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German loan for AKR rice farms

German development finance institution Deutsche Investitions-und Entwicklungsgesellschaft (DEG) has signed a $15 million loan with local rice miller and exporter Angkor Kasekam Ronngroeung (AKR), which will be used to expand operations to two new provinces and scale up their contract farming efforts.

DEG is a subsidiary of KfW, a German government-owned development bank, and will provide the loan without conditions that require AKR to export products to Germany. However, it will look to increase exports of milled rice, as opposed to exporting paddy, according to Herbert Baumgartner, director of DEG in Bangkok.

“We are proud that this will be the start of a long-term cooperation with AKR, by which DEG can contribute to strengthen the Cambodian rice industry,” said Baumgartner.

Of DEG’s $120million loan portfolio in Cambodia, a bulk of the funds go to microfinance institutions, with Baumgartner saying that agriculture, manufacturing and power are sectors they are looking to invest in.

“The power sector is always interesting and we are looking at projects in renewable energy that we currently have in the pipeline,” Baumgartner said.

Chieu Hieng, founder and chairman of AKR, said that the loan would be used to expand contract farming to the provinces of Kampong Chhnang and Kampong Cham.

“We also use it [the loan] to expand cultivation, which requires a lot of capital. This will also provide us with the capacity to export more,” Chieu Hieng said.

AKR currently produces 850 tonnes of rice per day – or 250,000 tonnes a year – and encompasses more than 4,000 hectares of contract farming in Kampong Speu, Takeo, Kampot, and Kandal provinces.

AKR also produces renewable energy from rice husk under its sister company Angkor Bio Cogen.

DEG’s funding is directed towards private sector companies in developing nations.

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