Rice Bank Buys Direct to Control Prices

KHMER TIMES
SOK CHAN

Farmers drying their paddy rice. Many of them could face bankruptcy if rice prices keep falling. KT/Chor Sokunthea

The Cambodia Rice Bank (CRB) will intervene to prevent the price of fragrant rice from falling further by offering to buy the staple grain directly from farmers at the market price of 840 riel (21 cents) a kilogram. The CRB also called on farmers to stop selling fragrant paddy rice to millers at below market price, according to a statement released yesterday.

“The Cambodia Rice Bank will purchase harvested fragrant paddy rice directly from farmers, at their farms, for 840 riel a kilogram. However, if the farmers bring the rice directly to the CRB’s location in Battambang they will be paid 900 riel (22.5 cents) a kilogram,” said the CRB statement.

“If farmers do not want to sell their fragrant paddy rice to the CRB, they can still store them in the bank’s warehouses. The CRB advises farmers to stop selling [harvested paddy] fragrant rice to millers at below market price,” added the statement.

The CRB, established in Battambang province in 2011, has silos and storage sheds to store paddy rice, and millers and exporters can loan or buy rice from the bank’s stockpiles.

“The CRB will also cooperate with rice millers who want to store their milled rice in the bank and use it as a collateral for loans. The criteria, however, is that the newly harvested fragrant paddy rice for milling must have been purchased from farmers at 840 riel a kilogram,” said the CRB statement.

The Rural Development Bank (RDB) has given a loan to the CRB for this direct intervention to protect farmers, according to RDB’s director general Kao Thach.

However, he did not reveal the size of the loan when questioned by Khmer Times and said the final amount would be confirmed at meeting next week.

“I think this direct intervention will help sustain rice market prices. Because of our limited funds, the CRB’s purchases will only be made in Battambang, Pursat and Banteay Meanchey,” said Mr. Thach.

Nop Saloeun, a rice farmer in Banteay Meanchey province, told Khmer Times that she welcomed this move by the CRB.

However, she said she had already harvested her fragrant rice crop and sold it to a rice miller because she did not have a place to store her grain.

“It’s been raining every day and if I leave my rice crop in the field, the kernels will be broken. Once the kernels are broken, the millers will reject them,” said Ms. Saloeun.

On Wednesday, she said, millers were offering below 800 riel per kilogram and she had no choice but to sell her harvested paddy rice to the broker.

Srey Chanthy, a rice expert told Khmer Times that many farmers could be made bankrupt if the price per kilogram of fragrant rice stays around 700 riel, from 1,200 riel previously.

“These farmers have debts to pay to microfinance institutions, fertilizer companies and mechanical harvester owners. On top of that they have no proper place to store their harvested paddy rice and no access to silos during the rainy season,” he said.

Mr. Chanthy said the only way out of this quagmire was for the government to disburse the promised emergency loans, through the Cambodia Rice Federation or RDB, of between $20 million to $30 million to rice millers and exporters to purchase rice for processing.

“The funding must prioritize to only rice millers and exporters who have large markets, silos for storing rice, and warehouses,” Mr. Chanthy said.

“Through this intervention, rice millers and exporters would be able to purchase paddy rice from farmers with a price of 1,200 riel for a kilogram for fragrant rice,” he added.

In a statement on Monday, the Ministry of Agriculture ordered all provincial agricultural departments to take action against rice millers who exploit farmers due to their inability to command a fair price for their paddy harvest because of a lack of bargaining power.

The ministerial order bans rice millers from block-buying the whole rice crop from farmers, just before harvest, and offering them a below market price for the exclusive purchase.