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Logo of Phnom Penh Post newspaper Phnom Penh Post - PM tells lenders to weigh drought

Kampong Speu rice fields lay bare and dry during wet season earlier this year as the climatic effects of El Niño saw many of the Kingdom’s provinces suffer from drought.
Kampong Speu rice fields lay bare and dry during wet season earlier this year as the climatic effects of El Niño saw many of the Kingdom’s provinces suffer from drought. Victoria Mørck Madsen

PM tells lenders to weigh drought

Prime Minister Hun Sen yesterday called on lenders to go easy on farmers bedeviled by a fickle rainy season that has hurt production and incomes, though financial institutions quizzed yesterday had no plan yet in place to facilitate the request.

This year’s powerful El Niño weather pattern delayed rainfall across much of Cambodia, leading to localised rice shortages.

In a Facebook post, the prime minister asked banks and microfinance providers to “favour” people who have suffered delayed harvests by deferring their repayments, reducing their interest rates and not seizing their property as collateral if they don’t pay up on time.

“Financial institutions and banks have to work with microfinance institutions in order to find some solution for the victims,” Hun Sen wrote.

According to the Ministry of Agriculture, Forestry and Fisheries, the rainy season’s slow start affected 234,695 hectares of rice seedlings and destroyed 15,954 hectares. Much of that land was later replanted.

And while the Ministry of Water sources last month said that less than 1 per cent of the Kingdom’s crop was destroyed overall, Ian Thomas, a consultant with the Mekong River Commission, has said this is likely an underestimation.

Meanwhile, communities without sufficient capacity to replant are at risk of hunger and reduced income, according to the World Food Programme. The trouble areas fall across provinces including Preah Vihear, Banteay Meanchey, Oddar Meanchey, Prey Veng, Kampong Speu and Battambang.

Sam Vongsy, vice CEO at the Rural Development Bank, yesterday said that farmers were hurt this year not just by drought but also falling commodity prices.

“We would have thought the drought would make rice prices increase due to the lower supply, but the prices actually decreased,” he said.

According to Vongsy, Cambodia doesn’t have effective large-scale storage for rice, so many farmers have to sell their harvest quickly to traders if they want to make money, giving traders leverage to push down prices.

Making matters worse is the growing indebtedness of the average farmer, according to Vongsy.

“Indebtedness of farmers is on the rise,” he said. “It’s possible that they are borrowing too much or borrowing from one institution to repay another. It’s not a good sign.”

Mey Kalyan, senior adviser to the Supreme National Economic Council, said that extreme weather, the growing debt load, poor infrastructure, low rice prices and interest rates of up to 4 per cent per month can combine into a perfect storm for poor farmers.

Ou Sophannarith, Canadia Bank director of finance, said his bank is studying the natural disaster’s impact on farmers but hasn’t yet come up with a way to answer Hun Sen’s call. Several other banks and MFIs reached yesterday said they had no plan in place either.

The prime minister also wrote that armed forces were assigned to help families harvest, called on agricultural institutions to provide better crops and noted that crop pests must be eradicated.



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