Thai rice millers are lining up to build mills in Cambodia to cash in on imminent regional economic integration, with experts warning Cambodian rice is likely to flood Thailand.
A rice mill in Phichit province was found to have illegally imported 50,000 tonnes of rice from Cambodia amid the rice-pledging scheme scandal.
An industry source said several millers from Thailand's central and northeastern regions are preparing to set up rice mills in Cambodia, mainly for export purposes, citing increasing production and relatively lower production costs in the neighbouring nation.
More importantly, the quality of Cambodian rice, especially Cambodian jasmine rice — phka malis in Khmer — is becoming more widely recognised in the world market.
Cambodian jasmine rice won the world's best rice award in 2013 after it won for the first time at the competition in Bali in 2012.
Cambodia's local operators have limited experience in marketing and exporting rice, while there is a dearth of sophisticated rice mills in the country.
This offers room for Thai and foreign exporters and millers to expand their investment, particularly to capitalise on Cambodia's rice policy that aims to raise exports to 1 million tonnes next year.
Cambodia is now capable of producing 9-10 million tonnes of paddy a year or 5 million tonnes of milled rice but exported only 370,000 tonnes of milled rice last year.
Cambodia's total rice consumption is estimated at 2.1 million tonnes for a population of 15 million.
The source said Cambodia's promising rice market has drawn several foreign firms to set up large rice mills including Taiwa Seiki Corporation from Japan and Asia Golden Rice and CP Intertrade in Thailand.
Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said a key area of concern after the installation of the Asean Economic Community late next year is an influx of Cambodian aromatic rice.
"Thai rice will be hard hit if Cambodian fragrant rice gains popularity among Thai consumers," he warned.
"It's essential that Thailand steps up efforts to develop and upgrade its rice varieties after the government's rice-pledging scheme has undermined the Thai rice market over the last three years."
Mr Chookiat said that over the last few years, Thai Hom Mali fragrant rice has declined in quality due partially to the rice-pledging scheme, which offers relatively higher prices than the market prices, leading most farmers to ignore improving the quality of their grains.
He also warned that some farmers might mix cheaper Pathum fragrant rice varieties with more expensive Hom Mali rice, then pass off the rice as 100% Hom Mali.
This unscrupulous practice might lead many consumers to think the aroma of Thai Hom Mali rice has diminished, Mr Chookiat added.