GUYANA UNDER SIEGE
THE PRICE OF RICE IN GUYANA
|by Rakesh Rampertab|
of these people say they have no money to pay the rice farmers…but they
are busy expanding…they are building fancy houses…the are driving expensive
vehicles…vehicles which I as president cannot afford to drive…because
the government cannot afford such vehicles.”
farmer and the Minister of Agriculture inspect rice field
Rice farmer and the Minister of Agriculture inspect rice field
The massive Rice Industry (RI) in Guyana, which provides employment for at least 100,000, is in shambles. It is struggling for its own survival now that it has been straddled by many dilemmas, including debts owed by farmers and millers to banks (G$12 billion debt), the closure of the lucrative Overseas Countries and Territories route, a shortage of capital in the rice sector, poor management, inadequate rice yields, loss in traditional markets, and a drop in the external price for rice (from US$400 to US$200 per bag of rice).
At the moment, the government is investigating the possibility of getting banks (primarily GNCB) to write off some of the money owed, as well as raising money to pay other banks. It also has received a confirmation from the European Union for a loan (US$30 to 60 million) to improve varieties and better yields in both rice and paddy. In addition, the government continues to invest (already invested G$7 billion since 1992) in irrigation and better drainage. But it will take much more than the government’s involvement to bring back the rice industry to its former glory days under the Cheddi Jagan administration.
Rice Industry under the First PPP:
Traditionally, the rice industry has been associated with the Indian community and the PPP political party. This is because rice cultivation has been a customary agricultural mean of livelihood amongst Indians in India and, secondly, most of the lands opened up for agriculture in early 20C Guyana were predominantly populated by Indians. By the late 50s when Guyana saw its first set of political parties formed, rice cultivation symbolized critical power, both political and economic. During the first PPP administration (1957-1964), the rice industry experienced its greatest rate of production, primarily due to the large-scale land reforms and commitment to infrastructure initiated by the Jagan government. Rice production jumped from 137,000 tons/year to 275,000 tons/year.
The PPP recognized the Rice Marketing Board as the official voice of representation for the rice sector, and in 1960, it made amendments to the Rice Farmer Act and the Rice Marketing Board Ordinance. According to Dr. Jagan this was to “place control of the Board into the hands of rice producers.” During this period, rice and paddy yields increase both in quality and quantity, as did the price paid for rice to the farmers. As a big boost to the colonized nation’s economy, the profitable Cuban market was acquired.
Rice Industry under the PNC:
Shortly after the PNC under Forbes Burnham came to power, the future of the growing rice industry began a reverse transformation for the worse, slowly at first, but then drastically, as the PNC systematically forced out primarily Indians (PPP supporters) from critical positions of authority within the sector, and initiated other techniques to remove control from the hands of the farmers, millers, and exporters. By the 1980s, both rice cultivation and rice production had become sluggish, national liabilities. Below is a list of measures taken by the Burnham administration to wrestle the influence of Indians (and the PPP party) from the rice industry:
According to Sallahuddin in his Guyana: The Struggle for Liberation (1945-1992), “Acreage cultivated fell from over 250,000 to 90,000 by the 1980s, despite the PNC’s efforts to eventually rehabilitate and modernize the industry when it recognized that survival depended upon the internal arrangements to ensure food security for the nation.” And Dr. Cheddi Jagan, in his West on Trial (p393), noted that paddy price per bag in the later 60s under the PNC fell to $3.14 from $ 5.19 (under the PPP). Under the PNC, Guyana once had to import rice from Italy to help meet the domestic need. Also, some of the rice provided for local consumption was of poor quality.
PNC RICE RECORD:
Peak Output of Rice (period, 1970-1981): 1977. Amount: 212,000 long tons
Peak Export of Rice (period, 1970-1981): 1978. Amount: 105,000 long tons
Export in Early 80s:
1980: 88,000 long tons
1981: 78,000 long tons
Source: Government of Guyana
Real Growth of Rice Sector:
(Compound Growth Rate % per year)
1970-1975: 1975-80 For the Entire Period of 1970-1980
2.4% 0.9% 1.7%
Source: Government of Guyana, IMF, World Bank
Due to this tremendous decline in rice production, Guyana failed to fulfill export obligations. Dependant Caribbean nations such as Jamaica (required via CARICOM) were forced to import rice from the US. The quantity and quality of rice yield plummeted, and prices received by farmers dropped severely. As control over the industry became a race-related issue (apart from political), friction developed between producers, millers, farmers, etc. (primarily Indians), and those in critical positions of authority (now primarily PNC supporters). In essence, it was clash between those attached to the land, and those who were not, traditionally, familiar with the rice business. After years of hardship, hundreds of rice farmers, etc. removed themselves from the business of rice cultivation. Many sold their land and stock and migrated, and other began other agricultural crop practices. When the PNC attempted to revitalize the rice industry in the late 80s, the land under cultivation and maximum production reached some 188,000 acres and 150,000 tons respectively—better than previously, but still not sufficient.
