Vietnamese rice exporters will face tough competition from foreign countries looking to exploit advantages that Cambodia presents as a beneficiary of the the EBA (Everything But Arms) initiative, says an Econet report.
Under the EBA, Cambodia, as a least-developed-country, enjoys zero tariffs and no quotas for exporting its farm produce, especially rice, to the EU.
“However, Vietnamese companies have not been able to take full advantage of its proximity to a country that produced 2.1 million tonnes of rice in surplus in 2001, and lacks investment and manpower to expand rice cultivation,” the report says.
The plan to build a modern rice mill near Phnom Penh announced by a Viet Nam-Cambodia joint venture nearly two years ago has made no progress.
Complicated formalities have been blamed for the delays in building a plant that aimed to process rice for export supplied by Cambodian farmers.
Cambodia-Viet Nam Foods Co (Cavifoods) – a joint venture between Viet Nam’s Southern Food Corp (Vinafood II) and two Cambodian firms – International Development Co (IDCC) and Green Trade Co, was established in October 2009 with a registered capital of US$8 million.
Cavifoods has since focused on purchasing Cambodian rice for export.
In November 2011, Viet Nam’s Thai Thinh Co signed with Takmoa Cambodia a $22.4 million contract to produce rice for export on 20,000 ha in Kompong Cham and Kompong Svay provinces.
Meanwhile, companies from other countries are preparing to enter the Cambodian rice market, presenting a stiff challenge to Vietnamese companies.
In March 2011, Toyota Tsusho, a subsidiary of the Toyota Motor Corp (Japan), joined hands with Thailand’s Huay Chuan Rice Co Ltd to invest in Cambodia’s rice growing industry.
The alliance, which includes Malaysian investors, has been in talks with Cambodia businessmen for a venture that would set up an export-oriented rice mill.
Takeo Province on the Vietnamese border has been chosen for building the rice mill.
Takeo, 150km east of Cambodia’s deep-water seaport Sihanoukville, is expected to help realise the Cambodian Government’s target of exporting 1 million tonnes of rice annually.
Thailand’s Asia Golden Rice Co is also working with Japanese partners to invest in Cambodia’s rice industry.
COFCO, the largest oil and food importer and exporter and a leading food manufacturer in China, is also seeking to invest in Cambodia’s rice industry. A rice inspection and quarantine agreement was signed between China and Cambodia in October 2010, making it easier for Chinese investors to export rice from Cambodia.
Vu Thinh Cuong, commercial counsellor at the Viet Nam Embassy in Phnom Penh, said price of standard rice exported to the EU could be nearly $1,000 per tonne while the same rice would fetch only $400 to $500 per tonne in other markets.
In the first five months of 2011, Cambodia exported rice worth $29.4 million, a year-on-year increase of 215 per cent.
According to the US Department of Agriculture, rice production in Cambodia rose from 4.5 million tonnes in 2009 to 4.7 million tonnes in 2010 and is expected to reach 4.8 million tonnes this year.
Cambodia’ Ministry of Agriculture said the kingdom produced 7.9 million of paddy in 2010, and had a surplus of 2.1 million tonnes of rice for export.
Cambodia reportedly shipped 900,000 tonnes of rice in 2010, almost double the 500,000 tonnes in 2008.
Chookiat Ophaswongse, managing director of Thailand’s Huay Chuan Group, said Cambodia should have four million tonnes of paddy for export this year – 3.5 million tonnes to Viet Nam and the rest to Thailand. — VNS