Investment opportunities abound in the rice sector given the high prices for the product on the world market and the potential benefits outweighing the risks, says one rice miller and exporter.
Speaking to this newspaper, Dr Peter de Groot, CEO-Production of Fairfield Rice Inc, said the profit margins being offered by rice were unmatched in any other sector.
He said that farmers could make as much as almost double the money that they invested, and a bag of paddy could easily reach a high of $4,000 per bag before the end of the crop in a few weeks time.
Such returns, he said, were encouraging to investors, even though there were risks such as the unpredictable weather, high fuel prices and the high cost of fertilisers.
According to de Groot, farmers were most likely to benefit most through new investments, since they were having no trouble selling paddy. The shortage of rice had increased the competition among the farmers for the supply of paddy, and this too was sending up prices. “It’s a seller’s market,” he explained. “The rice farmers are in control now.”
He said too that on the global market the demand was greater than what rice producing nations were able to supply.
Over the past weeks since the Christmas holidays, the price of rice has doubled and even though the government introduced a measure to stabilise prices, this has not had the desired effect. This past week saw rice prices still at an all-time high, approaching or in some cases surpassing $400 per gallon for white rice, and $600 for brown rice.
John Tracy, Director of Credit at the Guyana Bank for Trade and Industry (GBTI), told this newspaper that the European Union fund which the bank administered was going well. He said that the farmers were taking full advantage of the lower than standard interest rates and the straightforward qualifying terms at a time when the industry was faced with high fuel and fertiliser costs.
Tracy said that the bank hoped to see better and better production and more land going to rice cultivation. He noted that there had been some loss of acreage because of the rains and flooding over the past few years. Neverthe-less, farmers had risen very well to the challenge and had been making productive use of the monies available to them.
He went on to say that the fund, started in November 2006, would cease disbursements at the end of June 2008, and was encouraging rice farmers to come on board since there was still some money left. The EU project has an injection of $1.625 billion or 6.5M euros and is a part of broader EU assistance to Guyana to make the rice sector competitive.
Tracy said that the farmers must produce a business plan outlining a projection for at least one crop and once they meet the criteria, they would be able to access financing.
He said that the bank had a working knowledge of the industry and would be able to verify what the farmers said when applying for financing.
