VZCZCXYZ0041
PP RUEHWEB

DE RUEHYN #2070/01 2011301
ZNR UUUUU ZZH
P 201301Z JUL 06
FM AMEMBASSY SANAA
TO RUEHRC/USDA FAS WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 4703

UNCLAS SANAA 002070 
 
SIPDIS 
 
SIPDIS 
 
USDA - PASS TO USDA/FAS/EXPORT CREDITS FOR ROBIN TILSWORTH, 
ACTING DEPUTY ADMINISTRATOR AND USDA/FAS/EXPORT CREDITS FOR 
RON CROUSHORN, DIRECTOR, PROGRAMMING DIVISION. 
 
E.O. 12958: N/A 
TAGS: EAGR EAID YM
SUBJECT: YEMEN REQUEST FOR FY07 COMMODITIES DONATION UNDER 
THE FOOD FOR PROGRESS PROGRAM 
 
REF: SECSTATE 99922 
 
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SUMMARY 
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1.(U)  Embassy Sanaa seeks $20 million in FY2007 Food for 
Progress commodities donations.  The commodities will be used 
for rural agricultural development program assistance geared 
to capacity building and market reform, poverty alleviation 
through micro credit financing programs, and meeting critical 
water needs through environmentally sound projects in water 
capture and irrigation. 
 
2.(U)  Yemen is a nascent democracy still in transition from 
the political and economic strife caused by the unification 
of North and South Yemen in the mid-1990s. The country is the 
poorest nation in the Middle East and is currently contending 
with explosive population growth, severe malnutrition, and a 
looming water shortage crisis. Amid these challenges, the 
Republic of Yemen Government (ROYG) has remained committed to 
establishing democratic institutions, sustainable development 
and economic reform based upon free market principles. Yemen 
is also a valued partner in USG efforts to combat terrorism. 
An FFP commodities donation is not only well deserved but an 
excellent mechanism for enhancing the image of the USG in the 
eyes of the average Yemeni.  END SUMMARY. 
 
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Yemen is an FFP Priority Country 
-------------------------------- 
 
3.(U)  Yemen is a nascent democracy still in transition from 
the political and economic strife caused by the unification 
of North and South Yemen in the mid 1990s.  The poorest 
country in the Middle East, Yemen has a per capita GDP of 
approximately $720 dollars and has one of the fastest growing 
population rates in the world at 3.2 percent.  The population 
of Yemen now stands close to 20 million and is expected to 
double within ten years. More than 75 percent of the 
population resides in rural areas and more than 50 percent of 
the children under the age of 5 are moderately to severely 
malnourished. The World Bank has declared that the water 
shortage in Yemen is an extreme crisis, citing the country's 
move toward a market-driven agriculture sector as a 
contributing factor. All of these factors combine to present 
extraordinary challenges for the agriculture sector in Yemen, 
from the Ministry of Agriculture down to the poor, rural, 
subsistence farming families.  The USDA FFP program will 
assist the ROYG in its struggle to overcome these challenges 
and enhance the image of the USG throughout Yemen, especially 
among the rural population. 
 
 
--------------------------------------------- --- 
USG Coordination with Strong Yemen Stakeholders 
--------------------------------------------- --- 
 
4.(U)  Since the beginning of the USDA food aid programs in 
1999, the Embassy has worked closely with the USDA / FAS 
offices in Washington and Cairo in order to accomplish the 
goals of the program and provide real benefits for the Yemeni 
people.  Additionally, the Embassy has identified and 
developed strong ties with Yemeni officials in the Social 
Fund for Development (SFD), the Public Works Project (PWP), 
the Ministry of Agriculture and Irrigation (MAI) and the 
Ministry of Planning and International Cooperation (MOPIC). 
True partners, these officials have demonstrated their 
commitment to the objectives of the food aid program. 
 
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Commodities Requested and Market Impact 
--------------------------------------- 
 
5.(U) Commodities Requested: Due to the critical nature of 
the situation in Yemen, Post requests $20 million dollars in 
commodities donations from the Food For Progress program; $15 
million of soft white wheat (SWW) and $5 million of wheat 
flour. 
 
6.(U) Market Impact: Due to the rocky and mountainous terrain 
and desert conditions, Yemen is not, and will never be, a 
major grain producing country. Local production of wheat in 
Yemen represents only 5.4 percent of the market, while 
imports represent more than 94 percent. The amount of wheat 
and flour imported exceeds two million tons per year. U.S. 
wheat and flour face stiff competition in the Yemen market 
from Australian and Russian commodities of lower quality. 
 
Commodity donations of wheat and flour will not impact the 
domestic production and will increase Yemeni consumers' 
exposure to U.S. wheat and flour products, thereby increasing 
demand and allowing U.S. wheat and flour exports to command a 
higher market share in Yemen. 
 
