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RUEHLMC/MILLENNIUM CHALLENGE CORP

C O N F I D E N T I A L SECTION 01 OF 04 LA PAZ 000111 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/08/2017 
TAGS: ECON PGOV AGR FAO FAS IFAD IICA EINV BL
SUBJECT: BOLIVIAN FOOD SAFETY TAKES BACK SEAT 
 
REF: LA PAZ 3236 
 
Classified By: Acting EcoPol Chief Brian Quigley for reasons 1.4 (b) an 
d (d). 
 
 
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Summary 
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¶1.  (C)  The Bolivian Animal and Plant Health Inspection 
Service (SENASAG) is facing a funding crisis heading into the 
new year.  The termination of an Inter-American Development 
Bank (IDB) loan and an unwillingness to accept administrative 
controls mandated by the P.L. 480 program leave SENASAG 
facing a budget shortfall of over $5 million or 57% of their 
2008 budget. Currently, only 40% of SENASAG employees are 
working as the Ministry of Agriculture continues to muddle 
through with a SENASAG reorganization.  The process 
demonstrates a disregard of SENASAG's institutional 
integrity, the GOB's prioritization of political objectives 
over technical goals, regional rivalries, institutional 
incompetence, and hostility towards U.S. development 
assistance.  Meanwhile, programs designed to control 
biological threats to the food supply (including hoof and 
mouth disease) are at risk in 2008.  End Summary. 
 
------------------------------------------- 
An Incompetent Ministry Focused on Politics 
------------------------------------------- 
 
¶2.  (C)  The Ministry of Agriculture (MDRAyMA) under the 
Morales Administration often appears more focused on 
political ends than on providing competent service to its 
constituents.  A clear example is the Ministry's dealings 
with SENASAG, the Bolivian equivalent of the Animal and Plant 
Health Inspection Service (APHIS). Over the past year, it was 
clear that the agency would have financial difficulties as 
IDB funding came to a close.  Contingency plans were 
continually postponed as the Ministry voiced its desire to 
"reorganize" SENASAG. To date, no formal reorganization has 
been realized and according to Luis Carrasco, Administrative 
Specialist for APHIS, who works within SENASAG in a separate 
administrative unit (UNADE), the agency faces a budget 
shortfall of over $5 million or 57% of their 2008 budget. 
Currently, only 40% of SENASAG employees are working. 
 
¶3.  (C)  The USG is involved with SENASAG through APHIS 
employees who work directly in the agency and through 
financing from remaining Title I USDA funds (Ref. A).  Aware 
of the looming crisis, Regional Agricultural Counselor 
(Eugene Philhower, based in Lima) proposed using $800,000 
from the remaining Title I funds to fortify SENASAG, as long 
as the UNADE unit remained in place to effectively administer 
all program funding.  He thinks that UNADE control over 
finances is vital to curb the Ministry's penchant for placing 
MAS party members in an agency with easy access to small 
farmers throughout the country. Despite letters explaining 
the offer, no proposals were put forward by the Ministry 
until December 24th when P.L. 480 Secretariat Director, Juan 
Carlos Rodriguez was contacted by the Ministry.  Rather than 
calling for a P.L. 480 board meeting, the Ministry wanted to 
set up an emergency teleconference with Embassy officials in 
Lima and La Paz on December 28 to consider funding for 
SENASAG.  After that initial outreach, no additional, more 
formal proposals have been put forward. 
 
¶4.  (C)  In a January 7 meeting, SENASAG Director, Rolando 
Cazzol offered no insights as to when SENASAG reorganization 
would be complete.  Moreover, there was no plan in place to 
replace missing funding for 2008.  It also appears that 
rather than allow UNADE to continue operating with a 
transparently hired, technically competent staff, the 
Ministry would prefer a crippled SENASAG to partially operate 
 
LA PAZ 00000111  002 OF 004 
 
 
through 2008.  (NOTE:  Moreover, of the $1 million that the 
P.L. 480 board approved over a year ago for SENASAG to 
execute a Newcastle disease control program, only $46,000 has 
been spent.  When asked why these funds have yet to be 
utilized, especially considering the funding shortages, Oscar 
Sandy, Chief Administrator of SENASAG, replied that the 
strange controls imposed by UNADE prevented him from spending 
the funds.  Luis Carrasco denounced this as ridiculous to 
EconOff.  Both he and Cesar Orozco, the Veterinary Officer 
provided by APHIS, think that withholding the funds is 
strictly political.  Moreover, they say that Sandy has been 
blocking most funding for technical programs over the past 
year.  Both APHIS employees believe that Sandy will now blame 
UNADE controls for SENASAG inefficiencies and will seek to 
justify its elimination, or at least the replacement of its 
personnel. End Note.) 
 
¶5.  (C) The situation is made even more unpredictable, as the 
Minister of Agriculture, Susana Rivero, appears to be on the 
verge of being replaced.  President Morales recently 
denounced her as part of the "oligarchy" and wondered 
publicly why she was part of his government.  In practical 
terms, a new Minister would probably signify both new 
leadership at SENASAG (Cazzol is rumored to be a high school 
sweetheart of Rivero) and starting any reorganization plans 
again from scratch. 
 
