The Rural Development Bank (RDB), a state-own institution, plans to request an additional $50 million to beef up the government-led emergency fund for the agriculture sector, according to a bank representative.
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Kao Thach, RDB’s CEO, told Khmer Times the bank will ask the government to increase the funding available to rice millers that need cash to buy paddy rice collected in the upcoming harvest season, which begins next month.
Mr Thach said that in 2016, the year the emergency fund was started, $27 million were disbursed. Last year, the fund was expanded to $50 million, but only $36 million were dispensed.
The loans are part of a lending mechanism initiated by the government in 2016 to help millers who are short on cash buy paddy rice from farmers and keep the price of the commodity stable.
“I plan to ask the government to double the amount of money currently available in loans for the agriculture sector as demand is high,” Mr Thach said, adding that his petition will be accepted if the national budget allows it.
RDB decided to request the funds after the number of foreign buyers interested in Cambodian paddy rice fell short of expectations.
“We realised that there were no Vietnamese buyers this year, which means Cambodian rice millers need to absorb all production.
“We are concerned that the current $50 million in the emergency fund will be insufficient,” he said.
Mr Thach called on rice millers across the country to take advantage of the fund and file applications for a loan as soon as possible. He said demand for lending this year is expected to increase following the construction of several rice storage facilities throughout the year.
“This season we have new silos and warehouses which means storage capacity is much higher,” said Mr Thach.
In addition, this year, the animal husbandry and aquaculture sectors will also be included in the lending scheme. Farmers that employ organic methods to grow vegetables will also have access to the loans, he said.
Phou Puy, chairman of Baitang, told Khmer Times the current price of paddy rice is favourable for farmers and rice millers. He said he plans to buy 200,000-300,000 tonnes of the crop from farmers in Battambang, Banteay Meanchey and Pursat provinces.
Mr Puy said paddy rice now sells for $0.28 per kilogram, including the cost of transporting the produce to the warehouse.
He said the year is shaping up to be propitious for the rice sector, with the industry enjoying plenty of storage capacity, high prices, and sufficient demand from foreign buyers.
“Since we plan to purchase more paddy rice, we will apply for a loan with RDB. However, we are not sure yet how much we will ask for. It depends on how much paddy rice is available,” Mr Puy said.
Song Saran, CEO of Amru Rice, a firm that received a $5-million loan last year to build a silo and a warehouse in Kampong Thom province, told Khmer Times recently that he also will apply for a new loan to buy 100,000 tonnes of paddy rice.
He said the emergency loan programme has proven to be a very useful scheme for millers around the country.
According to RDB’s annual report, in 2017 RDB provided a total of $122 million in loans and advances, an increase of 71 percent compared to 2016. 61.2 percent went to the rice sector, with 14.5 taken out by businesses in other agricultural areas like rubber, maize, cassava, pepper, coffee and sugarcane.