US embassy cable - 03ROME2493

UNCLAS  ROME 002493 
 
SIPDIS 
 
 
AIDAC 
 
FROM U.S. MISSION IN ROME 
 
SENSITIVE 
 
STATE FOR A/S PRM DEWEY, IO A/S HOLMES, EUR/NE, EUR/WE, 
SA/INS, IO/EDA SWINNICK 
USDA/FAS FOR U/S PENN, MCHAMBLISS, RTILSWORTH AND LPANASUK 
USAID FOR ADMINISTRATOR NATSIOS, AA/DCHA WINTER, D/DCHA/OFDA 
BMCCONNELL, D/DCHA/FFP LANDIS 
BRUSSELS FOR USAID/PLERNER 
USUN FOR MLUTZ 
NSC FOR JDWORKEN 
 
E.O.  12958:  N/A 
TAGS: EAID, EAGR, AORC, PREF, KUNR, WFP, UN 
SUBJECT:  WFP POST-DELIVERY LOSSES IN BANGLADESH 
 
REF: (A) 02 ROME 02673 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY. 
NOT SUITABLE FOR INTERNET POSTING. 
 
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SUMMARY 
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1. (SBU)  WFP has issued a copy of a 2002-2003 draft food 
loss report conducted by the International Food Policy 
Research Institute (IFPRI) entitled "Food Aid Leakages in 
Bangladesh," supported by funding from the U.S., Australia, 
Canada, and the European Community. Preliminary findings are 
disturbing. Food grain losses in Bangladeshi harbors 
resulting from pilferage and other forms of misuse is 
estimated at 1.5 percent. Equally, there are problems 
associated with transportation and handling of grains for 
distribution at beneficiary level. The overall leakage in 
the Vulnerable Group Development (VDG) program (WFP's 
flagship undertaking in Bangladesh) is estimated at 8.01 
percent. In US Mission's view, although WFP has taken recent 
steps to tighten program accountability, intensified follow 
up efforts with the GOB are required. End summary. 
 
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Background 
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2. (SBU) In May 2001, the WFP Secretariat informed the 
Executive Board of a major dialogue with food aid donors 
(U.S., Canada, others) to address the problem of suspected 
food leakage to non-targeted beneficiaries through 
unauthorized distribution channels. WFP's initial misgivings 
came from a 1997 request it made to the International Food 
Policy Research Institute (IFPRI) to carry out a preliminary 
study to investigate the magnitude of the problem of food 
aid leakages and develop a monitoring methodology. In 1998, 
a comprehensive food commodity tracking system appraisal was 
carried out. In 1999, the WFP country office established a 
food transport and storage monitoring unit. Since then, 
efforts have been made to inform vulnerable group and 
emergency operation beneficiaries, as well as the public at 
large, of their rights and entitlements related to rations. 
 
3. (SBU) The latest IFPRI study began in October 2002 and 
fieldwork was concluded by March 2003. A first draft of the 
findings has now been issued. US Mission is informed that 
there is an active, ongoing effort within the GOB to review 
the draft report and provide suggestions, comments, 
criticisms, etc.  Donors and the WFP leadership appear to be 
convinced that this process cannot be rushed in order to 
assure complete GOB ownership of the results. The final 
report will be published in late July 2003 after a Policy 
Dialogue Session is held. The purpose of this session will 
be to formally confirm the findings and recommendations, 
and, perhaps more importantly, to develop a common plan of 
action aimed at effectively reducing leakage. 
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Preliminary rack up on losses 
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4. (SBU) Preliminary findings of the draft study are as 
follows: 
 
a) Food grain losses at harbours, defined as the difference 
between the Bill of Lading (BL) quantity and the final 
discharge report of the stevedores, is estimated to be 1.55 
percent of the BL quantity for all arrivals.  Operational 
loss due to normal handling and spillage at the port is 
 
estimated to be 0.05 percent.  The loss due to pilferage and 
other forms of misuse is therefore estimated at 1.50 
percent. Losses due to pilferage appear to be associated 
with the involvement of numerous agencies, the absence of 
appropriate legal mechanisms to transfer incentives to the 
right group, the presence of unhealthy unions, and 
collusion; 
b) While losses in the Public Food Distribution System 
(PFDS) have substantially declined in the 1990s, it is 
suggested that PFDS transit losses can be further reduced. 
First, private flour millers do not incur any transit loss 
in transporting their grain, as they operate under an 
arrangement where transporters assume sole responsibility 
for delivery of full invoice quantity.  If the storage 
facilities are well connected, the GOB can adopt the same 
strategy for transportation by road.  Second, by introducing 
hundred percent weighing in water transportation (except 
unavoidable cases at Mongla port), high permissible limits 
of losses (currently 0.4 percent) can be revised downward; 
 
