STUDY OF TRILATERAL FOOD AID TRANSACTIONS

STUDY OF TRILATERAL FOOD AID TRANSACTIONS

RONCO Consulting Corporation Prepared By1629 K Street NW Alice L MortonSuite 300 Warren J EngerWashington DC 20006 G Reginald King

Alexander F McCallaApril 23 1937 Contract No PDC-1096-I-00-4i64-00 Work Order Nu 3

TABLE OF CONTENTS

ACRONYMS

I EXECUTIVE SUMMARY iii iI BACKGROUND 1

The Multi-lateral Concerns 2 Other Donors Experience 3 WFP

3 USG Concerns 6 Magnitudes

10 The West African Trilaterals 11 The Southern Africa Trilaterals 13

III TIE PROS AND CONS OF USG EXPERIENCES WITH TRILATEFPLS

16 Background

16 The Pzos

17 Cost

19 Development Considerations--Domestic Policy and Trade Implications 21 Market Development Impacts 25 Nutritional Apprcpriateness and Taste Preference 26 Infrastructure Development 27 The Cons

30 Immediate Issues 31 Loss of US Identity of Food Aid Commodities 32 The Complexity Attributed to Trilateral Negotiations 35

IV PROGRAMMING USG TRILATERAL FOOD AID 40 Approval Trends 40 Design

40 Uegotiations

44 Implementation

45 Washington tpproval 49 The Fact Situation 49 Developing Country Perceptions 54 USAID Missions Perspectives 55

V CONCLUSIONS AND RECOMMENDATIONS 58

ANNEXES

A STATEMENT OF WORK 68 B METHODOLOGY

62 C CASE STUDY GHANA TO MALI AND BURKINA FASO 1985 1 D THE COST OF THE GHANA BARTER ARRANGEMENT

AND COST EFFECTIVENESS

BIBLIOGRAPHY

CRS CFAFCFA GRM OPIC OFDA RFPPO MIC FVAPPM Program PTOA

ONT UNDP EAACI RAMC MOS GOZ ADMARC

GOM REDSOESA

PID PP GPRM

TDY AIDMSEROPTRANS

Acquisitions DPCCM

WVI SHM UDI

ECOWAS OMB FVA FFP IDCA PPC

OPAA

FOR

UN IEER GOG

ACRONYMS

Catholic Relief Service West African France Government of the Republic if Mali Overseas Private Investment Corporation Office of Foreign Disaster Assistance Regional Food for Peace Office Ministry of Internal Commerce (Mozambique)Food and Voluntary AssistancePolicy and

ManagementProaressive Transport Owners Association

(Ghana)Organisation Malienne de TransportUnited Nations Development Programme Enterprise Malienne en Cote dIvoire AID Regional Accounting Office Paris Marine Overseas Services Government of Zimbabwe Agricultural Development and Marketing

Corporation Government of Malawi AID Regional Economic Development Support

OfficeEastern and Southern Africa Project Identification Document Project Paper Government of the Peoples Republic of

Mozambique Temporary DutyT r a n s p o r t a t i on D i v is ion of AID

Office Department for the Prevention of Natural

Calamities (Mozambique)World Vision international Self-Help Measures Unilateral Declaration of Independence-ZimbabweRhodesia Ecoconomic Community of West African States Office of Management and BudgetFood and Voluntairy Assistance Bureau (AID) Food for Peace International Development Cooperation AgencyBureau for Program and Policy Coordination

(AID)Commodity Credit CorporationOffice des Produits Agricoles et Alimentaires

du Mali

United Nations International Emergency Food Reserve Government Of Ghana

i

OFNACER PVO GFDC WVRO USG WFP FAO

EECEC USDA USAID

ODA

SADCC

ECU CILSS

GOF DCC FAC NGO UK GRZ CIDA

Office National des Cereals (Burkina Faso) Private Voluntary Organization Ghanian Food Distribution Corporation World Vision Relief Organisation United States Government World Food Programme Food and Agriculture Organization of the

United Nations European Economic Community United States Department of Agriculture United States Agency for International Development Overseas Development Administration (Great

Britain)Southern African Development Coordination

Conference European Currency Unit Committe Interetatique pour la Lutte contre

la Secheresse au Sahel Government of France Development Coordinating Committee Food Aid Convention Non-Governmental Organization

Uni ted Kingdom Government of the Republic of Zambia Canadian International Development Agency

ii

TRILATERAL FOOb AID TRANSACTIONS STUDY

I EXECUTIVE SUMMARY

Background

This study examines four trilateral food aid transactions inwhich the USG provided rice or wheat to an exportingdeveloping country in exchange for a local~y-produced commoditywhich was then provided free to a recipient developing countrynearby All four cases were pnroved and carried out under480 Title II emergency programs

PL In West Africa US rice wentto Ghana which provided white maize to Burkina Faso and MaliIn Southern Africa US wheat went to Zimbabwe and Malawi whichprovided white maize to Mozambique The total tonnage of che sixsuch deals approved between 1983 and 1986 of which these four are representative amounts to approximately 121 of all USGfood aid provided under all Titles of PL 480 during the same

period

Issues Addressed

The case studies are used to provide the basis for analysis ofpolitical and policy considerations developmental impacts andmanagement procedures for trilateral transactions in which theUSG has been and may again become involved They indicatethat foreign policy impacts may be significant since such dealsallow friendly countries on both sides of the transaction tobenefit in the context of regional arrang-ments and agreementsand thus interpret US intentions as supportive of both nationaland regional goals They may be successfully used to support orreward sinJ ica-n zc ifys i the xltortinc country such

inorovemnzs inceni yes[n produceras as was the case in Malawiand Zimbabwe Where local sales proceeds are generated as inMiozambique there is a possibility of policy influence in the recipient country too

US Market Development

Impacts on US market share development are mixed The casesshow that US comparative advantage is to promote consumption ofUS wneat in Zimbabwe Malawi and Kenya for example ratherthan trying to establish a market in these countries andMozambique infor US yellow maize Similarly by assistingsurplus-producing developing countries to market their surplusesproduction and overall purchasing power are likely to increasethen enabling these countries to purchase additional UScommodities on the world market The identity of the food aidreceived by beneficiaries sqems largely unknown at that levelbut the US definitely gets double credit frm trilateralsrather than less credit in terms of local perceptions than wouldbe the case in a bilateral as is sometimes feared

iii

Regional Trade Impacts

Impacts on regional terms and patterns of trade are less clearIn West Africa the Titleprior II Section 206 arrangement mayhave been more constructive in iissisting Mali liberalizeto itscereals market than the trilateral was in effecting improvementsin intra-regional trade barriers On the other hand theGhanaian truck fleet benefitted greatly from the influx of scarceforeign exchange due to the trilateral which may have subsequentpositive implications for intra-regional trade efficiency Otherinfrastructural outcomes demonstrated by cases lessthe arestriking but may prove out in the longer term

Prices Cost and Timeliness

The US trilaterals have probably had no impact on world pricesor on the US market share overall since in total they amountto such a small proportion even of US cereals exportedTrilaterals have the same impact on US surplus stocks as dobilaterals Overall cost assessments based on these casesindicate that trilaterals and bilaterals cost about the same forthe USGs contribution As to timeliness of the four two were at least as timely as most bilaterals cited as typicallytimely while two took about nine months for all deliveries to bemade which may not compare badly with some theof slowerbilaterals If trilaterals were taken out of the context of emergency aid their developmental impacts could be enhanced asmight their policy impacts and flexibility

Programming Lessons Learned

Lessons learned for przming of- -aansactions arethat pre-design analysis early informal negotiation withpotential exporting country the

are likely to make the transactionappropriate simple and fast-moving once isit approvedDiscussions with the exporting and the recipient country aboutthe barter terms of trade logistics organizational involvementand timing should go on simultaneously once there is an initialindication that the DCC may approve the transaction in principleTo date negotiations with countries involved have gone smoothlytaken little time except for required Washington reviews ofcontent and language and have not been complex Forimplementation government-to-government arrangements seemed atleast as expeditious as those involving PVOs whether expatriate or indigenous

Implementation concerns seem overall to mirror those forbilaterals In none theseof cases were there complaints afterthe fact about the quality of amounts of cereals swapped (theratio or barter terms of trade) although in the Ghana casesuntangling the large number of payments to be made to variousintermediaries has probably been quite staff-intensive forAIDWashington and perhaps the USDA Most field staff howeverwere quite supportive of trilaterals as developmental tools as

iv

supportive of policy dialogue and expressed keen interest inthem All those interviewed however recommended that AID andthe DCC develop a policy with regard to trilateral transactionsprovide the field with appropriate guidance and thereby ensurethat long delays in review beampnd approval in Washington mighteliminated

Conclusions and Recommendation

General Conclusions

1 The experience of trilateral transactions as regardstimeliness and complication of negotiation has been mixed As has been the experience of other donors some trilateral transactions are concluded swiftly and some bilateral deals prove more complex Since the AID transactions have beenin response to emergencies and in difficult or complicatedcircumstances it is difficult to generalize from the few experiences to date

2 Cost comparisons between trilateral and bilateral transactions suggest that they come out about equal

3 The question of donor identity appears largely to beoveremphasized The ultimate beneficiary is probably unaware of the source of most donated food aid There is no confusion in the minds of government officials as to the source of assistance However it is clear that the US gained considerably in improvement in relations as a result of the trilateral transactions It is at this level that there is much to be gained

4 Ini cases of real emergency the argument that people should accept whatever is offered may be justified However if apreferred food is available through a triangular transaction at no extra cost then this should probably be suppliedThis consideration appears to have been respected in theZimbabwe and MalawiMozambique transactions but less so in the West African deals

5 Infrastructure development as a result of trilateral transactions is much discussed at the level of theory but this aspect did not appear to be uppermost in the minds ofthose concerned with trilateral transaction either in the case of AID or other donors It may occur as a by-productof trilaterals but systematic development can only result from targeted projects such as are envisaged by EEC and France However the danger of projects based ontrilaterals reinforcing bureaucratic organizations to thedetriment of the private trade is recognized To date most trilaterals have been in response to short-term surplusdeficit situations and have avoided the question on the grounds that bureaucracies deal best with each other in the short run

V

6 The impact of trilaterals on market development has twoaspects First the extent to which this type oftransaction has a negative impact on US trade Theconclusion is that this is marginal recentIn years thevolume of food aid has not been sufficiently large to impacton world prices Trilaterals as a proportion of thatvolume are insignificant and are likely to remain so Tothe extent that food aid ties the recipient country to thedonor and there are potentially emerging wheat markets inEastern and Southern Africa the US participation intrilaterals will keep the US in the game where possiblecompetitive exprrters are already practicing trilateralsThe effect on US stocks in trilaterals is the same asbilaterals The second aspect of marketthe developmentquestion is of outletsthat finding for developing countryproducts In this regard the fact that these products find a market complements the immense funding of productionprojects which takenhas place over the years Theacuisition of real buying powet on the part of the farmersdevelops a market for US products both feed grains and farm family requirements

7 The policy of other donors is to see the trilateral (ortriangular) transaction in the acontext of multi-yeardevelopment tool combined with financing which will encourage increased production of indigenous cereals incountries which are currently occasionally in surplus thusdeveloping markets for cereals by raising living standardsIt is doubtful if this approach is entirely altruistic onthe part of the other donors since most seek to market agricultural products as does the US

Lessons Learned about Management of Trilaterals

The following lessons are derived from our four cpse studies allof which were approved and implemented under IITitle emergencysituations They may apply we believe to an expanded arena fortrilateral food thataid would not be restricted to emergency programs however

1 Pre-design analysis both in terms of the surplus commoditysituation in potential exporting country and of the deficitin the potential recipient country should be done asexpeditiously as possible so that the basic fact situation can be relayed to Washington early in the design process Asecond part of this pre-design phase should be an assessmentof the policy leverage that may be available in each countryas a ofresult trilateral negotiations These bemustcarried out in the context of an on-going policy dialogue to be effective however

2 For design once there is an initial indication thatWashington may be sympathetic the policy performance

vi

criteria for approval the barter terms of trade the pointsof delivery and all other logistical arrangement should bereviewed and determined This should go on simultaneouslywith the potential exporting and recipient countrieswherever possible shoul]

and involve private sector entities-shy

grain merchants truckers freight forwarders or others--sothat there will be a positive impact normal tradeon channels This does not however necessarily mean thatPVO is the best channel

a for this kind of transaction

especially if the Title I emergency limitation is removed for such transactions

3 For negotiation it seems that casethe studies indicaterelatively little that is surprising The smoothestnegotiations seem haveto been those where the developingcountry government had been on board from the beginning ofthe discussion of a trilateral and was pushing for such anarrangement as wouldit be to its own advantage WhetherMissions must take the time to cable back and forthsuggested agreement language andor whether this needs totake so long as it sometimes does to finalattain approvalwill depend on AIDW staffing patterns theand perceivednormality of trilaterals If trilaterals increase innumber and frequency boilerplate wording can be developed

4 For implementation given the cases evaluated governmentshyto-government arrangements asseem expeditious or more sothan those involving one or more non-governmentalorganizations whether expatriate-based or indigenous Too many actor3 Qnd to complicate the logistics and especiallythe payment and accounting process This is not howeversomething that is necessarily intrinsic to the trilateral sort of transaction per se

5 Where more than one USG office must be involved inmonitoring and reimbursement such as AIDFVAFFP OFDA andthe appropriate Regional Bureau Development ProgramsDivisions and in USDA and AID those tesponsibleshipping and accounting

for there should be an attempt toorganize compatible data gathering retentionand systems

including with other donors

6 Evaluations should be carried out of trilateral bilateral programs

and that have innovative features both thosethat are approved under emergency situations and those that are not The possibilities for innovation given AIDscurrent mandate to use food aid more creatively and tointegrate it fully itsmore into country development

programs provides a good opportunity for thinking andnew for developmentally sound mixes of food aid and dollars forprogramming Some of these opportunities can be based ontrilateral models especially problemsif associated withmonetization can be resolved

vii

Recommendation

On the basis of the findings of the report it is recommended thatthe USG expand trilateral transactions This should beparticularly within the framework of market development projectswhich are designed to encourage the production of indigenouscereals for supply to chronically deficit countries or regionsbut which will raise the living standards of producers Thistype of development would improve the purchasing powerproducers thus providing markets of

for developed country productsLong-term development projects would allow of careful designencourage private totrade participation and to reinforce ratherthan disrupt existing commercial networks US participation inthis development process will ensure its ability to takeadvantage of market opportunities as they occur as well as aninfluence on the policies of recipient nations

viii

II BACKGROUND

What is a trilateral food aid transaction Trilateraltripartite or triangular food aid transactions or arrangements take several forms As defined in the statement ofwork for this study such transactions are those involving threecountries The first (developed) country supplies commodities tothe second or exporting developing country which in turnsupplies a third recipient developing country with commoditieswhich the first country is unable to provide readily from its own resources European donor agencies and FAOW p call these triangular rather than trilateral transactions 1

European donors--individually and especially through the WFP-shyalso provide for local transactions These are conductedwithin one country and in practice usually involve cash purchaseof commodities by the donor agency rather than the supply ofcommodities in kind Finally isthere another categoryexchange transactions that are practiced and can be triangularor local and can involve the generation of counterpart funds or be conducted on a barter basis

For the purposes of reportthis trilateral transactions will bethe term used for such arrangements as have been entered into bythe USG involving three countries and where the USGprovided commodities in kind to the exporting developingcountry These may also referredbe to at some points as swapssifce this is the term commonly used in Southern Africa On thewhole we will comment primarily on four of the seven mostrecently approved USG trilateral closely examined theinfield Where appropriate willwe discuss similar orcomplementary triangular transactions in which other donors have been involved

Why have trilateral food aid transactions become a subject for current policy review and implementation The simplest answer isthat while in Africa particularly food deficits continue to beexperienced in some countries--and in specific parts of othercountries--more counties have been experiencing surpluses in thelast two years than may have been the case before the recentAfrican drought Thus there are some countries in the regionwhich are able either through normal market transactions or with some donor input to provide part of these surpluses toneighboring countries that are still experiencing significant

1 The French use the term triangular to includearrangements within country counterpartone where funds fromcommodity sales are provided by the donor country for purchase offood to be supplied to a deficit area of samethe developingcountry WFP calls this same kind of transaction a local exchange or swap arrangement

I

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TABLE 1

UTILIZATION OF 198687 CEREAL SURPLUSES IN SUB-SAHARAN AFRICA

(In Thousand Tons)

Region Cereal Import Except- Availabi- Utilized so farCountry Requirements tional lities Exports Remaininc

------------------- local for surpluseWheat Coarse puchase export Commer- Trian- Donorshyand Rice Grains require- andor cial gular financed

ments in local trans- local coarse purchase actions purchases grains

Eastern 1727 590 360 1810 324 26 0 1460 Africa Burundi 18 -

Cormoros 32 4 -Djibouti 46 4 -Ethiopia 470 430 - _ Kenya 196 - shy 630 224 26 - 280 Rwanda 22 15 - -Seychelles 10 -

Somalia 173 32 -Sudan 550 - 350 1150 100 1150 Tanzania 160 105 -Uganda 50 shy 10 30 -30

Southern 1110 841 7 2113 288 169 7 1649 Africa

Angola 190 140 -Botswana 39 149 -Lesotho 58 139 -Madagascar 215 shy - _Malawi 36 - 4 104 - 28 4 72 Mauritius 155 11 -

Mozambique 240 365 - _ Swaziland 19 27 - - _ Zambia 65 10 -Zimbabwe 93 shy 3 2009 288 141 3 1577

Western

Africa Benin 73 - shy 15 shy - - 15 Burkina Faso 90 shy 6- 130 130 Cape Verde 25 43 - -Chad 35 - 30 30 2 28Cote dIvoire 540 - - 200 200 Gambia 45 shy -Ghana 145

shy- - _

deficits

Table 1 presents data on the utilization of cereal surpluses inSub-saharan Africa In a recent paper on food security inSouthern Africa Rukuni and Echer (1987) give the followingoverview of the global food situation and the ways in which it has recently changed

The world food pendulum has swung widely every decade orso the doomsday predictions of the mid-1970s have beenfollowed by a much more optimistic assessment of the worldfood outlook in the 1980s punctuated by the great AfricanFamine of 1985 where a conservative estimate of 300000people died in Ethiopia alone The global food outlook is as follows

If food in the world were becoming more scarceits real price would be trending upward But thereal price of wheat in world markets has beenfalling for well over a century Moreover theprice has declined significantly since 1980

Global maize stocks in 198687 are 160 million metric tons (a 25 year high) compared with 40 million metric tons in 1983-84

The export quotation for No 2 yellow maize at USgulf ports was US$ 70ton in late 1986 as comparedwith US$ 100 in 1985 and US$ 160 in 1980 Maize is at an all time low in real terms

The production of rice is running ahead of demandin several large countries in Asia shy eg Indiaand Indonesia requiring large adjustment programmes to shift to alternative crops

The production of sorghum is running ahead of domestic demand in China India and Zimbabwe

In summary the code word of scarcity has been replaced bythe appealing phrase that the world is awash with grainbecause o near record production and stocks of all majorgrains

Despite global food abundance there are an estimated 300to 900 million people suffering from malnutrition in theThird World The FAO estimated that 100 million or roughlyone-fourth of the total population of sub-Saharan Africa were not receiving a calorie-adequate diet in 1985

The Multilateral Concerns

Meanwhile some multilateral donor agencies especially the EEC and WFP are becoming increasingly concerned with the

2

developmental aspects of food aid as against the formerlydominant concerns of feeding the hungry and in the case of theEEC at least disposing of Community commodity surpluses Thisshift in the orientation of policy concerns taken togetherthe recent availability of surplases

with in developing as well as indeveloped countries makes the trilateral or triangular sort of

food aid arrangement suddenly more salient

A certain amount of caution should be use6 in evaluating the last statement however As a number of EEC staff indicated there isstill a ten3ion between those in the EEC secretariat whoseprimary concern is properly surplus disoosal and those inanother directorate whose concern is more centrally ondevelopment issues It appears that this tension resemblesclosely that which characterizes opinions about similar issues onthe part of USDA versus AID staff in the USG This tensioniL then reflected as will be seen below by the representativesof these agencies--as well as others with similarly dividedviews-- when each particular country proposal for a trilateral comes up

Other Donor Experiences

A detailed discussion of lessons from other-donor experiences ispresented in Annex E Here we will summarize the data gatheredby the food aid specialist who interviewed other-donor staff inEurope primarily at the WFP EEC British ODA and the FrenchMinistry of Cooperation While there are some generalizationsthat may be made about these other donor expeziencesdifferences among

the these agencies themselves and their respective

policies are sufficient to warrant a brief discussion of each separately

WFP

As already mentioned WFP has for some years been in favor oflocal purchases of commodities to the greatest extent possibleData on actual WFP program purchases is provided in Table Regarding these actions the following points are most clear

- the WFP experience in trilateral arrangements is predominantly in zuyizig foodstuffs for cash from one developing country to supply another

- local purchases while many in number have been of limited size--a few hundred tons in most cases and down to five ton transactions in some

- exchange arrangements using inputs from the donor are even more limited but can be valuable in alleviatingchronic deficits and assisting production areas

- effects on development are unclear Since tradeshyflows within and between countries are ill-defined and

3

often clandestine impact of transfers effected byfood-aid flows is difficult to evaluate

The development effect of purchases from some traditionalexporting developing countries Js probably marginal except forthose that have the potential for becoming regular exporterssuch as Zimbabwe where the effect is probably greater

