Association warns of $720m rice loan need

via CAAI

Wednesday, 01 December 2010 15:01 Chun Sophal

CAMBODIA’S Small and Medium Industries Association warned that domestic rice millers require US$720 million in loans this harvest season, or they risk being out-competed by foreign merchants.

“We cannot compete with buyers from Thailand and Vietnam to buy grain if local rice mills can’t receive more capital from the government or private banks,” said the association’s secretary general Ut Ren.

Cambodia has about 100 millers, which purchase paddy from farmers, process the rice and sell it to dealers.

If the millers are able to borrow short-term funds, they can purchase more paddy and sell more processed rice.

A typical Cambodian rice mill can process between 2 and 6 tonnes of rice per hour, said Ut Ren, and generally possess capital of between $50,000 to $70,000 to buy paddy during the harvest season.

Sur Kheang, president of the Kampong Cham provincial rice millers’ association, said its 35 members were clamouring for more capital to purchase paddy. He said his association required an additional $2 million to add to its present capital of $390,000 to fund its lending to millers this harvest season.

“A call for extra funding for rice mills is a very good idea. Many of our rice mills are facing a lack of capital to buy rice,” he told The Post.

Schemes are underway to increase agricultural loans to millers.

The government has prepared to lend $36 million to the state-run Rural Development Bank in order to lend to rice millers, with a focus on those firms with capacity for exports, according to its director general Sun Kunthor.

Some banks are also increasing their loan portfolio in the field.

In Channy, chief executive officer of ACLEDA Bank – the Kingdom’s largest agricultural lender – said the bank had lent $112 million to develop rice production from the start of the year to the end of November, a stark increase on its loans of $78 million made to the sector last year.

“We are not afraid to grant loans for buying rice, since we see there are now modern rice processing machines in Cambodia, and also increased orders from overseas,” he said.

The Kingdom’s updated rice policy aims to ramp up exports of milled rice.Cambodia’s stated aim is to hit 1 million tonnes in rice exports by 2015.

Local firms are also looking to export to new markets, with Golden Rice targeting 50,000 tonnes of rice to Europe, the United States and Asia in the next year.