Local rice industry under pressure from falling prices
Stabroek News
March 2, 2002

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Dear Editor,

The global rice industry is undergoing a critical period of price depression but there is hope if one is to carefully study the University of Arkansas (UARK) Global Rice Model spanning the period 1998 2008. This model is referred to in the recent 'White Paper' on the Guyanese Rice Industry compiled by the Guyana Rice Development Board (GRDB) and other interested parties.

The recent remarks on the rice industry by Mr Peter de Groot whose company is an associate of Fairfield Rice Mill and John Fernandes Limited as well as Nidera Handelscompagnie (a Dutch interest operating from the John Fernandes Complex in Water Street) should be carefully examined.

Nidera Handelscompagnie, with which John Fernandes Limited shares an extremely close relationship, is unduly penalising millers who supply them with cargo rice. Obviously, the end result of this is a significantly lower price to the exporter for the rice which has been supplied at a specific contract price. The farmers, always at the receiving end, would automatically receive a lower price for his paddy from the miller.

I am not against penalties as these are practices the world over especially as these relate to commodity trading. But I do have a serious problem with any company, local or foreign, when they cannot justify these penalties and especially when they adopt the 'take it or leave it' attitude.

Most often the millers have to unwillingly accept these penalties since the pittances in the form of advance payments to them by Nidera are welcome at a time when commercial banks, including the state owned GNCB, are not likely to provide the millers with any funding for rice.

Mr de Groot should also be reminded that the Food For The Poor organisation was paying US$205.00, Free On Board (FOB), Guyana per metric tonne of White Broken Rice but this has now been reduced to US$165.00 per metric tonne, on the same basis. Why?

Mr Chris Fernandes was instrumental in getting Food For The Poor to lower the price by US$40.00 per metric tonne. This resulted in the traditional suppliers of White Broken Rice to Food For The Poor opting out and Nidera becoming the principal supplier.

The GRDB and the Rice Producers Association (RPA) are aware of this gradual destruction of our rice industry but they are helpless.

Yours faithfully,

Rekha Singh

Editor's note

Mr de Groot informs us that Nidera Guyana Limited is presently the largest exporter of Guyanese rice, all of which goes to the European Union and they have been doing this for over seven years. Last crop (Fall 200l) the quality of rice purchased by Nidera has been the poorest since they began operating in Guyana.

Although on a number of occasions this quality was well below export specifications, Nidera at no time penalised any of their supplying millers, in fact they absorbed over US $l00,000 in penalties during the crop. However, many rice industry offficials including the GRDB have criticised them for this, because the only way to improve quality is to penalise for bad quality.

At a meeting of rice industry officials and millers on Wednesday, 20th February, 2002, which was hosted by Nidera the subject of the deteriorating quality of Guyana's rice for export was fully discussed and the general consensus was that Nidera should start to penalise their millers for the poor quality of rice supplied and the millers in turn should penalise their farmers for poor quality of paddy.

In relation to the broken rice for Food for the Poor the price been paid by Food for the Poor for white broken rice prior to Nidera's starting to supply was equivalent to the local price for white rice. This was a blatant rip off of a charitable organisation that purchased broken rice for supply to the poor.