As Liberia looks toward its future, one company is determined to make its own contribution to the country’s prosperity, one rice farmer at a time.
Down a winding dirt road humming with cicadas, Peter Redd hoists a 100-pound bag of homegrown rice onto his back. In a light drizzle that hints at the rainy season to come, he and his family load 60 bags onto the waiting truck. It’s the first time Redd has sold his rice, and his smile couldn’t be broader.
A few miles away in a sunbaked warehouse, hundreds of rice bags are piled high to the ceiling. Within days, they will be shipped off to Mary’s Meals, a nonprofit that provides food for 126,000 Liberian school children.
Back in urban Monrovia, venture capitalist Fred Balogun weighs his investment options. His special interest is small “social impact” businesses that stimulate the economy of post-war, post-Ebola Liberia.
This is but a small slice of a network created by Fabio Lavelanet, CEO of Fabrar Rice, Inc., a new 24-employee start-up that buys rice from local growers, parboils it, and mills it for sale on the local market. This is no ordinary development in Liberia, where two civil wars and Ebola have crippled progress and left its subsistence farmers among the poorest in the world.
Rice plays the starring role in most Liberians’ diets, accounting for almost half the population’s caloric intake. Despite the centrality of rice and the country’s fertile climate—perfect for rice growing—a commercial rice market has never been developed. Liberia resorts to importing a whopping 80 percent of its rice, at a cost of about $480 million a year.
Why? It’s simply cheaper to do so. The world’s top suppliers—Thailand, India, Pakistan, Vietnam, and the US—have flooded the market, suppressed prices, and been allowed to import without taxation. It adds up to an absurd predicament: it costs less to ship rice from Thailand to Monrovia than from farms less than 50 miles away.
The dynamics—government inaction, tangled regulations, and corruption—that have kept this incongruity well-entrenched for decades are now under scrutiny from all sides. As the nation’s first privately-owned commercial rice company, Fabrar is on the front lines of the battle to reclaim Liberia’s rice economy, productivity, and self-sufficiency.
Financed by a mosaic of foreign aid, venture capital, lines of credit, and personal investments, Fabrar is widely hailed as a sign of good things to come. “This is a major step forward in what we need to do as a country,” said former President Ellen Sirleaf Johnson. “Agriculture is the enterprise of the future for Liberia.”
Activists and politicians at every level—the president, foreign donors, international organizations, and the private sector—are all looking to move the agricultural sector from what one politician called “farming-slavery” to “farming-prosperity.”
Their vision is unanimous: Improve roads to connect farmers with markets, which will increase their incomes. Infuse new techniques, fertilizer, and seeds into farmers’ practices and invest in small and medium-sized businesses to increase yields. With higher incomes, families can pay school fees, improve their housing, and continually update their equipment. All of Liberia benefits.
Building a business
Fabrar is the brainchild of Lavelanet’s mother Jeanine Cooper, who calls herself an “agri-preneur.” After a career with the UN, she established the business in 2009 with the dream of bringing Liberian rice to Liberian people. Formerly a liaison between the UN’s African Union and its Office for the Coordination of Humanitarian Affairs, she is known locally as an outspoken optimist, and she advocates for multi-sector commitment to, and investment in, local rice.
Lavelanet is as mission-driven as his mother. “People always ask me, ‘Are you a business or a charity?’” His answer: both. After earning a BA and MBA from Temple University in Pennsylvania, Lavelanet returned to his native Liberia with a lifetime commitment to its improvement.
“I’m part of a generation of rebuilders. Sure, I could be doing more elsewhere without so many obstacles. But would I be doing something that matters as much?”
In fact, he believes Liberians have a “moral obligation” to buy homegrown rice.
Fabrar’s trajectory has required immense patience and reveals the maze of obstacles, conflicts, frustrations, and opportunities in Liberia. Its story touches every level of society: small farmers like Peter Redd, Liberian politicians, families, multinational organizations, private sector companies, venture capitalists, and foreign governments.
