— Rice wholesalers say the extra expenses they incur while acquiring the rice from importers, denies them the right to increase their prices
The government’s decision to raise the price of rice to US$17 while forbidding businesses from raising their prices to cover the additional costs associated with buying the rice, according to wholesaler Lovette Johnson, is “callous and immoral."
Johnson claims that she is covering transportation costs from the Freeport of Monrovia to Caldwell, where her shop is located, and to bring the rice from the warehouse outside, they must pay.
“We paid L$10 (US$0.0.6) to have a bag taken from the importer warehouse to the roadside and then spent another L$60 (0.4) per bag to have it transported. Transportation is expensive, and yet the government is asking us to only add US$0.50 after we spent US$17 plus extra spending per bag,” said Johnson.
The news about the increment came as a surprise to many retailers, who were already struggling with the instability in wholesale prices. The government mandated that the wholesale price for a 25kg bag of rice is now US$17, up from US$13.50, while the retail price jumped from US$14.00 to US$17.50.
The increment comes after the Weah administration spent US$15 million on rice subsidies in the previous two fiscal budget years in an effort to stabilize the price.
The move appears to be supported by the International Monetary Fund and it is a measure adopted by the government to end some of the costly subsidies that have widened the country’s account deficit.
“In the absence of practical targeting mechanisms, subsidies can quickly become prohibitively expensive and difficult to reverse in an election year—a US$1 per gallon subsidy on gasoline costs about 2.5 percent of GDP and a 20 percent subsidy on imported rice some 0.5 percent of GDP. “
“The authorities intend to stay away from fuel subsidies for now and broadly limit rice subsidies to offset the sharply higher shipping costs for imports,” the IMF said in a 2022 Article IV Consultation report on Liberia, which was under the Fourth Review of the Extended Credit Facility Arrangement.
Of the US$15 million, US$11 million (0.3 percent of GDP) was allocated in the fiscal year 2022 budget to stabilize rice prices by offsetting sharply higher international shipping costs in the wake of global supply chain disruptions.
The special 2021 budget also had US$5.5 million for import subsidies.
“This is complete wickedness,” Hawa J. Karquoi, a wholesaler, said. “We are at a loss here. The US$0.50 will not cover up for the extra expenses.”
This, Karquoi argued, will hamper her business, as she would not generate profit. However, she called on the government to increase the retail price to US$18 instead of US$17 as a result of transportation costs.
“I am not even getting any profit. The rice in the country is plenty, but the government just wants to be wicked to us,” she adds.
Karquoi threatened to violate the government's prescribed price of US$17.50 , which is intended to cover additional expenses.
Meanwhile, the hike in the price of rice comes nearly three months after commotion between importers and the government that resulted in the spike in rice prices for some time. The importers had requested to increase their price, a decision the government rejected -- leading to hoarding.
Oliver Tamba, who runs a shop in New Georgia, said it is sad that the government is mandating them to sell at a fixed price without considering the extra expenses they incur to get the rice.
“The government says we should sell rice for US$17.50 without considering transportation costs. “I want to sell rice for US$18.50. That's the only way we will get something for ourselves.”
“You bring the rice outside, you pay for loading fees, and each bag costs L$10. The US$0.50 [the] government says we should add is just L$75 which is nothing compared to what we spend to get the rice,” Tamba added. “Pretty soon we will stop selling rice in shops because you can put your heavy money in rice for L$75. We want to sell rice for US$18.50.”
The government action meanwhile has also affected the most basic retail unit of the commodity, which is the sale of rice by cup. It is now L$60 (0.4) and L$70 (0.50).
The country’s major staple is rice. Even though there are other variations of the commodity, Liberians prefer long grain rice.
And the hike in price, which is the first in five years, raised the price of rice for many households, at a time, when 2.3 million Liberians are unable to meet their basic food and non-food needs — with poverty being higher in rural areas — home to 71.7 percent of the poor compared to 68 percent of the total population.
Food inflation as of 2022, according to the World Bank in its third Economic Update on Liberia that food inflation, notably for rice, had increased to 5.2 percent --deeply affecting rural communities, many of whom disproportionately poor.
Approximately 18% of households in Liberia’s estimated population of five million were identified as moderately to severely food insecure, the World Food Programme said in a comprehensive food security assessment report in 2018.
This is happening as Liberia, which is a fragile, low-income country of an estimated population of 5.2 million, still has a per-capita income that is around a third of what it was prior to the civil wars of 1989–2003, which would be around US$680 per year in 2021.
When George Weah became president in 2018, he met with rice importers to dialogue on the price of the commodity.
“I am ready to work with you and resolve all of the issues that underpin the galloping price of rice so that our people can afford to buy it,” he said.
Sometime last year, there was an increase in the price of rice. But it was not government sanctioned. Additionally, there was another rise this year, which prompted the President to pay an announced visit to several warehouses at the Freeport of Monrovia and guarantee that the price of rice would never increase.
“We are not getting anything for ourselves. Let the government allow us to sell at US$18,” said Mayoumum Fofana, who went to purchase 50 bags.