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Cablegate: Burma: Food Prices Continue to Rise

VZCZCXRO2831
RR RUEHCHI RUEHDT RUEHHM RUEHNH RUEHTRO
DE RUEHGO #0368/01 1341029
ZNR UUUUU ZZH
R 131029Z MAY 08
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC 7579
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1876
RUEHBY/AMEMBASSY CANBERRA 1183
RUEHKA/AMEMBASSY DHAKA 4881
RUEHNE/AMEMBASSY NEW DELHI 4727
RUEHUL/AMEMBASSY SEOUL 8271
RUEHKO/AMEMBASSY TOKYO 5833
RUEHCN/AMCONSUL CHENGDU 1475
RUEHCHI/AMCONSUL CHIANG MAI 1593
RUEHCI/AMCONSUL KOLKATA 0333
RUEATRS/DEPT OF TREASURY WASHDC
RHHMUNA/CDR USPACOM HONOLULU HI
RUEHGV/USMISSION GENEVA 3705
RHEHNSC/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 1602
RUEKJCS/SECDEF WASHDC
RUEHBS/USEU BRUSSELS
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 02 RANGOON 000368

SENSITIVE
SIPDIS

STATE FOR EAP/MLS, 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

Ref: A) Rangoon 352 B) Rangoon 353 C) Rangoon 342

RANGOON 00000368 001.2 OF 002


1. (SBU) Supplies of certain food products - rice, meat, chicken,
fish, and cooking oil - remain scarce in Rangoon and prices of food
throughout the city continue to rise. The price of rice has
increased 83 percent since May 1 due to insufficient rice stocks.
Prices of fruits and vegetables remain high, as does the price of
salt, which many Burmese who lack electricity use to preserve food.
Vendors report a drop in sales of fish and seafood products, as many
Burmese refuse to eat these products out of fear of contamination.
Prices of some items, such as chicken, purified water, and tomatoes,
have dropped slightly since last week, and other food prices
remained stable. The Myanmar International Terminal Thilawa opened
for limited operations on May 10, allowing for the import of key
goods, including diesel fuel. Prices of gasoline and diesel
continued to drop, and are now being sold on the market for 5,000
and 6,000 kyats a gallon respectively. End Summary.

Food Prices Continue to Climb
-----------------------------

2. (SBU) During trips to various markets around Rangoon during the
past few days, we observed vendors selling a wide variety of food,
particularly fruits and vegetables from Northern Burma. Several
food items - rice, cooking oil, chicken, and meat - remain scarce on
the market, and their prices continue to rise accordingly as the
demand for these products has not yet abated. The price of rice
continues to increase; ehmata rice (25 percent broken rice) now
sells for 44,000 kyat ($40) a bag, up 83 percent since May 1. We
observed several rice traders selling limited stocks of inferior
rice for 24,000 kyat ($22) a bag, up 60 percent since pre-cyclone
periods. Several businessmen told us that rice millers are
transporting stocks of rice from Irrawaddy Division to Rangoon for
sale, although we have yet to confirm this story.

--------------------------------------------- -------
Selected Commodity Prices, Rangoon
As of May 12, 2008
In Kyat
--------------------------------------------- -------
Good Pre-Storm Post-Storm Percent
Price Price Increase
--------------------------------------------- -------
Ehmata Rice 24000/bag 44000/bag 83
Inferior Rice 15000/bag 24000/bag 60
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 7000/viss 17
Fish 4000/viss 7000/viss 75
Salt 1500/viss 2800/viss 87
Onions 300/viss 800/viss 167
Potatoes 400/viss 1000/viss 150
Purified Water 300/liter 800/liter 167
--------------------------------------------- -------
*1 viss=3.6 lbs or 1 viss=2 liters

3. (SBU) Market vendors told us of an increasing demand for salt
in Rangoon, which people use to preserve food. Salt prices have
increased by approximately 87 percent in the past week, from 1,500
kyat ($1.36) to 2,800 kyat ($2.54) for 3.6 lbs. Much of the salt
sold in Rangoon came from Labutta, vendors stated. The cyclone
destroyed salt supplies, further driving up prices (Ref A).

4. (SBU) During the past few days, we observed fewer vendors

RANGOON 00000368 002.2 OF 002


selling fish and seafood. Several traders told us that only a few
fishermen had boats and could bring a catch into the market.
Consequently, prices of seafood have increased by up to 75 percent.
Demand for fish has dropped, however, as many Burmese refuse to eat
fish for fear of contamination from corpses in the rivers and
ocean.

5. (SBU) While prices continue to climb, we saw that prices of
several goods fell over the past four days. Immediately after the
cyclone hit, markets and supermarkets sold out of stocks of purified
water. Now, most stores in Rangoon now have an abundant supply of
drinking water. The price of purified water has decreased since May
8, from 1,500 kyat ($1.36) a liter to 800 kyat ($0.72), although
prices are still higher than pre-cyclone levels. Prices of other
goods, including chicken, tomatoes, and eggplant, have also
decreased slightly in the past few days, but are not yet back to May
1 levels. Prices of other goods, such as onions, garlic, and
cabbage, remain stable.

Fuel Prices Dropping
--------------------

6. (SBU) The Myanmar Port Authority resumed limited operations at
the Myanmar International Terminal Thilawa (MITT) on May 10,
allowing for the import of selected items, such as construction
materials and fuel. Business contacts confirmed that a private ship
delivered 10,000 gallons of diesel fuel on May 10 (Ref B); this fuel
is now available for sale in local markets. Economic contacts told
us that additional shipments of diesel and petrol will arrive in
Rangoon later this week. Prices of gasoline and diesel continue to
fall as supply increases (Ref C). On May 12, a gallon of petrol
sold for 5,000 kyat ($4.50), down from 7,000 kyat ($6.36) a gallon
on May 8. Diesel prices also fell from 8,000 kyat ($9) a gallon on
May 8 to 6,000 kyat ($5.45) a gallon on May 12, a drop of 25
percent.

7. (SBU) We also observed fewer cars queuing at gas stations
around town, with the average wait time decreasing to approximately
1.5 hours. Gas stations still restrict car owners to purchase up to
six gallons of gas at one time, and only 14 gallons per week.

Comment
-------

8. (SBU) Although prices of food in Rangoon remain high, food is
still available, so residents of Rangoon are in a much better
position than those living in the Irrawaddy Delta region. Supply
lines into Rangoon have improved, allowing a steady but limited
supply of food from Northern Burma to enter Rangoon's markets. With
the resumption of limited operations at the port, additional
supplies of food should be forthcoming, which will further reduce
market pressure and increase the supply of available commodities.
We expect that as the situation in Rangoon improves, food prices,
like fuel prices, will stabilize.

VILLAROSA

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