The European Economic Community

EEC food aid has now been untied to some extent Thiscombined with the flexibility to switch from food aid to cashaid should enable the EEC to develop projects which be basedcanon purchase of agricultural commodities in developing countriesTable 3a summarizes EEC triangular transactions and Table 3bgives a summary for such transactions within the SADCC regionThese are not swaps in that the EEC pays cash for thecommodities purchased in one country and distributed in anothercountry Until now there is no experience of long-term projectsdesigned on the basis of trilateral food transactions and EEC isreally only in a position to point to the potential benefitswhich should accrue to the exporting country in terms ofincLeasing the market opportunities and therefore theprosperity of the farmers and the general economy of thecouncry The EEC presently undertakes a number of tradepromotion projects and the view was expressed that armed withthe new regulations on the use of triangular food aid purchasesand the cash substitution system the way is now open for thedesign of long-term trade and marketing development projectswhich will have a direct impact on agricultural development

Club du Sahel

Club staff interviewed were vely much in favor of trilateral foodaid transactions seeing them as a stimulus to developmentthrough provision of marketing opportunities and thus increased revenues to the vending cour y withAs other organizationsimplementing trilateral arrangements however the Club had notevaluated parti-ular operations so as to be able to verify theirvalue Jost in a consultant study on Club-sponsoredtransactions makes several points about technical and politicalproblems that may be summarized here (see Jost 1985)

- saleable surplus information is crucial to theability of any organization to initiate a trilateraltransaction Information gathering has traditionallybeen concerned with shortages not surpluses

- donor organizations are institutionally not geared upto respond to the more micro shortages or deficits that are characteristic of targets for trilateraltransactions Procedures for financing would have to berefined before most donors would be able to respondrapidly

4

Beneficiary

Direct aid Somalia

Zimbabwe

Nicaragua

Zambi a

TAnzani a

Mozambique

Indirect aid

C

Totals (

(

1 ECU Europea

Product

White maize

5000

_

Jhite maize

Millet

Riceequiv

cereals

Totals

X of total avaishylable quantities

Currency Units

TAB LE 3a

EEC Purchase of cereals in developing countries in the context of triangular operations

Programme 1984Quantity Tonnes Origin Date decisionTonnes Approx date

of delivery

2200 Malawi 6 484 Avril 36 15000 26 484 Nov 8

Guatemala 3 784 JanIFv 85 20000 Malawi 3 784 SeptOct 85 10000

251084 AvriL 86 12000 Zimbabwe 2 186 JuinJuil 86

2600

000

i11960

80760

V1

1

Approx totalECUa 1 Eon- shy

05

448

178

698

179

190

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TABLE 3b

Triangular EC financed food aid within SADCC region

Origin Destination Budget Delivery Quantity Product Transpo7t Total Value Cost Value

1000 tons (MECU

approx)

ZIM ZAM 1982 Oct 83 150 198 058 256MAL BOT 1982 Dec 84 06330 064 127MAL TAN 1983 Aug 84 150 270 230 500MAL BOT 1983 Dec 84 40 084 099 183MAL ZAM 1983 Sep 34 506240 448 954MAL ZIM 1983 Nov 84 25 047 028 075MAL ZAM 1984 Sep 85 200 429 269 698ZIM MOZ 1984 Jun 86 120 144 047 191MAL ZIM 1984 Nov 84 150 281 167 448MAL TAN 1984 Mar 86 100 150 029 179ZIM ZAM 1985 Sep 85 150 073274 347ZIM OZ 1985 Sep 85 100 204 041 245ZIM ANG 1985 Har 86 12 016 015 031MAL OT 1985 Aug 86 40 041 017 058ZIM NOZ 1986 Sep 86 159180 070 229ZIM BOT 1986 - 40 038 010 048

Totals 1727 2904 1665 4569

Notes 1 The table refers ony to white maize There was also a delivery of bean to Mozambique from Malawi (2000 tins worth 14 MECU)

2 The table given only triangular operations with origin and destinatiolwithin SADCC There have been deliveries from SADCC Member States to third countries as well as deliveries from other developing countries to SADCC Member States (eg 10000 tons white maize from Kenya to Angola)

3 The EC has also delivered other food aid to SADCC on the same perio(mainly wheat rice and dairy products)

- on the recipient side administrative problems that may have characterized initial trilateral may be expected to diminish with experience

- food aid coming to a country under trilateral arrangements may often be following different routesfrom the normal food aid and commercial imports and sodoes not forcompete transport facilities (see West African case studies below)

- regarding cost although detailed comparisons have not been made in each instance the donor agency hashad to make a comparison between the relative cost of aproposed trilateral arrangement and the equivalent--and more normal bilateral one

- regarding delays while these bemay significant intrilateral arrangements they are often alsosignificant in more regular bilateral food aid arrangements even under emergency conditions

Politically or in policy terms the point is essentially thatthe trilateral food aid transactions that have been documentedrecently including by Jost are not commercially viable becausethe products are distributed at a cost subsidized by the donorthus potentially disrupting normal trade channels Also thebeneficiary country politics and policies may militate againstrelaxing this donor policy constraint This is a matter to which we will return in Sections IV and V below

Overall despite these constraints the position of theClubCoviti Interstats de Lutte conte la Seelresse dens la Sahelcountries is in ofclearly favor stimulating local trade as acontribution to agricultural development using trilateraltransactions with donor support as one means to this end

France

The GOF has an inter agency food aid committee similar to theAmerican Development Coordinating Committee (DCC) on whichAgriculture Foreign Affairs Economy External Commerce andTreasury are repre-ented Despite pressure from the farm lobbyand the desire to dispose of surpluses France has favored thetrilateral food aid approach to development Implementationbegun fairly receritly however resulting from

has a reform of theFrench bilateral food aid program in 1981 reformMay The wasdesigned to achieve better integration between food aid and reshyorienting a recipient countiys agricultural policies and itspopulations nutritional needs and to accelerate and rationalize

implementation procedures

To provide perspective total French bilateral food aid is200000 tons of wheat equivalent and 960000 tons through the

5

EEC The ceiling on trilateral transactions is set at 10000tons but so far has not reached 5000 tons Total French exports of cereals are on the order of 7-9000000 tons ThusMinistry of Agriculture officials note that trilateral food aidtransactions are not seen as a threat to the French farming interests

Most French trilaterals are implemented by NGOs and theirperformance is criticized as being patchy as is reporting ofresults Although the French experience of government to government transactions has always not been very good the use ofprivate trade is considered very complicated Support for longshyterm contracts between one country and another is being exploredThese would be supported by the donor country or a priceguarantee scheme for the selling country in its transactions might be provided by the donor country

United Kingdom

The UK has a fairly small overall food aid programapproximately 110000 tons per year Of this only about 30 ishandled bilateraly by the ODA the balance is directed throughmultilateral agenc es and especialy the WFP British food aidpolicy has recently been reviewed by Parliament and the result has been a broadly negative view of food ofaid largely becausedisincentives to production that non-emergency food aid isthought to involve The UK does however accept that food aid can play a useful role on occasion As a member of the EECUK has an obligation under the Food Aid

the Convention but seeks

to reduce it whenever possible

The NGOs that provided position documents to Parliament duringthis investigation came out largely in favor of trilateralpurchases They took the position that bulk food deliveries fromdonor countries should be the last resort if local purchasescould not madebe To the extent that Parliament ratified theapproach of providing most UK food aid through WFP it is thenthe WFP policies that will most directly represent UK perspectives including those on trilaterals discussed above

USG Concerns

In the US extraordinarily large surpluses and the relatedfarm crisis along with cuts in levels of dollar foreign aidhave combined to make food aid in general much more obviouslysalient than it may have seemed in the past The USGs foodaid program under Public Law 480 is administered by the USAgency for International Development As a development agencyAID has been cautiously ji favor of trilateral transactions in those instances where

- there is a clear cereal surplus in a country neighboring a deficit one

6

- -

FIGURE I

PL 480 Program Plarnir Process

Approx Office ofTiming USDA the President 1DCAAID State

APRIL Establishment

budget mark

JUNE Budget submission Budget sub-prepared for Budget subshyagri- mission forculture programs mission for development international

assistance naccount programs

AUGUST Interagency (DCCFA) consultations -

SEPTEMBER USDA State and IDCAAID submit their budcg- to the President

DECEMBER The President reviews

the budget submissions and returns them for revisicn and printing

JANUARY Budgets are revised by USDA State and IDCAAID in consultation with other agencies perPresidents instructions and sent to Congress

FEBRUARY Congressional authorization andor appropriations

AUGUST

SEPTEYLBER Initial allocation table prepared by USDA in consultation with other DCCFA members

OCTOBER Start of the Fiscal Year October I-September 30

Source Lawrence D Fuell The PL 480(Food for Peace) Proqram Titles IIII Termsand Conditions Planning and Implementation Procedures (Washington DCUSDAFASEC April 1982 Draft) p 10 Reproduced in AID Program Evaluation Discussion Paper No 19A Comparative Analysis of Five PL 480 Title I Impact Evaluation StudiesWashington DC December 1983

NQ

- the type of cereal in surplus meets the food preferencesof those experiencing the deficit

- transporting the food from the surplus to the deficit country is relatively simple and

- when there is a recognized food emergency situation in the deficit country

Despite this cautiously optimistic de facto approach totrilateral arrangements AID does not presently have a distinctpolicy regarding trilateral arrangements Further the AIDdoes not make USG food aid policy Rather policy decisionsand approvals of individual country programs are made by aninter-agency committee the [US] Development CoordinatingCommittee (DCC) and specifically its Food Aid Subcommittee

Since the late 1970s the DCC has only supported these types ofprograms under 480PL Title II the title authorizing reliefassistance and then only under formally determined emergencyconditions in the past however USGwhen commodity anddevelopment interests were somewhat different (and US surplusesnot so great) some trilateral arrangements were sponsored underPL 480 Title I the title of the act governing concessional salesprograms In a 1985 memo summarizing this experience under TitleI the then head of FVAFFPs Title I Division made this comment

Some years ago a Title I i-riangular program sent Title Icotton to Thailand in exchange for finished textiles beingsent to Vietnam There were a number of problems underTitle I procedures which resulted in [JSDA becoming verynegative about future triangular transactions (RhoadsBloch May 17 1985)

The USDA at least in recent years has had to take increasingcognizance of the views of American farmers that they areincreasingly facing unfair competition in the world marketleading in part to the perceived farm crisis in the US and oftheir desire that whatever food aid America gives to the pooroverseas should be composed of produce of American farms

These views of the USDAs major constituency are reflected in the

7 - 8

perspective voiced by USDA representatives on the DCC when considering trilateral and all other food aid initiatives proposed Within the USDA the Assistant General Sales Manager is often chosen to speak for the Department on the matter of trilateral arrangements tie presents opr spates this constituency view quite articulately and makes it clear that USDA and the Congress are likely to continue to take it seriously

Through the Commodity Credit Corporation (CCC) the USDA plays a key role in supporting and stabilizing prices of a number of key commodities including grain and dairy products Thus isit involved both in the creation and the disposal USG-owned surpluses

The CCC stabilizes and supports grain prices by making

loans to farmers against their crops When market prices fall below the loan rate plus the interest owed on the loan farmers can pay their loans off the CCC withto the commodities instead of cash

When market prices remin below legislated loan rates for long the CCC accumulates stocks of wheat corn and dairy products When prices are low inventories also accumulate in the FOR a Government program to ensure greater stability of domestic and international supply Combined CCC and FOR wheat stocks have exceeded a billion bushels several times in recent years Corn stocks reached 25 billion bushels in 198283 and are much larger now

Stocks buffer price swings created by crop failures at home or abroad But when market prices remain low relative to support prices inventories become large Government inventory costs rise as storage costs rise (ERS1987)

Under L 48 the CCC is then instructed to make ai-ilible to the President such agricultural commodities determined to be available as he may request [to] furnish on behalf theof people of the United States of America to meet famine or other urgent or extraordinary relief requirement to combat malnutrition especially in children to promote economic and community development in friendly developing areas and for needy persons and nonprofit school lunch and preschool feeding programs outside the United States (PL 480 Titles I and II)

As a result of recent unusually high surpluses and strong feelings on the part of farmers some members of the DCC and especially the USDA argue that the USG should promote only the agricultural exports of the US not those of other nations Further they argue that the country requesting US food aid should accept whatever substitute commodity the US can provide if the food is badly needed Some DCC members also frown on trilateral agreements because of the apparent time-consuming

9

complex negotiations they may involve (see below)

There is also a DCC concern over the high costs that may beassociated with trilateral as opposed to bilateral transactionsand about the possibility that the recipients do not perceive theaid as coming from the USG rather than the exportingcountry Finally it is not clear to some members whethertrilateral arrangements are really more timely than bilateral ones or sufficiently so to justify risking the other possibledrawbacks jus listed

As a result of these concerns of DCC meitibers and given the factthat no guidance presently exists within AID about whatcircumstances if any warrant recourse to a trilateralarrangement approvals of trilaterals by the haveDCC beenpainstaking and prior review by member

few agencies including AIDitself has been slow Nevertheless six have been approved since1985 including two in the past three months and to some extent at least sentiment against them within the USDA may have

declined as experience has increased

Magnitudes

It is important to note at the outset that the total tonnage ofcommodities donated by donors and received by recipient countriesthrough trilateral or triangular food aid arrangements in therecent period is very small compared to total tonnage donated andraceived Table 2 shows level ofthe purchases from developingand developed countries by funding source for the period 1983shyi986 for the WFP As may be noted over 70 has been purchasedfrom developing countries except for 1986 when the level was6982 Some of the developing country purchases however arelocal purchases for use in the same country so not all of thepurchases included a third country in the transaction

Tables 4a and 4b summarize triangular transactions in wheatand coarse grains for 19856 and 19867 as based the

rice on FAOGlobal Information and Early Warning System The grand total for19856 including local purchases 614158 whileis tons for19867 the estimate of planned cereal purchases under thesetypes of arrangements was 59895 tons Turning to triangulartransactions involving rice hcweve zne total was 312205 for

19856

If we take the USG trilateral transactions that have beenapproved in the equivalent period (1983-86) thus including theUS-Zimbabwe-Zambia transaction the total tonnage of wheatprovided is tons that13190 and of rice 9229 tons out of agrand total of USG-spoRsored bilateral PL food of480 aid39974000 tons equivalentgrain (Titles I II and III)--asindicated in Table 5 or 065 Perhaps more significantly itis only approximately 2600 tons grain equivalent out of a total tonnage of 21572000 tons provided under Title II programs

10

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TABLE 2

PURCHASES GROUPED BY TYPE OF FUNDING (1983-86)

Purchases effected in Purchases in Total US developing

countries in Developed Developing relation to Countries Countries overall purchases

1983 From regular cash 7931109 0 7931109 100 resources From FAC 3433098 2237192 1195906 35 From IEFR funds 21112880 0 21112880 100 From UN agencies 2095741 0 2095741 100 From Bilateral funds 53282144 20837711 32444433 61 Total 87854972 23074903 64780069 74

1984 From regular cash 9603825 349628 9254197 96 resources From FAC 6239633 0 6239632 100 From lEER funds 16059730 27575 16031795 100 From U14 agencies 594906 0 594906 100 From Bilateral funds 49737816 16419328 333128488 67 Total 82235910 16796531 65439019 80

1985 From regular cash 6722875 568045 6154830 92 resource s From 1335405 568045 6154830 92 5 funds 12220690 1996190 10224500 84 From agencies 671125 102960 568165 85 From oiLaterai funds 36966665 10718160 26248505 71 Total 57916760 13385355 44531405 77

1986 From regular cash 1608604 20640 1587964 99 resources From FAC 2883632 0 2883632 100 From FR funds 11920725 1510145 10410579 87 From cash in lieu of commodities 24139406 8122666 16016740 66 From oilateral funds 50301392 17762256 32539136 65 Total 90853759 27415707 63438051 70

TBE 4 a

Triangular Transactions and Cereal Purchases Pla2 ned for Sub-Saharan Africa in 198586 and 1986S71Type of

Donor operaion Sourc u s upply

Australia Triang trans Zimhahl

Auirie Triang trans 7imbjhc Locci nurch Zudan

Canada Triang rinsCnle rrhlnire Mnlawj Local purch

Oenmark Triong trans Local puch

EEC Triang trans

Local purch

France Triang trans

Local pueh

CermenyrR Trinr tan

Local urcn

Italy Local purch

Japan Triang trans

Netherlanda Triang trans

Local purch I

New Zealand Triang tr oS

Norway Triong rans Local purcn

ewlterland Local purc

Unltvd Knqdom TrioN trn

United States Trianq ans

Local Surch

WFP Triong on

Local iurci

TOTAL Triang trars

Local purcn

CRAJO TOTAL

Niger

(enya ihnbgihwe

udjr

Malawi imboiwe

(3urktin aIo rhnd Mali Niger udan

Cote dvoire Scnegal

Zimbabe Mali Senegal Sudan

Cote divoire Kcnya

MalawiTogo Zimbabwe

Benin Aturkrna Fasc Chad

MaliNiqtr3ne aISdan

Sudon

zimbolwc

Zimoehswe

n i iriIolur u 1 li Simii

I nibnhli

M ln isswMolialon Timap

Mali

KcnnirmbWw

Malaw Zimliwe

44mu

7iier Snhiln Afri

lu13tel Wvc t

i(cipn country1 19 56 1986187

tons

aotswnli fltliopia Somalia 29 986 7 7 000 Motasiniiriuc Znmbin

Mozanhque 5 050 3 3 000 Sudan 6 950 3

MaliMnznmbque 6 600 1 000 Niger 5 500

Etiouia Mozuibiric udon 8 900 2 000 5gn 5 100

Aiwlnl IInLwnan lnllc Verderollgi lcntliu Mninbiqtjc 123 000 4 000 Tonzuviia 7mbialrkii rFain Chnil 95 000

Moli Nirjtr ulun

Cape Vcrde Mauritania 5 000 1 500 Mozmubique Sierra Lenne Mnli Stncrgol Sudan 5 850 4

Botswnn Rur(ino Fnn 17 800 9 000 Cape Verde Mozambique

Benin Dur(n Faso Chad 24 5CO MaliNijcr ScnegaSudon

u0111 13 000

7mnhink 9 900 -

Mazninbique 15 0003

lhir i u rn u M li lsin 44 600 Y1

lihtw nin 1 750

M1jvq~i1 1r 1 100 Malw-4Mli 11 Isolo A coo 625

Mli 2 2w0

I 111i M iu Jeio 72 w 3

Mewudaini 5 000 1 4UU

65 000

Isizdln cIw~ri A( hrntrielAfrica 46 302 61 11 WmSi s-r t r Afrir 54 74O 7 JJU

ZU6 8JU 56 M 327 320 3 563

614 158 59 895 I r -a4nformtion cd tLyonurs Ea CIEWS as of mid-November 1986

1 Of which 14 000 tons to WFP J Pautly or fully handled by WFP [ The quantity (or Mall and Senegal includes estimated cereal equivalent of cash illocatlonLSource FAO GLoba Information and EarLyWrning System

--------------------------------------------------------------------------------------

TABLE 4b

TRIANGULAR TRANSACTION IN RICE 198586 (JULYJUNE)

SHIPMENT OR

COUNTRY OF ALLOCATION RECIPIENT PURCHASE DONOR QUANTITY PERIOD

(tons grain

equivalent)

African refugees Thailand Japan 175760 August 1985 Angola Thailand Japan 220000 February 1986 Angola Thailand Switzerland 7030 July 1985 Bangladesh Pakistan Japan 91580 January 1986 Bangladesh Thailand Japan 144260 March 1986 Benin Burma Japan 39780 February 1986 Benin Thailand Japan 3000 February 1986 Burkina Faso Thailand Japan 43910 March 1986 Burkina Faso Local purchase ICRC purchases 220 Jan-JUne 1986 BurundL Burma Japan 14620 March 1986 Cameroon Thailand Japan 19190 July 1985 Cape Verde Burma Japan 28860 March 1986 Central African Republic Thailand Japan 14400 March 1986 Chad Locak purchase ICRC purchurses 240 Jan-June 1986 Chile Local purchase ICRC purchases 260 Jan-Juae 1986 Comoros Thailand Japan 16600 March 1986 Congo Thailand Jlpan 3870 February 1986 Cote dIvoire Thailand Japan 4200 February 1986 Djibouti Thailand Japan 14110 July 1985 El Salvador Switzerland 5000 October 1985 El Salvador Thailand Switzerland 5000 January 1986 Equatorial Guinea Thailand Japan 31860 July 85-Mar 56 Gambia Pakistan Germany Fed Rep 23300 September 1985 Gambia Burma Japan 32720 February 1986 Gambia Thailand Japan 22410 July 1985 Ghana Thailand Netherlands 19000 June 1986 Ghana Burma Japan 56870 March 1986 Guinea Burma Japan 60760 May 1986 Guinea Bissau Thailand Japan 56060 March 1986 India Local purcnase Norway 03 Begin 1986 Indonesia Burma Switzerland 4200 May 1986 Jordan Thailand Japan 55000 March 1986 Kampuchea EEC 9500 September 1985 KampucheaUN-CR Thailand Germany Fed Rep 41200 1st half 1986 Kampuchea Australia 10000 February 1986 Kampuchea refugees Burma Japan 110420 September 1985 Kampuchea refugees Thailand Japan 551700 June 1986 Kampuchea Burma Sweden 9000 Jan-May 1986 Kampuchea Thailand UNKAM 5000 Jan-May 1986 Kampuchea Thailand UNCR purchases 31620 Jan-May 1986

