EDITORIAL: The Unavoidable Necessity of Price of Rice Adjustment

THE RESPONSIBILITY OF the government in any country is to ensure impartial supply of essential commodities to people at reasonable prices. In order words, the government has to fix prices of commodities where there are imbalances in market forces especially where scarcity of the products or an imminent situation where the availability is an issue.

IT WAS AGAINST this backdrop that the government out of necessity took a radical decision to adjust the price of rice, the nation’s staple, to mitigate a crisis of the availability of the commodity on the local market.

ACCORDING TO THE government, the decision to establish a new and realistic price was premised on the fact that there has been a disruption in the international supply chain due mostly to the Russian-Ukrainian war as farmers have been cut off from assessing fertilizers from Ukraine, thus resulting in low farm yield. Besides, the effect of climate change has had adverse repercussions leading to farmlands being destroyed or under constant threats of destruction.

WE BELIEVE THAT, GIVEN the globally exogenous circumstances Liberia finds itself, especially where the country has become vulnerable to external shocks just as every other country in Africa and the rest of the world, the decision to set a realistic, slightly upward price regime is in the right direction.

WHILE THERE MAY understandably be some misgivings in some quarters about the adjustment, it is important to note that besides addressing the issue of availability of the product, there has been an unnecessary loss of government’s revenue to keep the price at its previous state.

Information gathered from the government has it that the government set the import subsidy at $5.5m in 2021 and $11m in the current 2022 budget. But even with those cushions, the propensity for the escalation of such subsidies would have been higher in the coming years given the soaring global prices.

HAVING CONSULTED WITH well-grounded economists here and abroad, we too can conjecture that further attempts to keep the domestic price of rice artificially low outside of the contending market forces could have adverse effects on additional investment in Liberia’s agriculture sector. This is troubling. Investors should be encouraged to invest in the sector with the hope that the government will not distort their production and profit-making mechanism by subsidizing the very product imported in the country.

INTERESTINGLY, ALL COUNTRIES in the subregion have been reacting to the global trend, but only Liberia seems to be lagging behind, either because we want to be in self-denial or we are deliberately distorting the economy and keeping the country stunted.

IT IS AGAINST these stark realities that we applaud the appeal and explanation of the government, that Liberians should now be concerned with the availability of the product and not the price, as the global trends have also affected all countries in the world including even the advanced economies.

IN THE WAKE of the global financial crisis and increasing sovereign debt risk, financing for development is drying up and developing countries must now look inward to finance their growth and development needs. Liberia should not be an exception. Crisis times require bold reforms and President George Manneh Weah has demonstrated the political will and ability to take on this dreaded issue of rice being regarded as a “political commodity”. He should sustain the tempo.

THAT IS WHY we wish to encourage the government that in order for this policy to have a resounding impact on the citizens, it has to also take on another challenge, which is transparency in the use of whatever money that will be saved from not being spent on the subsidy. The Government must utilize these resources more efficiently to create social welfare and infrastructure improvement programs that will not only improve the quality of life for the poorest but also put the country on track to address the inherent food insecurity.

WE HAVE TO EDUCATE and tell ourselves that there was no way we could have avoided keeping the domestic price of rice low in the wake of the external pressure that we have no control over. 

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