Manila rice demand highlights challenges

[PHNOM PENH POST]

THE Philippines’ National Food Authority aims to begin importing Cambodian rice “at the very latest next year”, though experts say the  domestic rice industry must overcome hurdles as it aims to become a major exporter of the staple crop.

NFA officials met with Cambodian counterparts earlier this month on a fact-finding mission, aiming to sign an updated Memorandum of Understanding for rice shipments to the Philippines, according to NFA Chief of Staff Gilbert Lauengco.

Thailand and Vietnam – the world’s largest and second-largest exporters of rice, according to the Food and Agriculture Organisation – currently supply much of the Philippines’ needs, he said, but added, “We are studying the possibility of Cambodia as an alternate source [of imports].”

Last month, Reuters news service claimed the Philippines planned to import 1.3 million tonnes this year. But experts say Cambodia faces key challenges to tap this demand, particularly in competing with its established neighbours.

Cambodian Centre for Study and Development in Agriculture President Yang Saing Koma said the Philippines generally imports from Thailand or Vietnam, based on prices.

“Cambodia needs to compete with Vietnam and Thailand in terms of price and quality,” he said.

Several countries are interested in Cambodia’s rice – including the Philippines as well as China, Bangladesh and nations in the Middle East and Africa – but productivity needs to be increased to meet this demand.

Gordon Peters, Senior Consultant at Emerging Markets Consulting, said the Philippines was a major importer, accounting for 8 percent of the world’s total last year.

“A strategic relationship with the Philippines as a Cambodian rice buyer is a great sign for Cambodia’s long-term rice export plans,” he said.

“There’s an opportunity to create a Cambodian brand since one of the major buyers is looking at the Cambodian product,” he said. “This can be leveraged into other markets as Cambodia begins to see results from its national rice strategy and increases in yields and export-quality rice.”

However, Cambodia’s rice production was more costly than its neighbours due to excessive electricity costs, as well as a somewhat higher cost of doing business. “This includes infrastructure and logistics, and soft costs such as time spent waiting at the border,” said Peters.

Prime Minister Hun Sen has made increasing rice exports an administration priority, targeting exports of 1 million tonnes of milled rice by 2015.

Phou Poy, President of the Cambodian Rice Millers Association, said the Philippines indicated its interest in buying its rice, but had not yet specified a time frame. Manila would aim to import hundreds of thousands of tonnes from Cambodia, beyond the Kingdom’s current milling capacity, he said.

“They may be reluctant to buy from us, and seek to buy from other countries that can supply rice in large amounts,” said Phou Poy.

Gilbert Lauengco said milling capacity could be improved in Cambodia, though it could at present provide “certain amounts” to the NFA. He declined to reveal the amounts the authority requested from Cambodia. “We can’t give an actual number – it’s based on the shortfall,” he said.

The National Food Authority was also considering providing milling facilities to the Kingdom. It aimed to sign an updated Memorandum of Understanding with either the Ministry of Commerce or the Ministry of Agriculture, Forestry and Fisheries – after having talks with both, he said.

The Philippines had been overtaken by Indonesia as the world’s largest rice importer by volumes, he claimed, but added that even as Manila aimed to improve domestic production of rice, it would likely need to continue imports for at least three years.