drought.

"Instead of opening bidding for biogas or ethanol production, rotten rice could be produced as feedmeal. The government should urgently release its rice in the meantime to clear out stocks," a rice trading source said last week.
The government should allow general bidders, not just bidders for biogas or ethanol production, as many industries also want rotten rice'.

Heavy

Exports of rice from Cambodia are up by 60% this year so states Xinhua (Jul. 3). 

Roughly a fifth of this is to China which is emerging as Cambodia's main rice importer. This year exports to China are already up by 50% or 24,000 tonnes. However overall month on month exports are already up by 100,000 tonnes over the same period last year. It's unclear why and where the rest of the increase comes from / goes to. 

The latter from the latest data from the Mekong Oryza website.

The Nation (Jul. 13) notes that rice exports from Thailand are behind target:

'Thailand's rice export association lowered its annual target from 10 million to 9.5 million tonnes on Monday, due to a slowdown in the global economy and fears that drought in Thailand could slash output for the year.
Chukiat Opaswong, honorary president of the Thai Rice Exporters Association, said Thailand would face a tougher export market due to a global slowdown in trade and fluctuating exchange rates.
He added that concerns over the drought on Thailand’s rice production have boosted export prices and could drive buyers to Thailand’s competitors'.

Vietnam's exports are back in the doldrums so notes vietnamnet (Jun. 26). 

'According to the Vietnam Food Association (VFA), Vietnam had exported 2.1 million tons of rice by the end of May, earning $870 million, a decrease of 10 percent in export volume and 13 percent price decrease in comparison with the same period in 2014.

...

China remains Vietnam’s largest rice consumer, which bought 35 percent of the 2.1 million tons of rice Vietnam exported in the first five months of the year.
However, experts have warned against the heavy reliance on the Chinese market. China, despite high demand, has been tightening imports across the border gate since mid-2014, which has made it risky for Vietnamese enterprises to export rice to the market.
A source said that even contracts on exporting rice through official channels were also canceled, stressing that it was very risky to do business with China.
Nguyen Thi Bich Vuong, director of Hung Thinh Trade and Import/Export Company in Lao Cai province, specializing in exporting rice across the border gates to China, said only several consignments of goods were exported in the first three months of the year.
Meanwhile, no consignment has been exported since April when China began tightening control over imports'.

Loss
Land policies are often a contentious issue in Cambodia. And it should be noted that Cambodia has not yet lost it's spots. Cambodia Daily (Jul. 20):

'Environment Minister Say Sam Al was in Preah Vihear province on Sunday to help inaugurate Try Pheap’s newest project, a $52-million rubber plantation and additional facilities that the timber magnate has cleared thousands of hectares of protected forest to build.
Mr. Pheap was granted the 10,000-hectare concession inside the Beng Per Wildlife Sanctuary in 2011, and has clear-cut most of the site since. 
...
Numerous reports and investigations have placed Mr. Pheap at the heart of a vast illegal logging operation that involves collusion with government officials and is worth hundreds of millions of dollars, allegations that both he and the government deny'.

Odd that everybody seems to be stepping out of rubber and here there's a major investment in producing more future surplus.

This report coincides with a wider report on the wider push to export more rubber. From the Phnom Penh Post (Jul. 22):

'Protected areas and other biodiversity hotspots across Southeast Asia are increasingly under threat from expanding rubber plantations, with Cambodia at risk of losing more ecologically important land than any of its neighbours, a recent study reports.
If current trends continue, Cambodia stands to lose more than 2,500 square kilometres of protected areas to rubber plantations by 2020 – an area about the size of Luxembourg – according to a new study to be published in the September issue of the journal Global Environmental Change.
That number was significantly higher than for the other four countries surveyed – Laos, Myanmar, Vietnam and Thailand – with Vietnam clocking in at 1,900 square kilometres of protected areas potentially lost.
Cambodia is also predicted to cede more ground than that quartet in every other category of environmentally significant land save one: conservation corridors, where Vietnam fares slightly worse'.

Certainly not the best pupil in the class.

Meanwhile with the focus on rubber, governments are trying to be inventive. The Nation (Jul. 19):

'Thailand and Russia are considering a barter trade deal, with Russia seeking 80,000 tonnes of rubber while Thailand wants weapons and other goods in return'.

Flat?
Looking for alternatives? Here are a couple:

Phnom Penh Post (Jul. 9): 

Cambodia is seeking to export its mangoes to South Korea, according to a senior official at the Ministry of Agriculture, Forestry and Fisheries.

