Cambodia's largest rice association says a government loan has permitted an equipment upgrade leading to increased production of processed rice.
A new rice mill is demonstrated by CEDAC in Takeo province earlier this month.
THE head of Cambodia's largest rice exporter said Monday that a government loan granted last year had led to a significant increase in purchases of unprocessed rice.
That could mean more exports of processed rice, and ultimately, higher incomes for farmers, officials said.
Phou Puy, president of the Federation of Cambodian Rice Miller Associations (CRMA), said the organisation had purchased 1 million tonnes of paddy, or unprocessed rice, for US$200 to $210 per tonne since November 2008.
By contrast, a lack of equipment and funds for processing rice meant that only 400,000 tonnes of paddy could be bought and stored in all of 2008, Phou Puy said.
Cambodia's rice industry has suffered from a lack of processing capacity, which has led many farmers to export unprocessed paddy illegally.
A government loan given late last year allowed the association to upgrade equipment and increase its rice purchases as part of a government plan to restructure the sector and boost processed rice exports.
Son Koun Thor, president of the state-owned Rural Development Bank, which provided the loan, said it totalled $15 million and was to be paid back at an interest rate of 5 percent per year.
We expect that we will be able to expand our export base.
CRMA President Phou Puy said: "We have been able to increase our purchases of paddy because we have had both capital and modern equipment.
"We are trying to control local paddy markets because we expect that we will be able to expand our export base this year."
Of the 1 million tonnes purchased since last November, 340,000 have yet to be milled.
Phou Puy said the CRMA plans to export that rice as well as purchase an additional 50,000 to 60,000 tonnes of dry season paddy before the season ends in May. "Our plan this year is to find markets to export rice as farmers have more paddy in hand," he said, adding that the paddy would be sold to local markets for export to Germany, Malaysia and France.
"We are also negotiating with the Philippines to open a new market there," he said.
The Ministry of Agriculture, Forestry and Fisheries reported earlier this month that Cambodia harvested 7.17 million tonnes of rice in 2008, with 3.16 million tonnes earmarked for local use.
Cambodia has about 2.61 million hectares of rice under cultivation, and authorities are working to boost milling capacity to increase processed rice exports.
"We have modern and standard rice mills that are capable of producing rice with only 5 percent broken grains," Phou Puy said.
"Cambodia will become a major rice exporter by 2010 because the country has more paddy in stock, more capital for buying paddy, bigger storehouses and more modern rice-processing equipment."
If Cambodia's milling capacity were to increase, officials said, the amount of paddy smuggled across the border would go down. Vietnam reported that about 1 million tonnes of paddy was smuggled across the border last year.
"Through the federation's activity in buying a huge amount of paddy, I am sure that we can eliminate illegal smuggling of rice into neighbouring countries," said Phou Puy.