With the arrival of a new PPP administration in 1992, rice farmers that remained from the tough PNC days became reinvigorated; many small farmers took out loans to boost their production ability. New land reforms were implemented such as the MMA Phase One and Two schemes, the Canji reserve, and the Cosier Scheme. Today, land under rice cultivation is approximately 360,000 acres. In a good year, Guyana’s rice industry, which represents 12% to 14% of the country’s GDP, has the potential of producing a staggering US$90-100 million income.
But the rice renaissance has not be as easy as one would have liked and by 2000, especially after the 1997 elections that left the economy staggering, the rice industry began to suffer tremendous setbacks. The El Nino effect left severe droughts nationwide, and lands affected by sea defense breaches both contributed heavily to a drop in production. Despite the efforts of the new PPP administration, the industry continue to decline, primarily because of internal problem between millers and short-paid farmers (some problems include millers claiming they don’t have capital to pay farmers for paddy received, or millers low grading the paddy received which meant less money to be paid, farmers with unpaid bank loans (some forced to sell assets to meet these payments), and a drop in market prices. The fact that 97% of the rice industry falls under private owner did not help to facilitate under these trying circumstances. Instead, competition developed into a personal saga between farmers and farmers, and farmers and millers that, with time, resulted in a loss in the quality of rice produced as both farmer and miller struggled to maintain a certain income to accommodate of the drop in rice prices.
Additionally, the industry itself has been slow to adopt new technological and better management measures to rid it from technological and management inefficiencies. Specialists such as agronomists were not hired, and technology meant, in many cases, a tractor or a combine. The number of millers that exit (more than 100 currently) added to the problem, because many have too small an operation to produce adequate export quantity of quality grains. Their presence only helped to further congest an already competitive rice industry. As a result of all of this, Guyana lost its markets in Jamaica and Trinidad after failing to meet its obligations (as once happened under the PNC); these nations were forced to import rice subsidies from the Far East and the US.
Nevertheless, production under these trying new years in the 1990s increased drastically from the days of Hoyte’s PNC; export moved from an average of US$13 million/ year to US$93 million/ year under the new PPP administration. Whereas the PNC was exporting 54,000 (or 18 bags/ acre), this figure moved up to 252,000 tons (or 25 bags/ per acre). With this improvement, rice revenue was use to help offset the nation’s US$2 billion foreign debt. Meanwhile, the debt owed by the farmers and millers to banks grew steadily to G$12 billion (G$9 billion owed + G$3 billion interest).
The best debt payment solution established by the Rice Committee (see its report called the “White Paper”), initiated by the president to investigate the situation in the rice sector, if for the Guyana National Cooperative Bank to write off the interest owed (G$3 billion), and for the government to help pay off the G$9 billion. It will raise this money by issuing bonds to the financial sector, with a 10% interest rate. The committee also estimated that small farmers can sustain their businesses with at least 25 acres (minimum), if paddy prices were stabilized at G$1,200 a bag for paddy.
Other important steps that should be taken to refloat the rice industry include:
The rice industry will not be eliminated because it is too important. It has a higher stake in the agri-sector of Guyana than any other crop, including sugar. If these measures listed above are taken, it is very possible that the rice industry will become the most dominant foreign exchange earner for Guyana. However, much has to be done by the government, and this includes early intervention to prevent a drop in production due to possible friction between internal players within the industry. Most importantly, it must enact measures to reduce the enormous monopoly of the industry currently enjoyed by a few rice-family barons. It must cease using the rice sector as a mere tool to achieve political support for its party campaigns and, conversely, it must also encourage more black farmers into the business of rice cultivation.
© 2001 Guyanaundersiege.com