Identifier
Created
Classification
Origin
08CONAKRY176
2008-05-08 12:51:00
UNCLASSIFIED
Embassy Conakry
Cable title:
REGIONAL PRICE SURVEY - INSIGHTS INTO REGIONAL TRADE
how-toVZCZCXRO8753 RR RUEHMA RUEHPA DE RUEHRY #0176/01 1291251 ZNR UUUUU ZZH R 081251Z MAY 08 FM AMEMBASSY CONAKRY TO RUEHC/SECSTATE WASHDC 2495 INFO RUEHZK/ECOWAS COLLECTIVE RUCPDOC/DEPT OF COMMERCE WASHDC RUEATRS/DEPT OF TREASURY WASHINGTON DC RHEFDIA/DIA WASHINGTON DC RUEAIIA/CIA WASHDC
UNCLAS SECTION 01 OF 03 CONAKRY 000176
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SIPDIS
E.O. 12598: N/A
TAGS: ECON EPET PGOV GV
SUBJECT: REGIONAL PRICE SURVEY - INSIGHTS INTO REGIONAL TRADE
REFTEL: CONAKRY 0064
UNCLAS SECTION 01 OF 03 CONAKRY 000176
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E.O. 12598: N/A
TAGS: ECON EPET PGOV GV
SUBJECT: REGIONAL PRICE SURVEY - INSIGHTS INTO REGIONAL TRADE
REFTEL: CONAKRY 0064
1. (U) SUMMARY. An inter-Embassy regional price survey of select
necessities in Guinea and its neighboring countries shows that while
there is a rough parity in prices, significant differences remain.
With respect to Guinea, the data illustrates why the GOG's newly
imposed export ban is bad economic policy. The apparent differences
in prices from country to country for specific goods, especially
rice and fuel, suggest opportunities for cross-border trade and/or
smuggling. END SUMMARY.
2. (U) Embassy Conakry conducted an informal survey of regional
prices for staple good, in coordination with our embassies in Mali,
Senegal, Cote d'Ivoire, Liberia, Gambia, Guinea-Bissau, and Sierra
Leone, during the week of April 14. The survey covers gasoline,
domestic and imported rice, potatoes, and flour. (NOTE: The
production figures mentioned herein may not be reliable as they are
reported by the GoG, whose data collection is haphazard at best.
END NOTE.)
--------------
GASOLINE
--------------
3. (U) Gasoline ranges from 1.05 USD per liter in Monrovia to 1.63
USD per liter in Dakar, with a rough median around 1.55 USD per
liter. All reported prices are within one standard deviation,
except for outlier Liberia. (NOTE: Standard Deviation is a
statistical measure of dispersion of data points around the mean. A
smaller number indicates less dispersion. END NOTE.)
4. (U) Prior to terminating a gasoline subsidy which resulted in a
gasoline price increase on April 1 (REFTEL),Conakry had the
cheapest gas in the region at about .95 USD per liter. This price
reportedly spurred rampant gasoline smuggling from Guinea into
neighboring countries. For example, the local World Bank
representative told Econoff that prior to the end of the subsidy and
subsequent price increase on April 1, Siguiri, a town of about
50,000 people near the Malian border, consumed the same amount of
gasoline as Conakry, a city of two million.
5. (U) According to the survey it now appears that Liberia has the
lowest price for a liter of gasoline, suggesting that Guineans may
start looking to import fuel from Liberia, if they are not already
doing so. Guinean gas is still .25 USD cheaper than that sold in
Sierra Leone, suggesting continued opportunity for smuggling out of
Guinea, although probably less than before.
--------------
DOMESTIC RICE
--------------
6. (U) The survey indicates that prices for domestic rice range
from 17 USD per 45 kg sack in Liberia to 56.12 USD for a 50 kg sack
next door in Sierra Leone. All reported prices are within one
standard deviation, except for outliers Sierra Leone and Liberia.
