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Khmer Times/Chea Vannak Monday, 26 September 2016
The Cambodian government last week gave the green light to the Rural Development Bank (RDB) to disburse loans totaling $27 million to millers to buy paddy rice from farmers at 840 riel ($0.21) per kilogram, in a bid to stabilize falling prices. But problems abound, with farmers still offered low prices for their harvests and millers complaining of poor quality paddy rice from the fields. Khmer Times’ Chea Vannak sat down with Phou Poy, president of the Green Rice Miller in Battambang and also chairman of the Rice Bank, to discuss issues surrounding the current predicaments of both rice millers and farmers.
KT: How much did you ask from the RDB to buy paddy rice from farmers at a price of not less than 840 riel per kilogram?
Mr. Poy: The Rice Bank and a few millers joined hands together to purchase rice at a higher price from farmers, after complaints that they were receiving low prices for their paddy rice. We have been using our own funds to buy paddy rice at 840 riel per kilogram from farmers, even before the emergency loan package was announced.
We still have funds in the Rice Bank. But how long they will last is a good guess. We still have not made any requests for the loan. A few millers are waiting for their own funds to run out before they make their loan requests to the RDB.
KT: By using your own funds, up to today, how many tons of paddy rice have you bought from farmers?
Mr. Poy: With our limited funds, we could not make very large purchases of paddy rice. Also bear in mind that some of the rice fields are in very remote areas of Battambang province. Because of that, our teams could not get access to farmers there to buy their paddy rice at 840 riel per kilogram. So farmers in those areas had no choice but to sell the rice harvest to traders who were offering 720 riel ($0.18) per kilogram.
One important factor that affects the price of paddy rice, is its quality. Farmers often do not dry their harvested paddy rice well enough. Quality is lost if their paddy rice is still damp, and traders have no choice but to offer them lower prices.
The Rice Bank buys milled rice directly from the millers, so that they will have funds to buy another batch of paddy rice from farmers. So far, the Rice Bank has purchased 7,000 tons of milled rice from the millers. The Bank also buys paddy rice directly from farmers. We purchase close to 900 tons of paddy rice a day. That 900 tons is milled and processed for export, though some is supplied to local markets.
KT: How can help be given to farmers who have not been able to sell their rice at 840 riel per kilogram?
Mr. Poy: For farmers who missed selling their paddy rice to our teams, there is still hope. We have informed all community centers in Battambang province to contact rice farmers and tell them to prepare for the forthcoming harvest. The key message is that paddy rice not dried properly will only fetch low prices from the rice traders. Famers can still sell to us, by bringing their paddy rice directly to our warehouses in Battambang. But the paddy rice has to be dried properly. That can be a problem now because of the end of the wet season, where the rains are heaviest.
KT: What do think of the emergency funds from the government to help stabilize rice prices for farmers?
Mr. Poy: This is a good direct intervention to prevent rice prices from tumbling further. Without the 840 riel per kilogram government price, the price of rice might go into a free fall. But the $27 million is only a short-term measure.
We have to take into account the capacity of rice millers to store paddy rice in their warehouses and sell milled rice at a time when there is surplus rice in the market. If there is good market demand for their milled rice, and if they have the capacity to store paddy rice in their warehouses, then $20 million to $30 million is enough. But if the market is not there due to the influx of cheap quality rice from neighboring countries, then this $27 million will not go a long way. Then it’s just a band aid measure for the rice millers.
KT: What do you think caused the current crisis in the country’s rice sector?
Mr. Poy: Farmers have been affected by climate change. Wet season planting started late this year because of the delayed rains. Farmers only started planting in July, and due to the late wet season they also decided to plant fragrant jasmine rice together with other rice varieties.
This created a surplus in paddy rice harvest during the harvest period between 15 to 18 September. The farmers then found themselves in a tight corner ‒ unable to sell their harvested crop at prices to make ends meet.
Due to poor and limited storage facilities, farmers must sell whatever extra rice they produce immediately after harvest. With the oversupply of rice in the market, farmers have little bargaining power to negotiate the selling price. In addition to this, the quality of the rice has decreased, representing an added cost to farmers.
The Rice Bank and provincial officials then held emergency meetings to find ways to deal with plunging rice prices. We decided to buy paddy rice directly from the rice fields at 840 riel per kilogram. There were reports that the rice traders were buying farmers’ rice crop at less than 720 riel per kilogram.
KT: What do you think about the future of Cambodia’s rice sector? Will we weather this crisis?
Mr. Poy: As for poor rice farmers that are hardest hit by falling prices, immediate intervention by government, development partners, and civil society organizations is needed. We need a medium- to long-term strategy that involves enhancing competitiveness in rice export through the promotion of production technology, improvement of rice processing quality, and provision of short- and long-term credits for rice millers and exporters.
A major constraint for Cambodian millers is the quality of paddy rice sent for milling.
The combination of poor drying techniques, open storage systems, high relative humidity, and high temperatures reduces seed and grain quality during the storage period. Most rice traders have little or no capital to invest in storage. The government should encourage the private sector to improve processing capacities for paddy and processed rice as well as milling capacities by giving soft loan incentives or by seeking developing partners.
Yes, we will weather this crisis. But it has also shown the structural weakness in the country’s rice sector.
