Vietnam May Lose Export Monopoly On Cambodian Rice

Vietnam rice exporters are facing strong competition as the region scrambles and competes to take advantage of Cambodia’s favorable trade status with the European Union. Under the Everything But Arms (EBA) initiative, Cambodia enjoys zero tariffs and no quotas for exporting farm produce, especially rice, to the European Union. Cambodia’s lack of rice processing and transportation infrastructure has provided an opportunity for more sophisticated rice exporting nations to invest in rice processing ventures, facilitating the export of more Cambodian rice.  Traditionally, Cambodia has exported unknown quantities of rice, though to be quite large according to some estimates, through cross border trade with neighboring countries such as Thailand and Vietnam. Two years ago a Vietnamese company made plans to build a modern rice mill near Phnom Penh but has made no progress due to bureaucratic hoops.  Now more countries besides Vietnam are entering the Cambodian rice market, including Malaysia, China, Japan and Thailand. 

Cambodia’s Ministry of Agriculture reported national paddy rice production of about 7.9 million tons in 2010.  The USDA reported Cambodia’s milled rice production for 2010 was about 4.7 million tons, up from 4.5 million tons in 2009.  This year, the USDA estimates Cambodia will produce about 4.8 million tons of rice. Cambodia reportedly shipped 900,000 tons of rice in 2010, nearly double 500,000 tons exported in 2009.  This does not include unrecorded or unofficial exports through cross border flows.  With infrastructure investments, Cambodia’s reported rice exports have the potential to increase dramatically, though this may not affect the total rice available to trade, unless higher exports incentivize higher rice production.

 

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