US embassy cable - 05SOFIA1565

UNCLAS  SOFIA 001565 
 
SIPDIS 
 
 
DEPT FOR EUR/NCE - W.SILKWORTH, EB/TPP/ATT 
USDA FOR FAS/EXPORT CREDITS/ M.CHAMBLISS/ 
R.CROUSHORN/ K.NAYLOR 
 
E.O. 12958: N/A 
TAGS: ECON, EAGR, EAID, BU, Floods 
SUBJECT: BULGARIA REQUEST FOR FY06 USDA PL-480 TITLE I 
FOOD FOR PROGRESS GRANT 
 
REF:  SECSTATE 139203 
 
This is a joint USDA / STATE / USAID Cable 
 
Post requests a USD 4 million PL-480 Food for Progress 
grant for FY06 to assist the agricultural sector to 
compensate farmers and other agricultural producers for 
losses caused by recent heavy flooding and to provide 
support for the spring planting in 2006.  Funds also 
will be used to develop irrigation and flood control 
systems aimed at preventing another such catastrophe as 
described in ref cables.... 
 
FAS, STATE, and USAID fully support this proposal which 
will provide 15,000 MT of Soybean Meal to the Bulgarian 
Ministry of Agriculture to implement the above 
mentioned projects. 
 
Following is the proposed Plan of Operation in the 
format requested by USDA/Export Credits. 
 
Plan of Operation,  FY2006 
 
1. Name and Address of Applicant 
 
Government of Bulgaria 
 
Contacts: 
     Brian Goggin 
     Agricultural Attache 
     Sofia Bulgaria 
     Telephone: (3592) 939-5704 
     Email: Brian.goggin@usda.gov 
 
2. Country of Donation 
 
Bulgaria 
 
3. and 4.  Kind and Quantity of Commodities Requested 
and Delivery Schedule 
 
Commodity     Use of        Quantity    Package Delivery at 
              Commodity     Metric      Size    U. S. Port 
                            Tons (MT) 
Soybean Meal  Monetization  15,000      Bulk    February 06 
 
TOTAL         Monetization  15,000      Bulk    February 06 
 
5. Program Description 
 
(a) Activity Objectives 
 
The proposed monetization program will address the need 
to increase agricultural productivity  and improve the 
competitiveness of the Bulgarian agricultural sector. 
The 15,000 MT of soybean meal will be monetized and 
local proceeds estimated at $4 million will be used to 
compensate farmers and other agricultural producers for 
losses caused by floods; to provide certified seeds for 
the spring planting in 2006; and to improve watershed 
management infrastructure such as improved dikes, dams, 
irrigation canals, retention walls, and erosion control 
in order to prevent crops and livestock losses caused 
by reoccurring floods.  The project will be managed by 
Bulgarian Ministry of Agriculture (MoA) jointly with 
FAS in-country staff. 
 
Bulgaria has many farmers who intensively cultivate 
small plots of land as their only source of income and 
sustenance.  Hundreds of thousands of these small 
farmers cultivate plots located along the flood plains 
and are therefore susceptible to heavy rains and 
flooding.  During the summer of 2005 flooding caused 
the destruction of hundreds of thousands of acres of 
cultivated land as well as displacing 70,000 
residential and public building; damaging 1,000 km of 
roadways, more than 210 critical bridges, over 165 
water pipes, demolishing 626 supporting walls, 
activating 718 landslides, as well as causing billions 
of dollars in damage. 
 
Monetized proceeds will primarily be used to compensate 
farmers for lost income and to help repair damaged 
 
small scale irrigation infrastructure and to improve 
the overall management of flood control systems.  The 
project will improve flood control infrastructure 
thereby protecting the homes, lives and livelihoods of 
thousands of low-income Bulgarian peasants.  Solutions 
will focus on simple, low-cost flood prevention and 
control infrastructure to recover lost land and to 
protect future crops from flood related damage. 
 
In addition to compensation and flood control measures, 
this project will provide support for 
distribution and purchase of certified planting seeds, 
primarily for corn and sunflower, for the spring 
planting in 2006. 
 
