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Viewing cable 08RANGOON401, BURMA: FOOD PRICES DROPPING, FUEL COSTS BACK TO NORMAL

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Reference ID Created Released Classification Origin
08RANGOON401 2008-05-21 02:27 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Rangoon
VZCZCXRO9213
RR RUEHCHI RUEHDT RUEHHM RUEHNH RUEHTRO
DE RUEHGO #0401/01 1420227
ZNR UUUUU ZZH
R 210227Z MAY 08
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC 7638
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1885
RUEHBY/AMEMBASSY CANBERRA 1215
RUEHKA/AMEMBASSY DHAKA 4890
RUEHNE/AMEMBASSY NEW DELHI 4759
RUEHUL/AMEMBASSY SEOUL 8303
RUEHKO/AMEMBASSY TOKYO 5865
RUEHCN/AMCONSUL CHENGDU 1484
RUEHCHI/AMCONSUL CHIANG MAI 1613
RUEHCI/AMCONSUL KOLKATA 0342
RUEATRS/DEPT OF TREASURY WASHDC
RHHMUNA/CDR USPACOM HONOLULU HI
RUEHGV/USMISSION GENEVA 3737
RHEHNSC/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 1648
RUEKJCS/SECDEF WASHDC
RUEHBS/USEU BRUSSELS
RUEKJCS/JOINT STAFF WASHDC
UNCLAS SECTION 01 OF 02 RANGOON 000401 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, EEB/TPP/ABT/ATP - JANET SPECK 
BANGKOK FOR USDA/FAS, ECON OFFICE, USAID 
DEPT PLEASE PASS TO USAID - CHERYL JENNINGS 
PACOM FOR FPA 
TREASURY FOR OASIA:SCHUN 
 
E.O. 12958:N/A 
TAGS: EAGR EAID ETRD ECON PGOV PREL BM
SUBJECT: BURMA: FOOD PRICES DROPPING, FUEL COSTS BACK TO NORMAL 
 
Ref: A) Rangoon 398 B) Rangoon 368  C) Rangoon 390 
 
RANGOON 00000401  001.2 OF 002 
 
 
1.  (SBU) Summary.  Two weeks after Cyclone Nargis devastated Burma, 
food prices have begun to drop, although most prices remain higher 
than pre-cyclone levels.  While certain food items - rice, cooking 
oil, and chicken - remain scarce, prices of these prices have 
dropped slightly in the past few days.  Prices of other key 
commodities, including pork, potatoes, onions, salt, and bottled 
water, have dropped substantially now that more of these products 
are available in local markets.  Fuel prices have returned to 
pre-cyclone levels; petrol now costs 4,500 kyat a gallon and diesel 
costs 5,500 kyat a gallon.  Decreased demand and increased supply of 
fuel account for the decrease in price.  End Summary. 
 
Same Demand, Greater Supply 
--------------------------- 
 
2.  (SBU) During trips to various markets around Rangoon during the 
past few days, we observed vendors selling a wide variety of food, 
much of which was imported from Northern Burma.  Vendors told us 
they received increased supplies of many food products, including 
onions, potatoes, and pork, in the past few days due to improved 
supply lines.  As a result, prices of these products have decreased, 
although they remain higher than pre-cyclone levels (Ref B).  On May 
18, onions sold for 500 kyat ($0.45) per viss (3.6 lbs), a 37.5 
percent decrease from May 12 prices of 800 kyat ($0.72) per viss. 
Salt prices also decreased by 42 percent, down from 2800 kyat 
($2.54) a viss to 1600 kyat ($1.45) a viss on May 18.  Supplies of 
pork were also readily available, reducing the price per viss from 
8,000 kyat ($7.27) to 6,500 kyat ($5.90). 
 
3.  (SBU)  Rice prices are still high due to limited supply. 
However, we observed a slight reduction in both the price of ehmata 
rice (25 percent broken rice) and inferior rice since May 12.  On 
May 18, one bag of ehmata rice (69 lbs) sold for 43,200 kyat ($39), 
an 8 percent price reduction.  Inferior rice sold for 21,600 kyat 
($19.50) a bag, down from 24,000 kyat ($21.81) last week.  Prices of 
chicken, beef, fish, and cooking oil remained the same. 
 
--------------------------------------------- ------- 
           Selected Commodity Prices, Rangoon 
                   As of May 19, 2008 
                        In Kyat 
--------------------------------------------- ------- 
Good          Pre-Storm      Post-Storm     Percent 
              Price          Price          Increase 
--------------------------------------------- ------- 
Ehmata Rice   24000/bag      43200/bag         80.0 
Inferior Rice 15000/bag      21600/bag         44.0 
Peanut Oil     4500/viss      5000/viss        11.0 
Soybean Oil    4500/viss      6500/viss        45.0 
Palm Oil       3200/viss      3600/viss        12.5 
Pork           6000/viss      6500/viss         8.3 
Chicken        6000/viss      7000/viss        17.0 
Fish           4000/viss      6000/viss        50.0 
Salt           1500/viss      1600/viss         6.7 
Onions          300/viss       500/viss        66.7 
Potatoes        400/viss      1000/viss       150.0 
Purified Water  300/liter      300/liter       -- 
--------------------------------------------- ------- 
*1 viss=3.6 lbs or 1 viss=2 liters 
 
 
4.  (SBU)  During the past week, supermarkets, such as City Mart and 
Asia Light, have begun to restock their shelves with new products. 
City Mart Managing Director Win Win Tint told us that many companies 
 
RANGOON 00000401  002.2 OF 002 
 
 
have slowly received the shipments that were delayed by the storm. 
Not all the products were the same, she stated, but supermarkets now 
could import goods such as cooking oil, noodles, butter, and cheese. 
 Win Win Tint admitted that prices in City Mart were higher, around 
10-20 percent depending on the product, due to higher shipping and 
transport costs.  As things return to normal, she said, prices 
should return to pre-cyclone levels. 
 
Fuel Prices Return to "Normal" 
------------------------------ 
 
5.  (SBU) During the past few days, the black market price of fuel 
has dropped, returning to pre-cyclone levels.  On May 18, the price 
of gas per gallon was 4,500 kyat ($4), down from 5,000 kyat per 
gallon on May 12.  Similarly, diesel prices per gallon dropped by 8 
percent, from 6,000 kyat ($5.45) per gallon on May 12 to 5,500 kyat 
($5) per gallon on May 18.  We also observed fewer cars queuing at 
gas stations around town, with the average wait time decreasing to 
approximately half an hour or less.  Gas stations still restrict car 
owners to no more than six gallons of gas at one time, and only 14 
gallons per week. 
 
6.  (SBU)  According to economic contacts, fuel prices have returned 
to "normal" because of a significant drop in demand.  As the GOB 
restores electricity to more townships in Rangoon, fewer homes and 
businesses have to rely on diesel generators for electricity (Ref 
C), increasing the available supply of diesel on the market. 
Additionally, private businesses continue to bring in an average of 
three diesel shipments of 10,000 gallons each per week and at least 
one petrol shipment, both of which are sold on the local markets. 
 
 
Comment 
------- 
 
7.  (SBU) A steady, albeit limited, supply of food entering 
Rangoon's markets, has allowed prices to fall.  Several of Burma's 
ports have resumed limited operations, enabling approximately ten 
ships a day to deliver imported goods.  As the situation in Rangoon 
improves, additional ways to transport food into the city will 
develop, reducing market pressure and increasing the supply of 
available commodities.  Fuel prices have already returned to 
pre-cyclone levels; it is only a matter of time before food prices 
do the same. 
 
 
VILLAROSA