Let us address the rice industry’s real concerns

Nov 07, 2009 Letters

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DEAR EDITOR,
I will be among the first to passionately admit the rice industry needs critical support from government for it to survive these trying economic times.
Rice has remained a very volatile commodity on the world market and is subjected to the caprices of the international rice traders and speculators, especially in Asia and the US.
After making a remarkable comeback in Guyana in the past few years, rice is now dependent on government support to stay afloat as the world around us continues to battle with a lingering economic turmoil which has devastated many businesses.
Although I have been away from my homeland for an extended period, the internet provided me with timely reports on Guyana, in particular the rice sector, of which I have a keen interest, as it provided my family with sustenance in the old days.
The piecemeal intervention by the government of Guyana to ensure the survival and possible growth of this vital sector in our country must be carefully planned, guided and executed.
The Rice Producers’ Association (RPA), which Agriculture Minister Robert Persaud recently said “will be procuring the fertilizers”, is not in my opinion an organization which believes in transparency and accountability, and even the process by which the RPA executive was installed is presently the subject of litigation in our court, by a group claiming to represent the interests of rice farmers.
We are now being told that out of the $400M which President Jagdeo pledged as assistance to the rice industry, $208M will be used to purchase fertilizers which will be sold to rice farmers at a subsidized half-price.
The ministry, through the Guyana Marketing Corporation (GMC), recently advertised for bids for the supply of 6,000 urea fertilizer. The bids were due to be opened on October 20, 2009 and we are now being told, two weeks later, at Minister Persaud’s press conference on November 02, that the “bids are being evaluated” but, in contradictory fashion, we have also learnt from the honourable minister that “the RPA will be procuring the fertilizers.” Who really will be procuring the fertilizer, at what price and from which origin? Is this deliberate confusion? Is it a statement to deceive?
One of the conditions of the bid document is for the delivery of 3,000 tonnes of the urea on November 20, 2009, in Georgetown. The other shipment must be delivered on December 04, 2009.
Something is patently wrong here especially with the minister opining that the “current fertilizer situation was being controlled by a cartel in the Caribbean” but on the other hand we are yet to hear who won the bid to supply the fertilizer. Indeed the “cartel” controls the fertilizers and one would expect that the winning bid ought to have gone to someone outside of the “cartel.” We are still in the dark and can’t say for how long more before some light is shown on this imminent large financial transaction involving scarce state funds.
Despite the rhetoric, past and present, of the said minister about the ‘cartelisation’ of the fertilizer supplies to Guyana, bidding conditions as enshrined in the bid document do not allow for a new supplier to enter the picture.
Can we now know the name of the successful bidder and at what price the fertilizer is being “procured by the RPA?
If at November 02 at the minister’s conference, bids are still being evaluated to pave the way for a contract to be awarded, can farmers still expect the first shipment of fertilizer to be here on November 20, 2009? Will the fertilizer be shipped from outside of the “cartel-controlled” Caribbean where prices are likely lower or are we going to see the high-priced, low quality fertilizer from countries close to us being imported?
Or is it that the RPA will be “procuring the fertilizer” from importers in Guyana? Wouldn’t that be defeatist at best and financial incompetence at worst?
If this is how ministry and RPA intend to use state funds, then it would mean supporting the very “cartel” which has played such a strong role in ensuring the rice industry remains subservient.
This entire process of the government getting involved in the acquisition and distribution of an input critical for rice production in Guyana is excessively flawed and calls into question transparency and accountability in utilizing monies belonging to the state especially when these funds are being channeled through a governmental agency, pretending to be an NGO, which has no financial track records of being prudently managed.
Additionally, we are being told that based on consultations with farmers, it was decided that 12 drying facilities costing $180M will be constructed in the rice-growing regions and this will come from President Jagdeo’s $400M gift to the rice industry.
Agriculture Minister Robert Persaud stated at his conference last Monday that these facilities “will allow (for) paddy to be stored longer.” It is reported that an estimated 25 per cent of paddy will be dried at these facilities. Will these facilities be mechanical dryers or concrete drying floors, as in the old days?
