In response to the Cashew Nut Association’s (CAC) request for relaxed loan terms, the Agricultural and Rural Development Bank (ARDB) plans to earmark $30 million in 2024 for cashew nut purchases.

ARDB spokesperson Chan Seiha clarified on February 21 that the figure is not a new budget allocation, but rather a continuation from last year’s package.

He said the fund was intended not solely for cashew but also for rice and other industrial crops. 

“We have been utilising the [funds] since last year. The budget was intended to benefit the general good, not limited to just the cashew crop or its harvest. This means that farmers or enterprise owners can apply for loans for activities like cultivation and harvesting, covering crops such as rice and cashews,” he explained.

Seiha noted that last year, the bank’s general department promoted a low-interest loan for farmers, associations and cashew processing ventures to enhance domestic production.

CAC president Uon Silot expressed concerns over the complexity of the terms, causing hesitation among members to borrow from the bank. 

“Our members had complained about the slow processing of loans, which delays their ability to purchase raw materials for processing. We are seeking a relaxation of the terms that currently hinder access to these loans, as some conditions are excessively stringent for enterprises,” he stated.

“I have requested ARDB and SME Bank to expedite the release of funds and ease certain terms, enabling domestic enterprises to secure timely loans for harvest, especially now as the price of wet cashew nuts is declining. Access to working capital can aid domestic investors in stabilising the price of domestic cashew,” he added.

Seiha noted that the bank’s loan provision process also involves assessing the borrowers’ potential for repayment.

He explained that in instances where entrepreneurs lacked collateral, the bank could not sanction loans. 

“It’s not that the bank wants to create difficulties or is reluctant to lend, but we need to evaluate the feasibility of granting loans, considering the borrowers’ repayment capacity and collateral availability. Given that cashews are the second most important crop after rice, collateral is necessary for loans,” he explained.

“This means that entrepreneurs need to invest some capital to acquire collateral for loans and pledge assets as loan security. The bank can then offer them up to 70% of the collateral’s value,” he added.

Addressing a forum on the 2024 Law on Financial Management on February 19, Ministry of Economy and Finance secretary of state Phan Phalla said that the government, through ARDB and SME Bank, had earmarked funds to promote cashew production and increase processed exports to international markets. 

“To date, ARDB has provided a $30 million loan to the cashew sector and is ready to offer another $30 million for this season’s purchases,” he added.

He noted that SME Bank had received approximately $100 million from the government, aimed at supporting small and medium-sized enterprises (SMEs) in overcoming challenges in the cashew production chain and boosting the country’s processing of the commodity.

ARDB and SME Bank apply a 5.5% annual interest rate on loans, which equates to 0.41% per month, as per the ministry.