Press reports in June 2014 put Guyana’s rice production in 2013 at 532,000 tonnes, 25% more than the 425,000 tonnes produced in 2012. According to the reports, the rapid expansion in rice production has created storage problems in the country, requiring major government investment in drying and storage facilities. The Guyana Rice Producers Association (RPA) commented that there was “nearly 80,000 tons of rice from 2013 and about 150,000 tons of rice from the minor crop (January–June) of 2014… lying in warehouses”, with a crop of around 250,000 tonnes expected during the main crop season (May–November). The situation has been exacerbated by delays in shipments to Venezuela.
These considerations have led to mounting pressure in 2013/14 to find new markets. Sustained public and private sector efforts have been launched to find new export markets and expand traditional markets, but have been complicated by increased competition from Asian exporters on regional markets. This competition has also put pressure on prices, resulting in Guyanese rice exports to the region barely breaking even.
A number of successes have been achieved in 2014 to date, however:
- a market of 60,000 tonnes was secured in Jamaica in January;
- an extension of the deal with Venezuela was announced in early February;
- private traders struck a deal in March for the export of 50,000 tonnes of rice to Haiti;
- in the first 5 months of the 2013/14 season, exports of husked rice to the EU (which had fallen by 83% between 2006/07 and 2012/13) increased more than threefold.
In August 2014, press reports indicated that Guyanese government officials were projecting rice production in 2014 of 614,000 tonnes, with an exportable surplus of around 461,000 tonnes (an increase of 17%). Guyana’s Minister of Agriculture commented that the capacity existed to “sell all 600,000 tonnes of rice produced almost immediately”. But he noted that rice exporters had become used to premium prices, and that these were now under pressure from Asian competitors.
In the same month, a new multi-annual government-to-government deal was concluded with Panama to supply 50,000 tonnes of Panama’s annual 150,000-tonne rice import needs. Guyanese private sector operators gained rights to bid on equal terms for contracts to supply the remaining 100,000 tonnes of Panama’s import requirements. The Panama deal took 18 months to negotiate: it formed part of a wider agricultural cooperation agreement, and was described by the Minister of Agriculture, as “a concrete example of how south–south cooperation can be accelerated”.
The deal is held to increase the prospects of Guyana’s government hitting its export target of 500,000 tonnes of rice exports by 2020. Indeed, the government of Guyana expects to achieve exports totalling between 475,000 and 500,000 tonnes in 2014, rising to 550,000 tonnes in 2015, well over the 2020 target.
Suriname, meanwhile, has continued its steady growth in rice production and, alongside Guyana, has succeeded in displacing US rice exports from the Jamaican market. Like Guyana, Suriname faces the challenge of finding new markets and expanding its existing ones. This has included a shift (from husked rice) to exports to the EU of milled and semi-milled rice, which offers better prices. These exports increased by 93% between 2006/07 and 2012/13, accounting by the end of the period for 29% of total rice exports to the EU (up from 14% in 2006/07).
As Guyana’s Minister of Agriculture has noted, the Guyanese rice sector has become accustomed to premium prices on its traditional markets, first in the EU and then in Venezuela. The challenge faced has thus involved not only finding new markets, but finding new markets that offer sufficiently remunerative prices to sustain the expansion of production. This challenge has been compounded by growing competition from Asian rice exporters.
This makes the public policy rice sector decisions of major Asian rice producers/exporters a matter of considerable concern to Guyana. The Thai government’s decision to sell rice from its stocks exerted a strong downward pressure on rice prices (of between –23.6 and –41.5% from July 2013 to May 2014, depending on variety and quality), while the decision to halt such sales reversed this price decline (with prices increasing between 6 and 10%).
This suggests a need to carefully monitor the implementation in the rice sector of the WTO so-called peace clause on public stockholdings for food security purposes. ACP governments may need to activate the consultation provisions included in the December 2013 agreement, in terms of ensuring that measures adopted on food security grounds by major exporting economies do not “adversely affect the food security of other Members”.
Accessing secure markets from which regular payment can be secured is also important, since the difficulties in securing export markets have resulted in some millers experiencing cash flow problems and delaying payments to farmers, with potentially serious implications for growth in production.
In the case of Suriname, efforts are in progress to move into higher-value rice products. Potentially this offers an important long-term solution for exports to both regional and EU markets. In the EU, for example, imports of pre-packed retail-ready rice have grown rapidly in recent years, with this market component now accounting for fully 20% of all EU rice imports in 2012/13.
Quality-differentiated, retail-ready packaged rice could offer an important means of responding to commodity price volatility and sidestepping the rising challenge from Asian rice exporters on regional markets and responding to processes of preference erosion on the EU market.