Venezuela halts all rice, paddy shipments from Guyana

Venezuela halts all rice, paddy shipments

July 11, 2015 | By | By Jarryl Bryan

…270 containers of rice stuck on wharf, over US$5M in limbo

Rice shipments bound for Venezuela

Rice shipments bound for Venezuela

As the fallout from the collapse of the Guyana/Venezuela rice deal continues, Venezuela yesterday issued a directive for Guyana to cease all paddy and rice shipments to the neighbouring country with immediate effect.

This comes four months before the PetroCaribe agreement was scheduled to come to an end.
With some 270 containers of rice worth over US$5M left stranded on the wharves, and a further surplus crop expected to come by next month, this latest move by the oil producing giant, leaves Guyana with a more urgent need than ever to find an alternative market to Venezuela, which was responsible for 34 percent of rice exports under the PetroCaribe oil for rice deal.  

The cancellation is reported to have been first communicated to the Guyana Rice Development Board (GRDB) by Venezuelan rice counterparts through a phone call. The news was subsequently conveyed to the Guyana Rice Millers Association in a meeting yesterday.

Kaieteur News understands that while the directive goes into immediate effect, vessels already loaded and bound for Venezuela will be allowed to complete their shipment run. This will include the paddy vessel for this week, which is said to be currently on its way to the Spanish-speaking country and is slated to return to Guyana on July 18.

According to a senior official of the GRDB, the decision will leave Guyana with no alternative but to hasten its search for other markets. He stated, however, that a legal challenge from the Guyana Government against the early termination of the agreement was still on the cards.

Contacted yesterday, Minister of Agriculture Noel Holder confirmed that Venezuela pulling out of the agreement prematurely, sought the effect of embarrassing the Guyana Government and endangering the Guyana economy.

According to Holder, this was something the Government had not expected, but would nevertheless have to adjust to and find markets for the unshipped rice.

On what course the Government would take, Holder described the early termination of the contract as an international incident, whereby one country had broken its commitment to another. According to the Minister, seeking legal redress was definitely an option.
Prominent miller and former Chief Executive Officer of Alesie Group, Dr. Turhane Doerga, described the development as devastating, since some 270 containers, filled with rice and originally bound for Venezuela, were still sitting on the wharf. Before the paddy vessel left, it had been expected that on its return the containers would have been loaded and shipped.

At US$780 per tonne, this represents over US$5M in rice. According to Doerga, this was rice that millers had not been paid for as yet. Kaieteur News understands that the rice had already been packaged and fumigated.

Contacted yesterday, Co-Chairman of the Rice Action Committee, Jinnah Rahman made it clear that with some 120,000 people, including farmers and their families, dependent on the rice industry, Guyana could ill afford the present conflict and the concurrent fall out it has resulted in, whereby the shipments have been canceled.

He also said that this has come at a time when the country was trying to get out the backlog of approximately 100,000 tonnes of paddy and rice still in the system. He also stated that should alternate markets not be found by the next crop (late August-early September) the industry would be left with a major crisis on its hands.

Reminded of the Panama market, which Guyana commenced shipments to earlier in the year; Rahman said that Guyana has only received payments for one of four shipments. According to him, the new Panama Government has not indicated any intentions on clearing payments to Guyana, as the rice deal was derived from the previous Panamian administration, which is under fire over corruption allegations.

Finance Minister, Winston Jordan, had said earlier in the week that while visiting Venezuela, he was told in no uncertain terms that the South American neighbour would no longer be interested in renewing the oil for rice barter under the PetroCaribe deal which was originally slated to come to an end on November 16, next.

He said that Guyana was told to find new markets for its rice.

Venezuela’s decision regarding the rice deal comes at a time when it is claiming sovereignty over Guyana’s waters since the significant oil find by American oil giant, Exxon Mobil just 100 miles off of the Stabroek Block.

The issue is one which has seen the Government displaying complete resistance to Venezuela’s declaration and even its rhetoric over the past few weeks.

Jordan had said last Wednesday that Venezuela claimed it had hinted to the past administration as well as to top officials in the Guyana Rice Development Board that Guyana needs to start looking at other markets.

Based on records over the past two to three years, Jordan had said that it would show that Venezuela was scaling back on the volume of rice it was taking from Guyana.

It has been reported that the oil-rich country has even entered into new rice deals with rice-producing giants like Uruguay. That South American country has agreed to provide Venezuela with 120,000 tonnes of rice by the end of this year. This deal was struck so that Uruguay can clear its US$400M debt it accumulated from taking Venezuela’s oil at concessionary prices.

According to El Pais, a leading newspaper in Colombia, this is the first time that the Government of Uruguay has participated in a rice export agreement which will be officially signed on July 17.

Economic time bomb
It was only on June 14; last, that Presidential Advisor on Sustainable Development, Dr. Clive Thomas, predicted that like the ailing sugar industry, the booming rice industry could be sitting on another economic time bomb. He had said that certain factors affecting the rice sector leave it poised for a dispiriting future.

Dr. Thomas said, “The ticking time bomb that rice is perched” on is due to three factors. He listed these to be explosive growth of output, increasing difficulty in finding lucrative markets and the level of unit production costs.

The economist noted that rice output has grown explosively in the 2010s; rising by more than 100,000 tonnes annually since 2012. He said that much of this expansion has been fuelled by Government support to both supply (production) and demand (finding lucrative markets).

He had said, “As is common knowledge, the Venezuelan market is at great risk generating a potential demand/supply market imbalance. This imbalance risks a collapse of rice and paddy prices later this year, thereby impairing livelihoods, in contrast to what prevailed in the first half of the 2010s.”

