The Study On Rice Trade Between Cambodia And The Greater Mekong Subregion: China, Thailand And Vietnam

This study is an analysis of the determinants of rice trade between Cambodia and the Greater Mekong Subregion(GMS) countries: China, Thailand and Vietnam. Beginning with the country profiles of the GMS members and a review of the literature, the theoretical underpinning of the model is then demonstrated. This confirms that the gravity trade model can be derived from several trade theories. This model is then used to assess the GMS’s trade pattern. The results of the study based on a gravity trade model and time series data from 2000 to 2013 indicate that economic size, market size, exchange rate and distance of Cambodia and the GMS countries play important role in rice trade between Cambodia and these GMS countries. History and other dummies such as adjacent, colonial ties, trading blocs, however, do not seem to lead the rice trade. The results of gravity model are also applied to calculate the rice trade potential between Cambodia and the GMS countries. It shows that Cambodia’s rice trade with the GMS countries has considerable room for growth.This study also shows challenges and opportunities for rice trade in Cambodia. The challenges of rice trade in Cambodia are better extension services, they are necessary for Cambodian farmers for improving their yields and profitability. A greater access to institutional credit was also necessary, particularly for rice trade in Cambodia. Significant investments in infrastructure are required to grant for a better access to markets and information. The study also points out that the lack of adequate value-addition or quality processing often acted as an impediment to getting better prices in the export markets.The first emerging opportunity is the continual increase in international price of rice, which has risen over the last ten years at an average rate of 5 to 10 percent every year. Given the increasing global and regional demand for rice, its price is likely to rise further.A second emerging opportunity is export development and market diversification. Rice is among the 19 priority exports included in Cambodia. Although its current export is limited, rice is considered to have high export potential due to high world market demand and good domestic supply capacity. Cambodia’s rice exports receive tariff preferences from ASEAN, the EU and China through either free trade agreements or the Generalized System of Preferences.The third opportunity is expansion of value added. Since population increasing from day to day and need more food to eat and rice’s also can be processed into a variety of products, the industry could be localized to attract investment into food processing and animal feed. Growth of these demands would have big implications for rice production and farmers’ livelihoods.