The Head of the Rice Committee, Ellen Johnson Sirleaf Speaks on the Hike in the Price of Rice


The Perspective
Atlanta, Georgia
February 2, 2005

Let me first say that a Special Executive Rice Committee was setup to look into the cost of rice after its price began to escalate on the market beyond the US$18 that was first set after the induction of the Bryant government.

The committee held consultations with rice importers and dealers and came up with the price structure for rice based upon the world market price plus all the other costs including government taxes, and came up with US$23.50 for what is known as the “Pakistani family rice” (“Some done, Some not done”), and “Butter Rice” at US24.50. That was the official price agreed upon by all the importers and retailers. We now find that rice price started to go beyond that, reaching US$35.00, US$40.00! So the Chairman on the 5th of January reconstituted the Special Executive Rice Committee.

He asked me to chair this committee. It includes members of the previous committee, Mr. Harry Greaves, who is the Economic Advisor; the Minister of Commerce; the Minister of Agriculture; Mr. Sam Thompson; and a representative of the Ministry of Finance. This Committee includes also Elfreda Tamba who is the General Manager of the LBDI. The committee has since been meeting.

We sent our preliminary report to the Chairman on the 24th of January. That report to the Chairman centered around our mandate that includes: to investigate the circumstances that led to the sharp increase in the price of rice; examine government’s intervention on the rice market; what government could do, and what it could not do. We looked at options for adequate and timely supply of rice on the market as a long-term endeavor.

But for the immediate measures, our preliminary report found that the basic reason why rice price was going up from US$23.50 and US$24.50 was that the Liberian consumers were refusing the “Some done, some not done”, because of the poor quality of the rice. At the same time, the major importers – there are four of them, Bridgeway, K & K, Fouta and Fulani - particularly Bridgeway and K & K, when the rice dealers went for rice, imposed upon buyers the two types and would not give them “Butter Rice” unless they also bought “Some done, some not done”. But when they found out that they could not sell the “Some done, some not done”, what they did was to make up for their loss and so would increase the price of the Butter Rice so they could make up for it.

The Committee recommended that retailers who were forced to take the “Some done, some not done” be allowed to give it back to the importers. The notice was in the papers and on the air.hat said that. And we did so in consultation with the importers and the rice retailers; so that notice has come out. We know that Bridgeway has already complied by writing the Rice Dealers Association telling them that they are not imposing this rice on vendors and that they could bring it back and get credit or can exchange it for Butter Rice. We asked K & K and the others to do the same thing. A meeting was held in the Vice Chairman’s office, and K & K was asked to cooperate in the same manner. That, we hope will stop the price hike by rice dealers as they don’t have the “Some done” rice forced on them anymore. And so now have to sell Butter Rice at the official price that they agreed to, which is US$24.50. That is our preliminary report.

But we don’t want to stop there; first let me say to you that the Butter Rice on the market is not US$30.00; so that when all this “Some done, some not done” go back to the warehouse, the Butter Rice will finish very quickly. The Chinese as you heard on the air have given some rice but it’s not a lot because, they are telling me that the monthly supply of rice here that we eat is 200,000 bags. The rice that is in stock can only last for two and a half months. So when the Butter Rice gets finished, we will go back to that same “Some done, some not done”.

Is it to be sold at US$23.50, which was established, or should it be something else? So, we are looking at all the elements of the cost structure to see what should be the proper price if we all are forced to eat “Some done, some not done”. Bridgeway and others have placed in orders for more Butter Rice to come in, but it will take a few months, and before that comes in, we will look at the price structure and see what should be the proper price based upon the cost now.

We have some of our members auditing some of the rice dealers to say the price that they call “overhead”, which means all the charges they have to do to make sure that the overhead price is fair. We are looking at the warehouses issue for the long-term, so that the market can be open some more, because right now, K & K and Bridgeway control 80% of the rice market. We want to see it open, to get more people importing rice to make the competition better.

We are looking at that. We are also looking at the financing charges, the thing that they say they paid the banks because they don’t use any of the local banks; they use their banks in Lebanon. So we want to make sure that what the banks are charging is a fair price. We are looking at the taxes because, we have found out that there is an issue whether they are paying or not paying taxes, but the taxes is in the structure. Those taxes are being passed on to the consumers; all of us who buy rice are paying the taxes. And the issue is, have they paid the taxes to government? Because we hear some of them say no.

They told us we are waiving taxes; we don’t know the story yet. We have to get the right story from the Minister of Finance. Then there is also the exchange rate problem; because as you know we were paying fifty Liberian dollars to 1 US dollar. Right now, it has gone to 56, 58; well the rice dealers say that they have to pay their taxes in US dollars and so they want to sell their rice in US dollars, but the dealers are selling the rice in Liberian dollars, while some of them can do it.

These are all the complicated issues that we have to look into very carefully and then at the end of the day, we want to make recommendations to the Chairman, the government, to say we have looked at taxes; price of rice, looked at the supply of rice; overhead charges, looked at the margin and all that we think of fair price for this quality of rice will be done. We hope that our full report will be made to the Chairman by the end of next week, and all the issues that I have just mentioned will then deal with all of that and make recommendations to the Chairman as to what the government action should be.

I thank you.