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Article: The Dilemma of Rice Pricing in Liberia- Economic Prudence or Political Game?

By: Austin S Fallah  – A True Son of Liberia, Africa, and the Planet Earth Soil. A son of a farmer architecturalist.

Monday, May 20, 2024-In the complex and multifaceted world of Liberian politics and economics, a central concern that persists is ensuring the availability and affordability of the nation’s staple food, rice.

The Liberian government, currently led by the ruling Unity Party under the Presidency of Joseph Nyumah Boakai and his able Vice President Jeremiah K. Koung, and that of the Speaker Jonathan Fonati Koffa (CDC) and the President Pro-Tempore  Yonblee Karnga Lawrence (LP) grapples with the decision of whether to increase the interest price of rice, the debate has matured into one with significant socio-economic and political repercussions.

This cerebral interlocution delves into the argument of whether an increased price of rice is economically prudent to keep the food on the market or if it is simply a wrong political game for the ruling Unity Party, and other parties’ leadership within the government.

On one side of the argument is the notion that keeping the prices low would increase affordability but could potentially lead to a scarcity of the commodity due to the market’s inability to balance demand with adequate supply.

Conversely, allowing an increase in the price of rice is argued to maintain market stability by giving importers and local Liberian farmers an incentive to keep rice in supply.

However, this move might render rice unaffordable for many, leading to greater food insecurity among the populace.

To address this conundrum, it is necessary to delve into the intricacies of rice as a staple in Liberia, the economic principles that govern its market, and the potential socio-political consequences of manipulating its price.

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The Importance of Rice in Liberia:

Rice is not just a food item in Liberia.

It is a cultural staple food and a daily necessity and can sometimes become a political weapon.

According to the Food and Agriculture Organization of the United Nations, rice constitutes the foremost source of food for the vast majority of Liberians.

The nation’s reliance on rice transcends mere nutritional significance, and it is also deeply embedded in customs and societal norms.

Therefore, its availability and affordability directly impact the daily lives of Liberians.

The Unity Party, in particular, in its quest to cater to the needs of its populace, faces the pressure of ensuring that rice is both readily available at local markets and affordable to the average consumer.

The political gravity of this issue can not be overstated, for food security is closely tied to political stability.

The Liberian government has the daunting task of balancing economic realities with the societal implications of rice pricing.

Economic Prudence vs. Political Calculations:

To argue/expostulate for an increased interest price of rice ostensibly rests on the principle of economic prudence.

As a student of modern contemporary economic theories and through the lens of supply and demand economics, when a price is set too low, demand exceeds supply, resulting in a shortage.

By allowing the commodity price to rise, the government could ensure the motivation for importers to import rice consistently and for current local farmers who have honed into the production of the commodity to remain incentivized to cultivate rice.

This increased cost, theoretically, would mitigate the chances of shortages, thus maintaining a stable supply in the market.

However, this ostensibly prudent decision may not reflect the economic realities of many Liberians.

For the majority who live on the economic margins, even a minor increase in the price of rice can have cascading detrimental effects.

Higher prices might maintain market supply but could simultaneously result in decreased access to rice for families with limited financial resources.

A hike in prices may potentially lead to malnourishment, increased poverty rates, and social unrest scenarios that any ruling party would seek to avoid.

Interestingly, critics of price hikes may suggest that increasing the interest price of rice is a political gambit by the Unity Party.

They could argue/opine/avow that this is a tactic to appease the business sector, particularly importers and those farmers who have entered into rice production rather than addressing the needs of the average Liberian.

The government could be seen as prioritizing market principles over the welfare of its citizens, which could be interpreted as a move to ensure economic allies and secure political leverage rather than genuinely responding to the needs of its constituents.

The Consequences of Keeping Prices Low:

The alternative is that maintaining artificially low interest prices to make rice affordable has its set of repercussions.

While it seems to be a populist approach aimed at safeguarding the purchasing power of ordinary Liberians, it can be detrimental to the market’s health.

Suppliers and current Liberian rice-producing farmers may find it economically unfeasible to sell rice at lower prices, leading to a reduced incentive to import or local producers of the staple food rice.

The resulting shortages could lead to black markets and higher unofficial pricing, ultimately defeating the purpose of maintaining low official prices.

Moreover, consistent artificial price suppression can weaken the agricultural sector’s capacity to modernize and compete.

The lack of adequate profit margins may discourage investment in the commodity and hamper efficient production methods by Liberians who just venture into mass production of rice in the country and quality improvement.

Long-term reliance on imported rice due to local production inadequacies could jeopardize food sovereignty and expose the nation to the volatility of international markets.

The Role of Subsidies and Government Intervention:

One potential solution that navigates the middle ground is the implementation of government subsidies.

Subsidies could alleviate the cost burden on consumers while also maintaining a market price that ensures supplier profitability.

Such measures require careful government intervention in the form of direct subsidy payments to farmers or importers, reduced taxes on imported rice, or even the provision of farming inputs to local producers at subsidized rates.

This has been our argument for the resuscitation of the Agriculture Cooperative Development Bank (ACDB), Cooperatives, and the creation of more cooperatives in each of the districts in the hinterland.

However, subsidies themselves are not without challenges.

They must be well-targeted to avoid misallocation and require a stable fiscal commitment from the government.

Funding such programs may prove difficult, especially in a developing economy like Liberia, which faces numerous competing needs for its limited financial resources.

With the ACDB and the involvement of district cooperatives, it is feasible.

The debate on whether to increase the interest price of Liberia’s staple food, rice, highlights the complex interplay between economic necessity and political maneuvering.

Increasing the price may prove economically prudent for market stability but could bear the consequence of reducing affordability and political repercussions.

Keeping prices low appeals to consumer affordability but may create market distortions that lead to food shortages and political repercussions as well.

So, a careful and balanced approach is paramount, one that mitigates market instability and food insecurity while promoting economic development.

As the ruling Unity Party navigates these treacherous waters, it will need to tread carefully.

The decisions it makes will have far-reaching implications for both the economic health of the nation and the well-being of its citizens and its political future.

Ensuring that rice, a critical component of Liberia’s diet and culture, remains on the market and affordable will require a holistic strategy that incorporates effective economic policies, political foresight, and a genuine commitment to serving the needs of all Liberians.

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