CROP REPORTS FORECAST ACUTE RICE SHORTAGES

UNCLAS ANTANANARIVO 000777

SIPDIS

SIPDIS

STATE FOR AF/E - RMEYERS
AID/W FOR DCHA/OFDA - SKHANDAGLE
FOR DCHA/FFP/DP - SDOSHANJH, PNOVICK
PRETORIA USAID/OFDA/SARO - HHALE
NAIROBI FOR USAID/EA/FFP - NESTES, DGORDON
ROME FOR FODAG
GENEVA FOR RMA, DHA, IFRC

E.O. 12958: N/A
TAGS: EAID ECON EAGR PREL SOCI MA
SUBJECT: CROP REPORTS FORECAST ACUTE RICE SHORTAGES

REF: ANTAN 292 and previous


1. SUMMARY: According to harvest forecasters in the Government of
Madagascar's (GOM) Prime Minister's office, Madagascar's severe
2006-07 cyclone season destroyed the equivalent of 60,000 tons of
rice (reftels). Already an annual rice importer, Madagascar will
likely need almost 300,000 tons of imports to meet demand in the
season of penury between September and December. Remote regions in
the northeast and southeast, those hardest hit by flooding, will
face particularly exacerbated shortages. While predicting the need
for imports, the GOM is also leery given increases in worldwide rice
prices, particularly from usual sources in Pakistan and Thailand.
END SUMMARY.


2. EmbOffs met July 25 with Bertine Razaiarimanana and Patrick
Rasolofo in the Prime Minister's rural development office.
Razaiarimanana is Secretary General of the Rural Development
Assistance project and Rasolofo is Director of a monitoring unit for
rice harvest data and other rural food security and development
trends hey reported rice fields equivalent to 60,000 tons were
destroyed during the cyclone season, elevating Madagascar's annual
import needs from 200,000 tons to close to 300,000 tons to meet
demand. The damaged fields are centered in remote areas of
northeast and southeast Madagascar, where repeated cyclones in late
2006 and early 2007 caused severe flooding.


3. Rasolofo noted high world oil prices will keep transportation
costs high, thus exacerbating rice prices in remote areas. He also
reported that his research indicated a world rice price rise,
particularly from Madagascar's usual suppliers like Pakistan and
Thailand. USAID and NGO partners continue to work extensively in
Madagascar under the PL-480 program to help farmers increase yields
with improved methods.

TIKO MANIPULATING RICE PRICE?
--------------


4. In numerous regions throughout Madagascar, hoarding of rice
stocks for speculation on higher prices has been widely reported.
In the "rice bowl" of Lake Aloatra, rice farming associations report
President Marc Ravalomanana's TIKO rice mill, Fanampy, is trying to
force producers to accept unduly low prices. Beyond their simple
business logic of making a profit, Fanampy is also alleged to have
the political motive of keeping prices low for consumers. The
regional government official has reportedly limited access for
trucks to the area to prevent producers from selling to other
buyers. The stand-off continues, with farmers holding their supply
in community silos, speculating on higher future prices.


5. COMMENT: Cyclones and flooding are frequently two-part
disasters. The first is the dramatic loss of lives and habitations
directly caused by the event. The second is the damage to
livelihoods that often may not be apparent until the next harvest
season. It is this "second part" of the flood disaster that
Madagascar is now approaching. END COMMENT.

SIBLEY