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Viewing cable 06RANGOON1807, BURMA'S RICE SUPPLY SHRINKS AFTER OCTOBER FLOODS

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Reference ID Created Released Classification Origin
06RANGOON1807 2006-12-18 10:05 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Rangoon
VZCZCXRO7530
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGO #1807/01 3521005
ZNR UUUUU ZZH
O 181005Z DEC 06
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5518
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1269
RUEHBY/AMEMBASSY CANBERRA 0073
RUEHKA/AMEMBASSY DHAKA 4416
RUEHLO/AMEMBASSY LONDON 1885
RUEHNE/AMEMBASSY NEW DELHI 3665
RUEHUL/AMEMBASSY SEOUL 7171
RUEHTC/AMEMBASSY THE HAGUE 0572
RUEHKO/AMEMBASSY TOKYO 4757
RUEHCI/AMCONSUL CALCUTTA 0996
RUEHCN/AMCONSUL CHENGDU 0999
RUDKIA/AMCONSUL CHIANG MAI 0768
RUEATRS/DEPT OF TREASURY WASHDC
RUEHGV/USMISSION GENEVA 2975
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUCNDT/USMISSION USUN NEW YORK 0638
RUEHBS/USEU BRUSSELS
UNCLAS SECTION 01 OF 02 RANGOON 001807 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS; PACOM FOR FPA, TREASURY FOR OASIA:AJEWELL 
 
E.O. 12958: N/A 
TAGS: ECON PGOV EAGR EAID BM
SUBJECT: BURMA'S RICE SUPPLY SHRINKS AFTER OCTOBER FLOODS 
 
REF: A. RANGOON 1783 
 
     B. RANGOON 1216 
 
RANGOON 00001807  001.2 OF 002 
 
 
1. (U) Rumors are have circulated around Rangoon about an 
impending rice shortage as Burmese officials move rice stocks 
to provinces in central Burma hit by severe flooding in 
October.  In addition, smuggling, inflated production 
estimates, poor storage, and inadequate buffer stocks 
exacerbate the risk.  Burmese officials are increasingly 
concerned and have begun to ask for assistance.  End summary 
 
Low Key Pleas For Help Garner Low Key Responses 
--------------------------------------------- -- 
2. (SBU) While the GOB refuses to publicly disclose the 
extensive damage caused by early October flooding (ref A), it 
has begun to respond to some of the most urgentneds in the 
afflicted areas.  Ministry of Agriculture and Irrigation 
officials toured the flooded areas in Mandalay Division 
recently together with FAO and WFP reps, and requested their 
assistance to rehabilitate some paddy fields.  WFP provided 
20 metric tons of rice to workers who helped restore an 
irrigation canal, as the GOB requested.  FAO Country Director 
Tang Zhengping asked for additional emergency assistance from 
Bangkok FAO headquarters, but was informed that no funds were 
available. Tang then met with Chinese, Indian and Singaporean 
Embassy officials to seek their support, but was told that 
they prefer to make bilateral arrangements directly with the 
GOB. 
 
3. (SBU) Government estimates of damage indicate that the 
floods damaged 200,000 acres of agricultural land in central 
Burma.  70,000 acres in Kyaukse District used for growing 
rice, cotton, vegetables and fodder were especially hard hit, 
and 13,000 acres were severely damaged.  The official 
newspaper printed a few photos of evacuees receiving cash and 
rice from government officials and from the regime's mass 
member political arm, the Union Solidarity and Development 
Association (USDA), but did not mention the floods, and only 
stated that households "moved to safer places due to bank 
erosion." 
 
Where Has All the Rice Gone? 
---------------------------- 
4. (SBU) To Flooded Areas:  Embassy Agricultural Specialist 
leaned that the GOB moved most or all of its surplus rice 
stocks to flood-affected areas in Mandalay and Sagaing 
Divisions and in Shan State, forcing rice traders to close 
the small shops they established to sell price-controlled 
rice in Rangoon (ref B).   The quality of rice currently sold 
in the Rangoon main markets is poor, but traders believe 
enough of the old crop is available to last until a new crop 
is harvested in January and February 2007.  However, many 
rice merchants are concerned about adequate rice supplies in 
mid-2007, when the new rice crop is depleted and stores may 
not be adequate to cover any shortages before the October 
monsoon harvest. 
 
5. (SBU) Almost Exported: This year, officials allowed export 
of rice to other countries only in June.  While authorities 
have not instituted an official ban, permits to export can be 
refused.  Only the Myanmar Economic Corporation (MEC), run by 
the regime, has a valid permit to export rice.  One trading 
contact said the MEC attempted to export rice stocks earlier 
this year to earn hard currency, but could not find any 
international buyer willing to pay for the poor quality 
supplies it offered, so the MEC sold the rice on the domestic 
market and will try again with rice from the new harvest in 
January. 
 
6. (SBU) It Never Existed: Officials also are faced with 
 
RANGOON 00001807  002.2 OF 002 
 
 
shortages caused by their own inflated production figures. 
The GOB claims that 17 million acres of paddy have been 
planted, but contacts in the industry and farmers told us 
that the cultivated acreage has not increased this year, and 
that 14 million acres remains more likely.  Private sector 
reps also inflate their yields to gain permission to export a 
fictional "surplus."  Contacts at the Ministry of Agriculture 
and Irrigation report ongoing internal conflicts over the 
discrepancies between official figures and non-existent 
stocks. 
 
7. (U) Smuggled: One rumor repeated around Rangoon is that up 
to 500,000 metric tons (MT) of rice were smuggled out of 
Burma this year.  The main routes are Muse-Ruili (China), 
Tachilek-Mae Sai (Thailand) and Ranong-Kawthoung (Thailand), 
and islands off the coast of Rakhine State to Bangladesh. 
Traders concede that some smuggling occurs, but say the 
claimed volume is not possible, given the 40 MT weight limit 
of most trucks and tighter border controls.  Contacts in the 
import/export business suspect that the private sector 
created this story to encourage the GOB to allow more legal 
exports. 
 
8. (SBU) Hoarded: In an attempt to discourage speculation, 
authorities barred U Nyein, former Chairman of the Rice/Paddy 
Traders Association, from trading any rice for one year.  He 
was also assessed K.30 million (USD 24,000) in tax on the 
hoarded rice that officials discovered in his Rangoon 
warehouse.  Inexperience caused some new traders to store 
their rice stocks for too long, which resulted in significant 
spoilage and waste. To better monitor the market, the 
Association now demands that new entrants into the rice trade 
provide prior notification before entering the business. 
 
9. (SBU) Comment: Burma once was, and could be, a major rice 
exporter.  In trying to protect and control the supply and 
price of rice, Burma's staple, the regime tends to follow one 
ill-advised decision with another.  Frequent and 
unpredictable government interventions create disincentives 
for farmers, disrupt efficient market mechanisms, and result 
in less information, less transparency, and ultimately less 
rice. Given the steadily declining economy in general, rice 
shortages would significantly weaken the regime.  Thus they 
will try to monitor the situation closely, but can do little 
to correct the situation in the short to medium term, and 
have not reached the stage where they would contemplate long 
term reforms.  End Comment. 
VILLAROSA