UNCLAS MONROVIA 000952
TAGS: ECON PREL EAGR ASEC LI
SUBJECT: LIBYA INVESTS $30 MILLION IN LIBERIAN RICE DEVELOPMENT
Â¶1. (U) SUMMARY. The GOL and the Foundation for African Development
Aid's (ADA) $30 million concession for large-scale commercial rice
production, funded through Libyan African Investment Portfolio, is
the first large scale domestic rice program in a country that
imports over 55% of all its rice -- a staple in the Liberian diet.
Ambassador recently visited the site in Lofa County, near the
Guinean border, to witness the first harvest, which will be used for
seedlings. ADA will introduce its locally cultivated rice in July
2010, contributing to the availability and affordability of rice.
Improved rice production is key to Liberia's food security, and the
ADA agreement is seen as the first step in building a sustainable
local crop. However, without a sufficient transportation network,
ADA and other farmers will continue to struggle to distribute and
export their crop. Given ADA's proximity to the Guinean border,
issues of cross-border activities have arisen. END SUMMARY.
Â¶2. (U) ADA is financed through a $30 million loan from the Libyan
African Investment Portfolio (LAIP) at six percent interest for ten
years with a three year grace period. The 15,000 hectare, 20-year
concession was signed in 2008, and expects to supply the local
market in mid 2010 according to ADA Project Manager, Elvis Morris.
Its first harvest will be used primarily for seedlings. The
concession agreement includes the construction of a rice processing
plant, housing facilities, medical centers and schools for workers-
which the Ambassador did not see during her trip. ADA's initiative
should be a positive influence on the nation's rural economy,
bringing much needed employment and development by expanding ADA's
current workforce of 1,000 to over 6,000 in three to four years.
Â¶3. (SBU) The Ambassador, along with the SRSG, visited the Lofa
County concession area on December 18 trip. In her discussion with
the project manager, she noted rampant rumors that ADA is employing
mostly Guineans at the expense of the local Liberian population.
Morris, one of only two expatriate staff at ADA, noted with the
porous borders within sight of the concession area and close ethnic
ties of the people on both sides, it was impossible to differentiate
the two and acknowledged that some of the workers may in fact be
Â¶4. (SBU) The Ambassador also raised the concern that ADA's goal to
provide Liberia with enough domestic rice crop to meet demand could
squeeze out smaller farms. Morris said that many farmers will simply
turn to cash crops as the price for rice falls, and ADA plans to
regionally export some of its crop, so a market will remain in
Liberia. Overall, the large-scale mainly mechanized process was
impressive, although few of the promised social structures were yet
Â¶5. (U) ADA's investment will complement other donor initiatives such
as the World Bank's emergency food response. The Bank signed a $10
million grant agreement with the GOL in May 2008 to assist it in
tackling the sharp increases in the price of food. When the global
food crisis hit Liberia in 2008, the GOL adopted a three point
comprehensive strategy to alleviate the impact: mitigating domestic
price rise and maintaining consistent supply; maintaining access to
food among vulnerable populations; and promoting domestic food
production. The government at that time eliminated the two dollar
consumer tax on 50kg bags of imported rice; removed tariffs on
agricultural equipment; allocated $750,000 to a "rice stabilization"
fund to purchase seed rice for local farmers; and increased the
FY2009/2010 agriculture budget by about 30%.
Â¶6. (SBU) COMMENT: The scarcity of rice was blamed for the country's
political unrest in 1979, which led to 25 years of instability. The
political risk associated with the scarcity and high price of rice
is great, and GOL hopes ventures such as ADA will secure the supply.
Although ADA plans eventual harvests of 270,000 metric tons, which
will satisfy domestic demand, poor infrastructure will prevent
distribution. Without significant road improvements, it is unlikely
that the ADA rice will reach markets in Maryland, River Gee, or
Grand Kru and Liberia will continue with an insecure food supply.
Regional exportation from Liberia will be difficult as well, and a
more likely scenario would include exporting crop through Guinea
using the existing railways on the other side of the border.
Mechanized farming is the only way to create food security in
Liberia, enticing people back into the farms from the city slums and
lowering food costs for all. To do so, however, requires capital
investment not only in the farms but in the surrounding
infrastructure. That ADA appears to be a success has as much to do
with its location - Lofa County with its arable land and industrious
people. We hope this can be replicated elsewhere.