General Secretary of the Rice Producers’ Association (RPA) Dharamkumar Seeraj is accusing the APNU+AFC coalition government of using “skillful statistics” to inflate the rice production for this year.
According to him, the government is “comparing this year with last year because last year was not a good year. They should compare this year with 2014 or 2015.”
He pointed out that the low prices in the latter half of 2015 contributed to less being cultivated for the first crop in 2016.
The Ministry of Agriculture (MoA) has said that figures from the Guyana Rice Development Board (GRDB) indicate that farmers harvested a total of 89,290 hectares in this year’s first crop, 23 percent over the first crop in 2016.
General Manager of GRDB Allison Peters had said that there is a “26 percent increase over last year’s first crop figures.”
Seeraj told Stabroek News (SN) that the figure this year compared to the first crop figure in 2016 will show an increase in production.
That was because farmers “who recovered one way or the other,” cultivated more for the second crop in 2016 and the first crop in 2017.
Seeraj feels that “the statistic was used for convenience” and that there was “not necessarily an increase of an all-time high which would have been the case in 2014 and 2015.
He lamented that the rice sector is facing a crisis and “instead of putting systems and mechanisms in place to reduce that high cost of production, they are adding to the high cost for farmers.”
For instance, he said, both President David Granger and Minister of Agriculture Noel Holder “spoke about the high cost of production and then they consciously make a decision to increase D and I [drainage and irrigation] charges for farmers from $3,500 to $15,000.”
He also argued that the government “add VAT on machinery and inputs of agriculture.
And they further removed rice from being [VAT] zero rated and put it in the exemption bracket.”
He explained, “So if you buy anything to produce rice or paddy and you pay VAT on it, under exemption, you cannot claim back the VAT. So here again the cost has gone up.”
Seeraj said too that 537,000 tonnes of rice valued US$232M was exported in 2015, while in 2014 a total export of 501,000 tonnes of rice valued US$249M was recorded.
He said that while it may seem as though more money was made, “we actually exported 36,000 tonnes more in 2015 and got US$29M less.”
The MoA had also alluded to a decrease in exports of rice and paddy for the first four months of the year.
The ministry said too that this was because exports to the Panama market for the first crop was not realised.
Referring to the Mexican market, Seeraj said that in any sector, the “sale of a basic commodity is ill-advised… and the export of paddy is not what is desirable.”
According to him, “This started in a big way with the Venezuelan market but the price paid for paddy exported to the Venezuelan market was more often than not double the price on the international market, so it was lucrative.”
He said Guyana has always been negotiating with Venezuela to “increase the amount of rice purchased and reduce the amount of paddy purchased.”
He told this newspaper that the “200,000 tonnes that would normally go to Venezuela year after year since 2010 would have been a combination of both, with Guyana always negotiating to get more rice with paddy.”
He said too that the “Venezuelans’ argument, which has a lot of merit was that they were opening up their markets to us but they did not want to put their millers out of business too. So that was why they were taking paddy.”
“So by and large, the paddy section of the traders represent 50 percent of less than the overall export.”
He said based on the information he has received, the price from Mexico is around U$S265 per tonne CIF [Cost, Insurance and Freight] and that price would further pauperize the rice industry
He told this newspaper: “Any miller who is going to export paddy to Mexico will be forced to pay a lower than average price that is being paid now to continue with the export of paddy to Mexico.”
He said that it may work out “if it is a short term arrangement to get a bigger footing into the Mexican market with rice.”
Seeraj said too that “for a long term gain, you might want to do that but Mexico has not started any process as yet to take rice.
If they do, the price will not be able to compensate for the loss that you will experience by exporting paddy at that price.”
He noted: “At US$265, you still have to pay CIF, a miller will have to deduct the cost for drying and cleaning of the paddy and for transportation from the mill to the wharf to pay wharfage and grading fee and rice board fee.”
According to him, “That would amount to US$80 per tonne for the cost associated with drying, transportation, wharfage, GRDB fee and the fee for the company that has been identified by Mexico to provide independent grading certificate.”
He is not optimistic that the farmers are going to be better off with exporting of paddy to Mexico.
Seeraj said that “sometime you make a strategic decision to enter into a market at below your cost to increase your market share and then gradually to increase your price.”
He added: “It makes economic sense… but there is no guarantee that they would have an expansion of the Mexican market, you will have to bid and compete.”
He told this newspaper that the private sector would be going after that market as an act of desperation to get their produce off of their hands.