Opinion: Cambodian Rice Industry Endangered by Bad Policy

It may be only a matter of time before Cambodia’s rice industry disintegrates, partly as a result of a weak Cambodian Rice Federation and partly because of misguided government policies.

It is an industry fraught with deep problems since the 1970s, when it was largely destroyed from the depredations of the Khmer Rouge. As a result of food shortages, many farmers were forced to eat their rice seed and traditional varieties were lost. It wasn’t until the 1990s that Cambodia, for the first time in three decades, returned to self-sufficiency with assistance from the International Rice Research Institute in the Philippines, which reestablished indigenous rice varieties from its seed bank in Los Banos, in the Philippines.

Today, according to Chanthou Hem of the Asian Development bank, the industry still lacks practical production systems, infrastructure and post-harvest delivery mechanisms. Both the private sector and the huge aid industry that has been operating in the country since the Khmer Rouge were driven out have invested millions in attempting to rehabilitate the industry. Critics say government neglect is a big problem.

The industry’s main players from the private sector must stand up to play a role in improving the industry in the face of a new problem. It has been reported that the Ministry of Agriculture has been testing a strain of low-quality but high-yield hybrid rice for export. Cambodia attempted to return as a rice-exporting country in the late 1990s accelerating from a modest 6,000 tonnes in 2000, climbing to 51,000 tonnes in 2010 and over 500,000 tonnes in 2015.

There are two dangers in the government’s experience through the Ministry of Agriculture. As the industry runs through the testing process, without strict controls –which the government appears incapable of – hybrid pollens are certain to be spread rapidly kilometers away from the test zones, carried by the wind and insects or rodents. Hybrid cultivation would very likely eradicate Cambodia’s high-quality Rumdoul and Sen Kra Ob varieties for good. Destruction of the native species from hybrids is likely.

Low-end hybrids recommended by the government would put Cambodia at a disadvantage to Vietnam. Our market positioning should be at the high end. Going along the hybrid route would simply spell disaster and if such news is true, it shows that our Agriculture Ministry policymakers do not fully comprehend the implications of such a policy blunder. Recommending the use of hybrid rice for Cambodia is wrong.

Going head to head on low-end hybrids with our eastern neighbor would annihilate us. Second, the heavy usage of pesticide and fertilizers to grow hybrid rice will not only go against ESR and CSR but would contaminate our soil for good. Cambodia would likely be 100 percent dependent on the likes of Bayer, DuPont, Syngenta, etc., not only on their seeds every year but also on their chemicals.

Cambodia being a very small country, any soil contamination would rapidly and dangerously threaten our food security. With a stern laissez-faire attitude on the part of the government, Cambodia is likely to end up as a 100-percent low-end paddy-exporting country.

That simply means our government is handing over to our neighbors the ability to corner our paddy market via a maximum lower price tactic so that they capture a higher margin in the global rice markets. The trend is very likely to occur in the wake of the EU-Vietnam FTA kicking in.

Our strategy should also be to encourage farmers to grow less of our premium variety Romdoul as the current surplus has resulted in two negative effects. Currently our millers are facing working capital impediments and would not be able to absorb entirely Romdoul production to preserve our value-add in-country.

Our farmers should be encouraged to further plant Sen Kra Ob variety, which our brilliant agronomists at the Ministry of Agriculture are stubbornly against for some irrational reason.

With limited land but blessed with already great fragrant varieties, Cambodia should focus on high-end fragrant rice – high quality and high margin – and with appropriate marketing through an adequate branding strategy.

What do we have now in terms of supporting governmental and non-governmental ecosystem? No agriculture industry can grow without heavy government intervention as relying solely on market forces does not suffice. Why do you think the Doha Round has been stuck for decades if not for the stubborn western governments’ heavy subsidies for their agricultural sector?

Our next target should be to completely decouple from the obsessive “1 million tonne” target set by the government and shift our mindset to the profitability of the industry. Most probably an objective based on value in US dollar terms would be more relevant than based on volume (tonnage) terms. So what about fixing the next target to a finite amount by 2020?

But for the rice industry to succeed, government policies must have adequate accompanying measures which are nonexistent to date. There is a crucial need for infrastructure, particularly irrigation, and for the mechanisms to move rice to the market.

VAN David Vichet developed the Cambodia Rice Federation (CRF) for the Ministry of Commerce in early 2014 and assisted the Ministry to organize the Free & Fair Election for the CRF’s first Board of Directors.