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Cablegate: Burma: Food Prices Continue to Rise, Fuel Prices Decrease

VZCZCXRO8442
RR RUEHCHI RUEHDT RUEHHM RUEHNH RUEHTRO
DE RUEHGO #0342/01 1291124
ZNR UUUUU ZZH
R 081124Z MAY 08
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC 7528
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1863
RUEHBY/AMEMBASSY CANBERRA 1155
RUEHKA/AMEMBASSY DHAKA 4868
RUEHNE/AMEMBASSY NEW DELHI 4699
RUEHUL/AMEMBASSY SEOUL 8243
RUEHKO/AMEMBASSY TOKYO 5805
RUEHCN/AMCONSUL CHENGDU 1462
RUEHCHI/AMCONSUL CHIANG MAI 1573
RUEHCI/AMCONSUL KOLKATA 0320
RUEATRS/DEPT OF TREASURY WASHDC
RHHMUNA/CDR USPACOM HONOLULU HI
RUEHGV/USMISSION GENEVA 3671
RHEHNSC/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 1561
RUEKJCS/SECDEF WASHDC
RUEHBS/USEU BRUSSELS
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 03 RANGOON 000342

SENSITIVE
SIPDIS

STATE FOR EAP/MLS, SES-O, 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: FOOD PRICES CONTINUE TO RISE, FUEL PRICES DECREASE

Ref: A) RANGOON 336 B) RANGOON 335 C) RANGOON 331 D) RANGOON 323

RANGOON 00000342 001.2 OF 003


1. (SBU) Summary. Despite government efforts to reopen supply
roads into Rangoon, food supplies remain limited, resulting in
skyrocketing prices. Rice stocks throughout the city are almost
depleted, and the few traders who still have rice sell it for
approximately 40,000 kyat ($36) a bag, 67 percent higher than
pre-cyclone prices. Prices of other commodities, such as cooking
oil, meat, chicken, and fish, continue to increase dramatically due
to short supply and high demand. The GOB recently resumed rail
service, and supplies of fruits and vegetables from Northern Burma
have entered the Rangoon market, alleviating some pressure on food
supplies. However, fruits and vegetables are still expensive for
the average Burmese, who are unable to afford the higher prices. We
have heard of instances of theft in the markets, and people are
becoming increasingly desperate for food. Prices of fuel have
stabilized - black market petrol prices decreased from 8,000 kyat
($7.20) to 7,000 kyat ($6.36) per gallon, and diesel prices fell
from 10,000 kyat ($9) to 8,000 kyat ($7.20) per gallon. End
Summary.


Food Still In Short Supply
--------------------------

2. (SBU) While most of Rangoon's markets and supermarkets remain
open for business, food at these markets is becoming scarce,
particularly rice, cooking oil, water, and meat. Not only did the
cyclone destroy much of the Irrawaddy Delta's rice paddies (Ref C),
which supply the majority of Rangoon's rice, but it also wiped out
many poultry farms (Ref A). The storm also destroyed many of
Burma's fishing vessels, so fishermen are unable to bring fish and
seafood to the markets. Consequently, the availability of these
products has declined dramatically in the past few days, with prices
reflecting the limited supply. During our trips to several markets
in Rangoon, we observed only a few stalls selling fish and seafood.
Fish prices have jumped 75 percent in the past week, and chicken and
pork prices have increased by 33 percent each.

3. (SBU) Demand for rice, cooking oil, and drinking water remains
high, and most markets have sold out of all three products. On May
8, we saw one rice trader selling lower quality rice for 40,000
kyats ($36) a bag, up from 24,000 kyat ($22) a bag one week ago. He
told us that there is no more superior quality rice available in
Rangoon, and stocks of ehmata and inferior rice are quickly
depleting. Cooking oil and water are also scarce in the markets,
although we found several high-end supermarkets with a limited
supply. Prices of cooking oil have jumped between 22 to 56 percent,
depending on the type of oil. Purified water prices have increased
the most, more than 400 percent since May 1.

