Myanmar rice is back

Myanmar rice is back

WHILE exports of Cambodian rice have been booming, analysts are predicting that new competition from Myanmar could eventually rain on the parade.

Cambodia exported nearly 176,000 tonnes of rice in the first six months of the year, a 125 per cent increase from the same period in 2012, when about 78,000 tonnes left the country.

Most of that, or about 60 per cent, went to countries in the European Union, which grants Cambodia duty-free tariffs under its Everything But Arms agreement to provide opportunities for growth.

In June, however, the EU readmitted Myanmar to its trade preference scheme in response to wide-ranging political and economic reforms taking hold in the country since President Thein Sein took power in 2011.

The move should ease restrictions on an industry that is already producing vast quantities of milled rice for consumption in non-EU countries.

“They have been exporting already over one million tonnes [in the fiscal year of 2012/2013] and they plan to triple that tonnage capacity within the next couple of years,” said David Van, the deputy secretary-general for the Alliance of Rice Producers and Exporters of Cambodia (ARPEC).

He said Myanmar is poised to become Cambodia’s biggest competitor, aided not only by the EU but by future regional connectivity through the planned Asean Economic Community (AEC) of 2015.

“Taking into consideration AEC 2015 free flow of goods and manpower, it would be even harder for Cambodian millers to compete as it would make it a lot easier for neighbouring giants to get paddy across to mill at lower cost in their home countries since they have the capacity and economy of scale.”

Before 1962, when the military that would rule for the next 50 years seized power, Myanmar was considered the world’s top rice exporter.

The question is whether it can regain its title.

Srey Chanthy, Acting Interim President of the Cambodian Economic Association, said that Myanmar, with its “large land cultivated area” and “plenty of rice surplus”, can be a big player. But the decades out of the game have taken their toll.

“It will take Myanmar years to be recognised in the market and improve their production standards,” he said.

Chanthy said that Myanmar will have to put in place a new institutional structure and a relevant legal framework with quality standards before it can meet market needs.

“Having water in the reservoir is not enough, they need the pipes to build up good systems in place to transfer the water,” Chanthy added.

The United Nations seems to agree. In the latest rice market monitor for April, the UN’s Food and Agricultural Organization downgraded its prediction for Myanmar rice exports this year from 600,000 to 500,000 tonnes, citing “limited processing capacity” and electricity shortages across the country.

Though the FAO sees potential for Myanmar rice in Japan, a recent report from the United States Department of Agriculture says that India, which re-entered the export market in 2011, has moved in on Myanmar’s more traditional export partners Bangladesh, the Philippines and West Africa.

ARPEC’s Van said Myanmar will compete on price with Cambodia’s long grain white rice, while they will also grow the short grain Japonica rice that he says is very popular among the Japanese and Koreans.

Cambodia is not wholly unprepared for a more crowded EU. One of the key policies of the government in its goal to reach a million tonnes of rice exports a year in 2015 is diversification.

Song Saran, chief executive officer at Cambodia’s largest rice exporter, AMRU Rice Cambodia, was positive about the exports’ continuing potential in Europe, but he was also encouraged by expansion to other Asian and African markets.

“Cambodia has enjoyed good export growth (this year) through increases to existing markets as well as being more experimental with new emerging markets,” Saran said.

Statistics show that markets for Cambodian rice are beginning to open up in places as far and wide as Senegal, Kenya and Israel.

For the first time, Cambodia will start exporting rice later this year to Brunei Darussalam, according to a deal for shipments of 3,000 tonnes signed between officials and announced on Saturday in Phnom Penh.

At a workshop in the capital yesterday, Yang Saing Koma, president of the Cambodian Center for Study and Development in Agriculture, urged farmers to produce more organic rice.

Koma said that so far this year, Cambodia had already doubled it’s exports of organic rice when compared with all of 2012.

phnompenh post