COUNTRY OF SHIPMENT OR ALLOCATION

RECIPIENT PURCHASE DONOR QUANTITY PERIOD

(tons grain

equivalent)

Laos

Lebanon

Liberia

Madagascar

Malawi

Maldives

Mali

Mali

Mali

Mauritania

Morocco

Mozambique

Nepal

Nicaragua

Niger

Niger

Philippines

Philippines

Philliopines

Thailand

Local purchase Thailand

Thailand

Local purchase

Burma

Pakistan

Pakistan

Burma

Thailand

Thailand

vurma

Thailand

Surinam

Thailand

Burma

Pakistan

Thailand

Burma

Japan

ICRC purchases

Japan

Japan

WFP purchases

Japan

Netherlands

United Kingdom

Japan

Japan

Japan

Japan

Italy

Switzerland

Italy

Japan

S-tzerland

Switzerland

Switzerland

42790

1180

5050

108680

1350

17310

29000

17850

39290

90240

29330

158980

2000

3000

50000

54110

15000

5000

23180

JulyampSept85

198586

July 1985 March 1986 Jan-May 1986 February 1986

December 1985 November 1985 February 1986 March 1986

November 1985

February 1986 December 1985

February 1986 September 19E5

March 1986

August 1985 February 1986

May 1966 Sao Tome amp Princpe

Senegal

Sierra Leone

Sierra Leone

Sierra Leone Somalia Syria AR Tanzania Tanzania ThailandUNCR

ThailandUNCR

Togo

Vietnam

VietnamNGO

Vietnam Vietnam Vietnam WFPSingapore

Tnailand

Thailand

Burma

Thailand

Pakistan

Thailand Thailand

Thailand

Thailand

Burma

Burma

Thailand Burma Local purchase Burma

Japan

Japan

Japan

Japan

Switzerland

Japan Japan EEC Japan EEC

EEC

Japan

EEC

EEC

Australia Switzerland UNCR purchase Switzerland

17360

100010

33800

3500

3600

i0000 4500

34480 122670 34480

150000

42250

25000

20000

10000 25000 20800 10800

March 1986 July85-Mar86

February 1986

July85-Feb86

October 1983 July 1985 July 1985 February 1986 March 1986 November 1985 April 1986 February 1986

Jan-May 1986 January 1986 October 1985 February 1986 Jan-Mar 1986 May 1986

Total 3146103

Local purchases 24053 Triangular transactions (incl ) 3122050

3146103

k

---------------------------------------------------------------------------------------TRIANGULAR TRANSACTIONS IN COARSE GRAINS 198586 (JULYJUNE)

SHIPMENT OR

RECIPIENT COUNTRY OF PURCHASE DONOR QUANTITY

ALLOCATION PERIOD

(tons grain eruivalent)

Angola Angola Angola Angola

Zimbabwe Malawi Zimbabwe

EEC Austrialia ICRC purchases ICRC purchases

12000 5040 3000 4300

February 1986 January 1986 Jan-June 1986 Jan-June 1986

Benin Botswana Botswana Burkina Faso Burkina Faso Cape Verde Cape Verde Cape Verde Cape Verde

Local purchase Zimbabwe Malawi Cote dIvoire Local purchase Zimbabwe Argentina Togo Argentina

Germany Fed Rep Germany Fed Rep Norway Germany Fed Rep Netherlands EEC Germany Fed Rep Germany Fed Rep Switzerland

40000 15900 65000 40000

173000 110000 47700 48000 15000

Begin 1986 Jan-May 1986 Jan-May 1986 December 1985 JanFeb 1986 FebMar 1986 December 1985 April 1986 July 1985

Central African Republic Chad Chad El Salvador El Salvador Ethiopia Ethiopia Ethiopia Malawi Malawi Mali Mali Mali Mli Mali Mali Mozambique

Cameroon Local purchase Local purchase Local purchase Local purchase Sudan Zimbabwe Local purchase Local purchase Local purchase Local purchase Thailand Thailand Cote dIvoire Local purchase Local purchase Zimbabwe

Germany Fed Rep Netherlands ICRC purchases Norway ICRC purchases Australia Australia ICRC purchases Norway WFP purchases EEC EEC Germany Fed Rep Canada Norway Switzerland EEC

20000 3900 380

22600 1490

36000 60000 5000 4480 6290

150000 2000

60000 66000 13500 16000

120000

January 1986 198586 Jan-June 1986 Jan-May 1986 July-Dec 1965 April 1986 February 1986 Jan-June 1986 Jan-May 2986 Jan-May 1986 Mar-dune 1986 Septemoe 1985 December 1985 April 1986 July-Dec 1985 Mar-May 1986 March 1986

Mozambique Mozambique Mozambique

Malawi Zimbabwe Zimbabwe

Germany Fed Rep United Kingdom Australia

100000 145000 90000

OctNov 985 May-July 1986 Dec85-Feb86

Mozambique Mozambique Nicaragua Nicaragua Niger Niger Niger Niger Niger

Zimbabwe Malawi

Thailand Local pruchase Honduras Thailand Local purchase

Austria Norway EEC Switzerland EEC Germany Fed Rep Germany Fed Rep Italy Netherlands

50500 11000 50000 2600 1000

25000 30670 50000 43950

Jan-May 1986 July 1985 September 1985 February 1986 September 1985 1st half 1986 October 1985 November 1985 Jan-May 1986


SHIPMENT OR ALLOCATION PERIOD

(tons grain equivalent)

Niger Rwanda Senegal Senegal Somalia Somalia Stnalia Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Local purchase Local purchase Thailand Thailand Kenya Local purchase Zimbabwe Thailand

Local purchase

Kenya

Local purchase

Local purchase

Local purchase

Kenya

Zimbabwe

Canada Norway EEC Italy Germany Fed Rep Netherlands Australia EEC

Netherlands

Netherlands

Austria

Switzerland

WFP purzhases

WFP purchases

ICRC purchases

55000 1800

110000 28000 75000 15000 80000

380000

250000

20000

69500

20000

150000

14000

5000

March 1986 Jan-May 1986 September 1985 October 1985 January 1986 AprilMay 1986 February 1986 198586

JanFeb 1986 Jan-May 1986 Jan-May 1986

March 1986

Jan-May 1986 Jan-May 1986 Jan-June 1986

Tanzania

Uganda

Uganda

Zambia

Malawi

Local purchase Malawi

EEC

EEC

ICRC purchases EEC

100000

29800

1650

200000

March 1986 July 1985

198586

October 1985 Zambia Zimbabwe EEC 150000 March 1986 Zambia

Zambia

Zambia

Zimbabwe

Malawi

Zimbabwe

Zimbabwe

Local purchase

Germany Fed Rep Germany Fed Rep Japan

Germany Fed Rep

2000

6600

8540

18000

July 1985

2nd half 1985 MayJune 1986 2nd half 1985

UNCR EEC 20000 March 1986 WFP Zimbabwe Australia 100000 July-Dec 1985

Total 3766190


3766190

-------------------------------------------------------------------

TRIANGULAR TRANSACTIONS IN WHEAT 198586 (JULYJUNE)

-------------------


RECIPIENT PURCHASE DONOR QUANTITY PERIOD (tons grain

equivalent)

Cape Verde Chile

Ethiopia Ethiopia Ethipioa Mauritania Zambia

Local purchase

Local purchase

Argentina

Austria ICRC puchases Austria Switzerland ICRC purchases Austria Netherlands

5000 34

4000 2700 1945 4000 5000

JanFeb 1986 Jin-June 1986 MayJune 1986 May 1986 Jan-June 1986 JanFeb 1986 Jane 1986

Total 22679

Local purchases 1979 Triangular transactions 20700

22679

tLAi Fuod Aid lhb 14b1PL 480 and Section 416 [ABLE 5 FY 1981 - FY 1988

($ MILLIONS)

Title 1 (of which Title Il)Title II subtotal PL 480

Section 416

FY ]981 a

7934 (919) 7683

15617

FY 1982 a

7926 (1230) 6239

14165

FY 1983 a

8495 (1394) 5995

14490

FY 1984 a

8500 (980) 7240 b

15740

FY 1985

10997 c (1195)-

1 0600 dl 2T597

FY 1986

9887 (1170) 7587 e

FY 1987

9289 f (870)-5341

Z77414630

FY 1988 h

8520 (950) 5350

13870

872 1641 1637 1464 NA q NA D Food Security Wheat Reserve

Total Food Aid

15362 17381

915

24149

-_

18938 14630 13870

(METRIC TONS) GRAIN EQUIVALENT (000)Title I 3869 3586(of which litle ii)

4 133 4466 5636 6070(453) (611) 6290 5900Title II (766) (503) (--) (__)1803 1804 1950 2241 (____) (____)Subtotal PL 480 29735672- 5390 6083 2344 2163 19006707 8614 8414 8453 7800Section 416 90 179 199 293 650 _ 650 q

Food Security Wheat Reserve

-Total Food Aid 292

5672 5390 6173 6886 9105 8707 9103 8450 a PL 480 based upon Congressional Presentation figuresb c

Title Ii level includes $90 million of $150 million CY 1984 supplemental for African emergencieslitle 1 level includes $175 million supplemental of which $90 million was transferred to Title II for Africand Title II level includes $90 million transfer from Title I supplemental (see footnote c)million CY 1984 supplemental for African emergencies and $2603 $60 million of $150African supplemental ntllion of obligations from CY 1985 $400 millione Title I1 level is derived From a base budget of $650 million plus $1397 million carryin from CY 1985 Africansupplemental minus $2795 million resulting from Graham-Rudman legislation and a $30 million transfer to Title if Includes a $942 million transfer from Title II Future year cost estimates not available for Section 416 however legislation mandates tonnage levelFY 1988 Congressional Presentation1IUFV flFPlp(r o

uring that period -r 121 3 (In both cases the polished riceis figured at 65 grain equivalent) Thus ifeven trilateral arrangements may have increased in number frequency of approvaland tonnage in the past three years they still represent a verysmall per centage of US food aid

This factor should be borne in mind when reviewing the findingsand recommendations as well as in the case study narratives thatfollow More detailed case study narratives are presented in Annex C

The West African Trilaterals

The idea of a trilateral arrangement between Ghana andneighboring food deficit countries appears to have is originsback in at least October of 1984 Discussions undertaken by theUS Ambassador on the matter dated to the previous OctoberOther communications indicate that it was first given seriousconsideration in February 1985 By December of 1984 AIDW wasshowing favorable interest and notes that FVAFFP has supportedsimilar arranyementswhich have proved to be successful inmeeting African food needs and reducing USG costs (Working notes Bill Lefes 1886)

By late 1984 it was becoming clear that a sfrious food shortagewas developing in both Burkina Faso and Mali CRS was requestingfaster deliveries of food relief to Burkina Faso andUSAIDOuagadougou had requested 19000 mt of sorghum Of this7000 mt were to be loaded in the US in late January 1985 toarrive in Lome Togo onabout March 19 Two shipments of 7000mt and 5000 mt were called forward on January 15 to arrivein Lome in April AIDW suggested that USAIDOuagadougouconsider a barter agreement with Ghana to accelerate deliveriesof food aid (State 045624 February 14 1985) Meanwhile theMali situation indicates that there a deficit ofwas 230000 mtof cereals of which the US and other donor commitments were125000 mt USAIDBamako asked AIDW to increase assistance by35000 mt raising the USG total for Mali to 80000 mt Thelooming disaster terms of this request elicited a response from

3 For FY 1986 the estimate of total commodities shippedunder Title asPL 480 II of the time this study was carried outwas 596919000 pounds according to a draft of the Titleannual report provided to team April FYthe in In 1986 thetotal amount of wheat shipped under Title II was 140311000pounds according to the same document The trilateral involvingthe US Kenya and Sudan and Round II involving the US Zimbabweand Mozambique are the only ones that might have been included inthis estimate from what we can ascertain Together they totalup to 5562 metric tons or approximately 2236400 poundsThus the per centage is slightly higher when latterthese trilaterals are included--159 rather than 121

11

II

AIDW advising consideration of a barter arrangement although itis clear that Bamako had already been communicating with Accra on this matter as early as January 25 1985

USAIDGhana in consultation with the GOG felt that as much as40000 mt of surplus maize could be provided Later it wasdetermined that this was a high estimate and that only about 20000 mt would be available

On April 12 1985 the DCC approved a barter agreement in whichthe USG would provide 9202 tons US to inof rice Ghana and return the Government of Ghana (GOG) would provide 15000 mtof Ghanaian maize (corn) to be shipped to Mali Burkinaand Fasounder Title iI emergency programs Of the total amount of maize5000 tons were to be delivered to Ouagadougou in Burkina Fasoand 10000 tons were to be delivered to designated locations inMali A letter of agreement was signed between the USG andthe GOG on April 25 1985 effecting this arrangement

Burkina Faso

Of the 5000 tons fcr Burkina Faso the fi t shipments arrived on July 12 and the last on August 3 The Ghanian white maize wasofficially received theby Office Nationale des Cereals(OFNACER) After receipt however it was immediatelytransported to the warehouses of PVOs where it was dischargeddirectly from the Ghanaian trucks into the warehouses as follows

Amount PVO

1000 mt Red Cross (Croix Rouge)3015 mt Baptist Mission

984 mt Essor Familial

The grain was to be used by the PVOs to feed needy families in areas where they had established programs and generally onlynominal fees were charged to help defray transport costs within the country

Transportation of the grain to Ouagadougou was handled byChanaian Food Distribution Corporation the

(GFDC) the Ghanaian agentfor the trilateral through a contract directly from USAID withsubcontracts from GFDC to the Ghanaian State Transport Corp(2000 tons) and The Progressive Transport Owners Association(3000 tons) a group of independent Ghanaian truck owners TheGFDC handled freight forwarding within Ghana and USAIDOuagadougou contracted wich SOCOPOA in Burkina to handle freightforwarding beyond the Ghana border A private marine surveyorwas contracted by the USAID tosame inspect the condition of theshipments upon arrival Internal transport in Burkina Faso wasthe responsibility of the individual PVOs

Mali

12

The 10000 tons of maize shipped from Ghana to Maii was alsofurnished by the GFDC out of Kumasi It was shipped to fourlocations in Mali--Ansongo Bamako Gao and Meneka via BurkinaFaso and Niger The grain was consigned directly to World VisionRelief Organization (WVRO) a PVO which received the grain andinspected stored and distributed it in Mali The first shipments went out on June 6 and the last on November 23

The shipment of Ghanaian maize to Mali was included in the agreement between AID and the GFDC for the shipment of maize to Burkina Faso AID also established a separate agreementwith World Vision International to transport the grain to MaliTherefore a separate agreement was established between WorldVision and the GFDC to incorporate this arrangement and WorldVision paid the GFDC a fee for handling the grain in GhanaWorld Vision then contracted the shipment of grain to four pointsin Mali with Super Scientific Farms Ltd of Ghana World Visions direct costs an internal transport cost between Bamakoand Nioro of approximately 1768 mt of grain and freightforwarding costs through Burkina Faso and Niget we included in a separate PAPR The latter also included freight forwardingcosts incurred by Marine Overseas Services Inc(MOU)contracted by World Vision to organize and coordinat ta operation4

The Southern Africa Trilaterals

Un September of 1985 USAIDMaputo recommended a trilateral transiction of 40000 metric tons of white maize from Zimbabweand Malawi The amount was subsequently reduced to a request for 10000 mt5

There were several long delays in the approval process whichultimately led after approximately nine months to a signedagreement (see Section IV below) On June 13 1986 an agreement was signed between the USG and the Government of Zimbabwe (and

4 Some question could arise as to compliance with theterms of the PL 480 legislation and AID Regulation 11 for the transport of maize from Ghana to Mali under this arrangementSection 2114c (2) requires reimbursement by Voluntary Agenciesto the USG for expenses incurred at their request and fortheir accomodation which are in excedss of those which the USG would have otherwise incurred in making delivery (i) at thelowest combination of inland and ocean tranasportation costs tothe US as determined by the USG and(ii) in sizes and typesof packages announced as avaialable (AID Handbook Nine)

5 Maputo 2614 and Maputo 1063

13

FIGURE II

ZIMBABWE - TRIPARTITE - I

5 Sep 85 Maputo 2614 USAID Recommends Tripartite of 4 0000mt of Corn from ZimbabweMalawi

21 Mar 86 State 088058 AIDW proposes FFPW Pearson and OMB Moser travel to region

2 Apr 86 Visit by PearsonMoser

11 Apr 86 Maputo 1063

USAID Recommends Tripartite of l0OOOmt of Corn 11 Apr 86 World Vision Operational Plan for 10000mt Corn

11 Apr 86 Harare 2264 Proposed Language for Agreement

7 May 86 State 142634 AIDW Approves 70003000 Split

31 May 86 State 171219 AIDW Approves Language for Agreement

13 June 86 Agreement Signed

19 June 86 Grain Deliveries Begin to World Vision

17 Jul 86 3028mt Delivered to WVI

6 Aug 86 4750mt Delivered

ZIMBABWE - TIPARTITE - II

24 Dec 86 State 397639 PL 480 Title II Emergency Approval(DCC approved wheatmaize swap - 3372 mt wheat 3000 mt maize)

-

9 Jan 87 Harare 0134 Three options on swap for AIDW consideration

24 Jan 87 State 022053 AIDq chooses option A and with GOZ

approves negotiation

27 Jan 87 Harare 0473 GOZ confirms its agreement re option A requeits authorization to sign

USAID

10 Feb 87 Harare 0797 USAID requests authorization to sign

18 Feb 87 State 047351 AIDW authorizes signing of agreement

20 Feb 87 Agreement signed in Harare

countersigned by World Vision) 6 which provided for the deliveryof 7000 tons of Zimbabwe white maize to Mozambique Thesetransactions came to be known locally as Triparti e Round IGrain deliveries from the GOZ Grain Marketing Board to World Vision began five days later

Slightly later on July 24 1986 a similar agreement involving3000 tons was signed among the USG the Government of Malawiand World Vision reflecting a ten-month decision-making andapproval process Deliveries from ADMARC the GOM grainmarketing board World 90 orto Vision of approximately 2700mt were supposed to begin immediately As bewill seendeliveries of Malawi white maize under this agreement were stillbeing made to end-users in Mozambique in February 1987 when thestudy team was in the field and in April at the time of writing this report

Based primarily on the successful and speedy implementation ofthe Zimbabwe-Mozambique portion of Round I (see Figure I ) andthe continuing emergency situation in Mozambique the DCCapproved a second USG-Zimbahwe-lozarnblue trilateral December24 1986 Negotiations with 2 u the terms of the

undr-r thilt tr ction took about two monthsThe agreement was signed cii Pcruary 20 1987 and delivery bythe Grain Marketing Board was to begin in three days In this case World Vision was not included in the agrcrnent and the GMB was responsible for delivery to the appropriate GPRM agencies

On September 26 1986 a trilateral agreement between the USGand the Government Kenya signed theof was for provision ofKenya white maize for emergency feeding programs in Sudan

6 In Round II as will be seen World Vision was left out Even in Round I with the USG-GOZ agreement it was notclear at first whether it was appropriate for a PVO to sign as anequal party to the agreement As was the solution for theZimbabwe agreement in the Malawi trilateral agreement WorldVision was include6 as a signatory on a separate line A pointraised by most posts visited was fact in ofthe that none thesearrangements is the recipient country a signatory to the agreements So technically they are not legally obliged toreceive the commodities specified and are not bound in any other way to honor the agreements Where the PVOs have been included asintermediaries as in the Southern Africa trilaterals in Round Iit is the PVO that makes the agreement with the recipientcountry However in Round II this was not the case and theagreement is still only between the and GOZ notUSG the including the GPRM So far this does not seem to have caused any probiems However if the recipient country were a party tothe agreement it would be possible to include policyperformance objectives and to make more clear issues ofownership and title such as those that are raised at the ene ofthe West African case study narrative in Annex C

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A]though this trilateral is not included as a case study here it has had an impact on the approval of a subsequent trilateral involving Kenya and Mozambique whose background decision-making process is discussed in what follows

By February 1987 there was considerable discussion and cabletraffic concerning a further trilateral transaction among theUSGZimbabwe and Mozambique However there was an equalamount of discussion about whether or not Kenya could beatZimbabwes maize prices and also decrease the delivery time toaffected areas in Mozambique--and attendant transport costs--bysending its maize by ship down the coast from Mombasa Thesediscussions were taking place theduring teams visit to thefield and in fact REDSOESA requested that the team visitNairobi to get the details on the Kenya case for cheaper and more prompt delivery

Shortly after the team returned to Washington in March the DCCapproved a 22000 metric ton trilateral transaction to providewhite maize for emergency feeding in Mozambique Despite the casethat Zimbabwe hEgtd made regarding its ability to provide all orpart of this maize the decision was to use Kenya theasexporting country USAIDNairobi and REDSOESA had arguedsuccessfully in cable traffic that Kenya white maize could beprocured more cheaply in a barter arrangement than couldZimbabwe white maize They also posited that this Kenya maizecould possibly be moretransported efficiently by sea fromMombasa to Mozambiqan ports and that this would be andcheaperfaster than transporting Zimbabwe maize overland

It is only fair to note that this possibility was discussedduring an earlier visit of high-level AID officials to Kenyaand that the DCC approval took place in close proximity to avisit to the US by Kenyas President Further at the time this decision was made relations between the US and Zimbabwe were still poor and the bilateral AID program there had still not been restored There was also a desire on the part of USDA to establish an export market for wheat in Kenya