Waiting for the boom to bust? Growing Cambodia's Kampot pepper is increasingly popular. The Phnom Penh Post reports (Jul. 8): 

'Kampot pepper production almost doubled during 2015’s harvest season compared to last year’s, although prices have remained flat, according to an industry representative'.

And finally the problems with growing rice in Nepal, a very insightful article. The Nepaltimes (Jul. 3) mentions how the Nepali rice agriculture is succumbing to mechanisation:

'Even as Nepal’s annual rice production keeps dropping due to the shortage of farmland, fragmentation of holdings, labour shortage and falling productivity due to government neglect, here in the plains of eastern Nepal there is a quiet green revolution happening. 
...
Combining SRI with mechanisation and setting up farmers’ cooperatives, boosts productivity, creates jobs and empowers many women like Sabita Chaudhary. If what is happening here can be scaled up to the national level, Nepal could even export rice again'.

Fruition

Trade

Despite the poor progress of reaching Hun Sen's goal, it is noted that Chinese banks might just be willing to plough is some cash ($70 million?). PPP (27-08): 

'Son Kunthor, president of the Cambodian state-owned Rural Development Bank, told the Post that his Chinese counterpart proposed the establishment of $70 million in loans for rice milling, which would enable the production of between 270,000-450,000 tonnes of unmilled rice'. 

The bad news: 

'“This is their plan. We don’t know how much about it or if it will come to fruition, because first there are some conditions the government needs to ensure,” he [Son Kunthor] said'.

Hope to fulfil the dream is now heaped on Indonesia. An MoU was signed between Cambodia and Indonesia which would see 100,000 tonnes of rice head to Indonesia (PPP, 29-08). But ..., there's no timeframe, nor an exact amount. A respondent to the article questions the price to be received (higher than that of Vietnamese sourced rice?) as well as the shipping possibilities:

'how the rice will go to the port of loading ? as no vessel with rice was ever loaded in Sikhanoukville by any cambodian exporter . are these 2 gentlemen [Cambodia’s Minister of Commerce and Indonesia’s Trade Minister] on the photo asking themselves these questions'. 

Probably not. 

On the other end the Jakarta Post reports the signing on a non-binding agreement. An agreement meant as encouragement for Indonesian businesses to set up shop in Cambodia. It mentions the company Galuh Prabu Trijaya with extensive interests in fertilizer supplies. 

However background info on the company is scarce. Alibaba suggests 

'We are sole distributor of rice origin from Cambodian competitive price with Jasmine type and else We have hulled rice the best quality'. 

Quite.

Then the Jakarta Post (31-08) actually has an achievement to present:  

'Khy Thay Corporation, a Cambodian rice miller, said it was ready to ship up to 20,000 tons of rice to Indonesia starting this year and to buy Indonesian agriculture machinery valued at $380 million'.

Khy Thay? 

'Khy Thay is a family company established in 1930, which buys rice from farmers and sells it, husked or unhusked, to Thailand and Vietnam. The company oversees a farmers’ association with 1.2 million members, each of whom owns about a hectare of land'.

Hmmm, 1.2 million? Now I remember this figure. 

'Prabu Galuh Trijaya is the Indonesian partner of the Khay Thay Corporation'. 

But thinking practically: 

'Vietnam might try to squeeze out Cambodia, following its deal with Indonesia, by cutting short its sack supply,” Ika [ Prabu Galuh’s director] said, “This is a big opportunity for any Indonesian company to supply the sacks or even build sack plants here.”'

Finally back to China: 

'Cambodia expects to export around 300,000 tonnes of milled rice to China per year, Minister of Commerce Cham Prasidh said during the 44th ASEAN Economic Ministers Meeting in Siem Reap'. 

No idea as to when the expectations will be fulfilled, as reported by the PPP (30-08). 

Reality check.As an annually occurring event? The Phnom Penh Post (21-08) report Drought hits Cambodia. And then adds rice exports:

'The report [Econony and Finance Ministry’s review on the promotion of paddy production and rice exports during 2010-2011] listed expectations for 2012 to reach only 180,000 tonnes, equal to 18 per cent of the Kingdom’s 2015 export target of one million tonnes'. 

Reasons? Only a vague reference to drought-like conditions in the west of the country ...

Price surge?

ODI have forecast near-record level global rice production brought about by better monsoons over the Indian sub-continent. this may well imply lower prices, if ....

