Market and Welfare Effects of Food Security Policies on Smallholder Rice Farmers and Consumers in Sierra Leone

Abstract

This research examines the market and welfare effects of three food security policy options in Sierra Leone in response to the high rate of rice importation and rising rice prices over the last decade. These policies aimed at curbing the rate of rice importation, promoting local rice production, and enhancing welfare of smallholder rice farmers in rural communities. The policies investigated included: 1) reinstating tariffs on rice imports, 2) promoting value-chain strengthening interventions that increase production of locally produced rice and 3) instituting a quota (or some quantity restriction) on rice imports. A log-linear comparative static displacement model was used to carry out the analysis. For the first policy, 20%, 30% and 40% shocks were introduced in the equilibrium system to represent decreases in the quantity of rice imported as a result of reinstating tariffs on imported rice. Results revealed that welfare of consumers and or smallholder farmers of locally produced rice was enhanced by 9.4% at a 10% tariff increase and 17.8% at a 20% tariff increase. Consumers of imported rice had their welfare enhanced by 3.5% at a 10% tariff increase while welfare was dis-enhanced by 5.4% at a 20% tariff increase. With a 10% increase in the supply of locally produced rice, there was a corresponding welfare enhancement on smallholder rice farmers and consumers by 14.43% and by 27% for a 20% increase in supply. Marginal increases were recorded for consumers of imported rice. The results show that the optimal policy in the current post-Ebola national recovery environment is one that increases local rice production through cultivation intensification and rice value chain efficiency.