With the exception of the problems experienced with delivery ofMalawi maize on schedule which will be discussed in further detail below these trilaterals have been relatively simple toimplement once approval has been given by the DCC and agreementshave been signed with the respective exporting countries

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III THE PROS AND CONS OF USG EXPERIENCES WITH TRILATERALS

In this section we will discuss specific issues of timeliness and cost giving our findings both pro and ourcon assumptionsabout the developmental impact of these four trilaterals on theexporting and receiving countries including domesti- policy andexternal policy and trade considerations suitability ofcommodities provided in terms of nutritional status and tastepreferences of beneficiaries in the recipient countries andimpact on investmernt in infrastructure in the respective regionsThese rubrics essentially cover the pros of such trilateral arrangements

Next we will discuss the cons as they may been determinedfrom these same four cases Here what will be covered are themarket development interests of the USG the potentialinhibition of normal patterns of intra-regional trade the matter of loss of US identity of the food provided tobeneficiaries and finally the matter of complexity andburdensomeness of negotiations and approvals of trilateralt~ansactions These issues were identified in the scope of workfor the study and must of them turned out to be relevant as the study research was being carried out

Background

It was difficult for the team to obtain reliable composite dataabout how long it takes to get US relief food to the ultimatebeneficiaries under normal bilateral arrangements either in emergency or non-emergency Title II situations As is discusedin Annex B this is in part a result of different agencies ofUSG collecting and

the storing different data sets Additionally

what might seem fairly recent data--from FY 1985 for example--aredownloaded from the system in AID Those responsible in theUSG believe that food originating in USG-owned surplusstocks and shipped from Gulf ports on American vessels canreach ports of entry of countries with hungry populations inabout three months from the time the request is approvedSometimes in severe emergencies essels loaded with fooddestined for other countries are diverted at sea to ensurequicker delivery to those most in need Certainly manydedicated and hard-working people are involved in emergency fooddistribution both in the USG in US and European PVOs andin indigenous PVOs and recipient country governments Still for many reasons it cannot be guaranteed that a particular amount offood will reach a particular group of needy people in a givencountry within the amount of time desired or originallyestimated Many of those interviewed indicated that if all foodaid requested actually arrived on schedule the local system

16

would be incapable of handling it7

It should also be stated that US humanitarian assistance andthe willingness of the American public to contribute for suchassistance--through government and private sector initiatives--isquite weLl known As noted in a recent AID-funded evaluation of African emergency Lw) -issistance

in an extraordinary effort Unitedthe States throughpublic and private initiative shipped threeover million tons of food matched by another three million tons providedby the rest of the world [during the 1984-85 African drought] This immense response saved millions of lives andreduced the suffering of millions more Despite the heroiceffort however many died and hundreds of thousands suffered severely (Wood Barron Brown et al 1986)

In support of this effort many American interest groups-shyincluding farmer-based organizations and private voluntaryorganizations--were very active in lobbying the Congress for moreand quicker commitments of emergent ioo wnco Africaass is forThese same groups are active each year in insuring that the PL480 legislation continues to be backed up by suitable appropriations including for Title II

The Pros

Timeliness of the Four Case Study Trilaterals

How then do these four trilateral arrangements rate in terms of some generally acceptable norms for timeliness of emergencyaid programs Here we must

food take as the baseline the date onwhich the DCC approved the transaction since this can beidentified readily for bilateral as well as trilateral

arrangements For twothe trilaterals involving Ghana it iseasier to determine relative cost than relative timeliness (seeAnnex D) For the bilateral program with Mali the previous yearunder Title II Section 206 there does not seem to be a radicaldifference (see Newberg Morton and Harmon 1985) Here theapproval procedure is somewhat different and took about two years since and PID and PP had to be developed and approvedThe Program Approval Date for the transaction was June 15 1984the TA was signed in July 1984 Deliveries in year II wereloaded in September in the Gulf and began to be received at the

7 Recently better methodologies have been developedassessing food needs and scheduling emergency aid for

to meet themSome of this work has been funded by AID and carried out byLaura Tuck under a Food Needs Assessment Project

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port of Abidjan in October8

For Southern Africa the bilateral comparison for a normalTitle II program is that for Mozambique implemented by WorldVision during the same time period as the trilateral Here we were able to obtain from World Vision comparative cost estimatesbut did not discuss time comparisons in great detail The WorldVision staff interviewed indicated that in both instances theirperception was that delays occurred first at the Washingtonlevel in the approval process for both transactions They alsodiscussed problems with the bilateral in terms of theappropriateness of the commodities included--yellow maize isincluded along with beans and oil--and the appropriateness ofthe volumes and types of containers used WVROs contentionwhich seems to be borne out by the teams research is that thedevelopmental impact of the bilateral could be enhancedconsiderably if for example oil were shipped in larger drumsand then repacked in smaller drums made in Southern Africa even perhaps in Zimbabwe 9

World Vision argued as has been noted elsewhere that while thetrilateral with Zimbabwe had gone very fast and expeditlouslythey were now having more and more difficulty getting approvalsfor the various steps in the process of implementing a number ofother trilaterals for other donor countries Thus theysuspected that subsequent trilateral arrangements negotiated bythe US with the GMB would experience delays as well as moreand more demands were placed on limited infrastructure It wasasserted during our visit in February that all freight space onthe railroad was now booked up through July

As has been seen the trilateral involving Malawi was much slowerwhen it reached the implementation stage At the time of thisstudy all the maize had finally been received by World Visionalthough deliveries in Mozambique were probably still being made

8 One of the members of this study team was present at adonor committee meeting with the GRM thewhere issue of portcongestion and rail and truck constraints for moving food reliefcommodities to Mali was discussed in some detail in 1985 Inconnection with the 206 commodities the USAIDBamako AgricultureOfficer came to Washington on TDY at least once in connection with trying to speed up the dElivery of these US commoditiesAIDMSEROPTRANS indicated that the FY1985 data base had beendown loaded so there data were not vadily available for FY1985 year I of the 206 program

9 Their supposition Was that it would not be any moreexpensive to ship the oil in bulk from the US to Beira thenship it in bulk by rail through the Beira Corridor to a point inZimbabwe where it would be repacked in locally made smallercontainers and then shipped to Mozambique than it was to shipit in five gallon drums from the Gulf as is presently the case

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The extenuating circumstances accounting for this will be discussed further in Section V

In summary two of these trilaterals--the USG-Ghana-Mali andthe USG-Malawi-Mozambique transactions--deliveries were slowand took a number of months despite the relative proximity of the source of supply in the exporting country On the other hand theUSG-Ghana-Burkina Faso trilateral deliveries were completed infour months and those for the USG-Zimbabwe-Mozambiquetransaction were completed within two and a half months which seems to at least equal the fastest estimates for bilateral programs where the commodities come ex-Gulf and on US bottoms

Cost

Cost-effectiveness of all four trilaterals studied is analyzed indetail in Annex D Here we admitmust that the West Africantrilaterals especially that with Mali appear to have cost to the USG than would have been the case

more for equivalent

tonnage of bilaterally transacted food aid For Burkina Faso itis not so cle--r that the trilateral cost more either absolutelyor from the USG perspective With benefit of hindsight as isdiscussed below fewer facilitating organizations involved inthe transaction might have reduced the cost considerably at least in the Mali case

For the Southern African trilaterals there may have been somecost savings to USGthe Zimbabwe interested in surplusreduction and especially in obtaining US wheat without havingto expend scarce foreign exchange agreed to pay the costs of ocean freight for wheatex-Gulf the and were able to arrangeshipping that cheaperwas than it would have been to the USG given cargo preference considerations

For comparison purposes it should be noted that under the PL 480Title II program implemented by World Vision in FY 1985 13000mt was received from the USG for distributionsMozambique In cooperation with DPCCN

in the (Department for thePrevention of Natural Calamities) and the Mozambique Red Cross assub-cooperating sponsors WVI distributed these commodities todroughtinsurgency affected recipients in Tete and ManicaProvinces in Western Mozambique and some in Gaza Before thetrilaterals were arranged the FY 1986 program consisted of 9000

mt of maize 2160 mt of vegetable oil and 11800 mt of pintobeans Distribution was again primarily in Tete and Manicaalthough again some was distributed in Gaza ( Up 30to ofthese commodities could be commercialized) Some 3000 tons ofmaize were diverted to Zambesia Province

When the trilaterals were approved WVI amended its operationalplan to account for the additional maize as follows

The 10000 [sic] metric tons of Zimbabwe white maize to beprovided under this supplemental emergency request will not

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replace shipment of already-approved Title II commoditiesThis new approval will permit an acceleration of shipmentsinto western Mozambique and an expansion of the WVI progr-rminto Zambesia and Sofala Provinces that have recently beenaffected by increased insurgent activity Call forwards ofvegetable oil and pinto beans will proceed as originallyplanned Call forwards of US yellow maize will be diverted to Quelimane as required to meet emergency requirements inZambesia After this 10000 metric tons has been utilized(by July 1986) the additional remaining amounts will becalled forward to continue operations in Tete and Manicathroughout the remainder of the year (WVI Revised Operational Plan for FY 1986)

Five thour-and mt was to be delivered in Beira while 2000 and3000 respcctively were to be delivered to Manica and TeteMalawi became part

When of the arrangement the delivery pointschanged somewhat as is discussed in the cost-effectiveness

analysis

The conclusion that can be reached regarding a comparison of theFY 1986 bilateral and the additional trilaterals implemented byWVI as to cost is that holding WVIs costs constant thedifferences are the following for the inland freight costs

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Bilateral Trilateral

Ocean Freight Inland Freight 8913a 10070b Other 1200

Total 10113

Note Other bilateral includes handling etc to end userZimbabwe combined their trilateral grain with Section 416 and organized their own shipment The ocean freight value the USG would otherwise have paid was taken in wheat

a From WVI SA ports to point of entry Mozambiqueb Calculdted cost of maize from Zimbabwe and wheat to Zimbabwe

Generally other costs would be approximately the same unless thevalue of wheat was greatly different than the value of maize In a case large differencessuch in total ocean freight and total

inland freight costs would be noticed

Developmental Considerations--Domestic Policy and Trade Implications

Impact on Policy Reform in the Exporting Country

One of the points in favor of trilaterals argued by AID in itson-going dialogue on the subject with the USDA is the positiveimpact of such arrangements on policy reform in the exportingdeveloping country A draft Action Memo to the AssistantAdministrator for Africa providing the justification for theSouthern Africa trilaterals noted that such arrangements couldreinforce and reward agricultural inpolicy reform initiatives Zimbabwe and in Malawi that had been encouraged by other AID programs

Whose policy reform and policy dialogue achievements were mostappropriate for reinforcement was an issue raised both inUSAIDZimbabwe and USAIDKenya when both were competing for apossible Ecund III trilateral USAIDKinshasa raised policyconcerns during the pre-Round I exchange of cables arguing thatthe vaunted incentive prices for producers in Zimbabwe mentionedin the introductory cable by the FPPO were really inappropriate price subsidies

The memo mentioned elsewhere outlining the advantages of usingUS-owned cedis in Ghanathe trilateral transactions does makepoints about reinforcing policy reform objectives as well assolving USGexcess currency and Ghanaian debt paymentproblems However in the written documentation it isinteresting how few of the many pages we were provided from cabletraffic and memoranda address policy implications of trilateral arrangements Yet trilaterals in themselves may as we have

21

seen support existing policy reforms as well as helping to generate new ones

In fact given the eagerness of surplus producing countries toenter into trilateral arrangements it is plausible to assumethat at least in some instances the sorts of Self-Help Measures(SHMs) required in Title IIII agreements could be included atleast as side-letters to trilateral letters of agreement WithAIDs continuing emphasis on policy reform in Africa and the neworientation toward integrating food aid more fully intodevelopment program planning this would seem an attractivepossibility Thus policy progress would continue to bereinforced through trilateral arrangements while additionalpolicy strides could be encouraged at the same time All of this assumes however an effective on-going policy dialogue processand may not be appropriate

offor the ideally short timeframes Title II emergency situations

There is now a general consensus that the most critical elementsin developing commercial export markets for US commodities indeveloping countries is rapid economic development and rising percapita incomes In this context the question that arises withrespect to trilaterals is whether fostering intra-regional tradeand developing regional infrastructure for commercialtransactions is in the long run interest of the US In theEastern and Southern Africa context there is the question ofwhether if Zimbabwe couldand Kenya develop viable regionalcommercial markets for the products they have a comparativeadvantage in producing eg maize they would become commercial importers of for example wheat

In the Zimbabwe case it is clear that wheat consumption isconstrained to an unknown degree by a system which rations wheatto commercial millers and bakers This pent up demand willclearly expand as incomes rise and urbanization occurs It isalso clear that expanding domestic wheat production is expensivebecause current production is constrained by irrigationdevelopment There is at least a plausible case to be made forthe US encouraging white maize exports as an engine of growthparticularly in the commercial areas where maize can be grownefficiently While it is difficult at this point to marshal hardempirical evidence thisin regard development theory supportsthis notion If regional markets develop somefor productsthere is a real likelihood that tradingmore patterns could develop

In many respects the analysis of a trilateral food aidtransaction is to ofsimilar that bilateral transaction in termsof trade impacts Theigtt arq however some differences regardingmarket development impacts appropriate questionsThe are the following

1 What impact woulddoes the transaction have on world pricesand prices in the recipient country

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2 Is the commodity movement in addition to trade or does itpartially o7 completely replace a potential commercial transaction

3 Does it have the potential to increase US sharemarket even if total trade is not increased This is acompetitiveness question

4 Does it compete for transportation and handling facilities that could be used for commercial transactions

5 What are the competitive dimensions of the transaction in terms of other exporters

6 Does it contribute to reducing US stocks

7 Does it have the potential of developing long-termcommercial markets for US commodities

8 Does it contribute to US humanitarian and overseasdevelopment (alid) objectives

These questions are general with respect to food aid - bilateral or trilateral There are however additional considerations in a trilateral Given that a trilateral involves both surplus anddeficit countries the following additional dimensions need to be addressed

9 Is the market development potential greater (or less) in thetarget (recipient) countries or the intermediary (adjacent) country

10 If both countries are in the same region does thetransaction have regional developmental andor market implications

11 Does reducing surpluses in the developing country (as well as the US) make a positive development impact

12 What are the implications of the potential loss of productidentity in the recipient country

The impact of food aid transactions on world prices is a functionof (a) the size of the transactions relative to commercial trade(b) the degree of market separation between commercial andconcessiotial markets and impact of stock overhangs on worldprices Food aid in general and trilaterals in particular havenot in recent years been sufficiently large to impactsignificantly on world prices The fact that trilaterals to date are very small relative to total food aid allows the conclusionthat trilaterals at magnitudescurrent do not reduce worldprices The critical question for market separation is whetherconstraints such as availability of foreign exchange would

otherwise limit or prevent a commercial purchase by therecipient This is also the central question in theadditionality debate Accumulated evidence mainly anecdotal onfood aid in general suggests that food aid is somewhat (10-30)additional but does replace to some extenL commercialtransactions Even poor countries with severe constraints assignvery high priority to food supplies The major difference in atrilateral is the question whether the intermediary country wouldotherwise have dumped its surpluses on world markets Theoffsetting question is whether that country would havecommercially purchased the US product in the absence of thetrilateral In the case studies under consideration themagnitudes are so small that either eventuality would have hadnegligible impacts

The question of domestic price impacts in both countries is afunction of domestic policies and would be the same for bothbilaterals and trilaterals In sum issues of price impacts andadditionality are sufficiently similar in both cases so as not toallow differentiation between bilaterals and trilaterals

Questions 3 and 5 are best answered together Food aid has thepotential advantages that it essentially ties the recipientcountry to the donor source In this sense it should improve theUS share of total world trade to the extent that thetransaction has some additionality If there isadditionality ie notthe country eg Zimbabwe would have boughtwheat anyway the US still could gain share to the extent thatthe country would have bought from other importers instead of theUS This however is a tricy argument because we have no wayof knowing what the total volume of imports would have beenThis question has tuoubled all analysis of bilateral food aidGiven the oartici w

-h-x o-rters in trilateraltransactions particularly Canada and Australia to some extentthe US needs to be active to keep a competitive position inpotentially emerging wheat markets in Eastern and SouthernAfrica In other w rds if there is to be the possibilit oflonger-term market development US participation in trilateralsmay have a competitive imperative aside from aid and humanitarian objectives

(Question 4) Food aid does potentially compete with commercialtransactions for space in limited transport and handlingfacilities in many developing countries In this regardtrialterals may be advantageous in that regional trading patternsare likely to be distinctly different from internationalpatterns For example shipments from Harare to Biera are notcompetitive with potential commercial shipments to Maputo or intoZimbabwe via South African ports How severe transportconstraints are would vary from country to country but certainlyhere trilaterals could have an advantage

The question of whether trilaterals reduce US stocks is thesame as for bilaterals It depends on the [additionality] of the

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transactions given foreign exchange limits in both Zimbabwe andGhana it is likely that the trilaterals studied did contribute tothe reduction of US wheat stocks Conversely of coursedirect food aid shipments of yellow maize to Mozambique Mali andBurkina Faso would have reduced corn stocks Thus the stockquestion must seek the relative burden of stocks of one commodity versus another

In summary the trade impacts of bilaterals versus trilateralslikely on balance even out To date trilaterals aresufficiently small to limitedas have price and world tradevolume impacts If the aggregate volume of food aid remainsreasonably stable shifting volumes from bilaterals totrilaterals should limitedhave global and US market share impacts

Market Development Impacts (Questions 7 9 12)

One dominanz objective of US policy under PL 480 is long-termmarket development There is considerable qualitative (andanecdotal) evidence that persistent aidfood shipments in theearly stages of development develop trading patterns and nationaltastes for the donor product Japan South Korea and Taiwan areoften and appropriately cited as evidence There is also similarpreliminary evidence developing in Africa for rice and wheatThus concerns about the potential of trilateral food aid forlonger-term market development wellis taken In many of ourdiscussions this issue was raised

In the Southern Africa case the question directly put is is thepotential for commercial wheat exports eventually developinggreater in Zimbabwe and Kenya than one for yellow maize in say Mo nion lus analysis of income growth andurbanization patterns clearly suggest that it is Furthershipping a non-preferred product to a country is very unlikely todevelop long-term markets In this general sense the US seemsbetter off to trade wheat for maize in Zimbabwe than to ship US corn to Mozambique in addition meeting more effectively acountrys direct and preferred food needs even if indirectlyseems better Thus on market development and aid grounds thetrilateral seems to have an advantage if the recipients food

preferences are not for available US commodities

This argument however probably holds less force in Mali andBurkina Faso where the barter commodity (white maize) was not thepreferred commodity If red sorghum is the dietary preferencefor the semi-arid area then that transaction more likely wouldhave to be justified on efficiency (timeliness) and costshyeffectiveness grounds However the development of a long-termcommercial market ricefor in Ghana and other West Africancountries would still be a consideration Given increasing ricedeficits in West Africa this is an important consideration

In sum the market potential of trilaterals versus bilaterals

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really depends on a careful analysis of long-term demandpotential in the intermediary country for US products versusthe potential in the target or recipient country In the Eastand Southern Africa case the potential for a commercial wheatmarket seems clearly larger than for yellow maize The same is likely in West Africa for both rice and wheat

Nutritional Appropriateness and Taste Preference

One of the positive characteristics of trilaterals mostfrequently stressed by those who support the development impactpotential of such arrangements is that they facilitate provisionof locally appropriate commodities to food aid recipients Therehave been a number of stories in the past of famine-stricken people in various regions of the world who refused to eat donatedfood because they didnt know what it was knowdidnt how to prepare it andor because it was spoiled by the time it reachedthem Alternatively it has been asserted in some instances thatthe reason it is better nitritionally to provide cash for workthan food for work is that recipients will sell the food wage inthe market if it is an unfamiliar commodity in toorder obtainfoods that they find more palatable andor that they will spendthe proceeds on foods that are more nutritionally appropriate in terms of the rest of their diet (see AID Impact Evaluation No 8 and LeFrank 1986)

Perhaps fortunately the extent to which people who are starvingwill avoid unfamiliar foods has not been formally quantifiedStill there seems to be a certain amount of anecdotalinformation to this effect In any event it seems fairly clearthat a food which people are used to and know how to preparewith the means at their disposal is likely to be appreciated--andeaten--fore than one doesthat not have these characteristics

In the Southern African trilaterals the case that white maizethe kind preferred by people in Mozambique and elsewhere in theregion was an appropriate commodity for food relief from adietary and preference point of view is fairly clear Onother hand GPRM officials and PVO staff the

indicated that it wasundoubtedly true that people wculd eat yellow maize if they hadto and as we have the US wasseen providing yellow maize forfeeding in Mozambique under the regular bilateral programimplemented by World Vision Still this tnein region taste preference is clear and widesprea6

In Burkina Faso and Mali however the situation is somewhat lessclear-cut In some of the regions of Mali to which Ghanaianwhite maize was shipped under the trilateral millet isgenerally preferred the

food Millet is also a more frequentlyproduced cereal in Burkina Faso as Stillwell white maize iseaten in both countries particularly in the south of bothcountries (white maize can be found in markets in the north butit is not common) whereas rice is fooda more characteristic ofurban tastes Yellow maize in any event is not generally