--------------------------------------------- -------
Selected Commodity Prices, Rangoon
As of May 8, 2008
In Kyat
--------------------------------------------- -------
Good Pre-Storm Post-Storm Percent
Price Price Increase
--------------------------------------------- -------
Ehmata Rice 24000/bag 40000/bag 67
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 8000/viss 33
Fish 4000/viss 7000/viss 75

RANGOON 00000342 002.2 OF 003


Salt 1500/viss 2800/viss 87
Onions 300/viss 800/viss 167
Potatoes 400/viss 900/viss 125
Purified Water 300/liter 1500/liter 400
--------------------------------------------- -------
*1 viss=3.6 lbs or 1 viss=2 liters

4. (SBU) During the past few days, we have observed an increase
supply of fruits and vegetables in the markets. Vendors told us
that since the government resumed rail transport to Rangoon, farmers
and traders in Northern Burma have sent fruits and vegetables to
Rangoon rather than exporting them to China and Thailand. Prices of
fruits and vegetables have also increased since May 1, due primarily
to high transport costs and increased demand. Several Burmese we
spoke to emphasized that they prefer to eat rice, but will eat
fruits and vegetables if they are the only food available.

Stories of Theft, Looting
-------------------------

5. (SBU) Several contacts have told us stories about looting and
theft in the markets, particularly in the poorer areas of Rangoon.
One contact told us that she saw several adults and children
stealing oranges from one vendor in Hledan Market. Several
agricultural contacts told us that some rice traders who still have
rice stocks are afraid to open their stores for fear they will be
mobbed by hungry Burmese (Ref C). Despite these stories, we have
not seen any widespread looting. Still, as prices continue to rise
and refugees from the Irrawaddy Delta move to Rangoon, looting of
markets and stores remains a possibility.

But Fuel Prices Decline
-----------------------

6. (SBU) Although food prices on the whole continue to increase,
black market fuel prices - for both diesel and petrol - appear to
have stabilized, even decreasing in some areas. Immediately after
Cyclone Nargis hit, prices of petrol increased from 5,200 kyat
($4.70) to 8,000 kyat ($7.20) a gallon, a 54 percent increase.
Diesel prices rose by 72 percent, from 5,800 kyat ($5.20) to 10,000
kyat ($9) a gallon. On May 8, prices of both petrol and diesel fell
throughout Rangoon, to 7,000 kyats ($6.36) and 8,000 kyats ($7.20) a
gallon, respectively (Ref B). We have observed fewer cars queuing
at gas stations, with the average wait time decreasing from 3.5
hours to 2 hours. John Hetherington, Country Director for PSI, told
us that gas stations in Rangoon will now sell up to 6 gallons per
car. Previously, MPPE gas stations were rationing fuel, only
selling two gallons per car per day. Other contacts confirm the
increase in gas sales, but caution that the regime may resume gas
rationing in a few days.

7. (SBU) There are several reasons for the drop in fuel prices. In
the past two days, the government has restored city power to several
areas in Rangoon, reducing the demand for diesel to run generators.
The government has also restored water supply to parts of the city,
further reducing the need for diesel to run water pumps and
generators. Burma should receive a shipment of diesel fuel in the
next few days, which may temporarily drive down prices further. The
amount of petrol available on the black market has also increased,
as car owners who purchase six gallons a day have more gas to sell
to those in need. As the market supply of fuel increases, we expect
that prices will continue to trend downward.

Comment
-------


RANGOON 00000342 003.2 OF 003


8. (SBU) Despite the influx of fruits and vegetables from Northern
Burma, food prices across the board will likely remain high for the
foreseeable future. Before Cyclone Nargis, an estimated five
million Burmese lived under the food poverty line. As inflationary
pressures and food prices increase in Rangoon and other
cyclone-affected areas, more people will be unable to purchase food
to feed themselves and their families. Small scale theft and
looting is already occurring in Rangoon. The longer it takes for
the government to respond to the people's needs, the higher the
probability that looting and rioting will occur.

VILLAROSA

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