A clash in Parliament on Thursday over the state of the rice industry saw Minister of Agriculture, Noel Holder committing to a review of the imposition of VAT on imported machinery and spares.
He made the statement while debating a motion in the name of People’s Progressive Party/Civic (PPP/C) MP Irfaan Ali regarding the state of the rice industry. While rejecting many of the claims in the motion, Holder said: “It is true that VAT is now being charged on imported machinery, equipment and spares unlike the earlier years but this can be re-looked at and [I] will ensure this is done so that recommendations, if considered feasible, can be made to the Ministry of Finance.”
The motion had to be adjourned because of the opening of GuyExpo and debate on it will resume on May 24 with PPP/C MP Dharamkumar Seeraj completing his presentation.
The revocation this year of the VAT waiver sparked outrage from the PPP/C and the Guyana Rice Producers Association (GRPA) with the latter saying it was the death knell for the industry.
Order 6 of 2016, signed by Finance Minister Winston Jordan on January 29 and published in the Official Gazette on February 10 revoked the VAT waiver.
In presenting the motion, former Minister of Housing Ali also asked for negotiations with the Government of Venezuela to be resumed. His motion said that the calls were made after GRPA General Secretary Seeraj sent several letters to Holder without getting any response.
The motion also called for the government to work with financial institution to refinance loans for farmers and to suspend the payment of land leases and drainage and irrigation charges.
It also asked for provision to be made in the National Assembly for support to farmers in order to aid in the purchase of seed paddy and fertilizer.
The opposition also wants the implementation of minimum export prices for rice and paddy and an aggressive marketing strategy in order to enhance current prices and secure new lucrative markets.
It was also recommended that government withdraw its pronouncement that the rice industry’s crisis “is a private matter” and give support to the industry, especially to farmers.
In response to Ali’s presentation, Holder said he could not accept the motion unless the points were revised. Opposition speakers later expressed disappointment that effort was not made to embrace the recommendations and accused government of not looking after the interest of the rice farmers.
The minister acknowledged that in the Guyana Rice Producers Act, Cap 69:01 stated that, “among the functions of the (G)RPA shall be, ‘making representations to the minister concerning any matter affecting production in the industry, the operations of the Rice Board and the interests of rice producers generally’.”
The minister said too that “over the past several months, I have visited the entire rice belt and find myself continually being faced with farmers who complain of the neglect meted out to them by the so called representatives of the GRPA.”
The minister also accused the GRPA of refusing to hold proper, transparent and verifiable elections in accordance with the regulations for several years. Seeraj responded that the election, which is governed by a particular piece of legislation, is due next year.
The opposition argued that during the election campaign, government promised farmers that they would be paid $9,000 per bag of paddy. Ali also said it was the duty of the government to design and implement policies that will lower productions cost for farmers and producers.
He said too rice was exported to Venezuela at a cost of US$760 per tonne and paddy at US$480 per tonne and that the relationship between the two governments “did not start off on the right footing”. He said if the Guyana Government fails “to act and seek a plausible solution, the actions can be detrimental to our economy and most importantly affect adversely the living standards of our people.”
According to Ali, a quick analysis shows that over $11 billion or US$57 million in revenue was lost due to government’s failure to secure the Venezuelan market. Venezuela last year terminated the rice barter agreement with Guyana under the PetroCaribe Agreement.
Ali said too that it has also resulted in farmers seeking extensions on their mortgages and that the economic situation already negative impacts “in the forms of social ills and this can quickly worsen if appropriate measures are not put in place…”
He called on government to “suppress its pride and take our suggestions in good faith… It would be unfortunate if the government is making a deliberate attempt to suppress the rice sector…”
Ali questioned how it is that the government wants to help rice farmers when it has “now levied tax on the importation of tractors, when the sector is already in trouble…”
Negotiation
With regard to resuming negotiation with the Venezuelan government about the market, Holder said that under the PetroCaribe arrangement, Guyana signed contracts with Venezuela for each consecutive year from 2009 to 2015 and honoured all contracts.”
During this period, he said, the rice industry saw some positive transformations with farmers and millers gradually increasing their investments over the years. He said the arrangement was ended by Venezuela and that Guyana’s effort to resume shipments was not successful.
Holder also said that while Guyana benefited from the reduction of oil prices, Venezuela did not and is facing serious economic problems.
In terms of the removal of taxes, he said it may be possible and that the field staff of the GRPA can relate the quantum of fuel used for field operations on a per acre basis. He called on the GRPA to collaborate with officers from his ministry to present a proposal on how the removal of duties and taxes on fuel can be addressed without the haemorrhaging of such fuel into the society at a great loss to the government’s coffers.
Addressing the issue of suspending payment for land leases and D&I charges, Holder mentioned the Black Bush Polder and Tapakuma Schemes, where farmers were irresponsible in cattle rearing, cleaning and clearing of rice fields, and drainage to farm lands. He said they were not paying their D&I fees and that resulted in the deterioration of the schemes, causing government to intervene by accessing IDB loans to resuscitate these schemes.
In terms of financial support, “government has in the past, given favourable consideration for supplementary provisions for farmers. We are prepared to import fertilizers and make it available to farmers at the lowest possible price.”
The minister said in the rice trade, Guyana’s production is merely 0.161% in the world and that it was not in a position to dictate terms on the world market, nor influence price nor production trends.
He said the Guyana Rice Development Board has been implementing an aggressive marketing strategy in order to enhance current prices and secure new lucrative markets on a continuous basis. He noted that the Panama contract is a case in point and negotiations are in train to secure a new market in Mexico.
According to him, “The main issues facing the industry is the challenge of marketing our rice at a price that is profitable to all stakeholders. The enormous increase in rice production now means we must market our rice into newer markets and be competitive with other producers of rice.”
Holder said that 40 countries now buy Guyana’s rice, “allowing our export earnings from rice to grow to more than US$240 million. We must protect and extend these markets by ensuring the highest quality rice is exported.”
As for the pronouncement that the crisis of the industry is a “private matter,” Holder said “the rice industry is at present the most important agricultural industry in Guyana. Indeed, it is now ahead of sugar in terms of foreign exchange earnings.”
He said too that rice is the largest user of agricultural lands, and absorbs and influences more of the working population than any other industry in Guyana. “Mr Speaker, this government recognized the 7,300 farmers across the rice belt cultivating some 240,000 acres,” Holder declared.
He also said that he welcomes the GRPA “to come sit down with my officers and let us work on these measures in greater details for the benefit of the farmers and to improve the state of the rice industry.”
Other PPP/C MPs who spoke on the motion were Cornel Damon, Zulfikar Mustapha, Priya Manickchand and Anil Nandlall.
