Rice Importers Want Price Adjusted, Or...
Posted July 14, 2004
Importers of Liberia’s staple food, rice, are appealing
to the transitional government to immediately adjust the prices of the commodity
to reflect the growing world market rates or risk its shortage on the Liberian
They complain of operating at a loss presently because of the present prices for the commodity. They cautioned that if nothing is done to adjust the present prices to reduce the huge losses being experienced by importers, it might lead to a shortage of the commodity as they cannot continue to continue operating at a loss.
The importers said for a very long time, they have been sustaining losses, but said it was time that “something be done” to encourage them continue supplying the market
A major rice importer of the K & K Trading Corporation,
Mr. Chawki H. Kadouh on Thursday warned that unless the issue is addressed
soon, the nation risks rice shortage, with adverse effects on the fledgling
“A ton of Liberia’s favorite Butter Rice is currently sold in China for US$350 per ton, up from US$225 last December. This means we are paying US$17.50 per bag of rice in China. Add freight, import duty and other taxes to this and you will come up with US$22.50 for a bag of rice. How can we sustain our businesses if we continue to sell at the government price of US$17.00 when we are currently spending US$22.50 for a bag of rice?”, Mr. Kadouh lamented. “We are spending too much”, he added in a dismal tone.
He said while they remain committed to helping war-torn Liberia revive its economy, it was inconceivable to continue importing under the prevailing situation.
Mr. Kadouh said in the face of the Commerce Ministry’s inability to address the price of rice as has been done in the case of petroleum, rice importers have adopted a series of stop-gap measures to ensure that they keep their heads above water to avoid prematurely closing their businesses.
For the time being, he said, all wholesale buyers will be expected to transport their consignments from the Freeport of Monrovia to their business centers. Another cost-saving measure, Mr. Kadouh said, was the immediate reduction of their work forces. The K&K proprietor also said that they have put a temporary freeze on selling on credit.
“We have observed that business partners who take large quantities of rice on credit end up exporting the commodity to neighboring Sierra Leone, Guinea and Ivory Coast, where the price of rice is much higher than in Liberia”, Mr. Kadouh said, adding, “this measure is merely to ensure that the country does not run out of rice in the short-run.”
Also, another importer of the commodity, expressed similar concern about the continuous losses being experienced because of the present prices. He said they sustain a loss of US$6,000 daily from the supply of 4,000 bags of rice on a daily basis.
He said if the present trend continues, they would be constrained
to drastically cut down on the daily supply from 4,000 daily to 1, 000,
something which will eventually lead to a shortage of the commodity.
The importers said the Commerce Ministry has been informed about the effects of the present prices, but it has not shown interest to make the necessary adjustments to ensure the continued supply of the nation’s staple food..
In his inauguration speech last October, Transitional Chairman Charles Gyude Bryant announced sweeping reductions in the prices of essential commodities. About two months ago, the Commerce Ministry intervened to save the situation by announcing increases in the prices of petroleum commodities to reflect world market increases.
Meanwhile, the Rice Dealers Association of Liberia is calling on the government to break even with importers of the nation’s staple food, rice, who they said are complaining of incurring major losses due to the low cost of the current price of a bag of rice at USD17.25 on the Liberian market.
The association warned that there could be a serious shortage of the commodity in the country if government does not immediately make this issue a major national priority agenda.
According to them, in the next few weeks, the only two importers of rice, Bridge Way and K&K have told them they are losing enormously due to the high taxes levied on rice importation but are still selling at the lowest in the sub-region. A bag of rice, according to them, is sold in the Ivory Coast at US$23.00, Ghana US$33.00, Sierra Leone US$28.00 and between US$28 and US$30.00 in Guinea.
Speaking to reporters over the weekend at their headquarters in Duala, two executives of the association, Mohammed Kiadii and Dwana Kolleh said they were not supporting an increase in the current price for a bag of rice, but wanted the government to share the cost of importation with these major importers to allow the continuous availability of this political commodity in the country.
However, they emphasized, if the government can come up with a new price to commiserate with the increase on the international market as a way of subsidizing these importers, it would avert the imminent shortage and stabilize the market.
The executives pointed out that at the moment, rice distributors are finding it difficult to obtain their regular supply of the commodity from importers on ground that there is insufficient consignment in their warehouses to satisfy everyone. “If we don’t do this, we will end up selling everything (US$17.75) to businessmen who will take all across the borders and make more profit,” a warehouse supplier told our reporter.
A plan is underway, according to them, to hold meeting with NTGL Chairman Gyude Bryant and the Commerce Ministry as a means of addressing this grave economic issue.
Government economic advisors are also been called upon to revisit the January 2004 policy address by Chairman Bryant with the view of determining its significance and relevance to the present reality.
Investigation conducted by the reporters revealed that at present, consumers were buying rice at US$23.00 or its equivalent in Liberian dollars per bag.
The investigation also showed that businessmen from neighboring states are taking advantage of the low cost of the commodity in Liberia to purchase a huge quantity to make profits. Trucks from Sierra Leone, Guinea and the Ivory Coast are often seen loaded with thousands of bags of rice heading to the respective borders for resale in their countries.
This situation is said to be costing importers US$1.50 on every bag leaving the Freeport of Monrovia. As a result of this, they have grounded all their trucks which were used to distribute rice to various deport in Monrovia and around the country.
A consumption analysis conducted by our reporters discovered that a daily supply of 4,000 bags rice when the price of the commodity had not been increased on the international market is now being increased to 10,000. The surplus of 6,000 could be filtering into these neighboring countries economies with a huge profit margin.
Acting Commerce Minister Mustapha Kamara acknowledged the concerns of the importers and urged them to officially inform the ministry about the prevailing situation. Once that is done, he said, the ministry would invite the relevant agencies of government to meet and find a solution to alleviate the problem.
On the issue of an increase on the price of a bag of rice, Acting Minister Kamara advised dealers not to sell above the official price of the Commerce Ministry. He said a task force has been setup by the ministry to inspect various rice warehouses, noting that even if prices had been increased internationally, it does not have to affect the consignment already stored in the warehouses.
It can be recalled that early this year in a major policy address to the nation, Chairman Gyude Bryant announced the reduction in the pump price of petroleum products and the nation staple food, rice. Chairman Bryant hope at the time was that such reduction would have eased the hardship faced by Liberians just emerging from years of various kinds of wars in the country
The ever changing economic system has however made it impossible for these prices to hold. Nearly six months on, the hardship has not reduced. The government has also failed to enforce the reduction in its general transportation fares announced during the same period coupled with the lack of public transport system.
The increase in the price of petroleum products on the international market has had a ripple effect on consumers in Liberia to the extent that government has increased the price of the products to break even. Up to the time of writing this story, a gallon of gasoline was been sold for L$200.00 and there were rumors of an eminent shortage of the commodity.