Government and Rice

Rice was one of the bright spots in our agriculture sector, which at one point constituted almost one-third of our GNP. While it is expected that as we develop, agriculture might contribute a smaller percentage of our output as we move into manufacturing and services, in a world transfixed by “food security”, we have to guard against throwing out the baby with the bath water because of the marketing challenge posed by Venezuela’s cancellation of their rice-for-oil deal. Continued success lies in the private sector shouldering their responsibilities under a facilitating Government.

During the first PNC regime, the Government, for all intents and purposes, had nationalised the rice industry through ownership of the major mills and purchasing all production through a Rice Board. Rice production fell precipitously during this period for a host of reasons with Governmental control being the most significant. With the change of Government in 1992, the industry was returned into private hands and very quickly went into an upward production trajectory that has still not peaked. Last year we produced and exported record quantities of rice.

Because some paddy producers supported it during the last elections, the APNU/AFC Government might be tempted to return to the massive state intervention practiced by the PNC, its largest component. As is standard in free-enterprise economies, the PPP/C Government had invested massively in the infrastructure necessary to support the industry: drainage and irrigation, drying floors, farm-to-market roads, research stations, extension services, introduction of new varieties, seed paddy etc.

One example of his intervention was the construction of the multi-billion Hope Canal to alleviate flooding of rice lands in the Mahaica area during the rainy season. Its test this season worked and flooding was avoided. But in marketing, where it should have taken a leading role – the marketing of products in a free market economy is usually in private hands – the previous Government had to become very pro-active, because the twenty-eight years of PNC state control of marketing had destroyed private marketing’s institutional memory.

Back in 2009 when the effect of the EU’s abandonment of its special relationship with our rice industry kicked in, then President Jagdeo personally intervened with his Venezuelan counterpart, President Hugo Chavez, and secured the now cancelled, massive market which absorbed over two-thirds of our exports. The then Government had also taken vigorous steps to protect the CariCom market, while seeking to open new non-traditional markets such as Panama. The Government must accelerate this effort.

There is no question that private enterprises must become more active in the marketing of our rice. The Government will have to offer incentives to facilitate and catalyse this process. The PPP/C Government had to have been hamstrung from becoming aggressive in this area because of the strident and inflammatory propaganda from the then Opposition – and now Government – that they were creating “fat cats”.

The Rice Factories Act which the PPP/C Government also introduced and established legal remedies for farmers that are not paid by millers must be enforced. The APNU/AFC Government must not return to the PNC-system of purchasing all rice production, as an answer to farmers’ complaints. Thailand did this a few of years ago and it has proven very disastrous. Similarly, the AFC’s call while in Opposition for the Government to import fertilisers and pesticides for the rice farmers is dangerous as a permanent fixture.

The way to go in the industry is for the farmers and millers to form Producers Cooperatives as is common in the USA and Canada. Vietnam has adopted this form of private ownership with spectacular results. These organisations, owned by the stakeholders, would be manned by professionals that would take care of the needs of the industry such as fertilisers, machinery etc. as well as marketing. The answer is the growth of the private industry, not the return of the old PNC Government state capitalism.