Latest update January 1st, 2025 1:00 AM
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Rice board in discussions to stabilise rice prices
By Jarryl Bryan
The Guyana Rice Development Board (GRDB) is taking the first steps in establishing a stabilisation fund for rice farmers, an initiative that rice industry experts and farmers have been calling for in order to save the rice industry.
Chairman of the GRDB, Claude Housty confirmed this when contacted by Kaieteur News yesterday. According to Housty, the merit of the proposal is being examined by the GRDB as an internal matter, for now.
The stabilising fund as well as a pending feasibility study into establishing a development bank, took a prominent standing at the GRDB’s last Board meeting on Friday.
The stabilisation fund is important as it is a mechanism that caters for a fall in prices. It is currently incorporated in several countries with a strong agriculture sector.
Rice prices are a sore issue for farmers who have been producing paddy at approximately $3000 per bag but are being paid as little as $1200 per bag in some cases.
While sectors such as the mining industry got fuel concessions, the rice industry got no such concessions. On a per acreage basis, farmers have reported their production costing $90-100,000 per acre, but only receiving $60,000 in return.
Many owe the commercial banks and in some cases the millers, yet have nothing else to fall back on. Some farmers have exited the industry and have gone into other sectors.
The rice industry has been crying for a development bank, stabilisation fund
GRDB Chairman Claude Housty
Their problems were compounded earlier this year when Guyana lost its lucrative Venezuelan market.
Venezuela was purchasing rice from Guyana and other regional countries under its oil for rice initiative, until its agreement with Guyana came to an end last month. The loss of the Venezuelan rice market however meant the loss of the preferential prices that the Spanish speaking country offered under the agreement.
While the world market price for rice averaged at US$390 per tonne, Venezuela was buying white rice from Guyana for approximately US$780 per tonne. The loss of this market, accompanied by the financial woes of farmers caused them to launch protests in Georgetown and key rice producing areas.
At present, Guyana averages between US$335 to US$400 per tonne in its sale of white rice while parboiled rice sells for as much as US$600 per tonne.
Government’s commitment to establish the stabilization fund is tied with the establishment of an agricultural bank, as the coalition had made a commitment towards establishing both. This was contained in their 2015 General and Regional Elections manifesto.
Minister of Finance Winston Jordan had recently announced that an approach has been made to the Caribbean Development Bank (CDB), for a feasibility study to be conducted into establishing a development bank locally.
The Minister’s announcement was made at the Guyana Manufacturing and Services Association (GMSA) dinner and awards presentation last month. The Government’s concept is for a development bank to ensure that manufacturers, agro processors and service providers have access to capital for their enterprises.
Currently there is some funding being provided for the agriculture industry through the rural development fund and micro enterprises development fund. However, stakeholders have been heavily reliant on the commercial banking sector.
At one time farmers benefitted from the Guyana Agriculture and Industrial Development Bank (GAIBANK), which was first established in 1973 by the Government as a state-owned development bank catering for the Agricultural and Industrial sectors.
The bank was intended to fulfill the financial needs of farmers that were not being met by the terms provided by the Commercial banks.
It helped, with grants and loans from the International community.
Although Government signaled that GAIBANK’s return was indeed on the cards, it had indicated that its composition would be dependent on a study that would take into account the circumstances of GAIBANK’s collapse and the demise of other developmental banks within the Caribbean.
GAIBANK, Guyana’s only development bank at the time, was rendered defunct by the then Dr. Cheddi Jagan administration in 1995. In a bid to redress financial difficulties and recover its loan portfolio which was lagging behind, GAIBANK was merged with the Guyana National Co-Operative Bank (GNCB).
According to Minister Jordan, GAIBANK would not necessarily have the infrastructural form of a bank, but could be a window/division operating from a commercial bank. That bank could be paid via a commission. But all this would have to come about following a study of the GAIBANK proposal.
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