Paddy Prices Experience Unprecedented Rise

Unprecedented rising paddy prices, driven by an increase in demand from Vietnam, present a “double-edged sword” for Cambodia’s rice sector
A woman cleans rice in Phnom Penh, June 9, 2023. Kiripost/Siv Channa
A woman cleans rice in Phnom Penh, June 9, 2023. Kiripost/Siv Channa

Since 2008, Chhorn Sokkok, 49, has worked in crop trading, traveling to various areas in Cambodia’s provinces to purchase paddy rice. However, recent months have seen unprecedented hikes in paddy prices, impacting his - and other farmers’ - trade.

The father-of-four, from Prey Touch village in Battambang, acquires farmers’ crops to feed rice millers. He said he trades along the Cambodia-Vietnam border at the international check points of Banteay Chakrei and Kaoh Roka in Prey Veng and Takeo, Phnom Den.

Sokkok said the recent rise in paddy prices is due to Vietnam's increased trade with other countries. At the same time, Vietnam's excessive use of pesticides has contributed to a shortage of paddy supply, which has further driven up prices, he explained.

“I heard that Vietnam has white rice exports with other countries. India has suspended its rice exports, and it may be because Vietnam uses excessive levels of pesticides, affecting rice export standards. That’s the reason Vietnam rushes to collect paddy from Cambodia,” he said.

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The unprecedented rise in paddy prices started in early July, with OM 5451 and IR 85, high-yielding long-grain fragrant rice cultivars, raising the price from 800 riel per kg to 1,400 riel per kg at the Vietnam border.

This is the highest paddy price Sokkok hasn’t seen in his almost 15-year career in the trade. “It never​ happened before, just this year, the price increased so much,” he said.

Currently, Vietnam attempts to gather paddy from all growing provinces in Cambodia, including Takéo, Prey Veng, Banteamean Chey, Kompong Thom, and Siem Reap. Vietnam continues to make purchases and offers high prices. This gives farmers the chance to improve their livelihoods by taking advantage of this condition in their harvest, said Sokkok.

Selling paddy to Vietnam has become considerably easier as a result of strong paddy procurement. This has produced a competitive market for local rice millers, notably for those who suspended paddy procurement while processing rice at cheap market prices.

“Actually, some rice millers have suspended buying. For example, there are 100 rice millers, but only 20 are open to buying. They also complained about Vietnam gathering paddy at high prices, and that it is difficult to compete,” he said.

He is concerned that with the increased demand from Vietnam, there could be a paddy shortage to support local demand.

Seak Chanthou has worked in the field for nearly 20 years. She acquires paddy from local crop traders to sell at the Cambodia-Vietnam international border checkpoints. This is mostly traded at the Phnom Den border in Takeo province.

The crop trader told Kiripost that paddy prices have risen due to agreements between Vietnam and other countries. She noted that farmers are taking advantage of this opportunity, despite it being at a modest price. Chanthou, however, added that several rice millers have suspended operations.

“It’s good for farmers when paddy prices increase; it helps their struggling livelihoods. The majority of rice millers have stopped purchasing for a while. But If those rice millers have contact with other companies, they still purchase,” she said.

In the context of the unprecedented price increases in Chanthou's 20 years of working in the sector, she claims it has not had any impact yet on the economy. She said people should remain optimistic and seize the opportunity.

Vice president of the Cambodia Rice Federation (CRF), Hun Lak, told Kiripost that prices are noticeably higher than in previous years, owing to high demand mixed with some countries' delays in releasing their rice storage.

He admitted that the high price of paddy is a double-edged sword for the Cambodian rice sector. While it is an opportunity for farmers to sell their harvests at a profit, it could also have implications for rice millers processing rice for export.

“It impacts rice millers that gather paddy for processing into rice. Seeing this situation, the rice on the market hasn’t increased in price yet, that’s the problem. Meaning that it is good for farmers but not for rice millers who are concerned that market prices have not yet risen and this could lead to a loss of profit.”

CRF believes that any change will have a negative impact, slightly implicating stability in rice production, processing, and export volume. CRF is attempting to address low rice prices in the midst of growing paddy prices by closely monitoring the issue.

Nevertheless, Hun Lak, asserted that a few large rice millers are gathering paddy to process into rice to supply local demand, meaning the economy would remain unaffected.

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