The Cambodia Rice Federation (CRF) has asked the state-owned Rural Development Bank (RDB) to provide $200 million in emergency loans to buy paddy from farmers during the ongoing post-monsoon harvest season as falling prices threaten their livelihoods.
CRF vice-president Chan Sokheang told The Post on Tuesday that it had submitted a letter to the RDB last week proposing that it forward the letter to Minister of Economy and Finance Aun Pornmoniroth.
He said paddy exports from markets such as China and Europe, and fewer commercial bank loans to the agricultural sector have contributed to a decrease in working capital for rice millers and exporters.
The price of paddy has dropped to between 980 and 1,030 riel ($0.24 and $0.26) per kilogramme – depending on the area. However, the quality of the paddy remains high, Sokheang said.
“During this month last year, large countries in Europe and China ordered milled rice from us, but they have not placed any orders to date.
“Some commercial banks have reduced their agricultural loans by 50 per cent, and up to 60 per cent, since the EU decided to impose tariffs on rice imports from Cambodia. We need to supplement this capital shortfall,” he said.
RDB CEO Kao Thach told The Post on Tuesday that capital shortage in the rice sector is between $200 million and $250 million. To help remedy the issue, he has called on commercial banks to lend more to the sector.
“I am trying to mobilise more capital investment from other partners, and have already submitted a number of proposals to the government asking for more capital investment to help the sector,” he said.
Thach said an RDB study said rice millers and exporters have disbursed about $350 million from bank loans and direct capital to purchase paddy.
“The [sector] has been facing a capital shortfall since October, and will continue to do so until January next year because the payment for orders will not circulate on time.”
CRF secretary-general Lun Yeng told The Post last week that total capital investment in the Kingdom’s rice sector is between $300 million and $400 million.
“Normally, in the early harvest season, rice exporters and millers buy paddy for stockpiles, leaving them with a lack of funds by the end of the season,” he said.
Heng Pheng, the CEO of Thmor Korl Rice Import Export Co Ltd, a Battambang-based rice exporter, said prices in Battambang province appeared to have dropped slightly compared to the beginning of last year’s post-monsoon harvest season.
He said the price of paddy he bought from the farmers was worth around 1.17 million riel per tonne, compared to 1.28 million riel last year for the same quantity.