Cablegate: Request for Pl-480, Title I Program for Peru

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

UNCLAS LIMA 004706

SIPDIS

FOR STATE WHA/EPSC:VPOLISAR; EB/TPP/ATT/ATP:PKUDAK;
STATE ALSO FOR WHA/AND
FOR USDA EC/ CHAMBLISS, TILSWORTH, CROUSHHORN, TWEDT

E.O. 12958: N/A
TAGS: EAGR EAID PE
SUBJECT: REQUEST FOR PL-480, TITLE I PROGRAM FOR PERU

REF: USDA FAS

1. Post requests a USD 10 million PL-480, Title I program
for Peru in FY 2006. The program could consist entirely of
soybean meal or crude soybean oil, or a mix of both
depending on global market conditions. Peru has experience
importing these two commodities.

2. Funds generated from resale of the soybean products
purchased by the Government of Peru would be used to support
agricultural development and trade capacity building that
enhance Peru's effective participation in the Doha Round and
the U.S.-Andean Free Trade Agreement currently under
negotiation. Funds would also be used to support
complementary agricultural development through training and
technical assistance with respect to agricultural
sanitary/phytosanitary conditions, production research and
extension, and rural infrastructure.

3. A PL-480, Title I program with Peru will send a strong
message of the USG's desire to assist the democratically
elected government to continue to reduce illicit drug
production and increase market reforms, both of which are
being seriously challenged by regional and international
economic and political pressures. The activities supported
by this agreement also would demonstrate the USG's
commitment to assist Peru with capacity building critical to
agricultural development.

5. There was no program in 2005 due to disinterest by wheat
millers (wheat rather than soybeans were the principal
product in the past) and mixed signals from the Ministry of
Economy. After discussions with the Minister of Agriculture
and the Vice Minister of Economy, Post has concluded that
Peru is again interested in participating in the PL-480
program. It will be important to have funds available to
implement trade capacity building programs to assist Peru in
implementing the U.S.-Andean FTA.

6. This year we request monetization of soybean products
instead of wheat. The U.S. market share in those products
is small due to fierce competition from Argentina and
Bolivia. Given the expected tariff advantage the U.S. will
receive in those products in an FTA, it will be beneficial
to introduce U.S. products under the PL-480 program.

7. Peru produces virtually no soybean meal and oil;
therefore, imports of these commodities would not pose a
disincentive to local production. Peru imported $152
million worth of soybean meal (581,117 MT) in CY2004 and
$131 million worth of crude soybean oil (212,148 MT). The
proposed program is also well within Usual Marketing
Requirement (UMR) limits for these commodities for Peru.
STRUBLE

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