Rice Prices Set To Rise as Supplies Decrease

Rice prices will continue to rise over the next few months as supplies decrease following the yearend harvest, agriculture experts said Wednesday, al­though they disagreed on wheth­er prices will rise to the heights they did last year.

Retail prices for high quality rice currently float between around 2,400 to 2,800 riel per kg and lower quality rice goes for around 2,000 riel, said Yang Saing Koma, executive director of the Cambodian Center for Study and Development in Ag­riculture, or Cedac. That’s about the same as early February last year, he said.

Prices for those two types of rice could increase by 30 and 40 percent respectively by April, Yang Saing Koma said by telephone Wednesday. Rice prices typically increase as supplies run low in the months after the yearend harvest, he said.

Last year prices almost doubled, going from around 2,000 riel per kg in December 2007 to 4,000 riel per kg in April 2008, he said.

“It cannot be like it was last year because on the one hand the production in some countries has improved,” he said, adding that speculators trying to cash in on rising prices last year ended up further driving up those prices.

But Agriculture Minister Chan Sarun said by telephone Wedn­esday that prices could reach the same heights as last year be­cause global demand is still strong.

“We don’t worry that the price will decrease,” he said, adding that as a country that produces surplus rice, Cambodia’s agriculture sector benefits from the increases.

Unmilled rice is expected to top 7 million tons for the 2008 to 2009 harvest, and exports could reach 3 million tons in 2009, Chan Sarun said in January.

Chan Sophal, president of the Cambodia Economic Associa­tion, said retail rice prices have almost tripled in the last five years as global demand soared.

Retail price for a kilogram of high-quality rice was about 1,100 riel in December 2003 and 2,700 riel in December 2008, he said.

He predicted that with less speculating and increased production in the country and around the world, rice prices won’t be as high as last year.

“There is not as serious of a problem regarding rice prices,” he said.

Farmers, however, won’t be the main beneficiaries of rice- price increases, he said.

With high inflation in fuel, fertilizer and other supplies, profits won’t be that high for farmers, he said. Most farmers already sold their rice to millers in December and January. Millers, he said, will collect most of the profit as prices increase in coming months.

Farmers need to form more cooperatives and hold their stock until prices increase in order to increase their profits, he said.

Srey Sophan, a farmer in Pur­sat province’s Bakan district, said by telephone Wednesday he had to sell rice in December to re­coup fertilizer and labor costs.

“I got no profit,” he said. “I regret selling my rice when it was cheaper, but I don’t know what else to do. I needed the money.”

Phou Puy, president of the Fed­eration of Cambodian Millers Associations, would not answer questions about the profit made by rice millers, but he said that if production prices stay low this year it will reduce farmers’ overhead costs and farmer profits could increase next year.

Song Hong, a rice trader in Battambang, said by telephone Tuesday that so far he has raised prices slightly over the last month from 720 riel to 760 riel for unmilled rice.

Still, he said, over the last year, prices have fluctuated so much it’s hard to predict, particularly with the unstable economy.

“We cannot know whether the price of rice will increase the same as last year. It is up to the market’s demand,” he said.

 

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