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Cablegate: Mozambique - Request for Fy06 Usda Food Aid

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 MAPUTO 001101

SIPDIS
STATE FOR AF/S - TREGER
USDA/FAS/EXPORT CREDITS FOR MARY CHAMBLISS, DEPUTY
ADMINISTRATOR
USDA/FAS/EXPORT CREDITS FOR RON CROUSHORN, DIRECTOR,
PROGRAMMING DIVISION
PRETORIA FOR AGRICULTURAL ATTACHE - RBICKFORD
USDOC FOR RTELCHIN
E.O. 12958: N/A
TAGS: EAGR EAID MZ ETRD
SUBJECT: MOZAMBIQUE - REQUEST FOR FY06 USDA FOOD AID
THROUGH PL 480, TITLE I AND FOOD FOR PROGRESS

REF: STATE 139203

---------------------
REQUEST JUSTIFICATION
---------------------
1. Although Mozambique still remains one of the poorest
countries in Africa, its government has been successful in
encouraging economic growth, attracting foreign investment
and revitalizing several industries destroyed by the 16-year
civil war. In spite of the recent growth, Mozambique still
maintains a difficult and bureaucratic business environment
that tends to raise costs for established businesses and acts
as a disincentive for new investment. The Government of
Mozambique (GRM) is responding to these challenges by
reviewing and revising legislation and policies related to a
variety of business-related issues such as registration,
labor, land titling and ownership, telecommunications and
trade. These efforts are often complicated by lack of
technically qualified personnel and entrenched special
interests. The Ministry of Industry and Commerce (MIC) and
its partners are developing programs to address these issues
in a rational manner, with the goal of increasing jobs and
investment and reducing poverty.

2. The recent National Assessment of Poverty and Well-being
in Mozambique, conducted by the Ministry of Planning and
Finance, indicated that 60 percent of the population still
lives in poverty. With these levels of poverty, improvements
in the standards of living of the poor remain a central
policy objective for the GRM. In this context Title I is an
important economic tool to help Mozambique achieve its goals
through a government-to-government food donation and, in
turn, by using the proceeds from sold commodities to improve
the business environment. Receipt of Title I food
commodities will bolster Mozambique's potential to develop
its commercial markets, as the country undertakes measures to
improve food security and agricultural development. Despite
progress in increasing agricultural production, Mozambique
still has areas of food insecurity and, as the World Food
Programme indicates, one third of the population is
classified as chronically food insecure.

-------------------------------------
VALUE AND TYPE OF COMMODITY REQUESTED
-------------------------------------
3. Mission requests funding for PL 480 Title I-funded Food
for Progress grants of agricultural commodities, specifically
$5.0 million of crude soybean oil.

4. Title I sales of this commodity to Mozambique would not
disrupt normal world commercial trade.

------------------------------
DESCRIPTION OF USE OF PROCEEDS
------------------------------
5. This request is a follow-on to support and complement
continuing activities that were partially funded by FY 2005
Title I program in Mozambique.

6. Title I commodities will be sold by MIC. The government
will use proceeds from the sale of the soybean oil for
programs that will increase labor intensive exports by 1)
increasing the capacity of the government and private sector
in negotiating, and utilizing, trade agreements, 2) improving
the business environment by reducing bureaucratic red tape
through policy and regulatory interventions, and 3) offering
focused education and training programs on economics, trade,
and agriculture. These GRM efforts will reinforce U.S.
interests in making AGOA and the recently signed TIFA more
effective.

7. Approximately ten percent of proceeds will be used to
finance scholarship opportunities under USDA's Borlaug
Fellows Program. This program provides short-term scientific
training for international research scientists and policy
makers. The areas of training can be in any
agriculture-related field, and include areas such as
agronomy, plant pathology, entomology, veterinary sciences,
microbiology, and agricultural economics. The training areas
may also include areas such as food safety, sanitary and
phytosanitary topics, environmental sciences, agricultural
biotechnology, global climate change, water quality and
management, among others.

8. The GRM has demonstrated great interest in the
continuation of the current activities via an FY06 Title
I-funded Food for Progress program. Mission urges approval
of this request, which we believe will program resources in a
concerted and coordinated manner with other USG initiatives
in support of expanding free enterprise in the agricultural
sector.

9. This request has been coordinated with FAS Pretoria.
La Lime

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