Prime Minister Hun Sen has instructed the state-owned Rural Development Bank to finance a release of rice stock in order to quell worries over rapidly climbing prices.

Sun Kunthor, general director of Rural Development Bank, said yesterday that Hun Sen asked the bank on Friday to work closely with the Cambodian Rice Millers Association in supplying cheap rice to the market. Severe flooding in many of the Kingdom’s rice-producing regions has been blamed for the rising price.

The price of low-quality rice stood at about US$670 per tonne last week, up from a reported $570 per tonne in August. Financing from the Rural Development Bank brought the price down yesterday to about $560 per tonne, according to government-run stores in Phnom Penh.

High-quality rice – which is mainly exported – still sold at about $1,000 per tonne yesterday, up from a reported $860 in August.

The government will subsidies the rice until prices fall to pre-flood levels, Sun Kunthor said.

“We are trying to curb the price and prioritize domestic stability. The government rice sales will last until the price goes down. It is a temporary method of prevention,” he said.

Rice vendors and millers reported rice shortages last week. Soy Vannak, a 56-year-old vender who sells rice in front of Phnom Penh Station, said on Wednesday that she simply could not buy rice from a mill in Battambang.”

“I called [the miller] but they didn’t answer and when I got through I pleaded with them to no avail,” she said.

Seang Fo, a rice millers in Battambang, claimed that most of the rice had been sold to Thailand and Vietnam.

Yan Saing Koma, President of Cambodian Center for the Study and Development of Agriculture supported the government move to lower the price of rice during a time of emergency but warned of distorting supply signals.

“This type of intervention must also be cautious. If done too strongly it can affect the free market mechanism,” Yan Saing Koma said. “But because this is food I think it is right to stop the price from increasing so much.”

He added that the government should avoid running low on domestic demand during a time when the future supply is jeopardised by floods.

Floods have destroyed about 5.2 per cent of the country’s paddy fields and another 13 per cent could vanish if water levels do not recede, the National Committee for Disaster Management said last week.

As of last week, the committee estimated more than $100 million in flood damages.