Banking sector agrees to back rice industry

Mar 11, 2009 News

Local bankers have agreed to support the rice industry even as they expressed concerns about Mahaicony Rice Mills not making their payment obligations to farmers.
The bankers met with Minister of Agriculture, Robert Persaud, on Monday and, according to one banker, notwithstanding the reduction of the price for rice on the international market they have all agreed to support the local industry.
During the meeting, the banking sector also agreed to explore some options to reduce the cost for financing.
As such they will be working along with the Guyana Rice Development Board and Rice Producers Association in this effort.
Assurances were given that working capital will be available for millers and exporters. In discussing the issue of the delinquency of Mahaicony Rice Mills with respect to paying farmers, the bankers expressed surprise that despite exporting more than US$25M in rice the company is still unable to meet its obligation.
The meeting was convened, this newspaper was told, to discuss a comprehensive approach regarding the rice industry in light of the 30 percent reduction of the price for the commodity on the world market. Over the past two weeks there has been a brewing dispute between millers and rice farmers over the price for paddy.
Last Saturday during a meeting with farmers along the Essequibo Coast, Region Two, the farmers accused the millers of operating like a ‘cartel’ in negotiating the price for the commodity. The farmers called for more competition within the sector.
The Agriculture Minister in addressing the concerns of farmers appealed for good sense to prevail on both sides. He said that the situation requires both sides working together since the entire industry can collapse once unreasonable demands are made.
“I always believe that we need each other. One cannot exist without the other. We need to sit down in a very sensible way and look at what we can do to accommodate each other,” the Minister had said.
He also pointed out that some millers are using farmers as ‘bankers’ to acquire money for alternative investments but this will not be tolerated for much longer.
Addressing the issue of Mahaicony Rice Mills owing farmers huge sums of money, the Minister said that efforts are being made to contact the headquarters of the company in Trinidad to deal with the matter. He explained to the farmers that the record also shows that the paddy that was sold to the mills was milled and exported.
According to him, efforts were made to work with the company in order to pool resources and strength to address the outstanding payment issue.
He explained that under the Financial Institutions Act, foreign companies have a limit by law as to how much they can borrow, pointing out that Mahaicony Rice Mills’ limit has been exhausted.
In the interest of farmers, he noted, the Ministry of Finance has agreed to expand the loan portfolio of Mahaicony Rice Mills, if the loan is passed down as direct payments to farmers.
But the company is yet to submit the list of farmers that are owed.

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Banking sector agrees to back rice industry

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