VZCZCXYZ0000
RR RUEHWEB

DE RUEHAM #3584 2390326
ZNR UUUUU ZZH
R 270326Z AUG 07
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 0119
INFO RUEHRC/USDA FAS WASHDC
RUEHEG/AMEMBASSY CAIRO 3354
RUEHLB/AMEMBASSY BEIRUT 2701
RUEHRH/AMEMBASSY RIYADH 1831
RUEHDM/AMEMBASSY DAMASCUS 3691
RUEHTV/AMEMBASSY TEL AVIV 0744
RUEHJM/AMCONSUL JERUSALEM 4598
RUEHGB/AMEMBASSY BAGHDAD 5463

UNCLAS AMMAN 003584 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA 
FAS FOR OFFICE OF TRADE PROGRAMS AND OFFICE OF GLOBAL ANALYSIS 
CAIRO FOR FAS AGMINCOUNS PKURZ 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD EFIN PGOV SOCI JO
SUBJECT: JORDAN'S FEED SUBSIDY PROGRAM:  ANIMAL CENSUS IS FIRST STEP 
IN PHASING OUT THE PROGRAM 
 
 
Sensitive but unclassified.  Not for internet distribution. 
 
REF:  AMMAN 3557 
 
¶1.  (SBU) The Ministry of Agriculture (MOA) recently concluded a 
livestock census, the first serious attempt since 1998 to determine 
the number of ruminants - sheep, goats, camels, and cattle - in 
Jordan.  Officials told the press the survey was part of a broader 
effort to establish the geographical distribution of livestock and 
to control the spread of disease, but the driving force was the 
increasing cost of feed, particularly barley, and the consequent 
strain feed subsidies are placing on the budget.  The one-day survey 
was conducted by 1,250 eight-member teams comprised of personnel 
from the MOA, the Jordanian Armed Forces, the Ministry of Interior, 
and representatives from local governorates at a cost of $2 million. 
 
 
¶2.  (U) The Ministry of Industry and Trade (MoIT) subsidy policy has 
been based on, and the GoJ has budgeted for, not more than 3 million 
heads of livestock.  In practice, farmers, mostly semi-nomadic 
herders who must present a certificate to receive subsidized grain, 
often falsify their claims to limit their personal expenses and 
increase the amount of subsidized feed received, resulting in a 
skewed livestock population count.  Census results revealed a count 
of approximately 4.2 million ruminant animals. 
 
¶3.  (SBU) Regardless of the actual head count, any increase over the 
budgeted amount represents a fiscal challenge for the GOJ.  Jordan 
imports the bulk of its barely consumption, expected to reach 
850,000 MT in 2007; only 35,000 MT is produced locally.  The most 
recent barely tender awarded was priced at $340 per MT, which the 
GOJ subsidizes at $200 per MT.  The high cost of barley triggered 
concern about the effect of the subsidy policy on a budget already 
burdened by rising oil prices.  NOTE:  See reftel regarding Jordan's 
fuel subsidies and the recent resignation of the Deputy Prime 
Minister/Finance Minister over a decision not to raise fuel prices. 
END NOTE.  The cost of the GOJ's direct barley subsidy increased 
from $40 million in 2002 to $85 million in 2006.  Absent immediate 
change, the 2007 subsidy cost is expected to exceed $160 million, an 
amount which is "killing the budget," according to MoIT Secretary 
General Montasser Okla.  In addition to barley, the GOJ also 
subsidizes wheat bran at an annual cost of approximately $13 
million. 
 
¶4.  (SBU) Not all of the budget increase is due to underestimating 
the size of livestock herds.  Okla claimed that farmers from 
neighboring countries send their livestock to feed in Jordan.  He 
also reported that because of the Jordan's cheap barley prices, much 
of the grain is smuggled out of the country or used to supplement 
liberalized feed, such as corn, given to other animals.  In his 
assessment, 40 percent of the subsidized barley was being squandered 
through waste, illegal trade, or employee graft.  Rather than 
completely eliminating the subsidy program, he favored tighter 
controls, or switching to a subsidy for livestock feed that contains 
other, more economical grains or grain derivatives, and less barley. 
 Okla also requested U.S. assistance in identifying scientifically 
proven, more efficient feed formulas. 
 
¶4.  (SBU)  COMMENT:  Rising prices have made the GOJ aware that its 
subsidy policy is not sustainable, especially for an agriculture 
sector that contributes only $274 million -less than 3 percent - to 
GDP.  There is apprehension about changing course in an election 
year, but several senior officials are convinced change is both 
necessary and imminent.  Dr. Hamad Kasasbeh, Finance Ministry 
Secretary General, told EconCouns the Cabinet was expected to make a 
 
SIPDIS 
decision in the coming weeks to phase out the agricultural feed 
subsidy, opting for cash transfers to, or the creation of a 
"national safety net" for, the most needy farmers.  Foreign Minister 
Abdulillah al-Khatib also predicted the end of the subsidy policy. 
Nevertheless, the decision not to raise fuel price and the resulting 
August 21st resignation of Deputy Prime Minister/Finance Miniser 
Ziad Fariz calls into question the GOJ's willingness to risk highly 
unpopular moves among Jordan's vulnerable classes when elections are 
just around the corner. 
 
Visit Amman's Classified Web Site at 
http://www.state.sgov.gov/p/nea/amman 
 
HALE