The debt-related tension in the rice industry reached new heights yesterday with over 100 rice farmers from across the country taking to the city's streets to vent their unhappiness with the banking community.

The farmers had been promised breathing space and that there would be no new court action while the government, the rice sector and the banking sector continued efforts to deal with the $16 billion indebtedness to commercial banks. But this has been breached, according to Rice Producers Association (RPA) General Secretary, Dharamkumar Seeraj. Banking sector officials could not be contacted yesterday afternoon on this charge.

The RPA-organised protest saw the farmers from Crabwood Creek on the Corentyne to New Road, Essequibo picketing outside the National Bank of Industry and Commerce Ltd (NBIC) headquarters in New Market Street before moving on to Taking a stand: over 100 rice farmers protested yesterday outside the NBIC Water Street building over the debt crisis. (Ken Moore Photo)

The procession moved to the Bank of Guyana en route to the main branches of the Guyana Bank for Trade and Industry Ltd (GBTI) and NBIC's office on Water Street.

Hoisting placards which demanded an immediate restructuring of rice loans and calling on the banking sector to share some of the losses, the farmers moved on to picket GNCB, where Seeraj is an immediate past director. The bank's board's life has expired.

The protesting farmers then moved to Parliament Buildings and the Institute of Private Enterprise Development (IPED) before assembling outside the Ministry of Agriculture. The exercise, which began at 10 am, concluded at 1.30 pm outside the ministry.

Agriculture Minister, Navin Chandarpal came out and met the farmers and informed them that the bankers' association had put forward a revised proposal for the government's consideration. He advised the farmers that the government was reviewing this proposal and hoped to meet the bankers next week to further the discussion.

Seeraj told Stabroek News that the RPA had been assured that while the efforts were being made to deal with the indebtedness, no new court action would be started. However, he said farmers were being summoned to court and their assets seized in new procedures brought by the banks since October. He said that he had written to the bankers association on the issue but was yet to get a feedback.

The minister told the gathering that he would brief them on the outcome of the meeting. He said that he would do so by meeting small groups of farmers countrywide.

The rice industry is in dire financial straits. A series of companies have gone into receivership, with the latest being Arjune Persaud and Sons Ltd, Caribbean Rice Industry Ltd and Dhaneswar Industries Ltd.

The commercial banks have indicated to the government, a willingness to forego approximately $5 billion in accrued interest owed by the rice industry once the government granted them a waiver of taxes equivalent to $2.7 billion on the $6 billion in provisions to be written back into their accounts as profits.

The bankers were reportedly further willing to renegotiate the $12 billion principal at a lower interest rate and over a longer period. Sources indicated this would be over a ten-year period. The interest rate is expected to be tied to the rate of the 182- day treasury bills.

President Bharrat Jagdeo had earlier indicated that he was willing to make a fiscal concession to the banks to rescue the rice sector. He had pointed out that the taxes would be lost anyway if the industry was not resuscitated and the banks had to write off the amount as losses.

The bankers' proposal is a deviation from the earlier one by the rice committee and the bankers which had been thrown out by Jagdeo.

That proposal, made several weeks ago, had suggested that the government should take over 75 per cent of the $12 billion debt and the bankers would forego the interest. In return they would receive a waiver on the taxes on the provisions to be written back into their books.

But Jagdeo suggested that the proposal be reworked for the banks to take responsibility for what they had lent.

Of the $12 billion in debt, nearly $6 billion in provisions had been set aside from the profits of the banks. Once the government grants the waiver of the taxes, the banks would enjoy an increase in their profit close to the amount in uncollected interest which they would have to give up to the rice industry.

Additionally, sources say that working capital for the rice industry was also being looked at.

The government and the bankers were still reported to be working out the details of this new plan to rescue the rice sector. In the meantime, both millers and farmers continue to experience difficulty in surviving the hardships. (Gitanjali Singh)