Since the collapse of the PetroCaribe deal with Venezuela in July, Guyana has not yet clinched a similar rice deal with any other country that would see local rice farmers exporting their rice at premium rates as they did with the “rice for oil deal” with the Spanish-speaking nation.

The historic rice deal was sealed by the previous People’s Progressive Party/Civic (PPP/C) Government of President Bharrat Jagdeo with the Bolivarian Republic of Venezuela of President Hugo ChÁvez several years ago, which saw Guyana receiving oil in exchange for rice at premium rates.

Guyana Rice Development Board (GRDB) Chairman Nizam Hassan told Guyana Times International during an interview that such arrangements, like the PetroCaribe deal, usually developed at the higher levels of Government.

Making reference to the Guyana-Venezuela rice deal, Hassan explained that the arrangement was born out of discussions between the two Heads of Government – Presidents Jagdeo and ChÁvez and then thereafter, the GRDB facilitated the trade.

While not aware of any arrangements of similar nature to the PetroCaribe deal, Hassan said the GRDB would welcome any such initiatives as it would inevitably be of great benefit to the rice sector. Nevertheless, he noted too that although no other rice deal appeared likely in the near future, the GRDB continued to work to expand the rice exports of the local farmers.

Meanwhile, concerns have been raised on whether the Guyana Government intends to facilitate discussions with the Venezuelan Government to rescue the Venezuelan market either by initiating negotiations on renewing the PetroCaribe deal or forming another rice arrangement.

Former President Bharrat Jagdeo had hinted that this was possible and had, on many occasions, encouraged President David Granger to discuss with Venezuelan President NicolÁs Maduro the possibility of resuming trade between the two nations, even amid the border controversy.

Venezuela has been by far the major market for Guyana’s rice and paddy, accounting for around 60 per cent of total exports in 2010. In 2014, exports to Venezuela accounted for approximately 38 per cent of total exports although the overall tonnage exported (150,000 tonnes of rice and 50,000 tonnes of paddy) far exceeded the 2013 export levels. Therefore, the loss of the Venezuelan rice market was indeed a significant blow to the rice farmers, the entire industry and by extension, the entire economy.

Under the PetroCaribe deal, Guyana was required to pay upfront a percentage of the cost of fuel acquired from Venezuela, with the balance, which was being placed in the PetroCaribe Fund at the Bank of Guyana, being treated as a loan repayable over 23 years, with a two-year grace period and two per cent interest. Each deposit into the Fund was treated as a loan to the country on the same concessionary terms. This resulted in Guyana being able to defer its payments, which were at concessionary rates, over a longer period of time.

How the deal collapsed

The PetroCaribe deal was coming to an end in November 2015. According to the previous Administration, almost every year, Government would have had to negotiate with the Venezuelan Administration to renew the PetroCaribe deal. When the A Partnership for National Unity/Alliance For Change (APNU/AFC) Administration took office, it embarked upon such negotiations to renew the rice deal; however, it did not work out in Guyana’s favour.

According to Finance Minister Winston Jordan, during the PetroCaribe Ministerial Council Meeting which was held in Venezuela in July, he was told by Guyana’s Ambassador that Venezuelan authorities indicated that they would not renew the agreement.

He noted that this was a result of the fact that Venezuela would be taking rice from Suriname and as such, did not require the large amount which was currently being sent from Guyana. It was never made clear whether Minister Jordan even broached the issue of a new contract for 2016.

At that time, the PetroCaribe deal was to remain functional until it expired in November but due to certain circumstances, Venezuela halted the rice deal even before it was slated to end.

Based on reports, Venezuela had halted rice imports from Guyana since July 11. This was later confirmed by the Finance Minister who conceded that this development posed many challenges for the rice farmers.

However, Agriculture Minister Noel Holder explained that there was never any halting of shipments, but Guyana’s Ambassador to Venezuela told him that because Guyanese shippers were speeding up shipments, Venezuela wanted a slowdown for logistical purposes.

Speculation has since arisen over what prompted Venezuela to suddenly put an end to the PetroCaribe deal.

Future for farmers

Indeed, Venezuela paid the highest price for Guyana’s rice. In the last contract now being completed, Guyana received over US$200 per tonne over the world market prices. With the loss of this lucrative market, rice farmers grew concerned about their future.

Guyana Millers and Exporters Marketing Association Chairman, Dr Peter De Groot had asserted that the international prices for rice were almost half the price Venezuela was offering Guyana and, therefore, if Guyana was forced to depend on alternative markets, the rice industry may very well suffer.

Agriculture Minister Noel Holder recently assured that there was “nothing to worry about” over the loss of the Venezuelan market. He was at the time announcing that Portugal and Panama would replace Venezuela as markets for Guyana’s rice.

However, former Agriculture Minister, Dr Leslie Ramsammy accused the Minister of downplaying the importance of the Venezuelan market and chided the entire APNU/AFC Administration for not making stronger attempts to revive the deal.

Further, he highlighted that Portugal and Panama could not possibly replace the Venezuelan market, since Guyana has already been exporting rice to those two nations.

Portugal, being one of the largest European importers of Guyana’s rice, has imported cargo rice from Guyana for a number of years. Dr Ramsammy highlighted that it was highly unlikely that in the existing trade arrangement of the Economic Partnership Agreement (EPA) under which rice from developing countries enter freely into Europe can take up the extra 200,000 tonnes that Venezuela would not be taking from Guyana.

With respect to Panama, Dr Ramsammy disclosed that the small State has been buying small quantities of rice from Guyana – also for several years.

Therefore, Panama is not a new market and the former Minister is contending that it could not absorb the loss of the Venezuelan market.