US embassy cable - 05NDJAMENA329

UNCLAS  NDJAMENA 000329 
 
SIPDIS 
 
 
SENSITIVE 
 
STATE PASS USAID 
LONDON AND PARIS FOR AFRICA WATCHERS 
 
E.O. 12958: N/A 
TAGS: EAGR, EAID, ECIN, ETRD, PGOV, PHUM, PREL, SENV, CD, Political Stability, Humanitarian Operations 
SUBJECT: FALTERING CROPS AND A FRAGILE STATE:  TROUBLES ON 
THE LAND IN SOUTHERN CHAD 
 
REF: NDJAMENA 308 
 
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Summary 
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1.  (SBU)  Cash crops and the industries based on them should 
be thriving in southern Chad, the wettest, greenest part of 
this drought-prone country.  Cotton, textiles, and sugar had 
at one time been sources of prosperity for millions in the 
region.  But now cotton production is stagnant, and the 
marketing parastatal is bankrupt.  The once vibrant textile 
factory is shuttered.  The sugar industry is struggling to 
surmount high costs, water shortages, and competition from 
smugglers.  Ways must be found to revive commercial 
agriculture and promote rural development in this region. 
Chad's hopes of withstanding pressures that have shaken other 
fragile states depend on it.  End Summary. 
 
2.  (U)  The Ambassador traveled to southern Chad over 
February 8-15.  The sketches presented in reftel portray a 
region strained by rising claims on its pastures, soil, and 
water.  The impressions captured here bring to light the many 
problems facing its main agricultural sectors. 
 
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Cotton 
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3.  (U)  Heading into the hottest, driest time of year, the 
cotton crop is mostly in.  Fluffy white mounds are piled up 
in the middle of dozens of villages along the road between 
Moundou and Sarh.  They are waiting for trucks from 
Cotontchad, the state parastatal, to gather them up and take 
them to the cotton ginning plants.  What happens to the 
sector is a matter of life and death to the region, officials 
in Moundou told us.  Three million people depend on cotton 
directly or indirectly, they say. 
 
4.  (U)  If so, the outlook is bleak.  Chad used to be 
Africa's biggest cotton producer.  Production has suffered in 
recent years from mismanagement, low yields, inadequate 
inputs, poor or nonexistent secondary roads, and high 
transportation costs to the nearest ports hundreds of miles 
away.  This year, farmers responded to high price guarantees 
by throwing their meager resources into cotton and neglecting 
millet, sorghum, and other staple crops.  Food prices have 
soared in the local markets.  Food shortages are looming, and 
farmers have yet to be paid for their cotton, according to 
several local officials we met. 
 
5.  (SBU)  Meanwhile, Cotontchad, the only authorized buyer, 
is effectively bankrupt.  Bankers are refusing to advance it 
more funds.  The Chadian government has accepted the 
conclusion of a recent World Bank study and signed off on a 
plan to privatize Cotontchad no later than mid 2007.  Still, 
the question of how to pay for this year's crop remains.  One 
option is a one-shot deal to draw on Chad's new oil revenues. 
 Cotontchad's officials in their meeting with us pleaded for 
unilateral action to cut U.S. cotton subsidies.  Encouraged 
by the Ambassador to support a global subsidy-cutting package 
in Geneva, they argued instead that all of Africa would 
salute the United States, if it took such moves on its own. 
 
 
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Textiles 
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6.  (U)  Salvaging Chad's cotton sector will require action 
 
 
within Chad to privatize Cotontchad as well as improve 
extension services and transport infrastructure.  But part of 
the solution too lies in processing cotton domestically and 
avoiding the expensive transportation routes for raw cotton 
through Cameroon.  The apparatus for doing so used to exist 
on the outskirts of Sarh.  In its heyday the factory had 
capacity for spinning, weaving, dyeing, and stitching.  The 
boarded-up remnants of Compagnie Textile (Cotex) still stand 
north of town on the banks of the Chari River, but the 
buildings are vacant.  Its machinery, some dating back to the 
early 1960's, last ran in the late nineties when the 
parastatal company had to close down. 
 
7.  (SBU)  A group of private Chadian investors has taken 
over.  They have grand plans for the factory's revival.  They 
are counting on a Dutch partner to help jump-start the 
project.  They hope imminent approval of Chad's textile visa 
under AGOA will free up access to the U.S. market.  Perhaps a 
better bet than aiming for a fully integrated textile 
operation would be focusing on restoring the plants' spinning 
capacity.  This would enable Chad to process its own 
high-quality raw cotton and supply yarn to other African 
garment-makers who are not eligible for or who are about to 
lose their third-country fabric preferences under AGOA. 
Indian representatives in N'Djamena have spoken with us about 
a proposed credit from the Indian Government for this 
purpose.  Taiwan, with whom Chad has diplomatic relations, 
has invested in such ventures in other African countries as 
well. 
 
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Sugar 
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8.  (U)  Unlike cotton, which is produced entirely by small 
farmers, Chad's sugar is grown on large estates owned by 
Compagnie Sucriere du Tchad, a recently privatized company. 
AIG's African Infrastructure Fund is among the owners.  The 
company's cane fields stretch for miles along the Chari River 
to the south of Sarh.  At night blocks as big as several 
football fields are set on fire.  The charred stalks are 
collected in mounds during the night and carried to the 
processing plant the next day.  1700 metric tons of cane are 
crushed each day to make granulated sugar, sugar cubes, and 
the hard sugar cones the desert nomads use to sweeten their 
tea. 
 
9.  (SBU)  But even this sector is in trouble.  The company 
cannot compete with sugar they say is dumped on world markets 
by Brazil, processed in Nigeria, and carried by smugglers 
through Cameroon.  High costs, the company's executives say, 
are incurred by having to pump water from the Chari River 
into the spindly irrigation pipes that extend overhead for 
nearly a kilometer over the fields.  In many sections the 
company is gradually installing underground black plastic 
tubes that will allow water to seep directly into the roots. 
Its managers hope this more efficient Israeli technology will 
lower costs and reduce losses from evaporation. 
 
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Comment 
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10.  (SBU)  High hopes are pinned on oil revenues now flowing 
from the ExxonMobil-led project near Doba in southern Chad. 
But oil will never provide livelihoods for as many people as 
agriculture and its associated industries.  A WTO farm deal 
could enable the region to make the most of its advantages in 
cotton and livestock.  AGOA could provide incentives for 
investors to help overhaul the textile factory and perhaps 
 
 
build up other export industries as well.  But promoting cash 
crops and rural development cannot happen without fundamental 
reforms and investments within Chad.  Oil revenues, if 
managed well, can help with necessary resources.  So can 
support from well-targeted foreign assistance.  The region is 
facing intensifying environmental pressures and social 
strains described in reftel.  Managing them will require 
improving livelihoods of the millions of people who make 
their living from the land there.  Prospects for such a 
fragile state as Chad depend on it. 
 
11.  (U)  Khartoum Minimize Considered 
WALL 
 
 
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