Business interests seek capital to buy and store paddy, maximising profit from upcoming harvest

State-run Rural Development Bank (RDB) reported Tuesday that the end of the dry season had been marked by a rash of requests for loans by rice miller associations and local companies.

The bank received applications for US$46 million in loans, Director General Sun Kunthor said, adding that the money was earmarked for building rice mills and drying kilns, and to buy raw paddy to process.

“We are now examining applications to see if they fulfill our requirements,” he said, adding that a final decision would be made early next month at the beginning of the rice-harvesting season.

The RDB requires its applicants to state their business case for the capital and provide collateral to secure the loan.

Sun Kunthor said $41 million had already been set aside to finance the requests – $31 million for short-term capital to buy unprocessed paddy, and another $10 million to be distributed as medium- and long-term loans to increase the capacity of rice mills and improve equipment.

The interest rates offered by the bank range from 6 to 10 percent per year.

“Our main purpose is to enable business interests and associations to buy and store paddy to process rice in order to bring additional income to farmers,” he said.

A request by Prime Minister Hun Sen for banks to extend financial aid to the RDB to support its loan programmes was met on November 14 when the Bank for Investment and Development of Cambodia, Canadia Bank and the Foreign Trade Bank combined to offer $33 million. The RDB predicted the capital will allow the purchase of an additional 150,000 to 200,000 tonnes of paddy during the harvest season, assuming paddy prices between $200 and $210 per tonne.

Last year, paddy averaged $US170 to $US230 per tonne.

According to reports from the Ministry of Agriculture, Forestry and Fisheries, Cambodia’s paddy production exceeded local demand last year by about 3.16 million tonnes.

Sun Kunthor said previously that local interests were formerly able to buy only leftover paddy, amounting to 10 percent of the total, because they lacked capital and infrastructure, and added he hoped the loans would increase the figure to 25 percent over the coming harvest season.