Recent days, there are many articles and discussion about the high price of rice. As said in an article by Mr. Morn Vutha in his blog www.vuthasurf.com the price of rice has been increasing 20%. To my understanding it is the high inflation which the government shall take firm actions.

The high price of rice is due to main reasons.

1. There is increase in demand of rice in the world. Rice traders need to buy rice from Cambodia in order to supply rice market in countries where there are needs. The increase in demand is due to population growth, wars and natural disaster in some countries.

2. The supply of rice does not increase to the levels of demand. Cambodia does not produce high yield while land rice field is cutting down from days to days because land farmers had sold their lands and some farmers do not cultivate. Thus, we can see that rice production may not increase, leading to decrease in rice supply/production.

3. There is fears among Cambodians. When they know that rice price will be high, then they think they should buy rice and store at home. If the rice price increases, at least they have rice stored at home. This situation leads to higher demand of rice. The higher demand would encourage sellers/suppliers to increase rice price.

4. There is fears among some Cambodians regarding political stability while Cambodia is in preparation stage of national election July 2008. There will be war or unstable situation and thus buying rice and store rice at home is a good option. The fear comes from experiences Cambodia had in the past. The situation of Lon Nol regime which was seized of power by Khmer Rouge, the fighting warning 1993 after 1993 election, the fighting in 1997 and instability after election of 1998 and 2003 are examples of fears.

5. Rice traders may take this opportunity to get maximum profits as they can do. They may say something which cause concerns of the poor and sell rice in high price.

6. Some traders may buy a big amount of rice, store and sell rice when the rice price increases. This is easily done according the increase in price of other commodities such fuel, land, and others. The higher fuel price makes other goods, including rice, increases. The higher income of farmers who get money from selling land would encourage more spending. The more spending is higher demand and the higher the demand, the higher price.

The above points as I mentioned may give some ideas for discussion and inputs to find solutions. I have some, but it shall need more information and analysis.