Rice paddy bank short of funds
Rice paddy bank short of funds
Two years since the opening of Cambodia’s first large-scale rice paddy bank, the private sector company behind the project is seeking additional capital to carry it through the next five years.
Thaneakea Srov (Kampuchea) Plc launched services in late August 2014 with its sprawling facility in Battambang city acting as a massive centralised storage facility for the province’s harvested rice paddy.
The company disburses loans to farmers in exchange for the paddy they put up as collateral, while its paddy stockpiles ensure sufficient stock for Cambodian rice millers and traders.
The project aimed at addressing the lack of storage capacity and finance channels that had led many farmers in the province to sell their paddy to Thai and Vietnamese traders instead of local millers.
Phou Puy, CEO of Thaneakea Srov, said the rice paddy bank began in 2014 with $7 million working capital and received 20,000 tonnes of paddy rice during its first year. The following year, working with $13 million capital, the bank was able to collect 37,000 tonnes of rice.
Puy said the project would need $70 million over the next five years to satisfy the demand of Cambodian millers and traders.
“Most of our customers have come asking for more loans, but our capital is limited,” he said.
“We need more capital and storage capacity to meet the demand of rice millers [for paddy rice].”
According to Puy, loans are offered to rice farmers for a period of 10 months at a monthly interest rate of 1 per cent.
“We receive the paddy rice as collateral in return for disbursing loans amounting to 80 per cent of its market price,” he explained, adding that the hocked rice is only sold if the loan is not paid back in time.
Hun Lak, vice president of the Cambodian Rice Federation (CRF), said the rice bank was playing an important role in the industry and if it would put forward a strong and detailed impact and risk assessment, the Rural Development Bank (RDB) would put up the required funds for it to continue operations.
“Thaneakea Srov is playing an important role in the rice industry, but currently it is helping only one part of the industry,” he said.
“If it needs a bigger budget to expand, then they should come and put all the issues on the table at the CRF in order to develop the project and request financial assistance from the RDB.”
Khim Sophanna, senior advisor of the agricultural NGO CEDAC, said the rice paddy bank was essential to helping farmers who had run short of capital.
“The rice paddy bank is a place where farmers can use their paddy rice in exchange for money whenever they run into financial troubles, which is better than selling the paddy at a cheap price,” he said.
“The bank also gives farmers a chance to recover the paddy they used as collateral if the price of rice increases.”
Most importantly, he said, the rice paddy bank ensures that the profits of rice farming remain in the local community.
