While the Cambodian government and the Rural Development Bank (RDB) released $27 million in an effort to hedge against falling rice prices, lending institutions are also showing support for the struggling sector.

The large funding package was immediately followed by a large protest from Battambang farmers, which involved rice dumping along National Road 5 last week.

The reason is that their early-season fragrance rice was priced at 700 riel per kilogram, which was lower than the production price.

Sok Puthyvuth, president of the Cambodia Rice Federation (CRF) told Post Supplement, “We have sent a proposal to the government to create a ‘credit committee focusing on rice’ as I’ve talked with the National Bank of Cambodia and the Bank Association which includes major banks such as Acleda, ANZ, Canadia, Rural Development Bank (RDB), etc. to participate in monitoring this fund, and to make sure it is delivered smoothly to the farmers.”

Puthyvuth said once the committee agrees on the matter, “We will reach a phase of delivery to make sure the fund is divided into each region accordingly.”

When asked if the rice price crisis happening now is caused by the decrease of Cambodia’s rice export, he answered, “Actually, CRF needs to work a lot of the [foreign] market. Currently, we are trying to work on our inner practices to make sure it is tidy, and qualified which would lead to better confidence and cooperation. This is of utmost importance. We cannot export if our inner work is not good.”

A 51-year-old farmer, Soeung Sida, living in Kampong Preang commune in Battambang province, said, “After the help from our provincial authorities following the protest, Sen Kro-ob Rice is now sold for 750 riels. Merchants buying from us are mostly from Takeo province, Svay Rieng province, or Prey Veng province.”

Before the protest, fragrant rice had been sold for only 500 to 600 riels per kilograms. Normal rice had been priced for even lower than that. “The increase of fragrant rice to 750 riels per kilogram is only equal to the production cost. We can sell it at that price,” said Sida.

While his family has 12 hectares of rice field, which produce about four to five tonnes of rice per hectare, Sida claimed that “our family uses the least money to produce. We only spend about 2 million riel per hectare. We do most of the work ourselves. Other farmers in other villages spend about 2.5 to 3 million riel per hectare.”

Bun Mony, former president of the Cambodian Microfinance Association (CMA) and CEO of Sathapana PLC, which had been Sathapana Microfinance Limited until the end of 2015, showed his approval for the $27 million in aid from the government.

“Actually, we’ve been expecting an agricultural product price crisis for quite a long time if we all do not recognize our flaws such as the fact that the government or parties concerned should invest more in drying kilns, storage spaces, rice millers, processing plants and markets, etc.”

Concerning the demand for reconsideration, decrease, or abolishment of interest rates, Munny explained, “For Sathapana’s clients, we are monitoring this decrease in rice price to find out who is directly affected, and the level of the effect. We may have some solutions for them. However, we do not permit anyone to use this opportunity for fraud.”

“Our [microfinance institution] perception is that we all want our clients to be successful. That way, the lending financial institutions can also be successful,” said Munny. “We never wish to confiscate [anything from] our clients because that is not the right investment practice.”

Chea Chanto, governor of the National Bank of Cambodia, said it was the government’s duty to encourage banking organisations to assist the rice sector.

“As a mediator bank, we encourage commercial banks, and micro-financial institutions to help and facilitate loans,” he said.