With the rice harvest season beginning soon, state-owned Rural Development Bank (RDB) has started disbursing loans to local rice millers under its emergency fund, according to a high-ranking official.
The loans, disbursed by the government through RDB, are used by rice millers to purchase paddy rice from local farmers. This year, the fund will consist of $50 million, the same amount than last year, Kao Thach, RDB director-general, told Khmer Times yesterday.
“We have started disbursing the emergency loans to rice millers. This year, we are providing a total of $50 million in loans,” Mr Thach said. He did not reveal the percentage of the money that has already been disbursed.
The loans requested by millers range from $300,000 to $1 million, Mr Thach noted, adding that the companies will use it to buy the rice, process, and export it.
Most loan applicants are medium-sized rice millers located in the country’s main rice-producing areas – Battambang, Banteay Meanchey, Pursat, Prey Veng, and Takeo.
The emergency fund was launched in 2017 to enhance rice millers’ access to credit during the harvest season. The initiative was created after a ‘paddy rice crisis’ in 2016, when farmers were unable to find buyers for their rice because millers were lacking the liquidity to purchase the commodity and build the necessary facilities to store it.
RDB’s loans have a maturity of 12 months and a 5 percent interest rate per year.
Although the amount of money made available is small compared to the amount of rice that will be harvested, Mr Thach said the fund plays a critical role curbing the flow of paddy rice outside Cambodia.
“It enables rice millers to buy paddy rice from farmers during the harvest season, which reduces the amount of good paddy rice that informally exists the country and goes to neighboring countries,” Mr Thach said.
RDB also has a $30-million fund for rice millers in the main rice-producing provinces that want to build or upgrade storage facilities like warehouses and silos.
The Cambodia Rice Federation recently said that it aims to achieve 1 million tonnes in exports a year within the next three years.
During the first half of the year, Cambodia exported 281,538 tonnes of milled rice, an increase of 3.7 percent compared to the same period last year.