TFHO1: STOCKS OF STAPLES STILL SUFFICIENT

UNCLAS TEGUCIGALPA 000975 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EAID ETRD EAGR ELTN PINS PGOV SOCI KDEM HO SUBJECT: TFHO1: STOCKS OF STAPLES STILL SUFFICIENT ¶1. (U) Summary: The de facto regime temporarily suspended the nationwide curfew during the day on Wednesday, September 23 to allow Hondurans to stock up on food, fuel and cash; the curfew was lifted for most of the day on September 24. On September 23, thousands of people rushed to stores, banks, and gas stations to stock up on supplies, often forming long lines outside businesses. Atypical demand brought on by the curfew reprieve did exhaust resources at some gas stations. The de facto Secretary of Industry and Commerce publicly assured that there is ample supply of fuel. Management from three major supermarket chains said that stores were well supplied and distributors were also able make deliveries during the break in the curfew. Although there were no reports of widespread shortages at major supermarkets or significant violence related to these shopping sprees, retailers have security concerns. During the early morning hours of September 23, looters ransacked several stores in Tegucigalpa. By September 24, businesses were striving to return to normal operations, in spite of curfews and protests. End Summary. -------------- Shopping Between Curfews -------------- ¶2. (U) Since the September 21 return of deposed president Manuel Zelaya, the de facto regime imposed a curfew to limit opposition, mitigate violence and maintain order. In the early morning hours of September 23, an announcement sent over TV and radio airways indicated that the curfew would be lifted from 1000 until 1700 local time (1300 to 2000 EST). The reprieve was designed to allow Hondurans to stock up on food, fuel and cash. Throughout the country, thousands of people rushed to stores, banks, and gas stations to stock up on supplies, often forming long lines outside businesses. Shoppers and employees alike hurried to take care of their errands in crowded businesses and snarled traffic and return home before resumption of the curfew. There were no reports of widespread shortages at major supermarkets or significant violence related to these shopping sprees. ¶3. (SBU) Sales figures were not immediately available from major supermarket chains, although Leonel Giannini, the president of La Colonia, a Honduran chain with 16 stores, conjectured to EconOff that sales in those few hours may likely be only slightly higher than the sales they would have made during the time they were forced to be closed. -------------- Enough To Go Around -------------- ¶4. (U) The de facto Honduran Secretary of Industry and Commerce, Benjamin Bogran, held a midday national press conference to urge calm and assure Hondurans that there is ample supply of fuel. Bogran highlighted the deployment of a petroleum tanker to the northern port town of Tela nearly two hours after the curfew was lifted. ¶5. (SBU) Local contacts confirmed Bogran,s assertion regarding a one month fuel supply in the southern town of San Lorenzo. Atypical demand brought on by the curfew reprieve did exhaust resources at some gas stations. Daniel Mencia, Country Operations Manager at ExxonMobil, reported to EconOff that reports of dry gas stations were limited and occurred primarily in rural areas where distribution is an issue even under normal political conditions. C. Mauricio Sierra, General Manager of Shell, Honduras told EconOff that combustible stocks in the country should suffice for 15 to 20 days in the event of further border or port closures. Distribution and consumer demand is expected to stabilize in one to two days. ¶6. (SBU) Bogran guaranteed Hondurans that supermarkets throughout Tegucigalpa are stocked with 14 days worth of foodstuffs. He also stressed adequate grain reserves, which corresponds with newspaper reports that Honduras has strategic grain reserves to last until August 2010. ¶7. (SBU) Management from three major supermarket chains, La Colonia, PriceSmart (a Costco affiliate, with headquarters in San Diego and 26 stores in Central America and the Carribean),and Wal-Mart Central America (operating as HiperPaiz, Supermercado Paiz, Maxi Bodegas, and Despensas Familiares),informed EconOff that stores were well supplied, and that distributors were also able make deliveries during the break in the curfew. EmbOffs visited supermarkets near the Embassy on September 24 and found shelves well-stocked and little sign of the mob scenes from the previous day. A local Paiz supermarket, which the El Heraldo newspaper featured with photos during the height of shopping, was re-stocked and orderly, with only fresh milk and meat in shorter supply. While retail outlets strived to continue normal operations on September 24, they were still forced to adapt their hours for curfews. The curfew on Thursday, September 24 resumed at 19:00 and continued until 05:00 on Friday. Tensions remain high for managers, employees, and customers as protesters march daily. ¶8. (SBU) While Mey Hung, Corporate Affairs Manager for Wal-Mart, reported that the Ministry of Security allowed safe passage of their trucks during the curfew, Chris Souhrada, Senior VP of Operations for PriceSmart, lamented that the curfews, blockades, and border closures have had a serious negative impact on their business because of their dependence on imports and a variety of distributors. (Note: approximately 50% of merchandise available at PriceSmart is imported from the U.S. End Note.) He further conveyed that the general uncertainty and unrest not only affect the supply chain and increase costs for additional security, they also bring down the morale of employees and willingness of customers to shop. Borders have since re-opened, allowing shipments to and from El Salvador, Guatemala and Nicaragua. ¶9. (U) Small family-run shops (called pulperias) have had mixed results during the most recent political turmoil. EconOff spoke with the owner of a roadside stand who said he has done some of his best business during the curfew because he stayed open, when larger stores closed. This shop owner also explained that he controls his inventory by buying in bulk at the open air market. Other shop owners who depend on deliveries or traveling salespeople have found the curfew more disruptive. -------------- Unrest Turns Into Looting -------------- ¶10. (SBU) Security concerns do exist. During a demonstration in defiance of the curfew in the early morning hours Tuesday, September 22, a group of vandals overpowered a guard and broke into a shopping center in a Tegucigalpa neighborhood. During the early morning hours, looters ransacked a La Colonia supermarket, an Elektra appliance store, a Despensa Familiar supermarket, a branch of Banco Azteca, and several ATM machines. Management of La Colonia and Wal-Mart were not able to provide a dollar figure on the losses, but described the destruction as near total. In addition to emptying the shelves of products, the looters also stole the cash registers, computers, and office equipment, and smashed refrigerator cases that weren't even locked. La Colonia estimates it will take 45 to 60 days to restore their store, while Wal-Mart hopes to have the Despensa Familiar back in business in about a week. ¶11. (U) Police have raided houses of suspected looters and confiscated stolen goods, presumably identified by store tags and the shopping carts still full of swag. (Note: the conservative newspaper El Heraldo points to "Zelayistas" as the culprits, although there is no evidence of political motivation or affiliation among the looters.) LLORENS