Rice exporter chides govt over deal with Jamaica on US paddy
Says will hurt local industry
Stabroek News
February 22, 2003
Exporter, Robert Badal, yesterday accused the government of hurting the rice industry in sanctioning Jamaican duty-free imports of US paddy, arguing that this will undermine the local rice industry which is already facing stiff competition in Europe.
Guyana in the last two years fought for Jamaica to revoke two licences it issued for duty-free imports of US paddy into the island, as paddy is ineligible for duty-free treatment in the region given that it is a key produce of Guyana, Suriname and Belize.
Badal said Foreign Trade Minister, Clement Rohee had called on the Caricom Secretary-General, Edwin Carrington to rule that Jamaica was in violation of COTED rules of origin and to have the licences withdrawn. The licences were issued to businesses without the capacity to mill paddy.
However, at a special meeting between Guyana, Jamaica and Trinidad earlier this month, the government of Guyana sanctioned the duty-free importation of 65,000 tonnes of US paddy annually into Jamaica for the next seven years (until 2010). Jamaica’s argument is that such a cap would allow Guyana to access a larger share of the paddy market of 140,000 metric tonnes per annum.
But Badal dismisses this, arguing that Guyana does not have the infrastructure in place to export paddy to Jamaica, a crucial market for Guyana’s rice given the increasing competition in the European market. He pointed out the arrangement in effect relegates Guyana to a primary product exporter, when Guyana is trying to move into downstream processing. He also noted the numerous rice mills across the country which would face increasing hardships.
Badal said the agreement would facilitate the Jamaica Rice Milling Company, a subsidiary of the US giant ADM milling monopolising the market and cross- subsidising the price of US rice which faces a 25% tariff with rice milled from the duty-free paddy.
This, he said, would force Guyana’s rice out of the market as the rice industry in the US is heavily subsidised. Guyana last year exported about 50,000 metric tonnes of rice to Jamaica.
Badal said even if Guyana had the infrastructure to export paddy to Jamaica, this cross-subsidisation of prices would make it impossible to do so.
He argued that the government signed the agreement with Jamaica in spite of representation from the local rice industry against the duty-free access of US paddy to the region and a number of discussions at COTED meetings where Guyana took a position that Jamaica could not waive the tariff on highly subsidised paddy from the US.
“What is the intention of the government of Guyana in making such an agreement that will have disastrous effects on our rice farmers and millers? ... Why would the government want to sell raw materials? This situation illustrates the irrelevance of Caricom and comes when Guyana holds the chairmanship (recently relinquished) of Caricom. It asks the question who is looking out for Guyana?” Badal asserted.
He also questions the commitment of Jamaica to Caricom and pointed out that only two years ago the Jamaican government had levied a 180% tariff on USA chicken imports, claiming that the industry was highly subsidised. Jamaica also recently imposed an 86% tariff on cement from Thailand on grounds that it was being dumped.
“Why then grant a licence for highly subsidised paddy from the US that would adversely affect the main product of another member state, Guyana. Should Guyanese importers in like manner be granted licences to import cement duty-free or for that matter any other product,” Badal queried, noting that cement and other products are sourced from Jamaica.
Badal said the Guyana government should have insisted that Jamaica cannot breach the rules and should have asked other member states to raise their voices against Jamaica for unilaterally acting against the interest of another state. He said the government has failed to do the required work to mobilise support for its case and he is demanding an explanation from the administration on the issue.
“The full effects of this agreement on our farmers and millers, its adverse effects on foreign exchange stability and the resulting social problems will be seen during the upcoming rice crop”, Badal said.
Rice is the second largest source of foreign exchange for Guyana after sugar and its receipts are used to ensure stability in the foreign exchange market.
Additionally, the rice industry, which has been plagued by debt problems in the last few years depends heavily on the Jamaica market as a stable export zone.
