Middleman earns US$16M on Venezuela rice deal

Apr 20, 2014 News

Farmers lose out on better paddy price

Guyana’s rice-for-oil deal with Venezuela has been hailed as a blessing for the country but there is growing anger over the management of this billion-dollar trade initiative.

GRDB’s General Manager, Jagnarine Singh

Farmers and millers are now critical of the high cost of shipping, especially since a middle man is said to be enjoying a “sweet heart” brokerage deal.
He is enjoying the bulk of the proceeds from the rice deal.
According to figures seen by this newspaper, for the last crop, Guyana was paying to ship paddy/white rice a whopping US$56 per tonne to Venezuela. However, quotes from independent shippers estimated that Guyana could have received a deal for US$36 per tonne.
Farmers, crying for better prices, demanded to know how the Guyana Rice Development Board, headed by General Manager, Jagnarine Singh, could have allowed a middleman to handle the brokerage service.
That middleman is a former rice miller who had a track record of owing farmers. He is making US$20 for every tonne of rice shipped.
In recent years, it is estimated that almost 800,000 tonnes were shipped. “At US$20 more, this middle man earned US$16M that the Government could have paid to the rice farmers.
Rice farmers are asking if GRDB could not have gotten a better deal if it had done it themselves. GRDB is the state entity responsible for handling the logistics.
“Why the need for a middleman? Something stinks in this whole deal. This is almost like a kickback arrangement,” one rice farmer said.
The cost of shipping would be a critical one for farmers who have been complaining of low prices from millers. The higher the cost for shipping to Venezuela, the less money farmers would get.
For this crop, farmers are collecting around $3,500 per bag of paddy. Reducing the shipping costs could see farmers receiving at least $4,000 per bag of paddy.

Former President Bharrat Jagdeo

The rice initiative, finalised in 2009 by former President Bharrat Jagdeo with Venezuela’s late leader, Hugo Chavez, has been a major one for Guyana.
Initially viewed with suspicion by farmers, the Venezuelan rice market has become a lucrative, secure one, at least for the time being.
Currently, under a newly signed deal, Guyana is reportedly earning US$520 per tonne of paddy and US$850 per tonne for white rice. GRDB has until August to complete the shipments.
Under what is known as the Petro Caribe deal, Venezuela supplies oil and would be repaid in goods. In Guyana’s case it is rice.
Last year, Guyana’s rice production broke the all time production record reaching 535,000 tonnes.
This year, the target is set for 540,000 tonnes.