VZCZCXRO2541
PP RUEHGR
DE RUEHPO #0177/01 1212102
ZNR UUUUU ZZH
P 302102Z APR 08
FM AMEMBASSY PARAMARIBO
TO RUEHC/SECSTATE WASHDC PRIORITY 0142
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 1257

UNCLAS SECTION 01 OF 02 PARAMARIBO 000177 
 
SIPDIS 
 
STATE FOR WHA/CAR JROSHOLT 
EEB/TPP/ABT/ATP FOR JSPECK 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ETRD ECON BTIO NS
SUBJECT: RESPONSE: IMPACT OF RISING FOOD/COMMODITY PRICES - 
SURINAME 
 
REF: SECSTATE 39410 
 
PARAMARIBO 00000177  001.2 OF 002 
 
 
¶1.  (SBU)  SUMMARY:  Rising food prices, in particular of the 
Surinamese staple, rice, have received extensive play in the media, 
but did not result in public disorder or runs on foodstuffs. 
Political attention was high, with the opposition blaming the 
government, the government looking towards international conditions, 
and both sides calling for quick-fix policy solutions which would 
reduce government revenue with the intent of creating lower prices 
for consumers.  The remainder of this cable addresses selected 
topics keyed to paragraph 7 from reftel.  END SUMMARY. 
 
¶2.  (U) DEMAND:  Price increases affected all food items, whether 
locally produced or imported.  Suriname imports nearly 75 percent of 
its food.  Price increases for imported food varied depending on 
product origin.  Fifty percent of food imports came from Europe. 
Fifty percent or higher price increases of European goods were due 
to increased food prices in Europe, the devaluation of the 
Surinamese Dollar (SRD) vis-`-vis the Euro, and increased 
transportation costs due to the price of fuel.  (Note:  The SRD is 
linked to the U.S. dollar for foreign exchange.  End Note.) 
U.S.-origin goods increased in price, but more modestly since the 
exchange rate was stable and because of the closer proximity of the 
countries. 
 
¶3. (SBU) SUPPLY:  Rice is Suriname's most important agricultural 
commodity.  Rice is locally produced.  As of March 2008, the supply 
was double that of local demand; despite this, the price of rice had 
increased by approximately 100 percent.  This was predicted by rice 
producers and exporters, according to a local banker in Nickerie in 
January 2008.  Producers attributed the price increase to an 
anticipated world-wide shortage of rice due to Asian crises and the 
shift of many growers world-wide to biofuel commodities.  Sector 
stakeholders agreed that lucrative rice prices in neighboring Guyana 
and French Guiana, which are both reporting rice shortages, resulted 
in Suriname prices skyrocketing.  The bulk of Suriname rice exports 
have traditionally gone to Jamaica and Haiti, with a small portion 
exported to Europe.  World demand for cargo rice as animal feed, due 
to the high world market price of corn, was another factor cited. 
Distributors told us they have not noticed any significant changes 
in their sales figures, and in a conversation with Post a local 
businessman shrugged off shortage fears by saying "every Hindustani 
is keeping two barrels full of rice in his house."  (Note:  Keeping 
this amount of rice at home is normal practice for Hindustanis and 
should not be confused with stockpiling due to the price increase. 
End Note.)  The rice industry has 55,000 tons of rice in stock and 
has calculated the maximum local need through August 2008 will be 
only 20,000 tons.  This leaves over half the rice currently in stock 
for the export market.  The percentages of the rice crop going 
toward local or export markets remained the same as in past, the 
difference is the rice industry received higher profits due to the 
high value of rice on the international markets.  However, local 
officials and producers are discussing how to maintain social and 
economic stability in light of high prices.  Surinamese rice growers 
and distributors/exporters advised the government to implement 
export regulations on rice in order to maintain a stable local 
market until the September harvest.  This is to maintain an optimal 
market situation, and not to prevent shortages, however. 
 
