10.I.1 The rice industry is the second most important agricultural industry in Guyana. Indeed, it is second to sugar only in terms of foreign exchange earnings. Rice is the largest user of agricultural lands, (some 80,000 hectares being currently double cropped) and absorbs and influences more of the working population than any other industry in Guyana. About 12,000 farmers are involved in production and the industry supports at least 10 percent of Guyana's population directly and many more indirectly. It is the major source of income and employment in rural areas. In addition, the industry contributes approximately 20 percent of agricultural GDP and 12 percent of export earnings. On top of all this it is the main staple of the population, with consumption estimated at being around 50 kg per capita. The by-products, bran and broken rice, are the main constituents of locally produced animal feed. Broken rice is also used in the brewery industry. Moreover, the hull (shell) of the rice is utilised as fuel for paddy dryers and for electricity generation. The recent El Nino phenomenon has brought into focus the need for more use to be made of the rice straw as fodder for livestock.

10.I.2 Padi production has increased from 156,000 tonnes (equivalent to 93,444 tonnes of milled rice) in 1990 to 568,186 tonnes (equivalent to 340,911 tonnes of milled rice) in 1997. This has been achieved through increases in acreage and yields. The harvested acreages have grown from 126,878 acres in 1990 to 352,678 acres in 1997, and yields from 1.23 tonnes to 1.61 tonnes during this period. Because of the effect of El Nino on the first crop of 1998, there was a reduction in the acreage harvested, and production fell: the acreage harvested was 319,789, production was 522,907 tonnes of padi (equivalent to 339,890 tonnes of rice), and the average yield was 1.63 tonnes per acre.

10.I.3 Production is in the hands of both small and large farmers with holdings varying from less than 10 acres to over 1,000 acres. There are ninety-eight mills operating within the industry, with a total milling capacity of 242 tonnes of padi per hour. The capacity of mills ranges from 1/2 tonne to 20 tonnes of padi per hour.

10.I.4 The institutions specific to this sub-sector are: the Guyana Rice Development Board (GRDB), the Guyana Rice Producers Association (RPA), the Guyana Rice Millers and Exporters Development Association (GRMEDA), the Burma Rice Milling Complex, and the Caribbean Rice Association. It cannot be too strongly emphasised, however, that the future development of the rice industry depends not so much on these institutions, important though they are, but on the macro-policies of Governments, and the performance of institutions such as the Ministry of Agriculture, the Drainage and Irrigation Board, the University of Guyana's Faculty of Agriculture, the Guyana School of Agriculture, and the regional and local authorities. The lending policies of commercial banks would also exert a great influence on the industry's future.

10.I.5 In the latter half of the 1970s and for much of the 1980s, the fortunes of the rice industry declined, mainly because of the government's interventionist policies and the very high degree of central control. However, by the late 1980s, the rice policy which relied mainly on price control was clearly not working and Government began to dismantle its pricing and institutional structures. In 1989 the price formula was abandoned and farmers were allowed to sell freely to the market of their choice. The devaluations of the exchange rate in that period also had the effect of dramatically raising rice prices relative to most other prices in the Guyanese economy. Also important was the fact that Government privatised almost all its parastatal rice mills (retaining only one complex). This improved the competitiveness of the sector and gave farmers and millers the incentive to invest in the industry.

10.I.6 These major policy changes, and the institutional restructuring of the industry which accompanied them, were supported by agreements with the IDB for foreign exchange to rehabilitate rice mills, and to buy field equipment, spares; and with CIDA to procure fertilisers.

10.I.7 The spectacular growth of the industry during the period 1991 to 1996 was also facilitated by very favourable export prices. This was due mainly to the preferential access to the market. Between 1991 and 1996, the bulk of Guyana's exports went to the EU. However, from 1993 to 1996 most exports were made through the Overseas Territories (OCT) of the E.U., because imports of semi-milled rice through the OCT attracted no levy and there was no quota. On the other hand, exports from ACP countries that were made directly to the European Union attracted a levy of 50 percent. Moreover, a quota of 125,000 tonnes for semi-milled rice and 20,000 tonnes polished brokens was imposed on direct imports from ACP countries.

