VZCZCXRO5555
PP RUEHMA RUEHPA
DE RUEHNM #0446/01 1140941
ZNR UUUUU ZZH
P 230941Z APR 08
FM AMEMBASSY NIAMEY
TO RUEHC/SECSTATE WASHDC PRIORITY 4263
INFO RUEHZK/ECOWAS COLLECTIVE PRIORITY
RUEHRO/AMEMBASSY ROME PRIORITY 0263

UNCLAS SECTION 01 OF 03 NIAMEY 000446 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EEB/TPP/ABT/ATP FOR JANET SPECK; ACCRA FOR USAID;DAKAR FOR 
USAID/FFP AND OFDA; ROME FOR FODAG 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ETRD ECON PGOV PREL NG
SUBJECT: RESPONSE: IMPACT OF RISING FOOD/AGRICULTURAL 
COMMODITY PRICES -- NIGER 
 
REF: (A) STATE 3941 (B) NIAMEY 423 (C) NIAMEY 414 (D) 
 
     NIAMEY 238 
 
------------ 
Introduction 
------------ 
 
¶1. (U) As one of the poorest countries in the world, Niger 
will be among the hardest hit by rising food prices.  Post 
has reported on food developments (refs b, c, and especially 
d), and will continue to do as the situation evolves.  Much 
will depend on the fall harvest, which will in turn depend on 
the summer rains and developments in world and regional 
markets, particularly Nigeria.  Largely as a result of the 
2005 food crisis, the GON and donors have implemented 
mechanisms to monitor the food situation.  The Famine Early 
Warning System Network (FEWSNET) is monitoring regional 
developments as they relate to Niger.  Following is a 
snapshot of the current situation, keyed to ref A tasker. 
 
------ 
Demand 
------ 
 
¶2. (U) Rice is the most important staple for urban consumers, 
although wealthier consumers also eat bread.  The vast 
majority of rice and wheat is imported.  Millet and sorghum 
are the most important staples for rural consumers, who 
comprise 85 percent of the population.    Much of the millet 
and sorghum are grown locally by subsistence farmers.  Most 
of those farmers do not produce enough for their own needs 
and resort to buying food once they have exhausted their 
harvest.  In the last year, prices have increased by 23 
percent for rice, 33 percent for bread, 17 percent for 
millet, 21 percent for sorghum, 44 percent for corn and 28 
percent for cowpeas.  (Those increases are in cfa francs. 
The percentage increases would be even greater in dollar 
terms since the cfa franc is fixed against the euro, and has 
therefore appreciated against the dollar.) Urban consumers 
may respond to higher rice and bread prices by shifting 
consumption to millet and sorghum.  Some traders may be 
stockpiling cereals in anticipation of even higher prices. 
 
¶3. (U) Niger is a net importer of food.  In recent years its 
imports have averaged about 8 percent of its consumption. 
Higher fuel prices have exacerbated the effect of higher food 
prices, particularly in the more distant parts of the 
country.  A conflict which began in February 2007 has made 
the situation particularly bad in the north, and it has also 
made it more difficult to assess the situation there. 
 
------ 
Supply 
------ 
 
¶4. (U) There has been little or no supply response to higher 
prices.  Most agriculture is rain-fed, and the supply is 
therefore determined by rainfall. Most Nigerien farmers do 
not have the resources to increase production, and virtually 
all arable land is already being farmed.  While most cereals 
are grown without irrigation or fertilizer, some fruits and 
vegetable farming uses irrigation and fertilizer, and is 
therefore adversely affected by higher fuel (for pumps) and 
the doubling of fertilizer prices.  Rainfall this summer will 
determine pasturage next year, which will affect meat prices. 
 If pasturage is poor, herders will sell more cattle, 
reducing the price. 
 
¶5. (U) The market for food in Niger is driven to a large 
degree by developments in its much larger southern neighbor, 
Nigeria.  Normally Nigeria exports grain to Niger, but there 
are signs that the trade is now going the other way. 
Anything that raises prices in Nigeria will tend to pull up 
prices in Niger as well.  The governments of Burkina Faso and 
Mali have restricted exports, cutting off a normal supply of 
food.  The elimination of subsidized powdered milk imports 
from Europe has negatively affected Niger, particular the 
domestic dairy products industry and the domestic production 
of plumpynut (a food aimed at malnourished children). 
 
