RESPONSE: IMPACT OF RISING FOOD/COMMODITY PRICES -

1. SUMMARY: Guinea-Bissau is a net importer of basic foodstuffs,
most significantly rice. Rising world market prices and reduced
local production due to poor rainfall are impacting availability and
price. So far, there have not been demonstrations or unrest to
protest the rising cost of living. The World Food Program has an
office in Bissau and is making contingency plans to prevent famine.
END SUMMARY.

RECENT CHANGES IN FOOD PRICES


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2. People on the street are concerned about a potential food crisis
starting in July. Rice imports are lower than last year and are
expected to drop even more due to rising prices. For example, in
2007, the price for rice was USD 400 per metric ton and today it is
USD 700 per metric ton. Due to the escalating prices, some
importers have decided not to import rice anymore. Prices seem to
be changing almost daily for the basic foods at the market and in
restaurants.

OTHER COMMODITY PRICES


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3. Most commodities are imported, so escalating gas and diesel
prices have a direct effect on the price of staples such as rice.
Also impacting transportation was the recent fuel shortage in
Guinea-Bissau. Because there is no oil refinery or petroleum
storage facility, all fuel is imported from Senegal. Due to reduced
supply in Senegal, exports were briefly halted last month, causing
severe shortages and further driving up prices in Guinea-Bissau.

SHORTAGES/INDICATIONS OF HUNGER


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4. The production of rice and other cereals was affected by late and
inadequate rains. According to a joint mission in October by the
Food and Agriculture Organization of the United Nations and the
Permanent Inter-State Committee for Drought Control in the Sahel,
the 2007/8 cereal crop yields were 9 per cent below the 2006/7
yields. The Committee concluded there would be a substantial cereal
deficit and that the country would have to import over 85,000 tons
of cereal, the equivalent of one-third of overall cereal
consumption.

US PROGRAMS


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5. The USG has no budgetary support for food aid in Guinea-Bissau.
A Department of Agriculture Food for Progress program provided
school lunches and anti-malaria aid through monetization of
foodstuffs, but the program is set to conclude this year. No
follow-on funding has been made available.

SMITH