10.I.8 Preferential access contributed to exports increasing from 51,000 tonnes in 1990 to 262,000 tonnes in 1996, with 90 percent of the exports going through the OCT. With the imposition by the E.U. of safeguard mechanisms in 1997, and the establishment of a quota of 160,000 tonnes in 1998, 125,000 tonnes by the direct route and 35,000 tonnes through the OCT - total exports to the European Union have not only declined, but mainly go via the direct route. In 1998 some 97,951 tonnes (41 percent of total exports) went by the direct route and 22,093 tonnes (9 percent of total export) went through the OCT. The reduction of exports to the European Market has forced the industry to seek other outlets in the Caribbean and Latin America. However the prices in these markets are much lower than these that were previously obtained in the European market.

10.I.9 Guyana's rice exports to the Caribbean, primarily to Jamaica, have had to compete with exports from the United States which were sold at concessionary prices under the PL 480 Programme. However, this programme is being reduced and may eventual disappear. Guyana will therefore no longer be faced to compete with this low priced product.

10.I.10 Another export market is that for parboiled rice in Caricom, particularly in Trinidad. In order to meet the growing needs and preference of Caricom and other markets, Guyana has established three modern parboiling facilities and more are in the pipeline. However, access to the Caricom market has been slow because of its concern over quality, the continuing importation of rice from extra regional sources, and the fact that the CET is not being applied in these transactions. The establishment by specifications for parboiled rice traded in the region, and recent bi-lateral discussions with Trinidad, should address the quality issue.

10.I.11 In 1994 the Rice Act streamlined the institutional arrangements. The Guyana Rice Milling and Marketing Authority (GRMMA) was dissolved and a small parastatal rice company was created to operate the Burma mills that are the only rice factories that remain state-owned. In addition, the GREB and the NPRGC were merged into the new Guyana Rice Development Board (GRDB).

10.I.12 The role of the Board is (a) to develop the rice industry in Guyana and to promote the expansion of the export trade in rice; (b) to establish facilities for the conduct of research, to conduct research relating to rice, and to extend to rice farmers, through an established system, the benefits derived from such research; (c) to engage in such promotional and development activities that the Board deems necessary for developing the rice industry. Its specific functions are (a) to grade and certify rice and padi and to train and license persons, who are, in the opinion of the Board, qualified to grade; (b) to monitor developments in the rice industry at home and abroad; and (c) to provide sectoral information to farmers, millers and exporters; and (d) to be responsible for research and extension activities relating to rice, this task having been moved from the National Agricultural Research Institute (NARI) in 1995. All its activities are funded from a commission received by GRDB.

10.I.13 Two other institutions play an important role in the rice sector: the Guyana Rice Millers and Exporters Development Association (GRMEDA), and the Rice Producers Association (RPA). GRMEDA promotes the development, growth and expansion of the rice industry through the design and implementation of appropriate programmes. It also acts as a conduit for channeling technical and financial assistance to rice industry operators. The RPA is a statutory body which also qualifies as a non-governmental organisation. Its overall objectives are to promote, protect and advance the interests of rice producers generally and to facilitate GRDB's efforts in the operation of research and extension services by being in a position to mobilise and inform rice farmers of relevant meetings, etc. It receives financial support for its activities from the Guyana Rice Development Board.

10.II ISSUES AND CONSTRAINTS

10.II.1 Institutional Framework

10.II.1.1 Regulation of Quality

10.II.1.1.1 The privatisation of the rice industry has not been sufficiently complemented by appropriate regulations and standards. The most serious consequence of this is that the reputation of Guyana as a rice exporting country is at risk because exporters enter into contracts which they are not always able to fulfill; provide rice of inconsistent quality; ship rice of a quality and quantity that are incompatible with their contracts; and apply standards of grading which are not acceptable to overseas markets.

10.II.1.2.1 There is a lack of capacity for analysis and strategic planning for the expansion of the rice industry in Guyana.

10.II.1.3.1 Despite the general shift towards divestment and market liberalisation in the rice sector, many services such as research and extension and the grading of rice and padi, are still provided through public sector institutions. These, whenever feasible, should be undertaken by the industry itself.

