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


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FM AMEMBASSY NDJAMENA
TO SECSTATE WASHDC 1064
INFO AFRICAN UNION COLLECTIVE
AMEMBASSY ABUJA 
AMEMBASSY ACCRA 
AMEMBASSY ADDIS ABABA 
AMEMBASSY BAMAKO 
AMEMBASSY DAKAR 
AMEMBASSY KAMPALA 
AMEMBASSY KHARTOUM 
AMEMBASSY LONDON 
AMEMBASSY NAIROBI 
AMEMBASSY NIAMEY 
AMEMBASSY NOUAKCHOTT 
AMEMBASSY OUAGADOUGOU 
AMEMBASSY PARIS 
AMEMBASSY YAOUNDE 
USMISSION GENEVA 
USMISSION USUN NEW YORK 
USEU BRUSSELS BE

UNCLAS  NDJAMENA 000326 
 
SIPDIS 
 
 
SENSITIVE 
 
STATE PASS USAID 
LONDON AND PARIS FOR AFRICA WATCHERS 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ECIN ETRD PGOV PHUM PREL SENV CD
SUBJECT: FALTERING CROPS AND A FRAGILE STATE:  TROUBLES ON 
THE LAND IN SOUTHERN CHAD 
 
REF: NDJAMENA 308 
 
 
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Summary 
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¶1.  (SBU)  Cash crops and the industries based on them should be 
thriving in southern Chad, the wettest, greenest part of this 
drought-prone country.  Cotton, textiles, and sugar had at one 
time been sources of prosperity for millions in the region.  But 
now cotton production is stagnant, and the marketing parastatal 
is bankrupt.  The once vibrant textile factory is shuttered.  The 
sugar industry is struggling to surmount high costs, water 
shortages, and competition from smugglers. Ways must be found 
to revive commercial agriculture and promote rural development 
in this region.  Chad's hopes of withstanding pressures that 
have shaken other fragile states depend on it.  End Summary. 
 
¶2.  (U)  The Ambassador traveled to southern Chad over February 
8-15. The sketches presented in reftel portray a region strained 
by rising claims on its pastures, soil, and water.  The impressions 
captured here bring to light the many problems facing its main 
agricultural sectors. 
 
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Cotton 
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¶3.  (U)  Heading into the hottest, driest time of year, the cotton 
crop is mostly in.  Fluffy white mounds are piled up in the middle 
of dozens of villages along the road between Moundou and Sarh. 
They are waiting for trucks from Cotontchad, the state parastatal, 
to gather them up and take them to the cotton ginning plants.  What 
happens to the sector is a matter of life and death to the region, 
officials in Moundou told us. Three million people depend on cotton 
directly or indirectly, they say. 
 
¶4.  (U)  If so, the outlook is bleak.  Chad used to be Africa's 
biggest cotton producer.  Production has suffered in recent years 
from mismanagement, low yields, inadequate inputs, poor or 
nonexistent secondary roads, and high transportation costs to the 
nearest ports hundreds of miles away.  This year, farmers responded 
to high price guarantees by throwing their meager resources into 
cotton and neglecting millet, sorghum, and other staple crops. 
Food prices have soared in the local markets.  Food shortages are 
looming, and farmers have yet to be paid for their cotton, 
according to several local officials we met. 
 
 
¶5.  (SBU)  Meanwhile, Cotontchad, the only authorized buyer, is 
effectively bankrupt.  Bankers are refusing to advance it more 
funds. The Chadian government has accepted the conclusion of a 
recent World Bank study and signed off on a plan to privatize 
Cotontchad no later than mid 2007.  Still, the question of how 
to pay for this year's crop remains. One option is a one-shot 
deal to draw on Chad's new oil revenues. Cotontchad's officials 
in their meeting with us pleaded for unilateral action to cut U.S. 
cotton subsidies.  Encouraged by the Ambassador to support a 
global subsidy-cutting package in Geneva, they argued instead 
that all of Africa would salute the United States, if it took 
such moves on its own. 
 
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Textiles 
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¶6.  (U)  Salvaging Chad's cotton sector will require action 
within Chad to privatize Cotontchad as well as improve extension 
services and transport infrastructure.  But part of the solution 
 
 
too lies in processing cotton domestically and avoiding the 
expensive transportation routes for raw cotton through Cameroon. 
The apparatus for doing so used to exist on the outskirts of Sarh. 
In its heyday the factory had capacity for spinning, weaving, 
dyeing, and stitching.  The boarded-up remnants of Compagnie 
Textile (Cotex) still stand north of town on the banks of the 
Chari River, but the buildings are vacant.  Its machinery, some 
dating back to the early 1960's, last ran in the late nineties 
when the parastatal company had to close down. 
 
¶7.  (SBU)  A group of private Chadian investors has taken over. 
They have grand plans for the factory's revival.  They are 
counting on a Dutch partner to help jump-start the project. 
They hope imminent approval of Chad's textile visa under AGOA 
will free up access to the U.S. market. Perhaps a better bet 
than aiming for a fully integrated textile operation would be 
focusing on restoring the plants' spinning capacity.  This 
would enable Chad to process its own high-quality raw cotton 
and supply yarn to other African garment-makers who are not 
eligible for or who are about to lose their third-country 
fabric preferences under AGOA.  Indian representatives in 
N'Djamena have spoken with us about a proposed credit from 
the Indian Government for this purpose.  Taiwan, with whom 
Chad has diplomatic relations, has invested in such ventures 
in other African countries as well. 
 
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Sugar 
----- 
 
¶8.  (U)  Unlike cotton, which is produced entirely by small 
farmers, Chad's sugar is grown on large estates owned by 
Compagnie Sucriere du Tchad, a recently privatized company. 
AIG's African Infrastructure Fund is among the owners.  The 
company's cane fields stretch for miles along the Chari River 
to the south of Sarh.  At night blocks as big as several 
football fields are set on fire.  The charred stalks are 
collected in mounds during the night and carried to the 
processing plant the next day. 1700 metric tons of cane are 
crushed each day to make granulated sugar, sugar cubes, and 
the hard sugar cones the desert nomads use to sweeten their 
tea. 
 
¶9.  (SBU)  But even this sector is in trouble.  The company 
cannot compete with sugar they say is dumped on world markets 
by Brazil, processed in Nigeria, and carried by smugglers 
through Cameroon.  High costs, the company's executives say, 
are incurred by having to pump water from the Chari River 
into the spindly irrigation pipes that extend overhead for 
nearly a kilometer over the fields.  In many sections the 
company is gradually installing underground black plastic 
tubes that will allow water to seep directly into the roots. 
Its managers hope this more efficient Israeli technology will 
lower costs and reduce losses from evaporation. 
 
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Comment 
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¶10.  (SBU)  High hopes are pinned on oil revenues now flowing 
from the ExxonMobil-led project near Doba in southern Chad. 
But oil will never provide livelihoods for as many people as 
agriculture and its associated industries.  A WTO farm deal 
could enable the region to make the most of its advantages in 
cotton and livestock.  AGOA could provide incentives for 
investors to help overhaul the textile factory and perhaps 
build up other export industries as well.  But promoting cash 
crops and rural development cannot happen without fundamental 
reforms and investments within Chad. Oil revenues, if managed 
well, can help with necessary resources.  So can support from 
 
 
well-targeted foreign assistance.  The region is facing 
intensifying environmental pressures and social strains 
described in reftel.  Managing them will require improving 
livelihoods of the millions of people who make their living 
from the land there.  Prospects for such a fragile state as 
Chad depend on it. 
 
¶11.  (U)  Khartoum Minimize Considered 
 
WALL 
 
 
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