26

available or eaten anywhere in either country

To some degree despite the nutritional arguments and therealities of taste preference the type of commodity provided is more a political question than anything else As we noted in thebackground section there are many American farmers who feelpositively about their surpluses reaching hungry people indisadvantaged countries but who are not so positively inclinedto providing the produce of other countries and other farmersSimilarly there is a point of view that says that if the peopleare really in need they should take whatever is offered like it or not Subsidiary to these political questions or perhapsunde-lying them all the while are the questions of marketdevelopment that have been addressed above But it seems fairlyclear that even if people will eat US yellow maize when theyare starving they will drop it as soon as they have analternative Thus unlike the evidence for US wheat practiceencouraged by PL 480 and other import sources does not seem tohave much potential to encourage amp lasting change in tastepreference to yellow maize The lesson therefore seems to beto develop markets for wheat instead and for yellow maize where it can be imported for animal feed

Infrastructure Development

A theme of Len stressed by those who support regional developmentin AID and the SADCC initiative in particular is that ofinfrastructure development within the region At a recentconference on Southern Africa number ofa papers addressed thisissue from several points of view During our field visits weraised this question in each country but it was regarded as mostsignificant only in the cases of Zimbabwe and Mozambique interms of the impact of the Flepublic of Scuth Africa--and Renamo(MN R) insurgents--on the ability of Zimbabwe to export itssurpluses and of Mozambique to receive and distribute themZimbabwe commercial farmers also discussed with us the problem oflimitations to irrigated wheat production and matters of irrigation in general

The impact of the Republic of South Africa on agricultural tradein the region is discussed in some detail in a recent paper byMichael Lipton In the end Lipton argues for greater resourceallocation to agricultural research in SADCC ratherthe regionthan to attempts to circumvent the virtual South African monopolyon transportation infrastructure in the region 10 Certainly itis beyond the means of the Front Line States at the present time

10 See Lipton September 1986 and HH Patel 1985 for adiscussion of the influence of South Africa on Zimbabwes foreignpolicy and 1986 aPatel for discussion of the Republicsinfluence in the region

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to duplicate the infrastructure controlled by the Republic Theyare presently spending--especially the GOZ--quite high amounts oftheir limited budgetary resources to protect the Beira Corridorand contribute to the Corridor project

In terms of the trilateral transactions discussed South Africandecision-makers had the ability to decide to divert shipsbringing the US wheat for Zimbabwe or Malawi from Durbanintended port of entry in both transactions

the to Port Elizabeth or some even more distant port either on the basis of real

congestion issues or simply as a nuisance to the intended recipients It feltwas by representatives of the Zimbabwe GMBthat this might pose problems for the profitability of further trilaterals

The discussions regarding irrigation development in Zimbabwe toenable increased production of irrigated winter wheat tended to center around the cost of such infrastructure development andthe resultant increased costs of production as well as issues ofequity as whitebetween commercial farmers and communal farmers(Blacks) A loannew program had in fact recently beeninitiated by the government to enable communal farmers to developsmall scale irrigation for wheat production btt loans were apparently not being taken up with too much enthusiasm A furtherissue was the ultimate limits to irrigation development in Zimbabwe regardless of cost

Generally even the representatives of the Commercial FarmersUnion indicated that they realized that werethere definitelimits to the development of irrigation in the country--they arequite concerned with conservation in general--and also know thatirrigating wheat notis cost-effective given world pricesStill they are not keen about an imzo policy that would favorimporting cheaper wheat and thus encouraging diversification ofirrigated production There is a remnant of the bunker mentality that arose during the UDI (Unilateral Declaration ofIndependence) period and in part relates to contemporary worries about South Africas control of the long-distance transport infrastructure

Somewhat ironically given the present problems with RenamoMozambique is SADCCthe country charged with infrastructure planning for the region In this context it benefits from the services of some expatriate technical assistance (TA) from theUN as well as from AID To the extent that emergencyconditions continue and the many donors providing food aid toMozambique become increasingly frustrated by 2imited transportand storage capacity they may become more inventive and moresupportive of funding to resolve these problems in Mozambiqueitself and in the region

Meanwhile the EEC has designed a regional food security projectwhich is estimated to require $200000000 in donorcontributions EEC is guaranteeing the costs of the first year or

28

two including setting up an office in Harare and costs oftechnical assistance This project if fully funded will havesignificant impact on storage infrastructure and might have aspin-off effect on transport To the extent that Zimbabwesurpluses keep going to feed Muzambique--and are also exportedcommercially--this project and the trilaterals themselves maybe seen as providing further impetus for such regional projectsThese kinds of price-tags however are certainly inhibiting

In Francophone West Africa there have already been a numberefforts to initiate regional trade incentives including underECOWAS the West African Economic Community There are tariff agreements and other incentives already in place and the CFA zone also facilitates intra-regional trade However there arealso government-regulated price differentials for freight ratesthat have as may be seen in Annex C deleterious effects on theabilities of some of the countries such as Mali to get fastservice for delivery of their imports from coastal ports

While one of the sectors under the original Club-CILSS agenda wasimprovemetL o regional transport infrastructure donors have notbeen able on the whole to come up with funds in the magnitudesrequired Improvement of roads under the AID Sahelappropriations was a bete noire for several years althoughsuch improvements were at the top of the list of each hostcountry It was felt that infrastructure investments wereinappropriate under the AID policies then in place Ruralroads for farm to market purposes are the exceptions The Pericou-Niger border road in Benin is another

In summary the idea that trilaterals tend to encourageinfrastructure development that will in turn facilitate intrashyregional trade seems to be neither confirmed nor disconfirmed bythe evidence from these four cases The problems encountered inthe delivery of trilateral maize from Zimbabwe to Mozambique areendemic to the present situation in the latter country and cannot be resolved by increased frequency of trade along those routes Donors in Mozambique are however experimenting withvarious means of delivering relief food to shallow ports betweenBeira and Maputo so as to minimize problems caused by the MNRinsurgents According to those with whom we met theseexperiments were not very successful and wer extremelvexpensive however In West Africa rne problems of the policiesof the land-locked SaheLian states in terms of port congestionrail rates and competition for rail and truck capacity areunlikely to be resolved by additional use of already-strainedinfrastructure either since funds and--in some instances--the political will are lacking to alter the present situation

There is some evidence from the West African trilateral casesthat the recipient countries might in fact have done better toreceive US commodities shipped from the Gulf and trucked over more normal routes eg from Lome Yet as the case studypoints out among the advantages to the economy of Ghana was that

29

the national truck fleet of Ghana was greatly improved Highrates paid to contracted truckers in CFA france allowed them topurchase spare parts new tires as well as fuel for which littleforeign exchange would have been available without the transactions

The Cons

Lost US Export Opportunities

All of the cases included in this study have similar basiccharacteristics The target country (eg Mozambique MaliBurkina Faso) an foodhad acute shortage of a preferred staplefood commodity but lacked the foreign exchange to purchasenecessary quantities on world markets theIn case of Sudanthere was not an acute food shortage in the country as a wholerather there is a problem in the South because of civil strifeThe US decided for various humanitarian reasons that food aidto the target country was appropriate but it did not have(surplus) stocks of the preferred commodity available for immediate shipment

An adjacent or close-by developing country has stocks of thepreferred commodity but cannot afford to give the surplus awayand will not accept its neighbors local currency for commercialpurchasesll This adjacent country also has the need for acommodity the US has available To meet the target countriesfood aid need the US has at least three options (1) ship anon-preferred commodity directly to the target country (2)purchase for cash the preferred commodity from the adjacentcountry and ship it to the target country or (3) trade (barter)a US commodity to the adjacent country and have that country or a 2VO ship the preierrid commodity to th3 arge country

There are both immediate (and specific) issues of efficiency andcost-effectiveness of these alternatives and broader trademarket development and economic development issues involvedSeveral of the efficiency (speed) and cost-effectiveness issues are dealt with elsewhere reportin the However some additional ones are commented on here Then the remainder of the sectiondea with boader trade and the JS really only considersoptions 1 3and Therefore it is really a comparison ofbilateral versus trilateral food aid But it is noted that other

11 Zimbabwe has given surplus maize to Mozambique and to Ethiopia All theof countries in the SADCC region are probablywilling to contribute surplus grain to a grain storage activityfor regional food security andas when they have surpluses itdoes not seem from the evidence provided by these case studiesthat trilaterals in which the USG swaps surplus cereals forsurplus cereals of a developing country act as a disincentive toself-reliance of individual countries or regional entities

30

donors use option 2 extensively (see Section II) This factor isrecognized in the subsequent discussion of trade competitiveness issues

Immediate Issues

The immediate issues are (1) the effectiveness in terms ofdevelopment assistance (aid) and diplomatic advantage ofshipping the non-preferred (US) commodity versus preferredacommodity (adjacent couaitry) (2) the speed (efficiency) withwhich the needed food can be delivered and (3) the costeffectiveness of each option The issue of the delivery of anon-preferred commodity has two parts - first how will targetcountry react to a less-desired food product and second whether a non-preferred commodity shipment has any significant potentialfor long-term market development This tirst part is betteranswered in aid and diplomatic term- reflecting field and programjudgments which are beyond the scope of this study The secondpart is addressed below and in Annex E where the general issue ofmarket development potential is discussed in more dEtail

The issue of elficiency (speed) is addressed elsewhere inthis report The general conclusion is thar there may be alimited speed advantage to trilaterals once the terms of theagreement are negotiated There is little to suggest theynecessarily take longer The issue of cost-effectiveness hingeson two critical factors The first is relative transport andhandling costs This is addressed in Section III The secondfactor is the price paid by the US for the preferred commodityThe price comid either be cash or a barter swap of a UScommodity This point deserves a fuller discussion as it iscritical to the relative costs of bilateral versus trilateral transac ions

The cost of a bilateral transaction is the US price of thecommodity plus transport and handling costs The cost of atrilateral involves these at but also must include the relativeprice of the US versus the adjacent countries commodity Anunfavorjble terms of trade significantly increases US costsinvolves an implicit aid transfer and

to the intermediary countryThis issue is best illustrated in the Southern Africa casesinvolving Zimbabwe In Round I transactions it appears thatbeginning point

the was to value US wheat at FOB gulf (US price)prices and to use internal Zimbabwe support prices for whitemaize As world and US prices have fallen the wheat cost ofmaize has risen or stated alternatively the price of US wheatrelative to Zimbabwe maize has fallen such that in the mostrecent transaction unit prices for a ton of wheat are less thatfor maize a price ratio at variance with world and US prices

In Round II transactions the terms of trade were furtherdistorted by giving an implicit subsidy to Zimbabwe in terms ofinflated maize prices to compensate Zimbabwe for transporting the maize to Mozambique

31

In evaluating the appropriate terms of trade several criticalquestions arise if internal Zimbabwe prices are above world(US) prices The first is - what are the appropriate commodityprices to use--world prices for both internal (Zimbabwe) pricesfor both or some alternative negotiated set of prices From theUS point of view world prices for both would be mostappropri Lte because then the cost-eflectiveness question could bedirectly addressed by comparing transport and handling costs of ) i ILeta versus triLateral cases

Ifowever bartering at world prices when Zimbabwe has higherinterna I prices means that the grain marketing board suffers aLinancial loss on the maize transaction which could reduce oreliminate the willingnessother hand of Zimbabwe to participatevaluing both at internal Zimbabwe On theprices means thatZimbabwe is paying a premium for US wheat over what it coulda-qcuire it for at world prices if it had the foreign exchangeAlso va luing at internal prices would reduce US wheatshipments for a given quantity of Taize

Thus there atze clear disadvantages t ZiiE)abwe of using eitherworld or internal prices for both commodities It has thereforeappeared to be necessary to reduce relative wheat pricesinduce participition to(This appears to have happened in allcases in Africa except the pending US-Kenya-Mozambique swapwhere Kenya seemed willing -it first to accept lower maize pricesto move burdensome surpluses) As the price ratio of wheatversus maize falls relative to world (or US) prices thesetranosactions invo]ve an implicit aid transfer to Zimbabwe (orMalawi or Ghana) This consideratioi should be factored in toany cost-benefit analysis of bilateral versus trilateralshipments ifr comparably based relative commodity prices are notused The same issue would arise if option 2 (purchases) wereused It is the judgment of this study that negotiations ofbarter terms trade have been locationof and time specific Itis difficult to determine if considerations of implicit aidtransfers to Zimbabwe were taken into account In future

transactions they clearly should be

Loss of US Identity of Food Aid Commodities

During our visits to the field we tried wherever appropriateaddress this concern since to

it is common to those who are waryabout the value of trilateral versus bilateral food aidarrangements Since we did not visit end-users andconducting wereour study substantially after the West African foodhad been distributed we do net have direct evidence from thebeneficiaries themseves We do however have the comments ofrepresentatives of the recipient governments as well as those ofPVO representatives who distribute the food While both sourcesmay then be consideed to be biased it would also have beenlikely that had we visited beneficiaries and been announced asAmericans they would also have answered questions with what theythought we wanted to hear

32

From the evidence we have this seems to be a non-issue Despitethe efforts made in all cases to mark the containers of thetrilaterally provided relief goods Gift of the United Statesin one language and form or another--and in letters sufficientlylarge to be noticeable--it seems that end-users did notnecessarily distinguish the source and origin of food aidreceived We have no reason to believe that bilaterally providedfood aid is better marked or that it is somehow seen as moreclearly American by end-users In both types of food aidtransaction end-users proLably do associate the food receivedwith the PVO that distributes it In fact World Vision wasinterested in changing the terms under which it had to mark allgrain bags to be able to include gift of World Vision or asimilar phrase To a large extent labeling of this kind seems to be for the benefit not of the end-users but of the contributors back home

Host government officials interviewed--as well as in-countryUSAID staff--indicated that there was no confusion at allinitiated by trilateral versus bilateral botharrangements InRounds ol the Zimbabwe transactions there were formal signingceremonies and attendant press releases and the USG probablygot more favorable publicity for this effort than for a number ofothers--that is credit was given both in Zimbabwe and inMozambique The AID Mission in Mozambique is also active inensuring proper coverage for deliveries of US-funded relief food

In the absence of evidence to the contrary the benefit in termsof good press for the US is then probably increased ratherthan decreased by trilateral arrangements aLd to the extent thatthe end-users know that the food they lke to eat is beingprovided by the US whereas foods less preferred may beprovided by other donors this would also amount to an addedplus The fact that the USG takes into account the regionalstrengthening aspirations of the SADCC states by providing aidtrilaterally is also a point not missed by the concerned governments This is an instance in which US signals areprobably significantly less mixed than is true in other areas of our policy in the region

On the down side however is the matter of expectations raisedby initial agreements to work trilaterally One thing that wasclear during our Zimbabwe visit was that the Ministry ofAgriculture representatives interviewed as well as farmers andother private sector representatives interviewed felt that it was very odd that US policy seemed to be veering away fromsupporting further trilaterals with Zimbabwe whose surpluseswere meanwhile increasing radically From their vantage pointnothing had changed except that their surpluses were larger theywere willing to sell (trade) at world market prices rather thanartificially high prices as before and the USG had evidencethat the two trilaterals already agreed to worked very wellWhy then the change of policy we were asked

33

The representatives of both GOZ and private sector organizationswere very much aware of overall US policy in the region andthe reason why the bilateral AID program had not beenrestored They were in close touch with both AID officialsEmbassy personnel including

and the Ambassador and tried hard tomake suggestions to the study team for the design of trilateralsthat might contain more of interest to the USG such as a sortof combination Commodity Import Program (CIP) and food aid

trilateral

The impact of the trilaterals in West Africa on perceptions ofthe origins of the aid are less apparent Given the benefits tothe Government of Ghana of the trilaterals it is clear that theGOG is likely to remember the arrangements quite positivelyespecially given the sort of windfall that they received in termsof the foreign exchange rates over the life of the agreements(See Annex C)

For Mali the impact may be less clear In Mali the fooddonors have gotten together to deal with aid

the GRM on a variety opolicy reform issues related to liberalization of the grainmarket As of 1985 the US was again providing Title IIbilateral aid to Mali although it had ceased doing so forseveral years because of problems with GRM accounting for salesproceeds The then-US Ambassador had however playedactive observer anrole in the multi-donor group even when the USwas not contributing so his visibility was high to the GRMthroughout the period in question (see Newberg Morton and

Harmon op cit)

During 1985 there was considerable concern on the part of theUSAID Mission that the capacity of the GRM institutionsresponsible for food aid delivery was very low and that therewere great possibilities for corruption Therefore the Food forPeace Officer (FPPO) was trying to identify an internationalorganization such the

as the Red Cross that could be brought intoaction once commodities reached Mali What impact this mayhave had on end-user perceptions of the source of trilaterallyshyprovided food aid is however not clear World Vision ashave noted was new we

to the country and therefore probably hadlittle name-recognition or identification with the US as against any other country

In Burkina Faso the Red Cross and the Baptist Mission as wellas Essor Familial had greater longevity and were probably wellshyknown to beneficiaries by the time the trilaterally provided foodwas distributed Certainly the Burkina Government was aware ofthe source of the grain and the relative responsiveness to theemergency situation of the United States given already-strainedUS-Burkina Faso relations due to UN votes against USpositions This would have applied to bilateral as well astrilateral donations however so once again it seems unlikelythat the trilateral nature of the arrangement had any negative

34

effect on the identity of the USG as donor

In the market development and aid sense the question ofcommodity identity is repeatedly rai3ed It is often argued thatin a trilateral transaction the final recipients egMozambique are unaware that the indirect donor is the UnitedStates when it receives maize from Zimbabwe In an attempt tooffset this difficulty shipments of maize from Zimbabwe arelabelled (unfortunately in English) as gift from the People ofthe United State To the extent that Mozambiquians can read andread English this may help in donor identity issues But eventhis is not going to help in product development objectivebecause it notis US maize If the quality is good and theproduct accepted it is more likely to develop a market forZimbabwean not US maize If the product is of poor quality itmay develop negative attitudes towards US products Thus thereis a product identity issue in the third or recipient countryOf course the flip side is how well would a non-preferredproduct be received if shipped directly

The identity question it seems to us is a more relevant questionin the intermediary country (Zimbabwe Kenya Ghana) If theorabove analysis is correct it is in these countries that greaterpotential exists anyway Here the development of tradingpatterns commercial use of US products and tradinginteractions seem to be potentially positive elements for marketdevelopment In sum the more relevant concern with productidentity should be in the intermediate country in most instances

The Complexity Attributed to Trilateral Negotiations

As we will see in more detail in the next section in the four case examples negotiations were neither particularly complex norvery lengthy On the other hand the review and approval processin Washington between the time the trilateral idea was first putforward to the time DCC approval was given is complex and hasbeen lengthy so far although it seems to be speeding up with practice

Figure IV outlines the steps that have to be taken before a TitlefI emergency program is approved whether it be a trilateral or abilateral one These steps may obviously be achieved more orless rapidly depending on a number of factors most of which arebeyond the control of the field Mission(s) and host country(ies)concerned What further steps are necessitated if the proposedarrangement is trilateral rather than bilateral Arguably moreinformation must be provided to AIDW and from AID to the othermembers of DCCthe Subcommittee Once in receipt of thisinformation AIDW and have

the other members of the Subcommittee willto digest it and determine what policy issues if any areraised by the addition of the third country in and of itself Ifthese are few or none as was the case essentially in all four cases examined here then the policy question remains thetrilateral nature of the proposal itself

35

We have a better data base for the review and approval processthat preceded the Southern Africa trilaterals than for that whichpreceded those in West Africa A memo written May 15 1985summarizes an on-going problem between the GOG and OverseasPrivate Investment Corporation in the latters collection ofnotes due resulting from the sale of Firestone tire and tubersshares in Firestone Ghana Ltd and Ghana Rubber Estates Ltd in 1981

This memo explains that the GOG was obligated to payapprcximately nine million cedis or $6109800 plus anundisclosed amount of interest on the remaining unpaid notes

The suggestion made given the recent signature of the trilateralagreement was to assist both parties to be satisfied by the following mechanism

Ifthe USG were to pay only the foreign exchange costs(of the trilateral) and the GOG pay the cedi costs of the transport the OPIC account could be offset and creditedwith the equivalent of the $160 million in cedis which is near the equivalent of the accumulated interest and one ofthe outstanding notes In the event more barter arrangements are made between our two governments thenGovernment of Ghanas payment of cedi costs of transportcould be used to cover payment of cedi costs of transportcould be used to cover additional OPIC payments Bothgovernments can also jointly search for other cedi useswhereby the GOG could credit the OPIC account

This proposal would have the following advantages

The GOG could make an immediate demonstration of good faith in meeting its OPIC commitment

The foreign exchange impact on the GOG would be a netwash --- a bookkeeping transaction with neither foreignexchange inflow or outgo but a reduction in external arrearages

A major reduction in the Embassys cedi account at theUS Treasury would accordingly reduce USG incentives to eliminate the Currency Use Payment (CUP) provisionin current and future PL 480 Title I negotiations withGhana which will in turn bnefit Ghanas futureforeign exchange position by permitting partialrepayment of PL 480 TItle I loans in cedis rather than dollars (US EmbassyAccra)

While this memo was written after the trilateral agreement wassigned it seems clear that the excess currency issues faced bythe Embassy itself had an impact on the favorable view taken ofthe trilateral suggestion made by AIDW by the US country team

III

in Ghana This seems to be the sort of pre-condition to approval

Administrator of AID and

of a trilateral Southern Africa

that was perhaps missing trilateral(s) that were

in put

the to

case of the DCC

the the

following September

In the latter case the matter was taken up to the level of the the UnderSecretary of Agriculture as

have mentioned we

above Thus it went substantially beyond thelevel of the respective representatives on the Subcommittee from the relevant agencies