10.II.1.4.1 The GRDB is in an unsustainable financial situation as it depends heavily upon its commissions, i.e., an export tax, to finance all of its operations. Other cost recovery options need to be explored.

10.II.1.5.1 As representatives of producers and millers, these institutions need to play a more active role in the development of the rice industry.

10.II.1.6.1 Inadequate linkages with international research institutions restrict productivity gains, and this could lead to the duplication of research programmes. In addition, Guyanese rice institutions are currently isolated from related agencies such as the Lands and Surveys and the Hydraulics Departments.

10.II.2.1 The European Market - Easy access to the European Union in the past may have given the industry a false sense of security. However, developments within the last two to three years would seem to indicate that this market would no longer be so remunerative. Moreover, because of the current quota system, Guyana may not be able to export as much as it used to.

10.II.2.2 The Caricom Markets - The market within Caricom provides for the importation of some 160,000 tonnes of rice - 110,000 tonnes white rice and 50,000 tonnes parboiled rice. The imposition of the CET on rice from extra-regional sources should offer some protection to Guyana's exports. However, the tariff may be inadequate to protect against the import of cheap Asian rice, particularly from Vietnam.

10.II.2.3 Other Caribbean Markets - Cuba imports up to 400,000 tonnes of rice annually, practically all of which is sourced from Vietnam. The lack of foreign exchange restricts Cuba's ability to pay cash for its rice. Haiti imports up to 200,000 tonnes annually. In 1997, Guyana exported some 22,000 tonnes of rice to Haiti but in 1998 exports were at a reduced level. When Haiti becomes a member of Caricom, and with the imposition of the CET, Guyana's rice will benefit from preferential access. The Dominican Republic imports annually some 50,000 tonnes. Guyana has not yet been able to access this market.

10.II.2.4 The African Market - This market provides for the export of low quality rice e.g. brokens. Potentially, this market can absorb over 50,000 tonnes annually.

10.II.2.5 South and Central America - Exports have been made to Colombia, Ecuador, Peru, Nicaragua, Honduras and Mexico on a limited scale. However, a potential market for increased exports lies in these Latin American countries where a market exists for some 2.0 million tonnes - Brazil (1.0m tonnes), Colombia (200,000 tonnes), Peru (170,000 tonnes) etc. Access to these markets would be facilitated by Guyana becoming a member of the Andean Pact and Mercosur.

10.II.2.6 Because of inadequate export facilities (wharves, bulk handling and bond facilities) and high handling and transport prices, the costs of exporting rice are high in Guyana. In addition, the constant siltation of Guyana's rivers restricts the size of ships that can use available wharf facilities. Guyana's shipping costs to Europe could be significantly reduced if larger ships could enter its harbours, and bulk facilities were available. This would also reduce transportation costs to other markets.

10.II.2.7 The domestic market is characterised by variable supplies and consequently fluctuating prices. The need exists for increased availability of packaged parboiled and white rice.

10.II.3.1 Power failure during milling contributes to an increase in post harvest losses. Variations in the supply of electricity can lead to complications in operations and to serious damage to rice milling equipment.

10.II.3.2 Lack of sufficient investment in the milling sector has left the industry with inadequate equipment, particularly in the areas of drying and storage. Millers are finding it difficult to access finances to upgrade their mills at low interest rates.

10.II.3.3 Farmers have restricted access to credit. The main reason for the lack of credit is the insistence of commercial banks on freehold title as loan collateral, and their reluctance to accept leasehold land, especially short leases, or field equipment in its place. The high interest rates charged by the financial institutions contribute to farmers' inability to service their loans, and of course, to invest.

10.II.3.4 Despite the large increases in the amount of land that has come under rice cultivation in recent years, the general constraints to the transfer of lands have restricted the producers' ability to access these lands. In addition, delays in the processing of lease approvals and extensions; the existence of short-term leases for which there are no renewable options; and the difficulty of transferring leasehold land into freehold are factors which contribute to the lack of security of tenure experienced by rice farmers occupying state lands. This insecurity has led to the reluctance of producers to make long term investments in the land. As a consequence, the sustainability of the land and future productivity gains are jeopardised. The establishment of the Lands and Surveys Department as a semi autonomous commission, and the rationalisation of the land tenure system in our country, it is argued, will remove some of the present constraints.