7. (U) In Guinea, domestic rice is reported to be preferred to
imported rice. However, because imported rice is cheaper, it is in
greater demand. The interesting phenomenon is that the price for
domestic rice rises in lock-step with imported rice, even though
little of the domestic rice is legally exported. The World Bank
reports production of domestic rice is five times the quantity of
rice imported. President Conte grows rice on his private
plantations, most of which is reportedly exported, although exact
information is not available. It is rumored that the president's
rice shipments are not subject to export controls.
8. (U) For domestic rice, this rapid price increase could be a
result of one of the provisions of the tripartite agreement settling
the general strike in early 2007, which set the price of rice set at
87,500 Gnf per 50 kg sack. The arbitrary price control was
insupportable in the open market, leading to corrective market
adjustments. (NOTE: That agreement reduced the price initially for
several months, and then gradually allowed the sellers to adjust
prices according to the market rates. END NOTE.)
--------------
IMPORTED RICE
--------------
9. (U) The survey indicates that prices for imported rice range
from 30 USD per 45 kg sack in Liberia to 54.74 USD for a 50 kg in
CONAKRY 00000176 002 OF 003
Cote d'Ivoire. All reported prices are within one standard
deviation, except for outlier Cote d'Ivoire. The price of imported
rice in Cote d'Ivoire is more than two standard deviations from the
mean.
10. (U) In 2007, according to official government figures, Guinea
produced domestically about one million three hundred thousand (1.3
million) tons of rice; while importing about three hundred thousand
(300,000) tons. The Government of Guinea reports that India was the
main supplier of rice for 2007, with China a distant fourth.
However, even with a drop-off in rice imports from China during
2006-7, for the period 2001 to 2007, China supplied 1/3 of all rice
imported to Guinea.
11. (U) In Guinea, the price of imported rice appears to drive the
price of domestically produced rice, although the correlation is not
exact. In November 2007, imported rice cost 27.90 USD per sack,
while domestic rice cost 34.88 USD. That 7 USD difference has now
shrunk to about 2 USD per sack, but both prices have increased to
the 42 to 44 USD range.
--------------
POTATOES
--------------
12. (U) The survey indicates that prices for a 50 kg sack of
potatoes range from 10.53 USD in The Gambia to 60.82 USD in Cote
d'Ivoire. The price of potatoes has the widest spread of all prices
surveyed. This wide disparity in price could be a result of taste
preference, rather than other economic forces at work.
13. (U) Guineans prefer rice to potatoes, even though the Fouta
Djalon region produces significant amounts of high quality potatoes.
Contacts have asserted that Guinea produces nine thousand tons of
potatoes domestically, but only consumes five thousand tons. These
potato producers reportedly export their product to other
surrounding countries. The significant price differential between
rice and potatoes reflected in the survey for Guinea (approximately
30 USD) is greater than that for any other country surveyed, save
the Gambia, and could reflect the preference of Guineans for rice
over potatoes. The evidence of a substitution of potatoes for
increasingly expensive rice could show up as an increase in the
price for potatoes.
--------------
FLOUR
--------------
14. (U) According to the survey, flour ranges from 41.05 USD in the
Gambia to 71.77 USD in Cote d'Ivoire. Only Cote d'Ivoire is outside
of one standard deviation from the mean.
15. (U) In Guinea during December 2007, the price of local flour
and imported flour were the same, at about 36 USD per 50 kg sack.
Currently, there is a 5 USD difference between local flour and
imported flour, but the prices have risen to between 45 USD and 50
USD. This difference equates to a 38% increase in the cost of
domestic and imported flour over the last 5 months, while the cost
of bread has risen about 20% so far this year. The difference in
increases may be explained by unconfirmed local press reports of
pressure by the government on bakers not to raise prices too much
because the population is reportedly very sensitive to the price of
bread.
--------------
COMMENT
--------------
16. (U) COMMENT: The regional price survey provides some useful
data as to price trends in the region. With respect to Guinea, the
data illustrates why the newly imposed export ban of the government
of Guinea is unlikely to succeed, and may have unintended
consequences for Guinea. For example, the current interdiction of
the export of potatoes could force producers out of business since
the domestic potato market cannot support a significant increase in
supply without a corresponding price decrease in an already
inexpensive product, without an increase in demand.
