That worrying rice problem and Venezuela

Mar 22, 2015 News

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The Story within the Story…

By Leonard Gildarie
There are worrying developments in the rice industry. Farmers in Essequibo are protesting low prices and late payments. This follows a tyre-burning demonstration several weeks ago in Black Bush Polder, Berbice.

It would come at a time when harvesting for the first crop is underway.
It would also come with elections around the corner in mid-May and a breakaway faction of the Rice Producers’ Association (RPA) threatening to endorse the Opposition – they are accusing Government of mismanaging the industry. Farmers, they say, are barely managing to meet costs and are suffering losses.
On the other hand, Government has made it clear that the industry has become even more complex. There is more rice to trade now and the market does not represent closed ones alone…Guyana is now trading on the world market, which means that the vagaries of the price on those markets is what will have a definitive impact on what happens locally.
The issue is likely to become a major talking point in the elections. The reason is very simple. Rice is what essentially keeps the Essequibo Coast and Berbice alive.

As matter of fact, rice overtook gold to become the largest foreign currency earner for Guyana last year after the latter’s incredible seven-year run. So what is the problem?
We will attempt to analyse the situation using information both from what Government is providing and what the farmers and others are claiming. I had asked Government to provide some details but at the time of writing, none was forthcoming. I will agree these pages will not be enough to capture the entire picture. We will therefore have to do it in parts, starting with what Government has been saying.
According to information available publicly, the Ministry of Agriculture and the regulatory body, Guyana Rice Development Board (GRDB), are both indicating that the situation is a complex one.
Guyana’s production, thanks to higher yields and more lands being planted, saw production reaching a record high of 633,000 tonnes last year.
The Ministry is predicting paddy production to touch one million tonnes for the first time ever this year, with farmers expected to sell about $50B worth this year.
It would be significant to note that in 2010, some 361,525 tonnes were produced, while in 2011 figures flew past 413,000 tonnes. Rice exports earned over US$169M in 2011.
In 2013, the production passed the 500,000-tonne mark before eclipsing 600,000 tonnes last year.
Initially, the biggest problems for farmers had been late payments. For years, millers have been taking the paddy and paying farmers months later, sometimes never.
This all changed when the Ministry made amendments to the law in 2009 which mandates millers to pay farmers half of the money for paddy on delivery and the rest within 42 days or six weeks.
This was a significant piece of legislation, as farmers and Government alike have been accusing millers of using farmers as a cash cow to finance their operations.
The GRDB has made it clear that it will withhold the operating licences of millers if they continue to owe the millers. This had reportedly happened in the case of Mahaicony Rice Mills Limited, formerly managed by Dutchman, Jai Beni. The mills were later taken back by Government and placed in the hands of a new operator.
It was in October 2009 that the rice industry saw a major development that changed the ball game.
Guyana and Venezuela signed a long-awaited rice deal. Farmers were complaining that they were receiving too low a price for paddy from most exporters.
The deal saw the Spanish-speaking neighbouring country sourcing from Guyana, 50,000 tonnes of rice – of which 10,000 tonnes would be white rice and 40,000 tonnes of paddy at $330US and $560US per metric tonne respectively. The oil-for-rice deal between the two countries was worth US$18.8 million.
In 2011, Guyana signed a US$54 million agreement with Venezuela to supply 50,000 metric tonnes of paddy at US$520 per metric tonne, and 20,000 metric tonnes of white rice at US$800 per metric tonne.
In 2013, Venezuela agreed to take 140,000 tonnes of paddy and a further 70,000 tonnes of white rice.
According to the Ministry, in 2014, exports to Venezuela accounted for about 34 percent of the total production of rice in Guyana.
This year, the Venezuela exports are expected to be about 30% of production, even though the actual amount would be approximately the same. This is because the country expects greater production in 2015. The Venezuela market is expected to take 200,000 tonnes in paddy and rice this year.
The increased production is what has Government on the back foot. Markets have to be found… and found fast. Guyana has been entering new markets like Panama and Haiti, but nothing quite like Venezuela.
Last week, Government officials were talking with countries in Africa to take off some of the rice.
More than 100,000 tonnes of rice was left back from last year, officials have been saying.
This crop, the Guyana Rice Producers’ Association is urging that farmers get $3,000 per bag. To help millers pay farmers, Government has made available almost $5B in a revolving fund. Interesting indeed, but we have to stop here.
Next week, we will speak with the Government and attempt to include some more details. After that…the farmers will have their say.
In the meantime, please enjoy your weekend. You can send comments to [email protected] or call weekdays on 225-8491.

P.S….We have started a fund for the children of the late Courtney Crum-Ewing, murdered political activist and student of my former school, Queen’s College. The fund has been green-lighted by the Ministry of Home Affairs and our Accounts Department at Kaieteur News is handling the contributions.

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