A RE-FOCUSED EXPORT AND INDUSTRIALIZATION POLICY FOR THE RICE INDUSTRY
In 2012, rice was the second most dominant staple food in the world behind corn. Structurally, the traded market is a residual one. Many of the rice producing countries (mainly in Asia), consumed significant portions of their own production. The largest rice consuming countries outside of Asia are Brazil, Nigeria the United States.
In 2014, rice export earnings were the second largest for Guyana behind gold; some US$250 million. This industry employs some 5,300 farmers and supports some 110,000 persons nationally. Therefore, this Venezuela/Guyana state of affairs will have deep adverse socio-economic impact in rural Guyana, if we do not act urgently to secure new markets. Need I remind readers; Georgetown is not Guyana.
This rice crisis however has opened many new marketing opportunities. Brazil, Nigeria and the United States, along with the CARICOM market have great scope for Guyana. In addition to these core countries, emerging markets that are within Guyana shipping proximity such as Colombia, Panama, Honduras, Cote D’Ivoire, Ghana, Cameroun, Angola, South Africa, Haiti, Guinea, Gambia, and Congo must also be pursued. Speaking to this statement, one would think that this Venezuelan situation has created the opportunity to open a small High Commission in Accra (Ghana), a long-standing South-South partner. This High Commission can play a leading economic role in penetrating the African market, not just for rice, but also sugar and non-traditional exports.
Petro-Caribe
In 2009, after recognizing that Guyana’s debt to Venezuela increased by US$143 million as a result of the Petro-Caribe Agreement, the deceased Bolivarian leader of Venezuela, President Chavez agreed to the proposal from Guyana to barter “Rice for Oil”. This Rice for Oil deal was sound since it created the condition for debt reduction and the better management of several risks.
But this Agreement is no reason for Chavez’s predecessor to bully a smaller nation in 2015. President Muduro must not be allowed to make Guyana into a pawn in his geo-political and internal struggles against his political opponents. The people of the Co-operative Republic are not his enemy; we are his friends. Therefore Guyana has all rights to reject at every forum this “gunboat diplomacy” as is being practiced by Venezuela, even if the price is the loss of the rice/oil barter arrangement. Even little countries must have some self-respect and self-dignity. Thank you President Granger for making us all proud for your principled stance on the issue.
Rice – Cost of Production
If one is to observe the world rice prices over the years, they would notice that it continues to decline from a high of US$610 per MT in September 2011 to approx. US$385 in May 2015. Although the Venezuelan market offered a preferential price, Guyana received an average price of US$500 per MT in 2014, for all of its rice exports. But this Venezuela issue unearthed an even bigger problem in the industry; artificial distortions in the market both from a production and marketing perspective.
Although the yield has increased over the years from an average of 25 bags of paddy per acre in 1994 to over 36 bags of paddy per acre in 2013, the cost of the main input into the industry –fertilizer and agro-chemicals, labour, land preparation, flood control, fuel and so on, have all increased over the years, putting severe upward pressures on the costs of production. Therefore opportunities to enhance the competitiveness of the industry remains: further increases in the yield, more efficiency in the procurement and use of fertilizers and agro-chemicals and a better water management programs. Bulk procurement of fertilizers and agro-chemicals by the State for both the rice and sugar industry should be considered to partially supply the market. Vitally needed also is a greater injection of hard sciences into the industry especially in agro-engineering (better canal maintenance programs). When science amalgamates with experience, we can expect the yields to improve. My past interaction with the Guyanese farmers revealed a strong talent pool with much experience. However, they will need to more actively engage science to master their costs of production. That relation has to continually be fostered by the State with serious investments into organizations like the Department of Agriculture and Natural Sciences at the local University, the Rice Research Stations, IAST, NDIA and of course NARIE.
Brokerage Costs
The marketing of Guyana’s rice is severely distorted and the GRDB has to be blamed for this. This entire process has to be deconstructed and reconstructed to ensure that the brokerage charges and other freight related cost are fully transparent and well understood by the millers and other shippers of rice. If the current service provider is overcharging, then this rate has to be re-negotiated or an alternative service provider sought out.
Freight Costs
Freight cost from Port Georgetown remains uneconomical and exorbitant. Why? The state of the shipping channels in the Demerara River can best be described as counter-productive over the last decade. In the days of Guymine, the 12 mile channel through Port Georgetown had an average depth of 22 ft.; today it is a mere 13 ft. in most places. An immediate injection of G$4 billion to properly dredge the channel is urgently needed to significantly impact the cost of freight being shipped out of Port Georgetown. This is not a project that can wait. The poor state of the channel continues to make trading with Georgetown close to impractical.
Industrialization in the Rice Industry
After the productive experience with the “Break O’ Day” rice cereal in the 1980’s, one would have expected another attempt years ago. This new investment into a rice cereal factory on the Essequibo Cost is most welcomed. As a cornerstone to transforming the industry, Guyana urgently needs to build more alliances with major value-added producers of rice products across the world. There is no reason why Guyana cannot be a major rice cereal player in the world? But for this to happen we have to think big and work with the Diaspora to create the right kind of access in places like Battle Creek, Michigan, where the big boys and girls at Kellogg’s are planning their next meaningful international investments. All global investors are constantly looking for international locations that will allow them to bring new innovations to the market and generate adequate demand for their new value-added products. With one stroke of the pen, a Kellogg’s factory in Guyana can enhance value received by farmers for their production. It can be done but as I said before, we need to leverage the right relationships to open the right doors.
CONCLUSION
It would make all Guyanese so proud if as a 50th Independence Anniversary gift to ourselves, we can bring some solutions to the table on the big ticket challenges, rice being one of them. Guyana has friends and we must leverage that friendship to ensure that we will not be strangulated economically in an environment of covetous geo-political antagonism.
Next time I shall be continuing this conversation on the question of Plantation type agriculture on the West Demerara and its relevance to the sugar industry.
Sase Singh – Washington DC
Published in the Guyana Chroncile Newspaper @ http://guyanachronicle.com/a-r...r-the-rice-industry/
