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Cablegate: Impact of Rising Food Prices in Drc

VZCZCXRO2691
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0328/01 0941655
ZNR UUUUU ZZH
R 031655Z APR 08
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 7834
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHXR/RWANDA COLLECTIVE
RUEHNR/AMEMBASSY NAIROBI 5148
RUEAIIA/CIA WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE

UNCLAS SECTION 01 OF 02 KINSHASA 000328

SIPDIS

SIPDIS

USDA for FAS: DEVANS
NAIROBI for FAS: KSMITH

E.O. 12958: N/A
TAGS: EAGR EAID ECON SOCI CG
SUBJECT: Impact of Rising Food Prices in DRC

REF: 06 Kinshasa 1182

1. (U) Summary. Food availability in the DRC is already poor, with
high levels of malnutrition. Food price statistics indicate a 25
percent increase in food prices over the last six months, in
addition to an overall tripling of food prices since the end of
2000. Substitution from imported grains and oils to locally
produced cassava (manioc) and palm oil seems to be one coping
mechanism. Local food purchases by the UN World Food Program may
help, but even this program shows the poor availability of food in
the DRC. End summary.

------------------------------
Food Availability Already Poor
------------------------------

2. (U) Food availability in the DRC is very poor, with high rates of
malnutrition throughout the country due to conflict, displacement,
plant disease, severely degraded transportation and infrastructure,
lack of credit, high levels of corruption and banditry, chronic
underinvestment in research, and other factors. Over the past 15
years, food insecurity has increased significantly: between 1991 and
2002, the number of undernourished people tripled, from 12 to 36
million, and now includes approximately 72 percent of the 60 million
population. During this same period, average per capita caloric
intake declined from 2170 to 1610 calories per day. Preliminary
results from the recent Demographic Health Survey completed in DRC
show that 46 percent of children under 5 are malnourished. The
United Nation's Food and Agriculture Organization (FAO) categorizes
the DRC as a low-income food-deficit country. In urban markets such
as Kinshasa and Lubumbashi, rising world prices for staple
commodities can only further negatively impact this situation.
Congolese media regularly issue anecdotal reports about increasing
food prices and the country's inability to feed itself.

--------------------
Food Price Increases
--------------------

3. (U) There are a number of measures of food price increases
available in the DRC. Both the IMF and the Congolese Central Bank
(BCC) have economic units that conduct market basket surveys in
order to determine inflation rates. The official DRC inflation rate
for 2007, as measured by the IMF and BCC, was just under ten
percent. The GDRC National Statistics Institute (INS) and the
Embassy Kinshasa Economic Section also conduct market basket
surveys. The Economic Section survey has found that over the period
October 1 to March 31, 2008, the price of the average Kinshasan's
food basket has increased by about 25 percent, with food costs more
than tripling between December 2000 and December 2007. (Note: The
embassy market basket survey begun in December 2000 was indexed then
at 100, and now stands at over 300 for basic food items. Inflation
was often very high prior to 2003, sometimes in triple digits. End
note.) INS statistics track more closely to Embassy findings than
to IMF and BCC statistics, and show food price increases and
inflation rates for 2007 and since October 2007 of 36 and 20
percent, respectively, with close agreement on food price increases
during those periods. Recent increases in inflation and food prices
in Kinshasa are largely attributable to rising fuel and
transportation costs, with double digit increases observed in both
October 2007 and again in March 2008.

---------------------------
Bread Still Popular, but...
---------------------------

4. (U) Conflict and economic decline has transformed the urban
economy from a largely formal sector to about a 90 percent informal
sector today. Many people have become dependent upon daily, untaxed
sources of income (as opposed to monthly salaries) and are
increasingly dependent upon day-to-day income and subsistence
purchases, especially in the form of bread. Because bread,
especially for breakfast, has now become a relatively larger
proportion of the urban diet, as the price for wheat and corn
increases, cassava flour could be substituted for wheat flour and
corn meal in increasing proportion to produce bread. (Note: during
certain periods of the 1980s, this experiment in "cassava bread" was
tried and failed. End note.) As with public transportation, where
the GDRC-fixed taxi and bus fares were circumvented by shortening
routes, the price of bread has been maintained only through an
apparent reduction in portion size.

-----------------------

KINSHASA 00000328 002 OF 002


Let Them Eat Cassava...
-----------------------

5. (U) In the DRC, the primary food source has been and largely
still is cassava. Though all the cassava consumed in the DRC is
produced in-country, the price of cassava has also increased in line
with other basic food commodities measured (approximately 25 percent
over the last six months). This is likely due to increasing
transportation costs and increased demand as the urban population
substitutes for the more expensive rice and corn (maize) that are
also staples of the average Kinshasan diet. For the same price,
approximately USD 50, you can buy twice as much cassava (100 kilos,
or 220 pounds) as rice or maize (50 kilos, 110 pounds), making
cassava the cheapest calories. (Note: DRC cassava production, like
the caloric intake of its people, has also decreased significantly
over the last 15 years (as elsewhere in Africa), due primarily to
the cassava mosaic virus. Luckily, another staple of the Kinshasan
diet is the cassava leaf that often accompanies the cooked
cassava-flour dough, since the leaves are relatively high in
vitamins, minerals and protein. End note.) In rural areas, where
consumption is largely limited to cassava produced by subsistence
farms, there should be lesser impacts of price increases.

--------------------------
...and Cook with Palm Oil
--------------------------

6. (U) As the price for vegetable oil increases worldwide, and,
parenthetically, has investors looking seriously at rehabilitating
abandoned palm oil plantations in the DRC, there seems to be an
increased local demand for artisanally produced palm oil. (Note: The
once thriving industrial production and processing of palm oil in
the DRC, which reached almost half a million tons in the 1980s, has
been reduced to the point where domestic DRC producers of refined
oil, soap, and cosmetics are forced to import palm oil from Malaysia
and Indonesia (reftel) End note.) Meanwhile, perhaps due to these
higher imported vegetable oil prices and resultant substitution,
unrefined domestic palm oil prices have increased faster than any
other commodity over the last six months but it continues to be a
better buy than imported, refined oils.

--------------------
Local Food Purchases
--------------------

7. The UN World Food Program (WFP) has a mandate and money for local
purchase of food in areas of excess production to feed the hungry in
areas of need. WFP/DRC was able to purchase 5,638 metric tons (MT,
about 2,200 pounds) of local food commodities in 2007 and has
already purchased 2,534 MT in 2008. WFP buys from large scale
farmers, traders, and NGOs that organize small scale farmers. The
commodities purchased are maize (2/3 of total) and beans (1/3 of
total). Regionally (Zambia, Uganda, Kenya, Namibia, South Africa
and Tanzania), WFP/DRC has been able to purchase a total of 32,994
MT, primarily maize. This relatively low level of in-country
purchases is another indicator of poor food availability in the
DRC.

8. (U) Comment. The Congolese people in general, and Kinshasans in
particular, know how to get along despite hard times. One old joke
goes: "What did we do before there were candles?" Answer: "We had
electricity." The same might someday be said about cassava bread
and wheat bread, or palm oil and U.S. vegetable oil. The most
disturbing aspect of this food price trend is that, even with
substitution as a coping mechanism, there are those who are having a
difficult time putting food on the table. Recent events in Burkina
Faso, Cameroon, and elsewhere suggest that there is only so much
elasticity in hunger, and that eventually the population may decide
that it has not had enough...to eat. End comment.

Garvelink

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