Clik here to view.
Khmer Times/Chea Vannak Monday, 26 September 2016
The Cambodian government last week gave the green light to the Rural Development Bank (RDB) to disburse loans totaling $27 million to millers to buy paddy rice from farmers at 840 riel ($0.21) per kilogram, in a bid to stabilize falling prices. But problems abound, with farmers still offered low prices for their harvests and millers complaining of poor quality paddy rice from the fields. Khmer Times’ Chea Vannak sat down with Phou Poy, president of the Green Rice Miller in Battambang and also chairman of the Rice Bank, to discuss issues surrounding the current predicaments of both rice millers and farmers.
KT: How much did you ask from the RDB to buy paddy rice from farmers at a price of not less than 840 riel per kilogram?
Mr. Poy: The Rice Bank and a few millers joined hands together to purchase rice at a higher price from farmers, after complaints that they were receiving low prices for their paddy rice. We have been using our own funds to buy paddy rice at 840 riel per kilogram from farmers, even before the emergency loan package was announced.
We still have funds in the Rice Bank. But how long they will last is a good guess. We still have not made any requests for the loan. A few millers are waiting for their own funds to run out before they make their loan requests to the RDB.
KT: By using your own funds, up to today, how many tons of paddy rice have you bought from farmers?
Mr. Poy: With our limited funds, we could not make very large purchases of paddy rice. Also bear in mind that some of the rice fields are in very remote areas of Battambang province. Because of that, our teams could not get access to farmers there to buy their paddy rice at 840 riel per kilogram. So farmers in those areas had no choice but to sell the rice harvest to traders who were offering 720 riel ($0.18) per kilogram.
One important factor that affects the price of paddy rice, is its quality. Farmers often do not dry their harvested paddy rice well enough. Quality is lost if their paddy rice is still damp, and traders have no choice but to offer them lower prices.
The Rice Bank buys milled rice directly from the millers, so that they will have funds to buy another batch of paddy rice from farmers. So far, the Rice Bank has purchased 7,000 tons of milled rice from the millers. The Bank also buys paddy rice directly from farmers. We purchase close to 900 tons of paddy rice a day. That 900 tons is milled and processed for export, though some is supplied to local markets.
KT: How can help be given to farmers who have not been able to sell their rice at 840 riel per kilogram?
Mr. Poy: For farmers who missed selling their paddy rice to our teams, there is still hope. We have informed all community centers in Battambang province to contact rice farmers and tell them to prepare for the forthcoming harvest. The key message is that paddy rice not dried properly will only fetch low prices from the rice traders. Famers can still sell to us, by bringing their paddy rice directly to our warehouses in Battambang. But the paddy rice has to be dried properly. That can be a problem now because of the end of the wet season, where the rains are heaviest.
KT: What do think of the emergency funds from the government to help stabilize rice prices for farmers?
Mr. Poy: This is a good direct intervention to prevent rice prices from tumbling further. Without the 840 riel per kilogram government price, the price of rice might go into a free fall. But the $27 million is only a short-term measure.
We have to take into account the capacity of rice millers to store paddy rice in their warehouses and sell milled rice at a time when there is surplus rice in the market. If there is good market demand for their milled rice, and if they have the capacity to store paddy rice in their warehouses, then $20 million to $30 million is enough. But if the market is not there due to the influx of cheap quality rice from neighboring countries, then this $27 million will not go a long way. Then it’s just a band aid measure for the rice millers.
KT: What do you think caused the current crisis in the country’s rice sector?
Mr. Poy: Farmers have been affected by climate change. Wet season planting started late this year because of the delayed rains. Farmers only started planting in July, and due to the late wet season they also decided to plant fragrant jasmine rice together with other rice varieties.
This created a surplus in paddy rice harvest during the harvest period between 15 to 18 September. The farmers then found themselves in a tight corner ‒ unable to sell their harvested crop at prices to make ends meet.
Due to poor and limited storage facilities, farmers must sell whatever extra rice they produce immediately after harvest. With the oversupply of rice in the market, farmers have little bargaining power to negotiate the selling price. In addition to this, the quality of the rice has decreased, representing an added cost to farmers.
The Rice Bank and provincial officials then held emergency meetings to find ways to deal with plunging rice prices. We decided to buy paddy rice directly from the rice fields at 840 riel per kilogram. There were reports that the rice traders were buying farmers’ rice crop at less than 720 riel per kilogram.
KT: What do you think about the future of Cambodia’s rice sector? Will we weather this crisis?
Mr. Poy: As for poor rice farmers that are hardest hit by falling prices, immediate intervention by government, development partners, and civil society organizations is needed. We need a medium- to long-term strategy that involves enhancing competitiveness in rice export through the promotion of production technology, improvement of rice processing quality, and provision of short- and long-term credits for rice millers and exporters.
A major constraint for Cambodian millers is the quality of paddy rice sent for milling.
The combination of poor drying techniques, open storage systems, high relative humidity, and high temperatures reduces seed and grain quality during the storage period. Most rice traders have little or no capital to invest in storage. The government should encourage the private sector to improve processing capacities for paddy and processed rice as well as milling capacities by giving soft loan incentives or by seeking developing partners.
Yes, we will weather this crisis. But it has also shown the structural weakness in the country’s rice sector.