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C O N F I D E N T I A L SECTION 01 OF 02 LA PAZ 000638 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/19/2018 
TAGS: ECON PGOV PREL FAS AGR FAO IFAD BL
SUBJECT: BOLIVIAN EXPORT BAN COULD DEVASTATE ECONOMY 
 
REF: LA PAZ 589 
 
Classified By: Acting EcoPol Chief Brian Quigley for reasons 1.4 (b), ( 
d). 
 
 
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Summary 
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¶1.  (C)  On March 19, President Morales issued a decree 
banning the exportation of four types of cooking oil. If 
maintained for any length of time, the move would destroy the 
most important sector of the economy in the opposition 
stronghold of Santa Cruz and force the withdrawal of American 
firm Archer Daniels Midland (ADM).  More than 80 percent of 
cooking oil produced in Bolivia is exported and it represents 
the third largest commodity export earner after hydrocarbons 
and mining.  The government justifies the move as a step 
against inflation and unscrupulous oligarchs who are 
exporting cooking oil instead of supplying the domestic 
market.  Reaction from the Santa Cruz producers was swift. 
They promise to fight the decree through the local Santa Cruz 
government and have announced a national congress of farmers 
and oil producers on March 25 to determine further actions. 
End Summary. 
 
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American Investment Directly Affected 
------------------------------------- 
 
¶2.  (U)  On midnight of March 19, the Bolivian government 
banned the export of both crude and refined soy and sunflower 
oils.  These products are principally exported to the Andean 
Community of Nations and represented some $200 million in 
export earnings in 2007.  Of Bolivia's total cooking oil 
production, only between 15-20 percent is consumed 
domestically.  According to the General Manager of the 
Chamber of Santa Cruz Exporters (CADEX), Oswaldo Barriga, 
around 300,000 families could be left without work and eight 
oil companies will be severely hurt by not being able to 
export the 80 percent of production left over. 
 
¶3.  (C)  For Archer Daniel Midland (ADM), one of the four 
principal producers of seed oils in Bolivia, the losses could 
mount quickly.  The General Manager, Valmor Schaffer told 
EconOff that at midnight trucks loaded for export were 
stopped at the borders (despite having been loaded before the 
ban) and ADM expects three shipping vessels in the next week. 
Schaffer estimates that paralyzed trucking will cost the 
company some $15,000 a day, while moorage costs for the ships 
will run between $30,000 to $40,000 a day.  Even greater 
losses loom if contracts are canceled.  Schaffer worries that 
with prices for oil having risen by around 20% since some 
contracts were signed a year ago, buyers may use delivery 
delays as an excuse to cancel their orders.  Losses would be 
in the millions. 
 
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The Government Justifications 
----------------------------- 
 
¶4.  (SBU)  The government has justified the ban as both a 
fight against inflation and a move against unscrupulous Santa 
Cruz businessman.  The price of cooking oil has risen by 
around 70% over the last year.  By flooding the market with 
oil previously destined for export, the government hopes to 
drive down prices.  Taking a more political stance, the 
Minister of Agriculture, Susana Rivero, justified the ban by 
saying that in 2007 oil production totaled 420,000 tons, of 
which 70,000 went to the domestic market and 350,000 was 
exported.  She claims that in only the first two months of 
2008, "the big businesses" have already sent more than 
350,000 tones out of the country and little oil will remain 
for domestic consumption.  Rivero said that "you can't allow 
 
LA PAZ 00000638  002 OF 002 
 
 
them to think first about business and not about the Bolivian 
population." 
 
¶5.  (C)  Schaffer, from ADM, did not know where the minister 
was getting her figures.  To him, they are completely false. 
Moreover, he said that each month ADM crushes enough soy for 
the domestic market in three to six days.  What are they 
supposed to do for the remainder of the month?  Gary 
Rodriguez, the general manager of the Bolivian Institute of 
Trade (IBCE) is quoted as saying that he could understand 
that that President Morales may not be aware that only 20% of 
oil production is consumed domestically, but "it is the 
responsibility of his ministers to be more in touch with 
reality."  Illustrating possible confusion (or deceit) within 
the Morales Administration itself, Schaffer additionally said 
that he was scheduled to meet with a high level trade 
official on March 24 in order to finalize agreements to 
better serve the domestic markets.  He said meetings with 
that same official earlier in the week had be amicable. 
However, the move is not out of sync with past Morales 
Administration actions that directly harm the productive 
sector (Reftel). 
 
----------------------- 
Reactions in Santa Cruz 
----------------------- 
 
¶6.  (SBU)  Six private business associations took out a half 
page ad in two national newspapers denouncing the ban and 
accusing the Movement Toward Socialism (MAS) of using the 
economy as a political weapon to hinder the autonomy 
movement.  The group assured that with these types of 
actions, the MAS government is breaking any chance of 
dialogue.  A congress of farmers, producers, and all those 
who are part of the agro industrial chain of production will 
meet on March 25 to discuss further necessary actions. 
Additionally, if the government does not rescind the ban, 
local groups promise to go to the departmental government to 
request the implementation of a new system with the power to 
guarantee the production and exportation of their products. 
 
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Comment 
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¶7.  (C)  If left in place, the export ban would be a disaster 
for the Bolivian economy in general, and catastrophic for the 
department of Santa Cruz in particular.  It is difficult to 
say exactly what the Morales Administration hopes to gain 
through this action.  It is possible that they don't truly 
understand the implications of their actions and will back 
away from the ban over the coming weeks.  What does seem 
clear though is that the ban is yet another direct act to 
both undermine the productive sector of Santa Cruz and, 
perhaps, disrupt the department's plans to hold an autonomy 
vote on May 4.  Acts of defiance against the ban are nearly 
certain if it remains in place.  How the central government 
then reacts will be critical to determining if the current 
political crisis in Bolivia remains generally peaceful or 
turns more violent. 
GOLDBERG