Today, Dok Sareth went to the bank. He came home with a bag of rice.
“Before the rice bank was set up, I had to borrow rice seed to plant my rice crop,” Sareth told me on a visit to his village. “Every time I borrowed, I had to repay the loan with a 100 percent interest rate. Now because of the rice bank set up with Concern’s support, the villagers can help each other and the interest rate is much more affordable. It has made a huge difference to my life and I am extremely grateful.”
The people who Concern works with in Cambodia depend heavily on rain-fed rice production for their income. They are rural farmers who grow and sell rice on the small amounts of land that they own. Those without land work on other farmers’ paddy fields for a small daily allowance.
Planting season is in June and July, when the annual monsoon rains begin. Then, from August to December every year, they wait for the rice to grow. And whilst they wait, they often run out of rice and money. With no employment in the fields, and precious few alternatives, they typically turn to local lenders. These lenders offer very flexible services but, as Dok Sareth explained, at interest rates of 100 percent or more.
Poor rural households often end up indebted to multiple creditors at the same time. And when a sudden illness strikes in the family, as is often the case in rural Cambodia, many struggle to repay the multiple and mounting debts they’ve incurred.
Rice banks are how we in Concern help poor people in Cambodia avoid such indebtedness. They also help stave off the long months of hunger during the rice planting season. And they work just like a normal local bank that we would find at home.
Villagers in poor communities become members of their local rice bank, set up and capitalised with the help of Concern. They then receive a ‘loan’ of rice weighing between 100 and 200 pounds. The loan is given at the beginning of the food hunger months, typically in August. This is also the time when rice prices are high, so a good time to avoid buying extra bags.
After the harvest in December, the villagers pay their loan back. This is also the time when rice is plentiful and farm-gate prices are low. The loan is either from their own yield or bought from the proceeds of working in other fields collecting in their neighbours’ harvest.
The loan is accompanied by a low interest rate of 10 to 20 percent on the original amount. Some banks use this interest to feed the elderly, handicapped, disabled or chronically ill, or orphans within their own communities. It is this additional rice that helps those who cannot work or support themselves, people like Srey Met.
“I am a widow with no children to look after me,” Srey Met told me. “For a few years I have benefitted from a community-based savings scheme. Last year Concern’s partner sponsored me to raise some chickens. Unfortunately this year I have been sick a lot so I have had to sell all my chickens to pay for medicine.”
Without ‘social protection’ measures, Srey Met would struggle to survive. Instead, the community uses their own mechanisms, like the rice banks, to ensure that they have enough food for their daily needs.
If managed well, rice banks can assist 50 to 70 families in a village. And, just like a local bank that has money, these rice banks help people to borrow, to save, and to keep safe what’s most important to them.