Insolvency Looms in Rice Sector

[geovalin]

The specter of insolvency looms large over the businesses of rice millers in the Kingdom as the government drags its foot in providing emergency loans to bail out the sector, currently reeling from the aftereffects of a severe drought and facing stiff competition from low-grade rice flowing into the country from Vietnam. To further add salt to their wounds, two visiting European Commission delegations hinted last week that the European Union (EU) could limit rice imports from Cambodia as it moves from a low-income country to a lower-middle-income nation.

Late last month, the Cambodia Rice Federation (CRF) announced that the government agreed to make out loans of between $20 million and $30 million to help rice millers purchase rice from farmers after the harvest this November to store in warehouses and process them for export. The loans were to be made to CRF, with the foundation acting as guarantor. The CRF in turn will screen all applicants and hand out the money to deserving rice millers and exporters, said Hun Lak, CRF’s vice president.

But close to a month later none of the loans have been made and rice millers are becoming very anxious. Many millers, exporters and farmers are in financial doldrums due to a severe drought early this year that saw rice production fall drastically.

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