BISSAU, 7 August 2008 (IRIN) - Rising food and fuel costs could trigger social conflict in Guinea-Bissau according to the latest report by the International Monetary Fund (IMF), published last week.

The warnings come just as Guinea-Bissau has been plunged into a political crisis with President Joao Vieira dissolving parliament and appointing a new prime minister on 5 August. A new government is expected to be formed in a matter of days.

Rising food and fuel prices will hit the urban poor hardest, which could "reignite social tensions," according to the report.

A Bissau-based agricultural expert confirmed these findings: "Rising food and fuel prices could spark social instability here - they could even start strikes. There is a real risk and the government has to understand that." The national workers union has scheduled a protest against the cost of living on 12 August, according to Bissau local Antonio Samy.

Guinea-Bissau has suffered decades of political volatility with numerous uprisings and coups, and a brief civil war, since it attained independence in 1974.

The parliamentary committee of the West African Economic and Monetary Union (UEMOA) is taking seriously the threat rising prices could have on the country's already tenuous hold on stability and is currently holding emergency talks to discuss solutions.

Food insecurity "chronic"

Rice in Guinea-Bissau now costs US$50 for a 50kg bag, while fuel prices have risen to US$1.43 a litre.

"These prices are out of reach for many Bissauns," said Rui Alfonso Sami, director of rural growth at the Ministry of Agriculture.

Two-thirds of Guinea-Bissau's population live in poverty and the country comes 175 out of 177 countries listed in the UN Development Programme's Human Development Index.

Food insecurity is "chronic" in Guinea-Bissau according to Thierry Ange Ella Ondo, a representative of the Food and Agriculture Organization (FAO), and 80 percent of the population currently do not have enough stocks to last them through the lean season, says Patrice Kalisa, head of programmes with the World Food Programme. According to the FAO, farmers produce 62 percent of the people's rice needs every year, leaving 90,000 metric tonnes to be imported.

Government response

So far the government has been slow to face up to high food prices, according to Sami. "It is the rice importers who had to put pressure on the government to do something about rice prices, because they were shooting up so high that no one would buy their rice."

While WFP is finalising a food security assessment across the country, no specific evaluation has been launched to analyse the impact of rising prices on vulnerable households in cities such as Bissau, according to the WFP's Kalisa. Sami confirmed this: "We don't know if people here in Bissau are particularly in need - we have no figures."

Surveys undertaken in countries around the region have shown that inhabitants of some cities, including Conakry and Ouagadougou, are vulnerable to the current high price crisis because they are heavily reliant on imported food.

The government eventually removed taxes on imported rice and reduced customs fees on diesel imports, but this represents a "significant" loss in potential revenue, representing 10 percent of tax revenues for the year according to the IMF. The surge in food and fuel prices will also up the budget deficit and increase already high inflation rates, it predicts.

No agricultural strategy

There is also, as yet, no national agricultural strategy to tackle high prices though the Ministry of Agriculture is currently developing an emergency plan which it hopes donors such as the World Bank and the African Development Bank will support in the absence of internal funds.

The Ministry of Agriculture receives between just 0.1 and 0.4 percent of the country's annual budget, according to Sami, leaving little or nothing left over to invest in agricultural growth once salaries have been paid. This leaves the ministry, like so many others in Guinea-Bissau, heavily dependent on external donors and investors. "Every year I propose to the Ministry of Finance to increase the agricultural budget, but in vain," Sami said. According to a July report by the International Crisis Group the security sector receives up to 30 percent of the government's annual finances.

As a result of the lack of an agricultural support system, many farmers in Guinea-Bissau are heavily indebted according to FAO, and there is little indication that the government will extend its support to help alleviate this problem.

Not all bleak

But it is not all bleak. WFP is still awaiting the results of its rural vulnerability assessment, but Kalisa is confident that "we are in a less dramatic situation in comparison to last year, and at the moment there is no risk of famine in the country."

The rains have been strong so far in 2008 and the October harvest is expected to be likewise, unlike in 2007 when late rains caused a poor crop.

Furthermore, the price of cashews, which farmers grow for half the year and sell in exchange for imported rice, is 70 US cents per kilogram this year, as opposed to 15 US cents last year, significantly improving farmers' terms of trade.

Aware of the need to diminish the risk of added tensions on top of the current political crisis, international organisations investing in agriculture in Guinea-Bissau say diversification is the order of the day to ease people's reliance on expensive imports, both for farmers and city-dwellers.

"Farmers have to diversify away from rice," said according to FAO, "They need to plant manioc, peanuts, potatoes, vegetables - there is a lot of potential here for agriculture, and it has to start at a grassroots level."

FAO and WFP are encouraging diversification by distributing seeds to villages around the country, and giving families food while they plant their harvest to assist them through the "hungry" season. 

In the meantime, to reduce its vulnerability to further price hikes, the IMF is calling on the government to complete its agricultural strategy, and international donors to give timely support to offset the government's financial losses. UEMOA is expected to issue its recommendations in a week.

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