37

FIGURE IIA Major steps in the Approval of Title II Emergency Aid

AAID may offer or instruct a Mission to offer emergencyfood assistance or

Any cooperating sponsor may request food for emergencyassistance to USAID and forwarded to AIDW with appropriaterecommendations

Missions may propose emergency programs for consideration byAIDW prior to required receipt of formal host-country requests

Mission Director makes determination regarding ability ofthe cooperating sponsor to perform AID Reg record11 keeping and other requirements

Mission provides information on other-donor actionslocation and nature of emergency administrative provisionsfor management and control of the emergency program onadequacy of storage facilities and that distribution willnot result in a substantial domestic productiondisincentives nor disrupt normal marketing

Where a PVO is involved a Plan of Operation or an amendedPlan of Operation and supplimental AER are required

PVO calls forward the commodities

Mission cables a program summary

AIDW prepares Transfer Authorization (TA) for signature by recipient government

USDA contracts with independent cargo surveying firm to obtain discharge report

Ocean freight information provided by Mission including schedule port consignee

AIDW approval may also include the Office of Foreign DisasterAssistance (OFDA) participation in reviewthe and approvalprocess Emergency projects take prescedence allover other matters

It normally takes 90 days from date of program authorization toarrival of commodity at nearest recipient port

Source AID Handbook Nine Ch9 p4-5

In retrospect it is not entirely clear why this had to be the case at least to outsiders The respective representativesthe Subcommittee from AID

to and USDA were voicing substantially

conflicting points of view and were not themselves authorized tobe very flexible But there is no evidence to support the ideathat in all such instances the decision is kicked up the decision-making hierarchy in each agency

What is also somewhat confusing in reviewing the documentation ishow the issue was actually resolved in favor of approving theSouthern Africa trilaterals At one point within AID infact the decision was made that to pursue the matter furtherwith USDA would be disadvantageous This position seems to havebeen successfully countered by senior management of the FVABureau who felt it was important to proceed and perhaps in partmay have been onbased strong lobbying from the concerned field missions

We have no evidence -f similarly high-level negotiations leadingup to the approval of the West African trilaterals although the process seems hiveto been equally long slightly more than a year in both cases It may be inferred from documentation andinterviews that the fact that the US Ambassador to Ghana wasstrongly behind the trilateral proposal was probably importantFurther the excess currency issue which the proposedtrilaterals would help to resolve meant that Treasury as amember of the DCC Subcommittee was probably on board as wasOMB where otherwise both agencies might have been opposed forthe sorts of reasons outlined in Section II

It seems strange face iton the of that the earlier approvalwas in fact somewhat easier to achieve than the later one Thehitch however seems to have related essentially to the SouthernAfrica Round I transactions since then approval has been more

notswift if necessarily less problematic There have also been a number of opportunities for review of the issues involvedoutside the context of specific DCC approvals including in thework of a Presidential Task Force on Hunder in Africa whose report argues fairly strongly in favor of trilaterals givencertain conditions The recommendations of the Task Force weresigned by President Reagan in the form of an Executive Orderincluding the recommendation for greater use of trilateraltransactions The policy currently said to be lacking on thesubject would thus seem to have been made It remains to bedetermined how it will be operationalized

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ltV

IV PROGRAMMING USG TRILATERAL FOOD AID

Programming issues arising from close examination ofthe four cases included here--as well as from more superficialassessment of subsequent arrangements and their negotiation--canbe divided into three broad areas if policy is included underdesign These would then be design including policyquestions negotiation implementation and monitoring both bythe relevant field posts and by AIDW Since these are listed more or less in the order in which they arise they will be discussed in that order here

While we will try to be as balanced as possible we do not have way of measuring or weighting

a those aspects of each trilateral

that seem most and least successful in any more than the mostrudimentary terms--such as prompt delivery of the commoditiesfor example Thus in our assessment of what lessons may belearned it is possible that we may seem to be taking a proshytrilateral position in some parts of the discussion and antishyantrilateral one in others Given the presentation of our views onthe pros and cons above this should not be surprising however

Approval Trends

Although the trilateral transactions we are examining hererepresent less than 121 of overall Title II food aid for 1983shy86 if one includes those approved in 1986-87 the proportionseems somewhat more significant Whether this really reflects atendency for the DCC Food Aid Subcommittee to continue to approvesuch individual agreements more readily on an ad hoc basis or not however remains to be seen The recent Zimbabwe Round IIagreement for a swap of US wheat for Zimbabwe maize to bedelivered to Mozambique ard the pending one for a similar swapwith Kenya together total approximately 18250 metric tons ofwheat or nearly two-thirds as much grain equivalent as the fiveprior agreements combined However this may be merely anartifact of the continuing Mozambique emergency rather reflection of

than a changing opinions on trilateral per se

On the other hand these approvals have been somewhat more swiftif one starts with the first request from the field than werethe first ones that we examined in more detail in our casestudies We will return to the question of approvals the policymatters which underlie them and the amount of time they taKe at the end of this section

Design

The Regional Food for Peace OfficerLusaka provided us with a summary of design and imple-mentation steps for trilateral transactions as well as checklists for feasibilitydeterminations on the Zimbabwe and Malawi Round I trilateral withthe US and Mozambique These seem to to wellus be thought

40

out and to summarize some of the key points to be taken into account when designing and negotiating--and seeking approval forshy-trilaterals

Step One under the heading of Design Approval is to getSubcommittee to approve the idea principle DCC

in demonstrating awillingness to entertain the proposal of a trilateral This assumes that there has been some prior assessment andor formalanalysis that has led concerned governments and USAID Missions tobelieve that a trilateral arrangement may be mutually beneficial to at least two countries aside from the US

This assessment in turn is likely to have been based onassumptions about disposable surpluses in one country andcomplementary deficits in another country in the same region ( oranother region which is accessible in terms of transport) theavailabilicy of reasonable transport possibilities some estimateof how long it would ake to mobilize the two developing countrygovernments to agree to such an arrangement whether there is anavailable iistitution--probably a PVO--to act as fa-litator andfreight forwarder and an assumption about the appropriate ratiobetween US commodities and exporting country commodities thatwould be swapped under the proposed arrangement These kinds ofassumptions are spelled out and as to check in thelisted items checklists presented as Figures II and III below

In fact when we go back to the case study narratives wethat there were a number of policy considerations find

that enteredinto the initial calculus behind each theseof trilateraltransactions at the field level including but not limited tothose having to do with producer price supports subsidies toparastatal marketing boards excess currency implications for theUSG competition among surplus-producing friendly countriesin the region and problems associated with monetization asidefrom excess currency considerations Of these perhaps only the matter of competition among surplus-producing countries that havegood relations with the USG is tounique trilateral transactions as opposed to bilateral ones The potentialpolitical benefits of trilaterals in terms of US relationshipswith the exporting country seem one of the few aspects oftransactions that are rarely questioned

such and whose effectiveness

is also borne out by these four case studies

Assuming then thesethat policy and practical concerns havebeen assessed and the DCC Subcommittee is seen by AIDW to be atleast potentially favorably inclined iswhat the best way tocontinue with the design process Returning to RFPPOLusakaslist step two is to identify the third country or countries toparticipate This sem odd--why wouldmay somewhat one beproposing a trilateral arrangement without having identifiedthese countries in advance In fact as the studiescase showthere was a great deal of time spent and communication aboutwhich countries should participate in Round I in Southern Africa once the basic idea of a trilateral had been broached

41

As we see in the case study in Annex C quite a bit of baldlypolitical pressure exertedwas from time to time during this process to ensure that Malawi would be included Similarly inthe more recent Kenya-Mozambiquc approval cost and timeliness alone were certainly not the only criteria involved in theeventual selection of Kenya over Zimbabwe Malawi didnt want toparticipate in Round II otherwise the competition and politicaltrade-offs might have been even greater

For the West African cases the focus of political concern in country identification seems to have been more the intermediaryo exporting country that was chosen--Ghana--rather than an arrayof possibilities In all four cases the recipient countries seem to have been somewhat less relevant from a decision-making pointof view since by precedent only Title II emergency food aidrecigt-nts could be chosen Thus in all four cases solving theexporting countries problems was at least as critical to thedecisionA to organize a trilateral arrangement as was the emergency deficit situation in the ultimate recipient countries Put somewhat more elegantly the developmental concerns wereindeed at least as important to these transactions as were the food aid and humanitarian concerns

Where an intermediary is likely to be required this is the next step (three) after country selection The two may obviously berelated since not all PVOs that are experienced in Title II emergency food aid logistics are available in all countries Infact in Southern Africa exactly where World Vision actually hadoffices and staff in the region became a serious--and ultimatelydeterminant--issue in terms of their being selected to act asintermediary the second time around As a result if there is aRound III they are likely to have positioned their staff andtheir own resources closer to the administrativegovernmental source in Mozambique than was the case last spring

Conversely for the West African cases the fact that WorldVision was selected in addition to other PVOs parastatalorganizations and larine Overseas Services (MOS) related totheir presence in the exporting country rather thannecessarily their relationships in the recipient 12 countries They did however express a willingness to start a feeding program in Mali

12 At some points in our data gathering on these trilaterals it began to appear that there were so manyindigenous and expatriate organizations involved that AID was atrisk of having paid twice for all the freight forwardingtransportation and facilitation involved in the two trilaterals in question As will be seen in the annexed narrative it isstill not certain whether some duplication of payment did not actually occur (see Annex D)

42

One of the most interesting areas that notwas included in thestudy scope of work fact wholeis in the matter of selectionactions and payment of PVOs in these and other Title IIactivities Since the use of PVOs is mandated by the minimumtonnage provisions of the PL430 legislation law this becomespotentially as salient for trilateral as for bilateraltransactions depending on when the agreement is approved andnegotiated While it would not be appropriate to explore thisset of issues here at length we do wish to note that some basicstandard of comparison should be established if the proscons attributed to trilateral are as much and

conditioned by thebehavior of PVOs as was the case in West Africa

A subsidiary step (four) is ensureto that all amendments orupdates to any relevant existing country agreements forselected PVO(s) are taken care so that the

of such agreements willallow for trilateral transactions

The fifth step in design is to work out in detail with the thirdcountries what they will supply where who will pay freight towhere of the surplus commodity to be exported and swapped forthe US commodity The sixth step is the same but for thetransport of the US commodity to receivedbe by the exportingcountry Here there may be consensus reached at the fieldlevel but the ultimate arrangement may be reworked completelyorchangec when approval to conclude the agreement is given by theDCC s ice there are a number oL aspects of the Title IIlegislation and attendant regulations that enter into playespecially the requirement that a particular proportion of oceanfreight for the program as a whole in any given year to beshipped in US bottoms (cargo preference)

Thus if a trilateral is being negotiated early in the fiscalyear it likely it make ais more that can better deal on theratio of the swap if it offers to pay ocean freight or inlandfreight for example But such negotiating strategies may becomeof less interest to the CCC later in the year if the USbottoms quota has not been met That is sometimes it is in theinterest of the USG to a moremake expensive rather than acheaper deal although what is spent on the freight willhopefully be made up in other aspects of the agreement

Step seven is to get consensus from all parties at the fieldlevel for the trilateral arrangement given that priorthe stepshave been accomplished We may note that this is probably aniterative process not foronce all Here we are including theagreement of the in or mostPVO although some even instancesthis will also involve approval from the PVOs Hadquarters in the US or Europe

Stop eight is crucial--send in proposal to AIDWdetailing allthe arrangementsthat have been informally agreed upon andsuggesting language for the Transfer Authorization (TA) and theletter(s) of agreement (LOAs) to be signed with the third country

43

FIGURE III

TRIANGULAR EXCHANGE MOZAMBIQUE--MALAWIZIMBABWE--USG

CHECK LIST FOR FEASIBILITY DETERMINATION--Mozambi que

1 Review results of Tuck assessment of immediate foodneeds to determine whether or not triangular swap isneeded and can be justified solely on the basis of unmet emergency requirement

2 Verify that GPRM has no objections to maize from Malawior Zimbabwe determine whether they have strong feelingsabout the choice of the supplying country If there areany perceived problems determine to what extent theseshould influence decision making re our choice ofcountries to supply the maize

3 Make a determination on whether or not the GPRM iswillin to make the (what is probably extra) effort to bevery c -- -dn businesslike to minimize snags thatcould wreck the whole deal or cause significantimplementaticn problems

4 Make a determination on whether or not bringing maizein by rail (to Maputo Beira or both) would create significantly more documentationlogisticsinternalcoordination problems within Mozambique than would seadelivery ie can they handle rail receipts aseffectively as sea receipts and if not is the difference significant

5 Does the MIC have the ability to adequately determine(tally and collate) what is received ex-rail wagons Oris there a good chance that receipt figures will beconfused to such an extent that there will be unpleasantdifferences of opinion which are the result of poorrecord keeping by MIC which could lead to claimscounterclaims if the to theanswer second question is yes isthe MIC amenable ro an independent surveyor and will theyagree to acceot his findings provided there is no primafacia evidence that these findings are flawed

6 Is the MIC amenable to all three parties agreeing on amethod for reconciling any differences of shipmentreceiptfigures (For the bilateral part a tolerance of plus orminus 2 is standard practice and the GPRM will probablynot complain about plus or minus 5 (1000 MT) so this isnot a problem But if we find ourselves in a situationwhere 7 nbbwe says it shipped 20000 MT and the MIC sayswe got orny 19000 somebody has to pay Will the MICagree on a reconciliation methodology and be helpful)

7 Can MIC agree with the supplying countrys MarketingBoard on who is to do what and will mic clear the way(beaurocratically) for the shipment to come in and be unloaded as expeditiously as possible Ie determine whether MIC can and will truly meaningfully and actively cooperate and coordinate to the extent possible to smooth the way for the transport

8 Will MIC high level decision makers and other appropriate GPFM officials be willing to travel to Zimbabwe or Malawi to meet with supplying countryrepresentatives and USAID or receive such visitors here for the purposes of agreeing on all details

9 Has a political riskvulnerability assessment been done by USAIDEmbassy to give at least an amber light to proceeding with these arrangements

FIGURE IV

TRIANGULAR EXCHANGE MOZAMBIQUE--MALAWIZIMBABJE--USG

CHECK LIST FOR FEASIBILITY DFTERMINATION--Zimbabwe

1 Review results of Tuck assessment of immediate food needs in Mozambique to determine whether or not triangular swap is needed and can be justified solely on the basis of unmet emergency requirement

2 Determine if Zimbabwe can deliver faster cheaper andwith more guirtdntee the quantities desired to the pointsdesired than Malawi can (technical criteria)

3 Verify independently GMBs ability to deliver food to Maputo through the rail system by querying RSA SATS and the freight forwarder Also get a reading on how much muscle the GMB can bring to bear on _ne timely deliveryissue vis a vis Zim RR and SATS

4 In light of (2) and (3) and other considerations(polLtical) that may be important identify Zimbabwe as the (or one of the) supplying country(ies)

5 Determine if we can expect that the GMBs performanceand cooperation will be such to minimize problems and contribute to finding timely and rational solutions to the problems that do arise

6 Determine why the pipeline of maize in Zimbabwe (UKJapan) has not been delivered

7 Determine whether or not Zimbabwe is willing to cooperate to the max with the GPRM and an independent surveyor to reconcile the receipt documentation

8 Determine whether GMB and the GOZ will be willing totravel to Maputo to work out arrangements or receive the Mozambicans and USAID in Harare for the same purpose

9 Agree upon a method for determining the liability ofthe parties re the maize shipment dealing with insurance considerations Explore performance guarrantees andtheir implications on the Mozambique side of the border

(ies) (RFPPOLusaka nd)

Step nine is to obtain DCC approval for the program and the TAand LOA(s) language If this is achieved the next step is tosign the TA and LOA (s) and ensure that the PVO intermediary if a party agreement isto the protected by appropriate documentation

Next according to approach the criticalthis comes question ofdetermining how much of the US commodity (wheat etc) is to besupplied to the third country(ies) under what conditions on thebasis of some predetermined criteria This is usually referred to as the ratio but more formally should be thecalked barter terms of trade As trilaterals in the Southern Africa regionhave followed one upon the other those designing the most recent ones have profitted from prior examples Thus barterthe termsof trade are now tending to be more advantageous to the USGthan may seem have theto been case for the earlier trilaterals with the benefit of hindsight salient feature

Negotiation

Our data are better for the negotiation of the Southern Africa trilaterals than for those in West Africa In Round I as wenoted elsewhere it took about fourteen months for DCC approval

obtained Onceto be this was available however negotiationswith the respective exporting countries took relatively littletime Of course as was indicated in the RFPPO design hintsabove the most successful formal negotiations tend to be thosewhich merely summarize prior informal negotiations (see Morton and Newberg 1986)

To quote the USAID Missions self-assessment for Malawi

All parties entered negotiations for the agreemententhusiasm The GOM pleased have the opportunity

withtowas to

reduce what at that time was a surplus of close to 100000mt of maize above its strategic reserve of 180000 WorldVision International w-s anxious and hopeful that Malawiwould be able to delivk the food to points in MozambiquesTete Provincethat were hard to service from other poinswithin the country AID wanted to assist Malawi and to determine if Malawi could be an efficient sourceserviciing these areas in Mozambique and

of assess whether or

not the GOMs system could respond to this challenge Thenegotiations were held in a very collegial and efficient manner GOM officials demonstrated a high degree ofprofessionalism in working out the details of the exchangeagreement on a range of matters from calculating the maizefor wheat ratio to working out the details of payment andshipping cost reimbursement procedures No significantproblems were encountered in the negotiations and this stageof the program was generally implemented very smoothly(Lilongwe 01039)

Ak3

According to the cable traffic at the time USAIDMalawisDirector and RFPPOthe met with ADMARC to begin negotiations onApril 30 as authorized by Washington Negotiations are reported as concluded in a message dated June 5 1986 and suggestedlanguage for the letter of agreement is provided There is then almost a month during which exchanges follow among the concerned AID Missions and the RFPPO and AIDW about the wording of the agreement Final languege is suggested in Lusaka 3189 in earlyJuly and the final agreement signed at the end of the monthThese are characterized as long negotiationis in a subsequentcable from AIDMaputo probably referring to the whole approvaland negotiation process (Maputo 3252 October 22 1986) but seem when the negotiations themselves are considered alone to havebeen relatively quick as is argued by the Malawi Mission in the quote above

In the Zimbabwe portion of Round I the formal recommendation for a 10000 tou trilateral comes from Maputo in mid-April (thestart-off date in a sense for the Malawi trilateral as well)World Vision presented its operational plarn for 10000 tons onthe same date This plan subsequently had to be revised whenbecame clear that 3000 toris were to originate in Malawi

it The

revised plan was available May 7 the date on which the 70003000ton split was approved in Washington USAIDZimbabwe and the RFPPO were ready with a cable with proposed language for the agreement Amended proposed language was sent to Washington inHarare 2264 on April 21 The positive response came back from Washington in State 171219 dated May 31 and the agreement was signed on June 13 This seems to be again a quite expeditiousprocedure given the types of delays that are necessitated simplyby the exchange of cables between Washington and the field What is even more impressive however is the fact that deliveries began on June 19 frc the GMB to World Vision

As a point of reference we may note that in Round II the turnshyaround time from DCC approval of the transaction on December 24through signature of the agreement on February 20 is only about six weeks Thus in none of these three instances does negotiation appear to be a significant bottleneck in the trilateral process

For the West African trilateral the relevant period is April 12 to June 21 when the subsidiary transport agreements were finished for Burkino Faso and Mali Thes seem to have beennegotiated as essentially one transaction from the US and GOG point of view despite the fact that there were two different recipient countries

Implementation

There is evidence that implementation has been smoother in The most recent transactions if one takes as examples Rounds I and

45

II with Zimbabwe In both cases all the maize hasdispatched qite quickly--and with a minimum of been

difficulty--eventhough during our visit to Harare there wer complaints fromWVRO that the GMBs system and wholethe export approvalprocess were becoming overloaded given commercial sales ofsurpluses and a variety of trilateral arrangements with other donors including the WFP

Looking back theat two trilaterals with Ghana is thatit clearthere are a number of obstacles to smooth implementation wherethe arrangements are too complicated either because they involvetoo many players andor thebecause logistics that must bedesigned and followed-up are more convoluted than would be thecase with regular bilateral food aid The adage keep itsimple stupid as USAIDGhana was advised would have beenadvice well taken given the benefit of hindsight

A number of those interviewed in fieldthe indicated that thesame lack of interest in implementation that characterizes USbilateral development programs also characterizes PL 480 Title II programs whether emergency or not That is once thearrangements for a bilateral or trilateral transaction have beenmade the monitoring or follow-up becomes of less interest to AIDand also perhaps to the developing country governmentsconcerned The up-front paperwork and approval process that isrequired of the US country teams--for example the Ambassadorcertifying that isthere indeed an emergency in the recipientcountry--is considerable as we saw above

Once implementation begins the US country team in theexporting country hypothetically has relatively little to doespecially where a US PVO is the intermediary responsible fortaking title theto commodities and transporting them to therecipient country government andor the end-usersto in therecipient country As one such AID official put it when askedwhy he was not sometimes more helpful to local staff of such aPVO in resolving problems this is what the PVO is supposedlythere for in the first place In reality however in at leasttwo of the cases examined exporting country USAIDMission staffdid considerable monitoring and follow up

