Cambodia’s rice exporters – among the world’s largest – should start complying with environmental, social and governance (ESG) standards to align with the European Union’s market requirements and access better financing options, a Cambodian business consultant says.
The Cambodian rice industry is a “vital” part of the local economy, with the EU serving as a key export market, notes David Van, public-private partnership director at Phnom Penh investment advisory firm Platform Impact.
ESG compliance, Van adds, is now “essential” for maintaining and expanding market access. “The EU’s demand for sustainably sourced products means that non-compliance with ESG criteria could result in trade barriers, such as increased scrutiny or even bans on imports,” he notes in the August 22 edition of Cambodian Investment Review. “By adhering to ESG standards, Cambodian rice exporters can differentiate themselves in the global market.
“Compliance with relevant certifications can increase the appeal of Cambodian rice to European buyers and ensure the ESG factors are rigorously managed – a growing requirement to access premium markets.”
Access to sustainable farming practices
ESG-compliant exporters, Van argues, will be able to access green financing products, such as cheap loans for investing in sustainable farming practices like organic farming, water conservation and energy-efficient milling.
Showing a commitment to ESG principles would also help exporters attract long-term investors that prioritize sustainable and responsible growth, providing a reliable source of capital for ongoing development.
“Adherence to ESG standards,” Van points out, “can significantly enhance the reputation and brand value of Cambodian rice exporters.”
EU consumer expectations
“A strong ESG profile not only meets regulatory demands but also aligns with consumer expectations in the EU, where there is a growing demand for sustainably produced goods,” Van explains. “This can improve market positioning and open up new opportunities in premium segments of the market.
“By embracing ESG practices, Cambodian rice exporters can enhance their competitive edge, ensure long-term sustainability, and contribute to broader national and global sustainability goals.”
The EU was by far the largest importer of Cambodian rice last year (264,683 tonnes), Van states, followed by China (212,756 tonnes) and the Association of Southeast Asian Nations (Asean) region (93,376 tonnes). The EU also ranked first in the six months to June this year (186,377 tonnes), followed by Asean (77,933 tonnes) and China (77,204 tonnes).
In addition to his work at Platform Impact, Van serves as an adviser to Cambodia’s Ministry of Commerce, where he helped amalgamate three rice associations into the Cambodia Rice Federation in 2014. He is also an adviser to the country’s Ministry of Public Works and Transport.
World’s 10th-largest rice producer
Cambodia’s rice output is forecast to rise 1.8% to 7.9 million tonnes this year, according to the Food and Agricultural Organization (FAO) of the United Nations, making it the world’s 10th biggest producer after overtaking Brazil and Japan last year.
In its biannual World Food Outlook released in June, the FAO says record crops are expected in Bangladesh, India and the Philippines this season, while “area expansions in response to attractive prices are also anticipated to bolster production in Cambodia, Nepal and Pakistan.”
Elsewhere in Asia, the outlook is less positive, notably in Thailand amid planting delays and uncertainties over government support programmes. Smaller crops are expected in South Korea, Myanmar, Malaysia, Timor-Leste, Vietnam and especially Indonesia – where crops have been hit by unseasonable dryness associated with El Niño conditions.
For other Southeast Asian exporters, prospects are “downcast” for Vietnam and “below potential” for Myanmar, although Thailand “could remain close to the strong 2023 level”, the FAO adds. “Export prospects are also positive for Cambodia, owing to strong cross-border demand from Vietnam for domestic consumption and re-export.”
