Just over two years since Thaneakea Srov (Kampuchea) Plc launched the Cambodia Rice Bank, the Kingdom’s first private large-scale rice storage facility aimed at centralising rice paddy harvested in Battambang province, the company has won a new $15 million government-backed loan to build a new facility. The Post’s Cheng Sokhorng sat down with the company’s CEO, Phou Puy, to discuss the importance of having a centralised storage depot to help alleviate a struggling sector mired by logistical hurdles.
How did Thaneakea Srov win the bid for the $15 million loan from the Rural Development Bank (RDB) and what is its importance of expanding the facility?
We received approval for the budget package by the RDB because we followed government policy and they saw that expanding the storage facility would help address a lot of the challenges the rice industry faces.
The main criteria for winning the bid were that we needed at least 10 hectares to develop storage and drying facilities, had experience in operating a large facility and had formed good relationships with farming cooperatives in handling their export volumes. While we have yet to receive the $15 million and don’t know when we can withdraw the money and at what interest rate it needs to be paid back at, we are 80 percent ready to build a 200,000-tonne silo with an attached mill.
What will the facility’s capacity be and when will it be ready?
The silo and mill are expected to be operational by 2018. The mill will be capable of processing 3,000 tonnes of paddy rice a day.
How will this new facility expand the rice bank’s current storage capacity?
Right now we can store 40,000 tonnes of wet paddy rice and mill 850 tonnes of rice per day with a 5,000-tonne facility for processed rice. This is the largest capacity for any rice mill in Cambodia, but it still does not meet the demands of the industry. So the new facility will give more options for rice millers, allowing them to place paddy for storage as collateral to withdraw money, while they can also rent storage space for drying.
This should help relieve some of the constraints on farmers and millers who lack capacity for drying, which has caused prices to stall because they have to sell to brokers in neighbouring countries at much lower value. It will help small farmers and medium-sized millers the most because it should help guarantee paddy rice prices and help promote sustainable contract farming. We aim for our storage facility to be used by contract farmers in the provinces of Battambang, Banteay Meanchey and Pursat.
Why have millers who called for emergency loans not used the funds the government made available through the RDB?
Some millers have already accessed the $27 million in loans to buy paddy from farmers, but a lot have not been able to apply for loans because they have not had the storage facilities to qualify. Because the rice loans are linked to storage collateral, they have been really slow to be used, because everybody has the same constraints.
Still though, I believe this is the right government policy and we will see more loan disbursement in the next two months. The government has a role to play in making sure the industry survives, especially as production capacity increases every year.
Does the current model of small shareholder farming still work, or does Cambodia need to adopt giant super-farms like what Thailand is planning?
Transforming our current small shareholder model of farming to large-scale industrial farming is impossible right now because our economic development is limited. Currently, the majority of our farmers plant on less than 1 hectare while others have up to 10 hectares. It is difficult to plant more than this because farmers lack irrigation technology and access to water. If we could increase irrigation by 50 to 60 percent, we could see large-scale operations by investors like what we see in Thailand and Vietnam.While we are not close to those countries’ capabilities, we are on our way and in the future it could happen with the unified support of farming cooperatives.
This interview has been edited for length and clarity.