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MFI looks to provide loans to the struggling pepper sector

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A farmer holds fresh peppercorns after they were harvested from a plantation in Ratanakkiri province. Pha Lina

MFI looks to provide loans to the struggling pepper sector

PRASAC, the Kingdom’s largest microfinance institution (MFI), has launched a new loan program for pepper farmers to help the industry get back on its feet after plunging prices all but decimated it.

However, the farmers are cautious in welcoming the news, coming as it does just before the planting season.

They expressed worry that access to such loans would come with “heavy” terms and may only be applicable to larger plantations.

Prasac Vice President Say Sony said on Wednesday that the MFI views pepper production as a good investment in the long run, and that his institution is still willing to provide loans to farmers for the coming growing season.

“We hope that the price of pepper will be better in the future, and we still support farmers growing the crop, even though it is at a higher risk since its price stumbled. “However, farmers won’t rely on the crop alone as a source of revenue for repayment,” Sony said.

He said that since pepper is an agricultural product, loan terms, including the interest rate, would be the same as other crops. The outstanding loans to pepper plantations currently stand at $18.5 million, he said.

Over the past few years, farmers across the Kingdom switched from planting crops like cassava and rubber to developing pepper plantations because of its high prices.

As a result, the number of plantations, and thus the supply of pepper, had increased significantly, leading to the gradual decline in price.

Data from the Ministry of Agriculture says the total cultivated area of pepper nationwide was 7,471 hectares so far this year, up 12 percent from 6,678 hectares in mid-2017.

Tbong Khmum province, an eastern province that shares a border with Vietnam, contains nearly half of the country’s pepper plantations.

Yin Sopha, executive director of the Dar-Memot Pepper Agricultural Development Cooperative in Tbong Khmum, which comprises of 288 farmers, said on Wednesday that pepper prices had fallen to approximately 11,000 riel ($2.75) per kilogram. It was between 15,000 and 20,000 riel last year.

According to Sopha, the drop in price has caused lending institutions to stop providing loans to farmers in view of the high risks.

“Farmers in my community really need more funds to increase production in hopes of getting a return on our investment in the future. “But I have little hope as financial institutions may not offer loans as they did before, or they might offer it to other farmers in provinces that did not suffer like the farmers in mine,” he said.

The director of the Industrial Crops Department at Ministry of Agriculture Forestry and Fisheries, Khan Samban, said the new loan program for pepper production, if offered at a reasonable interest rate, would help increase production.

“Even though the price has been falling, some farmers are still making money from the crop. We hope the price will be better in the future. “Farmers need funds to care for existing plants and grow new ones, so having access to loans at cheap rates will be helpful,” he said.

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