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Justification 
-------------- 
 
7.(U)  Justification:  Yemen is a designated Food For 
Progress Priority country and the ROYG deserves the continued 
support of the USG at maximum levels.  The ROYG has proven to 
be a dependable ally in the GWOT.  The ROYG devotes much of 
its own resources to those efforts while it struggles to 
achieve its equally important goals of establishing and 
strengthening democratic institutions, economic reform, 
sustainable development, and the health and welfare of its 
citizens. The USDA FFP is ideally suited to enable Post to 
assist the ROYG in those important efforts.  More 
importantly, FFP donations demonstrate the USG appreciation 
and support for the Yemeni people.  The FY07 projects have 
been selected as those most likely to enhance the image of 
the USG in the hearts and minds of Yemeni citizens while 
mitigating some of the increasing economic and social 
challenges facing the ROYG. 
 
 
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Use of Commodities 
------------------ 
 
¶8.  (U) Use of the Commodities:  The commodities requested 
will be used to fund programs with three distinct goals: 
addressing the critical water shortage, poverty alleviation 
in rural agriculture communities, and improved capacity in 
the agriculture sector. The programs will be targeted to 
improve conditions in the five poorest governorates of Yemen. 
Through international tenders, Post hopes to work with our 
Yemeni partners to fund programs designed to accomplish our 
goals as follows: 
 
 
A)  Addressing the Water Crisis:  Working with PWP, donation 
proceeds will go toward the alleviation of the water shortage 
through environmentally sound methods of water capture, 
desalination, and irrigation technology utilizing Yemen's 
great untapped renewable energy resources.  The water 
shortage in Yemen is at crisis levels.  The water table is 
currently falling at a rate of 20 feet per year and each year 
80 percent of Yemen's water is used for agriculture but less 
than 30 percent of rural residents have access to drinking 
water.  Water availability in Yemen is the lowest in the 
world, at 136 cubic meters annually per person compared to 
the world average of 7500 cubic meters per person.  The 
amount of water needed to meet food production requirements 
for self sufficiency is 1,000 cubic meters per person 
annually. Yemen is an excellent candidate for the 
exploitation and use of renewable energy technology, 
specifically wind and solar powered desalination, water 
pumping, and irrigation technologies to increase the 
availability of water. 
 
Yemen has a 2500 kilometer coastline, more than 3500 hours of 
sunlight per year and, due to the mountainous terrain 
throughout the country, natural wind tunnels with consistent 
wind speeds of 8 meters per second.  Renewable energy 
technologies are uniquely suited to provide water and 
electricity to remote areas lacking water and electricity 
infrastructures. These systems will support greater capacity 
and higher quality produce.  A collateral impact of theses 
technologies will be an ability to utilize the technology for 
rural electrification and to provide farming communities with 
clean drinking water. 
 
B)  Poverty Alleviation:  Working with SFD, donation proceeds 
will go toward poverty alleviation through rural 
micro-finance institutions and programs. The potential 
micro-credit market in Yemen is enormous and the sector is 
only in its infancy.  In Yemen, 75 percent of the population 
live in rural areas and they depend upon farming as their 
sole source of earned income.  More than 40 percent of the 
population live in poverty and less than 1 percent of Yemenis 
have banks accounts.  The micro-finance programs will provide 
loans to individuals and families.  The programs will also 
aim to increase the involvement of women in the family and 
community economies. These loans will allow small and micro 
entrepreneurs to obtain financial support for small private 
 
sector initiatives.  The programs will enable them to 
increase their income, create employment and income 
generating opportunities in their communities, and to 
stimulate local markets. The micro-finance programs funded 
will be concentrated in rural areas, financing agricultural 
activities and agricultural community businesses. 
 
C)  Increased Agriculture Trade Capacity:  Under the 
Integrated Framework for Trade Development Strategy, working 
with the Ministries of Agriculture and Trade, donation 
proceeds will go toward trade capacity building measures in 
the agricultural sector, training programs focused on 
agribusiness skills, export/import reform measures, market 
development, and market access programs in agriculture.  The 
agriculture sector in Yemen is underdeveloped. The donation 
proceeds will be used to fund development programs focused on 
agriculture trade development and market access, and training 
in rural communities to increase the agribusiness skills of 
farmers. Finally, the programs will serve to fund programs 
focused on reform measures designed to encourage and support 
greater production in the agriculture sector through 
agricultural trade capacity development measures and 
increased market access for agriculture products.  By 
partnering with Yemen on reform and training measures 
designed to increase trade development activities in the 
agriculture sector and agribusiness skills in the rural 
communities, the USG will enhance its image among the 
individual farmers and farming communities as they realize 
greater prosperity through increased capacity and market 
access. 
Khoury