ISSUE 7

PURCHASE FOR PROGRESS

FEBRUARY 2013 UPDATE

ISSUE 53

FEBRUARY 2013

Technical Review Panel highlights way forward for P4P

P4P’s Technical Review Panel (TRP) held its fifth annual meeting in Rome from February 25th – 28th 2013. A group of nine external experts, the TRP provides independent guidance and advice on issues related to the implementation, monitoring and evaluation of P4P. In addition to the TRP members, staff of the P4P Coordination Unit, WFP technical units, Cornell University, the Partnership for Child Development and the African Economic Research Consortium (AERC) also participated in the meeting.

To thoroughly evaluate P4P, comprehensive impact assessments are being conducted in four of the 20 pilot countries: El Salvador, Ethiopia, Ghana and Tanzania. WFP and its technical partner AERC shared some preliminary results of the quantitative analysis and sought the TRP’s input on how to strengthen the analysis. The TRP advised that based on the data available so far, WFP and AERC should focus on describing the intermediate outcomes at this point. The full impact of the project should be documented towards the end of 2014 once the fifth year of data has been collected, cleaned and analysed. The experts also reviewed the range of case studies and reports that are or will be compiled by the pilot countries in 2013, and suggested that P4P should prioritise this information to prepare for the Final Evaluation (see box to the right).

Cost Benefit Analysis WFP plans to partner with FAO to carry out a Cost–Benefit Analysis (CBA) of P4P. Given that the impact of P4P will not be fully documented before 2014, the CBA will be based on intermediate outcomes. The TRP had the opportunity to comment on the proposed approach. It noted that while the “cost” side of P4P is relatively easy to capture, it is essential to also incorporate less tangible benefits such as the increased role of women in households and farmers’ organisations, the development of trust between members of an organisation and the establishment of quality standards.

The findings of a study currently being undertaken by Michigan State University (MSU) on the effects of WFP’s regular local and regional procurement (LRP) on local food markets will also form an important input into the CBA. Dave Tschirley presented preliminary findings of the study on behalf of MSU, which looks at the effects of WFP procurement of maize and beans in markets in Uganda, Ethiopia and Mozambique. The findings of this study will be shared widely later in the year.

Preliminary Recommendations At the end of the four-day meeting, the TRP members shared the following preliminary recommendations among others: • P4P should check the consistency of income and expenditure data through comparison with secondary sources and other welfare variables. • P4P should further refine the ‘impact pathways’ taking into account specific country contexts and P4P approaches. • In preparation for the final evaluation, P4P should prioritize key learning documents, given the broad range of materials being prepared. • P4P should review the role and membership of the TRP in preparation for the post-pilot context. The full report of the fifth TRP will be circulated in due course.

Towards the Final Evaluation of P4P

A final evaluation of the pilot phase of P4P will be undertaken between January and July 2014. Given P4P’s strong focus on learning, a wealth of both quantitative and qualitative data has been generated to date. WFP’s Office of Evaluation shared the timeline of the final evaluation with the TRP: An external service provider will start with a review of available P4P qualitative and quantitative information and the preparation of the evaluation methodology between September and December 2013. Country field visits and meetings with key stakeholders will begin in January 2014 with a final evaluation, report expected by November 2014. Internal and external reference groups will be constituted to provide input at key points in the evaluation particularly the review of the inception and draft reports. The TRP agreed to serve on the external reference group, as they did for the Mid-term Evaluation in 2011.

Inside this Issue: • Technical Review Panel highlights the way forward for P4P… page 1

• Procurement facts and figures: 2009 –2012… page 2

• Sales Beyond WFP: Experiences from Guatemala, Mozambique and Malawi… pages 3-5

• Other updates and contact information… page 6

20 P4P pilot countries • Asia: Afghanistan • Africa: DRC, Ethiopia, Ghana, Kenya, Burkina Faso, Liberia, Mali, Malawi, Mozambique, Rwanda,

Sierra Leone, South Sudan, Tanzania, Uganda, Zambia • Central America: El Salvador, Honduras, Guatemala, Nicaragua

Members of P4P’s Technical Review Panel: 1. Boaz Keizire - African Union (AU)

2. Dave Tschirley - Michigan State University (MSU)

3. Francesco Rispoli - International Fund for Agricultural Development (IFAD)

4. Marta Valdes Garcia - OXFAM (Intermon)

5. Maximo Torero – International Food Policy Research Institute (IFPRI)

6. Miguel Garcia - Inter-American Institute for Cooperation in Agriculture (IICA)

7. Riikka Rajalahti - World Bank (WB)

8. Shaun Ferris - Catholic Relief Services (CRS)

9. Shukri Ahmed - Food and Agriculture Organization (FAO)

Close to 300,000 metric tons for use in WFP food assistance programmes were contracted through P4P

