Insight

White gold: How the EU has been central to the rise of Cambodian rice

By Clothilde Le Coz

- Last updated on GMT

A typical scene in the Cambodian countryside
A typical scene in the Cambodian countryside

Related tags: Rice

With its rice industry going through salad days, Cambodia is nevertheless at a crossroads. While on the international front, it is shipping more rice overseas than ever before; domestically, there is still a number issues for producers and exporters to overcome. 

As is often the case in developing Southeast Asian nations, the state of Cambodia’s human conditions is directly related to its harvests.

Largely through its crops—the country could soon join the elite group of the world’s top five milled rice exporters—Cambodia has seen its poverty rate drop sharply from over 50% to under 20% over the last decade, with half of this said to come from increased rice production, higher rice prices and higher farm wages.

At the same time, European rice imports from the world’s least developed countries have soared by 51% over the last year, and much of this is to the benefit of Cambodia, whose success can be explained as much by its quality as by Europe’s current economic conditions.

Europe is Cambodia’s biggest market thanks to the EU’s Everything But Arms (EBA) initiative, which was extended to the country in 2011.

The EBA gives preferential treatment to Cambodia by allowing the country tax-free access to EU markets alongside other states on the United Nations’ list of least-developed countries. The initiative is meant to help eradicate poverty while improving living standards for farmers, and has been attributed by experts as being central to Cambodia’s export success.

Moreover, a recent EU study indeed showed that while total EU rice imports have been stable since September 2012, the share of duty-free rice imports under the EBA trade scheme has increased.

According to a 2013 World Bank report, paddy occupies 75% of cultivated land in Cambodia and at the moment, the country is believed to have a surplus of 3.5m tonnes of paddy, its biggest crop and main staple food. Rice production, processing and marketing were estimated to employ 3m people, amounting to around one-fifth of the country’s population.

This [EBA] initiative is a fantastic opportunity for our rice​,” Song Saran, chief executive of Amru Rice, Cambodia’s leading rice exporter​, told FoodNavigator-Asia.  

Moreover, the EBA makes Cambodia more competitive on the Asian market indirectly since, seeing our rice in Europe, countries such as Malaysia, Singapore and China are [also] asking for it.​” Currently, China accounts for just 7% of Cambodia’s total exports.

As economic diplomacy with Europe flourishes, Cambodia has been selected to host the 6th World Rice Conference in November this year after twice winning the World’s Best Rice award to honour its efforts to develop its export trade of jasmine rice.

At the end of October, it will also be represented for the first time at SIAL Paris, the world’s biggest food exhibition, with Song Saran part of the delegation.

It is a great way for European consumers to sample our rice and buy it more cheaply​,” he said.

But this success could only be temporary if the industry in Cambodia does not become better organised, according to Muong Sideth, a project officer for the French Agency for Development in Phnom Penh who heading a US$3.5m project to help commercialise Cambodian rice in the world.

In his opinion, Cambodia’s success is largely due to the difficult economic environment faced by the European and Thai rice industries, and a country on the rise could still stall if it fails to sort out its problems on the home front. 

European rice producers do not meet the demand in their region and Thai rice producers [the biggest competitors to Cambodia] are going through a crisis. This is all to the benefit of Cambodian rice exporters. However, on the ground, there are quite a few obstacles that need to be overcome to allow the industry to grow sustainably​,” he explained.

For example, the scale of shipments to Europe require rice producers and exporters to harvest, dry and store export-quality rice throughout the year, which is a significant challenge for what is still a traditional industry. And if this is not done continually, Cambodia could contribute to the creation of an unstable rice industry.

In light of this, Muong believes his government’s aim to export 1m tonnes of rice by 2015 will be difficult to reach.

While Song Saran told us that “Cambodian jasmine rice is considered to be close to organic grade thanks to farmers using little in the way of fertilisers and pesticides​”, Muong’s opinion is less enthusiastic.

This is indeed due to the ancestral way of cultivation but also to the fact that small producers cannot invest in fertilisers or pesticides in their paddy as they do not have enough money to do so​.

For example, for a farmer to buy this type of product, he has to use micro-credit banking and go into debt. This explains why the traditional way of cultivating rice is kept in Cambodia​.”

Despite this still fragile context and the obvious foreign aid designed to put Cambodian rice at the forefront of regional and international rice markets, the quality of the country’s rice remains undeniable thanks to traditional cultivation techniques and inherent savoir faire.

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