Indonesia Eyes Cambodian Rice Producers to Boost National Food Security

• 22 September 2024
• Property Focus
• 1458 Views

Indonesia’s state-owned food logistics company Bulog is exploring a plan to acquire rice producers in Cambodia to secure domestic rice supply amid declining local production. Indonesia’s rice production has faced setbacks, with national output decreasing by 1.39% to 31.10 million tons in 2023 from 31.54 million tons in 2022, according to data from Statistics Indonesia, published by Theinvestor on 05 September 2024.

Bulog CEO Bayu Krisnamurthi stated, “a technical team has been sent to Cambodia to conduct an intensive study and hold discussions with Cambodian businesses and relevant stakeholders, including neighbouring countries with business ties to Cambodia.”

He added that the evaluation is a response to President Joko Widodo’s directive to acquire Cambodian rice firms to enhance national food security and stabilize rice stocks.

Krisnamurthi highlighted several key considerations before making a final decision, including Cambodia’s comparatively smaller rice production capacity relative to major producers like Thailand and Vietnam. He also pointed out infrastructure challenges, noting the absence of essential facilities such as ports, roads, and reliable electricity, which are critical for efficient rice production. Although some infrastructure projects are planned, the current limitations could impact Bulog’s operations in Cambodia.

Furthermore, Krisnamurthi emphasised Cambodia’s strong agricultural ties with Vietnam, which is a significant competitor in the rice market and a major rice supplier to Indonesia. This could present competitive challenges for Bulog if it proceeds with the acquisition, as Vietnam’s established presence in Cambodia’s agribusiness sector could complicate market entry.

The decline is attributed to factors such as the climate crisis, reduced agricultural land, deteriorating soil conditions, and irrigation problems. In the first four months of 2023, rice production fell sharply by 17.54%, down from 22.55 million tons during the same period the previous year. To counter the shortfall, Bulog received approval to import 3.6 million tonnes of rice this year, underscoring the urgency of securing alternative sources like the potential Cambodian acquisitions.

• Agriculture and Aquaculture Project