Modernizing Mills a Challenge For Rice Policy, Experts Say

Last year, the government an-nounced a new policy aiming to export 1 million tons of rice by 2015 and modernize the country’s rice mills.

However, huge challenges re-main, agriculture experts say, as only a few mills now produce export-quality rice and the sector would require a 10-fold increase in milling capacity to meet the ex-port target.

Pin Kheang, head of statistics at the Ministry of Industry’s SME department, said last week that in 2010, the number of rice mills in-creased by 1,326 new milling in-stallations and now totaled 28,474 mills.

But Thon Virak, general director of state-owned rice trader Green Trade, said that among these thousands of mills, “only about seven mills” were capable of processing rice for export.

“We need at least 70 [quality] standard mills” to export 1 million tons, Mr Virak said, adding that most mills were small businesses set up in the 1990s that are unable to meet export standards.

According to Ministry of Com-merce data, last year millers only exported 50,000 tons of rice, worth about $35 million.

The Ministry of Agriculture’s secretary of state, Chan Tong, Yves acknowledged a sharp in-crease in milling capacity was required under the new policy.

“We have lots of millers, but these are small. We don’t have big mills that can produce [quality] standard rice,” he said.

Experts have said that Cam-bodian rice often suffers from a high percentage of rice grains that break due to poor milling and storage equipment.

A lack of milling capacity is only one of the numerous challenges for the rice policy, an-nounced in September by Prime Minister Hun Sen, as it tries to modernize rice cultivation, processing and storage to boost exports.

Thai and Vietnamese traders currently buy up most of Cam-bodia’s paddy, which they process and sell on export markets—leaving Cambodia unable to add value to its most ubiquitous product.

Millers require an estimated $250 million in capital just to buy up half of the country’s 3.5 million tons of paddy surplus. The Rural Development Bank has, however, only provided $18 million in credit last year, while a new World Bank project now hopes to create $50 million in credit.

Mr Virak, of Green Trade, said millers lack sufficient access to capital to buy up enough raw paddy for processing, let alone fund large-scale modernization of their equipment.

“When we use money for [im-proving] milling, we won’t have enough money to buy rice. We cannot just borrow money from the bank for both,” he said.                                     Mr Virak explained that it costs at least $500,000 to equip a modern rice mill that can process be-tween 5 tons and 12 tons of rice per hour.

Yang Saing Koma, director of the Cambodian Center for Study and Development in Agriculture, agreed that financing modern mills would be a major challenge.

“We see the [mill] machinery is not yet adequate,” he said. “At the same time, we need more re-sources for millers to buy paddy for export.”

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