10.II.3.5 The size of many of the rice holdings is insufficient to support a household and to keep rural incomes above a certain minimum level.

10.II.3.6 The deterioration of the drainage and irrigation network over the past twenty years has been a considerable constraint on increased production and productivity. Although the rehabilitation and improvements which have been undertaken during the last six years have removed some of the constraints, much more needs to be done.

10.II.3.7 Companies importing reconditioned machinery and equipment do not always have the necessary spares for repairs. Moreover, opportunities for machine rental are insufficient. As a consequence, Guyanese farmers therefore invest in new machinery even when the size of their holdings makes such an investment uneconomical.

10.II.3.8 Farm productivity must be increased through the development of high yielding varieties that are not only resistant to blast diseases, but which also possess good milling and cooking qualities. In addition, varieties need to be of different grain lengths e.g. extra long grains, long grain and medium grains to meet the needs of different markets. The milling potential of the varieties should be between 55 and 70 percent.

10.II.3.9 The transfer of technology which is of fundamental importance to the future of the rice industry in order to increase productivity, reduce costs and make the industry internationally competitive, must be optimised. The efforts of GRDB Extension staff should therefore be concentrated on: (i) increasing yields, (ii) improving quality (iii) reducing cost (iv) producing high quality seed.

10.II.3.10 The RPA also plays an important role in the extension service. It is mainly responsible for mobilising farmers to attend seminars and demonstrations that are organised by GRDB. It also has the vital function of collecting information from the producers' communities.

10.II.3.11 The current strategy of increasing rice production through the utilisation of more land, greater intensity in input use, expanded milling facilities etc. is occurring within a general void of environmental legislation, enforcement, and monitoring. Although the passage of the Pesticide Control Bill and the Rice Factory Acts has addressed some of the environmental concerns, a more comprehensive approach to this problem is necessary.

10.III.1 The overriding objective is for the sector to become internationally competitive. This would ensure its sustainability in the face of reduced preferential access and falling export prices. In order to attain this primary objective, costs must be reduced throughout the rice production process of the industry.

10.III.2 This might be done through a combination of activities. First, the unit cost of padi production must be lowered, primarily by increasing yields per acre. At present the average national yield is around 26 bags per acre. This ought to be increased to at least 35 bags per acre. Second, Guyana's milling yields are currently at around 45 to 60 percent. These rates are significantly lower than those of the U.S.A., for example, which are estimated to be between 55 and 70 percent. And third, transportation costs need to be reduced by the development of export facilities, including the establishment of bulk loading facilities. The establishment of such facilities will permit the loading of larger vessels and their quicker turn around.

10.IV.1 The capacity of the GRDB to develop a set of regulations and standards relating to contractual procedures, payment mechanisms, rice quality, etc., will be strengthened.

10.IV.2 The newly promulgated standards and regulations will be supported by a widespread campaign that will be designed to build awareness, and by training holding programmes that are especially targeted to millers and exporters.

10.IV.3 GRDB will collaborate with GRMEDA in conducting seminars to demonstrate the correct procedures for entering into export contracts and maintaining quality control.

10.IV.4 There is no satisfactory mechanism for arbitrating contractual disputes in the rice industry. However, through assistance provided by the IDB, draft arbitration rules have been drawn up. These are now being reviewed by legal personnel and will be enacted following acceptance by operators within the industry.

10.IV.5 The areas devoted to rice cultivation will be expanded. This will require close coordination between relevant agencies, so that the lands which offer the highest potential for rice production may be more precisely identified. However, it is already known that the best areas for expansion, given the suitability of the soils, are:

10.IV.6 The provision of services will be rationalised, taking into account the relative merits of different institutions and agencies in both the public and private sectors. GRDB (whose functions include regulation and promotional activities) will concentrate on providing services which the private sector cannot perform, for example, research; the establishment of research linkages with international agencies; extension, in collaboration with the RPA and GRMA; marketing information; the training of extension agents; and grading.