Since the launch of the pilot initiative in September 2008 through 31 December 2012, WFP contracted 293,369 metric tons of commodities through P4P modalities. Contracts at a value exceeding US$113 million were signed with farmers’ organizations, small and medium-scale traders, food processors, Commodity Exchanges and Warehouse Receipt Systems in 20 P4P pilot countries. Overall, 193,207 metric tons (mt) or 66% of contracted commodities were delivered to WFP by the end of 2012. This food was not only used to provide food assistance to vulnerable people supported by WFP but also contributed to the livelihoods of P4P-assisted smallholder farmers. A total of US$77 million was put more directly into the pockets of smallholder farmers. Other highlights of the report include:

• As of December 2012, 14% of contracted commodities were still to be delivered. Contracts which have already been completed and closed amount to a total volume of 243,929 mt, of which 24% was d e f a u l t e d . D e f a u l t calculated as percentage of total quantity contracted amounts to 20%.

• Smallholder farmers have not only sold to WFP but also to other buyers. As the overarching objective of P4P is to connect smallholder farmers to markets, this is a positive effect of the pilot. P4P has initiated data collection on these sales to markets beyond WFP and is conducting a study on quality markets in the 20 pilot countries. Data analysed to date indicates sales exceeding 150,000 mt to buyers in the private sector such as millers or supermarket as well as the public sector such as schools, hospitals and prisons.

• After a decrease in procurement in 2011 due to drought in the Horn of Africa and the Sahel as well as

government intervention in grain markets, P4P contracts in 2012 have again risen significantly. Over 86,000 mt were contracted during 2012. Some 42% was contracted in Ethiopia alone, including 28,200 mt through Forward Delivery Contracts. In Malawi, WFP significantly increased its P4P purchases through the Agricultural Commodity Exchange for Africa, accounting for 15,300 mt or 18% of the total quantity contracted in 2012. During the past four years, Malawi has contracted a total of 35,455 mt through this competitive marketing platform, with 79% already delivered.

• In 2012, 38,000 mt were successfully delivered to WFP while further deliveries are on-going. The share of P4P

purchases as a percentage of total local purchases by WFP in the pilot countries increased from 9% in 2009; to 13% in 2010; down to 9% in 2011 and remained stable at 9% in 2012. However, this figure only takes delivered amounts into account and therefore excludes the Ethiopian Forward Delivery Contracts. These account for one third of the total quantity contracted in 2012 but delivery will take place in 2013.

• Maize and pulses were the two primary commodities WFP procured under P4P in 2012, making up 91% of the

total. Compared to previous years, procurement of pulses particularly increased, with over 14,000 mt contracted, which is about double the quantities procured in 2010 and 2011. This can be linked to the P4P gender strategy, as one of its means to empower women is to increase procurement of pulses which is considered a “women’s crop” in most traditional settings.

• In Afghanistan and Sierra Leone, P4P successfully increased its procurement of processed food. With over 900

mt of high-energy biscuits contracted in 2012, Afghanistan increased procurement of this specialised nutrition product to 1,800 mt in total. Sierra Leone quadrupled the procurement of cassava flour and corn-soya blend in 2012.

Click here for the finalized procurement report:

http://documents.wfp.org/stellent/groups/public/documents/reports/wfp256083.pdf

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The Experience in Guatemala In Guatemala, P4P focuses on sales beyond WFP for two reasons: to promote long-term sustainability and to provide alternative outlets for farmers’ surplus production. Since WFP in Guatemala distributes only a few thousand metric tons (mt) of food every year, the quantities it can purchase from smallholder farmers’ organizations is relatively small, as illustrated in the table below. P4P assisted Farmers’ Organizations (FOs) are located in northern and eastern regions of Guatemala as well as on the Pacific Coastal plain. A market study examined potential alternative buyers for both bulked and processed grain, including regional and national buyers such as the food industry, private traders, exporters, NGOs and the Government of Guatemala. According to information collected between 2008 through 2012, approximately a third of the P4P supported FOs have sold maize or beans to buyers beyond WFP. Of the total of 6,800 mt sold, 70% was maize (4,800 mt) and the rest beans (2,000 mt). A maize processor in Guatemala that produces tortilla flour purchased 59% of the total tonnage. The second biggest buyer was Wal-Mart, which purchased 918 mt of beans. Sales to other national supermarkets, large traders and exporters represent 11% of the total (750 mt). Some 739 mt of maize and beans were sold on local markets (local grocery stores, municipal markets and traders). Small amounts were also purchased by NGOs, FAO and other P4P supported FOs.

