The government has officially made $27 million in emergency funds, initially intended for the rice sector, available for struggling corn farmers at a 5 percent annual interest rate to help prop up low market prices and free up liquidity after farmers protested earlier this month, a state official said yesterday.

Kao Thach, CEO of the government-backed Rural Development Bank (RDB), said that distributing the funds to corn traders would ensure better prices. He added that the 5 percent interest rate was preferential compared to the 7 percent the RDB offered rice farmers.

“We finalised the interest rate at 5 percent, and traders and owners of corn silos can access the loan from now on,” he said. “The process and loan applications are the same as they were [when we provided] the rice loan package.”

He added that the loan package can only be utilised during harvest season, and the money is expected to be returned to government coffers by the end of the year. He was optimistic that the emergency package would be better received by the corn industry than by the rice sector, which only took $3.5 million.

“Traders and silo owners are happy with the fair interest rate, and they have shown their intentions to apply for loans,” he said. “While some have requested we drop the requirement that corn stockpiles are used as collateral, we cannot agree to that as we need to ensure safe returns.”

Ros Mann Muy, the owner of three corn silos in the Samlon and Malai districts of Battambang province, said that news of the loan package had already increased prices from as low as 3 baht per kilo (about $0.09) earlier this month, to 3.6 baht per kilo yesterday.

“I am looking to access the loan and accept as much as [the government] can possibly give me,” Mann Muy said. “Right now I have a shortage of money, and I cannot buy from farmers as much corn as I want to buy.”

Lao Sunchea, director of the Sala Krao Cassava Cooperative in Pailin province, said that since the government announced its help, the price of corn has increased to 3.8 baht per kilo in his province. Still, he believes a lack of dry warehouses and silos for corn storage remains a considerable challenge that traders can’t immediately overcome.

“Right now we have the challenge of a shortage of storage locations,” he said. “Next year, traders should be able to access the loan from the government in order to expand the capacity of storage and dry warehouses. Then I believe the corn price would increase more than it already has.”