The Myanmar Rice Federation plans to open several warehouses for rice traders to store their product for use as collateral to receive bank loans, said its chair U Chit Khaing.
The system would alleviate the need to sell rice immediately even if prices are low to pay for a sudden expense. Instead, traders will be able to store the rice at the warehouses for a fee, using it as collateral for loans from U Chit Khaing-led Myanmar Apex Bank.
Speaking exclusively to The Myanmar Times, U Chit Khaing said, “If we can set up the system, farmers can keep their paddy in the warehouse till prices improve, while taking out bank loans and repaying their debts.”
U Soe Tun, joint secretary of the MRF, said a pilot project for the Warehouse Financing scheme would be launched in three townships in Ayeyarwady, Yangon and Bago regions.
Local rice prices have been in decline as China shuttered its border to imports from Myanmar beginning in late October. Some rice industry experts have suggested that the government should buy paddy directly, or lend to traders so they can buy from farmers, in an effort to support local farmers.
Freedom Farmers’ League chair U Thein Aung said, “We have approached the government in the hope of getting loans, even at a higher interest rate than the bank’s.”
But U Chit Khaing said buying buffer rice would not reduce farmers’ losses. “We’re going with the paddy storage system,” he said.
Source: MYANMAR TIMES