---------------- 
Political Impact 
---------------- 
 
¶6. (SBU) There have not been any political protests against 
rising food prices -- yet.  Higher food prices have 
contributed to demands for higher wages by the small number 
 
NIAMEY 00000446  002 OF 003 
 
 
of Nigeriens who have paid jobs.  The GON suspended for three 
months the duties on imported rice to mitigate the effect of 
higher world prices.  That suspension will probably be 
extended. Ref C provides additional detail on how the food 
situation is related to the ongoing conflict in the north, as 
well as the political and economic situation.  There are 
reports of Nigeriens in the south-central region migrating to 
Nigeria in search of food. 
 
--------------- 
Economic Impact 
--------------- 
 
¶7. (U) Given that food constitutes a large share of the 
average Nigerien's budget, the higher food prices clearly 
represent a sharp increase in the cost of living.  The GON's 
suspension of duties on imported rice has a large effect on 
the GON budget in terms of lost revenues.  Demands for higher 
civil service salaries, fueled in large part by the rising 
food prices, will also likely lead to increased government 
expenditures.  Ref B provides additional detail on the 
economic situation. 
 
-------------------- 
Environmental Impact 
-------------------- 
 
¶8. (U) There is no discernible environmental impact at this 
time. 
 
-------------------------- 
Government Policy Response 
-------------------------- 
 
¶9. (SBU) Food is a politically sensitive issue in Niger, 
particularly after the controversy over whether the 2005 food 
crisis was a "famine."  President Tandja, whose background is 
the military rather than agriculture, tends to micromanage 
food policy, down to determining soil conservation methods 
and prohibiting food for work.  The prohibition of food for 
work programs last year necessitated revisions in the PL-480 
programs, which has delayed non-emergency PL-480 food aid. 
The GON may be reluctant to admit the severity of the food 
crisis, which could delay GON and donor actions to alleviate 
the situation.  It is also reluctant to allow free food 
distribution to vulnerable groups.  The GON recently bought 
10,000 MT of imported rice that was already in the country. 
It had hoped to buy 15,000 MT, but was unable to do so 
because prices had risen from cfa 250,000/ton less than a 
year ago, to cfa 318,000/ton now.  It has urged traders to 
release food stocks.  As noted above, it has suspended duties 
on imported rice. 
 
----------------------- 
Impact on Post Programs 
----------------------- 
 
¶10. (SBU) The food situation has not affected post programs. 
It could potentially lead to demands for higher wages on the 
part of locally engaged staff and create security issues if 
there is urban unrest.  It clearly affects USG food aid 
programs.  USAID does not have a mission here; Food aid is 
handled by the Food for Peace Office in Dakar, which may be 
able to provide details. 
 
---------------- 
Policy Proposals 
---------------- 
 
¶11. (SBU) On one level, the policy response is obvious -- 
ensure adequate levels of food aid for free distribution for 
vulnerable groups.  In practice, the problem is complicated 
by uncertainty about the extent and details of the problem. 
The donor community is actively monitoring the situation, 
including updating the list of vulnerable populations.  A 
donor response may be complicated by GON reluctance to admit 
the severity of the problem and capricious decisions 
regarding the type of aid it will accept and the conditions 
for its distribution. 
 
¶12. (SBU) The Embassy specifically recommends that the USG 
treat the situation in Niger as an emergency.  Niger is 
chronically on the verge of a food crisis, and rising world 
food prices will likely push it over the edge. A poor 2008 
harvest will greatly exacerbate the situation.  Food For 
Peace should have a regular presence in Niger to follow and 
report on developments, and coordinate with the government 
 
NIAMEY 00000446  003 OF 003 
 
 
and other donors.  We recommend accelerating the delivery of 
planned non-emergency food.  Currently, call forwards for 
this assistance is planned for May, with delivery in 
September.  That lag time needs to be reduced. 
KORAN