Guyana Bank for Trade and Industry (GBTI) continues to bet on rice despite its highly dubious performance
Devember 2006 | By Rawle Lucas
Self-Assurance
In his statement to shareholders about the 2005 performance of his bank, the Chief Executive Officer (CEO) of (GBTI), Mr. Radhakrishna Sharma declared that “[GBTI] values the importance of [the rice] sector to the economy, and will continue to be the leading Bank in providing support to the sector”. The rice sector accounts for 26 percent of the income-generating assets of GBTI. With such a large exposure to one industry, it is quite understandable why GBTI would have a keen interest in what happens to the rice industry and make self-assuring statements about its relationship to that industry. Moreover, the rice industry is a major foreign exchange earner and contributor to the domestic output of Guyana. But the performance of the rice industry in recent years has not been that good. So, it is not clear what gives the Chief Executive of GBTI much faith in this industry, especially in light of the risks that the rice industry poses to his company and, ultimately, to the deposits of customers.
Performance
Let us compare the performance of the rice industry over different time periods. One way to find out is to compare the performance of the rice industry over different time periods. In comparing the numbers over the last five years with those from 1996 to 2000, one gets the sense that the rice industry is not living up to its full potential. The failings are occurring despite some positive developments in the industry. For example, the amount of acreage used to plant rice has fallen by 13 percent during the period 2001 to 2005 compared with the period 1996 to 2000. The good thing about this is that average rice yield has increased by 7 percent during 2001 to 2005 over the prior period of comparison. However, that efficiency is not translating into better financial returns. Judging from the performance of the rice industry, the confidence of GBTI in the industry cannot be all that strong.
Falling Export Sales
The bulk of the revenue of the rice industry comes from the export of rice. Between 1996 and 2000, Guyana exported over 75 percent of the rice that it produced. Within the last five years, rice exports have declined by an average of 18 percent compared to the previous five years. This fall in the foreign sales of rice occurred during a period when average prices went up by 8 percent. The fall in sales resulted in an average decline in revenues of 13 percent during 2001 to 2005 vis-à-vis 1996 to 2000.
Permission required © 2006 Rawle Lucas