Fifty-six or almost half of the rice mills in Guyana are today out of business, mainly as a result of financial troubles and a further 25% are expected to fall by the wayside in the banking sector's case-by-case deliberation of those entities eligible for loan restructuring.

The National Bank of Industry and Commerce Ltd (NBIC) has rejected the proposal put forward by the Guyana Rice Millers and Exporters Development Association (GRMEDA) to provide assistance to 100 large farmers/millers who did not benefit from the deal the government struck with the banking community.

GRMEDA met over 60 of those 100 farmers/millers at an emergency session on Wednesday evening at the Hotel Tower to be briefed on the prospect for further debt restructuring. Last month, the government and the bankers association agreed on a deal to alleviate the debt burden of 1,200 small rice farmers. Chairman of GRMEDA, Harribhajan Persaud told Stabroek News the meeting sought to update the large farmers on what was taking place and was not of a confrontational nature. He said that all of the farmers there wanted to know why they were not included in the package negotiated between the government and the banks.

Persaud said that the meeting was notified of a small committee formed by GRMEDA to address the concerns of the 100 large farmers and of this committee submitting a restructured proposal with a bond component to the banking sector.

He said that NBIC's response, which he was tight-lipped about, was communicated to the farmers. Those present at the meeting, he said, fully endorsed the reworked proposal that went to the banking sector. They further mandated GRMEDA to write to the Governor of the Bank of Guyana seeking a waiver of the requirements for rescheduling as outlined in Section 14 of Supervision Guideline 5 accompanying the Financial Institutions Act.

Stabroek News understands that NBIC had set out in its letter of rejection to GRMEDA that all necessary waivers should be negotiated between the farmers/millers independently of the bank and it was this recommendation that GRMEDA has acted on.

The loan-to-bond proposition was the only new aspect of the proposal. Its other sections - total write off of interest on the $10 billion debt, the write off of 25% of the capital and a one-year moratorium on debt repayments - were all a part of the previous document presented to the government. Instead of a fiscal waiver from the government on profits on these loans to allow the farmers to receive lower interest rates, the proposal speaks of converting the individual debts of the larger farmers/millers to bonds, which would attract withholding interest of 15% and could attract interest rates of 12% per annum. The new proposal also sees the $6 billion in loan loss provision being written back onto the accounts of the banks' books, enhancing their bottom line.

Persaud said that GRMEDA did not want assistance to be proffered to those businesses that were not viable, and was not asking for this. He said that the agency was asking for help as outlined in the proposal to be extended to those farmers/millers whose operation could be viable once they get the relief outlined in the package. He said the meeting was told that many of the debtors might not satisfy the conditions of the bank and would need business plans and management supervision by the banks to be able to survive.

NBIC, Stabroek News was told, wanted an immediate injection of equity by the borrower, which would be impossible since if the farmers were unable to repay their debts they could not source equity. The bank was also reported to be asking for a business plan for each individual case to be considered. The bank rejected any carte blanche treatment for the 100 farmers left out of the earlier negotiated package with the government .

And as GRMEDA awaits the response of the other banks to its new proposal and the response of the Bank of Guyana to the waiver request, the price for rice continues to slide with cargo rice in Europe now at US$205 per tonne against US$208 last year.

Meanwhile, a look at the list of mills in Guyana revealed that over the last few years six of the 26 mills on the Essequibo Coast have closed. In the West Demerara Islands 13 of the 21 mills have ceased operating, while on the East Coast Demerara/West Berbice, 17 of the 28 mills have shut down. And on the Corentyne, 20 of 26 mills are inactive.