The government is preparing short-term emergency loans for rice millers to bolster paddy prices for farmers in the upcoming harvest season.
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Local officials, rice millers, and provincial governors in Battambang and Banteay Meanchey provinces met this week to discuss the plan.
Rice millers are now preparing relevant documents for the loans, according to Kao Thach, president of the government-backed Rural Development Bank.
“I have held talks with rice millers, local officials and provincial governors to inform them about the availability of emergency loans from the government, which will be disbursed to rice millers to make sure they have funds to buy paddy in the upcoming rice harvest season,” Mr Thach said yesterday. “This will boost purchases of paddy from farmers.”
The RDB wants rice millers to prepare documents including warehouse and rice inventories, plus sales contracts, to act as collateral for any loan, Mr Thach said.
The amount available for emergency loans this year will be the same as last year and the interest rate will be unchanged, he added.
Last year, the government launched its first one-year emergency loan offer through the RDB to help rice millers buy paddy rice from farmers.
The fund was worth about $27 million with an interest rate of 7 percent per annum.
Rice sector representatives requested the loans from government, warning the country’s rice sector would collapse if they did not have enough funds to buy paddy.
Mr Thach said the amount paid out of the emergency loan fund will be adjusted to market demand.
“At the moment, the emergency loan package this year will be the same as last year and the interest rate will be the same.
If demand is more than that, we may increase what is available according to the situation. The interest rate will be the same, but if possible, we will pull it down a bit more than last year,” he said.
Mr Thach suggested the amount of loans disbursed this year could increase, since rice millers have been given more time to apply than last year.
Last year, five rice millers applied for nearly $5 million worth of loans from RDB. They had all paid the entirety back by its maturity date in May.
Phou Poy, president of Baitong Rice Mill in Battambang province, said that provision of emergency loans from RDB is important for sustaining the business of rice millers.
“Rice millers who are interested in getting loans to buy paddy should prepare now,” Mr Poy said.
Demand for loans will likely increase this year, Mr Poy said, but rice millers are still hoping for a cut in the interest rate.
Responding to that concern, Mr Thach said he will raise the issue with RDB’s board council.
Meanwhile, rice farmers can expect some kind of short respite due to current high prices caused by a depletion of rice stockpiles in neighbouring Thailand.
Hun Lak, vice president of the Cambodia Rice Federation, said rice prices had gone up by about 17 percent with the cost price of white rice at $425 per tonne and jasmine rice fetching between $690 to $700 per tonne.
“Cambodia can be expected to benefit from this price rise,” said Mr Lak.
Song Saran, CEO of Amru Rice, said that rice prices are high now due to demand from the Middle East, Bangladesh and the Philippines.
“The Thai stockpile is almost finished so there is a global shortage,” said Mr Saran.
“Cambodia will benefit because we have different markets, compared with Thailand and Vietnam.
“Our main markets are China and Europe and we hope this coming year we can reach out to the Middle East and the US,” he said.