Stabroek News
March 14, 2001

Caricom Rice Mills (CRM) have not escaped the financial troubles plaguing the rice sector.

Ossie Davy, head of CRM which is among the top seven rice players in Guyana, said the only difference is that his indebtedness is not to the local banking sector.

"It is just that I owe my parent company. However, the entire industry is in the same position - crisis. A lot of us are in the red," Davy said, revealing that for the first time the operation he heads made a loss in 2000. He said that because of the low prices for rice, sometimes the firm has had to sell at a loss and at other times breaking-even.

CRM is also putting in a five-ton parboiling plant to capitalise on markets other than the European Union. Davy pointed out that the EU preferential access is being phased out and Guyanese millers/exporters have to look at other markets in the Caricom region.

He said CRM's aim is to export 15 000 tons of parboiled rice per year and to continue to service its white-rice markets because there will always be a market for this type of rice.

He feels that rice prices may remain low for now because of heavy competition but noted difficulties in predicting prices for the latter half of the year because a surplus of padi on the local market can affect export prices. This is possible because of the good weather patterns now being experienced which can realise harvests above expectations.

Additionally, he feels that if the European farmers also enjoy good yields, this will further depress prices which have already been affected by a depreciating Euro.

However, Davy sees a future for the rice sector once the necessary realignments are done in the industry in terms of marketing. He underscores that all players in the rice sector have to focus more on management, accountability, costing, marketing and to become very quality conscious.

"The days of running a rice mill with a book-keeper is long passed. Now you need a qualified accountant to do costing and cash flow projects to help you determine what you can and cannot do," Davy told Stabroek News recently. He also underscored the need for enhancing productivity gains and for the industry to increase its integrity level in the marketing arena.

Rice production in 2000 was 291 841 metric tons of which 207 638 tons were exported, earning US$51.7 million. This compares with exports of 251 519 metric tons with a value of US$71 million in 1999. The average price per ton in 1999 was US$282.2 compared with US$248.9 in 2000, a differential of US$33.3 per ton.

This compares with an average price per ton of US$390 in 1995 and US$356 in 1996 before slipping to US$295 per ton in 1997 and US$293 per ton in 1998.

The average price for Guyanese rice supports the claim by the rice industry that it took advantage of the high prices which prevailed in 1994 (averaged US$304 per ton), 1995 and 1996 to retool the sector. However, this plan backfired in 1997 because of low commodity prices, adverse weather conditions, unfair trading arrangements, the loss of the Other Countries and Territories route and finally the depreciation of the Euro.

The sector is currently indebted to the banking sector to the tune of G$11 billion and is clamouring for interest relief and favourable refinancing terms.

Already over 10 millers/farmers have been foreclosed upon and five of the top seven rice millers have reported to the rice millers and exporters association that they are in financial difficulties.