It also reveals the widespread hope and determination to transform Liberia.
Fabrar started slowly, with a handful of employees and few customers. Sometimes a slow pace is a choice, Cooper laughs, most often not. Patience is a fine art in Liberia, where the simplest transaction can get caught up in a tangle of regulations, missteps, and delays.
“When we started, we made the rounds of banks,” she recalls. “Banks are supposed to bridge the gap. Everywhere in the world banks play a role between farmers and processor, between processor and distributors. Here, they don’t play that role,” she said. “None were lending.” Banks aren’t interested in investing, she says, because companies usually don’t have sufficient collateral.
“In a country where 70 percent of citizens earn their livelihoods through agriculture, there are no banks in Liberia that even have an agricultural lending package,” she adds, shaking her head.
But Cooper would not be deterred, and she and Lavelanet have gone on to secure a diverse funding portfolio that has allowed rice production to surge from 25 tons a month in its first year to 150 tons a month in 2017.
In 2015, the United States Agency for International Development’s (USAID) $11.5 million Food and Enterprise Development program, offered support to Fabrar as part of its efforts to move farmers from subsistence to players in the local economy. With USAID support, Fabrar was able to renovate its warehouse, buy Liberia’s first automated rice milling machine, and install an electric power generator that runs on non-edible palm oil instead of gasoline. Rice production doubled.
That same year, they turned to an unlikely financing source: venture capital. The West Africa Venture Fund (WAVF) was established with businesses like Fabrar in mind. It likens post-conflict Liberia to post-World War II Japan, South Korea, and West Germany, which, like Liberia, had secure democracies and international support, but no financial foundation for sustained growth. WAVF is a partnership anchored by the International Finance Corporation (IFC), the World Bank’s private lending arm. The fund is also supported by the Catholic Organization for Relief and Development Aid (CORDAID), a Netherlands-based NGO.
“We selected Fabrar because rice is a staple, and we want to support local production. If we can continue to scale up production, I believe it will have a great impact on the country,” says Fred Balogun, WAVF’s country director for Liberia. The $330,000 investment enabled Fabrar to buy a processing machine and increase its output from one ton to 75 tons a month. With the 2015 deal, WAVF took 49 percent ownership of the rice plant, serves on the board, and offers advice and consultation on business systems, administrative controls, and governance. WAVF expects to sustain the investment for 3-5 years and exit with Fabrar able to thrive on its own.
Balogun is optimistic, but realistic.
The $6 million he is investing in 13 Liberian projects “is like a drop in the ocean compared to what is required,” he says. “What we really need is more expertise and scaled-up investment at the national level.” He bemoans the catastrophic loss of intellectual capital in Liberia, as almost an entire generation was denied an education during the civil wars, and many who fled from Ebola have not returned.
Most recently, after lengthy negotiations with the Liberian Bank for Development and Investment, Fabrar secured a line of credit. “That gave us working capital—the biggest need for a business like ours,” he says. Fabrar was able to buy a new processor.
“That’s how I was able in the very beginning to build my supply chain,” says Lavelanet. “We rise and fall by the people and economy around us.”
Lavelanet marvels at the support. “All of this,” he says, sweeping his arms, “is because of that kind of support.” And he doesn’t only mean dollars. Advice and counsel on a business plan, administration, and expanding the market have been essential.
Fabrar has also created other multi-party partnerships to expand its reach and impact. For example, it made a deal with the Dokondan Farmers Collective in northeastern Liberia to buy its rice on a long-term basis. The purchases are made possible by a loan guarantee fund under another USAID-funded initiative, the Liberia Agribusiness Development Activity (LADA), which supports agricultural development and food security. LADA collaborates with Ministry of Agriculture through the Liberia Bank for Development and Investment.