The economist had opined that should Guyana fail to deal with the aforementioned factors with great haste, then the sustainability of the rice industry could prove to give the new government, a similar kind of hell it is facing in trying to nurse the ailing sugar industry back to good health.

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Comments

  • de castro  On 07/12/2015 at 4:30 am

    This should come as no surprise.
    34% of production is not as bad as 64%….eggs in one basket.
    Am sure other markets will be found but my concerns “how quickly” !
    Am no economist but surely “storage capacity” and “supply/demand”
    comes into question. Eco/politico decisions.
    Fortunately it’s only 34% …..the positive.
    Question
    Is local demand less/more than 34% ?
    What % is local consumption ?

    More questions that answers for GRDB management to answer ?

    Uruguay USD400M debt accumulated in “Oil” for “rice” deal stinks of dead fish
    (corruption) let’s see how that one plays out.

    These are testing times for new administration in Guyana but am sure this
    matter can be resolved…..my concerns how quickly ?😴

    Lesson
    Never put your eggs in one basket…..selll before they are laid.
    Sell rice to “futures”: market at guaranteed price….on world markets.
    Also increase your exports in ” packaged” rather than “bulk” shipments
    creating more jobs for local people.

    Que sera

  • Ron. Persaud  On 07/12/2015 at 12:36 pm

    Three words! And each one is Diversify! Long ago, sugar could have been a by- product of molasses and alcohol production. Longer ago, sugar could have been the raw material for the production of polyesters.
    Hopefully the Guyana School of Agriculture and the University of Guyana are working on it.

  • Clyde Duncan  On 07/12/2015 at 5:31 pm

    Venezuela should be cautioned on the economic concept of “unintended consequences” – after Guyana finds alternative markets, and Guyana surely will, hungry people could be angry people in Venezuela – it could be hell to pay!

    Take You Meat Out Me Rice: https://www.youtube.com/watch?v=ZqWLwZIncec

    • de castro  On 07/13/2015 at 6:47 am

      Ha ha absolute hilarious laughter….
      In today’s OIL fuh RICE deal is another calipso in the making would love to listen to.
      Calipsonians were the first rappers !songs of life !

  • Gigi  On 07/12/2015 at 7:08 pm

    Essequibo should do what Crimea did – secede! This would not only ensure the continuing market of its rice to Venezuela but its citizens will also become Venezuelans too. Beautiful citizens of a proud country with a rich and vibrant history and culture. World opinion is that Venezuela has the most beautiful girls. Since humans are naturally shallow it’s only human for me, Gigi, to have a burning desire to be finally recognized as a natural born Venezuelan. Soooooo close…the gods must be smiling on me…yeah, sweet lucky me…

    All kidding aside, perhaps Guyana can sell its rice to America. I mean, it’s the least America can do for making poor uncle Tom and the Guyanese people (by association) look so much more stupider than necessary. Oh, silly me, America doesn’t give a flying monkey. The very popular phrase, “Americans would sell their mother for a nickle” didn’t come about for no reason. America is only interested in exporting its gmo zombi food to Guyana and elsewhere and importing Guyana’s minerals in exchange.

    @Clyde Duncan, YOU should be telling THAT to Granger!

  • Clyde Duncan  On 07/12/2015 at 7:53 pm

    Gigi: Do you want ME to speak for you? Do you really want ME to look and sound STUPID? Why? – Tell President Granger yourself!!

  • Clyde Duncan  On 07/13/2015 at 1:04 am

    Poor Venezuela – even Switzerland has a bone to pick with them:

    The golf story that has our attention this morning is not Jordan Spieth winning his second major tournament at age 21… but a neighbourly dispute that’s become an international incident. [this time it has nothing to do with borders, well it does]

    [Photo deleted] That’s a banner on the fence surrounding the residence of Switzerland’s ambassador to Venezuela — not far from the Caracas Country Club’s golf course.

    It reminds all concerned that under international law, the residence is considered sovereign Swiss territory. “Launching balls into this residence,” it goes on to say, “is a danger to whoever is within Swiss territory and a violation of the Vienna Convention if a golf ball injures or kills anyone on Swiss soil.”

    The ambassador, reached by Reuters, had no comment. The Venezuelan Federation of Golf, however, calls the banner a “strange overreaction.”

    And if you’re wondering, yes, Venezuela is still an economic basket case. The official inflation rate is 64%. But the Troubled Currencies Project maintained by Johns Hopkins economics Professor Steve Hanke finds the real inflation rate as of two weeks ago was 492%. – The 5

    NB: The people in Guyana are better off living in Guyana than, say, Venezuela.

  • de castro  On 07/13/2015 at 6:59 am

    If comrade MADuro is not careful he will end up like Musolinni….
    Hung drawn and quartered by his own people.
    Mugabee of Mozambique…..comes to mind.
    Is he still in power in Mozambique ? Will now Google for update.
    Another lunatic whose intentions were good ! Just went about the wrong way.
    Power corrupts ultimate power corrupts ultimately.

    Gigi
    We are all waiting for your pin up photos ….now urgent.
    Beauty is only skin deep…..one has to go much deeper.

    In anticipation
    Kamtan

    • Thinker  On 07/13/2015 at 8:53 am

      Robert Mugabe is President of Zimbabwe.

  • de castro  On 07/13/2015 at 9:40 am

    Guess one of many “dictators” who prefer to die on job than step down.
    Castro did but some say that his replacement is worse….minority of course
    of the majority now American citizens.
    Chavez did die on the job.
    Maybe jagdeo will follow in this respect.
    At my cynical best.
    Que sera
    In mugawbee case how do you replace farmers with soldiers….?
    Replace AK47 with tractor !😇

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