May 06, 2013 Editorial
Rice farmers across Guyana breathe a sigh of relief last Friday when Venezuela’s Food Minister, Felix Osoria, signed the long-awaited contract for Guyana to supply paddy and rice to his country this year. The present agreement will see Venezuela purchase 140,000 tons of seed paddy and 70,000 tonnes of white rice, which will be about 60% of our entire production. As per the protocol, Minister of Agriculture Dr. Ramsammy will travel to Caracas on May 15 to tie up any loose ends.
But the little hiccup in the rice shipments to Venezuela demonstrates the importance of that market for the health of our rice industry in the near term. Paddy prices fell precipitously in the last month in the uncertainty over markets as the first crop began to be harvested. We will receive US$520 per ton for paddy and US$800 per ton for rice from Venezuela which are substantially higher than the world market prices for rice at this time. In comparison, Europe was only willing to offer US$605 per ton rice and US$512 per ton paddy.
What is instructive is that back in the 1960’s we switched from the medium grain rice we had been producing for decades and plunged totally into the extra long grain rice, specifically for the European market. The Europeans, much as they had done with sugar, offered us “preferential” prices for our rice – for as long as it suited their interest. When they reorganised their agricultural policies a decade ago, they abandoned those prices as we were told to stand in line with other rice suppliers and compete on prices.
The lesson for us is that we will have to work out a long term strategic plan for the marketing of our rice. Take the Venezuelan market, for instance, which in common with other Latin American countries is more comfortable with a medium grain rice. Our premium extra-long grain rice does not excite their taste buds to such an extent that they would willingly pay a premium price. We have secured the Venezuelan market primarily because of the PetroCaribe oil facility established by former Venezuelan President Hugo Chavez.
In essence, we are bartering our rice to “pay” for the oil, which has been shipped to us on “credit”. There are huge benefits for Guyana under this arrangement, not the least being the extremely generous credit terms for the oil. Then, since our farmers are paid in local currency, there are no foreign currency demands on our balance of payments. Furthermore, as is being explored at the moment, in times of uncertainty, the government can forward payments to millers/exporters ahead of shipment so as to relieve pressures on the cash-strapped farmers.
It is now obvious that Guyana needs a professional and permanent body to market our rice and cannot depend on ad hoc rescue missions, as occurred when former President Jagdeo intervened to secure the Venezuelan contract. At present, Guyana’s marketing thrust, such as it is, is ill-served by the Guyana Rice Development Board (GRDB) which is funded through a levy on every ton of rice exported from this country. The marketing arm would work in tandem with the technical support to produce varieties that are more suitable to markets in Latin America. We have belaboured the point in this space that northern Brazil is an opportunity that we have neglected for too long.
The CariCom market, including Haiti, also has to be deepened. But here it appears that there is some confusion reigning. There have been reports that our Ministry of Agriculture, citing the Jagdeo Initiative in Agriculture, is assisting Trinidad to expand their rice production. This is a misguided reading of that Initiative, which in any case, Trinidad has never taken care of its assigned responsibilities. Our comparative advantage in Agriculture is our availability of land and farmers: Trinidad’s is finance.
The Ministry should be working with Trinidad to provide financing for our rice farmers to expand our rice production to the million-ton mark.
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