THE problem of prompt payments to rice farmers for their paddy by rice millers has been with us for quite a long time and as a result the government moved to implement new legislation to help resolve it. In so doing, it passed the Rice Factories Act with amendments added recently. However, it seems that this legislation, while it has alleviated the problem significantly, has not prevented a few milling companies and one in particular from defaulting payments to farmers.
Rice Producers Association (RPA) General Secretary, Mr. Dharamkumar Seeraj, announced recently at a meeting earlier this week that while no definite payment schedule was finalised, the Principal of Mahaicony Rice Mill (MRM), Mr. Jai Beni is clear on the stakeholders’ position. MRM, one of the biggest buyers of paddy, had signed agreements with rice farmers to make half the payments in the first 14 days and the rest after 41 days, with delays attracting two per cent in addition to the current lending rate interest at commercial banks.
But the company has violated the terms and, as a result, some farmers have resorted to legal action to secure what is owed to them while several others are still waiting to be paid.
Seeraj said: “The RPA’s position is that payments should be made within 42 days.”
He said the Association will continue to advocate for conditions that ensure farmers are comfortable and millers are encouraged to adopt and maintain good business practices in the sector.
Meanwhile, harvesting continues and Seeraj said the reduced scale of operations at MRM has not affected the industry, particularly because the weather has been fair.
It is most unfair that farmers have to take legal action, which requires considerable sums of money, to get money owed to them, while the millers take their paddy and produce rice for which they have been paid but yet they fail to pay the farmers.
Farmers must be treated with dignity and respect because they are humans as well and they have mouths to feed just like how they help to feed the mouths of others.
In view of this recurring payment problem with respect to farmers the Agriculture Ministry, GRDB and RPA along with farmers should sit with legal expertise to determine whether they are “bolts and nuts” within the current legislation which need to be tightened.
But apart from that millers should know that without the farmers there will be no rice industry. They are the pillars of the industry and they undergo tremendous hardship, sacrifice and great risk to put food on the table of the nation and earn foreign exchange and create employment.
The millers should also know that many of these farmers are still in the process of recovering from the devastation of The Great Flood and to now delay payments for produce already delivered to them is adding insult to injury to put it mildly.
A new crop is imminent and farmers obviously would need money to purchase inputs so if they are not paid on time where will they get the money? They could go to the banks and further indebt themselves, but in any case many are already deeply indebted so that would rule out that option. Apart from that they are hardly any other options.
Millers must understand that the success of the rice industry is crucial to the national economy, which brings benefits to all when it performs well, and in order for this to be realised a partnership approach is essential. Each entity within the industry has a complimentary role to the entire production process and therefore must be supportive of each other. Therefore millers should seek to help farmers as much as possible rather than place obstacles in their way.
The current global trend indicates that rice prices would continue to rise because of natural disasters and other factors and therefore exporters would benefit tremendously and as such they should allow farmers as well to benefit from the good fortunes, because as is well known it is a business with price swings from one extreme to the other.
According to FAO, after several months of slow but steady declines, international rice prices started rebounding in November 2009, coinciding with several announcements by the Philippines that it would bid for around two million tonnes of rice imports in various tranches. The market was further stirred by rumours that the Government of India was approaching the authorities of major exporting countries to secure several million tonnes of rice. Although the prospect of India entering the global market to buy large volumes has yet to be confirmed, the news was sufficient to lift world prices in a period usually associated with abundant supplies and falling quotations. The price strength was particularly evident for lower quality Indica, the type the Philippines is buying, which pulled the index for this category upwards by 14 percent between October and November.