BURMA: FUEL

UNCLAS SECTION 01 OF 02 RANGOON 000367 SENSITIVE SIPDIS STATE FOR EAP/MLS, EEB/TPP/ABT/ATP - JANET SPECK BANGKOK FOR USDA/FAS, ECON OFFICE, USAID DEPT PLEASE PASS TO USAID - CHERYL JENNINGS PACOM FOR FPA TREASURY FOR OASIA:SCHUN E.O. 12958:N/A TAGS: EAGR EAID ETRD ECON PGOV PREL BM SUBJECT: BURMA: FUEL Ref: A) Rangoon 352 B) Rangoon 353 C) Rangoon 342 RANGOON 00000367 001.2 OF 002 ¶1. (SBU) Supplies of certain food products - rice, meat, chicken, fish, and cooking oil - remain scarce in Rangoon and prices of food throughout the city continue to rise. The price of rice has increased 83 percent since May 1 due to insufficient rice stocks. Prices of fruits and vegetables remain high, as does the price of salt, which many Burmese who lack electricity use to preserve food. Vendors report a drop in sales of fish and seafood products, as many Burmese refuse to eat these products out of fear of contamination. Prices of some items, such as chicken, purified water, and tomatoes, have dropped slightly since last week, and other food prices remained stable. The Myanmar International Terminal Thilawa opened for limited operations on May 10, allowing for the import of key goods, including diesel fuel. Prices of gasoline and diesel continued to drop, and are now being sold on the market for 5,000 and 6,000 kyats a gallon respectively. End Summary. Food Prices Continue to Climb -------------- ¶2. (SBU) During trips to various markets around Rangoon during the past few days, we observed vendors selling a wide variety of food, particularly fruits and vegetables from Northern Burma. Several food items - rice, cooking oil, chicken, and meat - remain scarce on the market, and their prices continue to rise accordingly as the demand for these products has not yet abated. The price of rice continues to increase; ehmata rice (25 percent broken rice) now sells for 44,000 kyat ($40) a bag, up 83 percent since May 1. We observed several rice traders selling limited stocks of inferior rice for 24,000 kyat ($22) a bag, up 60 percent since pre-cyclone periods. Several businessmen told us that rice millers are transporting stocks of rice from Irrawaddy Division to Rangoon for sale, although we have yet to confirm this story. -------------- -------------- Selected Commodity Prices, Rangoon As of May 12, 2008 In Kyat -------------- -------------- Good Pre-Storm Post-Storm Percent Price Price Increase -------------- -------------- Ehmata Rice 24000/bag 44000/bag 83 Inferior Rice 15000/bag 24000/bag 60 Peanut Oil 4500/viss 5500/viss 22 Soybean Oil 4500/viss 6500/viss 45 Palm Oil 3200/viss 5000/viss 56 Pork 6000/viss 8000/viss 33 Chicken 6000/viss 7000/viss 17 Fish 4000/viss 7000/viss 75 Salt 1500/viss 2800/viss 87 Onions 300/viss 800/viss 167 Potatoes 400/viss 1000/viss 150 Purified Water 300/liter 800/liter 167 -------------- -------------- *1 viss=3.6 lbs or 1 viss=2 liters ¶3. (SBU) Market vendors told us of an increasing demand for salt in Rangoon, which people use to preserve food. Salt prices have increased by approximately 87 percent in the past week, from 1,500 kyat ($1.36) to 2,800 kyat ($2.54) for 3.6 lbs. Much of the salt sold in Rangoon came from Labutta, vendors stated. The cyclone destroyed salt supplies, further driving up prices (Ref A). ¶4. (SBU) During the past few days, we observed fewer vendors RANGOON 00000367 002.2 OF 002 selling fish and seafood. Several traders told us that only a few fishermen had boats and could bring a catch into the market. Consequently, prices of seafood have increased by up to 75 percent. Demand for fish has dropped, however, as many Burmese refuse to eat fish for fear of contamination from corpses in the rivers and ocean. ¶5. (SBU) While prices continue to climb, we saw that prices of several goods fell over the past four days. Immediately after the cyclone hit, markets and supermarkets sold out of stocks of purified water. Now, most stores in Rangoon now have an abundant supply of drinking water. The price of purified water has decreased since May 8, from 1,500 kyat ($1.36) a liter to 800 kyat ($0.72),although prices are still higher than pre-cyclone levels. Prices of other goods, including chicken, tomatoes, and eggplant, have also decreased slightly in the past few days, but are not yet back to May 1 levels. Prices of other goods, such as onions, garlic, and cabbage, remain stable. Fuel Prices Dropping -------------- ¶6. (SBU) The Myanmar Port Authority resumed limited operations at the Myanmar International Terminal Thilawa (MITT) on May 10, allowing for the import of selected items, such as construction materials and fuel. Business contacts confirmed that a private ship delivered 10,000 gallons of diesel fuel on May 10 (Ref B); this fuel is now available for sale in local markets. Economic contacts told us that additional shipments of diesel and petrol will arrive in Rangoon later this week. Prices of gasoline and diesel continue to fall as supply increases (Ref C). On May 12, a gallon of petrol sold for 5,000 kyat ($4.50),down from 7,000 kyat ($6.36) a gallon on May 8. Diesel prices also fell from 8,000 kyat ($9) a gallon on May 8 to 6,000 kyat ($5.45) a gallon on May 12, a drop of 25 percent. ¶7. (SBU) We also observed fewer cars queuing at gas stations around town, with the average wait time decreasing to approximately 1.5 hours. Gas stations still restrict car owners to purchase up to six gallons of gas at one time, and only 14 gallons per week. Comment -------------- ¶8. (SBU) Although prices of food in Rangoon remain high, food is still available, so residents of Rangoon are in a much better position than those living in the Irrawaddy Delta region. Supply lines into Rangoon have improved, allowing a steady but limited supply of food from Northern Burma to enter Rangoon's markets. With the resumption of limited operations at the port, additional supplies of food should be forthcoming, which will further reduce market pressure and increase the supply of available commodities. We expect that as the situation in Rangoon improves, food prices, like fuel prices, will stabilize. VILLAROSA