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Farmers request ARDB loosen loan criteria, drop rates

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A farmer sows rice seed in his field in 2020. Heng Chivoan

Farmers request ARDB loosen loan criteria, drop rates

Agricultural cooperatives have asked the state-owned Agricultural and Rural Development Bank (ARDB) to ease some of its lending criteria, with some saying they have been unable to access loans from the institution.

Pat Savoeun, the leader of O’Saray Cooperative in O’Saray commune of Takeo province’s Tram Kak district, said that over the years the co-op has taken out loans with high interest rates from commercial banks. He explained that his co-op has not yet been able to obtain loans from the ARDB because of their “cumbersome” requirements for documents and collateral that they cannot fulfill.

“We would like to apply for loans without collateral, but we are prepared for different conditions: we will make a clear production plan and a contract with our local mill. We would like the ARDB to consider these conditions,” he added.

He said the lack of capital is a major issue for the co-op, especially during the harvest season, as its members need to immediately pay for their expenses.

Din Sakhorn, the president of Trapeang Russey Cooperative in Trapeang Russey commune of Kampong Thom province’s Kampong Svay district, said that each rice harvest season, the co-op faces a lack of capital to buy paddy from members. Some of the members are eligible for loans, while others are not.

He added that the reason loans are not more widely accessible is because in the past, some co-ops had run into financial trouble. Each year, the co-op requires about $50,000 to buy paddy from farmers.

“It’s very difficult to raise capital as our committee has used land titles as guarantees for the ARDB, while at the same time borrowing from our members who have resources during the harvest season. The interest rate that our members borrow at is eight per cent, whereas the local mill can obtain loans at six per cent. We want the same interest rate as the mill so we can buy paddy rice from our members,” he continued.

Sakhorn noted that his co-op has 40 members who produced 170 tonnes of Phka Rumduol rice from 50ha of land to supply the provincial market.

Kao Thach, director-general of the ARDB, said the bank is preparing a package of loans for those who need credit for rice seed production or working capital to purchase rice seed. Any co-ops that are interested should contact the bank, as the institution does not have stringent requirements that could be barriers to receiving the loans.

“I have heard comments from farmers about difficulties in obtaining capital, but most of them were applying for non-ARDB funding, such as ADB projects or World Bank projects,” he added.

“[Other financial] institutions may have different principles and requirements to the ARDB. We are able to supply loans smoothly and quickly,” he continued.

On February 19, Thach visited the Trapeang Russey co-op to gain a clearer understanding about the farmer’s complaints, and to encourage them to try modern farming techniques that meet market demand, in line with government policy.


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