Export led investment key in Rice sector

Amru Rice is at the forefront of developments in the Cambodian rice industry. In 2012, Amru worked with Emerging Markets Consulting under the Export Market Access Fund, to boost its export growth.

Amru Rice was founded on three generations of agricultural trading dating back to 1960. SONG Saran joined the family firm in 2008, and embarked upon a process of export-led investment and modernization. Today he is Chairman of a leading diversified agricultural business in Cambodia.

Amru logo

Leading Cambodian rice exporter

Following the completion of a new rice mill in 2012, Amru launched an export drive and approached the Export Market Access Fund (EMAF) for support. EMAF was a four year program, implemented by Emerging Markets Consulting for the Ministry of Commerce, to help develop export markets for Cambodian products and services. During that year, EMAF worked with Amru to create an export strategy and attend three major international events; in China, France and the USA, with the aim of making direct contact with global customers.

Export Success

Saran thinks support from EMAF came at a critical stage in Amru’s growth, and helped the firm become one of the two biggest milled rice exporting companies in Cambodia.

Between 2012 and 2015, Amru’s rice exports have risen from approximately 20,000 tonnes per year to 60,000 tonnes – an increase of 300%. Thanks to this growth, Amru has invested millions of dollars in mills and rice-drying equipment and now owns facilities around Phnom Penh, Battambang, Kampong Cham and Kampong Speu. It has also implemented contract farming to secure paddy supply, supporting the income of approximately 10,000 farmers.

These investments and commitment to premium quality were recognized when Amru achieved GMP / HACCP and Organic certifications – crucial to continued growth in key international markets.

Also, in recognition of Amru’s contribution to the development of the rice industry in Cambodia, Saran won the global Takeda Young Entrepreneurs Award 2015, alongside five contemporaries from Japan, Iran, Pakistan, Uzbekistan, and Indonesia.

Challenges to Rice Sector

However, despite the success of Amru, and other firms, the rice industry still faces developmental challenges – in particular market access and costs.

Rice exporters have been concerned that Cambodian’s preferential access to the European market, under the ‘Everything But Arms’ (EBA) tariff may be eroded. A bilateral free trade agreement (FTA) between Vietnam and the European Union (EU-V BFTA) will provide tariff-free access to Europe for up to 80,000 tonnes of milled and husked rice per year[1].  To put his in context, that figure is around double current Vietnamese rice exports to Europe and around 25% of current Cambodian rice exports to Europe (2015 figures[2], 303 903 tonnes).

Electricity prices in Cambodia are still stubbornly high compared to Vietnam and Thailand, where millers pay no more than ten cents per kilowatt of electricity – around 50% the rate in Cambodia,

Transportation is also a headache. According to the Cambodia Rice Federation, the cost of inland transportation averages about $15-$17 per tonne, whereas in Thailand the cost is about $4 per tonne for the same distance[3].

 

[1] Annex 2-(x) paragraph 11(a), 11(b), and 11(c) of the agreed FTA text

[2] Export Helpdesk (http://exporthelp.europa.eu/thdapp/index.htm?newLanguageId=EN), accessed on May 23, 2016.

[3] Cambodia Rice Federation. 2014. Challenges & Opportunities Cambodia Rice Sector. (http://www.moc.gov.kh/tradeswap/userfiles/file/uploadedfiles/Gallery/5.%20CRF%20Snapshot%20of%20Rice%20Industry%20Aug2014%20(2)8_21_2014_11_30_10.pdf)