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LIBERIA: Effects of Growing Rice Shortage on the World Market
Apr 21, 2008
Francis W. Nyepon
 A rice shortage on the Liberian market is very likely as rice producing nations cut export of the commodity due to spikes in global demand and poor harvests. Global rice stocks are at their lowest level since 1976, and foreign sales restrictions by many producing-nations have removed about a third of the rice traded in the international market out of reach of poor and medium income countries. For example, in Liberia where rice is now available at a premium, consumers are likely to see an even higher price over the next few months for the 100 lbs bag of parboiled long-grain rice. However, due to the current global economic movement on rice sales, and soaring price to an all-time high shortage of rice on the Liberia market will soon become evident to local rice dealers and consumers.
Let it be stated here and now that there is no shortage of rice on the Liberian market at this time. However, there is a genuine concern of this author that scarcity in global rice stock could lead to higher import costs and higher prices. Hence, one can only suggest that the Sirleaf administration not allow itself to be caught off-guard and later find itself scrambling to take necessary action if the worst should comes to past.
In the past few months, major rice-producing countries, such as Thailand, India, Vietnam, China, Cambodia, Indonesia, and Egypt, have all limited export of rice to assure adequate supplies at home as prices hit record levels. Nearly half of the world's 6.6 billion people depend on rice to survive, and it is a staple for more than 4.5 billion people in Africa, Latin America and Asia. With rising populations and economic growth, the world is already eating more of the grain than is now being harvested. Data from the US Department of Agriculture shows that world rice inventories now stand at about 72 million tons, enough to cover only about 17 per cent of global annual consumption in 2008, when just eight years ago, stockpiles were equal to 35 per cent of demand.
According to Reuters, and National Public Radio, the price of Thai rice, a global benchmark, shot up 30 per cent from US 580 dollars to US 760 dollars a ton in the month of April alone. That was more than double its price of US 360 dollars a ton in January just few months ago. Thailand is the world's largest rice exporter, and according to TIME, this sudden spike in the Thai rice prompted Vietnam and India, the world's second- and third-largest exporters to follow suit; hence, the impending crisis.
Experts at the Ministry of Commerce in Monrovia predicts with certainty that should this global trendy persists, the average Liberian would be unable to pay for the anticipated price hike in rice of US 50 to US 80 dollars in market rate for a 100lbs bag of rice. With the specter of a shortage looming, and indicators from local markets, coupled with statements made by senior administration officials, including some well positioned lawmakers, this author sees all indicators pointing to a rice shortage on the Liberian market.
In addition, discussions with experts from the UN's Food and Agricultural Organization (FAO), and an agricultural policy officer at the Ministry of Agriculture in Monrovia, confirms that the global commodity price hike could serve as a wakeup call to Liberia to prioritize a rice policy based on self-sufficiency. Notwithstanding, this author should caution that if a strategy is not crafted carefully, market conditions could severely hit ordinary Liberians very hard especially those transitioning from forced displacement and migration after 14 years of civil war and chronic economic dislocation. The primary concern here is that poorest families will suffer most as they spend more than 70 percent of their income on food, according to a recent World Food Program (WFP) report. Unable to afford high-priced rice, many poor transitioning families would expect and rely on government to subsidize rice or international food aid, and they could become the bedrock for social discontent, and the single most affected sector to be mostly malnourished.
Economists and political scientists at the University of Liberia contents that this is a crisis that has been brewing for some time. Although there has been substantial progress on the political and democratic fronts, the lack of substantial capital investment in the agricultural sector, which has stagnated or even declined in real terms could cause additional challenges in other sectors. Unless there is concerted investment in the agricultural sector, rice price hikes will become a perennial problem and real food shortage could cause growing anger among the poor desperate for food. To ensure that the pending economic shock doesn’t escalate into a crisis on the Liberian market, a national rice strategy needs to be promulgated now. Liberia does not yet have a food problem, but there is an underpinning of an agrarian crisis looming, which could pose a problem, and further stretch our fragile democracy and challenge our weak social cohesion.