10.IV.7 Extension services will cover more than the traditional area of providing information on production techniques and inputs (seeds, agro-chemicals). They will, in particular, include farm management as a core activity.

10.IV.8 The RPA and GRMEDA will be strengthened and provided with assured sources of financial support from the GRBA, in the short run. In return for this support, these institutions will put in place systems for the full representation of their members, including transparent and democratic elections.

10.IV.9 The organisations will also move towards increased cost recovery for the services they offer, and will aim at eventually becoming self-financing.

10.IV.10 GRDB will establish a Market Information System. International linkages are especially vital to the future prosperity of Guyana's rice sector, particularly in the areas of market intelligence and research.

10.IV.11 A permanent, formal and appropriate mechanism for bringing together the primary institutions of the agricultural sector to discuss and resolve issues such as land use; the need to put down new infrastructure (D&I, roads, etc.) for opening new rice lands; competition for scarce water resources; and environmental matters will be established. Such issues require regular consultations among agriculture officials, other relevant professionals and civil society.

10.IV.12 The industry will be assisted by the relevant government industries to continue to access the markets of the European Union, Caricom and Africa. At the same time, it will be helped to develop further the markets in the broader Caribbean, particularly in Haiti and Cuba, and in other countries of Latin America. The use of Information Technology will be of special importance in this regard.

10.IV.13 To penetrate these markets successfully, the industry will be encouraged to establish a "consortium" with the capacity to export large shipments, develop export strategies, and a market intelligence service.

10.IV.14 Mechanisms for "futures" marketing will be developed.

10.IV.15 In addition to the rehabilitation of facilities in Georgetown, and the installation there of bulk and bond facilities, such services will be installed at Corriverton, Rosignol and Essequibo.

10.IV.16 A review of the present system of drying and storage will be undertaken in order to effect its improvement as these operations are crucial to the attainment of increases in yields and quality.

10.IV.17 Regulations will be issued and enforced to ensure that the quality of rice exported is that which is stated on the export contract.

10.IV.18 The rice industry will be diversified. Fiscal incentives will be provided for the production of such value-added goods as rice flakes, popped rice, rice straw (for mushroom production and as a ruminant feed) and for the use of hulls as a fuel and in concrete production.

10.IV.19 Within the general policy of facilitating credit to Guyana's producers, measures will be taken to ensure adequate financing for rice producers and millers. In this regard several options will be explored e.g. group lending, in which farmers guarantee each other's loans; and the conversion of existing leaseholds to transferable tenures which could be used as collateral.

10.IV.20 Millers will be provided with more intensive courses in financial management, in the operation of letters of credit, and in other methods of payment, as part of their regular extension and advisory services.

10.IV.21 Appropriate institutional and fiscal arrangements will be put in place to ensure that the Drainage and Irrigation system is operated and maintained in an efficient and sustainable manner. This will include greater farmer participation.

10.IV.22 A machinery/inputs pool will be established to reduce costs of production.

10.IV.23 A research programme, based on both market demands and the experience of farmers, will be developed and implemented. Such a programme will be relevant to the farmers' perception of field-level problems, and should lead to the long run sustainability of the rice sector.

10.IV.24 Research will concentrate on increasing productivity, decreasing the variability of yields, increasing pest resistance, enhancing quality, and developing and maintaining those characteristics demanded by export markets and domestic consumers.

10.IV.25 The economic analysis of research proposals will determine the feasibility of research projects. However, some a priori suggested priority areas for research are the improvement of germplasm, integrated pest management, and integrated crop management.

10.IV.26 The training programme for extension workers will be oriented to ensure that the interface between extension workers and farmers results in a two-way flow of information. In addition, business management will be emphasised.

10.IV.27 The protection of the environment, particularly but not exclusively with respect to the utilisation and disposal of agro-chemicals, will be emphasised throughout the sector.

10.IV.28 Extension workers will be trained in environmentally sustainable cropping activities for padi production.

10.IV.29 The private sector and agro-chemical suppliers will be encouraged to play a role both in supplying information to farmers through the established extension network, and in providing information on the use of agro-chemicals directly to users.