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Viewing cable 08NAIROBI1336, AG MINISTER RUTO VOWS TO REMOVE DUTIES ON WHEAT IN MEETING

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Reference ID Created Released Classification Origin
08NAIROBI1336 2008-05-28 08:57 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Nairobi
VZCZCXRO4692
RR RUEHGI RUEHRN
DE RUEHNR #1336/01 1490857
ZNR UUUUU ZZH
R 280857Z MAY 08
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC 5922
RUEHRC/USDA FAS WASHDC 1645
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHXR/RWANDA COLLECTIVE
RUEHEG/AMEMBASSY CAIRO 4000
RUEHFR/AMEMBASSY PARIS 2751
RUEHRO/AMEMBASSY ROME 5302
RUEHBS/USEU BRUSSELS
RUEHGV/USMISSION GENEVA 4441
RUEHDU/AMCONSUL DURBAN 0185
UNCLAS SECTION 01 OF 02 NAIROBI 001336 
 
AGRICULTURE FOR USDA/FAS CJACKSON AND MHOUSE, USDA/FAS/OFSO FRANK 
LEE, USDA/FAS/OCBD PATRICIA SHEIKH, USDA/FAS/OCRA CHUCK ALEXANDER, 
AND USDA/FAA RON VERDONK 
 
STATE FOR EEB/TPP/MTA CHEVER VOLTMER, EEB/TPP/ABT GARY A. CLEMENTS, 
JACK A. BOBO, AND AMY WINTON; EEB/IFD/ODF MARGO SIEMER; AND EEB/TPP 
MIKAEL LURIE 
 
STATE ALSO FOR AF/E, AF/EPS, AND EEB/TPP/ABT/ATP JANET SPECK 
 
STATE PLEASE PASS USTR BILL JACKSON AND USAID/EA 
 
COMMERCE FOR BECKY ERKUL AND USITC RALPH WATKINS 
 
LONDON, PARIS, ROME FOR AFRICA WATCHERS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EAGR ETRD TBIO ECON EAID EFIN PGOV KE
SUBJECT: AG MINISTER RUTO VOWS TO REMOVE DUTIES ON WHEAT IN MEETING 
WITH AMBASSADOR RANNEBERGER 
 
REFS: (A) STATE 53353 (B) STATE 533346 (C) STATE 52628 
      (D) NAIROBI 1122 AND PREVIOUS 
      (E) FAS NAIROBI GAIN KE8012 
 
NAIROBI 00001336  001.2 OF 002 
 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY.  FOR 
INTERNAL USG DISTRIBUTION ONLY. 
 
1. SUMMARY: Kenyan Minister for Agriculture William Ruto promised 
the Ambassador on May 8, 2008 that he would remove the 35% tariff on 
imported wheat as a way to ease inflationary pressures on bread 
prices.  The Minister also agreed to work closely with the Kenyan 
Ministry of Science and Technology to fast track passage of 
trade-friendly biotech legislation. END SUMMARY. 
 
2. Ambassador Ranneberger, Agricultural Counselor Kevin Smith, and 
USAID General Development Officer Robert Buzzard met with the newly 
appointed Minister for Agriculture William Ruto on May 8, 2008 to 
discuss issues of agricultural development and reform in Kenya. 
Ruto candidly accessed Kenya's agricultural situation as dire.  He 
stated that post-election violence resulted in the destruction of a 
large percentage of corn stocks and displacement of hundreds of 
farmers from their land.  Many of these farmers have not returned to 
plant the long rains crop.  The situation has been exacerbated by 
the escalating cost of inputs. (See ref D for an extensive account 
of the agricultural losses).  According to Ruto, the Kenyan 
government needs to invest 3.75 billion Kenyan shillings (US$61 
million) to assist in a recovery effort.  Ruto claims that the Kenya 
Commercial Bank (KCB) has agreed make 850 million Kenyan shillings 
(US$14 million) available to finance the purchase of fertilizer. 
Since the crop has already been planted, the fertilizer will be 
applied as a top dressing and should assist in increasing yields. 
 
3. The Minister estimates a deficit of 540 thousand tons of corn for 
the current year and fears that at current consumption levels, 
stocks will only last until the end of June.  Apparently, the 
government intends to allow duty free imports of corn to compensate 
for shortfalls in production.  Ruto expressed a desire to increase 
the strategic reserves of corn from 4 million 90 kg bags to 8 
million (360,000 tons to 720,000 tons). 
 
4. An initiative the Minister feels will have a major impact on the 
agricultural sector is the public/private sector partnership among 
Equity Bank, Alliance for a Green Revolution in Africa (AGRA), 
International Funds for Agricultural Development (IFAD), and the 
Ministry of Agriculture that will provide low interest loans to 
farmers for the purchase of inputs and land preparation.  Resources 
exceeding US$50 million will be made available for this initiative. 
Ruto asserted that additional resources from the government would 
leverage an additional US$50 million in low interest loans to 
farmers from the Cooperative Bank. 
 
5. The Ambassador informed Ruto that US$200 million through the Bill 
Emerson Humanitarian Fund has been released to address food security 
concerns around the world and that it is possible some of these 
resources may be coming to Kenya.  He also told Ruto of the 
President's request to Congress for an additional US$770 million to 
fight hunger (ref C).  The Ambassador and Minister agreed that USAID 
and FAS would work with the Ministry to coordinate efforts to 
revitalize agriculture in Kenya. 
 
6. To assist in addressing the high cost of food, the Ambassador 
opined that the high tariffs on wheat and corn should be reduced. 
He stated that the 35% tariff on wheat in addition to the doubling 
of CIF prices over the past year have passed a heavy burden to 
consumers.  In addition, flour millers will find it difficult to 
 
NAIROBI 00001336  002.2 OF 002 
 
 
compete as wheat import duties in Uganda and Tanzania of 0% and 10%, 
respectively, make the cost of wheat flour production in those 
countries much cheaper.  The Ambassador urged Minister Ruto to 
significantly reduce, if not eliminate altogether, quotas and 
tariffs on imported staple foods in order to improve food security 
and reduce consumer costs (ref A). 
 
7. Minister Ruto agreed and stated that even Kenyan wheat producers 
feel the tariff is too high and fear flour millers may relocate to 
countries with lower tariffs.  He said that he intends to meet with 
the Ministry of Finance to initiate a zero tariff on wheat for the 
remainder of the year, then convert to a permanent 10 percent tariff 
in December of 2008. 
 
8. As instructed ref B, Ambassador Ranneberger asserted that Kenya 
could also help increase its agricultural productivity by employing 
new technologies such as biotechnology.  He encouraged the Minister 
to facilitate the passage of trade-friendly legislation for 
biotechnology that will allow the United States to respond quickly 
to food aid needs. 
 
9. The Minister concurred and promised to work with the Ministry of 
Science and technology to ensure quick passage of a bio-safety 
bill. 
 
Ranneberger