VZCZCXRO0602
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0418/01 1430815
ZNR UUUUU ZZH
O 220815Z MAY 08
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHINGTON DC IMMEDIATE
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 PHNOM PENH 000418 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/TPP/MTA- C. VOLTMER, EEB/TPP/ABT - G. CLEMENTS 
STATE ALSO FOR EEB/TPP - M. LURIE 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ECON ETRD TBIO
SUBJECT: CAMBODIA ON FOOD STAPLE EXPORT RESTRICTIONS, 
PRESIDENT'S GLOBAL FOOD SECURITY INITIATIVE 
 
REF: A. STATE 53353 
     ¶B. STATE 53346 
     ¶C. STATE 52628 
 
¶1.  (SBU) SUMMARY: Pol/Ec Chief May 21 delivered food 
security initiative demarche (Ref C) to Secretary of State 
H.R.H. Sisowath Chivannariddh in the Ministry of Foreign 
Affairs and International Cooperation, and relayed points on 
food staple export restrictions and agricultural 
biotechnology (Refs A, B) to the Ministry of Economy and 
Finance (MOEF).  Prince Sisowath stated that the U.S. 
initiative was very welcome news to the Royal Government of 
Cambodia (RGC), especially considering that Cambodians have 
been hard hit by the dramatic increases in food prices, 
notably for rice, a traditional staple in the Cambodian diet. 
 The MOEF outlined plans to soon end the partial ban on rice 
exports, while bolstering some rice export monitoring and 
regulation.  At present, Cambodia has no significant 
restrictions on agricultural biotechnology.  END SUMMARY. 
 
MFA: Capacity to Store Commodities a Problem 
--------------------------------------------- 
 
¶2.  (SBU) Noting that Cambodia did not have the capacity to 
store large rice stockpiles, combined with farmers' eagerness 
to sell their crops soon after harvest, Prince Sisowath said 
the situation had reached a stage where temporary shortages 
could occur.  He noted large quantities of rice were sold 
across the border because the farmers did not have the 
capacity to store their yields.  The government now had as 
its top priority a policy to increase technical capacity to 
store rice and monitor sales for export.  This would help 
prevent domestic shortages in the future, he noted.  Other 
agricultural capacity-building initiatives were underway, he 
said. 
 
¶3.  (SBU) Prince Sisowath noted that bringing the Doha trade 
round to a close this year with a reduction in farm subsidies 
would be a welcome development. 
 
MOEF: Regulation Better than Temporary Rice Export Ban 
--------------------------------------------- --------- 
 
¶4.  (SBU) Vongsey Vissoth, Deputy Secretary General in the 
Ministry of Economy and Finance, agreed with our points (Refs 
A, B) in support of open markets that support farmers' 
ability to have the means and incentives to increase 
production.  That is the Cambodian policy, he noted, 
supported by Prime Minister Hun Sen.  However, in the wake of 
a brief rice shortage due to unbridled export activity, the 
RGC imposed a temporary, partial ban on rice exports which 
would end in the next few weeks, he said. (The Ministry of 
Commerce confirms that it is set to lift the ban on May 26.) 
Cambodia's bottom line was to encourage agricultural exports 
in multiple sectors while assuring self-sufficiency. 
Cambodia wants to encourage farmers to produce more and 
higher-yeilding harvests through market-led mechanisms, he 
noted, citing the work of the Supreme National Economic 
Council (SNEC), of which he is a member. 
 
¶5.  (SBU) Going forward, Cambodia was examining a mechanism 
to more closely monitor the flow of key agricultural 
commodity exports and regulate that flow when it went above a 
defined limit, he said.  Vissoth suggested the RGC would 
support an export tax on rice if the outward flow exceeded an 
amount deemed harmful to the nation's food security (he did 
not say how the export tax would be structured). 
 
¶6.  (SBU) At the same time, Vissoth said the SNEC was 
tackling a comprehensive agricultural development policy in 
seven areas:  infrastructure, technology (including 
agricultural extension services), finance, land, marketing, 
institution building, and policy.  The goal was to support 
market-driven mechanisms, he emphasized. 
 
COMMENT 
------- 
 
¶7.  (SBU) While the RGC finance and commerce ministries agree 
in principle with (and often support) basic market 
mechanisms, on the sensitive issue of rice exports the proof 
will be in the pudding.  As so often happens with a 
cash-strapped developing country, adding a tariff is a 
tempting possibility, especially when it shows the government 
is meeting a short-term objective to store for the country a 
sufficient stock of rice.  Discounting possible 
election-season posturing through the summer (with statements 
supporting a flat export tax on all rice exports), we expect 
 
PHNOM PENH 00000418  002 OF 002 
 
 
that in the mid term the government will get it right in 
continuing to aggressively join open, world agricultural 
produce markets and thereby help to increase food production. 
 That market-led economic growth strategy has been the strong 
and incontrovertible trend in Cambodia over the last decade. 
CAMPBELL