How the rise of basic commodity prices impacts Liberians

Action Against Hunger just published an excellent detailed report about how the surge in the price of basic commodities is impacting Liberians in Monrovia. Below are some things I learned from the report, but if you have time I strongly recommend reading the whole thing. Or at least the executive summary and the analysis on trends in the price of rice (pages 8 -10). (In the bullets below I copy some language directly from the report.)

Rice

• 2/3 of annual rice consumption is met through imports.
• The international price of rice has increased 112% in the past year.
• In 2006, US parboiled rice was $22 for a 50kg bag. It is now $45. (A Liberian friend was looking over the report with me and said it is even higher now, in the week or two since this report was published.) Chinese butter rice was $20 in 2006. It’s now $31.
• As consumers often cannot afford a bag of rice, most buy by the cup. While the government regulates the price of a bag of rice, they do not regulate the price of a cup. A cup of butter rice currently costs 20 Liberian Dollars, which translates into $39 for a bag, or 25% more than a bag if it was bought at once. (One 50kg bag of rice feeds a family of 7 for 3 weeks.)
• Employees with regular monthly salaries usually purchase rice per bag, while low-income households buy on a daily basis. Low-income households therefore have to pay more for rice. The poorest pay the highest price for their staple food, and are thus more severely hit by the current food crisis.
• Since the war, Chinese butter rice is the main type of rice consumed by low-income citizens in Monrovia, although preference would be given to American parboiled rice or maybe even to country rice if available and affordable.
• Available stocks of rice could be undermined by cross-border trading, as rice prices are much higher in neighboring countries.
• Former president Tolbert’s efforts to enhance rice self-sufficiency, increase producer price incentives, and slow down the rural-to-urban migration led to an increase in the price of rise, and the subsequent April 1979 rice riots.
• Local rice is more expensive than imported butter rice because of insufficient production and transport costs/road conditions. Local rice is mainly produced and sold within the same county, while imported rice can be found throughout the country.
• Parboiled rice is a sign of wealth. Local production will have to overcome this social bias anchored in the westernization of the way of life in cities. Massive migration from rural to urban areas in the recent past may have positive effects on the food preference as rural Liberian were more used to local rice.
• Rice accounts for an average of 28% of daily caloric intake for Liberians, irrespective of social class.
• Protein intake has decreased for many Liberians for two reasons: 1) Budget for food supplements has been reduced to respond to increase in price of rice. 2) Increase in the price of meat and fish due to the cost of fuel.

Farming

• The number of farmers recently has increased significantly in Monrovia and the suburbs.
• Only 4% of swamps are being used for farming. Available manpower will be one of the most critical issues for enhancing farming production,

General

• Liberia is particularly vulnerable to international market instability because of its dependency on imports for basic commodities and limited capacity of the government to mitigate the impact of the rise in prices.
• An extreme rise in prices leads to increased international dependency because Liberia relied on donors to mitigate effects of the crisis.
• The rainy season has an impact on job opportunities because it limits transportation, which adversely impacts petty trading. Petty trading is the main source of revenue for low-income women.
• The peak of the crisis has not yet been reached in Liberia.
• When the price of food rises, sometimes people cope by reducing expenditures on health or education. This has long-term negative consequences.
• The 2007 national GDP is 40% of the pre-war level.
• The agriculture and fisheries sectors are the largest contributor to GDP. Agriculture accounted for 10% of the national GDP in the late 1970s, against 44% in 2007. This difference is not due to an increase in farming production, but to a complete collapse of other sectors during the war.
• In 2007 rubber accounted for 92% of exports.
• Because Liberia is extremely dependent on the US dollar, imports from Europe are now unfavorable due to the exchange rate. As a result, Liberia has changed some of its commercial partnerships, giving preference to neighboring or South Asian countries.
• The 2008 census indicates a 133% increase in the population of Montserrado County since 1984, compared to a national population increase of 66%. Almost 1/3 of Liberia’s population lives in Montserrado.
• The average household spends 52% of their income on food and 8% on transport.
• The draft national budget puts the minimum salary for civil servants at $70/month. The current minimum salary is $55/month.
• Monrovia was designed for a population of 450,000. The 2008 census puts the population of Greater Monrovia at 1,010, 970.
• Most international NGOs in Liberia are now involved in strengthening local capacities, not direct humanitarian assistance. It is likely that their capacity to alert and react to humanitarian crises has weakened.