Manila opportunity for Cambodia’s rice

[PHNOM PENH POST]

WITH Cambodia still looking to solve the conundrum of how to develop its agricultural infrastructure to meet a government export target of one million tonnes of rice by 2015, recent interest by the Philippines could provide a much-needed solution.

Confirmation from Filipino and Cambodian officials last week that Prime Minister Hun Sen discussed the issue with counterpart President Benigno Aquino of the Philippines during a meeting on May 7 on the sidelines of this month’s ASEAN Summit in Jakarta points to the very real prospect of future collaboration.

If Manila were to offer investment to develop processing infrastructure in Cambodia in exchange for rice exports, as requested by Hun Sen, the possibility the Kingdom could reach its rice-export target would rise dramatically. And the chances look promising given the relationship would benefit both countries.

Although the Philippines is looking to drastically reduce its reliance on rice imports that saw it buy 2.25 million tonnes last year – more than any other country in the world – in practice Manila’s stated target of rice self-sufficiency by 2013 looks unrealistic. The threat of tropical storms that regularly destroy crops in the country combined with little scope to increase cultivation amid a dense and rising population have led to substantial rice imports in recent years that are likely to remain a mainstay of Manila’s food security policy.

At the same time, the Aquino government has stated a desire to reduce the cost of rice imports that reached an average of US$630 per tonne last year. This is where Cambodia comes in.

Traditionally Vietnam and Thailand have provided the majority of rice shipments to the Philippines but reports from this month’s meeting between Aquino and Hun Sen suggest Manila sees Cambodia as a viable lower-cost alternative. Following the visit of a Filipino fact-finding delegation last month, an official from the Phillippines National Food Authority said Cambodia could begin shipments “at the very latest next year”.

On Cambodia’s side, the problem remains providing low-cost, sizeable quantities of processed rice of a high enough quality – the Thai Rice Exporters Association estimates up to 1.5 million tonnes of paddy disappears to Vietnam every year due to a lack of domestic processing capacity. And more is also escaping to Thailand. With a surplus estimated at nearly 4 million tonnes for this year, Cambodia can no longer afford the opportunity cost resulting from insufficient processing capacity.

A tie-up with the Philippines offers the possibility of a high-demand market and investment that would help Cambodia add value to its agricultural industry in-country, meaning less paddy would be lost across the border. The key question is: Will the Philippines be prepared to make the necessary multi-million-dollar investments to make the deal a reality?