Monrovia — The Government of Liberia (GOL), through the Minister of Commerce and Industry Amin Modad, has announced that it has agreed to a request from importers to increase the price of a specific brand of rice on the local market, describing the rice industry as a "cartel."
Rice is Liberia's staple food.
Major importers of the commodity have been playing politics and threatening shortages if the government does not agree to a price hike due to the 20% export tax extended by India on parboiled rice.
FrontPage Africa has gathered that the rice importers have written to the Ministry of Commerce and Industry, proposing a minimum price of US$20 per 25kg bag of parboiled rice. They argue this increase is necessary to offset the rising cost of importing rice to Liberia.
Addressing the Ministry of Information, Cultural Affairs and Tourism (MICAT) regular press briefing in Monrovia on Monday, May 19, Minister Modad disclosed that in February this year, the government received a communication from rice importers citing several previous communications addressed to the past government, requesting an increase in the price of rice on the local market from US$17 to US$20.
According to him, the importers claimed that a 20% surcharge is being levied on the commodity by the Indian government.
"India imposed a 20% surcharge on parboiled rice, which has impacted the price of rice. Additionally, they (rice importers) cited the war in Ukraine and issues in the Middle East that also impacted freight, insurance, and timing."
Following the request, Minister Modad disclosed that the government requested a three-month grace period from the rice importers to assess all issues surrounding the need for an increment.
Minister Modad said the government's request was intended to ensure that the right decision was made for Liberians.
"We also negotiated with them that our priority is to reduce the cost. If we were to consider all the issues they raised to increase the price of that particular rice, we obligated them to ensure that there were several varieties of rice on the market that would be sold for US$16 or less. They committed to do so."
According to him, the government also emphasized that rice production remains a priority under the Boakai-led administration to promote food sufficiency during the meetings held with the importers.
He pointed out that instead of increasing the rice price from US$17 to US$20, the government negotiated with the importers to reduce the cost to US$16.75 as a "temporary measure for a new government."
Minister Modad added that while the government and the importers agreed on the US$16.75 reduction for a 25 kg bag of rice, the ministry was verifying the facts supporting the importers' request for an increase to US$20.
He said the surcharge was increased to about 24% on parboiled rice, which led to rumors of a shortage of the commodity on the Liberian market, contradicting the government's commitment to ensuring no shortage of basic commodities, including rice.
According to him, importation permits were given to additional importers to prevent the shortage of the nation's staple food.
"During this time, we also, in our effort to ensure that Liberians participate in all sectors, granted IPDs to three or four new Liberian enterprises to expand the importers of rice."
Minister Modad claimed that the first consignment of rice, under the Unity Party-led government, arrived in the country on April 22 this year.
Since the importation, vessels bringing in rice have faced constraints at the port, causing importers to incur extra fees for storage.
According to him, the ministry is currently working with authorities of the National Port Authority (NPA), Liberia Revenue Authority (LRA), and APM Terminals to address the situation.
"Our team has broken down the cost of rice, solicited invoices from India and other countries, and invited distributors to bring in new importers who can supply rice at a competitive price. It is a difficult process. The rice industry is like a cartel. So far, we have not been able to get any rice at a competitive price."
Reasons for Increment Verified
Minister Modad said the government has verified all the points made by the rice importers as reasons for the price hike, noting that some costs can be reduced domestically, and they are working on that.
Last week, he disclosed that the government received a communication from importers stating they have adhered to the previous agreement with the government, but the high cost of freight prevents them from continuing to sell at US$16.75.
"We had several meetings with them (rice importers) over the last few days. As the President has emphasized, there is no other way around this rice issue and self-sustainability unless we are able to grow rice."
Minister Modad observed that financial and global issues continue to affect the stability of rice prices in Liberia, causing market prices to fluctuate.
Ruling Out Subsidy
He maintained that while there have been suggestions for the government to provide subsidies to rice importers, the strategy, which was partially applied by the immediate past government, is not the solution.
"We did our calculations--even if we give the rice importers a US$0.75 subsidy per bag, which amounts to US$9M a year--our recommendation to the President, which he supports, is that amount should be dedicated annually towards local rice production."
Minister Modad stressed that with that amount, the government can empower local farmers to produce rice, instead of giving money to importers.
"So, from US$20, we have made the hard decision to increase the rice price to US$18.50 starting tomorrow. In our discussion with them, this is predicated on the continuation of the duty imposed by the Indian government."
He said the government will not hesitate to reduce the price of rice following a reduction in the surcharge, subsiding of other global factors, and a reduction in charges at the Freeport and shipping agencies for the benefit of the citizens.
Not All Rice Prices Increased
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According to him, the increment of the price of rice to US$18.50 is restricted to the 5% Indian parboiled rice and does not affect other brands of rice on the market.
"The increment doesn't impact any other rice on the market. Our Inspectorate will be very vigilant to ensure that rice importers do not capitalize on this to increase the price of white rice or the 10% or 25% Indian parboiled and other rice varieties."
He said importers have also brought other varieties of shorter-grained rice that will remain at US$16 for a 25kg bag.
Minister Modad pointed out that the importation of acceptable rice varieties would be increased by the importers.
"Our aim, as mandated by the President, is to ensure that while we cannot control the external factors impacting rice or foodstuffs, we must provide varieties for our people. If you cannot afford the US$18.50, you must have a cheaper, good-quality alternative. We made the hard decision to ensure that there is no shortage of rice on the market."
Local Production
He stated that as part of the ARREST agenda, the government is willing to invest in local rice production, but processing and packaging remain major concerns.
He said the government would set up a processing facility at the Industrial Park to be operated by a Consortium of Liberian Enterprises to process, package, and sell locally produced rice on the market.
According to him, the government has already committed US$200,000 to start the process, with a commitment to increase allocations in the future.
