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$100M in rice financing set to ratchet up productivity

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A farmer harvests rice in Kampot province’s Kampong Trach district in 2019. Hong Menea

$100M in rice financing set to ratchet up productivity

The rice industry has applauded government plans to invest an additional $100 million in the near future, towards ramping up production of the grains as well as the procurement of paddy for export-oriented processing.

Prime Minister Hun Sen revealed the plan on March 24 at the closing ceremony of the annual meeting of the Ministry of Agriculture, Forestry and Fisheries, stating that the cash injection aims to improve productivity in the rice sector and strengthen markets.

The government has made “continuous efforts” to support processing of the crop and expand the market presence of Cambodian rice overseas, he said, adding that the local agricultural sector’s efforts have softened the impacts of food price inflation and other economic pressures to a great extent tied to Covid-19 and the Ukraine conflict, preventing a major food crisis.

Ministry of Economy and Finance secretary of state Meas Soksensan confirmed to The Post on March 26 that his ministry is preparing the working capital financing package, geared towards the betterment of the rice sector.

“We’ve allocated the funds, and we’ll release them to the Agriculture and Rural Development Bank [of Cambodia (ARDB)] to manage and provide to private entities in the rice sector,” he said.

Speaking at the annual meeting, Minister of Agriculture, Forestry and Fisheries Dith Tina assured that his ministry will continue to pave the way for low-interest loans and improve farmer-to-market linkages through contract farming.

In 2022, ARDB provided about $380 million in loans to farmers and food processing enterprises in connection with a particular programme, of which 60 per cent had an interest rate falling in the 5.0-5.5 per cent range, he said, adding that the ministry expects the volume of low-interest “targeted and prioritised” loans to increase this year.

Signalling the government’s shift in focus towards propping up the rice industry, the financing package will help maintain price sustainability, better enable the private sector to buy paddy from farmers at acceptable rates, and thereby increase exports, according to Chan Sokheang, president of the Cambodia Rice Federation (CRF), the Kingdom’s apex rice industry body.

“A lack of capital to buy paddy from farmers has ushered in price instability”, and the latest injection of funds “will ensure better, more stable prices”, in a “reflection of the government’s commitment to further boosting the sector, and especially exports”, he said, adding that overseas demand and sales of Cambodian milled rice remain on the upswing.

For reference, a recent CRF report found that in the first two months of 2023, Cambodia formally exported “nearly 100,000 tonnes” of milled rice “worth $72.67 million” to “38 markets” through “40 exporters”.

However, local reports in early March 2022 – citing data from the National Phytosanitary Database – noted that milled-rice exports for the January-February period last year amounted to 103,058 tonnes, although they pointed out that this had been a 35.21 per cent year-on-year increase.

Amru Rice (Cambodia) Co Ltd CEO Song Saran is confident that many of the exporters who often report a shortage of capital during the rice harvest season will be able to step up purchases of paddy from farmers, to mill for export as well as to stockpile.

“The Royal Government pays constant attention to promoting the rice sector, since we’ve historically been confronted with a lack of capital to buy farmers’ paddy, leading to bottlenecks and drops in prices.

“The private sector has, time and again, teamed up with the agriculture ministry to help out the farmers – the capital that the government plans to release will further promote the sector, and in particular, help maintain price stability for the people,” he said.

According to the English-language version of the CRF report, of the formal January-February milled rice exports, 49,056 tonnes worth $33.26 million went to mainland China and Hong Kong.

The rest were shipped to 21 “European countries” (38,456 tonnes; $27.26 million), Malaysia and Singapore in ASEAN (4,409 tonnes; $3.02 million), and Russia, Turkey, Australia, the US, the Middle East, and other markets (5,546 tonnes; $8.14 million). Earlier CRF reports suggest that “European countries” here very likely refers specifically to EU member states.

However, the English and Khmer versions – as well as provided graphs – contain conflicting figures that also do not add up to the totals.

The Khmer version and graph put the value of exports to mainland China and Hong Kong at $33.93 million, while the graph also put the ASEAN sum at $3.01 million and totals for “other markets” at 5,232 tonnes and $8.13 million. Given that the total value was said to be $72.67 million in both versions, this leaves no fewer than $295,000 unaccounted for.

Broken down by variety, premium aromatic “Malys Angkor” rice represented the lion’s share at 49,381 tonnes, followed by Sen Kra’op (SKO) fragrant (36,495 tonnes), white (6,461 tonnes), parboiled (2,890 tonnes) and organic (2,284 tonnes). Accounting for rounding, these add up to no less than 39 tonnes more than the total provided for exports to the different markets.

Additionally, the Kingdom formally exported 871,319 tonnes of paddy worth $217.82 million, exclusively to at least one “neighbouring country”, the report indicated without elaborating, although historically this has meant that the full amount went to Vietnam.


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