Rice Interventions

Nov 04, 2009 Editorial

Reacting to the depressed prices being offered to rice farmers for their paddy in the current crop, the government had announced that it would deploy $400 million to assist farmers. Simultaneously the President personally intervened with his Venezuelan counterpart, Hugo Chavez, to secure a contract for 50,000 tons of paddy at a price that would offer some solace to farmers.
Concerning the latter initiative, farmers who have already been forced to sell their harvest at the prevailing depressed prices, and are somewhat up in the air as to how they would benefit. The Ministry of Agriculture should issue a clear statement as to how the millers that sell the paddy to the Venezuelans would be forced to share their windfall with farmers. Additionally, steps should be taken to institutionalise the Venezuelan connection since that government has made it clear that it is committed to securing its food security – especially for its poorer sections that depend on rice as their food staple.
We have previously called for our overseas missions to become integrally involved in the marketing of our products and it is a shame that even though we have a resident Ambassador in Venezuela, it took an intervention by the President to secure a market for our rice.
The President will probably be criticised for “micro-managing”. The GRDB should be liaising closely with our Venezuelan Embassy to follow up with securing a market in that country on a more sustained basis. And we hope our other missions are taking note.
On the $400 million initiative, it was reported in our Tuesday’s edition that in consultation with farmers’ representatives, half of the funds will be used to subsidise fertilizers for farmers in the next crop and $180 million will be used to construct 12 “drying facilities” in the rice producing regions.
We hope that “drying facilities” include not only “drying floors” but silos to store the dried paddy. The latter intervention is helpful, of course, because without them, farmers are forced to sell their paddy immediately to the millers at whatever price offered since the undried paddy will deteriorate.
But this expenditure brings to mind the more than $2 billion grant from the EU that was disbursed between 2004 and 2008 as part of a project to make the industry more competitive.
A Project Management Unit under Interim Head Nigel Dharamlall had been established within GRDB to oversee the project. The volatile nature of paddy prices had always been a bugbear for farmers – the universally conceded most volatile section of the industry – and the need for drying facilities had long been identified by their representatives as necessary for their protection.
It was our understanding that a number of such facilities had already been constructed and it would be useful if our experience with them could be released. We cannot afford to create facilities that will not be supported within an institutional structure.
Which organisation, for instance, will be responsible for maintaining and utilising the facilities? Will the farmers have to pay for use of the facilities?
It was announced, also at the meeting, that “a permanent revolving intervention fund for rice farmers is being looked at.” The nature of the “interventions” was not identified but in addition to farmers’ contributions, the RPA announced that it “is hoping to approach donor agencies to further boost the fund for development purposes.”
This proposal again reminds us of the 6.5 million Euros (about GY$1.5 billion) financial facility that was established from the EU grant at GBTI in 2007 to provide “low interest commercial credit to operators of the rice sector.”
Since this latter fund was to be used to provide loans to “operators” it is expected that unless there has been a 100 per cent default rate, there exists the base for establishing an intervention fund. It would also be of interest if the details of the utilisation of the financial facility could be released.
Farmers have always been apprehensive that most of these funds invariably end up in the pockets of the bankers and the middlemen. Hence their scepticism about any new “intervention” fund.

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