Four days after the EU imposed tariffs on rice imported from Cambodia, China agreed on Monday to increase its import quota for Cambodian rice to 400,000 tonnes this year from the previous 300,000 tonnes.
If Cambodia can supply the quantity under the new Chinese quota, then that market alone would effectively absorb 63 per cent of Cambodian rice sold abroad based on last year’s export of 626,225 tonnes.
Prime Minister Hun Sen met with Chinese President Xi Jinping during a four-day visit to Beijing which began on Monday.
In a post on his official Facebook page on Tuesday, Hun Sen said that Xi agreed to import 400,000 tonnes of rice from Cambodia this year as part of the plan to increase bilateral trade between the two countries to $10 billion by 2023.
“Although relationships at the international [level] are changing, that between China and Cambodia will still continue to provide a lot of mutual benefits,” Hun Sen said, quoting Xi.
Both countries confirmed to continue collaborating in the areas of politics, national security, and the economy.
The prime minister did not elaborate in detail the terms and conditions under which China agreed to raise the purchase quota of Cambodian rice.
Cambodia Rice Federation vice-president Hun Lak said on Tuesday that the new quota meant that the Chinese government has allowed buyers in that country to purchase rice from Cambodia tariff-free.
He stressed that without the quota, rice sold in the Chinese market would be charged at very high tariff rate.
“The quota offering is good and it unlocks opportunities for us. But what Cambodia needs to solve is our offer price as what we are facing now is price competition."
“However, when it comes to actual business, how much of a success Cambodia achieves [from the new quota agreement] depends on good strategy, and for this, we need a discussion among the relevant parties,” Lak said.
China first offered to purchase Cambodian rice in 2015 at a quota of 100,000 tonnes per year. It gradually increased this and last year, the quota was raised to 300,000 tonnes.
The Chinese market is the largest for Cambodian rice in terms of individual countries, and it is the second-largest buyer after the European bloc. Last year, China bought 170,154 tonnes of rice from Cambodia or equal to 56 per cent of the latest quota.
Centre for Policy Studies director Chan Sophal said that having a higher quota from China will be helpful to the marketing of Cambodian rice, but in the past, Chinese buyers found rice in Vietnam and Thailand more competitively priced and did not buy as much as they agreed.
“Cambodia should look for ways to improve the competitiveness of the rice sector,” he said.
The Cambodian rice sector lost its duty-free export status to the EU last Friday and for the next three years, the tariff rate will be steadily reduced.
As a result, the sector will be forced to pay about $53 million in the first year based on the amount the Kingdom exported to the EU last year.
Exporters and economist have said to minimise risk from the imposition of EU tariffs, Cambodia needs to diversify its markets. A good option for a start, they said, is the Chinese market.