In Zimbabwe despite the fact that World Vision was virtually aparty to the agreement the Agriculture Officer and his Assistantkept in close touch with the Grain Marketing Board with WorldVision and with relevant MinAg and other GOZ officials to make sure that deliveries took place on time that local currencyfunds contributed by the GOZ to WVRO were made availableschedule it is worth pointing out

on that there was considerableenthusiasm within the Mission about the trilateral as well as onthe part of the GOZ and that relations are traditionally good

46

between the Mission and Ministry of Agriculture entities13

In its case study narrative provided for this study USAIDMalawiasses3es its own performance somewhat sternly

OSAIDMalawi Performance As the Missions first tripartite program our retrospective observation is that this Mission should have reajistically expected to assume much more of the implementation and follow-up responsibilitythan it did At the time the program was concluded theMission did not have the staff resources to providemonitoring and backup support to the implementing agencyThe lack of frequent Mission follow up in the early weeks ofthe program no doubt also contributed to delays in programimplementation (Lilongwe 01039 March 11 1987)

In discussions about the Malawi portion of Round I World Visionstaff based in Harare indicated that they had traveled to Malawi numerous times in order to try to free up the bottlenecks that were causing severe delays in maize deliveries As the Missionpoints out one of the problems was whether or not there was anyone to talk to at ADMARC the Malawian grain marketingorganization Just after the agreement was signed (July 241986) ADMARC and WVI apparently concluded a delivery scheduleand worked out the logistics for delivering thr maize to agreedpoints in Mozambique Just after that however there weresignificant management changes made at ADMARC and theorganization was virtually in limbo (ibid) There was nearly athree-month delay before deliveries began The Mission indicates that this was a sort of blessing in disguiseas the Moviments Nacional do Revalucas insurgents took over the areas into whichthis maize was to have been shipped in the interim This allowedalternative delivery points to be determined and only 60 tons was lost to the MNR in a single shipment

World Vision on the other hand points out that had the initialapproval process not taken so long the MNR would still have been at staging points in Malawi and not where the deliveries were tobe made in Mozambique This matter of the insurgency inMozambique cannot be ignored in assessing implementation of RoundI trilaterals nor can the matter of which countries in theregion were really supporting the MNR or at least were seen to be doing so by the GPRM

13 USAIDZimbabwe staff point out with some pride that part of the Round I agreement was that the GOZ would contribute about Z$ 290000 from local~currency salps proceeds of prior PL480 agreements to support WVROs costs in transporting anddelivering the Zimbabwe maize to Mozambique This was seen as a gesture from Zimbabwe to its neighbor and fellow member of SADCCand as an indication that the GOZ was really a full partner in the agreement

47

In fact strictly speaking there would have been no Round I ifthere had been no emergency in Mozambique and there might nothave been an emergency in Title II terms but for the(Renamo)insurgency Further one reason why Malawi MNR

was included more or less toward the end of the whole Round I approval processis alleged to have been the earlier refusal on the part of theGPRM to accept maize from Malawi since it was giving shelter tothe MNR Thus the impact of the presence of the MNR at nyparticular place at any particular point in the Round Ichronology can be argued either way Certainly the presence orthreat of the MRN insurgents has added significantly to the realtransport costs of Zimbabwe and Malawi maize since trucks must go in convoys and the GOZ pays large sums to provide militarypersonnel to accompany shipments on the railroad through the Beira corridor

Also it is worth noting that because of the insurgency (CivilStrife) conditions the US Ambassador to Mozambique hasseverely restricted in-country travel by official Americans This has hampered efforts of the AID office in Maputo to follow up on deliveries and end use Rather they have relied moreheavily than might otherwise have been the case on the reports ofCARE who are assisting the DPCCN (Department fo Ms Prevention ofNatural Colamities of Mo GPRM) and WVRO This in turn hascontributed to hard feelings since AIDMaputos staff feel thatWorld VisionMozambique should have staff located in Maputo aswell as in Tete City and not in Harare as was the case when theteam visited Maputo Since World Vision is billing AID only$3300 out of a total project management cost of $100000 forproject management - Maputo and does have staff wheredeliveries are being made this seems a moot point--again giventhe insurgency

The matter of implementation where there is no intermediary PVO can be assessed only indirectly here ofthrough the beginningsRound II involving Zimbabwe and Mozambique From WVRO and AIDcomments alone it seems that USAIDHarare is able to deal wellwith GPRM and that GPRM is able to be more efficient as anexporter since it is part of the GOZ World Vision both inbehalf of AID and in behalf of other donors had beenexperiencing considerable difficulties in obtaining clearancesthe Central Bank and other concerned bodies in order tocontinue exporting relief grain from Zimbabwe These problemsdisappear for the GPRM

From what we have learned since our field visit all deliverieshave been going smoothly under Round II under which they areconsigned to GPRM agencies (Harare telex April 16 1987) We are not able of course to assess the quality of implementationfor this trilateral once the grain is consigned to the GPRMSince CARE has been working with the DPCCN for some time it islikely that DPCCN is able to achieve delivery readily especiallysince this maize is for feeding in the Beira area and thus does not have to be moved far

48

For the West African trilaterals the case study provides anumber of examples of problems in implementation which may insome instances be attributed to problems in design alreadyalluded to The FFP Officec ir USAIDGhana indicated to thestudy team that he had spent about six months on the work leadingup to the trilateral whereas he spent very little when he wasdealing with a bilateral arrangement but we are not clear on howmuch time he had to spend monitoring implementation On therecipient country side there were a ofnumber actors andagencies involved as has been noted in the case studyTransportation and freight forwarding was done or facilitated byso many organizations it is hard to tell what really happenedNevertheless the relief maize did reach the end-users at the agreed-upon points in the recipient countries

Washington Approval

What remains to be discussed is the matter of the approvalprocess which pre-dates the negotiation process and sometimesthe end of the design phase of trilateral arrangements Here wewill try to discuss both the facts as they are available to usand the perception of those facts on the part of the USAID fieldMissions and the recipient and exporting country governmentsthat became involved in approved trilaterals

The Fact Situation

We have seen earlier that in the case of the Southern Africatrilaterals the ultimate decision to approve the proposal went up to the level of the Administrator of AID and the Under-Secretary of Agriculture This occurred only six months afterthe Ghana arrangements had been approved with what seems to havebeen little problem The main reason seems to be that Mozambiqueis a Marxist country and that the idea of providing that government with US food aid even in emergency conditions wasnot popular with a number of people in the US Congress as well as in the Administration

Available documentation indicates the following chronology of decision-making benchmarks

September 26 1985 - DCC asked to approve the two trilaterals in principle

October 2 1985 - FVAFFP attempts to avert USDA sending a letter from the Under-Secretary to theAdministrator of AID strongly arguing against anyfurther trialterals

October 4 Letter from Secretary Amstutz recieved in AID

- AAID and Under-Secretary have lunch and discuss

I

further

November 7 Letter from AAID to Under-Secretary of Agriculture is drafted following luncheonon discussion

March 21 1986 AIDW proposes FFPW Pearson and OMBG Moser travel to region

- April 2 1986 Visit by PearsonMoser

- April 15 DCC approves 10000 trilateral

May 7 1986 AIDW cables field that 70003000 ton split in the proposed 10000 trilateral has been approved including Malawi as well as Zimbabwe

The issues as presented by the USDA in the Under-Secretarys

letter to the AAID were expressed this way

I wish to iterate [sic] t _tJthe Department of Agriculture does not believe that PL 480 is an appropriate tool to use to help other countries find markets for excess productionThe Department of Agriculture views the use of PL 480 resources in tripartite barter arrangements as appropriateonly in exceptional emergency cases after careful consideration by the DCC Working Group

In the Department of Agricultures view PL 480 authorities are not intended to relieve surplus supply situations in other countries The PL resources are designed to supportdevelopment efforts based on the direct use of US agricultural commodities which remain in a surplus situation causing severe problems in the US farm sector Furthermore experience in implementing and monitoring such arrangements demonstrates these ar2that arrangements more difficult to undertake successfully than bilateral programsTripartite arrangements often result in disputes concerningcommodity quality condition otheror aspects which cannot be provided for within the framework of PL 4C0 agreementsand regulations (Amstutz-McPherson October 4 1985)

The draft response from Administrator McPherson after the lunch discussion was a careful statement of arguments mostthe AID likely to aoo tD interests capresented by the USDA

One major reason for the US to support a tripartitebarter arrangement is the development of a new market for US grain such as wheat or rice A good example of this kind of arrangement is the proposed Zimbabwe-Malawi-Mozambique trilateral barter proposal

In these three countries demand for wheat totals about 450000 metric tons annually while production is about oneshy

50

half this level This production-consumption gap is likelyto become larger as demand increases rapidly with urbanization rising incomes and increased foreign exchangeearnings Local production however will not grow asquickly The proposed emergency trilateral arrangmentwhich would provide 43000 MT of white maize from those countries to Mozambique presents a unique opportunty for USDA to enter the growing wheat market in the southern Africa region

In addition to emergency programs such as the one described above for Mozambique there may well be regularTitle I or Title II tripartite barter proposals which USDAwould wish to support for market development purposes Inthe long run AID and USDA share a common interest in usingall possible mechanisms to support economc development andtrade approaches based on comparative advantage These approaches will result in increased trade within expandedrole for US exports to Third World trading partnersThus we believe that the DCC should have a measure offlexibility to approve on a case-by-cased basis both emergency and non-emergency tripartite barter proposalswhich strongly serve US interests (Draft McPherson-Amstutz November 7 1985)

What seems to have broken the logjam was the trip of Pearson andMoser to the region during which they visited both Zimbabwe andMozambique (and Kenya) but did not in fact visit Malawi asoriginally planned Their reading on the emergency situation inMozambique combined with their discussions with local AID and host government officials appears to have convinced them of the

51

value of the trilateral transactions requested by the fieldShortly after their return the 10000 ton trilateral wasapproved To extent OMB hadthe that been against the trilateralproposal along with USDA Mosers participation in the regionalvisit would seem to have been crucial to the ultimate approval bythe DCC

While such visits are often extremely useful they are alsosomewhat high-risk for the Missions in question since thevisitor may come not theaway with impression the Mission wishes to convey for reasons completely out of their control Still inthis case it seems to have worked excellently as did asubsequent visit to the region by the AID Administrator

Developing Country Perceptions

Such visits to the field may also prove more persuasive thanvisits of host country officials to the same persons inWashington The Permanent Secretary of Agriculture of the GOZindicated that when he spoke with senior officials in Washingtontrying to generate suppot for Round T given tiie su(ccess of theZimbabwe-Zambia transaction he certain policywas that changed athough

had no one would tell him this directly Wherereception of his arguments had been quite warm an earlieron

visit there was distinct coolness the second time around Heconcluded as he told us that there was a stronger lobby againstsuch transactions by the time of his second visit

In Ghana the trilateral produced the most spectacular gains forthe USG particularly from a foreign relations perspectiveIt was emohasized that prior theto 1985 trilateral Ghana - USrelations were if not srrained certainly only luke warm Thetrilateral produced results because of the financial gains to theGhana Government in foreign exchange savings reducing surplusmaize supplies refurbishing a large part of the national truckfleet producing profits to the GFDC and reducing the cedibalances in USG accounts It was also clear when talking toGhana officials that there was a degree of satisfaction inhaving been able to be a partner in theirassisting neighborsBoth US and Ghana officials noted that relations had improved agreat deal after the trilateral Whether or not that improvementwas worth the cost or could have been obtained at a lesser cost must be answered elsewhere

We have little to support any assertions about the view of thetrilateral transaction on the part of the Government of MalawiVarious people interviewed in the region--but not in Malawiitself--indicated they felt that the GOM was fed up with thewhole thing b time it was finished and that this is whyUSAIDMalawi did not make a strong case to be included in apotential Round III We have no evidence that this is the casehowever rather for thatthan example the GOM is not coping

54

with as large actual or potential surpluses as was the case in the past

The Government of Peoples ofthe Republic Mozambiquerepresented by the Director of International Operations in theMinistry of Commerce indicated strong GPRM support fortrilaterals because of the sense that they help rationing anddistribution within the region He also indicated that if theGPRM had the money to purchase cereals in the region they would certainly buy from Zimbabwe andor Malawi because isit easiernearer cheaper and supports regional initiatives However heindicated that if the money were available and if US yellowcorn the GPRM wouldwere offered on favorable concessional termsbuy from the US In the same conversation however he pointedout that the GRM has to its 480 I andhad stop PL Title programwill have to begin paying for the earlier Title I commodities next year at the rate of $1 million a year They owe $498000interest on the more recent Title I agreements as well Hementioned IMP and World Bank strictures currently in place andindicated that Title II was certainly easier in the presentcircumstainces of the GPRM since it is easier to arrange thecommodities are donated and the ocean freight is forpaid

USAID Missions Perspectives

Here we have rather more evidence given the extensive cabletraffic that reflects the expression of views to and from the field We made the point earlier that in Southern Africa atleast Round I of the trilaterals Zimbabwewith (and ultimatelyMaLawi) seems to have been basically a field initiative one inwhich the RFPPO and the USAIDZimbabwe Mission Director took thelead but which also involved other posts in the region in a fairly intensive dialogue

All of the Missions involved in the Southern African trilaterals have been positive about the basis for such transactions indevelopmental and humanitarian terms under emergency food aidconditions but also under other conditions Even AIDMaputowhile pointing out with some asperity how thelong approval and negotiation process took together supports the trilateral approach in principle

USAIDGhana staff seem to be less enthusiastic and those in Maliand Burkina Faso did not seem to be nearly as involved as wasAIDMaputo for example Perhaps this is because the regionaldialogue that took place in Southern Africa among the Missions does not seem to have had an analogue in the West African case

One thing about which all field posts seem to agree is that thereshould be a definite policy andor guidelines for trilateral transactions As USAIDMalawi put it in the cable prepared for

55

this study and as the Representative in Maputo put it to usduring an interview the hope is that there will be a policy and that it will be made clear to the field

USAIDMalawi believes thiat AID would be well advised tofurther develop and retine its trilateral food aid policyAn important consideuation in this regard is the need to establish as clear US policy part and parcel of oureconomic development assistance strategy the practice ofusing tripartite arrangements on a routine and notexceptional basis when it makes sense to do so It isnoteworthy that despite several precedents because of thelack of a clear policy regarding ptripartite arrangements itrequired almost nine months for AI) and USDA to agree toproceed Additional time was then required to clear textsof trilateral agreements Obviously the potential for usingthe tripartite mechanism would be considerably enhanced if apolicy and procedures were established Again in this regard the Southern Africa region offers an opportunity for use of trialteral food aid programs as a development tool (Lilongwe 01039)

The AID Representative in Maputo pointed out that the countryexperiencing the emergency is caught in the middle waiting tofind out whether a trilateral proposal has been approved or notBy the time the answer is available as he put it it bewillboth too late for the commodities to be shipped directly from theUS in time and for them to be available for delivery from the proposed neighboring exporting country

He also made some interesting points about the ways in whichtrilaterals could integratedbe into other AID activities in a country like Mozambique even under emergency conditions Herehe was primarily discussing the implications of the large amountof local currency that AID and other donors currently have in accounts unprogrammed His suggestions included assisting theGPRM to improve its financial management and control over its ownfinancial situation and future by insisting that in any futuretrilateral the GPRM be a party to the agreement and pay theexporting country--or at least reserve the medecais currencyMozambique for such a payment--up front

of Since the AID program

a9ide from food aid consists of a CIP this kind of approach tothe local currency problem may make considerable sense The outcone however must await the results of a local currencystudy that was requested by AIDW

An equally interesting suggestion put towas the study team by arepresentative of Lonhro in Zimbabwe on behalf of the commercial farming interests Here the principle was to use the trilateralmodel to US tohelp get wheat Zimbabwe draw down Zimbabweon maize surpluses but also help Zimbabwe additionally to mitigatethe foreign exchange constraints it is currently undergoing in

56

another way as well Thus the suggestion was to combine thebest features trilateralof a swap and a CIP Zimbabwe wouldtrade maize for wheat and US agricultural equipment thushelping to support what was believed to be USG private sectororientations sweeten the deal for the US by importing more USequipment thus creating a market in the region while at thesame time avoiding the necessity for scarceusing foreignexchange

The team when this was put to them responded that it wasprobable that this might not be an acceptable model for severalreasons but that if perchance the GOZ could persuade anotherdonor such theas Japanese to buy the equivalent amount of USwheat at commercial rates to the amount that would be swapped forthe Zimbabwe maize then there might be more interest Stillgiven the various concerns about trilaterals it seems unlikelyat first glance that those on the DCC who are already objectingto further trilateraLs would be very sympathetic toward anarrangement with even more variables including additionalancountry Nevertheless if sentiment against trilateralspat2gtur-- and bartr trade in

in general were to decrease thesek i n of [i no vat iv(- ideas m ig ht be worth examining given thepervasive foreign exchange difficulties being experienced by thedeveloping countries with which AID deals and in which the USDA would like to see market development occur

It is worth noting that for some officers in the field whosefamiliarity with Food For Peace has been little or none in thepast it is as though the proposal for a trilateral goes in toAIDWashington and eventually outcomes again but without theirknowing the intervening steps involved in approval ordisapproval Thus AIDW seems frequently to be blamed for delaysthat may in fact have more to do with the system on which the DCCSubcommittee and Working Group are based than with AIDs ownstaffing and procedures About as often however the DCCprocess which may be poorly understood is blamed whatfor DCCSubcommittee members from other agencies say are AIDWashingtondelays The USDA representative stated this very strongly for example

To the extent that food aid is becoming more significant as partof development programs overall there might be some meritetsuring that the internal AID procedures and to

the role of the)Care better understood by all AIDguidance were field staff If specificprepared governing the circumstances under whichtrilateral transactions are more or less appropriate forconsideration and what sort of justificatory information willrequired in Washington this

be in itself would probably go a longway toward speeding decisipns and--perhaps--weeding out thosekinds of thatproposals Washington is least likely to approve

before they are submitted

57

V CONCLUSIONS AND RECOMMENDATIONS

General Conclusions

1 The experience of tr ilal eral transactions as regardstimeliness and complication of negotiation has been mixedAs has been the experience of other donors some trilateraltransactions are concluded swiftly and some bilateral deals prove more complex Since the AID transactions have beenin response to emergencies and in difficult or complicatedcircumstances it is difficult to generalize from the few experiences to date


3 The question of donor identity appears largely to beoveremphasized The ultimate beneficiary is probably unaware of the source of most donated food aid There is noconfusion in the minds of government officials as to the source o assistance IHoweve- i iti clcy the USgainld ccniorably iii im1 in re atloan as resulta of the trilateral transactions It is at this level that there is much to be gained

4 In cases of real emergency the argument that people should accept whatever is offered may be justified However if apreferred food is available through a triangular transaction at no extra cost then this should probably be suppliedThis consideration appears to have been respected in theZimba-ibwe and MalawiMozambique transactions but less so in the est African deils

5 Infrastructure development as a result of trilateral transactions is much discussed at the level of theory butthis aspect did not appear to be uppermost in the minds ofthose concerned with trilateral transaction either in the case of AID or other donors It may occur as a by-productof trilaterals but systematic development can only resultfrom targeted such areprojects as envisaged by EEC andFrance However the danger of projects based ontrilaterals reinforcing bureaucratic organizations to thedetriment of the private trade is recognized To date mosttrilaterals have been in response to short-termsurplusdeficit situations and have avoided the question onthe grounds that bureaucracies deal best with each other in the short run

6 The impact of trilaterals on market development has two aspects First the extent to which this type of transaction has a negative impact on US trade Theconclusion is that this is marginal In recent years the

58

volume of food aid has not been sufficiently large impacton world prices Trilaterals as a proportion to of that

volume are insignificant and are likely to remain so Tothe extent that food aid ties the recipient country todonor and there are potent-ally emerging the

wheat markets inEastern and Southern frica the US participation intrilaterals will the inkeep US the game where possiblecompetitive exporters are already practicing trilateralsThe effect on Us stocks in trilaterals is the same asbilaterals The second aspect of the market developmentquestion is that of finding outlets for developing countryproducts In this regard the fact that these products find a market complements the immense funding of productionprojects which has taken place over the years Theacquisition of real buying power on the part of the farmersdevelops a market for US products both feed grains and farm family requirements

7 The policy of other donors is to see the trilateral (ortriangular) transaction in the context of a multi-yeardevelopment tool combined with currency which will encourageincreased production of indigenous cereals countriesin which are currently occasionally in surplus thus developingmarkets for cereals by livingraising standards It isdoubtful if this approach is entirely altruistic on the part

most toof the other donors since seek market agriculturalproducts as does the US


The following lessons -ire derived our fourfrom case studies all werof which approved and implemented under Title II emergencysituations They may apply we believe to an expanded arena fortrilateral food that notaid would be restricted to emergency

however

1 Pre-design analysis both in terms of the surplus commoditysituation in potential exporting country and of the deficitin the potential recipient country should be done asexpeditiously as possible so that the basic fact situation can be relayed to Washington early in the design process Asecond part of this pre-design phase should be an assessment of the policy leverage that may be available in each countryas a result of trilateral negotiations These must becarried out in the context of an on-going policy dialogue to be effective however

2 For design once there is an initial indicationWashington may be sympathetic the

that policy performance

criteria for approval the barter terms tradeof the pointsof delivery and all other logistical arrangement should bereviewed and determined This should go on simultaneously

59

with the potential exporting and recipient countries andwherever possible should involve private sector entities-shygrain merchants truckers freight forwarders or others--so that there will be a positive impact on normal tradechannels This does not however necessarily mean that aPVO is the best channel for this kind of transaction especially if Titlethe II emergency limitation is removed for such transactions

