The state-owned Rural Development Bank (RDB) distributed $50 million in loans to private rice millers last year to sustain the paddy market for farmers, according to RDB CEO Kao Thach.
Thach told The Post on Thursday that despite many provinces in the Kingdom facing drought, the demand for loans remains high.
“Our loans have already been released to rice millers. Since we have better options compared to commercial banks, we need to look for more funds to meet the needs of the rice industry."
“Even though some areas are faced with drought, demand for loans is still high. There are still other areas with the potential for rice production,” he said.
Kao Thach said RDB will request a further $50 million from the Ministry of Economy and Finance to meet the industry’s demand.
The government’s decision to disburse loans directly through RDB sidestepped the Cambodia Rice Federation – the industry body which has lobbied the government since March 2016 to provide emergency funds to its members.
Cambodia Rice Federation vice-president Hun Lak said the amount was based on necessity as its current loan balance is insufficient for the rice industry to sustain itself.
“We still need more financial support to boost the rice industry. Based on realistic figures, the loans provided by the government are merely equivalent to approximately 10 per cent of the rice industry,” he said.
Lak said the entire industry currently spends $400 million per annum to purchase 1.5 million tonnes of paddy to yield some 600,000 tonnes just for rice exports.
Supporting the industry
In September 2016, the government transferred its share of a $27 million package to RDB so the bank could disburse loans to millers, allowing them to purchase paddy from farmers.
Another $23 million was injected by the government in August last year, bringing the total to $50 million, aimed at propping up the struggling industry.
When asked if the loan contribution keeps paddy rice prices fair for farmers, Lak said it is important to have government financial assistance and other forms of support to reduce production costs.
“We need to collect paddy rice stock and compete with the [international] market. Paddy price fluctuations are based on the flow of the international market – RDB funds alone will not be enough to sustain paddy prices,” he said.
Phuor Sokleang, marketing manager at Phour Kokky, a rice miller and exporter which has borrowed $2 million from RDB, said loans are very important to the rice industry and paddy collection.
“It is very important and helpful, not only for me but for the whole rice industry. What I’ve received is still not enough to buy paddy . . . we still need more funds,” she said.