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Wednesday, June 12, 2024

Liberia: Rice Importers Seek Price Hike Amidst Surging Costs

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By E. J. Nathaniel Daygbor

In the face of escalating production and transportation expenses, rice importers in Liberia are pushing authorities to increase the retail price of the staple commodity, aiming to prevent disruptions in local supply.

The importers are requesting a 20% hike, from the current US$17.50 to US$21 per 25kg bag of Indian parboiled rice. They cite a 20% surge in charges levied by producers, driven by the ongoing conflict between Israel and Gaza, which has impacted the Suez Canal and led to longer shipping routes.

Also, the importers point to heightened fees imposed by entities such as APM Terminals, Med-Tech, the National Port Authority, and the Liberia Revenue Authority.

The call for a price adjustment is not a new development. As early as October 2023, the importers began lobbying the previous administration of President George Weah to allow an upward revision. Their efforts intensified in February 2024, as they reiterated their stance.

Amin Moada, the current Minister of Commerce and Industry, has been leading the negotiations with the importers, seeking to maintain prices below their requested level while exploring other interventions to preserve market equilibrium.

The government had previously agreed to a price of $16.50 per 25kg bag until May of this year, contingent on the importers’ commitment to bring in rice and sell it at that rate. This decision was also tied to the expectation that the Indian government would reduce tariffs, while the Liberian government encourages investment in local production.

However, the importers’ satisfaction with the government’s stance was short-lived. On May 14, 2024, they communicated another request for a price increase to US$21 per 25kg bag, citing an additional 4% hike imposed by the Indian government.

In response to the latest developments, the government has settled on a new price of US$18.50 per 25kg bag of Indian parboiled rice. The authorities have instructed the importers to provide a variety of rice options at the lower price, while assuring that there will be no shortages in the market.

Amidst these negotiations, the importers have made an initial commitment to invest US$200,000 in local rice production, with the intention of increasing this investment in the future. This move aligns with the government’s efforts to promote domestic production and reduce the country’s reliance on imports.

The supply, demand, and price dynamics of rice are shaping food insecurity and poverty in Liberia, the World Bank said in the Fourth Edition of its annual Liberia Economic Update released in September 2023.

“Rice makes up over 20 percent of total food consumption, accounts for nearly half of the calorie intake of adults, and accounts for about 15 percent of the overall spending of an average household in the country. Demographic trends and a strong preference for the commodity are the main drivers of demand.

Yet Liberia produces only a third of its rice needs due to several constraints, including limited access to technology, inefficient farming practices, low public and private investments, and a fragmented value chain, among other factors that have kept productivity low.”

 

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