With support from FAO, some FOs have developed the capacity to produce seed as well as grain. This represents 1.3% of the tonnage sold, but 4.2% of the income generated through collective sales beyond WFP. Such a successful focus on higher-income options has motivated the FOs to explore other markets such as retail packaging of beans, production of red beans specific to the El Salvador market, and fresh corn on the cob. The P4P team works with the FOs to encourage sales beyond WFP. Commercialization committees are formed in the FOs and a roster of identified potential buyers in the market is shared with all. Training on effective negotiation t e c h n i q u e s a n d t h e development of business plans also begins this year.

Potential buyers are invited to

the field to see the production of the grains, post-harvest management

and quality control. This also allows them to become familiar with the

maturity of the organization, increasing the confidence of buyers in the

capacity of the FOs to establish commercial relations. This is

complemented by demonstrating tools such as the “Blue Box”1, which is

both a training tool and a field laboratory, which separates produce that

does not meet specifications. Through partnering with P4P, FOs gained

the trust of the commercial sector and confidence in their own abilities

to reach a broad range of markets.

Some Challenges…. FOs also need credit to purchase grains from their members. Processing equipment is also necessary to clean and dry the grains. Silos or warehouses are needed to store the stocks required by industrial buyers or exporters. ….Some Solutions Strategic partners such as local banks, cooperatives and projects sponsored by IFAD are identified and contacted. The FOs have been developing by-laws for credit committees to handle the demands of higher level financial requirements.

Year Commodity FO Surplus (MT)

WFP Purchase from FOs (MT)

2011 Beans 6,800 292 (4.3%)

Maize 65,600 1,640 (2.5%)

2012 Beans 7,000 350 (5.0%)

Maize 67,000 3,015 (4.5%)

Sales beyond WFP P4P aims to connect smallholder farmers to markets. Making sure that farmers and their farmers’ organisations can sell their produce not only to WFP, but also to other quality-conscious buyers is of crucial importance. This includes linking farmers to private sector buyers such as millers or supermarkets, public procurement sources such as schools prisons, hospitals and also input or service providers. In this update, we share three success stories from Guatemala, Malawi and Mozambique that show how far farmers organisations in these countries have already come in selling to markets beyond WFP.

Preparing for delivery, Escuintla, Guatemala. Copyright: WFP P4P/Sheryl Schneider

FO Surplus and WFP’s Purchase

1The ‘Blue Box’ includes a calibrated scale, a moisture meter, sieves, grain sampling equipment, an aflatoxin test kit, and

power supplies. Farmers, WFP field staff and implementing partners use it to conduct basic quality testing.

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Farmers organizations’ experience steady progression in Mozambique In Mozambique, farmers’ organizations (FOs) were created by both national government and non-governmental organizations to facilitate technical assistance in agricultural production and marketing. This was especially important in the recovery period that followed the 1992 General Peace Agreement. Most FOs gradually evolved from the village level to linking with other FOs at a district level. The district level is often represented by an ‘umbrella’ association of FOs, the tier with which P4P in Mozambique works directly. There are currently 10 such “umbrella” FOs in Mozambique participating in P4P. As of 2012, WFP has bought almost 10,000 metric tons (mt) of maize, beans and pulses from these FOs, valued at $5.8 million. Apart from selling to WFP, P4P is helping FOs to identify sustainable and fair markets for sales beyond WFP. Prior to participating in the P4P initiative, many farmers had limited or no experience in selling collectively to markets. In 2009, sales beyond WFP were only 644 mt, tripling by 2012 to 1,800 mt. The table below summarizes crops sold by all 10 FOs under P4P in Mozambique and the income generated from sales per year. P4P’s support to smallholder farmers in accessing markets for crops such as maize, beans and pulses has had a positive impact. When P4P began in 2009, soybean was the most-sold commodity by P4P supported FOs (2,480 mt). Maize was second at 926 mt, sesame third with 699 mt, followed by pigeon peas at 538 mt of sales. The possible profit margin for growing and selling maize is beginning to compete with the profits available in the soy and sesame trade, although commercial maize value remains low compared to other commodities. Buyers that are purchasing commodities from these FOs are: Soybeans: Livestock companies, NGOs, and informal traders Maize: Livestock companies, exporters, processors, wholesalers, and informal traders Pigeon Pea: Processors, millers, exporters, and energy companies Sesame: Supermarkets Peanut: Processors

The volume of products marketed in relation to the number of buyers demonstrates that the market in Mozambique is neither structured nor stable. There are often a high number of buyers intervening at the same time in more than one crop. Quality issues are often secondary for many buyers, as product availability is often considered more important. While marketing platforms still have a long way to go in Mozambique, participating in P4P has helped with sales to markets beyond WFP. The relative consistency of having WFP as a buyer and the training provided by P4P and partners has helped many FOs meet the demands needed for selling to other buyers of quality.

