Liberia – Establishing a Regulatory Framework for The Agricultural Commodities Market

The objective of the Technical Assistance (TA) is to support the Liberia Agricultural Commodities Regulatory Authority (LACRA) to develop a framework for regulating agricultural commodities trade in Liberia based on best practices. The application of these best practices will take into account the state of the agricultural sector in Liberia and establish goals of efficiency, growth and equity that can be supported in the agricultural commodities market through improved regulations. LACRA is mandated by Liberian law to serve as the regulator of all agricultural trade, particularly those involving cocoa, coffee, and oil palm. As a. new agency that began operations in 2018, most of the work needed to support the establishment of a regulatory framework for agricultural commodities market is yet to be undertaken. Therefore this TA will address some of this initial work as well as support the development of the regulations that can guide the development of the sector with aim to ensure that the markets performs in an efficient and equitable manner to enable all actors to earn acceptable rates of return on their investments in the sector and to enhance employment and income generation as well as support the accumulation of domestic tax revenue to support development efforts.

For this assignment CDCI has put a team of four specialist including one senior agro-economist/ agriculture policy specialist who is the team leader and is required to provide overall guidance on the project; a technical consultant who is also an agroeconomist with specific experience in commodity markets and value chain; a trade finance specialist with knowledge of markets for commodities and warehousing receipt systems; and finally a local agriculture specialist with knowledge of the country and Liberian value chains.

 Major issue the proposed regulations are required to address is the growth and development of the agricultural sector, which is Liberia’s major employer, and the importance it has in poverty reduction and growth of the Liberian economy. Thus the scope of work is to come up with proposals that expand and develop the sector in ways that benefit producers, and provides incentives for investment by the private sector. The assignment therefore is required to address the current gaps in the sector to meet these objectives. The specific scope of work CDCI is undertaking include:

1. Review the best practices for regulating agricultural commodities markets in developing countries (with emphasis on Sub-Saharan Africa) for cocoa, coffee, and oil palm;
2. Assess the current performance of cocoa, coffee, and oil palm markets in Liberia under the de facto free-market conditions with a focus on each segment of the value chain, namely producers, buyers, input providers and exporters to reveal how the market performs for each. In undertaking this we also assessed the role of development assistance, cooperatives and the Government of Liberia (GoL) in affecting market outcomes, separating agro-forestry cocoa and bulk to the extent data can permit.
3. Propose a set of regulations to improve market performance and promote high returns across the value chain for cocoa, coffee and oil palm again taking into consideration the agro-forestry cocoa and bulk cocoa.
4. Assess LACRA’s capacity to regulate agricultural markets in Liberia with recommendations for how to ensure that the institution can be effective in carrying out the proposed regulations, given the other players in the sector including the Ministry of Agriculture, Cooperative Development Authority, Ministry of Commerce, etc.
5. Develop options for ensuring warehouses owned by the GoL are effectively used to enhance the commodities market in Liberia, by evaluating various options including direct management of the warehouses by LACRA; public-private partnership (PPP) arrangements; or outright divestment of the GoL from the commodities market.

Key Deliverables for this assignment include:

1. Report on best practices for regulating agricultural commodities market in developing countries.
2. Report on the performance of cocoa, coffee and palm oil industries in Liberia under current de facto regulatory practice and market conditions.
3. Report on recommendation of strategies to best integrate GoL-owned warehouses in the agricultural commodities market, outlining different options and the pros and cons of each of the options.
4. Proposed regulations to improve market performance and support the goals of increasing returns across the value chain and enhancing GOL revenues.

Capacity-building needs of LACRA to be able to implement the proposed regulations.