Liberian consumers need to be made aware of the potential shortage of rice on the world market and the looming skyrocketing prices that is currently causing a stir around the world. It is only fair to publicly discuss the crisis before officially warning of drastic actions that might be needed to curb potential disaster. Liberians need to know that food prices all over the world are going through the roof, due to global oil prices among other economic factors, and it doesn't matter where one lives, people around the world are paying higher prices for food, which is causing lots of problem for lots of governments. Liberians need to know that countries like South Korea is releasing more rice from state reserves to boost supplies, a source at that country‘s embassy near Washington, D.C. informed this author. Also, an information offer at the Chinese Embassy near Monrovia also stated that his country has already announced that it will pay farmers more for rice and wheat, in an attempt to raise output and cool surging inflation.
In a Liberian context, what implications would a global rice shortage have on the economy and society? What should the government do to ensure that ample supply of rice is on the Liberian market? Can rice be further subsidized in Liberia as some countries are currently doing to avoid social anger? Will the government target subsidies to rice growers as an incentive as is customarily done in America, Europe and Asia for specific commodity farmers?
Serious consideration should be given to finding fundamental alternatives to counter anticipated market forces and the expected surge in global rice prices caused by high demand and poor harvests. In the opinion of this author, the Liberian Government should move quickly and take immediate action before anxiety sets in amongst the population and people become restless and use the high price of rice to stair up unnecessary social discontent. Policymakers both in the administrative and legislative branches of government need to take immediate action because if current spike in global rice prices continues, and available global stock keeps declining sharp as they are, market disruption in Liberia seems set to escalate. If ever a time was right to encourage Liberians to grow more rice, that time is now. Better yet, what better time than now to encourage Liberians to eat more cassava, yam, eddo, plantain, and fufu?
While Liberia is one of the largest consumer-nations of rice per capita in the world, its fret over food security should be brought to the forefront and priority of policymakers who need to understand that many of the rice-producing countries mentioned above, sole aim presently is to tame inflation in their respective countries by keeping more of their supplies at home in order to drive down domestic prices. Likewise, in a bid to stabilize prices here at home, the Liberian Government needs to fundamentally restructure the consumer pricing index on consumer goods, such as petroleum, building materials, because the wholesale inflation price is close to a 19-month high, posing a major policy challenge at a time when economic growth in the country has slowed across the board, but most significantly in the employment sector.
Current domestic market trend would suggest that the following steps be considered with some urgency. First, that the government issue an immediate national rice emergency decree and completely break the monopoly on rice importation. Second, special incentives should be considered to encourage new investors into the sector. Third, a determination should be made to actively become a player on the world grain market. This means, the government should plan a major purchase of rice in the international market to boost supplies on the Liberian market in order to keep prices down. This would suggest that the Sirleaf administration move to purchase at least 300,000 metric tons of rice to cover the anticipated import and production shortfalls. The challenge would be how to make this process transparent, accountable and corruption free? Would officials see this as national emergency or an opportunity for personally financial gain?
Rice, is the staple of our national diet. Instead of improving local production, successive governments have usually focused on importation because it is cheaper to buy rice outside of the country rather than subsidizes our farmers to grow the prefer long-grain rice Liberians desire. A quarter century of bad governance, and monopolistic business policies, including mismanagement and war have handcuffed our national interest to the misguided pleasures and special interests of a few self-centered, unpatriotic and narrow-minded individuals. Notwithstanding, over the past two years, our country has undergone profound changes. A move in the right direction is to fundamentally root social transformation.
Our country known over two decades for civil and political strife is slowly but surely recovering under a democratically elected government. With the current leadership rooted in social transformation, the lack of self-sufficiency in rice production isn’t a burden Liberians have to accept, but rather a challenge that we must all overcome as a collective. The Sirleaf administration must now prioritize a pro-growth national rice policy, and completely open the market and break the monopolistic business practices on rice and other basic commodities like concrete, petroleum etc. In addition, weak non-performing state owned enterprises needs to be auction off to the highest bidder. The Ministry of Agriculture should be given the leverage and then take the lead in refining aged-old policies that have long disadvantaged farmers and rural people.
About The Author: Francis Nyepon is managing partner of DUCOR Waste Management in Liberia. He is a policy analyst and vice chair of the Center for Security and Development Studies, and serves on several boards of humanitarian, environmental and human rights organizations in the United States and Liberia. He can be reached at francis.nyepon@Gmail.com
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