Editorial
Senior rice industry officials have submitted to the government an interesting proposal to lighten the debt burden on farmers and millers and give them a breathing space. The essence of the deal set out in the White Paper is that of the rice debt now held by the banks, about $l2 billion plus interest of $4.6 billion, the banks will write off the interest and $3 billion of the capital, leaving $9 billion, the government will take over the $l2 billion owed to the banks and any securities held by them and pay the banks the remaining $9 billion due to them . The government will raise the money by issuing bonds to the financial sector at a rate of interest of l0%. The government will charge the farmers and millers interest at 5-l/2% (a fraction of bank interest rates) on the $l2 billion debt it takes over and will give a moratorium on the repayment of the principal to the second crop next year. The banks will get debt relief on the income they earn from the writing back of bad debt provisions already made.
Stabroek News
August 23, 2001
The proposal is imaginative, and has the potential to revitalise the industry which is at present crippled by debt and the lack of capital. It can also relieve the threat to the banking sector posed by the massive rice debt. Its viability hinges on the recovery of the local rice industry. If that does not occur, the government could end up holding some bad debt or having to give more time to pay.
The industry has suffered from the closure of the Overseas Countries and Territories (OCT) route through Curacao in l996 which removed a lucrative preferential market and from the fall of rice prices on the export market from a high of US$425 a ton to the current price of US$208 per ton. The key question is whether new markets at good prices can be found and whether prices are likely to recover. The White Paper estimates that small farmers can sustain farms with a minimum of 25 acres if paddy prices were to stabilise at G$l,200 a bag. The White Paper feels that this can be achieved if the rice can be exported at US$300 per ton. It also frankly admits the need for improved productivity through such measures as increased yields per acre due to improved varieties and good quality seed, improving milling yields and better post harvest technologies (drying , milling and storage).
Can the markets be found? This has been the vital issue for some time. As regards the world market, the White Paper refers to the Arkansas Global Rice Model as indicating that consumption will increase and prices will rise. However, that model itself says that it is not a forecast and actual market conditions could differ substantially. There are so many variables such as whether more people will eat rice (partly a lifestyle issue), whether big producers will expand or contract, the scope for expansion and so on. Efforts must certainly be made to find new markets, but this has not proved easy so far and there has been little success. Traditionally, the main preferential markets have been the European Union and Caricom. The White Paper discusses these markets and refers to lost opportunities in Trinidad and Jamaica where subsidised rice has been imported from the far east and the USA respectively. Certainly more pressure has to be exerted to develop these markets with help from the government. Recent efforts in this area are welcome but more needs to be done.
The Paper recommends among other things that the government should help rice trade negotiations with Brazil, Haiti, Cuba and the Dominican Republic and that the European Union be lobbied on the current import licensing system and other matters.
The rice industry in Guyana is at present in a severe depression because of low prices, as it is in other countries. This is an effort by the industry to devise a way out of it. It deserves close consideration by the government and it has been indicated that the President will be meeting the officials later this week to discuss the proposals.