FROZEN ASSETS: RECORD COLD SNAP HARMS CROPS, LIVESTOCK AND

UNCLAS SECTION 01 OF 02 HANOI 000206 SIPDIS STATE FOR EAP/MLS STATE PASS USTR FOR DBISBEE AGRICULTURE FOR FAS SIPDIS E.O. 12958: N/A TAGS: ECON ETRD EAGR VM SUBJECT: FROZEN ASSETS: RECORD COLD SNAP HARMS CROPS, LIVESTOCK AND ECONOMY IN VIETNAM Ref: A) HANOI 141; B) 07 HANOI 1929 HANOI 00000206 001.4 OF 002 ¶1. Summary: Now entering its sixth-week, a record long period of cold weather is killing livestock and crops in northern and central Vietnam, threatening the food source and economic well-being of some of Vietnam's poorest populations. With temperatures from the city of Hue north to the border with China dipping below normal for such an extended time, the Ministry of Agriculture and Rural Development is estimating total losses to be approximately USD 25 million. That figure may rise if the cold weather persists. Local and national authorities are taking actions to mitigate the effects on some of Vietnam's poorest populations. Trade officials caution that the weather's impact on Vietnam's crops, most notably rice, may affect export forecasts. End summary. BABY, IT'S COLD OUTSIDE -------------- ¶2. A record long cold spell, which began January 14, has inflicted serious damage on crops and livestock in northern Vietnam. Provinces from the central city of Hue north to Vietnam's mountainous border provinces with China are reporting record low temperatures. Temperatures have hovered between zero and 10 degrees Celsius (32 to 50 degrees Fahrenheit) over the past 38 days, with some locations in Vietnam's northernmost provinces even dipping below freezing. Thanh Nien newspaper quoted the Director of Vietnam's National Hydrometeorological Forecasting Center, Mr. Bui Minh Tang, as saying this cold snap breaks the previous 31-day record, set in 1989. Moderate temperatures returned to Hanoi and parts of the north on February 21, and the cold weather is forecast to ease throughout northern Vietnam in the next few days. MOTHER NATURE IS EXTRACTING HER TOLL -------------- ¶3. Government of Vietnam (GVN) and provincial officials are reporting the cold has caused wide-spread and significant damage to the winter-spring crop of rice, corn, peanuts and other plants. The Ministry of Agriculture and Rural Development's (MARD) Crop Production Department Director Nguyen Tri Ngoc estimated that by February 18, the cold had destroyed more than 146,000 hectares of rice and 9,500 hectares of rice seedlings, totaling more than VND 200 billion ($12.5 million) in damages. MARD officials told the Embassy that in the 16 northernmost provinces, more than 67,000 of the 293,000 hectares (23 percent) of planted rice were damaged. ¶4. The effect on livestock has been similarly damaging. The head of MARD's Livestock Production Department estimated that 60,000 cattle have died as a result of the additional strain on the animals caused by the cold spell, resulting in nearly VND 200 billion ($12.5 million) in damages. About 75 percent of this number is reportedly calves and young buffalo. Even if temperatures begin to thaw, these figures could rise due to the residual effect the cold has caused on stores of animal feed. MARD officials told the Embassy that the the number of cattle killed by the weather could climb as high as 100,000. Deputy Director of Lai Chau Province's Department of Agriculture and Rural Development (DARD) told the Embassy that not only were cattle in his province dying from the cold, but the weather has affected the growth and reproduction of livestock, portending longer-term and costlier financial repurcussions for his Lai Chau farmers. ¶5. Consequences of the cold spell are also being felt in Vietnam's tourism industry. Provincial authorities are blaming the cold for lower-than-forecast guest rates in Sapa, a popular tourist destination in the northwestern province of Lao Cai, and other popular sites in the region. FROM COLD TO DRY... -------------- ¶6. Even after the cold weather abates, the northern provinces are facing the threat of a water shortage over the next three months, which officials from the National Hydrometeorological Forecasting Center attribute to low levels of rain during this cold streak and the damming of rivers for hydroelectric power. MARD warned that water available for rice and other crops could be down by about 33 percent in the spring, potentially making the situation more acute for farmers in the region. AFFECTING VIETNAM'S POOREST AND HARDEST HIT POPULATIONS -------------- -------------- ¶7. The abnormally cold weather is wreaking its worst havoc on some of Vietnam's poorest populations - small-scale farmers and workers in Vietnam's traditionally poor northwest, northeast and central HANOI 00000206 002.2 OF 002 provinces (reftel A). Livestock and crop losses are threatening to push some of Vietnam's farmers in these regions below the GVN-defined poverty line of $130 a year or 35 cents a day. This cold spell is bringing further misery for many in the central provinces whose land was already devastated by waves of heavy flooding last fall (reftel B). Residents - some of whom are still awaiting housing reconstruction - have suffered double losses; in December they replanted crops lost in the floods only to see these descimated by cold in January. Recovery from these losses will be difficult for many in the region. THE GVN'S LATEST GOVERNANCE CHALLENGE -------------- ¶8. Local, provincial and national officials are working to adopt policies to mitigate the affects on farmers and poor households in these regions. On February 18, Prime Minister Nguyen Tan Dung announced he had approved a VND 149 billion ($9.3 million) aid package submitted by MARD. The plan includes payments for lost animals and subsidies for farmers to buy new crops and livestock. To supplement this plan, provincial authorities are growing rice seedlings to supply to their farmers. Provincial DARDs, however, report varying levels of preparedness to fulfill this role - Deputy Director of Bac Ninh's DARD reported that it had sufficient seeds to replant 90 percent of the province's damaged areas, whereas other provinces like Vinh Phuc, where more than 50 percent of the rice crop was destroyed, would only be able to provide for one third of the demand. The Prime Minister also asked the Ministry of Labor, War Invalids and Social Affairs (MOLISA) to provide relief on loans to farmers whose crops and herds were damaged by the weather. ¶9. With the likelihood that the cold will drive more people under the poverty line, the Prime Minister instructed MOLISA to review its national poverty figures and to redouble efforts to ensure that Vietnam's poorest households receive "urgent help." He further instructed MOLISA to work with other GVN ministries to develop targeted assistance programs for provinces where the poverty rate exceeds 50 percent. IMPACT ON TRADE -------------- ¶10. The Ministry of Industry and Trade (MOIT),together with MARD, the Vietnam Food Association and several provinces are working to develop new regulations on rice exports. MOIT Vice Minister Nguyen Thanh Bien told newspapers that the directive is designed to "regulate" rice exports to ensure domestic food security, while also protecting the financial interests of Vietnamese rice exporters. Bien cautioned that it is premature to determine annual volume targets for rice exports, as the GVN must first ensure there is enough rice for those living in the provinces affected by the cold spell. (Note: Vietnam is the world's second largest exporter of rice. In 2007, it exported 4.5 million tons. Despite the uncertainty of the volume of rice exports, MOIT noted that as of early February, the price of rice was $400 per ton, up from $300 per ton in early 2007. End note.) COMMENT -------------- ¶11. While the long-term effects of this cold spell remain to be seen, in the short term it has damaged two of the key industries for the rural regions of northern Vietnam - agriculture and tourism. The GVN and local authorities have been proactive in seeking solutions to help affected rural populations, but pressure could rise on the GVN to adopt additional poverty alleviation measures if the cold weather continues, and if the forecast water shortage in the north comes to fruition. ¶12. This cable was coordinated with ConGen HCMC. MICHALAK