Rice price for Panama market still to be settled

With the recently announced sales deal with Panama, Guyana is hoping to cash in on the Central American country’s rice shortage which is projected to carry over into 2015 but a price is still to be settled.

Stabroek News understands that Guyana is hoping that packaged rice sales to Panama will be anywhere from US$500 to US$520 per tonne in the initial stages of the agreement. The commodity at the end of June averaged around US$414 per tonne, however since then world market prices for 25% broken rice have been as low as US$395 and as high as US$460.

This newspaper was told that that Guyana will be exporting 20% broken rice to Panama under the new agreement signed last Thursday at theOffice of the Minister of Agriculture in Panama City. The agreement is for the supply of 5,000 tonnes of rice per month commencing in September and ending this year. A new contract would have to be negotiated for next year.

Panama has initiated a rice subsidy and has also curbed the imports of milled rice since the beginning of July according to LaPresna.com. The Panamanian news website stated that a US$0.08 subsidy is being paid per US$0.46 which is the current rate at which one pound of rice is sold.

This newspaper was told that the price for rice from Guyana is still to be finalized and that discussions were ongoing. However, Guyana is hoping for much higher prices leading into next year or even before.

Currently, if Guyana exports at US$500 the impact will be felt by local Panamanian millers who will be forced to sell rice at a higher price than is being imported even with the subsidy provided by the Panamanian government.

If Guyana was to sell rice at a mere US$500 per tonne the import breakdown would be roughly US$0.22 per pound free on board. Guyana will have to set its selling price to ensure that the deal is beneficial to millers at home and farmers while also ensuring that the selling price is enticing to the Panamanian market. This newspaper was told that if possible Guyana would sell to Panama at US$600 per tonne, but these figures were all dependent on how successful the deal was until year end. In the statement issued by the ministry after the deal was signed it was noted that the Panama market would likely be based on world market prices.

Minister of Agriculture Dr Leslie Ramsammy told Stabroek News that the agreement entailed the supply of 50,000 tonnes of packaged rice to Panama. Only millers capable of supplying packaged rice will be utilised for the Panama agreement.

This new agreement is the second rice export deal of this size. In April, SAJ Rice Mill inked a deal to export 50,000 tonnes to Haiti. The SAJ Rice Mill agreement was a private initiative unlike the new Panama agreement and the longstanding Venezuelan rice agreement which consists of 210,000 tonnes of rice and paddy being exported under the Petro Caribe Agreement.

Guyana’s rice agreement with Venezuela is valued at US$130 million. The price per tonne of paddy and rice ranges from US$600-620. This agreement is by far the most lucrative as the smaller markets such as Jamaica and Europe are dependent on world market prices which have shown significant drops in recent years due to the market being flooded.

Through the Guyana Rice Development Board and the Rice Producers Association, this country has been trying to tie down export markets in light of increased rice production in recent years. This year it is expected that production could be well over 600,000 tonnes. In 2013 it was over 532,000 tonnes, a record.

The lack of markets has created problems all across the industry with millers being delinquent in payments to farmers. This has caused some farmers to question why they are planting at such volumes if their payment is not secure. In Panama, after years of poor export markets, farmers contracted planting due to uncertain markets and preference was shown for imports over local producers.

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