VZCZCXYZ0000
RR RUEHWEB

DE RUEHQT #0588 1851253
ZNR UUUUU ZZH
R 031253Z JUL 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 9078
INFO RUEHBO/AMEMBASSY BOGOTA 7635
RUEHCV/AMEMBASSY CARACAS 3093
RUEHLP/AMEMBASSY LA PAZ JUL LIMA 2683
RUEHGL/AMCONSUL GUAYAQUIL 3659
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS QUITO 000588 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR MEWENS 
 
E.O. 12958: N/A 
TAGS: ECON EINV EAGR ELAB PGOV EC
SUBJECT: ECUADOR ECON WEEKLY: RICE PRICE CONTROLS, UNEMPLOYMENT RATE 
FALLS, NEW MINISTER OF INDUSTRIES 
 
¶1.  (U) The following is a weekly economic update for Ecuador that 
reports notable developments that are not reported by individual 
cables. 
 
Rice Price Controls Supplement an Export Ban 
-------------------------------------------- 
¶2. (SBU)  On May 31, President Correa extended a September 2007 
decree to banning rice exports, in an effort to increase domestic 
supply and lower prices.  He also issued a decree mandating that the 
price for rice should be between USD 24-28 per 100 pound sack (the 
domestic market price is currently USD 28-30 per sack; producers 
reject the lower price).  According to Julio Carchi, President of 
the America Lomas Rice Association in Daule, rice producers are 
furious at the GOE's rice export ban, denying them access to the 
lucrative Colombian market where rice goes for USD 48-50 per sack. 
Some industry experts believe Ecuadorian rice producers are 
stockpiling rice in order to export it to Colombia later, creating a 
rice shortage in the domestic market and further exacerbating price 
increases.  On June 17, President Correa, the Minister of 
Agriculture Walter Poveda, and a team of advisors met with 800 rice 
producers to negotiate a compromise rice price.  To date, no 
compromise has been reached, and rice producers still reject the 
prices proposed by the GOE. 
 
Unemployment Rate Falls 
----------------------- 
¶3. (U) On June 19, the Central Bank reported an unemployment rate of 
6.9% for May, covering Ecuador's five main cities of Quito 
Guayaquil, Cuenca, Ambato and Machala.  According to Finance 
Minister Fausto Ortiz, this is much better than last March, when the 
rate reached 10.28%.  Ortiz also noted that unemployment has fallen 
since April, when the rate reached 7.93% due to major spring floods. 
 Among cities, Guayaquil has the largest unemployment rate (9.10%) 
and Ambato has the lowest (4.05%). 
 
New Minister of Industries 
-------------------------- 
¶4. (U) On June 19, President Rafael Correa dismissed Raul Sagasti as 
Minister of Industries and Competitiveness and replaced him with 
businessman Xavier Abad Vicua.  Sagasti was the last original 
member of Correa's economic cabinet. 
 
¶5.  (U) Correa said that Abad will be in charge of the management of 
a new project to supply natural gas to Cuenca.  In 2006, Abad was 
administrator of the Corporation "Much Better Ecuador," which 
promotes Ecuadorian-made products.  In 2005, he served as Executive 
President of Cuenca's Chamber of Industries.  In 2003 he was Vice 
Minister of Industries under the Lucio Gutierrez administration. 
Abad was also part of Ecuador's official negotiating team during the 
Free Trade Agreement negotiations with the United States. 
 
JEWELL