Half of public funds disbursed last year in the form of loans to aid the ailing rice sector has been repaid, according to a representative of the Rural Development Bank.
Repayment of outstanding loans will likely be suspended until the harvest season comes to an end.
In October, the government expanded its emergency fund for the sector to $50 million, with final payments set for May.
Only $36 out of the available $50 million were disbursed, and half of the loans taken out have already been repaid, said Kao Thach, chief executive at RDB.
“About half of the money borrowed has been repaid. The millers who have not fulfill their obligation yet have asked to postpone payments for one or two months as farmers have not finished harvesting,” he said.
“If we allow them to delay payments, RDB will use own its own funds to pay the government by the agreed date,” Mr Thach said. “We made this decision because we want to help businesses in the sector.”
With many lacking the infrastructure needed to store large amounts of produce, millers did not find it necessary to take out more loans, leaving half of money in the emergency fund unused, Mr Thach explained.
In 2016, the government launched its emergency fund, which aims to help rice millers purchase paddy rice from farmers. The money is available in the form of loans disbursed by RBD. For the period 2016-2017, $27 million were made available.
Hun Lak, vice president of Cambodia Rice Federation, said the reason no more millers took advantage of the emergency fund this year is that the supply of paddy rice in the country is low.
“Officially, paddy rice production in 2017 equalled 10 million tonnes, but a lot of it didn’t stay in the country and was sent abroad by unregistered exporters,” he said. “If the supply of paddy rice is low, rice millers are not likely to take loans as they want to avoid paying the interest rate. This is why the fund was not exhausted.”
However, demand for funding may be higher this year, particularly as a number of storage facilities come online in key rice-producing provinces.
“We hope all the money in the fund will be disbursed this year. If more is needed, the government will make it available,” he said.
Last year, the government provided $30 million in loans for building silos and warehouses for storage purposes. The new facilities will be finished in June in Battambang, Kampong Thom, Prey Veng and Takeo.
The new silos and warehouses will halt the flow of paddy rice out of the country, Mr Lak said. “When the new storage facilities come online, less paddy rice will be sent out of the country by informal exporters.”