Earlier this month, bankers and rice millers met with the agriculture ministry to discuss the overdraft system and to work out criteria to assist with loans.
Stabroek News understands that the meeting, which was facilitated by the ministry on June 9, was set up to address the major concerns of the industry due to a high level of production but weak export market which results in millers owing farmers on a continuous basis.
With the exception of the Bank of Baroda (Guyana), all of the major financial institutions were present during the discussions as well as Dr Peter deGroot who was one of the representatives on behalf of the millers. Representatives from the Guyana Rice Development Board (GRDB) and the Rice Producers Association (RPA) were also present.
President of the RPA, Dharamkumar Seeraj, told Stabroek News that payments to farmers continue to be an issue. He explained that in relation to the Venezuelan Rice Agreement the GRDB is to receive payment under the barter arrangement and millers are then paid. This only happens once the rice and paddy are delivered to Caracas. As a result many millers are unable to pay farmers in a timely manner.
Seeraj noted that the millers needed to take responsibility because the arrangement has always been that payment was only received when the rice was delivered to Venezuela. Since millers are aware of the situation they would need to be prepared to pay farmers prior to them receiving payments if need be.
He said that the export market was expanding, but that rice production here was considerably higher than what the export market could manage. He did say that Guyana was actively pursuing new ventures and that rice was moving on a regular basis.
In addition to Venezuela, Guyana has secured markets in Belize for an expected 33,000 tonnes to be exported in 2014 as well as a 50,000-tonne private sector deal with Haiti. It has also secured an increase in the Jamaican market which could eventually see Guyana exporting just shy of 90,000 tonnes annually, a 40,000-tonne increase from the current arrangement.
This newspaper was told that over 61,000 tonnes of paddy and rice have been shipped to Venezuela under the 2014 agreement. The rice agreement, which began in 2010, caters for 210,000 tonnes of white rice and paddy to be shipped annually to Venezuela valued at US$130 million.
Since the end of May over 160,000 tonnes of rice and paddy have been exported to all the major markets. Around this time last year, approximately 140,000 tonnes were shipped. According to one expert in the industry, Guyana had to do “much better than this” given that production was well over 300,000 tonnes for the first crop. Stabroek News was told that an additional 120,000 tonnes will be exported by the end of August given the current schedule.
The export market continues to be a struggle for the industry. With small export partnerships being established, the industry is yet to snag large scale markets that will really impact the industry and provide sustainability.
There is still too much rice on hand currently and this was problematic be-cause buyers then demand lower prices. Seeraj had previously told Stabroek News that Guyana would need to sell at US$520 to US$540 per tonne to be globally competitive and ensure adequate compensation at home.
Value added
The industry has also realized its need for diversification. In 2013 rice production was over 532,000 tonnes, a record, and well over the 413,000 tonne target.
Rickey Ramraj, Deputy General Manager of the GRDB, told Stabroek News that the board was currently doing research on a variety of valued-added products. He noted that the GRDB has acquired a small rice cake machine for $1 million and will be showcasing how to utilize the machine at the Guyana School of Agriculture.
He said that “we are doing some research on other products and which would require other machines. We want to see this one roll out and kick off, if it catches on then we go further”. Ramaj said that the GRDB was also looking into rice bran oil and instant rice.
Stabroek News asked about rice flour production, which historically has been seen in a negative light due to the wheat flour ban in the 1970’s to 1980’s. Ramraj stated that the GRDB would not be ruling out the idea however the nutrient component would need to be assessed and more research would be needed to see if in fact rice flour would be feasible on a commercial scale.
He noted that Guyana has produced and sold rice flour in the past but more research would be needed. He said that branding was more of a possibility and the GRDB was looking to create niche brands.
Stabroek News was told that small scale machinery was one of the focuses in valued added ventures. Having millers buy small scale equipment that was affordable and could be used to test markets was more encouraging to entrepreneurial investments.