c) There are problems associated with transportation and 
handling of grains for distribution at the beneficiary 
level. The draft study estimates average leakage in the VGD 
program due to short ration to be 7.53 percent, or 2.25 kg 
per month per beneficiary.  Leakage due to under coverage 
(when the actual number of beneficiaries is less than the 
officially determined number for whom food was allocated) 
was 0.48 percent.  Hence, the overall leakage in the VGD 
program is estimated at 8.01 percent of the total wheat 
allotment.  This leakage estimate corresponds to food 
distribution from the Local Storage Depots (LSD) to the 
programme beneficiaries. Moreover, about 10 percent of the 
VGD cardholders reported that Union Parishad (UP) members 
made them "share" their VGD card with a non-cardholder 
woman, and thus received only one half of their ration 
entitlement; 
 
d) Lastly, leakage within the Integrated Food Security (IFS) 
programme is worrisome in the case of Training and Nutrition 
Centres (TNC) where beneficiaries received 18.64 percent 
less than their full entitlement.  The surveys reveal that 
the relatively high leakage in TNC was mainly due to 
malpractice by a Community Based Organization (CBO) assigned 
to support TNC user committees. 
 
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WFP management steps taken to address leakages 
--------------------------------------------- - 
 
5. (SBU) Concrete recent WFP in-country actions include: 
 
a) In 2001, WFP began decentralizing its staffing and office 
set-up. To date, 38 qualified field staff (all recruited 
locally) are posted in six offices established in strategic 
locations throughout the country; 
 
b) In 2002, with extensive technical support from the German 
Government's GTZ, WFP adopted a comprehensive Monitoring and 
Evaluation (M&E) system for its food targeting and 
distribution activities; 
 
c) WFP Bangladesh has initiated an extensive program of 
training/briefing for key GOB and NGO staff involved in the 
planning, implementation and monitoring of WFP activities at 
the central, district, sub-district and union levels. 
Resources from monetized funds, together with the planning 
of the second phase of the Strengthening the Institutions of 
Food-Assisted development (SIFAD) project are aimed at 
improving the capacity of program partners to more 
 
effectively monitor; 
 
d) The commencement of distribution of micronutrient- 
fortified wheat flour (funded by Canada), presently covering 
138,000 beneficiaries - where lifting of the wheat from GOB 
stores, milling, fortification, packaging and distribution 
to the distribution sites is done by NGO partners - has 
dramatically reduced leakage. Similar success has been 
achieved with micronutrient-fortified biscuits targeted 
presently to one million primary school children. 
 
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Other measures 
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6. (SBU) Other measures to be actively pursued include: 
 
a) A broader acceptance of problems inherent in the present 
system and their root causes is the key to positive results 
in combating post-delivery losses; 
 
b) Involving more NGOs to deliver food aid rather than 
relying heavily on government would most likely result in 
reduced leakage; 
 
c) WFP plans to conduct a detailed assessment of "carrying 
costs" incurred by Government in the process of moving food 
from the local storage depot to the distribution sites to 
determine whether the current rate of compensation is 
adequate. 
 
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Comment 
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7. (SBU) The recently concluded WFP Executive Board Annual 
Session (May 28-30) looked at WFP's post delivery losses 
worldwide (including a special report on Bangladesh 
presented by Country Director Doug Coutts) and concluded 
that every case of commodity hemorrhaging in today's 
constrained budgetary environment has to be swiftly and 
vigorously addressed. Food leakages in Bangladeshi ports, to 
non-targeted beneficiaries through unauthorized distribution 
channels, and under-deliveries to targeted beneficiaries - 
have constituted a long-term problem for the WFP program. 
While WFP is to be given due credit for identifying the 
problem, given the sizable amounts of commodity leakage 
involved, WFP, the GOB and the principal donors now need to 
fix what has been well documented (by the highly-respected 
IFPRI) to be broken. It is expected that the July Policy 
Dialogue workshop will provide the platform for the 
immediate enactment/endorsement of remedial actions to 
firmly establish a credible oversight system in Bangladesh. 
WFP in our view is committed to institutional reform and is 
pursuing the delicate task of public accountability with a 
constancy of vision and a tenacious single-mindedness. 
Hall 
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	2003ROME02493 - Classification: UNCLASSIFIED