Rice BankRebuilding communities after years of mistrust

LotusImplemented by READA

March 20111

Lotus

The people behind Lotus:

Lotus Relief Charitable Trust (“Lotus-Trust”) was established and registered with the Charity Commission in the UK in 1998.

Lotus Hilfe zur Selbsthilfe e.V (“Lotus-Hilfe”) was established in 2007 and is a registered charitable Association in Germany.

Wolfgang Sietz and Ivy Christou, Partners of Sietz und Partner AG & Co. KG., are Trustees of Lotus-Trust and “Vorstand” members of Lotus-Hilfe. They are joined by Ross Badger of Hillier Hopkins LLB, a long term business associate, who is a Trustee of Lotus-Trust and “Vorstand” member (together with various other business associates) of Lotus-Hilfe.

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Reada

Lotus’ local partner is READA (Rural Economic and Agriculture Development Agency). READA is a non-political, non-religious organisation which focuses its efforts on rural community development and livelihood improvement in the Province of Siem Reap. READA was established and registered with the Ministry of Interior in 2004. READA has an integrated approach to rural community development and works closely with poor villagers, addressing a variety of needs (farming and small business skills, small infrastructures, disaster risk management, community empowerment, raising awareness on rights/gender/HIV/AID issues etc.)

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The three decades of war and serious internal conflict which ended in 1998 have left Cambodia gravely impoverished and underdeveloped. The years between 1975 and 1979 were particularly devastating as the Khmer Rouge took over the country and led Cambodia into chaos. The Khmer Rouge regime, one of the most lethal* of the 20st century, left an entire nation stripped off its civil society, infrastructure and education system. As Cambodia recovers from its tragic past; the damage caused still lays deep in the heart of the Cambodian society, impacting the values, solidarity and trust amongst members of the community.

Brief Introduction

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* It is estimated that between 1.5 and 2.5 million people (out of a population of approx 8

millions) died in less than 4 years as a result of the Khmer Rouge regime.

The Province of Siem Reap, one of the last Khmer Rouge strong hold, is one of the poorest Provinces in Cambodia*. Paradoxically, the region is also home to the World Heritage site of Angkor and the flourishing city of Siem Reap. The tourism led economic growth has however not reached the rural population. Earned profits are not being effectively redistributed (due to a lack of linkage to local industries and investments in the communities’ development). At this stage rural communities still lack infrastructure, resources and knowledge to take advantage of the rising opportunity.

In the Province’s rural areas, poor subsistence farmers face challenges such as: Small/lack cultivation land - maximum 1 hectare Chronic floods and droughts – increasing frequent as a result of global warming

Poor/lack of irrigation infrastructure Heavy reliance on rice cultivation –harvests taking place from September to

January Lack of modern agricultural skills and machinery – Most farmers still use

water buffalos Low education levels

Remoteness from markets and services

Brief Introduction (cont.)

*The 2004 CSES survey from National Institute of Statistics (NIS) ranks the Province as third highest rate of poverty nationwide 5

Consequences

Poor villagers in the Province of Siem Reap face food shortage for between 6-10 months a year.

This in turns leads to:

• Negative impact on children’s health and education

• Migration to cities and neighbouring countries with all the risks this may entails (human trafficking, HIV/Aids etc.)

• Debt: villagers borrowing rice (both for consumption and seeding) *from local lenders at extortionate interest rates (up to 200% a year) which contributes to keeping already poor families in a vicious cycle of debt and poverty.

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Rice Bank Initiative The concept behind the Rice Bank is to provide the

community with a capital of rice available for the villagers to borrow at low interest rate and pay back year after year in accordance with the rice harvest cycle; therefore tackling food insecurity and its consequences.

The amount of rice available at community level, which is stored in the village “rice store”*, increases every year thanks to the interest rate fixed by the villagers.

READA has already successfully implemented 18 Rice Banks in collaboration with Lotus and Concern Worldwide in the Province of Siem Reap and strongly believes that this initiative contributes to building stronger, sharing, self reliant and sustainable communities.

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*”Rice store”: Storage building for the rice. Rice Bank (RB) refers to the overall initiative.

Rice Bank (RB)- how it works

2- Build Rice store 3- Purchase rice

4- June/August - rice distribution Overseen by RB Committee

6- Rice harvest

7- January- rice repayment (with interest)Overseen by the RB Committee

9- Providing rice for next season at low interest rate…

5- Provides villagers with rice for food and seeding

Donor ContributionCommunity Contribution

•Material to build rice store•Initial rice deposit•Rice top ups

•Labour to build rice store•Land for rice store•Management/maintenance RB

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8- Small additional rice distributions needed in first 2 years.

1- RB Committee formation

Process Overseen by READA

Breakdown Donor Contribution Rice store components: Roof, pillars, nails, walls and floor.

Initial rice deposit: Distributed to the families involved in the scheme. Families borrow and pay back the rice loan after harvesting. The RB stock is then available for the villagers to borrow each year. This initial amount represents approximately 100/150 Kg paddy* rice per family (over 1 month’s worth of rice) and provides emergency relief for food and seeding.

Rice top ups: Are part of the RB cycle. Up to 2 small additional rice distributions are generally needed during the first couple of years of project implementation due to: o Number of RB members increasing.o Depending several variables (such as natural disasters) a rice top up may be needed to further

assist RB members.