17. (U) The data also illustrates why Guinea's previous subsidized
pricing of its gasoline at .95 USD per liter reportedly led to
massive smuggling since there was a more than .50 USD difference per
liter between Guinea and its neighbors. The recent increase in fuel
prices in Guinea means that fuel smuggling out of the country will
CONAKRY 00000176 003 OF 003
likely taper off, but there may still be an interest in smuggling
into Sierra Leone. There may also be increased interest in
smuggling fuel in from Liberia, where it is sold for .50 USD less
than in Guinea.
18. (U) Given the relatively low prices for rice and gas in
Liberia, Guinea could experience an influx of cheap rice and gas
from Liberia, thus increasing supplies of these staples. Similarly,
if the current export restrictions on potatoes stay in place, Guinea
could experience an increase in potato smuggling to neighboring
countries. Contacts report that most of the prices of substitute
goods for these staples are also rising, leading little left but
potatoes once rice become unaffordable, assuming the export ban on
potatoes has not driven the producers out of business first.
19. (U) The market mechanism for prices is complex. For example,
if Guinea's export ban is successful in bringing down the price of
domestic rice in Guinea, the resulting affordability could encourage
an increase in rice smuggling to neighboring countries to take
advantage of the differential, thereby driving up demand and thus
price. This would nullify the purported justification for the
export ban.
20. (U) Embassy thanks Wallace Bain for Senegal and Guinea-Bissau,
Brian Bachman for The Gambia, Amantchi Beugre for Cote d'Ivoire, Amy
LeMarr for Sierra Leone, Lucy Abbott for Liberia, and Glenn Fedzer
for Mali who willingly collected the data from each of their
respective posts. END COMMENT.
Senegal Guinea Guinea-Bissau Cote d'Ivoire
Gas 1.63 1.55 1.56 1.49
Dom.Rice 48.66 44.44 42.58 39.53
Imp.Rice 42.57 42.22 36.50 54.74
Potatoes 31.63 13.33 21.90 60.82
Flour 53.53 50.00 43.80 71.77
Liberia Sierra L. Mali Gambia
Gas 1.05 1.30 1.54 1.57
Dom.Rice 17.00 56.12 42.16 42.11
Imp.Rice 30.00 40.82 38.93 39.47
Potatoes 15.00 32.32 31.93 10.53
Flour 45.00 44.22 52.92 41.05
Notes:
All prices are in USD
Gas is priced per liter
All other quantities are for 50 kg, except Liberia at 45 kg
Prices are for week of April 14
CARTER
DEPT FOR AF/W
DEPT FOR EB/IFD/OMA
DEPT PLEASE PASS TO USTR FOR LAURIE ANN AGAMA
DEPT PLEASE PASS TO COMMERCE FOR SALIHA LOUCIF
TREASURY FOR OFFICE OF AFRICAN NATIONS
SIPDIS
E.O. 12598: N/A
TAGS: ECON EPET PGOV GV
SUBJECT: REGIONAL PRICE SURVEY - INSIGHTS INTO REGIONAL TRADE
REFTEL: CONAKRY 0064
1. (U) SUMMARY. An inter-Embassy regional price survey of select
necessities in Guinea and its neighboring countries shows that while
there is a rough parity in prices, significant differences remain.
With respect to Guinea, the data illustrates why the GOG's newly
imposed export ban is bad economic policy. The apparent differences
in prices from country to country for specific goods, especially
rice and fuel, suggest opportunities for cross-border trade and/or
smuggling. END SUMMARY.
2. (U) Embassy Conakry conducted an informal survey of regional
prices for staple good, in coordination with our embassies in Mali,
Senegal, Cote d'Ivoire, Liberia, Gambia, Guinea-Bissau, and Sierra
Leone, during the week of April 14. The survey covers gasoline,
domestic and imported rice, potatoes, and flour. (NOTE: The
production figures mentioned herein may not be reliable as they are
reported by the GoG, whose data collection is haphazard at best.
END NOTE.)
