US embassy cable - 05MAPUTO1101

UNCLAS SECTION 01 OF 02 MAPUTO 001101 
 
SIPDIS 
STATE FOR AF/S - TREGER 
USDA/FAS/EXPORT CREDITS FOR MARY CHAMBLISS, DEPUTY 
ADMINISTRATOR 
USDA/FAS/EXPORT CREDITS FOR RON CROUSHORN, DIRECTOR, 
PROGRAMMING DIVISION 
PRETORIA FOR AGRICULTURAL ATTACHE - RBICKFORD 
USDOC FOR RTELCHIN 
E.O. 12958: N/A 
TAGS: EAGR, EAID, MZ, ETRD, Title 1, Commerce 
SUBJECT: MOZAMBIQUE - REQUEST FOR FY06 USDA FOOD AID 
THROUGH PL 480, TITLE I AND FOOD FOR PROGRESS 
 
REF: STATE 139203 
 
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REQUEST JUSTIFICATION 
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1. Although Mozambique still remains one of the poorest 
countries in Africa, its government has been successful in 
encouraging economic growth, attracting foreign investment 
and revitalizing several industries destroyed by the 16-year 
civil war. In spite of the recent growth, Mozambique still 
maintains a difficult and bureaucratic business environment 
that tends to raise costs for established businesses and acts 
as a disincentive for new investment. The Government of 
Mozambique (GRM) is responding to these challenges by 
reviewing and revising legislation and policies related to a 
variety of business-related issues such as registration, 
labor, land titling and ownership, telecommunications and 
trade. These efforts are often complicated by lack of 
technically qualified personnel and entrenched special 
interests. The Ministry of Industry and Commerce (MIC) and 
its partners are developing programs to address these issues 
in a rational manner, with the goal of increasing jobs and 
investment and reducing poverty. 
 
2. The recent National Assessment of Poverty and Well-being 
in Mozambique, conducted by the Ministry of Planning and 
Finance, indicated that 60 percent of the population still 
lives in poverty. With these levels of poverty, improvements 
in the standards of living of the poor remain a central 
policy objective for the GRM. In this context Title I is an 
important economic tool to help Mozambique achieve its goals 
through a government-to-government food donation and, in 
turn, by using the proceeds from sold commodities to improve 
the business environment. Receipt of Title I food 
commodities will bolster Mozambique's potential to develop 
its commercial markets, as the country undertakes measures to 
improve food security and agricultural development. Despite 
progress in increasing agricultural production, Mozambique 
still has areas of food insecurity and, as the World Food 
Programme indicates, one third of the population is 
classified as chronically food insecure. 
 
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VALUE AND TYPE OF COMMODITY REQUESTED 
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3. Mission requests funding for PL 480 Title I-funded Food 
for Progress grants of agricultural commodities, specifically 
$5.0 million of crude soybean oil. 
 
4. Title I sales of this commodity to Mozambique would not 
disrupt normal world commercial trade. 
 
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DESCRIPTION OF USE OF PROCEEDS 
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5. This request is a follow-on to support and complement 
continuing activities that were partially funded by FY 2005 
Title I program in Mozambique. 
 
6. Title I commodities will be sold by MIC. The government 
will use proceeds from the sale of the soybean oil for 
programs that will increase labor intensive exports by 1) 
increasing the capacity of the government and private sector 
in negotiating, and utilizing, trade agreements, 2) improving 
the business environment by reducing bureaucratic red tape 
through policy and regulatory interventions, and 3) offering 
focused education and training programs on economics, trade, 
and agriculture. These GRM efforts will reinforce U.S. 
interests in making AGOA and the recently signed TIFA more 
effective. 
 
7. Approximately ten percent of proceeds will be used to 
finance scholarship opportunities under USDA's Borlaug 
Fellows Program. This program provides short-term scientific 
training for international research scientists and policy 
makers. The areas of training can be in any 
agriculture-related field, and include areas such as 
agronomy, plant pathology, entomology, veterinary sciences, 
microbiology, and agricultural economics. The training areas 
may also include areas such as food safety, sanitary and 
phytosanitary topics, environmental sciences, agricultural 
biotechnology, global climate change, water quality and 
management, among others. 
 
8. The GRM has demonstrated great interest in the 
continuation of the current activities via an FY06 Title 
I-funded Food for Progress program. Mission urges approval 
of this request, which we believe will program resources in a 
concerted and coordinated manner with other USG initiatives 
in support of expanding free enterprise in the agricultural 
sector. 
 
9. This request has been coordinated with FAS Pretoria. 
La Lime