The Ministry of Economy and Finance yesterday launched a new $2-million fund to increase small farmers’ access to credit.
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The money will be made available to support the production of agricultural goods other than rice, and will be disbursed by the Rural Development Bank (RBD).
The move follows similar initiatives by the government in recent years. There are two other special funds to support the local agriculture sector. One, consisting of $50 million, seeks to help rice millers buy paddy rice from farmers. The second makes $15 million available for rice millers to build silos and warehouses to store rice in the provinces of Battambang, Kampong Thom, Prey Veng and Takeo.
According to Kao Thach, director of RBD, the minimum amount that can be borrowed through the new fund is $20,000, with farmers being able to apply for a maximum of $100,000.
The money will not be accessible to individual farmers, but only to agricultural communities, said Mr Thach, who explained that if farmers want to take out a loan, they will have to join an existing agricultural community or form a new one.
“Right now, we are just at the testing phase of the programme. Our hope is that the fund will help small farmers boost production of healthy vegetables and meat,” he said, adding that this is the first time that this type of funding has been made available to small farmers that specialise on crops other than rice.
He said interest rates will be lower than those of loans offered by commercial banks and microfinance institutions, and pointed out that RBD will help borrowers find buyers for their products.
Mr Thach cited concerns over the safety of imported vegetables as one of the main motivations to establish the new fund. “The programme seeks to capitalise on market demands for healthy food. People now are thinking seriously about their health.”
Song Saran, CEO of Amru Rice, a firm currently working with more than 50 agricultural communities through contract farming schemes, said the fund is a sound initiative to boost local vegetable and meat production.
“It is a good move and will help farmers increase production and reduce our reliance on imported goods,” he said. “It will not only boost farmers’ livelihoods; it will also help increase production of vegetables and meat.”
RBD’s Mr Thach said that under the new programme, maturity dates will vary depending on the purpose of the loan – loans used for longer term investment will need to be repaid over a 5-year period, while those used to increase working capital will have a maturity of just one year.
Last week, the German Cooperative and Raiffeisen Confederation (DGRV), a federation of German cooperatives, pledged to continue its support of local agricultural cooperatives for three more years. DGRV’s work focuses on boosting and developing agricultural communities as well as establishing contract farming schemes that ensure the prices of agricultural commodities remain stable.