Can MOA Harmonize Crops Price Without Subsidy for Farmers?

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Recently the Ministry of Agriculture (MOA) revealed that it would harmonize a standard pricing system for agricultural products (crops) to alleviate price constraints smallholder farmers are faced with as it relates to marketing their farm produce.

The pronouncement by the Ministry is contained in its 8th edition of the Food and Nutrition Security Situation Response report. The regular report seeks to inform stakeholders and the general public about the level of food security in the country and step the Government has taken, amid the Coronavirus pandemic (COVID-19).

The report said amid the pandemic, food prices are very stable in all parts of the country except for oil palm which continues to climb up in Lofa County. At the same time, the report also stated that there has been a noticeable increase in the price of gari (processed cassava) in some parts of the country, including Grand Kru, Bong, Sinoe, Margibi, Grand Cape Mount and Bomi Counties respectively.

In March 2020, Liberia experienced the COVID-19 outbreak and it has led to serious disruption of agricultural activities due to stringent measures introduced by the Government to contain the spread of the virus.

Considering the effect that the virus could pose on the food security and livelihood of the citizens, the MOA is said to be working to identify challenges that confront agriculture and food security and finding ways to mitigate the effects.

Poor pricing system for crops is one of the many challenges that is facing smallholder farmers. Many farmers in the various areas of production are yet to get fair prices for their produce on the local market since the end of the Liberian civil war.

For instance, farmers in the cassava and cocoa sectors have constantly experienced frustration from the sale of the produce.

This is because the market is being dominated by middle men who have considerable influence on the price of products sold to the consumers.

The situation which has remained unaddressed by previous administrations continues to keep most farmers in abject poverty as they cannot obtain better profits from goods sold. It also discourages potential local investors from venturing mainly in the food sectors.

But an expert in the sector has said that products pricing system cannot become successful if the government will not consider subsidy for farmers.

Joseph Morris, president of the Cassava Sector Coordinating Committee, told the Daily Observer through a mobile telephone conversation, “We understand that the move is good but I see it not to work right now. There was a study done in the past to ensure price harmonization, but did not succeed because it was not supported by the Government.”

Morris said that giving out planting materials to smallholder farmers to plant at the start of every farming season is a form of subsidy and therefore the Ministry of Agriculture  should work harder in providing such assistance.

“The Government must begin to promote the provision of more grants and loans for smallholder farmers across the value chain,” Morris added.

It can be recalled that Agriculture Minister Jeanine Milly Cooper upon taking office early 2020 promised to make subsidy to farmers a priority to enhance production, but since then not much has been done to realize the dream.

In the 2019/2020 fiscal year national budget, the Government allotted US$1 million to improve rice production. But the Government in March of this year through the Ministries of Finance and Agriculture signed US$700,000 cash collateral agreement for use in the rice sector. Unfortunately, the US$ 700,000 is yet to be released by the Ministry of Finance to the selected beneficiaries, something this paper is investigating.

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3 COMMENTS

  1. Haha, in Liberia they talk a big talk but they can’t execute and that’s a huge problem for everything in that country. Price harmonization is cliche for price control which distorts market dynamics. One way to lower prices for commodities is to increase production, the inverse is true if you want to increase prices. Price control is a bad solution. Even Communist China doesn’t do price controls; they allow supply and demand to determine prices. Stay away from price controls because it will do more harm than good. It seems like Liberian policy makers are gradually moving from free market to government control market. It’s unfortunate because some of the people making these terrible decisions have lived in America and they know the free market system is very efficient. Liberia has always been a free enterprise system, so why move to a socialist market based system that has failed around the world? Some countries like Russia and China for example have since abandoned government control markets because it didn’t work. If you tell a farmer he can only charge a certain price for his produce, he might not produce that crop again because you have just lowered his profit margin. Consequently, less of that crop will be produced, hence it will be scarce on the market, the black market will take over and jack up prices.

  2. Pathetic!

    Using $30 million, of which $9 million thrown in the thin air with no economic benefits, to buy food items that cannot benefit even a million people over a period of 1 month while they allot meagre $1 million in the budget for Agriculture, mon Dieu!

    You have such a fine Agriculture minister and giving her just $1 million a year? Come on CDC!
    Pump 30 million in the economy each year with this fine minister and watch the results in the next 3 to 5 years. Liberia would be competitive indeed with improved livelihood.

    Anyway, we will show you people how to lead. We DO NOT know how to rule.

  3. Hi Mr. James———,

    Is the World Food Program (WFP) involved in controlling prices of food produced within advanced countries?

    You indicated that socialism has failed because of price control. You added that, “Even Communist China doesn’t do price controls; they allow supply and demand to determine prices. Stay away from price controls because it will do more harm than good.”

    Did the writer advance the idea of price control or focus on price control? I think he paraphrased the views of the Minister of Agriculture and stated that the Government has not provided the promised assistance to small farmers. Predictably, subsidy would help small farmers to increase production, which would reduce the price of the produce.

    On the issue of socialism, many countries that are implementing some form of socialism are better off than those countries (USA, etc.) that have limited the role of governments in the ownership and management of major economic activities. For instance, China accumulates huge excess cash reserves because it owns and controls many economic activities. America, which has no ownership in its economic activities, owes China $2 trillion.

    This statement is from a report. “BEIJING, Jan. 21 (Xinhua) — Profits of Chinese state-owned enterprises (SOEs) grew 4.7 percent year on year in 2019 to reach about 3.6 trillion yuan (about 521 billion US dollars) last year amid reform efforts, official data showed Tuesday. Total revenues of SOEs reached 62.55 trillion yuan in 2019, up 6.9 percent year on year, the Ministry of Finance said on its website. Centrally-administered SOEs generated a combined profit of 2.27 trillion yuan, up 8.7 percent year on year.”

    Let us review price control in the US. Forget about the price control that NYC Yellow Cab drivers carry out, forget about NYC Rent Control Policy, which reduces the cost of housing units, forget about States in the US controlling gasoline price, etc.

    Rather, let us review the activity of the World Food Program. The United Nations established WFP to help countries reduce hunger. Yearly, WFP gets about $6B from donors and governments to fulfill its mandate. Instead of helping countries to produce local food, it purchases and distributes food produced in advanced countries. Critics have and continue to encourage WFP to end the practice of buying food. However, WFP and allies have stated that buying food for distribution is good for big agricultural business. If WFP ends the practice of buying food, they argue, the price would reduce and agricultural business will become bankrupt.

    Is it the “invisible hand” that controls the price of stocks of corporations? Yes, sometimes, the market determines the price of shares. Other times, governments buy stocks or shares of corporations, if the decline in price of those corporations will significantly affect the market.

    So, sir, price control is good and its effectiveness depends on how bureaucrats institute it.

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