# **Rice Market**

# _Supply_

The supply of rice to the Sierra Leone market comes from three primary sources; (i) domestic production from the five rice ecosystems, (ii) commercial imports and (ii) donations (food aid). Domestic production of milled rice has averaged 620,000 metric tons over the last ten years to 2018. According to the 2015, Comprehensive Food Security and Vulnerability Analysis, more than nine out of every 10 rice farmers reported that they sold a portion of their rice harvest to generate income. This is despite the fact that a clear majority of farmers (96 percent) operate at the subsistence level. It has been argued that the subsidization of imported rice is a major disincentive to farming household producing consistent surpluses, as they cannot compete with the price for imported rice.

Empirical work suggest that the supply of rice is elastic with respect to price. Conteh et al (2012) used an Ordinary Least Squares (OLS) log model with a small sample (2001 -2010) to analyze the domestic supply response to price as well as the effects of the price of imported rice. They found a supply response elasticity with respect to price of 1.14. Although imported rice is normally considered a substitute for domestic rice and _a priori_ , the elasticity coefficient is expected to be negative, the coefficient for the price of imported rice was 0.69. Their plausible explanation for the positive coefficient is that increase in domestic production of rice (which does not meet the quality standard of the urban population) does not cause a decline in the quantity/volume of rice imported into the country, since the urban population depend on the imported rice for their consumption. Kargbo (1979) also used OLS technique with a single equation model to estimate the supply response to price. The analysis is based on data from 1961 to 1976. He found an inelastic supply response with elasticities of 0.178, 0.376 and 0.349, respectively for the linear, semi-log and log-log specifications of the supply response model. Kargbo (1979) argued that the low elasticities reflected the government’s pricing policy, which effectively held down the price paid by consumers and prevented it from rising to provide farmers with an incentive to increase production or adopt new methods.

Annual commercial imports of rice averaged over 400,000 metric tons per year, over the five-year period to 2018, at an average cost of US$140 million per year, as domestic production has failed to keep pace with Sierra Leone rapidly growing population. There is no consistent data on rice food aid that enters the market. Although the channel and structure for the marketing of domestic and imported rice are similar (see Spencer et al, 2009), consumer surveys suggest that the imported rice is more available. Overall, nearly 90 percent of households across both urban and rural districts indicated that imported rice was always available in their nearest market, compared with only 49 percent of households for domestic rice. The exception being the Western urban area, where 95 percent of households indicated that domestic rice was always available. The Western area is also the most urban and inhabited by the relatively higherincome population with the means to afford imported rice.

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