US embassy cable - 05HANOI2220

UNCLAS SECTION 01 OF 02 HANOI 002220 
 
SIPDIS 
 
USDA FOR J.B. PENN 
USDA/FAS/EXPORT CREDITS FOR MARY CHAMBLISS, RON CROUSHOURN 
USDA/FAS/FAA FOR SEBRANEK, ALEXANDER, 
USDA/FAS/CMP/G&F FOR RIEMENSCHNEIDER,RADLER 
 
E.O. 12958:  N/A 
TAGS: EAGR, EAID, VM 
SUBJECT: POST PROPOSES FOOD FOR PROGRESS PROGRAM FOR VIETNAM 
 
 
1. Summary.  The Vietnamese Mission has concerns that 
USDA/Washington has removed Vietnam from the list of 
priority countries for its Food for Progress program.  The 
food security situation in Vietnam remains precarious and 
the country continues to make progress in introducing 
greater political and other freedoms.  Accordingly, the 
Mission proposes a $4 million Food for Progress program for 
Vietnam to be used for agricultural development, rural 
infrastructure improvements and disaster relief.  End 
Summary. 
 
2.  Despite improvements in recent years, Vietnam remains 
one of the poorest countries in Asia with a per capita 
income of well under USD 600 per person.  Levels of 
malnourishment also remain very high at over 30 percent of 
the population nationally, with certain regions facing much 
higher levels. 
 
3.  Despite Vietnam's low income and high level of 
malnourishment, USDA has indicated that Vietnam is not a 
priority country for Food for Progress because it is a net 
exporter of food and thus does not have a "food gap." 
Vietnam relies very heavily on imports of fertilizer, 
agricultural chemicals, equipment, petroleum, soybean meal 
and fish meal to exploit comparative advantages in the 
production of aquatic products and rice to achieve this 
export surplus in food commodities.  It is impossible given 
available statistics to calculate a true balance when these 
other food production imports are taken into consideration, 
but clearly they significantly reduce, if not eliminate, any 
trade surplus.  Even an incomplete analysis, not accounting 
for imports of petroleum and machinery used in agriculture, 
aquaculture and fishery shows a surplus equal to less than 1 
percent of Vietnam's food needs. 
 
4.  In fact, low per capita GDP and a large population 
competing for limited land and other resources have created 
a very precarious food security situation for Vietnam as 
clearly indicated by its high malnourishment rate.  In 
addition, the exclusion of Vietnam based on its net exporter 
status unfairly penalizes Vietnam for adopting the very 
market-driven private sector initiatives that the Food for 
Progress program is intended to encourage. 
 
5.  The Mission also questions USDA/Washington's apparent 
assessment that Vietnam has failed to make adequate efforts 
to introduce political freedom, which is another prime 
prerequisite of the program.  Although Vietnam is by no 
means a representative democracy -- it is a one-party state 
ruled by an unelected group of leaders -- it has made 
progress over the years in expanding personal freedoms, 
strengthening representative institutions and improving the 
situation for religious believers.  For example, the 
Vietnamese are now essentially free to live the lives they 
choose, reside where they wish and travel abroad. 
Furthermore, the National Assembly (Vietnam's highest 
legislative body) is increasingly playing a role as a 
"check" to Government waste and abuse.  In addition, Vietnam 
has created a new framework on religion that bans forced 
renunciations of faith and seeks to encourage heretofore 
"underground" churches to operate freely and out in the 
open.  The number of prisoners of conscience in Vietnam has 
declined significantly over the past two years.  Finally, 
Vietnam's press is increasingly able to play a watchdog 
role, identifying government waste, fraud and mismanagement 
and uncovering corruption.  While none of this makes Vietnam 
a "free" country, we believe it meets the definition of a 
country making progress in this direction. 
 
6.  Thus, although USDA/Washington has removed Vietnam from 
its priority list of countries for Food for Progress, the 
Mission believes strongly that the need for the program 
remains great and that Vietnam's current situation is quite 
consistent with the goals outlined in the Food for Progress 
legislation.  Vietnam has used past donations to great 
effect and can be expected to continue to do so for any 
future program. 
 
7.  Accordingly, the Mission proposes an approximate $4 
million program for Vietnam to be realized through 
monetization of   a 24,000 to 35,000 MT wheat shipment.  In 
accordance with with domestic needs and to support U.S. 
industry marketing efforts, the wheat shipment would be 
split between Dark Northern Sprin (minimum protein 14 
percent) and Western White (maximum protein 10.5 percent). 
Wheat is not produced in Vietnam and this shipment should 
thus not disrupt domestic agricultural production. 
 
8.  Post proposes that the proceeds from the monetization be 
used as follows: 
 
A.  Agricultural production and research.  (Approximately 62 
percent of the estimated proceeds.  Areas of focus would be: 
 
Improve systems for animal disease monitoring and control. 
The ongoing outbreak of avian influenza in Vietnam points 
out the great inadequacy of the country's current system and 
the great threat this poses not only Vietnam but the entire 
world.  Emphasis would be placed on in-country training to 
develop expertise in disease monitoring and management at 
all levels in both the private and public sector.  Money 
would also be allotted for needed equipment and to encourage 
the development of less disease-prone production systems in 
the poultry and swine sectors. 
 
Building on previous donations, work on developing 
irrigation systems in several provinces. Many provinces are 
poverty stricken and suffer from seasonal food shortages. 
This project would develop several canals to feed a series 
of smaller water networks throughout the provinces. 
 
Continue research on quick testing methods for pesticide 
residues in fruits and vegetables, and undertake a food 
survey for chemical residues in Hanoi and Ho Chi Minh City. 
As Vietnam becomes a larger producer of fruits and 
vegetables, both local and foreign consumers are demanding 
more information about chemical residues in the food. 
 
Encourage development research and support for adoption of 
biotech crops.   Vietnam is expected to soon pass 
legislation that will allow [biotech] adoption of biotech 
crops.  This will create a huge opportunity for improving 
agricultural productivity in Vietnam.  Funds will be used by 
the Center for Plant Biotechnology to advance to development 
of crops appropriate for Vietnam and to facilitate the 
commercial adoption of biotech varieties. 
 
B. Investment in rural infrastructure development for 
building and rehabilitating rural roads, primary schools, 
medical stations, electricity distribution, and drinking 
water systems (approximately 30 percent of estimated 
proceeds.) 
 
The largest share of the funds would be allocated to the 
construction of primary schools and health clinics in rural 
areas.  The key to improving the lives of rural children is 
to provide each child with the opportunity to attend school, 
and to ensure that there is a medical clinic within the 
commune or district. 
 
C.  Disaster relief primarily small grants for construction 
of housing, reforestation and other self-help local 
empowerment projects.  (Approximately 8 percent of the 
estimated proceeds.) 
 
MARINE