Average Rice Bank Cost: US$ 3,050 Number of families in scheme: 60

•Rice deposit: US$1,850•Rice Top Ups: US$ 500 •Rice store material: US$400•Transportation (rice & material): US$150• Project cost**: US$150

Average cost per family: US$ 50

* Paddy rice: rice not yet processed. 60kg milled rice = 100kg paddy rice** Project cost: includes staff salary, utilities, external auditing fee Note: The cost varies from village to village depending on the number of families, their size, the cost of the rice etc., and varies between US$3050-3170Note: No admin fee is charged by Lotus 9

Breakdown Community Contribution The exact community contribution is agreed with and amongst villagers. The

following gives an idea of what it generally includes:

Land for the rice store: donated by one of the villagers for the benefit of the community.

Labour to build the rice store. Ongoing Management of the RB by the RB Committee. The RB

Committee is made up by village volunteers who take responsibility for the scheme setting it up and overseeing its progress year after year by:

o Setting up RB regulations, defining roles and responsibilitieso Deciding on interest rate to be charged * (see below note page)o Overseeing rice distribution to families o Record keeping on borrowings/repaymentso Overseeing the redistribution of the interest according to the initial

agreement.

Thus ensuring a good repayment level and sustainability of the scheme in the long run.

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Rice Bank Implementation: Steps Step Action

Village Identification READA identifies the specific village where the Rice Bank is to be built and informs Lotus

Meetings with community & relevant stakeholders

•Define needs•RB Beneficiary and Committee selection•Agree on rules, roles, responsibilities, contribution, interest rate etc.

Proposal sent topotential Donor

Lotus informs READA of a specific donor’s interest and READA develops and send formal proposal (incl. budget)

RB Committee READA gives training and coaching to Rice Bank Committee

Donor’s engagement Funds transferred directly to READA or via Lotus

Rice & material purchase Cost Control:• Set up an independent quotation Committee• At least 3 quotations for each purchase exceeding $300

Building rice store •Rice Store built by the community (including donor’s name plaque)•READA’s first report to donor at end of Rice Store construction

Rice distribution • Rice borrowed recorded by RB Committee• READA and Local Authorities involved in this process•READA sends out second report to donor

Monitoring & Auditing • Monitoring and follow ups by READA• External audit

Repayments • Amounts paid back recorded by RB Committee• READA and local Authorities involved in this process• READA sends out third report to donor

Ongoing Management by RB Committee

•Committee ensures interests are distributed according to regulations• Committee ensures rice is available for borrowing each year• READA’s involvement gradually decreases

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Chikreng Chas village The Rice Bank in Chikreng Chas village (Chikreng District, Siem Reap Province) was

established in 2008 in response to the challenges resulting from food insecurity. Koyra, a RB Committee member, tells us about one of these challenges being debts due to the thigh interest rates charged by the local lenders (up to 200%). He explains: “The year before the rice bank was set up, the local lenders came (after the harvest) to collect the rice I had borrowed, and left my new harvest severely depleted”.

76 families benefit from the Rice Bank. 6000 kg of paddy rice were initially distributed. During a visit from the Cambodian Development Council (CDC) in 2009, the Phnom Penh Governor decided to donate a further US$100 of his personal money to top up the RB stock; which enabled the community to purchase an extra 500Kg of paddy rice.

The total community rice stock has now increased to 6772 kg thanks to the RB interest rate (15% total interest rate: 5% RB Committee, 2% social protection, 1% Admin, 7% rice stock increase). The scheme has also helped reduce external borrowing (although the community admits becoming completely debt free will be a slow process) and migration. We also note that more children are attending school during the food shortage months. Sivsaing, another RB Committee member tells us: “We now get rice support during the food shortage period enabling our families to undertake other activities to generate more income”.

The 5 RB Committee members now fully manage the RB. There is good collaboration amongst Committee members and with local authorities who are invited to attend the rice distribution and collection every year.

There is a strong commitment from the RB beneficiaries and a 100% repayment rate.

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In conclusion the Rice Bank: Provides vulnerable families with food during the

most critical time of the year.

Enables villagers to carry on other activities, such as income generation and enable children to go to school.

Allows villagers to borrow at a low interest rate.

Helps the community’s destitute people by allocating a part of the interest towards social responsibility schemes.

Increases the amount of rice stock available within the community each year.

Is managed by the community for the community (fully self run after a maximum of 2 years).

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What Next?

We truly believe that many more villages would greatly benefit from this initiative and are committed to helping them overcome food insecurity and work towards self reliance.

At this stage, READ has prioritised the below villages as

suffering the longest food shortage:

Tra peang veng, Chikreng District, Siem Reap Province -In process

• Sre Chang Hot, Banteay Srey District, Siem Reap Province

• Kla Khmom, Chikreng District, Siem Reap Province• Kok Thlok, Chikreng District, Siem Reap Province• Ta Pnhea, Chikreng, Siem Reap Province

The above have been identified through collecting data

from the Commune Councils (CCs) such as Commune Investment Plans (CIPs) as well as discussions with the communities. 14

How You Can Help

The cost for implementing a rice bank ranges between US$ 3,050-3,170.

By donating money towards this initiative you will help the poorest of the poor remote families combat hunger, migration and dependency on local lenders and the high interest rates they charge. Thus empowering them to take control and improve their lives whilst building stronger, sharing communities which ultimately benefiting the overall country’s development.

Lotus and READA encourage donors who have made a significant donation towards a rice bank to visit Cambodia and the project they have donated to!

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