Gov’t exporter sits out rice deal

Gov’t exporter sits out rice deal

Thu, 1 October 2015 ppp

Cheng Sokhorng

Employees at a rice warehouse in Phnom Penh stack bags of rice earlier this year for processing. The Cambodia Rice Federation is seeking a part of Indonesia’s 1.5 million tonne rice tender. Heng Chivoan

Indonesia, the world’s third-biggest rice consumer, is looking to place a mammoth government-to-government order to import 1.5 million tonnes of rice, but state-owned rice exporter Green Trade said yesterday that it has no plan to enter a bid.

Heang Vutha, director-general of Green Trade, said he was not contacted by the Indonesian government and had been unaware of the prospective rice deal. However, the volume requested and the November-through-January delivery date ruled out any Cambodian participation.

“We will not have enough rice for them, and the timeframe they have set is too short,” he said, adding that Green Trade only has the capacity to deliver 2,000 tonnes of milled rice per month.

Indonesia’s vice president last week said his country plans to import 1.5 million tonnes of rice to avert a spike in prices as the effect of the El Nino weather phenomenon cut into domestic supply.

“We are forced to import because of the drought,” Indonesian Vice-President Jusuf Kalla told local media.

“We’re taking rice issues very seriously. We could delay imports of chilies or shallots, but when it comes to rice, we’re not playing around.”

Bulog, Indonesia’s state rice procurement agency, was reportedly looking to Thailand and Vietnam to fill the order.

But Thailand’s rice exporter association told the Bangkok Post this week that Indonesia might have to import from other countries as well, as neither Thailand nor Vietnam had the capacity to deliver 1.5 million tonnes within the given timeframe.

Kim Savuth, vice president of the Cambodian Rice Federation (CRF), said the Cambodian government should give the private sector a chance to participate.

He said the CRF, which represents nearly 100 rice millers and exporters, has surplus stock and could help fill the order on its behalf.

“If the government can negotiate a contract with Indonesia, we have plenty of rice to supply to them,” he said.

However, the private sector is not waiting for an introduction. Song Saran, CEO of Amru Rice and a CRF member, said the federation plans to send a letter to Bulog expressing its intent to supply a portion of the rice contract.

“We have the right to negotiate with them directly, without Green Trade,” he said.

“Commerce Minister Sun Chanthol has granted approval to the CRF to work directly with Bulog, and our members met already to discuss exporting rice to Indonesia.”

Saran said CRF members had a combined total of 100,000 tonnes of rice in storehouses, though much of this was already earmarked for other export contracts.

He estimated that 60,000 tonnes of rice could be exported by the Indonesian government’s deadline.

Indonesia has not said whether it would be willing to divide the supply contract into smaller orders.

In September, Green Trade declined to participate in a tender by the Philippine government to import 750,000 tonnes of rice, saying it could not compete on price with neighboring Thailand and Vietnam. It sat out the government auction having already lost two consecutive bids to its rivals.

Higher transport and milling costs cancel out the comparative advantage in milled rice that Cambodia enjoys due to its low farm-gate prices of paddy rice. But beyond cost is a question of supply.

“The most important is whether we have enough rice to export or not?” said Ly May, manager of Meng Hong Leap Logistics Co.

She said her cargo transport firm has the resources to ship about 40,000 tonnes of rice a month by sea, but questions whether rice millers can supply even that amount to fill the Indonesian order.

Cambodia exported 369,000 tonnes of milled rice during the first nine months of 2015, a 37 per cent increase over the same period a year earlier, according to data released yesterday by the Secretariat of One Window Service for Rice Exports.

Exports rose despite a 31.7 per cent drop in September shipments, compared to one year earlier.

While the European Union continues to be the largest export destination for Cambodian rice, accounting for 64 per cent of shipments, China is the single largest importing country, receiving 78,000 tonnes last year.