Venezuela's Rice Availability Diminishing

C O N F I D E N T I A L CARACAS 001539

SIPDIS
SECSTATE PASS AGRICULTURE ELECTRONICALLY

E.O. 12958: DECL: 2024/11/23
TAGS: ECON EAGR VE PGOV ETRD
SUBJECT: Venezuela's Rice Availability Diminishing

CLASSIFIED BY: Duddy, Ambassador, DOS, AMB; REASON: 1.4(B)


1. (C) Summary: According to local rice producers and
traders, Venezuela's rice supplies are contracting due to
diminished domestic output and a slow import program. Although
there have been high profile purchases in the last few months from
Ecuador, Argentina, and Guyana to cover the expected production
gap, we understand that they will not meet Venezuela's needs, and
the country may once again have to turn to the United States. End
Summary.




2. (C) According to Tulio Burgos (protect),a leading rice
producer in Guarico state, rice production is expected to be lower
this year, as rainfall was neither timely nor sufficient to make a
good crop. Although Guarico normally has sufficient water stored
in irrigation dams, water levels have fallen significantly.
Compounding the problem is the fact that irrigation infrastructure
has deteriorated to the point where it is becoming more difficult
to distribute the water that is available to farmers in need.
According to Burgos, this government-owned system has not been
maintained as it should be, despite the user fees the government
collects from farmers and promises by the Minister of Agriculture,
and has become outdated and inefficient.




3. (C) Although official government sources claim that the
current rice crop will be a success, private sector analysts
believe that at best production will fall by about 100,000 metric
tons, or some 15 percent from the previous year. Using these
numbers as a starting point, private sector analysts estimate that
rice imports for calendar year 2010 could reach 400,000 metric
tons, at least 100,000 metric tons greater than in 2009.




4. (C) With the government essentially the sole rice importer,
its actions NOW become critical to the maintenance of domestic rice
supplies. In calendar year 2008, the government's desire to keep
food on the table resulted in a significant import program of more
than 300,000 metric tons, nearly all from the United States.
According to trade contacts, however, the government's rice import
program to cover the expected larger deficit has not begun in
earnest. Limited contacts so far between the US rice industry and
CASA, the BRV's principle rice distributer, have not resulted in
any notable sales. This delay could have an important impact on
the BRV's pocketbook; with world prices rising and supplies
tighter, failure to close business soon may mean that any rice
imports will end up costing the government significantly more.




5. (C) According to contacts, attempts to avoid rice shortages
by purchasing from other countries have so far not been successful.
They report that some 80,000 metric tons of rice purchased from
Ecuador arrived in poor condition and thus may have to be used as
feed instead of food. Deals finalized with Guyana for 50,000 tons
are being held up by logistical issues, and we are told that 30,000
tons of rice purchased by CASA from Argentina is being delayed as
CASA does not have sufficient funds to open a letter of credit.
DUDDY