FALTERING CROPS AND A FRAGILE STATE: TROUBLES ON

UNCLAS NDJAMENA 000326

SIPDIS


SENSITIVE

STATE PASS USAID
LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: N/A
TAGS: EAGR EAID ECIN ETRD PGOV PHUM PREL SENV CD
SUBJECT: FALTERING CROPS AND A FRAGILE STATE: TROUBLES ON
THE LAND IN SOUTHERN CHAD

REF: NDJAMENA 308


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Summary
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1. (SBU) Cash crops and the industries based on them should be
thriving in southern Chad, the wettest, greenest part of this
drought-prone country. Cotton, textiles, and sugar had at one
time been sources of prosperity for millions in the region. But
now cotton production is stagnant, and the marketing parastatal
is bankrupt. The once vibrant textile factory is shuttered. The
sugar industry is struggling to surmount high costs, water
shortages, and competition from smugglers. Ways must be found
to revive commercial agriculture and promote rural development
in this region. Chad's hopes of withstanding pressures that
have shaken other fragile states depend on it. End Summary.


2. (U) The Ambassador traveled to southern Chad over February
8-15. The sketches presented in reftel portray a region strained
by rising claims on its pastures, soil, and water. The impressions
captured here bring to light the many problems facing its main
agricultural sectors.

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Cotton
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3. (U) Heading into the hottest, driest time of year, the cotton
crop is mostly in. Fluffy white mounds are piled up in the middle
of dozens of villages along the road between Moundou and Sarh.
They are waiting for trucks from Cotontchad, the state parastatal,
to gather them up and take them to the cotton ginning plants. What
happens to the sector is a matter of life and death to the region,
officials in Moundou told us. Three million people depend on cotton
directly or indirectly, they say.


4. (U) If so, the outlook is bleak. Chad used to be Africa's
biggest cotton producer. Production has suffered in recent years
from mismanagement, low yields, inadequate inputs, poor or
nonexistent secondary roads, and high transportation costs to the
nearest ports hundreds of miles away. This year, farmers responded
to high price guarantees by throwing their meager resources into
cotton and neglecting millet, sorghum, and other staple crops.
Food prices have soared in the local markets. Food shortages are
looming, and farmers have yet to be paid for their cotton,
according to several local officials we met.



5. (SBU) Meanwhile, Cotontchad, the only authorized buyer, is
effectively bankrupt. Bankers are refusing to advance it more
funds. The Chadian government has accepted the conclusion of a
recent World Bank study and signed off on a plan to privatize
Cotontchad no later than mid 2007. Still, the question of how
to pay for this year's crop remains. One option is a one-shot
deal to draw on Chad's new oil revenues. Cotontchad's officials
in their meeting with us pleaded for unilateral action to cut U.S.
cotton subsidies. Encouraged by the Ambassador to support a
global subsidy-cutting package in Geneva, they argued instead
that all of Africa would salute the United States, if it took
such moves on its own.

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Textiles
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6. (U) Salvaging Chad's cotton sector will require action
within Chad to privatize Cotontchad as well as improve extension
services and transport infrastructure. But part of the solution


too lies in processing cotton domestically and avoiding the
expensive transportation routes for raw cotton through Cameroon.
The apparatus for doing so used to exist on the outskirts of Sarh.
In its heyday the factory had capacity for spinning, weaving,
dyeing, and stitching. The boarded-up remnants of Compagnie
Textile (Cotex) still stand north of town on the banks of the
Chari River, but the buildings are vacant. Its machinery, some
dating back to the early 1960's, last ran in the late nineties
when the parastatal company had to close down.


7. (SBU) A group of private Chadian investors has taken over.
They have grand plans for the factory's revival. They are
counting on a Dutch partner to help jump-start the project.
They hope imminent approval of Chad's textile visa under AGOA
will free up access to the U.S. market. Perhaps a better bet
than aiming for a fully integrated textile operation would be
focusing on restoring the plants' spinning capacity. This
would enable Chad to process its own high-quality raw cotton
and supply yarn to other African garment-makers who are not
eligible for or who are about to lose their third-country
fabric preferences under AGOA. Indian representatives in
N'Djamena have spoken with us about a proposed credit from
the Indian Government for this purpose. Taiwan, with whom
Chad has diplomatic relations, has invested in such ventures
in other African countries as well.

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Sugar
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8. (U) Unlike cotton, which is produced entirely by small
farmers, Chad's sugar is grown on large estates owned by
Compagnie Sucriere du Tchad, a recently privatized company.
AIG's African Infrastructure Fund is among the owners. The
company's cane fields stretch for miles along the Chari River
to the south of Sarh. At night blocks as big as several
football fields are set on fire. The charred stalks are
collected in mounds during the night and carried to the
processing plant the next day. 1700 metric tons of cane are
crushed each day to make granulated sugar, sugar cubes, and
the hard sugar cones the desert nomads use to sweeten their
tea.


9. (SBU) But even this sector is in trouble. The company
cannot compete with sugar they say is dumped on world markets
by Brazil, processed in Nigeria, and carried by smugglers
through Cameroon. High costs, the company's executives say,
are incurred by having to pump water from the Chari River
into the spindly irrigation pipes that extend overhead for
nearly a kilometer over the fields. In many sections the
company is gradually installing underground black plastic
tubes that will allow water to seep directly into the roots.
Its managers hope this more efficient Israeli technology will
lower costs and reduce losses from evaporation.

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Comment
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10. (SBU) High hopes are pinned on oil revenues now flowing
from the ExxonMobil-led project near Doba in southern Chad.
But oil will never provide livelihoods for as many people as
agriculture and its associated industries. A WTO farm deal
could enable the region to make the most of its advantages in
cotton and livestock. AGOA could provide incentives for
investors to help overhaul the textile factory and perhaps
build up other export industries as well. But promoting cash
crops and rural development cannot happen without fundamental
reforms and investments within Chad. Oil revenues, if managed
well, can help with necessary resources. So can support from


well-targeted foreign assistance. The region is facing
intensifying environmental pressures and social strains
described in reftel. Managing them will require improving
livelihoods of the millions of people who make their living
from the land there. Prospects for such a fragile state as
Chad depend on it.


11. (U) Khartoum Minimize Considered

WALL


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