West African Countries Cut Tax to Combat Increasing Food Price

Aug 08, 2012 03:17 AM EDT | By Sharon Robinson

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millet
The price of millet has risen drastically in the last month, in Niger. (Photo : wikipedia.org)

In an effort to mitigate the effects of food inflation on the people, Niger, the Ivory Coast and Mali have either lowered or cut taxes completely. Several basic imported foods will now cost a lot less than they did before. These countries faced civilian unrest in 2008 due to rise in food prices.

Several countries fear that rising food prices will lead to riots and protests, as it did five years ago. But, the FAO believes that adequate rice supply may appease people.

"I know we are in a period of rising prices, especially when it comes to basic foods like sugar. But I call on businesses to respect promises that they made with the ministry of trade," Niger's President Mahamadou Issoufou, said in a speech late on Thursday, referring to meetings between the government and traders last month, according to Reuters.

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Niger has removed all taxes on imported cereals, but compared to their prices this time last year, it is 43 percent higher. A quintal of millet now costs 30,000 CFA Francs, or $55.61. Last month, it was CFA 25,000, or $47.25.

The neighbouring Mali, which is under civil strife, has already brought down tax on imported rice to around 2.5 percent, including value added tax. The import tariff on sugar is 2.5 percent, as well.

"This year I was surprised to buy a kilogram of sugar even cheaper than the price fixed by the authorities," said Moussa Doumbia, a stonemason, to Reuters. "Long may it continue."

 The drought in the mid-western farm belt in the US, and in the Black Sea region has the UN's Food and Agriculture Organization worried. But, it does not believe that the world will see another food crisis.

Russia's heat wave has analysts speculating about a possible ban on the export of grains. The US corn and wheat prices, meanwhile, rose by 50 percent in six weeks. Speculation is rife that a bushel of corn will soon be around $10.

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