Latest update May 27th, 2023 12:27 AM
A prominent rice production figure Dr. Thurhane Doerga is contending that as the industry continues to swim in financial problems, millers will be hard pressed to meet their financial obligations.
This he said is due to the unavailability of rice markets, coupled with a banking system that is unable to sustain the needs of such a volatile industry.
Reports have been emerging that some rice farmers are still owed money for the paddy they supplied last year and Doerga is repeating the call for the establishment of a special financial institution to assist millers who find themselves in a crisis as a result of the aforementioned problems.
“Because there is no security of rice markets, banks are hesitant,” he said. “That is why an agriculture bank is necessary.”
Currently, payments to farmers are under the protection of the Rice Factories (Amendment) Act.
Under the Act, it is illegal for millers to withhold payments to rice farmers in excess of 42 days after delivery of the produce.
Failing to pay in a timely manner makes the miller liable by law to pay farmers interest that is two per cent higher than the going interest rate of the Bank of Guyana.
Over the past few years, however, there has been a growing outcry from rice farmers, who would have sold tonnes of paddy to millers, but in many cases have been forced to wait in excess of the 42 days prescribed under the Act.
In light of the problems in the industry, Dr. Doerga noted that the Act is impractical, as millers have few options if they are up to their necks in debt.
And while the industry has enjoyed record production for a few successive years, events of last year have placed rice on shaky footing.
For instance, some degree of the security Guyana’s rice enjoyed dissipated when the Guyana/Venezuela oil for rice agreement came to an official end in November. While Government has since stated that markets such as Panama and Portugal have done well in taking rice off of Guyana’s hands, the preferential prices that exporters earned from the Venezuela deal, are not there.
Regarding the way forward to smooth over the wrinkles in the rice sector, Doerga noted that the only recourse Government has is to set up an Agriculture Development Bank, which will be manned by professionals that can conduct risk assessments for loans, from a developmental aspect.
He also spoke of the need for a stabilization/intervention fund to help the industry, but ultimately cited the need for a shake up at the Guyana Rice Development Board (GRDB) and the placement of specialized professionals to spearhead initiatives in the rice sector and to deal with late payments.
The issue of money owed by millers to farmers reared its head during an outreach by Prime Minister, Moses Nagamootoo and Minister of State, Joseph Harmon in Essequibo last week. During that visit, a number of farmers took the opportunity to highlight what was affecting them.
Essequibo rice farmers have called for Government to take drastic measures against millers who do not discharge their financial obligations. One Better Success farmer called for measures in the form of suspension of millers licenses.
An Agriculture Development Bank concept is not a new one. At one time farmers had access to the Guyana Agriculture and Industrial Development Bank (GAIBANK), which was first established in 1973 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.
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).
Although the current APNU+AFC Government had signaled last year that a Development Bank could be on the cards, it had indicated that its composition would depend on a study that would take into account the circumstances of GAIBANK’s collapse and the demise of other developmental banks within the Caribbean.
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