$1.6 billion EU boost for rice sector
By Shawnel Cudjoe
Guyana Chronicle
January 27, 2007
THE local rice industry got a major boost yesterday when a $1.6 billion credit facility for its benefit was launched.
The funding was made available by the European Union (EU) following a commitment to support the development of the sector.
Rice producers and millers can access loans from the source for use as working capital and purchasing machinery and equipment.
Exporters, too, can borrow working capital to also restructure or expand facilities and importers could be facilitated for fertilisers and pesticides, as well.
The 18 months loan scheme runs through June 2008 and was established under the EU Rice Competitiveness Programme to be administered by the Guyana Bank for Trade and Industry (GBTI).
At the launch, in the GBTI Recreational Centre, Bel Air Park, Georgetown, it was stated that the establishment of the service was the result of the direct intervention of President Bharrat Jagdeo, who engaged the commercial banks in discussion after their initial reluctance.
Minister of Agriculture, Mr. Robert Persaud said the venture is part of the government’s continued commitment to seek resources for the development of the industry.
He said the credit availability will serve as an impetus to drive production and re-investment which are needed to enhance competitiveness and ensure sustainability in the rice sector.
Persaud said, in 2003, after a feasibility study, it was agreed that the financial arrangement was necessary to offset the credit challenges facing the sector.
He said the government expects the loans will be extended to the most deserving and, therefore, there should be a high level of transparency and competition, with funded projects being viable and employment generating.
Persaud said the borrowings should be utilised wisely and not for refinancing debts.
He assured that the government remains committed to the rice industry because of its role in socio-economic development, rural poverty alleviation and national and regional food security.
GBTI Chief Executive Officer (CEO), Mr. Radhakrishna Sharma said the interest rates will range between six and 11 per cent and all loans will be assessed and rated in accordance with sound lending principles.
He observed that the rice industry has always played an important role in the life of this country and the produce is the second most important agricultural crop in Guyana, contributing directly to food security and employment while being the primary source of livelihood for most rural farmers.
“The industry absorbs and influences more of our country’s working population than any other industry, supporting at least 100,000 Guyanese directly and indirectly in all the three counties,” he remarked.
Sharma said statistics have shown that the industry accounts for about 14 per cent of the Gross Domestic Product (GDP) and is the third largest earner of foreign exchange.
“Given, therefore, its crucial role in the future development of Guyana, it is imperative that, together, we show our commitment to its continuing success,” he declared.
Sharma said GBTI has remained strongly associated with the rice industry in times of difficulties, including the El Nino and La Nina phenomena, the dramatic decline in global prices for the commodity and the significant increase in oil prices that affected mechanised production operations.
“It is a testimony to our commitment to the sector and the country that, in the year 2000, GBTI restructured and rescheduled close to $3 billion of the indebtedness of farmers and millers to aid the sector’s recovery,” he stated.
Sharma added that, today, that debt stands at $1.4 billion, making GBTI the largest credit provider to the rice industry.
He said, as manager of the fund, GBTI sees itself as contributing further to the efficient operation of the industry by providing loans in a timely manner.
“Through our network of seven countrywide branches and with our team of experienced and well trained credit officers, we remain committed to providing the rice growing communities of our country with the best services and support for the success of their operations,” Sharma assured.
He pointed out that the scheme can only survive for the benefit of everyone if it has the vital ingredients of certainty and integrity. “There must be willingness on the part of borrowers to honour their repayment obligations, because, as a revolving fund, the scheme must be replenished by repayments in order for new loans to be granted.”
Director of CARIFORUM, the grouping of Caribbean states among the African Caribbean and Pacific (ACP) countries, Mr. Percival Marie remembered that, in 2003, an agreement was signed between his organisation and the EU, for 24 million euros in support of rice industries in this region.
Forty per cent of that money, which translated into 10 million euros, was allocated to finance and Guyana received $6.5M while Suriname got the remainder, he said.
Describing the EU decision to provide the financing, Marie said it was “ground breaking” and posited that all important stakeholders had to get together and design a new system which took some time.
Also addressing the gathering were Charge d’Affaires of the Delegation of the European Commission, Ms. Helen Jenkinson and General Secretary of the Rice Producers Association (RPA), Mr. Dharamkumar Seeraj.