Small rice loan restructuring hits new snag
Stabroek News
June 4, 2002
The restructuring of the loans for small rice farmers has hit a new snag with some banks demanding interest payments from August 2001, before the loans could be rescheduled.
General Secretary of the Guyana Rice Producers Association (GRPA), Dharamkumar Seeraj, told Stabroek News in an interview on Friday that the agreement with the banks announced by President Bharrat Jagdeo on January 31, was that there would have been an interest write-off up to August 31, so technically they could demand the payment.
But he pointed out: "The new condition effectively disqualifies most farmers and small millers. We had also catered for a moratorium on payment, recognising that farmers were incapable of repaying now."
According to Seeraj, it was agreed that the banks would write off all interest accrued on loans with a principal of $10 million or less, up to August 31 last year. But he pointed out that the negotiations for the agreement began in 2000 and it was envisaged that the rescheduling would have been on stream and August 31 was a feasible date then for the farmers.
The banks were also aware there was a moratorium on repayment because of the farmers' inability to pay, Seeraj said, so the banks would be aware that the interest from August last year to now would only add to the farmers' woes.
He remarked that the GRPA's position was that the decision by the banks should not be a condition for the rescheduling of the loans. He said that the GRPA was advising all farmers to check with their banks to find out what needed to be done for the restructuring to go ahead.
Seeraj said the association was talking to the banks on an individual basis regularly to try to resolve the situation. "We feel it's in bad faith [for] banks to demand this arrangement knowing the farmers' plight," he said.
According to Seeraj, other components of the agreement were: a suspension of 25% of the principal if the restructuring of the loan was serviced to satisfaction; the balance of principal would be rescheduled not exceeding ten years at ten per cent per annum; a moratorium for one crop over payments on principal; a stay in the judgments against rice farmers for cases where they defaulted on their payments to the banks; provision for further assistance not exceeding $3 million for rice production after a process of due diligence and the undertaking proved feasible.
As a result of the difficulties being faced by the rice farmers some of them did not go back to the land for the spring crop, which recently ended. Out of the 185,000 acres available for rice cultivation only 135,000 were utilised. The two main problems were non-financing and inadequate irrigation. Leguan, for example has 5,000 acres of rice land but only 648 acres were cultivated for the last crop.
Another problem that affected the spring crop was paddy bug infestation, which reached the highest level in years, Seeraj said.
He stated that Region Five (Mahaica/West Berbice) and Region Six (West Berbice/Corentyne) were the most affected areas where the bugs were responsible for some 38% of the damage done.
Seeraj said the farmers needed to have a comprehensive approach to the paddy bug problem.
Apart from using chemicals, farmers should also make efforts to weed their farms and keep their surroundings clean, he said. He added that spraying of the dams should also be done to restrict the bugs there before they got into the rice fields.
Seeraj stated that in some areas farmers consistently got a yield of about 30 bags of paddy per acre while in other areas they got 20 bags. He said the yield was higher in the areas with good drainage and irrigation. These were mainly Region Two (Pomeroon/Supenaam) and Region Three (Essequibo Islands/West Demerara) and Cane Grove in Region Four (Demerara/Mahaica).
Low productivity was experienced in the riverain areas like Black Bush Polder, Mahaica, Mahaicony and Abary. Seeraj said that a major problem facing farmers was the maintenance of the existing drainage and irrigation structures.
"We are concerned about the quality of work being done. Much improvement is needed for the supervision of the works being carried out. This way we feel we could get better value for the money spent," he said.
An increase in acreage fees to $1,000 per acre was recently implemented. The previous rates were between $14-$21 per acre in land development areas and $300 per acre in other drainage and irrigation areas. Seeraj said the increase was initially backdated to 1998, but this brought an outcry from the farmers. He said representation was made to the Commissioner of Lands and Survey Department, Andrew Bishop, that the farmers were not opposed to the increase but were strongly against it being backdated.
Seeraj pointed out that there were cases where farmers had already paid the fees for 1998-2001 at the old rate. It was eventually agreed that the increase would not be backdated.