Guyana and Venezuela concluded negotiations for the annual rice barter agreement last week with shipments to commence later in the month after the first crop harvest begins, according to a release yesterday from Minister of Agriculture, Dr Leslie Ramsammy.
The agreement is worth roughly US$120M which is a decline from previous years. Last year the agreement was estimated to be worth US$130M though Guyana’s shipments of rice and paddy have stayed relatively in line with the 200,000-tonne agreement.
According to the release, Ramsammy led a team to conclude negotiations in Caracas. The rice is being bartered for oil on concessional terms under Venezuela’s PetroCaribe agreement.
The new deal comes at a particularly sensitive time as two weeks ago Venezuela objected to oil exploration offshore Guyana by ExxonMobil.
The release added that the proportions of rice and paddy to be shipped and the prices to be received will be along the same lines as in 2014.
Last year, Guyana did receive above world market prices for rice and paddy but there was a fluctuation for rice per tonne with Guyana not receiving US$800 per tonne as in years prior.
Last year, Stabroek News was made to understand that the price per tonne of rice ranged from US$550 to US$700, averaging around US$600 plus. Since late 2011, rice prices have steadily declined. For almost two years the global average has not gone beyond US$500 per tonne.
Guyana’s rice sector is expected to expand again in 2015. Last year’s production exceeded a whopping 635,000 tonnes. Of that figure, more than 501,000 tonnes was exported. The release projected that Venezuela may account for 30% of rice exports in 2015, down five percent from 2014. For several years the Venezuelan market had accounted for as much as 60% of the local industry’s exports. However, new markets have had to be found to cater for the expanded production.
Meanwhile, outstanding payments to farmers continue to temper the industry’s success. Ramsammy highlighted that over $300M is outstanding to date. He stated that in 2014 farmers sold $44B in paddy to millers and yet not all farmers have been paid.
The government assisted by injecting $5B to compensate for late payments throughout the year. It is unclear where this $5b came from and what steps are in place to make certain that it is fully repaid.
Ramsammy said that the completion of 2014 payments was ongoing. Most recently in February, Black Bush Polder, Corentyne rice farmers protested in the streets over non-payment for their paddy. They said that the Black Bush Mill was delinquent to the tune of $140M.
As farmers prepare for the first crop harvest, many are frustrated over the low price being set for paddy. Dharamkumar Seeraj of the Rice Producers Association (RPA) recently told farmers to expect $3,000 to be the price paid for the best paddy grade. Paddy prices have long been a bone of contention between farmers and millers.
Farmers have also not been impressed with the intervention by the RPA and the Guyana Rice Development Board on the matter. Farmers have routinely complained that they receive well below the average price, some even citing that millers offer $2000 per bag of paddy which they are forced to accept because of the lack of storage facilities.
Ramsammy asserted that paddy production in 2015 will surpass one million tonnes for the first time in the country’s history and the value is to be between $45B and $50B. He said that the government and stakeholders were working on a mechanism to ensure that farmers receive timely payments.
Since the beginning of 2015, Guyana has exported 70,000 tonnes of rice leaving approximately the same amount within the system which is for local consumption and further exports.