A sidenote on the price crisis. The Independent (01-09) notes that Barclays Bank made 500 million pounds on the futures market in the past years. Another company involved, Glencore, was quoted 

'... describing the global food crisis and price rises as a "good" business opportunity'. 

An official bank response: 

'The bank defended its actions, pointing out that trading in so-called futures contracts – an agreement to buy or sell a certain quantity of a product, at a given price on an agreed date – helped parties such as farmers and bakers to hedge against the risk of rising or falling prices. "Our clients include investment companies, food producers and consumers who, among other things, seek our help to manage risks"'. 

And whoops: 

'Barclays Capital analysts admitted in a note to clients in February that speculation did push up prices. Barclays said: "The second key driver is that commodity investors have begun allocating to commodities again after beginning 2012 heavily underexposed to the sector."'. 

A few days later (sept 5) the Independent quotes OXFAM as believing that climate change could well lead to more cereal price spikes in the future. Surprisingly all agencies quoted are calling for more investment in production. And here I was believing that strategic reserves would be the answer ... Now where did I read that rice prices were stable  for most of the year because of reserves/stockpiling in Thailand, India and China ...

Well, not in the following:

'The Asian Development Bank yesterday pointed out that Asean nations could help avoid world rice-price shocks by reducing export restrictions, placing less emphasis on self-sufficiency, retooling Thailand's rice-pledging programme and expanding coordinated rice policies with India and Pakistan.

Thailand is projected to return as the world's top rice exporter, but its pledging scheme, which guarantees farmers a higher-than-market price for their crops, provides disincentives to its exporters, resulting in the steady decline of rice-export revenues since late last year. As of May 28, exports were down by 43.1 per cent or 2.86 million tonnes, according to the ADB's working paper'. 

As reported in the Nation (31-08). 

Anyway, Cambodia has nothing to fear, come price surge and all; at least that was noted in the PPP (11-09): 

'Nina Brandstrup, FAO representative in Cambodia, said the high level should not be considered too dramatic'. 

And 

'“On balance, we are pleased that the food index remains stable, and expect it to turn down in the near future,” Peter Brimble, ADB deputy country director for Cambodia and senior country economist, said'. 

Oh well, so much for the concern about rising prices.

Follow the lead
Rice pledging. The Thai government seems to be convinced that it has signed deals worth 7.3 million tonnes (the Nation, 13-09). Only 4 million tonnes to get rid of, apparently. No word on the price agreed, so it is only guessing how much the scheme is actually costing the Thai taxpayer. 
The same source also reports the need to refinance the scheme. The Bangkok Post (13-09) simulataneously notes that the rice has been sold, but exporters believe that only 0,2 million tonnes have actually been sold. Suggestions are that if there were done deals these were at below market prices.

Meanwhile. Opposition in Thailand blames the government for falling agricultural prices (Nation, 23-08). Prices of rubber, palm oil fruit and coconuts have dropped considerably without the government able to do anything about it. 
That's how the economy usually works. 
The opposition though refrain from comment on the rice pledging; obviously farmers are getting better returns. The losses will befall to the government. But that is entirely a different matter.

Back on the ranch. The Bangkok Post (17-08) has an interesting article on a recent study of rural debt. Household debt levels are increasing 6% per annum, partly being driven by the government rice pledging scheme which is leading farmers to take out more credit to pay for farm inputs. As the lender is often informal, post-harvest there is often is a mis-match between achieved pluses minus the outstanding plus interest.

'The survey showed the government's agriculture measures did nothing to improve farmers' lives'.

So much for the heralded government input.

Wrapping up session

The ADB also contends that Laos will become a rice exporting nation, report by the Vientiane Times (7-09): 

'The Asean and Global Rice Situation and Outlook, which was released on the ADB's website recently, shows that Laos will be able to shift its status from rice importer to a minor rice exporter over the next 10 years, if it can maintain the growth rate of rice production above the growth rate of consumption'.

Hybrid rice; SL Agritech wants to expand from the Philippines big time. Their partner in Thailand would be Capital Rice to which SL Agritech will bequeath hybrid technology apparently without anything in return (source). 
Capital Rice make no mention of the link, but I do see that Capital are wanting in on the Cambodian market.

Nuts. Cashews. PPP (24-08) reports on cashew selling, by pointing out that Vietnam demands more nuts. Somehow demand is believed to be up, but prices are down. Not economics? Or poor reporting? 

Climate Change and Rice Production in Cambodia

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?