If West Africa disposes of significant potential for rice production, it only meets 60% of its needs in rice. This dependency is expected to continue in the coming years due to population growth and urbanization. It is expected, according to several sources, to become the staple of the region in the coming years, rice is a cereal for which the stakes both in terms of production and consumption, are more strategic than ever. A multiparty study conducted by WFP, CILSS, FAO, CIRAD and FEWSNET, published in April 2011, returns to the rice crisis of 2008, the evolution of markets and food security in West Africa .
Below we have published the last part of this study, which focuses more precisely on the opportunities and lessons learned from the evolution of rice markets for food security in West Africa. It is a very instructive report : the authors show that West Africa would do well to set up a system for price regulation through interventions on physical markets to protect against excessive price volatility on international markets. Given the regional nature of stock management and trade, the implementation of such a policy should probably be addressed at a regional level by the Economic Community of West African States (ECOWAS).
momagri editorial board
The West African rice balance remains in deficit
Rice is expected to be the staple in the coming years in West Africa. A series of trends such as population growth, urbanization and changing dietary habits will continue to increase consumption of rice per person at the expense of dry grain.
Despite stabilization in self-supply in the region since the crisis, production constraints and the continued growth in consumption per capita means that the region will remain largely dependent on the international market to cover the deficit in its rice balance. In an international context marked by high price volatility, the threat of a new crisis similar to that of 2008 continues to weigh on West Africa. Rising wheat and maize prices in 2010 and 2011 is in this sense is a warning shot for the region.
For current consumption per capita, consumption in West African rice will rise from 13m tonnes in 2010 to 20m tonnes in 2030. An increase in consumption beyond these levels seems likely, as a result of population growth, urbanization and changing food habits. The capacity of the local sector to supply the market has exceeded its current growth rate.
West Africa has a well-known potential for rice production. Currently, production costs are comparable to those of Asia and Latin America. Productivity gains achieved by increased local production would produce more marketable surplus and increase producer incomes.
Progress in regional self-sufficiency will be achieved by implementing integrated sectors where industrial rice producers maintain formal ties with players upstream and downstream. Public-private partnerships are also a real possibility for development in countries with high rice potential, such as Mali, Nigeria, Ghana, Benin and Senegal. The emergence of an integrated local rice sector is also an opportunity to professionalize the industry, and represents an opportunity for local rice purchases. However, it would be misleading to think that these partnerships will avoid rice imports on the world market in the short and medium term.
Towards the implementation of price regulation
As long as dependence on imports continues, West Africa will remain exposed to the hazards of the international market, which is very unstable since 2007. The West African experience, described in this report shows that high prices are a strong incentive for increasing production across the entire region. However, the implications of a high price policy vary depending on the importance of rice in food consumption.
Countries such as Nigeria, Ghana and Benin, where the diet is varied, where rice is a cereal among others, and where the productive potential is important - can afford to play the high price card in favour of producers; consumers will always have other alternatives.
In contrast, in countries with high rice consumption, such as Senegal and Liberia, largely dependent on imports, high prices threaten food security for consumers. In these countries, governments are tempted to ensure the availability of cheap imported rice for the urban consumer. The challenge will be to further develop local rice production, without making the local product more expensive. Otherwise, the vocation of the rice industry would be mainly local consumption with a few market niches.
Moreover, if high prices are necessary to increase production in these high deficit countries with high consumption, it will also be necessary to establish safety nets for the most vulnerable populations.
The stakes on price levels and volatility raises the question of regulating them through public policy. Restrictions on trade and subsidies showed their limits in 2008. Since then, industry players are looking for benchmarks with respect to public action which has become unpredictable.
Tax on rice imports and production subsidies are particularly prone to random changes. In May 2010, a few weeks before planting, Malian producers still didn’t know if fertilizers were to be subsidized for the coming season. Price regulation through trade restrictions is also counter-productive. In February 2011, rice farmers in Sierra Leone were deprived overnight of their access to the lucrative Guinean market.
Price regulation can also be achieved through interventions in the physical market, operated through the offices and state companies. Moreover, the 2008 crisis has forced States to strengthen their public grain stocks. In most cases, these stocks are primarily used to make food available to populations identified as vulnerable to food crises – not to regulate market prices. Price regulation, based on predictable institutional purchases, with price and purchasing volumes objectives publicly known would promote market stability.
Countries without intervention instruments on the physical market need to develop physical stocks, as in Senegal where institutional purchases are poorly developed, which limits the possibility of intervention in case of deficiency or abundance of rice on the market. Recent investments of private rice producers (often made with the Sate assistance) create however many opportunities for public-private partnerships for institutional rice purchases.
Given the regional nature of the management of public grain stocks and grain trade, the question of setting up a regulatory policy should be raised with the ECOWAS and the CILSS. The aim would be to coordinate national policies in order to avoid measures that could create adverse effects. In a second phase, a synergy among the States should be looked into.”