BURMA: WFP FOOD PIPELINE RESTORED

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000743

SIPDIS

STATE FOR EAP/MLS, INR/EAP, EEB/TRA
DEPT PASS TO USDA
DEPT PASS TO USAID
BANGKOK FOR USAID/OFDA, REO, FAS
PACOM FOR FPA
TREASURY FOR OASIA, OFAC

E.O. 12958: DECL: 09/19/2018
TAGS: EAGR ECON EFIN PREL PGOV BM
SUBJECT: BURMA: WFP FOOD PIPELINE RESTORED

REF: A. RANGOON 672

B. RANGOON 742

RANGOON 00000743 001.2 OF 002


Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4
(b and d)

Summary
--------------


1. (C) World Food Program (WFP) Burma in mid-September
resumed the provision of full rations to its beneficiaries in
the Irrawaddy Delta, following a one-month break in its food
pipeline. From mid-August to mid-September, WFP relied on
several NGO partners to procure local rice on its behalf and
halved food rations for more than 200,000 individuals due to
shipment delays of rice imports and its inability to procure
rice within Burma. WFP on September 16 received the first of
two rice shipments from India, further bolstering current
food supplies. WFP Country Director Chris Kaye confirmed
that WFP has secured emergency food rations to feed Burma's
most vulnerable populations from mid-September through the
end of January 2009, although he acknowledged there may be a
small shortage in early October. Separately, WFP faces a
funding shortfall for its regular food distribution programs
in other parts of Burma, for which Kaye again requested
continued USG financial support. End Summary.

Pipeline Break Mostly Over
--------------


2. (C) According to Country Director Chris Kaye, WFP Burma,
which has provided more than 24,000 tons of food to 684,000
cyclone victims since May 3, no longer faces an acute food
shortage. Between August 15 - September 15, WFP faced a
shortage of 10,000 metric tons of rice due to logistic and
political issues. Prior to Cyclone Nargis, WFP purchased
rice directly from Burmese rice farmers and millers, allowing
it to feed vulnerable populations immediately. However, in
mid-June, the GOB prohibited WFP from buying rice locally in
an effort to control the supply of rice and prevent a surge
in rice prices. The GOB permitted WFP to import rice from
India and Thailand, but political issues in Thailand and
procurement delays in India pushed back shipments (Ref A).
Consequently, WFP was forced to deliver half rations to more
than 200,000 beneficiaries in the Irrawaddy Delta, and relied
on its NGO partners to cover the shortfall. Kaye informed us
that eight of WFP's 12 partners circumvented the GOB ban on
WFP rice procurement by quietly purchasing and distributing
more than 7,000 metric tons of rice on behalf of WFP.


3. (C) The acute food shortage is over, Kaye told us
September 16. WFP received a shipment 3,500 metric tons of
rice from India on September 16 and its partners will procure
an additional 6,000 metric tons of rice throughout the rest
of September to meet WFP's emergency program needs. Kaye
acknowledged WFP may face a small rice shortfall of 2,850
metric tons in early October. WFP already inquired whether
India could ship its next rice shipment, due to arrive on
October 15, early to cover any shortage. If this is not
possible, NGOs will continue to procure and distribute rice
on behalf of WFP, Kaye stated.


4. (C) WFP currently has enough donor contributions to
cover its food needs for November through January, estimated
at 13,000 metric tons a month. Kaye informed us that WFP
needs an additional USD 39 million to secure sufficient

RANGOON 00000743 002.2 OF 002


quantities of food from February through April 2009 for the
emergency program.

Procurement Possibilities?
--------------


5. (C) Kaye noted that he will meet with the Minister of
Commerce in the next few weeks to discuss lifting the ban on
WFP local rice procurement, since it appears that the GOB
will allow private companies to resume rice exports in
November (Ref B). Purchasing rice locally would enable WFP
to prevent any future food pipeline breaks. Kaye also noted
that Burmese rice costs approximately 25 percent less than
Thai or Indian rice, so WFP could secure more food provisions
with future donations. He is confident that the GOB will
allow WFP to procure rice locally within the next few months.


Maintaining Access to the Rest of Burma
--------------


6. (C) Kaye highlighted that while WFP's emergency relief
program is well-funded, WFP Burma continues to experience a
significant shortfall in its normal Protracted Relief and
Recovery Operations (PRRO),which operates in Shan State,
Chin State, Northern Rakhine State (NRS),Kachin State, and
Magway Division. WFP needs USD 47 million to fund the
remainder of this three-year program, which provides food to
1.2 million Burmese living under the food poverty line. He
emphasized that in addition to assisting the Burmese, this
program provides the only access for the UN to remote areas,
such as the Wa area in Shan State, Northern Rakhine State,
and Myitkyina in Kachin State.


7. (C) According to Kaye, WFP needs USD 10 million over the
next six months to meet basic needs and to keep the program
solvent. The EU donated two million euros (approximately USD
three million) for WFP's NRS program and the UK's Department
for International Development (DFID) will donate USD 1
million to assist in Chin State, Kaye noted. Once again, he
urged the USG to continue funding the PRRO. In 2007, the USG
provided USD 200,000 to WFP to support the PRRO.

Comment
--------------


8. (C) WFP successfully maneuvered its way through the
acute pipeline break, relying on NGOs to buy and supply local
rice to circumvent GOB restrictions. The Burmese
Government's purported rationale for banning WFP local
procurement -- to maintain domestic rice stocks and avoid
price spikes -- was fundamentally flawed; NGOs successfully
procured more than 7,000 metric tons of rice without causing
shortages or price hikes. WFP needs to be able to procure
rice locally without resorting to unapproved transactions
that pose risks to ongoing operations; we are anxious to see
if the GOB reverses its policy as Kaye expects.

DINGER