--------------
GASOLINE
--------------
3. (U) Gasoline ranges from 1.05 USD per liter in Monrovia to 1.63
USD per liter in Dakar, with a rough median around 1.55 USD per
liter. All reported prices are within one standard deviation,
except for outlier Liberia. (NOTE: Standard Deviation is a
statistical measure of dispersion of data points around the mean. A
smaller number indicates less dispersion. END NOTE.)
4. (U) Prior to terminating a gasoline subsidy which resulted in a
gasoline price increase on April 1 (REFTEL),Conakry had the
cheapest gas in the region at about .95 USD per liter. This price
reportedly spurred rampant gasoline smuggling from Guinea into
neighboring countries. For example, the local World Bank
representative told Econoff that prior to the end of the subsidy and
subsequent price increase on April 1, Siguiri, a town of about
50,000 people near the Malian border, consumed the same amount of
gasoline as Conakry, a city of two million.
5. (U) According to the survey it now appears that Liberia has the
lowest price for a liter of gasoline, suggesting that Guineans may
start looking to import fuel from Liberia, if they are not already
doing so. Guinean gas is still .25 USD cheaper than that sold in
Sierra Leone, suggesting continued opportunity for smuggling out of
Guinea, although probably less than before.
--------------
DOMESTIC RICE
--------------
6. (U) The survey indicates that prices for domestic rice range
from 17 USD per 45 kg sack in Liberia to 56.12 USD for a 50 kg sack
next door in Sierra Leone. All reported prices are within one
standard deviation, except for outliers Sierra Leone and Liberia.
7. (U) In Guinea, domestic rice is reported to be preferred to
imported rice. However, because imported rice is cheaper, it is in
greater demand. The interesting phenomenon is that the price for
domestic rice rises in lock-step with imported rice, even though
little of the domestic rice is legally exported. The World Bank
reports production of domestic rice is five times the quantity of
rice imported. President Conte grows rice on his private
plantations, most of which is reportedly exported, although exact
information is not available. It is rumored that the president's
rice shipments are not subject to export controls.
8. (U) For domestic rice, this rapid price increase could be a
result of one of the provisions of the tripartite agreement settling
the general strike in early 2007, which set the price of rice set at
87,500 Gnf per 50 kg sack. The arbitrary price control was
insupportable in the open market, leading to corrective market
adjustments. (NOTE: That agreement reduced the price initially for
several months, and then gradually allowed the sellers to adjust
prices according to the market rates. END NOTE.)
--------------
IMPORTED RICE
--------------
9. (U) The survey indicates that prices for imported rice range
from 30 USD per 45 kg sack in Liberia to 54.74 USD for a 50 kg in
CONAKRY 00000176 002 OF 003
Cote d'Ivoire. All reported prices are within one standard
deviation, except for outlier Cote d'Ivoire. The price of imported
rice in Cote d'Ivoire is more than two standard deviations from the
mean.
10. (U) In 2007, according to official government figures, Guinea
produced domestically about one million three hundred thousand (1.3
million) tons of rice; while importing about three hundred thousand
(300,000) tons. The Government of Guinea reports that India was the
main supplier of rice for 2007, with China a distant fourth.
However, even with a drop-off in rice imports from China during
2006-7, for the period 2001 to 2007, China supplied 1/3 of all rice
imported to Guinea.
11. (U) In Guinea, the price of imported rice appears to drive the
price of domestically produced rice, although the correlation is not
exact. In November 2007, imported rice cost 27.90 USD per sack,
while domestic rice cost 34.88 USD. That 7 USD difference has now
shrunk to about 2 USD per sack, but both prices have increased to
the 42 to 44 USD range.
--------------
POTATOES
--------------
12. (U) The survey indicates that prices for a 50 kg sack of
potatoes range from 10.53 USD in The Gambia to 60.82 USD in Cote
d'Ivoire. The price of potatoes has the widest spread of all prices
surveyed. This wide disparity in price could be a result of taste
preference, rather than other economic forces at work.
13. (U) Guineans prefer rice to potatoes, even though the Fouta
Djalon region produces significant amounts of high quality potatoes.
