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RR RUEHMA RUEHPA
DE RUEHFN #0044 0361000
ZNR UUUUU ZZH
R 051000Z FEB 08
FM AMEMBASSY FREETOWN
TO RUEHC/SECSTATE WASHDC 1683
INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS FREETOWN 000044 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD ECON SL
 
SUBJECT: SIERRA LEONE STRUGGLES WITH RISING PRICES 
 
 
¶1.  SUMMARY:  Although news reports generally exaggerate the 
situation, tensions between bakers, millers, and flour and rice 
importers are coming to a head due to steadily rising prices.  In 
the eye of the storm is Seaboard West Africa Ltd., a U.S.-owned 
company that imports wheat, bakes bread, and runs the only domestic 
mill.  END SUMMARY. 
 
¶2.  FLOUR AND RICE PRICES:  According to one news report, flour 
prices in January are nearly double what they were in August 2007. 
The Ministry of Trade, without providing prior warning to importers 
and producers, announced on Saturday, January 26 a reduction in 
flour prices to 115,000 Le (38.92 USD) per 50 kg of locally 
manufactured flour and 100,000 Le (33.84 USD) per 50 kg of imported 
flour.  Announced rice prices ranged from 66,000 Le (22.34 USD) per 
bag to 82,000 Le (27.74 USD) per bag, depending on the origin and 
type of rice.  The Minister stated that although GoSL is committed 
to international trade liberalization, current circumstances dictate 
the need for these price ceilings. 
 
¶3.  BUSINESS COMMUNITY RESPONSE:  Despite several false reports in 
the newspapers of a bakers' strike on January 21 and the suspension 
of baking operations on January 28, producers have stated their 
intention to continue providing these needed staples to the public 
for the time being. Continuing full-scale production in light of the 
price ceilings, however, will likely become financially unfeasible 
in a short period of time. Seaboard, for example, is continuing to 
sell its flour at 130,000 Le (44 USD) per bag, which it claims is 
below cost. 
 
¶4. SEABOARD:  Seaboard West Africa runs Sierra Leone's only flour 
mill, which it built in 1968.  Seaboard's operations also include 
grain imports and a bakery. The company is 51% owned by the Seaboard 
Corporation (U.S.) and 49% by Global Trading Corporation (Belgium). 
It is managed in Sierra Leone by Houssein Bazzy of Ibrahim Bazzy & 
Sons, owners of approximately 70% of Global Trading Corporation. 
 
 
Despite being a major market player, Seaboard has experienced some 
challenges. While some companies resort to bribery to avoid taxes 
and expedite the lengthy import process [NOTE: A variety of sources 
state that it can take upwards of 3 weeks for goods to clear 
customs. END NOTE], Seaboard attempts to conduct business by the 
book. A further challenge includes media allegations that Seaboard 
is a provocateur in the political scene, with some reports 
suggesting that their prices are kept deliberately high in an effort 
to undermine the fledgling APC government. Seaboard maintains, 
however, that this is untrue. 
 
¶5. COMMENT: The sharp increases in commodity prices have serious 
impacts on the Sierra Leonean economy for producers and consumers 
alike. While the government response to place limits on these 
increases is laudable, it creates further difficulties for companies 
like Seaboard, which are selling below cost without government 
subsidies. How long such companies will choose to continue providing 
their goods to the public under these circumstances is unknown. 
Further information on this issue and the larger economic context 
will be provided septel. END COMMENT.