Home Economy Boakai Rejects Rice Price Increment… As Government Finds New Options

Boakai Rejects Rice Price Increment… As Government Finds New Options

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By: Frank P. Martin

MONROVIA: Top importers of rice, Liberia staple food, met with President Joseph Nyuma Boakai yesterday, May 21, 2024, to address the controversies surrounding recent increment in the price of 25kg bag of rice from US$16.50 to 18.50.

But, following the meeting, the Liberian leader rejected the importers’ demand for price increment.

He indicated that his government would find an alternative to address the rice situation that faces the country.

The Executive Mansion confirmed that “President Boakai says there will be no increment in the price of rice” on the Liberian market.

The Executive Mansion didn’t detail what measures will President Boakai and his “RESCUE MISSION” take to address the rice situation in the country.

Commerce Minister Amid Modad disclosed in a news conference on Monday that the Rice Importers rejected several proposals from government to maintain the price of rice on the Liberian market.

The Rice Importers sent a letter to the previous administration of former President George Manneh Weah in October 2023, requesting an increase in the price of rice from $17.50 to $20.

However, the request was not fulfilled due to political considerations during the 2023 election period.

In February of this year, the importers wrote a letter to President Joseph Nyuma Boakai’s administration, outlining the reasons for their price increase request, including imposing an additional 20% charge, long shipping routes through the Suez Canal due to the raging war in the Middle East, resulting in increased transportation costs from APM Terminal, Med-Tech, NPA, LRA, etc.

Addressing the Ministry of Information, Cultural Affairs and Tourism (MICAT) regular press briefing in Monrovia on Monday, May 19, 2024, Commerce 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,” he mentioned.

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 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,” the minister added.

This followed top exporter India’s rice export prices that rose early March as traders factored in higher duty on rice shipments, while demand remained lackluster in Thailand.

India’s 5% broken parboiled variety was quoted at US$550-$558 per ton recently, shapely increased from in March, 2024, $543-$550. Since March, prices hit a record high of $560.

“We’ve had to raise prices since the government is considering the total transaction value instead of Free on Board (FOB) value to calculate the 20% export duty. This has pushed our export prices higher,” said a New Delhi-based dealer with a global trade house.

New Delhi imposed a 20% export duty on parboiled rice exports in August 2023 to control domestic rice prices.

Indian exporters have received notices from the customs department demanding payment of duty differentials on rice exported in the last 18 months, four exporters told Reuters, a rare tax demand that could cripple rice shipments from India.

The Indian Government has added another 4% this year, totaling 24% taxes to ship rice from India.

India is the world’s largest rice exporter, accounting for more than 40% of global shipments. Apart, from the recently ban higher-grade basmati rice – India’s best-known variety– non-basmati white rice accounts for about 25% of exports.

Other factor that led to the Indian Government in rice taxes on rice export has to do with climate change.
Rice prices have surged to their highest levels in a decade, marking a 14% increase since 2023 June.

The situation is primarily caused by warmer, drier weather and erratic rainfall damaging rice production throughout Asia.

In the past months, torrential rains and floods in northern India, for example, have damaged many rice fields.

Also, Thailand’s 5% broken rice prices was quoted at $585-$590 per ton, slowly went up recently to $598.

Another Asian nation, Vietnam’s 5% broken rice was offered at $590-$595 per metric ton, remain the same for now.

“Exporters have slowed down their purchases from farmers after an U.S. forecast saying earlier this month that the Philippines might reduce its imports this year on rising domestic supplies,” a trader based in Ho Chi Minh City said.

The Philippines is Vietnam’s largest rice export market.

Meanwhile, rice prices in the United States have are also on rise. According to the U.S. Bureau of Labor Statistics, prices for rice are 93.90% higher in 2024 versus 1997 (a $1.27 difference in value).
The current national average price is $1.35 for “Rice, white, long grain, precooked (cost per pound/453.6 grams)”. This data is collected by a national survey and can vary from region to region.
In the US, between 1997 and 2024: Rice experienced an average inflation rate of 2.48% per year. This rate of change indicates significant inflation.

In other words, rice costing $1.35 in the year 1997 would cost $2.62 in 2024 for an equivalent purchase. Compared to the overall inflation rate of 2.48% during this same period, inflation for rice was higher.
With these global rice traders hiking the prices of rice, which is Liberia’s staple food, reports say this could lead to local price increment here as well.

However, to address food security, previous administrations including the turbulence regime of President Charles G. Taylor, rice was subsided.

Former President Taylor used US$8m annually to subsidy rice while former president George Manneh Weah administration reportedly used US$20m annually to address the much-talked about rice saga.
It is not clear whether President Joseph Nyuma Boakai’s meeting with the importers highlighted such idea.

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