------------------------------ 
IDB Observations Match Our Own 
------------------------------ 
 
¶6.  (C)  According to the Senior Multi-Sectorial Specialist 
at the IDB, Masami Yamamori, IDB administrators were 
concerned about institutional sustainablity in SENASAG due to 
constant personnel changes.  SENASAG hired around 300 
"consultants" for temporary work in 2007 and Yamamori also 
thought the Ministry was using SENASAG for MAS political 
activities.  Despite this, Yamamori said that the IDB would 
be considering funding additional SENASAG programs for 2009 
if they receive a promised formal proposal from the 
government. (NOTE:  Oscar Sandy said that IDB funding for 
2009 was 80% secure.  Curiously, Yamamori also said that a 
SENASAG proposal would have a leg up on other proposals in 
Bolivia because it has a proven track record.  The IDB has a 
$75 million quota for Bolivia in 2009. End Note). 
 
---------------------------- 
The Departments Want Control 
---------------------------- 
 
¶7.  (C)  An additional reason for SENASAG's budget shortfall 
is that the opposition departments of the 'Media Luna' 
(Tarija, Santa Cruz, Beni, and Pando) have all withdrawn 
financial support for the agency.  All are demanding a 
greater say over SENASAG activities within their departments. 
 Tarija has moved the furthest in establishing independent 
plant and animal health operations.  The prefect currently 
funds and staffs its own foot and mouth disease control 
program and just established an independent organization for 
control over fruit flies.  According to the Prefect's 
Secretary of Economic Development, Ernesto Farfan, the MAS 
 
SIPDIS 
had been using SENASAG workers for political means.  He even 
blamed the agency for organizing several blockades in Tarija. 
 He claims that the national organization could recognize the 
work of third parties in carrying out food safety programs, 
and thus give department exports national certification, but 
it is something that SENASAG leaders would be unlikely to 
concede.  Tarija will share their experiences in a January 17 
meeting in Santa Cruz where "relations with SENASAG" will be 
discussed among 'Media Luna' agricultural leaders. 
 
¶8.  (C)  Claims of abuse are not one-sided.  Oscar Sandy 
accuses the Tarija Prefecture of spreading anti-MAS 
propaganda while carrying out cattle inoculations.  APHIS 
 
LA PAZ 00000111  003 OF 004 
 
 
employees think that both claims are probably true and that 
both they and their technical work are caught uncomfortably 
in the middle. 
 
----------------------- 
Dangerous Ramifications 
----------------------- 
 
¶9.  (C) Despite the negative portrait of the situation, 
SENASAG has achieved many successes.  Carlos Covarrubias, 
APHIS Program Coordinator in Santiago, Chile described how 
since UNADE controls were placed in SENASAG seven years ago, 
Bolivia has been able to control its foot and mouth disease 
problems and effectively initiate other technical programs. 
Unfortunately, these advances are currently threatened. 
Under the Morales administration, technical work has been 
increasingly difficult to carry out (particularly since 
Minister Rivero was appointed one year ago).  The 
ramification is that Bolivia is again vulnerable to disease 
outbreaks.  The most high profile is foot and mouth disease, 
which can not only threaten beef and other agricultural 
exports from Bolivia, but can also quickly spread throughout 
the region. 
 
¶11.  (C)  It is not just beef exporters however, who will 
suffer with a dysfunctional SENASAG. For example, a program 
for the control of fruit flies was just initiated in Bolivia. 
 According to the local APHIS representative, 40%-60% of 
Bolivian fruit is lost because of fruit flies.  Ironically, 
it is not the large producers who are most affected (they 
have the money to spray), but rather all rural Bolivians with 
a fruit tree or two.  Similarly, the avian Newcastle disease, 
which can wipe out all the chickens in an infected area, 
likely won't affect large exporters who can afford to 
inoculate their birds, but rather those rural families that 
critically depend on eggs and chicken for protein in their 
diet.  These concerns for the poorest Bolivians however, have 
taken a back seat to regional conflicts and political 
agendas. 
 
¶12.  (C)  The personnel upheaval in Senasag also has 
implications for the continued sound operation of the 
Phyto-sanitary Inspection Center based in the Chapare region 
of Bolivia.  This region has received heavy U.S. assistance 
to reduce coca production and spur sustained economic 
development based on high value export crops, e.g., bananas, 
pineapples, and palm hearts.  The inspection center was 
jointly funded by USAID and the British Government and is now 
owned and managed by SENASAG.  Currently, the center is being 
operated with minimal personnel resulting in weakened 
inspection, quality control, and speed of certification. 
Even if the center is once again fully staffed with new 
personnel, the learning curve means that export processes 
will be slowed down.  Furthermore, if SENASAG is not able to 
carry out its responsibilities in controlling problems such 
as foot and mouth disease in the Chapare, this could 
seriously hurt the ability of farmers to continue to export 
from this region.  To date, USAID-funded programs have taken 
on this responsibility, but ideally and over the long term, 
SENASAG needs to provide this service. 
 
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Comment 
------- 
 
¶11.  (C)  After dialogue with SENASAG officials, it is the 
conclusion of USDA, APHIS, and Embassy officials that we must 
take a "wait and see" approach toward SENASAG funding through 
the P.L. 480 program.  While probable backsliding on plant 
and animal health control programs is regrettable, providing 
the MAS controlled agency with a blank check for 
reorganization plans is unpalatable.  Ideally the government 
will realize that the technical work is important and that 
the model suggested by the P.L. 480 board is both logical and 
 
LA PAZ 00000111  004 OF 004 
 
 
has achieved laudable advances in the area, but currently 
this positive outcome seems unlikely.  Ultimately, if the 
Morales administration truly thought that the work being done 
by SENASAG was important, it could use some of its budget 
surplus to fully fund the agency in the form of its liking, 
but that too appears unlikely. 
GOLDBERG