SEABOARD FIGHTS FOR LEVEL PLAYING FIELD IN MADAGASCAR

UNCLAS ANTANANARIVO 000053 SIPDIS SENSITIVE SIPDIS DEPT FOR AF/E AND AF/FO E.O. 12958: N/A TAGS: ETRD PREL ECON MA SUBJECT: SEABOARD FIGHTS FOR LEVEL PLAYING FIELD IN MADAGASCAR Reftel: 07 Antan 1144 ¶1. (U) SUMMARY: Seaboard Corporation continues to report difficulty in doing business in Madagascar, citing unfair competition from the President's TIKO conglomerate. Seaboard's Madagascar country manager has concluded the President is trying to force them out of the market. Seaboard has begun a new round of lobbying and will not go without a fight, for which they continue to enjoy full embassy support. END SUMMARY. ¶2. (SBU) Armando Lopez, Manager of Seaboard's flour mill investment in Madagascar "Les Moulins de Madagascar," updated the Ambassador on operations and competition with President Ravalomanana's TIKO flour mill. Sharing data on world wheat prices and shipments, Lopez made the case that TIKO is selling flour well below cost in what Seaboard concludes is an attempt to force them out of the market. He estimated TIKO is losing up to USD 200,000 per month in this strategy. Seaboard, sitting on stocks of lower-cost wheat bought forward, has suspended operations until such time as TIKO raises its price - then they will restart flour sales. ¶3. (SBU) Lopez continues, without success, to seek a meeting with TIKO's General Manager to discuss potential business cooperation. He believes the President has forbidden TIKO officials from having any contact with Seaboard. Similarly, officials at the Port of Tamatave are dragging their feet on promised upgrades to the conveyor facilities to the Seaboard silos, and also refuse to meet with or speak to Seaboard. Overall, Lopez concluded, Seaboard faces obstacles at every turn to remain in the Madagascar market. Playing Hardball - - - - - - - - - ¶4. (SBU) To up the ante on the price war over flour, Seaboard will soon enter Madagascar's rice, sugar, cooking oil, and powdered milk markets - all sectors where TIKO is dominant or has an outright monopoly. "We will try to get the President's attention, to hit him where it hurts," Lopez said. New Round Of Lobbying - - - - - - - - - - - ¶5. (SBU) Lopez shared that he will initiate a new round of lobbying of international organizations in Madagascar, starting with the International Monetary Fund. He will make the case that TIKO must be compelled to pay tax and port fees in Tamatave, otherwise the President's company clearly has an unfair advantage. Seaboard Vice President Ralph Moss will make the rounds in Washington to make the point that if President Ravalomanana continues efforts to force Seaboard from the market, then the United States should reexamine its support for Madagascar. This comes just as the GOM is preparing their "MAP Road Show" to Washington during the week of February 4Q during which they hope to showcase Madagascar's investment potential. What the Embassy Will Do -------------- ¶6. (SBU) The Ambassador readily agreed to continue to raise Seaboard's current problems with the GOM, including with President Ravalomanana and Prime Minister Rabemananjara, with whom meetings have been requested (MCC will be the other major agenda item). The Ambassador arranged a meeting last week between Lopez and the Agriculture Minister to buttress our own meeting with the latter on this issue. Our point continues to be that potential American investment in Madagascar will remain stillborn unless and until Ravalomanana makes good on his November promise of a level playing field (reftel) and to welcome foreign investment in all sectors. On that point, New Year's receptions on Friday and Monday at the Presidency and Foreign Ministry respectively offered the Dean of the Diplomatic Corps the opportunity pointedly to remind the GOM of those promises, using language we provided. MARQUARDT