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Logo of Phnom Penh Post newspaper Phnom Penh Post - Rice millers group receives $20 million loan from bank

Rice millers group receives $20 million loan from bank

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14_story1.jpg

Government hopes the funds will allow producers to increase their stocks of unprocessed rice, which would cut rice smuggling to neighbouring Vietnam

Photo by: TRACEY SHELTON

The government hopes to add value to the rice sector by encouraging more in-country rice processing, rather than exporting raw goods.

THE Rural Development Bank has offered a US$20 million loan to Cambodia's largest rice-milling association in an effort to cut the flow of unmilled rice to neighbouring countries during next month's harvest season, bank officials say.

Sun Kunthor, director of the RDB, said the loan, which the millers association says constitutes only 20 percent of needed funds, will allow the association to purchase more local rice and curtail smuggling, particularly to Vietnamese traders.

During the harvest season, rice farmers become increasingly susceptible to offers from Vietnamese traders who offer better prices for unprocessed paddy, said Cheing Am, governor of Svay Rieng province.

"We hope the loan, which has a low six percent interest rate, will encourage local rice millers to keep more of the rice harvest in Cambodia instead of allowing it to be traded across the border," he said.

Cambodia has about 2.5 million hectares of rice paddy, with an expected annual yield of about seven million tonnes in 2008, say government estimates.

In 2007, Cambodian farmers produced 6.27 million tonnes of rice, about 1.5 million tonnes of which was exported by local border farmers to Vietnam and Thailand.

Phou Puy, president of Cambodia's Rice Miller Association, welcomed the news despite the funding shortfall.

"We need about $100 million to keep as much as 500,000 tonnes of unprocessed rice in the Kingdom.

"The $20 million loan will only buy about 100,000 tonnes of rice. This is small compared to the amount being exported. However, we consider this an important loan as it will help reduce rice husk exports and increase local stocks," he said.

Rice husks

Rice husks are an emerging value-added product used in the manufacturing of food products and fertilisers, a sector that he said was a major employer in rural Cambodia.

We need about $100 million to keep as much as 500,000 tonnes ... in the kingdom.”

The loan announcement follows earlier efforts to bolster local rice stores. In 2007, the RDB lent $10 million to the millers association to stabilise the rice market and improve productivity for Cambodia's rice millers, Phou Puy said.
Yang Saing Koma, director of Cambodia's Center for Agricultural Development and Studies (CEDAC), said the government should consider granting loans to the Kingdom's farming associations to purchase additional rice stores.

"I think the loan will help keep local rice prices stable," he said, adding that the government should monitor funds to ensure they are being used properly.

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