Unofficial Translation

Selected Comments at the Dissemination of the Cambodian Policy Paper on the Promotion of Paddy Rice Production and Rice Export

| Climate Change - A Factor to Food Insecurity | a bigger market for rice than for garment products | credits or loans by commercial and credit banks | land, seed and management system | institution to perform their duties  | a sub-working group |

17 August 2010

In addition to the prepared text, Samdech Techo Hun Sen is making comments on various related aspects on Cambodian rice production and export orientation, which the CNV team is making selections and translations as follows:

… Let me clarify this point (with regard to weather condition) as in these weeks climate change has become major threat to China which after snowfall which destroyed crops, there followed by drought and then at this moment flood. Take Russia into the picture, its production of wheat is perhaps less than expected, whereas appalling conditions of this sort is also noted in India and many other countries. It has been estimated that prices of various crops this year are on the trend of rising. Taking this note Cambodia should try and benefit from the situation to increase its produce which is for own food security and also for world demand. That does not mean that Cambodia is trying to make the most in term of price at all and if Cambodia is becoming a main actor in this, it will not partake in increasing the price of rice at all. In short, due to climate change and the change of other productive conditions, it is foreseeable that for years to come, countries that used to export food would probably reduce it and/or even turn to be importer of food too.

…. Another point to make here is that with respect to market size, we could find a bigger market for rice than for garment products. Export of garment products is meeting with competition from so many countries, while for rice the conditions would be different because not every country is fit for rice cultivation at all. As far as this is concerned, as of now Vietnam and Thailand stay at ahead in rice export, but many countries have better records in competition for exports of garment products. As you can see now that the market for rice is still large, which would fit in our outward-looking strategy whereby exporting rice is a major factor. The market potential is more favorable and therefore we should be quick to gain access and get a share of the market.

Before long we will send a delegation to the Philippines as proposed by HE Aun Poan Munirath (Secretary of State for Economy and Finance) because this country has expressed interest, by former President Arroyo, and I have yet to meet with the new President, in purchasing rice from Cambodia directly. Also during the visit of HE Najib Tun Razak, Prime Minister of Malaysia to the Kingdom of Cambodia, he has expressed interest of importing rice from Cambodia to Malaysia. In my recent visit to Singapore, I also discussed with (Prime Minister) HE Lee Hsien Long about the prospect of exporting rice from Cambodia too.

It is important for us to know what sort of rice species and quality that is demanded out there so that we could orientate our rice production to answer those demands. There has been argument that exporting paddy rice is easier because there is no need to fulfill the customs and/or trade procedures. But we should also see that exporting paddy results in loss of value added stuff such as rice bran, broken parts, husk and also jobs for our people. It has been studied and estimated to be some 600 million US dollars loss if we were to export a sum of three million tons of rice in the form of paddy. It is therefore a must for us to change the situation whereby all value added stuff will be retained in the country.

By the way, I would urge our people to consume pork again. I have pork everyday. After I told our people about the pig disease, it seems our people do not consume pork and this situation has in turn brought up high the price of beef, chicken and fish. Those who sell pork have had a bad time. In fact I just placed an order to ban import of pork from foreign markets and suggested that those who sell pork from local farms should not benefit from this situation in high pricing. Unexpectedly, traders of beef, chicken and fish have done it otherwise. So please be informed that it is ok to consume pork but it needs to be well-done.

So if we could keep rice bran and broken parts of rice in the country, these will contribute to raising animals also. This is what they say using money to make more money. Rice could be made into many forms of final products. Some rice mills make use of husk to generate electricity, which they use as energy for running the mills. This is one small example and it should not be understood that this is to be achieved by sole Government’s effort. It is required that there must be participation from private sector and that of the civil society.

… As far as credit is concerned, here we mean credits or loans provided by commercial banks and loans by credit banks. I also have received a letter from Oknha Pong Khieu Se regarding why commercial banks find it hard to provide credits or loans for the rice mills to purchase rice. He has proposed some ideas in relation to that and suggested the State have to provide some assurances too. We may think of providing some 50% insurance but that does not mean they come and collect money from the state. For example, Canadia Bank provides 100% loan for which loan taker is obliged to pay 100% interest to the Bank. In case of risk, the state could provide 50% insurance so that all commercial banks could feel assured in providing risky loans.

