Glimmers of hope in Liberia
From Ebola-gripped Liberia some positive signs emerge. In the cocoa-producing county of Lofa the spread of the disease appears to decrease sharply and smallholder farmers look forward to a good harvest.
In August the UN Food and Agriculture Organization (FAO) reported about widespread panic and a threatening food crisis in Lofa, otherwise known to be part of Liberia’s bread basket. Three months later almost no new cases of Ebola are reported in Lofa. Meanwhile, actors within the cocoa sector, an important source of income for smallholder farmers, say that activity within the cocoa market does not appear to be seriously affected by the disease. NAI researcher Gun Eriksson Skoog who is engaged in a research project on Liberia’s cocoa market is working in close contact with actors on the ground.
“The harvest season has only just started. The worst panic over Ebola appears to have subsided and the cocoa harvest seems to become very good this year”, says Eriksson Skoog, who before the interview informed representatives from the Swedish MFA, Sida and the Swedish embassy in Monrovia on the economic implications of Ebola in West Africa.
Aversion behaviour the worst
The economies of Liberia, Sierra Leone and Guinea have already been hit hard by Ebola. A major question is whether the negative effects will be temporary or more persistent, according to Eriksson Skoog. The World Bank has lowered its economic growth forecast for Liberia this year, from 5.9 percent to 2.5 percent as a result of Ebola. The budget deficit is expected to grow from 7.1 percent to 11.8 percent of GDP. The economic impact could become much worse if Ebola is not quickly tamed.
The World Bank distinguishes between two types of economic effects from Ebola. On the one hand, there are the direct and indirect costs for healthcare and production loss. On the other hand, there are the behavioral effects due to fear of contagion. People avoid crowds, workplaces shut down and travel and trade are disrupted. The effects caused by aversion behavior are by far the greatest. Hence it is important to address fear as quickly as possible in order to mitigate aversion behavior and normalize business activity.
Almost business as usual
Approximately 30 000 Liberian smallholder farmers depend on cocoa production for their living. David Parker, head of an American aid project within the cocoa sector, says that poor farmers are forced to overcome their fear:
“Overall, despite Ebola, it has been business as usual. Some of the big concessions that operate in Liberia have scaled back their activity, but for smallholder farmers life goes on. They have no choice but to continue farming”, Parker says to the business publication C&CI Cocoa World.
Activities during the cocoa-harvest season that started in October and ends in March next year seem to be well under way. Farmers are harvesting and work together in farmers’ organizations to bulk and store cocoa. Buyers are travelling around the country on re-opened roads to make purchases and collect cocoa aimed at export markets. Meanwhile, the world-market price of cocoa has increased, partly because of worries over Ebola in the world’s largest cocoa producer, Côte d’Ivoire. The recommended price to farmers in Liberia has risen by 46 percent in one year, which gives a strong stimulus to the market. The actual price increase that farmers receive will, among other things, depend on the competition between buyers.
In Liberia there is a wide gap between the country’s economic and political elite and the poor and politically marginalized majority who largely depends on agriculture for a living. However, within the cocoa sector positive developments can be observed in recent years, according to Eriksson Skoog. Structural and institutional changes have taken place within the cocoa market and competition between buyers has increased, and farmers enjoy improved economic conditions and a stronger position in the market.
Wrong aid could hurt farmers
The current status of smallholder farmers producing other crops for the market remains largely unclear. There is little available research, statistics are almost completely lacking and it is difficult to conduct fieldwork under prevailing circumstances. However, there are certain signs that food production may have been hampered.
Eriksson Skoog warns that emergency aid in the form of food aid from foreign donors could, if sustained for a longer period, potentially put local food producers out of business. Free handouts of rice could for example aggravate the situation for rice producers and donations of seeds could delay the emergence of a local market – something that Liberia experienced after the civil war and which politicians and aid donors should be wary of.
“It is certainly important to provide humanitarian aid during an emergency phase, but it is important not to obstruct the development of viable and sustainable markets for smallholder farmers. Donors should seek to ensure that the Government of Liberia is promoting economic growth that includes the large majority of the population”, says Eriksson Skoog.