The proceeds from the monetization will be managed by 
the Agricultural Attache, US Embassy and the Minister 
of Agriculture or their designees.  The specific use of 
funds (such as target beneficiaries, best methods of 
flood control, selection of contractors, etc.) will be 
approved upon consensus by the Agricultural Attache and 
the Minister of Agriculture and funds will be disbursed 
only after joint signatures by representatives of both 
U.S. and Bulgarian governments. 
 
The duration of the project is 18 months following the 
monetization of the commodities. 
 
(b) Method of Choosing Beneficiaries 
 
Beneficiaries will be farmers or other agricultural 
producers who suffered the most severe damage in 
regions of Pazardjik, Plovdiv, Vratza and Pleven. 
These regions are widely known and have historically 
suffered damage during years of above average rainfall. 
The most susceptible land is owned by the most 
vulnerable populations.  Simple low-cost control and 
conservation methods will advance agricultural 
productivity and protect and maintain rural incomes. 
 
Benefiting villages and residents will be selected 
based on need, vulnerability and potential impact. 
Beneficiaries will be residents of the poorest and most 
vulnerable communities that posses the highest 
potential for a successful project intervention. 
 
(c) Program Administration 
 
The Bulgarian Ministry of Agriculture, with support and 
oversight by FAS Office, will receive and monetize the 
commodities and create a special project account for 
the funds generated from the sale of the soybean meal. 
MoA will be responsible for the overall coordination of 
the project with representatives of US Embassy, MoA, 
and office of Agricultural Attache. 
 
The Ministry of Agriculture will provide personnel 
dedicated to managing the project.  MoA staff in 
regional offices will provide logistical and technical 
support needed for implementing the project, while 
office staff in Sofia will provide clerical, financial 
and logistical support services. 
 
(d) Activity Budgets 
 
The estimated $4 million in monetized proceed will be 
used primarily to cover the compensation of farmers; to 
purchase planting seeds and plant protection chemicals 
for the spring planting and 
to cover the costs of construction materials, equipment 
and machinery.  MoA will contribute human resources 
dedicated to managing and administrating the project 
and technical resources in the area of identification 
of farmers who need compensations; and in the area of 
flood control, irrigation and crop production.  FAS 
will support the project with in-country staff that 
will coordinate and oversee implementation. 
 
All costs for this program not covered by resources 
provided by the Commodity Credit Corporation will be 
borne by the Government of Bulgaria. 
 
(e) Recipient Agency 
 
The recipient agency is the Bulgarian Ministry of 
Agriculture (MoA).  Use of all proceeds will  be 
decided by a joint decision of the  representatives of 
US Embassy, MoA, and office of Agricultural Attache. 
An attempt will be made to reach a consensus regarding 
 
 
the use and distribution of program funds, however if 
such consensus can not be reached in a reasonable 
timeframe, the US government retains the right to 
determine the use of the proceeds.  All decisions 
rQarding the use of project funds will be recoQed and 
must be approved in writing.  Funds will be disbursed 
for the special project account only with joint 
signatures from Agricultural Attache and Ministry of 
Agriculture. 
 
GOB will adhere to its laws in allocating, disbursing 
and auditing use of project funds.  The distribution 
and use of funds will also include a procurement of an 
independent professional audit.  US PVOs, as well as 
local NGOs, and contractors will be eligible to receive 
funds or bid on contracts.  GOB will require recipient 
organizations or sub-contractors to demonstrate 
experience and accountability in order to be eligible 
for a sub-contract. 
 
The recipient agency has extensive experience in 
monetization.  Given the fact that MoA has committed to 
this project they will facilitate the process by 
providing the necessary permits and waivers to allow an 
effortless and cost-effective importation and 
monetization of the commodities. 
 
(f) Governmental or Nongovernmental Entities 
 
The Ministry of Agriculture will participate in the 
project.  The project will provide an opportunity to 
compensate farmers for losses and prepare them for 
upcoming crop year.  In addition, small scale flood 
control and irrigations projects will be implemented to 
improve agricultural production.  The project will rely 
on US expertise and will serve as a model for further 
GOB interventions in other aspects of US-Bulgarian 
cooperation. 
 
Sub-contracts will be awarded on a competitive basis. 
International PVOs, as well as local NGOs, will be 
eligible to bid on different aspects of project 
implementation such as community organization, flood 
conservation, construction, or agricultural education. 
 