I would warn against a situation that so and so might get together and create so and so association for accessing the credit scheme from the commercial banks. It is indeed up to the Banks to make their judgments. Some may go this far to talk to the press in case of loan denial by the banks. They may resort to blaming them for going against the Prime Minister’s instruction. Under the State of Cambodia, there was this situation that the state was making loan for someone to operate in fishing business. The loan taker had in fact not used the loan for that but for buying gold for speculation purpose when the gold price went up. The principle was returned to the state whereas the profit went to his house. So I urge that your judgment has to base on real action.

So far commercial banks have given loans for purchasing immobile assets and now I urge that they set aside a part of their resources for loans relating to this rice production and export policy. It is indeed a concern that the Banks are not confident of possible return in some accidental risks such as the mill is on fire, for example. In that particular case, the state will have to help cover half of the cost.

… I have the need to clarify issues of land management, seed and management system. Herein we talk about farmer’s organization. It is frightening for us to have heard the word “cooperative” because in true experience among many of Cambodians, the term connotes a hidden meaning of killing. As far as rice export is concerned here, if we were to let actions be taken and implemented in a sporadic way, it is not realistic to talk about exporting rice, though we may have found market for our products. It would not be feasible when our people keep cultivating rice of different species.

Former Ambassador of Japan, HE Fumiaki Takahashi, raised an idea to me, while we inaugurated the irrigation system at Kandal Stoeung district of Kandal, about forming cooperatives. I told him it is better to use a different word like farmer association or rice production community. In fact the true meaning of cooperative is not bad but Pol Pot had given it a bad meaning like “organization,” literally translated into Khmer ‘Angkar,’ which has become a word with of killing power meaning.

With better irrigation system in some areas, take for instance in Pursat in Damnak Ampil and Jaret I, we have to go into contract with some markets and also have to assure that a particular species of rice will be grown and that species of rice will be harvested and shipped to destined markets. In Battambang there is this place where they cultivate dry season rice “Techo Dry Season Rice Production,” which consists of farms with sizes between 2,000 to 3,000 hectares, and even 10,000 hectares. This kind of farms could cultivate this particular rice among those living in the area.

We should start with area where there are water irrigation system and water resources. We should get our farmers together to provide them with seed and credit, and also market for their products, through which we will buy from them. Some farmers who have better skills and knowledge could opt for best quality rice production and sell to us because we provide them with better price. Take for instance, if they produce and sell good quality rice two tons at a price they could buy three tons of lower quality rice, they would then go for it. This is what we could understand it to be a swap from production for consumption to one for commercialization.

Before Cambodia was in general producing rice only for consumption, which we call subsistent agricultural production. As of now, roughly, Cambodia has moved to production for commercialization already. Some people who are clever have picked up good quality rice production and sell them to local market. They use the money to buy rice of lower quality at lower price for consumption. However, I have to say that mobilizing our farmers to change his habits in cultivation would not be easy. Those who have benefited from advanced technology happened to be those who cultivate rice along the border with Vietnam. Vietnam has got better technology and seed for cultivation. Our people learned from them. In some instances, some have also acquired skills from Vietnam, like hiring technicians from them too.

In 1995, in my visit to the district of Kirivong of Takeo province, people there have made use of expertise and labor from Vietnam. But when I visited our people in Pursat, I happened to learn that our farmers there produce some 100 different rice species. That is why I have termed the sort of long-term rice species cultivated there “hidden lady” to mean “rice that is not giving crops.” Again these are some of the ideas as to where to start with. It is better that we start doing where there is sufficient water source. It is important that each province knows of its production areas and the conditions on which cultivation depends.

… As far as some shortcomings are concerned with regard to export and import process, I would urge that all relevant institution to perform their duties in a smooth and timely manner way. This is not only for rice but for everything. Thanks to what we have instructed to the customs house and their mechanism, we have noted an increase in export of rice in the first half of this year. We are hoping for further improvement. I would demand that we have to make sure of our ability to secure supply when we are going into contract with so and so in the market. It should be a successful campaign for outsiders to get to know Cambodian rice.

… As far as working team formation is concerned, I would urge for the establishment of a sub-working group in the field of agriculture both in the Royal Government and agricultural working group to look into issue of rice production and export. Millers could also be recruited to be members of the sub-working group, where HE Chan Sarun (Minister of Agriculture) and HE Cham Prasidh (Minister of Trade) could work together on this endeavor. Besides making ourselves food sufficient, we have to strive to make Cambodia a real exporter of rice and one of the main actors in regional and world food security./.

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