An Optimal Rice Policy for Sierra Leone
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World Bank, Washington, DC
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Rice is a staple food in the West
African nation of Sierra Leone with little difference in
consumption between poor and wealthy households. Rice
production is also an important source of livelihood with
half of all households, three-quarters of rural households
and about two-thirds of poor households grow rice. The final
price of rice in the domestic market is an important policy
issue. The policy challenge is complicated by the fact that
poor households, which earn the bulk of their income from
rice production, also purchase rice when own production is
inadequate. Under the broad assumption that money income is
a reasonable measure of well-being, this paper develops a
simple model of the Sierra Leone rice sector and applies
procedures to determine key outcomes in terms of domestic
production, imports, and exports under conditions that
maximize consumer's and producer's surplus. The
paper finds that the rice sector is operating at a
suboptimal level. In addition, simulations suggest that an
optimal policy path to balance consumer and producer welfare
and meet the higher societal objective of creating jobs
requires a moderate level of tariff on imported rice,
combined with structural policies to improve the
productivity of the sector.
Palabras clave
CONSUMER SURPLUS, PRODUCER SURPLUS, WELFARE, SUPPLY RESPONSE, RICE PRICE, DEMAND ELASTICITY, SUPPLY ELASTICITY, FOOD SECURITY