(g) Method of Educating Consumers 
 
Upon approval of the donation GOB will publicly 
recognize the USG for the assistance in the mass media 
and will post banners and signs on project worksites 
acknowledging the USG as the source of the donation. 
Distribution of certified seeds and plant protection 
chemicals for the spring planting, as well as 
compensation to farmers will be recognized by the MoA 
press and communication to media and at major 
agricultural events/trade shows.  Individual works, 
such as dikes, recovered farm land, and irrigation 
canals will be inaugurated in specific communities and 
the press will be invited to report on the outcome of 
the project and report the USG as the source of the 
donation. 
 
(h) Criteria for Measuring Progress 
 
                     Timeframe For      Food 
Activity             Implementation     Tonnage 
                     (months from       (MT) 
                     monetization) 
Public Tender to     January 2006          --- 
sell Commodity 
Ship Commodity       March 2006           15,000 
Identify target      Nov. 05 - March       --- 
communities          2006 
Implement project    March 06 -June.       --- 
                     07 
Evaluation,          June - Sep. 07        --- 
reporting 
Project end Date     September 30,         --- 
                     2007 
 
6. Use of Funds or Goods and Services Generated 
 
(a) Quantity and Type of Commodities 
 
Commodity 
 
 
Soybean Meal 
TOTAL 
 
 
(b) Impact on Other Sales 
 
There will be no negative impact on commercial sales. 
Bulgaria is a net-importer of Soybean meal with nearly 
all of the imports coming from South America.  Given 
the damage to crops caused by the 2005 floods and other 
factors, Bulgaria faces a shortage of vegetable protein 
for both human and livestock consumption. 
 
The importation of 15,000 MT will not affect normal US 
exports nor displace local production.  The Ministry of 
Agriculture has expressed both their permission for the 
importation of this commodity as well as their strong 
desire for this commodity based on the aforementioned 
shortage of vegetable protein.  FAS/Sofia has analyzed 
normal trade patterns and assures that no market 
disruptions will occur and no US sales will be affected 
from the importation of the requested commodity.  ASA 
has been consulted and fully supports the commodity 
donation. 
 
(c) Amount of Sale Proceeds Anticipated 
 
Commodity 
 
 
Soybean Meal 
Anticipated Interest Earned* 
TOTAL 
*Interest earned will be used in program activities; 
estimated at 3.5% on unused balance over 12 months. 
 
(d) Private Sector Participation in the Sale of the 
Commodities 
 
GOB and FAS have identified and spoken to dozens of 
potential buyers willing to participate in a public 
tender.  Given the vegetable protein deficit that 
exists, poultry and animal breeders as well as 
importers and producers, have expressed interest in 
bidding on the soybean meal.  The number of potential 
buyers ensures a competitive bidding process that will 
yield a competitive price equal to or near market 
value. 
 
GOB, with the support and supervision of FAS in-country 
staff, will hold a competitive public tender selling 
the commodities to the highest bidder(s).  The 
commodity donation will be announced publicly in 
several daily newspapers inviting potential buyers to 
participate in an informational meeting where the terms 
of reference for the tender will be discussed.  The 
terms-of-reference will describe the commodity 
specifications, import conditions, minimum price, 
transportation requirements, obligations of the buyer, 
and procedures for the tender. 
 
Monetization will take place at an open bid at Sofia 
Commodity Exchange based on the experience generated 
from previous USG programs in Bulgaria.  The outcome of 
the tender will be recorded and the commodity will be 
sold to the highest bidder(s).  The MoA will support 
the sales with technical staff and supervision from its 
legal team. 
 
(e) Uses of Sales Proceeds 
 
The proceeds from the monetization of the commodity 
will be deposited into a special project bank account 
and administered by MoA for uses determined by the 
inter-agency committee.  The proceeds will go directly 
into compensations for farmers; purchasing of seeds and 
plant protection chemicals and implementing program 
activities aimed at conserving and improving 
agricultural production in impoverished communities in 
high-risk flood areas. 
 
The cost of managing and implementing the program will 
be absorbed by the MoA. 
 
Administrative Expenses and Internal Transportation, 
Storage and Handling (ITSH)