Prime Minister Hun Sen announced yesterday that the government would sign an agreement for the export of Cambodian rice to China, the region’s biggest market.
“Now we are actively talking with the Chinese market,” Mr Hun Sen said during a university graduation ceremony in Phnom Penh.
“This week there will be a signing ceremony between Cambodia and China concerning rice” exports, he said, adding there was a potential to sign similar future agreements with China for exporting crops such as cassava.
China is a net exporter of rice. It was unclear yesterday how much Cambodian rice could be exported under any trade deal. The prime minister in August announced that the government planned to export a millions of rice annually by 2015.
Mr Hun Sen said the agreement was part of the government’s strategy to expand exports beyond US and European Union markets–which currently buy garments and limited quantities of rice and sugar–and focus on the growing Asian markets, which had weathered the global economic crisis better than elsewhere.
“Asia has recovered before Europe. This is…leading to the change of economic sectors in the region,” Mr Hun Sen said.
Chinese Embassy spokesman Qian Hai said a Chinese delegation would visit this week to discuss establishing a quality standard for Cambodian rice export to China.
“We will have a delegation coming this week, they will discuss a [memorandum of understanding] regarding rice quality,” Mr Qian said. “We will set up a quality standard for export.”
“Now Cambodia encourages the export of rice to the other countries. China has a big population that needs rice. So it’s a win-win situation and good for rice exports in the future,” he added.
Hong Narith, Cabinet chief at the Agriculture Ministry, said the government was scheduled to sign a protocol with China on Friday on the rice export’s quality, food safety and sanitation, a so-called SPS agreement.
The two governments “plan to sign a protocol on SPS October 22,” he said.
The Chinese market has so far been closed to Cambodian rice and experts say the new export market could provide a boost to the government’s effort to raise rice export to 1 million tons by 2015.
Thon Virak, director of government-owned rice trading firm Green Trade, said that in the past the government had been unable to reach an agreement with China on the SPS standards for rice export.
“Many times we discuss this already,” he said. “We want to export to China already but we could not because of the SPS.”
Mr Virak said the agreement would be “very important for the export of goods to China,” adding that he hoped the agreement could be expanded to include cassava and other crops.
However he said that as China is a rice exporter, it was unclear how strong its demand for Cambodian rice would be.
“China, they don’t want to eat rice a lot right now. They grow a lot and export rice,” he said.
Yang Saing Koma, director of the Cambodian Center for the Study and Development of Agriculture, or CEDAC, said China had so far been reluctant to open its rice market to imports.
“So far, I know China is not really very open for rice, as I they want to protect rice producers in China,” he said.
Peter Brimble, country economist at the Asian Development Bank, said that, though he did not have details of the SPS agreement, it would provide Cambodia with a major opportunity to expand its rice exports.
“There is no question the Chinese market for rice could be very important for Cambodia,” he said. “At the moment, there are Chinese SPS rules in place that claim there are things in Cambodian rice such bacteria and insects.”
Mr Brimble said however that Cambodian rice producers would need to meet the agreed upon standards to benefit from the increased access to the Chinese market.
“It’s going be a double barrel thing. You need access to the markets and then you need to meet the standards,” he said. “A major challenge for Cambodia’s agricultural development for the future is addressing quality of agriculture products”
Exports from Cambodia to China–mainly rubber, wood and garments–stood at $17.68 million during the first half of 2010, while total bilateral trade was $501.06 million.
(Additional reporting by Van Roeun)