¶4.  (SBU) POLITICAL AND ECONOMIC IMPACT:  Loud calls were made for 
the government to step to the plate and take concrete action. 
Employers called on the government to stop hiding behind the 
international market as the cause of the problem.  Opposition 
members voiced dismay of the government's handling of the situation. 
 Although Suriname was fortunate not to have any protests or 
violence stemming from this food price crisis, labor unions used the 
rising food prices and ever increasing inflation to demand higher 
wages, transport subsidies, and other assistance packages.  Unions 
representing civil servants called for wage increases of between 10 
and 22 percent. (Note: The 12-month inflation for March hit double 
digits at 13.8 percent.  End Note.) The Governor of the Central Bank 
of Suriname stepped in and advised employers, both private and 
government, not to implement any excessive wage increases that might 
fuel the inflationary pressures on the economy.  He advised only 
wage increases that could be matched by increases in production and 
exports of natural resources.  The government responded to the 
public's demands with an array of short-term initiatives and 
quick-fixes to put money back in the hands of consumers (see 
paragraphs 6 and 7). 
 
¶5.  (U) ENVIRONMENTAL IMPACT:  Increased food prices did not 
discernibly impact Suriname's environment. 
 
¶6.  (U) GOVERNMENT POLICY RESPONSE - REGIONAL:  Through statements 
made by Vice President Ram Sardjoe, the government acknowledged an 
economic crisis.  On a regional level, Suriname engaged CARICOM 
member states at the Heads of State meeting where all CARICOM 
 
PARAMARIBO 00000177  002.2 OF 002 
 
 
members agreed to work together to find a collective solution.  One 
suggestion at the meeting was that import duties on non-CARICOM 
goods under the Common External Tariff be lowered or temporarily 
suspended. The Government of Suriname produced a list of 48 products 
it imports from non-CARICOM sources to submit to CARICOM for 
consideration under this suggested program. 
 
¶7. (U) GOVERNMENT POLICY RESPONSE - DOMESTIC:  Political attention 
to the issue was high.  Minister of Trade and Industry Clifford 
Marica attempted to curb some of the immediate damage.  The Suriname 
government has engaged in price-setting on food staples, and in 
reaction to rising costs, the government negotiated with business to 
lower profit margins to seven percent on a list of 44 "basic" food 
staples -- to be applied to both importers and retailers.  Baby 
food, historically subsidized by the government, was slated to 
increase only slightly in price.  The government will continue to 
provide foreign exchange for these imports at a reduced exchange 
rate, as historically has always been the case.  Government 
negotiations with the Bakers' Association resulted in agreements to 
maintain current bread price levels, and bakers agreed to calculate 
bread prices (plain white roll, not specialty breads) using an 
artificially low price.  The GOS assigned a group of Ministers to 
identify problem areas and present further possible solutions, and 
President Ronald Venetiaan stated that his first priority is to 
assist low income families.  Some opposition members proposed the 
government suspend fuel taxes, currently around 1 SRD per liter, in 
order to leave more money in the hands of consumers.  Privately, two 
coalition parliamentarians told Post they also favor a reduction in 
the government take on fuel sales. 
 
¶8.  (U) IMPACT ON POST PROGRAMS:  Post has noticed no impact in its 
programs as of yet although complaints about U.S. rice growing 
policy as a "subsidy program" that works against exports have been a 
frequent, if muted, complaint when Post officers visit rural 
Nickerie, the rice-growing region of Suriname.  Most rice growers 
admitted domestic and local problems are the chief cause of 
underproduction in Suriname's local rice industry, and complained 
about U.S. policy only as an addendum.  The Speaker of the National 
Assembly was quoted in the press on April 28 as stating rising food 
prices were caused by the U.S. war in Iraq.  While the food price 
issue has received extensive play in the media, media attention has 
focused on government options more than on placing blame.  Post 
continues to monitor local media articles and editorials for 
positive or negative content regarding the United States and food 
prices, but has found little to note. 
 
SCHREIBER HUGHES