US embassy cable - 04ROME2969

UNCLAS  ROME 002969 
 
SIPDIS 
 
 
FROM U.S. MISSION TO THE UN AGENCIES IN ROME 
 
AMEMBASSY BEIJING FOR AMBASSADOR RANDT 
USDA/FAS BEIJING FOR MINISTER COUNSELOR MAURICE HOUSE 
STATE FOR IO A/S HOLMES, EAP/CM 
USDA/FAS FOR U/S PENN AND MARY CHAMBLISS 
USAID FOR DAA/DCHA GRIGSBY 
NSC FOR JMELINE 
 
E.O. 12958: N/A 
TAGS: EAID, AORC, PREF, EAGR, CH, WFP, UN 
SUBJECT: WFP SCHOOL MILK PROPOSAL FOR CHINA 
 
 
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Summary 
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1. WFP plans to phase out its operations in China at the end 
of 2005, and remains hopeful that China will become a major 
food aid contributor in the future. In 2001, WFP approached 
USDA related to a one-time 100,000 metric ton donation of 
Dry Skimmed Milk powder to support Chinese school feeding 
efforts in Western China 2002-2007. In 2003, a request for 
10,000 mts of milk powder was made, again to support school 
feeding. The requests were turned down due to inability to 
find funding to pay support costs on a development project. 
In Mission's view, as we enter the "home stretch" on WFP 
efforts in China, school feeding may be a good legacy to 
leave behind. End summary. 
 
 
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Background 
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2.  While China has achieved remarkable economic growth over 
the  past  two decades, wide regional disparities in  income 
and  living  standards  persist,  leaving  the  central  and 
western  provinces  significantly poorer  than  the  coastal 
regions.  There still remain an estimated 100  million  poor 
people  in  China living on less than US $1  dollar  a  day. 
Poverty  is  most  acute  in remote and  mountainous  areas, 
predominantly populated by ethnic minorities. 
 
3. WFP is presently operating its CY 2001-2005 Country 
Program (CP), which the Executive Board approved in February 
2001. The main objectives of the CP are: 
 
-Focus on food-insecure minority communities in China's 
western provinces; 
-Integration of targeting and M&E (monitoring and 
evaluation) to demonstrate results of food assistance; 
-Focus on activities which contribute to closing the gender 
gap; 
-Move away from large-scale agricultural sector 
infrastructure works in favor of investment in human 
capacity (training, education) and asset creation under 
community or individual control; 
-In view of a gradual phase out of development assistance: 
increase GOC contributions to WFP - transfer food assistance 
capacity and approaches to the Government of China (GOC). 
 
4. WFP's activities in China are aimed to bring about 
sustainable improvements in food-security to some 5.2 
million of the poorest people in the country. The 
corresponding WFP food requirement over the five-year period 
amounts to 546,000 MT of wheat, valued at US$86 million. 
After three-and-one-half years of operations the program is 
resourced at 197,145 mts (none from the United States), 36 
percent. 
 
5. In view of the serious resourcing shortfall of its 
Country Program, WFP has renewed its request for a 
contribution of 10,000 MT of Dry Skimmed Milk powder (DSM) 
for its activities in China. After discussion with 
Government of China (GOC), it is suggested that the DSM be 
exchanged for wheat to be released from GOC stocks and made 
available to WFP CP activities. The milk powder itself would 
be used in the school feeding effort. Exchange mechanisms 
with wheat from GOC warehouses in the project areas have 
been successfully carried-out in the past. Its main 
advantage is that it reduces the internal transport and 
handling costs, which are borne by the GOC. Based on the 
ratio of WFP cost for the two commodities, the GOC will make 
available 200,000 MT of standard quality wheat in exchange 
for 10,000 MT of DSM. The GOC also agrees to bear the cost 
of ocean freight as well as all costs related to the 
internal transportation of the wheat equivalent to the final 
distribution point. 
 
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Comment from Ambassador Hall 
 
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6. I would like to see China become a major donor to WFP. A 
timely U.S. donation of milk powder is a win-win 
proposition, especially given China's offer to pay for the 
transportation costs. It will help WFP garner more commodity 
support for its Country Program, thus helping WFP to leave 
China at the end of 2005 on the high note that it met its 
commitments. This in turn will engender an excellent climate- 
of-opinion in WFP's dialogue with China becoming a major 
donor in the future. Hall 
 
 
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 2004ROME02969 - Classification: UNCLASSIFIED