Press reports indicate that the government of Guyana is seeking to conclude a deal for the delivery of 120,000 tonnes of rice to Ghana over the coming year. Samples have already been despatched, and the challenge now is to work out a competitive price for supplying the West African market. It is hoped that this could be the first of a number of deals with West African countries. Oryza.com, a rice sector website, reported in September FAO’s estimate that Guyana’s rice exports for its marketing year 2014–15 would increase to approximately 460,000 tonnes, “up about 15% from about 400,000 tons exported in the previous year”, and that rice production in 2014 was expected to be up a further 6.5%, “mainly due to increase in plantings, higher yields, favourable weather conditions and improvements in agricultural infrastructure, such as drainage and irrigation systems”.
Demand for rice in West Africa continues to grow. In the first 6 months of 2014, Thai rice exports to the whole of Africa were up 118% “from about 2.8 million tonnes exported during the same time in 2013”, to approximately 3.29 million tonnes. The main destination markets in West and Central Africa were Benin Republic, Côte d’Ivoire, Cameroon and Nigeria; other important sub-Saharan Africa destinations were Mozambique and South Africa.
Shipping challenges are now faced in exporting rice to West Africa, given the Ebola outbreak in the region. According to reports on Oryza.com, “shipping companies are hesitant to send their shipping vessels to Africa, with the fear of their crews catching the virus.” According to representatives of the Thai Rice Exporters Association, “operators of dry bulk vessels cannot find crews to man their ships because of fears of possibly contracting the deadly Ebola virus.”
Indian exporters have sought to put the issue in perspective, arguing that rice will be shipped to alternative ports, where it will then be forwarded by road. This, however, will increase the landed cost of rice for consumers. Nigeria’s newspaper Shipping Position Daily has reported that “European ship owners have increased freight rates for cargo and imposed surcharges on crews coming into the West African countries battling Ebola.”
Between February and June 2014, the prices of Thai rice destined for African markets fell by between 6.8 and 9.1%, before recovering in July and August by between 5.6 and 14.6%. Thai rice prices, however, remained substantially below the price levels prevailing in August 2013.
The West African region is playing an increasingly important role in the global rice import trade. Asian suppliers have increasingly dominated this trade, but current shipping difficulties arising from the Ebola outbreak could open up opportunities for the delivery of Guyanese rice, given the reluctance of Asian shipping companies to land cargo in West African ports.
If this opportunity is to be realised, however, it will require careful contract negotiation in order to ensure that the commercial profitability of sales is not undermined by rising shipping rates to West African ports.
If prices can be negotiated on an FOB (free on board) basis, the problems of rising shipment costs could be sidestepped. If CIF (cost, insurance and freight) prices are negotiated, then close attention will need to be paid to the logistical challenges faced in delivering rice to West African destinations.
In recent months rice prices have been rising slightly, but they are still significantly below the prices prevailing in August 2014, suggesting that Guyana may struggle to obtain the remunerative prices it requires to make rice exports to West African market commercially attractive.