Gov’t loans $30M to spur rice purchases

THE government has provided $30 million in loans to rice millers since September to facilitate the purchase of paddy rice, with the head of a state-run bank saying more money was available if necessary.

The loans were issued to 38 rice millers by the state-owned Rural Development Bank (RDB) in the months since September’s rice harvest, and would all need to be paid back by April this year, according to RDB’s CEO Kao Thach.

“Demand for loans keeps increasing, however it still has not met what the government has provided,” Thach said. “We still hope the need for loans will increase by next harvest season, as capacity of storage and drying will be ready.”

Over the past two years, the RDB has focused on beefing up millers’ storage and drying capacity to improve processing and enable the staggered purchase of paddy rice, which could raise paddy rice prices and help farmers.

That effort has proved moderately successful, though some farmers have said that other issues, such as pests and a lack of access to water, have eaten into any profits that higher prices might have brought.

Rice miller Khmer Food group, which got about $10 million in loans from the RDB last year to expand drying and storage facilities, has received about $1 million this season from the bank to buy paddy rice, according to CEO Kim Savuth.

“The demand of the internat i o n a l r i c e mark e t h a s increased, and rice millers saw the opportunity for profit, so they applied for loans to buy the paddy rice,” Savuth said. He also predicted the demand for loans would increase as expanded storage and drying facilities came online in the next few months.

The emergency rice fund was launched with $27 million in September 2016, following protests from rice farmers in Battambang province over the low price of paddy rice. The government injected another $23 million into the fund in August last year.

Savuth, who is also the vice president of the Cambodia Rice Federation, said that while the RDB’s actions had provided relief for the rice sector, persistent problems – such as high logistical costs and bloated energy prices – were still threats to the industry.