If we are to engage in the economics and cost and benefit analyses of this additional expense of drying the paddy, transportation to and from the drying facilities then transporting to the mills at a later date, labour costs for this exercise, empty bags cost, additional interest on bank loans and some unavoidable incidentals, the ministry as well as the RPA are involved in supporting an exercise which lacks financial commonsense and which will serve only to put more pressure on the farmers, most of whom are presently operating at a subsistence level.
What guarantee is there that the farmer with the dried paddy will get a price adequate enough to offset his additional expenses and make a profit above and beyond the price the miller would have paid for his ‘wet’ paddy?
Have the farmers the technical capabilities to uniformly dry their paddy to ensure a high yield on rice when milled.
Can the poor rice farmer afford to dry and store his paddy then negotiate with the millers for better prices especially when his creditors, especially the banks, are on his back for debt servicing?
What will be the total drying capacity of the 12 facilities and can these cope with 25 per cent of the amount of paddy that will be reaped in one day? Or will there be lines of farmers waiting to commence drying their paddy?
Spending $15M to construct one drying facility is not addressing the real problems of the industry and these facilities are bound to become ‘white elephants’ and add to the existing woes of an industry which continues to reel from the international economic chaos.
Where is the Guyana Ride Development Board (GRDB) in all of this? There has been no word from this entity which is headed by the eminently qualified Mr. Jagnarine Singh and which has some of the best rice professionals in the country as compared to the RPA which is bereft of any technical and basic managerial capacities.
On the contrary, persons who know little about the industry, have been the ones presenting the government initiatives, though the GRDB must have played a pivotal role in the realization of these initiatives in keeping with the collective thrust of transparency, consultation and democracy, if these have been employed in the process. Too much politics have enveloped the rice industry.
What the industry needs is access to ready and cheap credit which the commercial banks have so far failed to provide.
The $400M of state’s money which President Jagdeo pledged will never be enough to help the industry pull through this period of global economic devastation, stagnation and uncertainty.
It, however, signals a good intention by the government to assist in a meaningful way.
Only this week Dharamkumar Seeraj, General Secretary of the RPA, publicly declared that the $400M should have been $4B but that he is aware of the constraints facing the government and its inability to assist with a bigger financial package at this time.
If Seeraj is truly knowledgeable of the rice industry and if indeed he is providing his sparse membership with effective leadership, he ought to know that there is the European Union (EU) €6.5M intervention fund, a grant, which is being administered by the Guyana Bank for Trade and Industry (GBTI).
This fund was disbursed to borrowers in the rice industry and most of it has been repaid to the bank by the borrowers though it is not known who were the borrowers/ beneficiaries and the interest rates charged as well as the other terms and conditions of the loans.
In fact, it is understood that the first two tranches of the fund have since been transferred back to the government of Guyana in keeping with the EU arrangement. The final tranche to bring the total back to the original €6.5M will soon be paid over to the government.
The Guyana Dollar total of the amount will be $2B so Seeraj ought to know that the industry can benefit almost immediately from the $2B plus the $400M state gift.
But, where exactly is the money representing the first two tranches which the GBTI paid to the government? Why can’t this money be allocated to meaningful projects in the rice industry for the benefit of the farmers and the general good of the economy? Or is it that the $400M which the President pledged, seen as a goodwill gesture from the government, is really a sum from the EU intervention fund?
Seeraj then has a lot of work to do to re-establish his integrity and credibility in the industry which was badly damaged by protesting Essequibo rice farmers a few short weeks ago.
Seeraj must do his investigations and tell the farmers why the government is withholding money meant for their upliftment.
But, what farmers need in addition to immediate state help, is access to readily available cheap credit on good terms from a farmers-friendly bank. The commercial banks have failed in this regards.
The lone agricultural banking institution in Guyana was closed about 15 years ago and farmers were forced to seek credit from the commercial banks at oppressively high interest rates and unreasonable terms.
We need to reshape our thinking, do away with party paramountcy and address the real concerns of the rice industry if we are to meaningfully assist its recovery and growth.
Lenny Sumair Singh

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