A policy meant to give the government a measure of control over rice exports is actually hurting Cambodia’s already impoverished farmers and should be scrapped, experts say.
The government-required licensing system for rice export does nothing more than create “unofficial costs” for rice traders, which decreases the demand for the rice and forces farmers to sell their harvest for a lower price, according to a Cambodia Development Resource Institute report.
The licenses are free, but customs officers, customs inspectors, sanitary inspectors, economic police and border police often use the licensing system as an excuse to extort money, according to the CDRI report.
Exporters may pay as much as $14 per ton of rice, or $281 per cargo container, in such expenses, according to the report. These costs lower the amount a buyer will pay for a farmer’s rice harvest.
In order to ease the burden on farmers, the government needs to retract its license requirement as soon as possible, say the report’s authors.
While making recommendations to the government, including publicizing price information and finding better varieties of rice for export, the CDRI report said “the elimination of export licenses should be the first significant step to encourage exports and stabilize prices.”
“Farmers are the group most vulnerable to price variations,” the institute said in its first-ever yearly economic review of the country, which was issued last week. Limited rice variety, low savings levels and a lack of markets put the farmers at the mercy of buyers and traders, the report says.
Buyers can control the price of rice because poor farmers often need to sell their unmilled rice—called paddy—immediately after the harvest in order to pay off loans and cover other expenses, the report said.
Export licenses for rice are also used to gather information on the private sector, said Khek Ravy, undersecretary of state for the Ministry of Commerce.
The licenses help the government make sure applicants who want to buy rice, either paddy or processed, have the money to do so, and won’t leave farmers in a lurch, he said.
However, “it seems that the measure is not working,” Khek Ravy said.
The government has been looking at ways to improve or eliminate the license system for at least six months, Khek Ravy said. Before they do it, they need a new system for gathering information on private export companies, he said.
Unofficial fees, coupled with the high cost of transport in Cambodia, make the gap between the price farmers are paid for rice and the price at the market almost twice as high in Cambodia as in Thailand, according to the institute.