Year Quantity (MT) (US$)

2009 644 342,958

2010 1,176 481,737

2011 1,187 523,910

2012 1,769 1,059,667

Total 4,776 2,408,272

Women cleaning maize in Alto Molocue, Zambezia Province. Copyright: WFP P4P/Mozambique

Sales Beyond WFP: 2009-2012

The Secret of Partnership Success in Mozambique ROME—In acknowledgement of the importance of partnership in tackling global issues including the role played by the P4P partnership, the staff of the Food and Agriculture Organization (FAO), the International Fund for Agricultural Development (IFAD), and the World Food Programme (WFP) have been recognized for their outstanding work together in Mozambique. Click here to read more about the partnership: http://www.wfp.org/stories/staff-un-food-agencies-mozambique-receive-award-excellence

Malawi – How a farmers’ organization is progressing Kafulu Smallholder Farmers Organization (FO) was established in 2003. At the time of its establishment, Kafulu had two clear objectives: to achieve food security in the area and to find markets for their surplus. Currently the FO has 1,400 members (of which 500 are women) and with assistance from the National Agricultural Smallholder Farmers Association of Malawi (NASFAM), they have been able to build a warehouse. Kafulu had experience of selling maize collectively before P4P started in Malawi, however, since joining P4P they have been given the opportunity to learn the skills needed to achieve better deals with buyers. A Challenging Beginning Though Kafulu has progressed in their ability to connect to markets, the process has not been without difficulty. When the FO decided to participate in P4P it obtained credit in the 2008/2009 season, allowing them to expand their inputs loan scheme. In the 2009/2010 season, the organization again had access to credit, but faced severe problems in repayment. Loans were given to individuals and not directly to the FO and as a result, some individuals were unable to meet repayment obligations causing tensions among members. In addition, Kafulu signed a contract with WFP for the sale of 526 metric tons (mt) of maize, but was not able to deliver anything at all due to quality problems. The FO then had to sell the maize to other buyers who were not looking for high quality and they received a lower price. In spite of these difficulties, Kafulu persevered. They managed to retain most of the membership despite the credit repayment issue, and tried to sell to WFP once again. In the 2010/2011 season, Kafulu delivered 100 mt of maize to WFP, this time with no quality issues. Towards Graduation By then, Kafulu farmers saw a clear way ahead: “We want to sell to people like WFP, because they are able to get a lot of money at one time and they offer fair prices for quality produce”, stated one of the members of the Executive Committee. Although Kafulu farmers did not know then, they were completing the first step towards graduation - they had learnt how to condition their crop for higher quality standards and they had managed to aggregate at least twice. This placed them in a better position to compete with other FOs. In the 2011/2012 season, Kafulu managed to aggregate 460 mt of maize, which they deposited into the warehouse receipt system (WRS) at the beginning of the season. From this deposit, they managed to get 70 percent of the receipt value as credit, which allowed them to wait until later in the season to sell when better prices were available. Market Experience Today In February 2013, Kafulu was awarded a contract for almost 230 mt of maize from WFP. They competed directly with medium and big traders in the Malawi market. By that time, they had already sold half of their maize to other buyers, at prevailing prices of around 90 MWK/kg (USD 0.27), making a good profit and enabling them to repay the credit and fees for the warehouse. Kafulu FO still has problems with its membership stemming from past individual loan defaults and it is now dealing with the challenges of managing a WRS on its own. However, the FO has more knowledge of markets and is now prepared to engage competitively in them.

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Kafulu Farmers’ Organization—Executive Committee members. Copyright: WFP P4P/Malawi

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P4P Country Coordinators/Focal Points

