Rice exports in January saw a small decline that exporters have blamed on the European Union’s decision last month to impose tariffs on local rice.
Last month, Cambodia exported 59,625 tonnes of rice to international markets, a 5 percent drop compared to January 2018, according to a report issued yesterday by the Secretariat of One Window Service for Rice Export Formality.
The same report points out that the EU bought 20,000 tonnes of Cambodian rice in January, which is around 40 percent of all Cambodian rice exports. China bought about the same amount.
In January, the European Commission decided to re-impose tariffs on rice coming from Cambodia and Myanmar to protect farmers in Europe, whom the European Union believed to be at a disadvantage.
During the first year, the EU is levying 175 euros ($199.5) per tonne on imports of Cambodian rice. 150 euros ($171) will be charged in the second year, and 125 euros ($142.5) in the last.
Hun Lak, vice president of Cambodia Rice Federation, said orders of Cambodian rice abroad saw a decline last month because international buyers were busy preparing for holidays like the Chinese New Year and the Vietnamese New Year, but also because the EU tariffs went into effect.
“These factors led to a slight decline in rice exports,” he said, adding that rice exports to the EU remained large because a lot of European buyers had placed their orders before the tariffs kicked in.
He said the real impact of the tariffs will be felt in February and following months, but had some room for optimism.
“Exports to the EU are likely to decrease, but it will really depend on whether consumers continue to choose Cambodian rice despite the price increase. We have to wait and see,” he said.
Mr Lak stressed the need to diversify away from the EU market and to make local rice more competitive internationally by reducing production costs.
Chan Sokheang, chairman and CEO of Signatures of Asia, said the 5 percent decline was not alarming, adding that the worst is still to come.
He estimated that last month only 20 to 25 percent of Cambodian rice shipped to Europe was taxed.
“What really worries us is February and March, when the tariffs will have a bigger impact. We hope the loss in shipments to the EU can be offset by more exports to China.”
Mr Sokheang said his company did not see a drop in sales in January but that it is likely to be a different story this month.
Another rice exporter contacted by Khmer Times and who asked for anonymity said, “Exports decreased last month because the EU is our biggest buyer. Unfortunately, the tariffs are likely to have a much larger impact in upcoming months.
“Our company saw a 3 to 4 percent decline in orders from the EU in January,” the exporter said, adding that some European buyers are now choosing to buy rice from producers in Thailand and Vietnam instead of Cambodia.
Cambodia exported 626,225 tonnes of rice to international markets in 2018, a drop of 1.5 percent compared to 2017.