History teaches that for most Liberians, to maintain low prices for such threshold commodities as rice, building materials and petroleum products is to effectuate good governance and to “have the people at heart”.

	• Some officials of Gov't

In this case a little deviation from propriety in politics and rule of law may be ignored.

The Sirleaf administration threw its weight at the rising prices of threshold consumer goods, this week, perhaps in an apparent effort to use this lesson of history.

But observers say the government is actually “digging hole to cover hole”. So, the question they are asking is, “Isn’t it a fight against a stone wall, given the nation’s tax-dependent economy?”

The Sirleaf administration has taken long- and short-term shots at what it called “global commodity price increases”, targeting rice, gasoline, cement, and public transport.

RELATED: Govt's Response To Global Commodity Price Increase

“The government of Liberia wishes to provide the public with the following update on its ongoing response to the Global Commodity Price increases,” said a government statement issued yesterday by the Office of the Press Secretary to the President.

According to the statement titled, “Government’s Response to Global Community Price Increases”, government’s approach to the rising prices of rice is two fold – short and medium-to-long term.

It said under the short-term approach, the government has concluded negotiations with the governments of China, India, Japan and the United States to help maintain constant supply of rice to the Liberian market.

As far as the government is concerned, the statement said, this meets it’s policy on availability because under the concessions reached with those governments there will be no shortage of rice on the local market.

It put the current official retail price per 100-pound bag of rice at US$31.00 but noted that with lingering uncertainty on the global petroleum market, the price of new negotiated stocks may climb to or over US$35.00.

With the prices of the nation’s staple grain relying on the freight cost of oil, observers say, there is no telling by how much the prices of rice will be pushed up into the ceiling. But they say that is not the only cause of concern as government combat rising prices.

“There is no doubt that the round-about of thirty-five dollars per a 100-pound bag of rice is an official wishful thinking. It, though, provides the backdrop for the serious question of what will happen in the parallel market where retailers and ‘grab and go’ dealers often resort to commodity hoarding in order to profiteer,” said one observer.

He said if the price of the nation’s staple food is dependent on the unpredictable prices of oil and the freight cost derived from its illusiveness then there is no question that government’s short-term approach to rice price control is a fight against a stone wall.

The government, though, sees things differently, insisting that its approach holds the best intermediary solution under the prevailing economic situations in the country following years of death and destruction.

It insisted further that the new official price of US $31 per 100-pound bag, which is expected to increase by more than US $4 when the new stocks arrive, is a windfall for the average Liberian compared to rice prices elsewhere.

‘This compares with current average price of US$45.00-US$50.00 and above in neighboring countries. Despite this increase, the Government policy on affordability is still partly met,” the statement said in an apparent effort to preempt the reactions of critics.

The government statement however conceded that the real solution to sustainable availability and affordability of rice prices is increase in domestic production and noted that local production would be the mainstay of its medium-to-long term approach to rice price reduction.

Analysts say the government probably took the decision against the background that the nation’s economy is so tax-dependent that levy cutting in order to decrease or stabilize key commodity prices is a risky business – a “dig-hole-to-cover-hole” approach to national development – that ultimately undermines the monetization of the national budget.

Where under the short-term approach the government of Liberia simply negotiated with rice-producing countries to continually supply rice to the Liberian market at prices that it believes most Liberians can afford, it moves in the medium-to-long term approach to appropriate funding for mechanized farming in select counties.

“Toward this end, the government has concluded, with Legislative ratification, a US$30 million Concession Agreement for mechanized large scale rice production on 15,000 hectares acres primarily in Lofa and Nimba counties,” the statement said.

It revealed further that the government has negotiated a US$2.5 million concession agreement for mechanized large scale rice production on 5000 acres in Grand Cape Mount County.

It did not say with whom the concession funding was negotiated, but it went further to reveal that the government has also reached an understanding with the Chinese government for mechanized rice production on 300 acres in Bong County.

Besides, it noted that the government has concluded negotiations with the World Bank for US$10 million to support rice and other food production.

This World Bank support grant, the government statement said, will support a cash-for-work program, continue the World Food Program (WFP) lunch feeding in schools, and fund seed multiplication and provision of post harvest facilities for local farmers.

Further under government’s medium-to-long term approach to rice production in Liberia, the statement said the government provided US$250,000 to purchase and distribute rice to farmers for this planting season and allocated US$500,000 to buy from farmers their surplus of paddy rice for milling after upcoming harvest.

Finally it said the government has increased by 70 percent budgetary allocation to the Ministry of Agriculture to facilitate expansion in its support for food production.'On petroleum price, the statement said the government was pushed by external circumstances to increase the per-pump price of petroleum products by an average of $0.50.

It did not say whether the increase is in U.S. or local currency, but it noted that the increment was necessitated by a corresponding rise in the price of the product by more than 25% and by efforts to avoid hoarding and shortage that would lead to artificially higher prices.

On cement, the government said contrary to requests for increase in the current official prices of US$9.05-$10.50 for cement, the prices would remain unchanged for the time being.

The statement did not say who opted for increase in the price of cement, but it indicated that further action on the price of cement would be taken after a government study and dialogue with manufacturers and potential importers.

Meanwhile the government says it has taken practical actions to ensure that the prices of the commodities targeted in the “response” remain stable and affordable.

“In order to mitigate the effect of these price changes the following measures have been or will be taken in the next few days: a continuation of the suspension of the US$2-$2.20 Import Tariff on a bag of rice and a continuation of the suspension of Import Tariff on agriculture and road building equipment and agricultural materials and supplies,” the statement said.

Other action taken to “mitigate the effect” of the prices, the statement said, is a removal of taxation on all employees (GOL and Non-GOL) on income of US$75.00 or less, a reduction from 1.5% to 1.2% in BIVAC Fees, and the reduction in the cost of clearing a 20-foot container by US$396 and US$498 for a 40-foot container effective July 1, 2008.   

Indicating that the National Port Authority will post the details of the fees that have been eliminated in port transactions, the statement said the government has abolished “all illegal and improper charges and fees at the several ports”.

It then announced the disbursement, by July 15, 2008, of two months of civil servants arrears and noted that MTA bus fares would remain unchanged up to December this year after which they would be reviewed.

Further on MTA, the government statement said the authority will obtain additional vehicles in coming months to beef up its fleets of buses.

Observers say while the government appears convincing in its policies and approaches, it would be premature to begin celebrating before the basic consumer products are constantly supplied at truly affordable prices.

In their view, availability and affordability may be separate concepts, but they are complementary in economic terms.

“If the goods are available but unaffordable, they are practically unavailable. If, on the other hand they are affordable but not available, they are also unaffordable. In either case, there is a fighting against a stone wall,” said one observer.

That may be so, but analysts say the hard question that remains relevant to government’s current efforts to control commodity prices is, “Has the government moved far enough in its efforts to address the troubling rise in the prices of basic commodities in post-war Liberia to ensure peace and reconciliation amongst the people?”