RDB loans $30M to boost rice purchases

Cheng Sokhorng | Publication date 10 January 2018 | 19:07 ICT

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A woman harvests her rice crop at a paddy field in Phnom Penh’s Dangkor district in 2016. Heng Chivoan

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) following September’s rice harvest, and would 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 lack of access to water and pests, have eaten into any profits that higher prices might have brought.

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

“The demand of the international rice market has 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 the expanded storage and drying facilities came online in the coming months.

The emergency rice fund was launched with $27 million in September 2016, following large protests from rice farmers in Battambang province. The government injected another $23 million in August last year.

Savuth, who is also the vice-president of the Cambodia Rice Federation, said that while the ADB’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.