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Fresh worries for rice industry as no markets yet for large surplus
Guyana’s record-breaking run of rice production is expected to continue this year but there is worry now over a large surplus of the grain.
The situation has Government and the industry contemplating the next move as almost 250,000 tonnes is expected to be reaped in the coming harvest, with no markets for a large portion of that.
File photo: Rice being loaded for neighbouring Venezuela.
Last week, stakeholders- including the banks, millers and the Ministry of Agriculture- met on the issue. In addition to prices for farmers, there were also concerns expressed over adequate storage and markets.
According to officials of the Guyana Rice Producers Association (RPA), almost 150,000 tonnes of rice have been left over from the first crop. Almost 80,000 tonnes was carried over from last year, industry officials confirmed yesterday.
For this year, it is now being estimated that a worrying 300,000 tonnes will likely be left back unless new markets are found or the existing ones start taking off some more.
The meeting last week was to determine whether the banks would be willing to finance the harvests. However, the banks are still to decide as there are no immediate indications of any significant new markets.
Another major problem facing the industry is storage space for the milled rice or paddy. The country simply does not have the capacity to store that amount and have it sold before the next harvest starts in August.
While Guyana has smaller markets in Jamaica and Haiti, the price being offered is not nearly as attractive as the oil-for-rice deal with neighbouring Venezuela. But that market is a limited one for Guyana.
Under this year’s contract, Guyana has to supply 140,000 tonnes of paddy and 50,000 tonnes of white rice. With delays in Venezuela’s ports with the rice ships, a known problem, the country has so far for the year been able to only ship about half of the quota – 25,000 tonnes white rice and 70,000 tonnes paddy.
Yesterday, RPA officials who are busy with Agriculture to come up with strategies said the biggest fear remains the price of paddy for farmers. Currently, they are receiving between $2,800- $3,500 per bag. A huge surplus as is being forecast is likely to drive the price down to as low as $2,500, an untenable situation for farmers.
According to figures provided in Budget 2014, as provided by Finance Minister, Dr. Ashni Singh, rice export receipts last year expanded by 22.2 percent to US$239.8M, mainly attributed to an 18.2 percent increase in export volume to 394,989 tonnes, combined with a 3.4 percent increase in average export prices to US$607 per tonne.
The rice industry is projected to grow this year by a moderate one percent, with a production target of 540,793 tonnes. However, industry officials said that at the current production rate, that target is likely to be exceeded.
The market problem has been one acknowledged by Government for years now. This year was no different.
According to the Finance Minister in his budget speech, emerging challenges have manifested early in 2014, “including lower paddy prices, late payment by millers, and some degree of uncertainty in key export markets”.
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