Today, Fabrar buys rice from between 500 and 2,000 local rice farmers across the country—individual farmers who deliver to the processing plant, collectives that pool their rice, and independent farmers like Peter Redd. After processing, Fabrar then sells to stores, government agencies, and nonprofits. Cooper predicts that once Liberian rice companies get the requisite support, they can produce 40 percent of rice consumed in the country. But she knows it will take time.
Supporting Liberian development is a point of principle and pride for Fabrar. About half of its rice is sold to Mary’s Meals, for school lunches at 156 schools. Fabrar is known for being one of the few suppliers who stayed open, paid its workers, and sold rice to the UN Food Programme during the Ebola crisis of 2014; a notable example of the potential impact of strong local businesses in developing countries.
Game-changers
Two omnipresent elements of Liberian life are on everyone’s minds when it comes to developing the rice economy: The condition of the country’s roads and the Liberia-based Firestone Rubber, the largest natural rubber operation in the world.
Rutted, washed out, and neglected, roads are one of the most frustrating aspects of life for Liberians and have been for decades. Less than a quarter of Liberia’s roads are all-weather, with most impassable during rainy season, isolating people and businesses from markets, supplies, and information. Agriculture in Liberia is at the mercy of its roads, but the government has been slow to build or repair them, with foreign donors and private companies filling the gap.
USAID, for example, has announced a partnership with the World Bank, the Swedish International Development Cooperation Agency, and the Japan International Cooperation Agency, to provide a total of $240 million in the next five years to build 300 miles of roadway.
Firestone, with its miles of rubber tree fields across 75,000 acres, employs 8,000, and purchases rubber from 60,000 small farmers. It wields both explicit and subtle powers. It funds corporation schools and health care for its employees, pays millions in taxes, and has been the major driver in the agricultural economy. The company website says it has invested more than $135 million in projects since the end of the civil war that will help Liberia rebuild.
But they buy imported rice. “It would be a game-changer if Firestone bought local,” says Lavelanet.
Untapped potential
Oxfam believes that development programs – including those that partner with the private sector – are most effective when they’re designed, led, and owned by local people. They know the context best and stand to gain most (or in the worst cases lose) from the outcome of foreign assistance projects. When it comes to agriculture in Liberia, there is no shortage of ideas among, farmers, businesses, NGOs, and government players on how to improve the country’s agricultural self-sufficiency.
In conversations with Lavelanet, Cooper, and Liberians across sectors, five essential development needs emerge.
- Finance: Create mechanisms to infuse businesses with capital, especially ones that connect local and foreign investors. Bring the financial sector (banks, insurance companies) into the mix in a coordinated fashion. Develop creative mechanisms for posting collateral for businesses that are trying to grow.
- Coordination: Better coordinate and integrate the programs of donors. Organizations are duplicating efforts and sometime working at cross-purposes. Many one-off efforts quickly evaporate at the end of funding, with no plan for local ownership. There is a role for a cross-organization convener or advisory board that could identify levers and solutions, create mechanisms for sharing information, and hold players accountable to ensure that the right assets are deployed at the right time in the right place.
- Government investment: National commitment to small and medium-sized businesses is essential to improve the business climate, knowledge, and practices. Policies must favor domestic rice—ultimately all government rice purchases should be locally grown. To spur the rice sector, local experts suggest a simple one percent tax on rice imports could fund local farmers.
- Research: Identify trusted, reputable and reliable institutions that can develop well-researched, promising models for developing the rice sector.
- Corruption reduction: Eradicate the culture of whispering about the age-old scourge of corruption, and take action. The word “corruption” is still met with an impatient shrug and the widespread agreement that it will go on unless serious action is taken at the highest levels of government.
Covered with a dusting of rice powder and husks, Peter Redd wipes his brow and muses about what rice sales might mean for his family’s future. “With more income, there will be more food to eat and education for my children.” He thinks he can earn enough money to replace the thatch roof of his home with stronger, more protective corrugated metal. That might be possible in a year or two.
This is Liberia, after all. Patience abounds.