Finance Minister clears air on $23B budgetary allocation for rice

– budgeted for under ‘statutory expenditure’ Finance Minister Winston Jordan has sought to explain the genesis of his $23B allocation to the rice industry in his budget presentation in August, an allocation that has lately caused much confusion within the industry. According to Jordan, the money was budgeted for under ‘Statutory Expenditure’, in a bid to decrease the outstanding oil debt to Venezuela. As a Statutory Expenditure, he said, it did not need the approval of the National Assembly. Following the reading of the budget, the allocation to the rice industry was at first greeted with praise by farmers, who were owed millions for the paddy they had already supplied and with caution by People’s Progressive Party (PPP) parliamentarians, who adopted a ‘wait and see’ posture to the announcement.

Finance Minister Winston Jordan

When the time came for examining the budget estimates, however, the Opposition party was vociferous in declaring that there was no such provision in the estimates. In the weeks that followed, the confusion arising from the issue led to repeated demands from the Guyana Rice Producers Association (GRPA) and the Rice Producers’ Association- Action Committee (RPA-AC). In addition, rice farmers from Regions Two, Three, Five and Six, have picketed the Ministries of Agriculture and the Presidency, in addition to the office of the REO of Region six (East Berbice-Corentyne), Dr. Veerasammy Ramayya within last week demanding an explanation. In explaining the original PetroCaribe arrangement and Guyana’s obligation towards Venezuela, Jordan said that Guyana had paid up front a percentage of the cost of the fuel. The balance of the cost was placed in the PetroCaribe fund, which was created at the Bank of Guyana (BoG). The balance, he pointed out, was treated as a loan repayable over 23 years, with a two year grace period (which would have ended in 2011) at 2 percent interest. The higher the price per barrel of oil from Venezuela, he noted, the lower would have been the payment upfront. This would have resulted in a higher amount going to the PetroCaribe fund. According to this arrangement, Guyana would thus have deferred its payments, already at concessionary rates as rice was being used as a buffer to pay Venezuela, over a longer period of time. The balance in the fund was also used to make payments to rice farmers, through millers.

Farmers during the recent protest

However, upon their entry into the Government following the May General and Regional Elections, A Partnership for National Unity/Alliance for Change (APNU+AFC) had announced that they found an ‘empty’ PetroCaribe fund. It was later revealed by the Prime Minister Moses Nagamootoo that the previous People’s Progressive Party/Civic (PPP/C) administration had used the money to fund Government agencies and several projects- the Guyana Power and Light (GPL) is reported to have gotten US$115M, the Ministry of Housing got US$10M and US$16M went to funding the $3.6B Hope Canal project. This, the Prime Minister had noted, was contrary to where the PPP had insisted the funding had come from during their time in office. According to Jordan, future payments to farmers which could not thus be met from the PetroCaribe fund had to be met through the consolidated fund. He went on to explain that it was in that context that the $23B was set aside under “statutory expenditure’. Meanwhile, the rice harvesting exercise for the current rice crop has already begun on the Essequibo Coast, with an estimated 1,404 acres of paddy already reaped. There was an estimated 37,783 acres of rice that were cultivated for the season. The high production numbers do not denote, however, that all is well within the industry, as farmers are still lamenting the high production costs associated with the industry, versus the price of $1600 to $2000 per bag of paddy they have been receiving. Some farmers have already indicated that they will drop out of the industry, citing the continued losses they are incurring with each crop.