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Kingdom’s rice sector faces lack of capital

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A truck is carrying bags of rice grains in Battambang Province. The industry insiders said a lack of working capital has remained a challenge for the Kingdom’s rice industry. Heng Chivoan

Kingdom’s rice sector faces lack of capital

A lack of working capital has remained a challenge for the Kingdom’s rice industry and has impeded rice export growth for years, industry insiders said.

The comments were made at a meeting between the state-owned Rural Development Bank (RDB) and the Cambodia Rice Federation (CRF) on Monday.

RDB CEO Kao Thach told The Post on Tuesday that among its total funds of more than $160 million, the bank has lent about 70 per cent to the rice sector, which he said was too much for the bank’s ability.

RDB’s funds “are almost exhausted to disburse more loans into the rice sector”, he said, calling on other sources – including the government – for help.

The Kingdom exported 398,586 tonnes of rice in the first nine months of this year, an increase of 2.3 per cent compared to the same period last year, a Secretariat of One Window Service for Rice Export Formality report said.

China became the leading importer of Cambodian rice after the EU imposed tariffs on rice imports from the Kingdom early this year.

The Kingdom exported 157,793 tonnes of rice to China in the first nine months of the year, 135,471 to the EU and 53,347 to the Asean region.

Cambodia Rice Federation (CRF) secretary-general Lun Yeng told The Post on Tuesday that the Kingdom’s rice sector needs more working capital to keep the market strong.

“Normally, in the early harvest season, rice exporters and millers buy paddy for stockpiles, leaving them with a lack of funds by the end of the season.

“The Cambodian rice sector needs about $200 million more in working capital,” he said.

Yeng said the total capital investment in the Kingdom’s rice sector is between $300 million and $400 million.

Heng Pheng, the CEO of Battambang province-based Thmor Korl Rice Import Export Co Ltd, said if the millers had sufficient capital, it would help curtail unofficial exports to neighbouring countries and boost exports to other markets.

“I would like to ask [RDB] and other commercial banks to provide additional loans or at least keep low-interest rates unchanged,” he said.

The price for paddy in Battambang province currently stands at 1,180 riel ($0.29) per kilogramme, compared to 1,350 riel during the same period last year, Pheng said.

“Although the price is now lower than it was last year, it is acceptable to farmers and buyers,” he said.

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