Passage of rice bill ups pressure on millers
- 95% of purchases must be paid for by end of year
Stabroek News
January 24, 2007
The Rice Factories (Amendment) Bill 2006, which was recently passed in the National Assembly, aims to alleviate problems facing rice farmers by, among other things, guaranteeing that they are paid a minimum of 95% of outstanding purchases by millers at year-end before the renewal of their mill/export licences.
Minister of Agriculture Robert Persaud introduced the amended bill earlier this month since many rice farmers are faced with payment problems from the factory owner/proprietor/exporter.
The minister indicated in his National Assembly presentation that the overall programme to make the industry more competitive is ongoing. But it is also necessary to protect all stakeholders and the future of the industry. "The gains we made need to be expanded, but that can only happen in an environment where all parties meet their obligations - millers to farmers; farmers to farmers; millers to exporters, etc," Persaud emphasized.
He went on to say that most farmers do not receive their payments on time and those who have taken loans from the banks are then unable to repay on time. Oftentimes the banks foreclose on the land and equipment of the farmers as the millers' payment system is characterized by slow export turn-over. Some millers owe farmers for in excess of 6-12 months with one crop overlapping the other.
Farmers are therefore unable to proceed into the next crop and many farms are abandoned.
This leads to a drop in production which affects the national target. In addition, national budgetary implications, sectoral dislocations and socio-economic challenges of rural families arise as a result.
The agriculture minister also observed that the system of rice/paddy grading is still onerous and too subjective in its present form. And criticism was also levelled against the practice of 'cartelization' of rice/paddy prices by millers/exporters. Realising that farmers do not have adequate access to their own drying and storage facilities to hedge on future prices, some mills hold them to ransom during the harvesting season. "Available information proves that whilst international rice prices are relatively high, comparative paddy prices in Guyana remain low," Persaud said.
The amendment therefore seeks to make it mandatory that millers pay a minimum of 95% of outstanding purchases to farmers before renewal of their licenses. Further amendments and regulations are also being drafted to improve the relationship between farmers and millers/exporters and regulate the purchase and milling of paddy.
In spite of these regulations being imposed on the millers, Persaud commended those millers and exporters who have been honourable, noting that they need to be rewarded and protected. This, he said, was because the reputation of the industry was being destroyed by a few unscrupulous millers/expor-ters.
Instead of considering the measures as a disincentive for millers, Persaud said, they were meant to ensure viability of the industry. ". . . a mill can only operate if supplied with paddy and a reliable supply will ensure no down time; and an exporter can only meet his market requirements if supplied with the correct quality, adequate supply and timely delivery," he told the National Assembly. Consequently, the minister sees the measures serving as a deterrent for conduct which can harm the future of the industry, and this would lead ultimately to benefits for the millers.
The amendment includes provisions for discretion in the event of particular circumstances, which may face a miller/exporter. Such discretion is covered by the insertion of `h', 'h (i)', and 'h(ii)', after paragraph 'g', 'Conditions of Licence'.
The paragraph states the licensee's total debt owed to producers shall not exceed 5% of the licensee's gross turnover for the past year ending December 31 unless: (i) the licensee notifies the Board in writing as soon as total debt exceeds the specified level and gives reasons and (ii) the Board upon being notified gives the licensee written approval for the debt to exceed that level for not more than three months. Another incentive in the system, Persaud stated, was the broad-based composition of the Board that includes millers, exporters, farmers and consumers.