The government has come to the rescue of rice millers and exporters, currently in the throes of a serious financial crisis, with loans of between $20 and $30 million to the Cambodia Rice Federation (CRF). This is to help the sector purchase rice from farmers after the harvest this November, to store in warehouses and process them for export, said the CRF.
Hun Lak, CRF vice president, told Khmer Times yesterday that he and key rice millers and exporters had met with economy and finance minister Aun Pornmonirath on Monday.
In the meeting, Mr. Hun Lak said, important issues like an emergency budget to revive the rice sector following the severe drought that affected production, the flow of low-grade rice into the country from Vietnam, and high taxes imposed on rice millers were discussed.
“The government agreed to make out the loans of between $20 and $30 million to CRF, with the foundation acting as a guarantor. The CRF in turn will screen all applicants and hand out the money to deserving rice millers and exporters,” he said.
Mr. Hun Lak said the government would charge an interest rate of about seven to eight percent for the loans. “These loans would enable rice millers and exporters to purchase rice from farmers to store in their warehouses and later process them for export.”
Mr. Hun Lak said the CRF had already formed a working group with representatives from the Ministry of Economy and Finance and the Rural Development Bank to process all the loan applications.
“We hope to complete all the formalities immediately after CRF’s annual general meeting on July 2,” he said.
“All CRF members have to submit their loan request forms if they want to apply for the grants. There will be a formula for vetting the applicants to ensure that the loans would be put to good use to revive their businesses,” added Mr. Lak.
In March, rice millers and exporters wrote to the government urging intervention due to stiff competition in export markets as well as domestic ones. In the letter, they said they were facing a cash crunch due to a flood of low-grade rice from Vietnam while stressing that bankruptcy was widespread amongfarmers, millers and exporters alike.
The letter said Vietnamese companies were snapping up high-quality Cambodian paddy for export from Vietnam and flooding the Cambodian market with low-grade rice. This, the letter said, was driving domestic millers out of the market.
To make matters worse, many millers, exporters and farmers are in financial doldrums due to the severe drought early this year that saw rice production fall drastically.
Economy and Finance Minister Aun Pornmoniroth, stressed that Cambodia would not totally stop importing rice from neighboring countries. However, he said the government plans to reduce the export duty of milled rice.
By Sok Chan, The Khmer Times