VZCZCXYZ0000
RR RUEHWEB

DE RUEHAM #2177/01 2021354
ZNR UUUUU ZZH
R 201354Z JUL 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 3163
INFO RUEHBR/AMEMBASSY BRASILIA 0025
RUEHEG/AMEMBASSY CAIRO 3728
RUEHDM/AMEMBASSY DAMASCUS 3934
RUEHRH/AMEMBASSY RIYADH 1989
RUEHTV/AMEMBASSY TEL AVIV 1267
RUEHJM/AMCONSUL JERUSALEM 5102
RUEHRC/USDA FAS WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS AMMAN 002177 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/TTP/ABT 
USDA FOR FAS, APHIS, AND FSIS  FAS FOR OFFICE OF GLOBAL ANALYSIS 
CAIRO FOR FAS AGMINCOUNS PKURZ AND APHIS ATTACHE LLOGAN 
 
E.O. 12958: N/A 
TAGS: EAGR ECON PGOV JO
SUBJECT: Jordan Takes Measures to Provide Relief to Agricultural 
Sector; Some Subsidies to Continue 
 
Refs: A) Amman 1639 
      B) Amman 1616 
       C) Amman 1392 
      D) Amman 1149 
  E) Amman 1034 
 
¶1.  (U) SUMMARY: The Ministry of Agriculture (MOA) has recently 
taken measures to provide some relief from rising costs of 
production, reduced competitiveness within the agricultural sector, 
dry local growing conditions, and the rise in global commodity 
prices (refs C and D).  These measures include tax relief for 
poultry producers, renewed efforts to boost exports, a higher barley 
subsidy, increased subsidies and guaranteed prices for grain 
producers, and subsidized loans for horticulture producers.  End 
Summary. 
 
Tax Breaks for the Poultry Sector 
--------------------------------- 
¶2.  (SBU) Jordanian households, which spend 40 percent of their 
budgets on food, have been hit hard by the global increase in food 
and commodity prices.  As a result, the Ministry of Agriculture 
(MOA) decided in May 2008 to reduce duties on all poultry meat 
imports from 20 percent to zero.  Agriculture Minister Muzahim 
Muhaisin told FASOff that the move was based on his desire to reduce 
poultry prices to an affordable level for the average Jordanian 
consumer.  Industry representatives have been harshly critical of 
the decision, contending that move has resulted in a flood of cheap 
imports (mainly from Brazil) and caused them severe losses.  They 
argue that small and medium sized producers will be driven out of 
business.  According to Hyder Amayreh, the owner and CEO of the 
Union for Agricultural Development and Slaughtering (the second 
largest poultry production plant in Jordan), "the future of the 
poultry industry is not good, and I am seriously considering selling 
my business.  I don't see how we could compete with Saudi Arabia 
given all the subsidies they receive from the government and the low 
fuel and electricity prices." 
¶3.  (SBU) Muhaisin acknowledged to FASOff that the decision to lower 
duties on imported poultry meat was not popular with the local 
poultry industry, but further explained he needed to balance the 
needs of producers and consumers.  In an attempt to mitigate the 
measure's impact, Muhaisin recently announced during a public forum 
with poultry producers that the GOJ is considering reducing or 
removing sales taxes on inputs for the poultry sector.  Lower level 
MOA officials, however, question whether the Ministry of Finance 
would agree to waive taxes on inputs for the poultry and livestock 
industries. 
 
Barley Subsidies to Continue 
---------------------------- 
 
¶4.  (U) In a separate public forum with livestock producers, 
Muhaisin stressed that the GOJ would not open the barley sector to 
market forces, and would continue to subsidize barley for sheep/goat 
producers at USD 120 million annually (ref B).  He also stressed 
that the subsidy system would better target the small and truly 
needy producers, and that the GOJ would increase the quantity of 
subsidized feed per animal that farmers can receive.  To further 
demonstrate that he was taking concrete steps to assist the sheep 
industry, the Minister also reviewed measures he had taken to resume 
sheep exports to neighboring Saudi Arabia.  He also noted that the 
GOJ would present the Lower House of Parliament a draft law to 
establish a fund to support the livestock sector. 
 
Drought Relief: Greenhouse Loans and Higher Feed Prices 
--------------------------------------------- ---------- 
 
¶5.  (U) The MOA also announced that it had allocated USD 14 million 
to provide interest-free loans to farmers to build greenhouses, in 
lieu of uncovered horticultural production in open fields.  This 
measure is intended to enhance agricultural productivity and 
minimize the evaporation of irrigation water, already at a premium 
as Jordan faces a drought (ref A). 
 
¶6.  (SBU) The dry growing conditions in 2008 have severely reduced 
grain production.  Barley and wheat production this year is 
estimated at 1,000 and 5,000 tons, respectively, well below the 
annual average of 35,000 tons for each crop.  In response, the GOJ 
recently raised the guaranteed purchase prices for barley from USD 
 
225 to USD 500 per ton, and raised the purchase price of wheat from 
USD 300 to USD 565 per ton, "this incentive package cannot grow 
spikes," criticized Ziad Shweirat, Head of MOA's Cereals Division, 
to FASOff, adding that severe drought in parts of southern Jordan 
had eradicated all production.  Note:  Guaranteed prices for both 
wheat and barley are well above prevailing world market prices.  End 
note.  The MOA also reported that a serious problem of seed 
shortages for next year's wheat and barley crops, and the GOJ was 
unsuccessful in its attempts to secure seed stock from Syria. 
 
¶7.  (SBU) Muhaisin further reported that the government subsidy for 
wheat/bread stands at USD 400 million annually (ref E).  In terms of 
producer support, he said the government will provide farmers with 
JD 50 (USD 70.60) for each hectare planted with wheat, barley or 
fodder, noting that some 35,000 hectares have been allocated for the 
Hashemite Fund for the Development of Badia in the Southern Badia 
area to grow fodder. 
 
¶8.  (SBU) Comment:  The Minister has faced sharp criticism recently 
to "do something" to relieve the dwindling profits most producers in 
the agriculture sector have experienced in recent months.  The 
measures announced represent the Minister's best efforts to provide 
support to some of his core political constituencies, while at the 
same time meeting demands to lower internal food prices. 
Unfortunately, the longstanding desire to reduce government 
intervention and to liberalize the agriculture sector has been 
overtaken by the negative effects of recent trends in global 
commodity markets. 
 
Visit Amman's Classified Web Site at 
http://www.state.sgov.gov/p/nea/amman 
 
Rubinstein