Farmers’ export group stands to make slim profit from Venezuela deal

Even with the middleman cut out, the Essequibo Farmers’ Group which is exporting paddy directly to Venezuela, under a recent agreement with that country, may not make a significant profit.

Last Saturday, under the supervision of Agriculture Minister Robert Persaud, Guyana sent off its first shipment of paddy to Venezuela under the second contract to be signed with the Spanish-speaking country.

The shipment, Persaud said then, was historic since it marked the first time that Guyanese farmers were shipping directly to Venezuela as opposed to doing so through a miller or exporter.

While this may reduce the delay in farmers receiving payments for their paddy it does not necessarily mean that they will be making more money than if they were to sell to millers or exporters.

General Secretary of the Guyana Rice Producers’ Association (GRPA) Dharamkumar Seeraj told this newspaper on Wednesday that based on current prices being offered by millers, the farmers in this group stand to make $300 to $700 more on a bag of paddy.
Millers in Essequibo, according to Seeraj, are currently offering $2,800 to $3,200 a bag.

There is one miller, he said, who is offering farmers a high price of $3,500. However, the Farmers’ Group found that if they exported directly they get $3,500 a bag.

Farmers, Seeraj explained, usually harvest and sell their paddy directly to millers. The Venezuelan contract, he explained, demands that high quality cleaned and dried paddy be supplied to them.

Usually the millers undertake the post-harvest preparations needed to get the paddy to the state stipulated in the contract.
By forming this group, the GRPA official said, farmers have become more involved in post-harvesting activities. This is a bold move which shows that they are willing to become independent and to work for better conditions in the industry.

It is also a move which will educate farmers. Knowledge is the most valuable asset in the industry and the key ingredient needed by farmers to become more profitable.

The Farmers’ Group, according to Seeraj, has been using the available drying facilities in Essequibo. They have also been paying what Seeraj described as “a small toll” to have the paddy cleaned and packed for shipping.

The “small toll” to which Seeraj referred is $600 per bag to have the paddy cleaned and packed. But the $600 price, Stabroek News learnt, is only guaranteed if the group commits to supplying the Old Mac Mill which is providing the service, with at least 100,000 bags of paddy. In addition to the cost of cleaning the paddy, a source in the industry explained, the group will also have to pay for any manual labour involved in the drying, cleaning and packing process, transporting paddy from Essequibo to the Guyana Rice Development Board (GRDB) in Georgetown and any other expenses incurred during that part of the process.

After the paddy is handed over to the GRDB, the source explained, it is then determined if the quality is what is demanded by the Venezuelan contract. The paddy is then prepared to be loaded for shipping. Export commission, freight, wharfage, fumigation, quality control and any demurrage accumulated will also have to be paid by the Farmers’ Group. The group, the source said, is being treated like any other exporter.

These and other expenses which will be incurred by the group, when deducted from the earnings for the paddy under the Venezuela deal leave a slim profit.

Guyana and Venezuela finalized the second rice deal valued at US$38 million in late August.

The contract will see 50,000 tonnes of paddy and 20,000 tonnes of white rice being shipped there from October. Under the deal, suppliers will be paid US$420 per tonne of paddy and US$700 per tonne of white rice. These prices, the Agriculture Minister had said, are about 75% more than those offered at other markets. However, Guyana is indirectly paying itself for rice and paddy supplied from payments to Venezuela for oil supplied under the PetroCaribe deal.

The first shipment under this second deal should have arrived in Venezuela by now. Minister Persaud told Stabroek News in earlier correspondence that 393 sacks from the Farmers Group were on that shipment. Priority, he said, is being given to these Essequibo farmers. Paddy was received from Mahai-cony Rice Limited, Golden Fleece Rice Mills and Ramlakhan Rice Mill.

The second vessel is expected to arrive here between November 1 and 3 and a third by November 5 and 7.

The minister said efforts are being made to accelerate arrangements for the honouring of the second contract as this is the market where Guyana is getting the best price.

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