VZCZCXYZ0008
RR RUEHWEB

DE RUEHAM #1616/01 1491057
ZNR UUUUU ZZH
R 281057Z MAY 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 2746
INFO RUEHEG/AMEMBASSY CAIRO 3674
RUEHDM/AMEMBASSY DAMASCUS 3898
RUEHKH/AMEMBASSY KHARTOUM 0030
RUEHRC/USDA FAS WASHDC

UNCLAS AMMAN 001616 
 
SENSITIVE 
SIPDIS 
 
CAIRO FOR FAS AGMINCOUNS PKURZ 
DAMASCUS FOR AG SPECIALIST DALATI 
FAS FOR OFFICE OF GLOBAL ANALYSIS 
FAS FOR OFFICE OF TRADE PROGRAMS 
 
E.O. 12958: N/A 
TAGS: EAGR EFIN JO
SUBJECT: JORDAN TESTING A RANGE OF PROGRAMS TO PROVIDE MORE ANIMAL 
FEED AS IT MOVES TO CUT SUBSIDIES 
 
REF: A) Amman 1612 
      B) Amman 1034 
     C) Amman 816 
      D) Amman 409 
      E) 07 Amman 3584 
 
¶1. (SBU) Summary: Jordan's current animal feed subsidy program is 
based on an inaccurate count of sheep and goats, and consumes a 
steadily increasing share of the Government of Jordan's (GOJ) 
budget.  An animal tagging project is expected to decrease the 
fodder subsidy by USD 87 million.  As it moves to cut subsidy costs, 
the GOJ also seeks to increase domestic production of wheat and 
barley.  A plan submitted to the cabinet would set aside 100,000 
hectares of arable land, increase irrigation, and provide farmers 
with cash and improved seed stocks.  Challenges to full 
implementation of the plan include: drought, dropping groundwater 
levels, a lack of identified water sources, insufficient seed 
supply, and rising fertilizer costs.  The GOJ is also revisiting a 
plan to grow fodder in Sudan in exchange for employing Sudanese 
workers, exchanging technical information with Sudan, and developing 
virgin land.  End summary. 
 
¶2. (SBU) Background: Jordan's animal feed subsidy program consumes a 
steadily increasing share of the GOJ's budget as world commodity 
prices go up.  The subsidy program is targeted at Jordan's 
resource-poor, rural population which has no income-generating 
activities other than raising livestock.  The program, however, has 
been subject to fraud, and the GOJ has made several unsuccessful 
attempts to get out of the subsidy business.  The current subsidy 
system is based on an animal census.  The most recent census, which 
was met with skepticism from the media, was conducted in late 2007 
(Ref E).  The GOJ has since launched an animal tagging project for 
ruminants (sheep and goats) and the expected result is three million 
head, much fewer than the six million on which the subsidy plan is 
now based (Ref C).  End background. 
 
Animal Census to Cut Subsidy Costs by USD 87 Million 
--------------------------------------------- ------ 
 
¶3. (U) Amjad Darwish, director of the animal tagging project, told 
FAS Officer that the GOJ could save half of its feed subsidy costs 
by using the results of his project's census.  Each animal now 
receives 120 kg of subsidized feed each year, and the GOJ budgets 
for a maximum of 360,000 tons of subsidized barley at a rate of USD 
242/ton.  If subsidy beneficiaries were targeted more accurately, 
the projected savings would be USD 87 million.  Collateral benefits 
of the tagging project include more efficient allocation of services 
to areas with high animal populations, and improved methods for 
tracking animals resulting in better animal health and enhanced food 
safety measures. 
 
¶4. (U) Muhanned Ghesh, Ministry of Industry and Trade (MOIT) 
Director of Tenders and Financial Affairs, commented to FAS Officer 
that the revised census would also help to keep the subsidy for 
barley under control.  He stressed, however, his concerns about 
leakage of subsidized wheat into the feed industry (Ref B).  Ghesh 
also said that in addition to changes resulting from the census, a 
new subsidy policy for wheat and barley, both traded by MOIT, would 
be implemented in order to close the gaps in the current policy. 
 
Efforts Underway to Increase Local Fodder Production 
--------------------------------------------- ------- 
 
¶5. (U) As an additional cost-saving measure, Jordan seeks to 
increase local production of animal feed.  Jordan's average 
consumption of wheat and barley is 700,000 tons each, of which 
Jordanian farmlands produce less than 4 percent.  It is estimated 
that Jordan needs to grow 0.4 million hectares to meet its current 
needs of wheat and barely.  To address this need, Abdallah Al 
Sheshani, Ministry of Agriculture (MOA) Director of the Private 
Sector, told FASOff that the MOA has submitted a comprehensive plan 
to the cabinet to explore the potential and feasibility of growing 
in various areas of Jordan up to 100,000 hectares of wheat and 
barley.  One identified growing area receives an average annual 
precipitation of at least 200 mm (8 inches), sufficient rainfall for 
barley production.  The plan calls for seeding 60,000 hectares in 
that area during the upcoming October to mid-November sowing season. 
 Farmers would be given USD 70 per hectare as well as improved 
seeds.  The Agriculture Minister has already launched phase one of 
this project to grow 3,000 hectares of wheat in southern Jordan. 
Since wheat production requires more water than barley, he further 
explained to the media that the necessary licenses have been 
obtained and artesian wells are being dug to provide irrigation. 
 
 
¶6. (SBU) This ambitious plan, however, faces a number of challenges. 
 The proposal submitted to the cabinet is only financially feasible 
if the current soaring prices for agricultural products are 
sustained.  There has been no apparent discussion of the potential 
effects of fodder production on fragile soil of marginal lands. 
Additionally, there is a seed shortage in Jordan, and Syria declined 
an official Jordanian request to provide seeds, Ghesh reported. 
Basic fertilizer prices have also increased 500 percent (Ref A). 
Moreover, identified farming areas have been subject to a drought 
which prevented seedlings from maturing.  Groundwater levels have 
also been dropping in Jordan as twice as much groundwater is used as 
is recharged annually.  Sheshani confided to EmbOff that MOA plans 
do not include any water sources.  Growing one hectare of cereals 
could require at least 3500 cubic meters, or 350 million cubic 
meters for 100,000 hectares, a significant input from one of the 
driest countries on the globe already suffering a water deficit 
estimated at 250 million cubic meters (Ref D).  Nevertheless, 
Sheshani said plans will proceed, explaining that "desperate times 
need desperate measures." 
 
Revisiting Old Sudan Plan 
------------------------- 
 
¶7. (SBU) MOA is also re-examining a 1997 agreement with Sudan to 
address Jordan's needs.  Under the arrangement, the Sudanese 
government "gave" Jordan 160 hectares of fertile irrigated land in 
Northern Sudan, in exchange for employing Sudanese citizens, sharing 
technical information, and exploiting the vast virgin lands in the 
Sudan.  The project has been stagnant with no real investment as the 
GOJ did not have adequate resources and could not convince the 
Jordanian private sector to become involved. 
 
Visit Amman's Classified Website at 
http://www.state.sgov.gov/p/nea/amman/ 
 
HALE