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PROJECT “NETWORK FOR AGRICULTURE AND RURAL DEVELOPMENT
THINK-TAKS FOR COUNTRIES IN MEKONG-SUB REGION” (NARDT)

crops compared to other target countries. It is estimated that more than 50% of
Vietnamese farmers can grow two crops per year while this data recorded in Lao PDR
and Cambodia is only 11.2% and 23% (The World Bank, 2016). Particularly, farmers in
the Mekong River Delta, Viet Nam can produce up to three rice crops per year. The
limitation in rice intensification influenced the income of Lao PDR and Cambodia rice
farmers, especially they are incapable of producing dry season crops, which is believed
to bring more benefits than monsoon crops (The World Bank, 2016). Moreover, this
intensification problem also affects the rice value chain due to the shortage of rice
resources for milling and exporting, which requires more capital and time for storage
after harvesting.

Farmers in the southwest region of Viet Nam have rented land in Cambodia
(in Takeo, Kandal, Prey Veng, and Svay Rieng Provinces) for rice cultivation. Due to
the application of intensive farming practices from Viet Nam, productivity has been
increased along with the expansion of the cultivated areas. Farmers bring IR 50404,
OM, and aromatic rice varieties to Cambodia to produce, and the output has been
transported through cross-border trade. Rice production traded across the borders
of Vietnam and Cambodia has tended to increase rapidly in the last five years (about
1.5-2 million tons of rice per year). Farmers in Cambodia also serve as collectors and
traders, buying and transporting paddy rice to the Vietnamese border and selling it
to Vietnamese consumers or exporters. Some reasons for this situation are: i) many
domestic consumers prefer Cambodian rice while the price of rice importing from
Cambodia is quite cheaper than high-quality rice in Vietnam, ii) rice traders also get
higher profits in term of Cambodian paddy rice.

1.2.3. Millers and processors

Rice mills have been expanded over time in the countries with changes
in ownership and scale. Rice mills are increasingly privately owned and financed
rather than cooperatively or state-owned. The number of small rice mills has been
decreasing since farmers and traders are increasingly selling to medium-large mills.
Larger mills, particularly in Viet Nam and Thailand, have invested in expanding and
improving milling equipment with higher capacity, more functions such as combining
with polishing rice and producing high-quality rice to serve local consumption, and
entering markets with strict requirements. Despite the construction of modern mills in
Cambodia and Lao PDR in recent years, milling capacity remains a bottleneck.

Viet Nam is the leading country in terms of both quantity and efficiency of
milling operation among target countries. First, it is estimated that the number of rice
mills constructed in Viet Nam is up to 250 thousand units, which is about 20 times
higher than Cambodia and 7 times higher than Lao PDR. However, the percentage
of unregistered rice mills in all countries is still high. Second, the running period of
rice mills in Cambodia is only half of Viet Nam and Thailand. Third, Thailand and Viet
Nam are the leaders of milling efficiency rates with a value of 66%, indicating the
conversion of paddy rice to milled rice. To gain more benefits from the rice sector,
Cambodia and Lao PDR need to develop milling systems with higher capacity than
they have now.

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