Contacts have asserted that Guinea produces nine thousand tons of
potatoes domestically, but only consumes five thousand tons. These
potato producers reportedly export their product to other
surrounding countries. The significant price differential between
rice and potatoes reflected in the survey for Guinea (approximately
30 USD) is greater than that for any other country surveyed, save
the Gambia, and could reflect the preference of Guineans for rice
over potatoes. The evidence of a substitution of potatoes for
increasingly expensive rice could show up as an increase in the
price for potatoes.
--------------
FLOUR
--------------
14. (U) According to the survey, flour ranges from 41.05 USD in the
Gambia to 71.77 USD in Cote d'Ivoire. Only Cote d'Ivoire is outside
of one standard deviation from the mean.
15. (U) In Guinea during December 2007, the price of local flour
and imported flour were the same, at about 36 USD per 50 kg sack.
Currently, there is a 5 USD difference between local flour and
imported flour, but the prices have risen to between 45 USD and 50
USD. This difference equates to a 38% increase in the cost of
domestic and imported flour over the last 5 months, while the cost
of bread has risen about 20% so far this year. The difference in
increases may be explained by unconfirmed local press reports of
pressure by the government on bakers not to raise prices too much
because the population is reportedly very sensitive to the price of
bread.
--------------
COMMENT
--------------
16. (U) COMMENT: The regional price survey provides some useful
data as to price trends in the region. With respect to Guinea, the
data illustrates why the newly imposed export ban of the government
of Guinea is unlikely to succeed, and may have unintended
consequences for Guinea. For example, the current interdiction of
the export of potatoes could force producers out of business since
the domestic potato market cannot support a significant increase in
supply without a corresponding price decrease in an already
inexpensive product, without an increase in demand.
17. (U) The data also illustrates why Guinea's previous subsidized
pricing of its gasoline at .95 USD per liter reportedly led to
massive smuggling since there was a more than .50 USD difference per
liter between Guinea and its neighbors. The recent increase in fuel
prices in Guinea means that fuel smuggling out of the country will
CONAKRY 00000176 003 OF 003
likely taper off, but there may still be an interest in smuggling
into Sierra Leone. There may also be increased interest in
smuggling fuel in from Liberia, where it is sold for .50 USD less
than in Guinea.
18. (U) Given the relatively low prices for rice and gas in
Liberia, Guinea could experience an influx of cheap rice and gas
from Liberia, thus increasing supplies of these staples. Similarly,
if the current export restrictions on potatoes stay in place, Guinea
could experience an increase in potato smuggling to neighboring
countries. Contacts report that most of the prices of substitute
goods for these staples are also rising, leading little left but
potatoes once rice become unaffordable, assuming the export ban on
potatoes has not driven the producers out of business first.
19. (U) The market mechanism for prices is complex. For example,
if Guinea's export ban is successful in bringing down the price of
domestic rice in Guinea, the resulting affordability could encourage
an increase in rice smuggling to neighboring countries to take
advantage of the differential, thereby driving up demand and thus
price. This would nullify the purported justification for the
export ban.
20. (U) Embassy thanks Wallace Bain for Senegal and Guinea-Bissau,
Brian Bachman for The Gambia, Amantchi Beugre for Cote d'Ivoire, Amy
LeMarr for Sierra Leone, Lucy Abbott for Liberia, and Glenn Fedzer
for Mali who willingly collected the data from each of their
respective posts. END COMMENT.
Senegal Guinea Guinea-Bissau Cote d'Ivoire
Gas 1.63 1.55 1.56 1.49
Dom.Rice 48.66 44.44 42.58 39.53
Imp.Rice 42.57 42.22 36.50 54.74
Potatoes 31.63 13.33 21.90 60.82
Flour 53.53 50.00 43.80 71.77
Liberia Sierra L. Mali Gambia
Gas 1.05 1.30 1.54 1.57
Dom.Rice 17.00 56.12 42.16 42.11
Imp.Rice 30.00 40.82 38.93 39.47
Potatoes 15.00 32.32 31.93 10.53
Flour 45.00 44.22 52.92 41.05
Notes:
All prices are in USD
Gas is priced per liter
All other quantities are for 50 kg, except Liberia at 45 kg
Prices are for week of April 14
CARTER