Asia

Afghanistan: Djordje Vdovic <Djordje.Vdovic@wfp.org>

Regional Bureau Focal Point: Francois Buratto <Francois.Buratto@wfp.org>

Eastern, Southern & Central Africa

Democratic Republic of Congo: Francis Bere <Francis.Bere@wfp.org>

Ethiopia: Enrico Pausilli <Enrico.Pausilli@wfp.org>

Kenya: Martin Kabaluapa <Martin.Kabaluapa@wfp.org>

Malawi: Irene Del Rio <Irene.Del-Rio@wfp,org>

Mozambique: Ana Touza <Ana.Touza@wfp.org>

Rwanda: Emmanuela Mashayo <Emmanuela.Mashayo@wfp.org>

South Sudan: Marc Sauveur <Marc.Sauveur@wfp.org>

Tanzania: Marina Negroponte <Marina.Negroponte@wfp.org>

Uganda: Germain Akoubia <Germain.Akoubia@wfp.org>

Zambia: Aurore Rusiga <Aurore.Rusiga@wfp.org>

Regional Bureau Focal Point: Simon Denhere <Simon.Denhere@wfp.org>

West Africa

Burkina Faso: Veronique Sainte-Luce <Veronique.Sainte-Luce@wfp.org>

Ghana: Hassan Abdelrazig <Hassan.Abdelrazig@wfp.org>

Liberia: James Legg <James.Legg@wfp.org>

Mali: Isabelle Mballa <Isabelle.Mballa@wfp.org>

Sierra Leone: Miyuki Yamashita <Miyuki.Yamashita@wfp.org>

Regional Bureau Focal Point: Isabelle Mballa <Isabelle.Mballa@wfp.org>

Latin American & Caribbean

El Salvador: Hebert Lopez <Hebert.Lopez@wfp.org>

Guatemala: Sheryl Schneider <Sheryl.Schneider@wfp.org>

Honduras: Lenin Gradiz <Lenin.Gradiz@wfp.org>

Nicaragua: Francisco Alvarado <Francisco.Alvarado@wfp.org>

Regional Bureau Focal Point: Laura Melo <Laura.Melo@wfp.org>

The update is published by the P4P Coordination Unit in Rome, Italy. External: www.wfp.org/p4p Internal: http://go.wfp.org/web/purchaseforprogress

P4P in the News

The New Times - Rwanda has moved beyond food security: http://www.newtimes.co.rw/news/index.php?i=15272&a=64019 In order to sustain the food production that has contributed to food security in Rwanda, the government introduced a number of policies, some of them controversial. Interview with Minister of Agriculture, Dr. Agnes Kalibata

El Heraldo – P4P: Hacia un modelo hondureno de desarrollo (Honduras): http://www.elheraldo.hn/Secciones-Principales/Opinion/Columnas/P4P-Hacia-un-modelo-hondureno-de-desarrollo The challenge now is to strengthen P4P as a national development strategy and continue to help other farmers integrate into the value chain. UN News Centre – Ethiopian farming co-ops begin record food delivery to UN for national relief efforts: http://www.un.org/apps/news/story.asp?NewsID=44228%23.UTYUgzd9c24 Local farmers’ cooperatives in Ethiopia are beginning to deliver what is expected to be the largest amount of maize they ever sold to WFP.

KEY P4P CONTACTS IN ROME

P4P COORDINATION UNIT • Ken Davies, P4P Coordinator: Ken.Davies@wfp.org

• Catherine Feeney, Snr Programme Adviser,

Partnerships: Catherine.Feeney@wfp.org • Edouard Nizeyimana, Snr Programme Advisor for

Ethiopia, Kenya, Malawi, Mozambique, Rwanda, Tanzania, Uganda & Zambia: Edouard.Nizeyimana@wfp.org

• Clare Mbizule, Programme Adviser, M&E:, Learning and

Sharing: Clare.Mbizule@wfp.org

• Batamaka Some, Gender Consultant:

Batamaka.Some@wfp.org

• Tobias Bauer, Communications and Advocacy Officer:

Tobias.Bauer@wfp.org

• Bhai Thapa, Finance Officer:

Bhai.Thapa@wfp.org

• Barbara Pfister, Reports Officer:

Barbara.Pfister@wfp.org

• Judy Gicharu, Snr. Admin Assistant::

Judy.Gicharu@wfp.org PROCUREMENT DIVISION

• Shane Prigge, Food Technologist:

Shane.Prigge@wfp.org

• Brigitte Labbe, Procurement Officer:

Brigitte.Labbe@wfp.org LEGAL OFFICE

• Ariona Aubrey, Legal Officer:

Ariona.Aubrey@wfp.org

P4P within the new WFP Structure

Following the merger of WFP Programme and Policy, P4P is now within the Policy, Programme and Innovation (PPI) Division, effective February 2013. Under the new Division Director, Stanlake Samkange, the P4P Initiative will have the opportunity to interact with other parts of the Division: Resilience, Cash for Change, School Feeding, Nutrition, the Center of Excellence in Brazil and others.

Calendar

• LAC P4P Data Validation Workshop in El Salvador: March 16-18

• PAA Workshop Senegal: April 23-25

• P4P Annual Reviews: DRC, Burkina Faso and Ghana