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Rice Shortage Imminent in Liberia
The Analyst (Monrovia), July 12, 2004
Prices of basic commodities, including the nation's staple, rice, are spiraling upwards and are most likely to do so out of control shortly. Worst, importers are claiming losses at current retail market prices and are reluctant to continue in this line of business unless adjustments are made. While consumers are barely putting up with fluctuations in the prices of commodities generally branded "luxury," there appear to be general fears and apprehensions in official, business, and consumer circles that unless a consumer-friendly balance is struck through the revision of government's policy on these commodities, any scarcity (artificial or not), or further increase in the prices of rice and/or petroleum products will impact negatively on the security of the state - a fear well-grounded in the experience of the past.

The Rice Dealers Association of Liberia (RDAL) is calling on the government to break even with importers of the nation's staple food, rice, whom they said are complaining of incurring major losses due to the current prices of bag on the Liberian market which they consider "very low" compared to elsewhere in the sub-region.

In a position statement over the weekend, the leadership of the association said at the current low level of official prices that range from 17.25 and 18.00 United States dollars per bag of rice, importers were reluctant to continue importing the commodity.

It then warned that there could be a serious shortage of the commodity in the country if government does not immediately make this issue a major national priority agenda item.

Accordingly, it noted, scarcity is likely to erupt in the rice market in the next few weeks because the only two importers of rice, Bridgeway and K&K, have told them that they will consider other options to rice importation unless new arrangements were made to ease the pressure on their return margins which appears to be benefiting businesses in neighboring countries currently where the prices of rice remain relatively high.

A bag of rice, according to them, is sold in the Ivory Coast at USD23.00, Ghana USD33.00, Sierra Leone USD28.00 and between 28 and 30.00 USD in Guinea.

Speaking to reporters at their headquarters in Duala, two executives of the association, Mohammed Kiadii and Dwana Kolleh said they were not supporting an increase in the current prices of rice, but wanted the government to share the cost of importation with the major importers to allow the continuous availability of "this political commodity in the country." The two RDAL executives fell short of stating the much-referenced current increases in the cost prices of the various grades of rice in the international rice market, nor did they say what the tariffs were that were exacting so much premiums and making it difficult or impossible for importers to continue importation without running aground.

They however suggested that if the government can come up with a new price to commensurate with the increase on the international market as a way of subsidizing these importers, it would avert the imminent shortage and stabilize the market.

The executives pointed out that at the moment, rice distributors are finding it difficult to obtain their regular full supplies of the commodity from importers on grounds that there is insufficient stocks in the warehouses to satisfy everyone.

"If we don't do this, we will end up selling everything at USD17.75 to businessmen who will take all across the borders and make more profit," a warehouse supplier told our reporter.

While the warehouse control mechanisms employed by rice importers may be having its upside in ensuring the continued availability of the commodity on the local market up to the arrival of the next consignments, the downside is that it is already creating panic on the market and hoarding and price hiking by unscrupulous retail rice dealer is accordingly beginning to take their tolls on the ability of consumers to pay.

In what appears a true picture so far of what is obtaining in rice exporting countries, the proprietor of one of the major importers of rice, K&K Trading Corporation, Mr. Chawki H. Dadouh, revealed Thursday last week that they were losing US$5.50 on every bag of "butter rice" sold in Liberia.

He said: "A ton of Liberia's favorite, Butter Rice, is currently sold in China for 350 United States dollars per ton, up from 225 dollars last December.

This means we are paying USD17.50 per bag of rice in China.

"Add freight, import duty and other taxes to this and you will come up with USD22.50 for a bag of rice.

How can we sustain our businesses if we continue to sell at the government price of USD17.00 when we are currently spending USD22.50 for a bag of rice?" In order to lessen the strains on the rice market and help cut losses, he indicated, all wholesale buyers were required to transport their consignments from the Freeport of Monrovia to their business centers.

Besides, he noted, K&K has undertaken other stopgap loss reduction measures including the reduction of its workforce and the putting of temporary freeze on selling on credit.

"We have observed that business partners who take large quantities of rice on credit end up exporting the commodity to neighboring Sierra Leone, Guinea and Ivory Coast, where the price of rice is much higher tan in Liberia. This measure is merely to ensure that the country does not run out of rice in the short-run," Mr. Dadouh said.

While rice importers were committed to helping war-torn Liberia revive its economy, the K&K manager said, it was inconceivable to continue importing under the prevailing situation.

He then joined the RDAL to call for the immediate intervention of the government.

A recent investigation conducted by The Analyst reveals that at present, consumers are grudgingly buying rice between 23.00 to USD25 or its equivalence in Liberian dollars per bag and that the number of households that are capable of doing so is tumbling very fast.

"In fact it is now becoming difficult to get the brand of rice you want. Retailers say importers are refusing to sell "pussawa" rice to them and are only willing to sell the damaged low grade rice now," a consumer told our investigator, Friday, in Duala, Bushrod Island. "Pussawa" is a local name for American parboiled rice.

Besides the domestic effect of the present rice crisis, the investigation also shows that foreign businesspersons are profiteering enormously from the disparity amongst the prices of rice in the sub-region.

A consumption analysis conducted by our reporters indicates that the daily consumption of rice, which stood at the rate of 4,000 bags per day prior to the "increase" in the prices of rice on the international market, is now 10,000.

This observed jump which cannot be related to any obvious upward internal adjustments suggests that the 6,000 bag-surplus is filtering into economies of these neighboring countries with a huge profit margin at the expense of the Liberian people.

A plan is underway to hold meeting with NTGL Chairman Gyude Bryant and the Commerce Ministry as a means of addressing this grave economic issue, according to the RDAL officials who agreed that further delay may be dangerous.

In order to make the meeting fruitful, they say, there was a need for government's economic advisors to revisit the January 2004 policy address by Chairman Bryant with the view of determining its significance and relevance on the present reality in preparation for the proposed meeting with importers and retailers.

Acting Commerce Minister Mustapha Kamara acknowledged the concerns of the importers and urged them to officially inform the ministry about the prevailing situation.

Once that is done, he said, the ministry would invite the relevant agencies of government to meet and find a solution to alleviate the problem.

Minister Kamara however warned importers and retailers against hiking rice prices prior to the meeting, revealing that a task force has been set up by the ministry to inspect various rice warehouses to ascertain the would-be impact of the pending crisis.

He however argued that if prices had been increased internationally, it does not have to affect the consignment already stored in the warehouses.

The government has also been unable to enforce the general reduction announced in transportation fares during the same period, besides not being forthcoming in putting into place the much-hoped-for public transport system.

Further price increase in the face of the perennially low and/or delayed income, they say, would have the same impact as scarcity or shortage.
MGR Archive 13.7.2004
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