Source: http://www.kaieteurnewsonline....nd-the-rice-sectors/
The government and the rice sectors
Over the past decade under the PPP, the productive sectors in the Guyanese economy were crippled. We had bumper production in rice, but how productive was the industry? The PPP did very little to improve productivity. If it were not for the lucrative Venezuelan market, the industry would have melted since 2008.
Last year, it cost on average G$1,700 to produce and deliver a bag of paddy to the mill. The millers then offered on average G$3,500 per bag of paddy to the farmers. If this paddy was shipped to Venezuela, the millers earn about G$8,650 per bag of paddy. The bottom line was – because of Hugo Chavez, everybody made money in the rice sector and very few paid attention to improving its productivity.
Today, it still costs $1,700 to produce and deliver a bag of paddy at the mill gate but with a now dead “Chavista” deal, millers are now earning about 50 percent of what they earned in 2014. As the pain trickles down, the farmers can expect about G$1,800 per bag from the millers. This is not good business for the small rice farmers and it means many of them will have no choice but to rest the land for the 2016 Spring Crop unless relief arrives. Horrible socio-economic situation.
We desperately need foreign currency from the rice export trade to continue to fund our imports. With prices and export volumes both falling, the trade balance from the rice sector will deteriorate. This will have a direct adverse impact on our balance of payment, which will adversely impact the nation’s foreign reserves.
Can we afford this situation? Not when there is the additional impact of some level of unemployment in the industry as a result of the small farmers resting their lands. Those who are lucky can utilize their six months visa as a mitigating strategy to ride this out, but that does not help the Guyanese economy.
Clearly, the economic impact of this situation is not a private sector affair but a national crisis since it will directly affect our GDP growth for 2015. This rice crisis demands some State intervention to ameliorate the impending hardship that will visit the homes of thousands of small rice farmers in the upcoming months as many of them engage in a tryst with privation.
When the government was appointed, they appointed a new GRDB Chairman Mr. Claude Housty, and they sold him as an expert in the rice export market. To date, he has not outlined his plans for the GRDB. Included in the GRDB’s mission statement is the function “…to market rice….for international markets….while providing foreign exchange earnings.” Where are the new markets to replace the now lost Venezuelan markets Mr. Housty?
But the more long term challenge is how can we all will work to enhance the productivity in the industry. As an immediate step to motivate the small farmers, a stimulus bill needs to be laid in the National Assembly offering some help similar to what was offered to the gold mining sector – temporary duty free fuel for one or two crops.
If this situation is not skillfully addressed by the Ministry of Agriculture, more Guyanese will lose their income stream in the months to come. It is the duty of the government to put policies in place to prevent hard working people from losing their homes and their right to a livelihood.
In that rice industry stimulus bill, clear strategies have to be outlined around what will be done in the form of the drainage and irrigation system, state sponsored storage facilities to tide farmers through periods of slack markets, financial support to help small farmers set up their own small mills grounded in a co-operative movement.
The current meltdown in the rice industry is only part of a larger meltdown, and a stimulus bill in the National Assembly is only one attempt to fix a larger developmental challenge. But we have to start now, not tomorrow.