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Millers selling to themselves, colluding with overseas buyers
… Rice scam probe
Authorities say that they are looking into some practices of rice exporters that include, among other things, collaborations with oversea buyers to drive down local prices.
In addition to possible under-the-table dealing that see low prices being reflected in contracts, which ultimately is used in the arguments to pay farmers poor prices, there is also evidence of some millers and exporters actually selling back rice to one of their subsidiaries, again at a low price.
Paddy being loaded into ship destined for Venezuela.
Addressing issues affecting the rice industry last week, Minister of Agriculture, Robert Persaud, last Friday, noted that this was one of the reasons that the government regulator, the Guyana Rice Development Board (GRDB), has been asking for contracts that are signed between local exporters and their overseas buyers.
While stressing that government is not inclined to tell millers what kind of price to pay farmers for their paddy, there must be some level of “decency” in the arrangements in which poor farmers must benefit fairly.
According to Persaud, amendments to legislations over recent years have been designed to protect farmers. While most millers have been toeing the line, a small number has not.
Recently, government ordered an audit on Mahaicony Rice Mills, one of the largest purchasers locally of paddy. MRL controls an estimated 40 per cent of the local market.
Farmers are claiming that the rice miller owes them in excess of $250M in outstanding payments.
According to the Minister, during a press conference at his office Friday, it was clear that MRL bought paddy and then sold it to buyers overseas. However, the monies had not been paid on a timely manner.
GRDB officials have said that they encountered numerous problems getting the miller to answer and then there were problems with reconciling some of the claims of the farmers against what MRL said they owed.
It was then decided that an audit team from Government would be sent in to determine what is actually owed.
Regarding an amendment to the Rice Factories Act which is before parliament, a proposal for GRDB to hold 10 per cent of the gross purchase made in the previous crops, will only target millers who have a track record of being delinquent, the Minister said.
Persaud noted that while some have been calling for government to move in, the reality is that it has to be done in a proper manner according to law.
Some 300 farmers are said to be owed by MRL for the last crop. Under regulations, millers have to pay farmers within a certain time or face paying interest also. Additionally, GRDB could effectively withhold operating licences unless 95 per cent of the money owed to farmers for the previous crop has been paid at the time of the new application.
Meanwhile, on Friday, Persaud noted as a means to allow farmers not to be dependent too much on millers to sell their paddy, GRDB had opened up the Venezuela rice market for all farmers who have their paddy to sell.
Interested farmers can call GRDB for more information on this development, the Minister disclosed.
Following an historic rice deal last year to the tune of US$21M, Guyana has signed another lucrative rice deal with Venezuela for US$38M.
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