Afraid of potential EU tariffs, exporters and millers buy less rice

Sok Chan / Khmer Times No Comments Share:
A worker carries a sack of rice in a warehouse in Phnom Penh. KT/Chor Sokunthea

Local rice exporter and millers will buy significantly less paddy rice this year as they await the European Union’s final decision on whether or not to impose tariffs on Cambodian rice, industry insiders say.

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Chan Sokheang, chairman and CEO of Signatures of Asia, told Khmer Times that his company will purchase between 25,000 to 30,000 tonnes of organic and fragrant paddy rice from Cambodian farmers from now until April, a sharp decrease from previous years, when it bought between 40,000 to 45,000 over the same months.

He said his firm is not the only one reluctant to buy as per usual, with many exporters and rice millers fearing the effect on the market of an EU decision to activate the safeguard clause that would enable bloc members to tax Cambodia’s and Myanmar’s rice.

“We don’t know what to do with regards to exporting rice to the EU,” he said. “We don’t know whether they will impose the tariffs on our rice or not. We don’t know how to prepare for this scenario,” Mr Sokheang said.

“Sales thus far are normal, but we are not purchasing paddy as before. Last year, we bought a lot of paddy rice for processing, as we rely mainly on the EU and the Chinese market, but now we don’t know what’s happening with the European market, so we are hesitant about buying too much.

“On top of that, some commercial banks have cut lending to rice exporters by about 60 percent,” he said, adding that, “All rice millers and rice exporters are facing the same issues, so it affects the whole production and value chain.”

In March, the European Commission launched an investigation to see if imports of semi-milled and milled Indica rice from Cambodia and Myanmar resulted in serious difficulties to EU producers of similar or competing products.

On December 4, a vote on whether to impose tariffs on Cambodian and Burmese rice was held, with EU members failing to come to a consensus. As a result, the European Commission was task with issuing a final decision on the subject by early next month.

The EU is looking at imposing tariffs over the next three years: 175 euros ($199.5) per ton during the first year, 150 euros ($171) in the second year, and 125 euros ($142.5) in the last.

CRF secretary-general Moul Sarith told Khmer Times that Cambodian exports of milled rice will experience a significant drop in 2018 due to this issue.

“From October to December, rice exports, particularly to the EU, will drop because exporters are waiting on the EC’s decision.

“Our exporters are reluctant to buy rice until they hear the decision,” Mr Sarith said.

“We ask the EC to consider their decision carefully, and call on our members to continue exporting and strengthening the quality of our paddy rice,” he added.

Kann Kunthy, vice president and managing director of Amru Rice, posted on his Facebook profile that rice exports in 2018 will amount to just 560,000 tonnes, a 12 percent drop compared to last year.

He blamed the decrease on the potential EU’s tariffs as well as Vietnam’s decision to put more stringent customs measures in place for transshipments that go through Vietnamese ports.

From January to November this year, China bought 137,866 tonnes of Cambodian rice, making it the biggest buyer. It was followed by France (73,669 tonnes), Malaysia (37,289 tonnes), Gabon (25,335 tonnes), and the Netherlands (23,643 tonnes), according to data from the Secretariat of One Window Service for Rice Export Formality.

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