3 For negotiation it seems that the case studies indicaterelatively little that is surprising The smoothestnegotiations seem haveto been those wher2 the developingcountry government had been on board from the beginning ofthe discussion of a trilateral and was pushing for such anarrangement as would toit be its own advantage WhetherMissions must take the time to cable back and forthsuggested agreement language andor whether this needs to take so long as it sometimes does to attain final approvalwill depend on AIDW staffing patterns and the perceivednormality of trilaterals If trilaterals increase in number and frequency boilerplate wording can be developed

4 For implementation given the evaluatedrases governmentshyto-government arrangements seem as expeditious moreor sothan those involving one moreor non-governmentalorganizations whether expatriate-based or indigenous Too many actors tend to complicate the logistics and especiallythe payment and accounting process This is not howeversomething that is necessarily intrinsic theto trilateral sort of transaction per se

5 Where more than one USG office must be involved in monitoring and reimbursement such AIDFVAFFP OFDA andas the appropriate Regional Bureau Development ProgramsDivisions and in USDA and AID those responsible forshipping and accounting there should be an attempt toorganize compatible data gathering and retention systemsincluding with other donors

6 Evaluations should be carried out of trilateral andbilateral programs that have innovative features both thosethat are approved under emergency situations and those that are not The possibilities for innovation given AIDs current mandate to use food aid more creatively and tointegrate it more fully into its country development programs provides a good opportunity for new thinking andfor developmentally sound mixes of food aid and dollars forprogramming Some of these opportunities can be based ontrilateral models especially problemsif associated with monetization can be resolved

60

Recommendation

On the basis of the findings of the report it is recommended thatthe USG expand trilateral transactions in line with theExecutive Order signed by the President This should be donewithin the framework of market development projects which aredesigned to encourage the production of indigenous cereals for supply to chronically deficit countries or regions while at the same time raising the living standards of producers This typeof development would improve the purchasing power of producersthus providing markets for developed country products over the medium term Lcng-term development projects would allow carefuldesign to encourage private trade participation and to reinforcerather than disrupt existing commercial networks USparticipation in this development Llocess will ensure its abilityto take advantage of market opportunities as they occur as well to exert an influence on the policies of recipient nations

61

ANNEX A

STATEMENT OF WORK

The contractor will provide a report on trilateral food aid transactions as described under the Purpose section aboveand will make a presentation of study results at an informal consultation among major food aid donors in the Spring of 1987 in the Washington D C area The study will be prepared on the basis of independent research and analysis existingprogram documentation the academic literature and interviews with officials experienced with tripartite agreements in the United States and selected European and African countries

Specifically the contractor will

1) Identify and evaluate the pros and cons of USGtrilateral food aid transactions from the perspectives ofthe USG the developing exporting country and the recipient country Pros and Cons might include the following among others

Pro s

a create additional effective demand and help developagricultural markets in developing countries with agricultural surpluses

b provide food commodities for beneficiaries consistentwith their food production and consumption habits

c promote the development of regional trading relationships

d encourage investment in improved transport and logistics infrastructure in the developing countries involved and

e reduce transport costs and delivery time

Cons

a promote developing country exports at the expense of US agricultural exports

b inhibit the development of regional trade that would otherwise occur

c entail negotiations that are too complex and time-consuming

d incur more costs than bilateral food aid transactions and

68

e lose the USG identity as the food aid donor among the beneficiaries

2) Describe the USGs past experience with tripartite programs

3) Describe the policies and experience of other food aid donors most active in trilateral food aid transactions This will entail visits to London Paris and Rome

4) Identify lessons learned from past USG experience in terms of program design negotiation and management

5) Examine the timeliness with which the USG can respond to a food aid request under a trilateral as opposed to a bilateral program

6) Assess the recipients perception as to who donated the food under trilateral programs Does the USG lose its identity in such transactions

7) Prepare a cost-effectiveness analysis of USG bilateral vs tl te 1L food aid programs The recent US i US-Ghana-Burkina Faso and US-Mozambique-Zimbabwe programs will serve as case studies

8) Assess the likely impact of trilateral food aid transactions on US short-run and long-term market

development objectives Assess the likely impact on regional trade and economic development Identify trade-offs between US and regional market development

9) Items 4 through 8 will entail travel to Ghana Mali Burkina Faso Zimbabawe Malawi and Mozambique

10) Recommend whether or not the USG should expand trilateral transactions and if so how might they be improved in terms of design negotiation and management

A suggested outline for the report is attached

Personnel Requirements and Tasks

The contract requires four consultants as follows

Food Aid Specialists (2)

The food aid specialists will examine past USG and other donors experiences and policies regarding trilateral food aid transactions They will identify lessons learned from past experiences with respect to the design negotiation and implementation of tripartite programs The food aid Specialist should have had previous experience with US food aid programs and should be familiar with PL 480 terms and policies

69

Agricultural Economists (2)

The agricultural economists will prepare a cost effectiveness analysis of USG bilateral vs trilateral food aid programsThey will also assess the likely impact of such programs onUS market development objectives and on the regional tradeand economic development of the developing countries involved One of the agricultural economists should be familiar to theUS agriculture community in Washington and have a goodunderstanding of US agricultural export policies and issues

Both agricultural economists must be knowledgeable aboutcommodity and non-commodity accounting issues that are likelyto arise in undertaking the cost-effectiveness analysis andhave experience working in developing countries

Reporting Requirements

A draft report will be submitted to FVAPPE within three months after the contract i signed It is anticipated that the contract will be signed about mid-December 1986 A final report vill be submitted to FVAPPE no later than 30 days after receiving AID s comments on the draft report

Timing

The preparation of materials and reports required under this contract will be completed within four months after the contract is signed

70

Annex B

Methodology

A Purpose

This stody was designed to provide the US Agency forInternational Development (AID)--and other members of theDevelopment Crordinating Committee (DCC)--with an assessment ofthe pros and cons of trilateral food aid transactions involvingthe US Government The positive and negative aspects of suchtransactior were to be examined from the respective points ofview of the USG the exporting developing country and the recipient developing country

B Objective

By documenting past USG experience with trilateral food aid arrangements study results and recommendations were to help theAgency to determine whether or not to support furthertransac ions of this type Should the study yield results thatportray past experiences as essentially positive--both those ofthe USG and of other donors--then AID might activelyformulate a policy directive and continue to support sucharrangements when proposed by the field If the study results were not positive however the Agency might be less likely tosupport such proposals in the future andor might develop apolicy determination actively discouraging them AID policymight or might not be adopted by the other members of the DCChowever

C Aoproach

AIOVApN is-sed - request for proposals to carry out thisstudy in July of 1986 Subsequently a second RFP was issued inOctober RONCO Consulting Corporation won the contract to carryout this study on a competitive basis Key to RONCOs approachwas the inclusion of field visits both to Europe nidcountries in Africa

to involved in the four case studies chosen

AID We proposed to use bN

a team of four to accomplish the tasksoutlined in the resulting scope of work (see Annex A)

The study team consisted of two agriculturaltrade economistsfamiliar with USDA and its mandate in terms of surpluscommodities US market development concerns and PL 480 programs aL well as two food aid specialists familiar with the way USG and other-donor food aid programs and policies operatein the field One of the food aid specialists based in the UK(also an agricultural economist) was to carry out the assessmentof other-donor experience first thus providing a context for thefield work and analysis to be carried out by the other three teammembers Two agricultural economists based in the US wererespectively to carry out the cost-effectiveness analysis and

62

the market impact analysis one traveling to the field in WestAfrica and the other in Southern Africa secondA food aidspecialist (an anthropologist) was to participate in field work on at least tuo case studies examine other PL 480 food aidexperience as televant and identfy lessons learned with respectto issues of designnegotiation and implementation of trilateral arrangements

To the extent feasible the four team members carried out theirwork in such a way that relevant ita gathered by each would beavailable in time for appropriate use by the others Thisproved largcely possible although there were some problems inscheduling trips to the field and in coordinating reportpreparation activities since the team members were located indifferent areas and didnt come together before the draft was completed

The four case studies examined in the field were in Vest Africathe US-Ghana-Maii agreement and the US-Ghana-Burkina Fasoagreement (one member thisteam did alone) while in SouthernAfrica two membersteam examined the US-Zimbabwe-Mozambique agreement (Round I) and the US-Malawi-Mozambique agreement(also Round I) Unfortunately due to scheduling conflictsUSAIDMalawi asked the notthat team make the anticipated visitand instead offered to develop a succinct case study narrative inline with the study scope of work This offer was accepted andthe resulting narrative is summaiized in the main body of the report The team membei-s who isited Southern Africa were asked

rcl2vane issionby the poundieL to take account of a newly-signedtrilateral agreement (Round If) among the USZimbabwe andMozambique and proposal a- for further trilateral among theUS Kenya and Mozambique which was subsequently approved by theDCC as this report was being preoared (in the interim a US-Kenya-Sudan agreement had also been approved)

Team members wrote up their respective sections of the reportseparately on the assumption that once an initial draft had beenprepared all would be able to get together to produce a finalproduct after an informal seminar that was to take place in Washington DC in May

t orgt poi interest is expressed by the EEC and WFP infacilitating a broader meeting to review the findings of thisstudy as well as those of two similar studies being funded bythese donors during the same period Despite goodwill thisproved too complicated to negotiate Instead the team presentedand discussed findings and recommendations of the draft report in an informal seminar relevantwith AIDW officials in May Thedraft was also sent to the cQncerned field posts for comment

All members of the team received extensive cooperation fromAID USDA other USG and other-donor staff well asas from

63

host-country officials private citizens and representatives of involved private voluntary organizations (CARE World Vision theBaptist Mission in Burkina Faso) In most instances these individuals and groups went out of their way to provide the team with data on costs and logistics that were not necessarily readily available in the form requested14

D Issues and Their Presentation

The main issues addressed in the report which follows are thedevelopmental appropriateness of trilateral arrangements their vegional and internatihnal trade and market development impacttheir cost vis-a-vis some hypothetically equivalent bilateral arrangement(s) and their tmeliness In Section II we brieflyoutline the developmental and agricultural context into which the four case study arrangements fit including the matter of othershydonor experiences with trilateral or triangular arrangementsthe overall food situation and particular USG concerns

In Section III we discuss positive and negative aspects of theUSG experience as documented in the four cases examined InSection IV we examine issues relating to programmingtrilaterally obtained and delivered food aid including designnegotiation and management In Section V market development and trade implications are briefly discussed In the final sectionV we present conclusions and recommendations based on our study findings

To enable the reader more interested in one aspect of the studythan in others to find necessary detail we present several annexes The first contains the study scnpe of work The second presents the methodology and approach In the third annex we present somewhat detailed accounts of the four cases examinedwith chronologies The fourth contains the cost-effectiveness analysis comparing trilateral versus bilateral programs based ondata gathered during this study The fifth annex presents in greater detail an analysis of the impact of such trilateral arrangements on USG market development objectives both in the

14 Attempts to coordinate information and investigation with the study ams being sponsored by the other donors were not so successful although the RONCO team initiated various overtures The feeling on the part of the other contractors seemed to be that everyone already knew what the USG policywas on this matter and in any event those already contracted to carry out these studies did not need any help (This was refuted by the fact that one team wrote to AID and asked that the RONCO team provide in writing a considerable summary of USG experience in the trilateral area for the purposes of the othershydonor contractors own report No reciprocal offer was made to share information however)

64

short and in the longer term and on regional trade and economicdevelopment annexA final provides more detail on other-donor experiences

E Caveats

Here we should note that despite considerable help andwillingness on the part of AID host country USDA and PVOofficials we experienced difficulty in getting reliable figuresand other information as to cost logistics timing andintermediary organizations that provide the background forcost-effectiveness analysis The problem

the seems to relate to thenumber of offices and agencies on each side of a transaction that are involved in data gathering and retention Since they areusing and storing data for different purposes and from different

sources it is not surprising that their numbers do not all agree However this presents a fairly serious problem both forthis type of applied research and presumably for the ability ofthie governments and agencies concerned to evaluate the success oftrilateral versus otqier kinds oi food aid trLssuctions

In fact a finding of the study is the specialthat parametersintroduced by emergencythe nature of these programs createspecial problems for analysis as well as for Amanagementrepresentative of CARE in Mozambique responsible for a large andcomplex progam under Title II and with other donors as well putit this way

We dont know what anything costs--we are dealing almost exclusively with donations including andtrucks ftiel aswell as food so that we cannot tell you what our programcosts in general or what specific donor portions cost Wecould figure it cut starting from the supposed dollar valueof the food pledged and we could assign costs to fuelpersonnel trucks etc but so far we have been too busyrunning the program to do so

The team was asked as part of the scope of work to comment uponUSG experience with trilaterals including the policy issuesinvolved In trying to accomplish this task we had somedifficulties with background or contextual information since forat least some of the cases a portion of the relevant cabletraffic is classified Judging by the gaps in at least someinstances what was not available to us seems to have been thatportion which would be most enlightening about the policybackground We surmize that this may also include informationwhich would explain the duration of the sometimes extremely longdecision-making and approval process for some cases

Given these data-related difficulties we urge readers to take

65

seriously those cautionary remarks about data made in what follows to take what might otherwise seem to be curious gaps in case study analysis in stride and to remember these caveats when making judgments and eventual policy alterations

66

117~

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ANNEX C

CASE STUDY GHANA TO MALI AND BURKINA FASO 1985

SUMMARY

On April 12 1985 the DCC approved a barter agreement in which the United States Government provided 9202 metric tons of US rice to Ghana and in return the Government of Ghana provided15000 metric tons of Ghanaian maize (corn) to be shipped to Mali

2and Burkina Faso Of the 15000 metric tons of maize 5000 tons were to be delivered to Ouagadougou Burkina Faso and 10000 tons

to be delivered to designated placeswere in Mali A barter agreement was signed in Accra on April 25 1985 effecting this agreement

Of the 5000 metric tons for Burkina Faso the first shipmentsarrived on July 12 and the last on August 3 Te Ghanaian white corn was officially received by the Office Nationale des Cereals (OFNACER) After receipt however it was immediately transportedto the warehouses of PVOs (Private Voluntary Organizations) whereit was discharged directly from the Ghanaian trucks into the warehouses of the PVOs followsas

Metric Tons PVO

1000 Red Cross (Croix Rouge)3015 Baptist Mission

984 Essor Familial

The grain was used by the PVOs to feed needy families in areaswhere the PVOs had established programs and generally only small nominal fees were charged to help defray the costs of transport in Burkina Faso

Transportation of the grain to Ouagadougou was handled by the Ghanaian Food Distribution Corporation (GFDC) the Ghanaian agentfor the ja~rer trade througi conzracz directly from USAID 3 with subcontracts by GFDC to the Cor-Ghanaian State Transportporation (2000 MT) and The Progressive Transport Owners Asshysociation (3000 MT) a group of independent Ghanaian truck owners The GFDC handled freight forwarding within Ghana and

1 Transfer Authorization number 641-XXX-000-5603

2 TA number 688-XXX-000-5622

3 Contract number 641-0000-C-00-5004-00 executed by the USAID Mission Director in Ghana

1

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USAID Ouagadougou contracted with SOCOPQA in Burkina Faso to handle freight forwarding beyond Ghana A private marine surveyorwas contracted by USAIDOuagadougou to inspect the condition ofthe shipments upon arrival Internal transport in Burkina Faso was apparently the responsibility of the individual 4PVOs

The 10000 metric tons of maize shipped from Ghana to Mali wasalso furnished by the GFDC out of Kumasi Ghana It was shippedto four locations in Mali Ansongo Bamako Gao and Meneka viaBurkina Faso and Niger The grain was consigned directly to aPVO World Vision Relief Organization (WVRO) who received thegrain inspected it and stored and distributed the grain in MaliThe first shipments went out on June 6 and the last on November 23

The shipment of Ghanaian maize to Mali was included in the agreement between USAID and the GFDC for the shipment of the

5maize to Burkina Faso The inland transport costs of the maize shipments to Burkina Faso were covered by a ProcurementAuthorization from 6AID AID also established a separate agreeshymeit with World Vision International to transport the grain to7jal i A separait agreement was therefore established betweenWorld Vision and the GFPC to incorporate this arrangement andWorld Vision paid the GFDC a fee for handling the grain inGhana 8 World Vision then contracted with Marine Overseas Servshyices (MOS) to handLe the shipment of the maize to Mali which in turn contracted the shipment of grain to four points in Maliwith Super Scientific Farms Ltd of Ghana World Visions direct costs an internal transport cost between Bamako and Nioro of apshyproximately 1768 metric tons of grain and freight forwardingcosts throuuih Burkina Uaso and Niger were included in a separatePAPR 9 This latter also included freight forwarding costs of

4 Reports for example from the Baptist Mission indicate thatthey paid the internal freight charges It is likely that atleast a portion of this cost is funded under OFDA or otherGovernment program funds but it

US is not included in the CCC

costs

5 Contract 641-00-C-00-5 ]]1-lj

6 PAPR number 641-48-000-5701 in the amount of $677000 June 28 1985

7 PAPR number 899-950-XXX-5784 in the amount of $3040000 June 4 1985

8 The fee was $360 per mt as established in the USAID - GFDC contract noted above

9 PAPR number 899-950-XXX-6784 This PA was issued in June of 1986 following requests by WVRO to cover additional costs inshy

2

Marine Overseas Services Inc (MOS) who was contracted by World Vision to organize and coordinate the operation

BACKGROUND

The concept of a barter arrangement appears to have its originsdatin( to at least October 198410 It was noted in a cable from Ghana l that discussions by the US Ambassador dated to the preshyvious October Later in working notes apparently prepared byBill Lefes on 1-8-86 it was remarked that the idea was hatched inNovember of 1984 and serious consideration was given in Februaryof 1985 By December of 198412 AIDW shows favorable interest andnotes that FVAFFP has supported similar arrangementswhichhave proven to be successful in meeting African food needs and reducing USG costs

In late 1984 or early 1985 it was becoming clearer that a seriousfood shortage was developing in both Burkina Faso and Mali CRS was requesting faster deliveries to Burkina FasoUSADOuaiadougou had requested 19000 metric ton sorghum Ofthis 7000 metric tons were to be loaded in the US in lateJanuary to arrive in Lome ona March 19 Two shipments of 7000metric tons and 5000 metric tons were called forward on January15 to arrive in Lome in April CRS had 8790 metric tons ofcornmeal and 525 metric tons of oil ordered in mid February toarrive in May or June AID suggested that Ouagadougou consider abarter arrangement with Ghana1 3 to accelerate deliveries of food a id

Meanwhile the Mali situation indicates that there was a deficitof 230000 metric tons of cereals of which the andUS otherdonor commitments were 125000 metric tons USAIDBamako asks AID

curred with the shipment particularly the fees to MOS Thisrequest was made in December of 1985 approved by the USAID Misshysion in Ghana in January but because of various delays was not issued until June of 1986

10 Memo from DAAFVA Walter Bollinger to CFFP Thomas H Reese III and DCFFP Steven Singer October 4 1981

11 Accra 02994 26 April 1985

12 State 375790 December 21 1984

13 State 045624 February 14 1985

3

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to increase assistance hy 35000 metric tons raising the USGs total for 4Mali to 80000 metric tons1 The loomingdisaster terms of this request elicits a response from AIDW toconsider a barter arrangement although clearly Bamako had been communicating to Accra on this matter as early as January 25 1985

USAIDGhana in consultation with the Government of Ghana feltthat as much as 40000 metric tons of surplus maize could be provided 1 5 It was later determined however that this figure was high and that only about 20000 metric tons would be availshyable A major reason for this was that the GFDC after examiningthe situation found that large quantities of maize were alreadymoving across the border into Burkina Faso through clandestine trading operations The 20000 metric ton figure was retained in tne DCC approval of April 12 whereby the USG would exchange12258 metric tons of Lice for the maize Apparently Ghana furshyther reduced its targets oL what it could supply as Mali agreedthat the quantities of maize targeted could be reduced to 10000mt [or Mali (8000 for Gao and 2000 for Nioro) 16

THE TERMS OF THE BARTER

The determination of the exchange rates of Gbanaian white maize for US rice was established in negotiations between USAIDAccraand the GFDC The value of Ghanaian maize was established at $19000 per metric ton including bagging in jute 100lbs netloading free on truck and marking bags gift of the United

Saeor- to b -gtdThe cricshyUS I3 y n rice jjec Lzs was pur aDJ ner$31000 per metric ton This established a ratio of 163 tons ofmaize per ton of rice According to Paul 1 7Russell who undertook most of the negotiations on behalf of USAID there were severalpossibilities to use in pricing the exchange Ghana used procureshyment prices world market prices sales prices etc The pricedecided upon was the procurement price (to GFDC) plus the cost of fumigation rebagging and loading converted at the official exshychange rate at the time 1 8 the agreement was reached Apparently

14 Bamako 0605 January 29 1985

15 The figures of 40000 to 50000 metric tons came from the Ghanaian National Mobilization Committee

16 Bamako 2638 25 April 1935

17 Paul Russell was a private consultant to USAID in the earlystages of the barter program He later was employed under the MOS contract with WVRO when the maize was shipped to Mali

18 This figure is approximately 95 cedis per kilogram There is

4

the US price of rice was set as the market price in the19States Although these exchange rates were originally calcushylated for the 200 tons level they were kept for the actual15000 tons that were finally agreed upon One problem with thevalues used here for exchange of commodities is that the rice is being calculated on an approximate world market prie while themaize is being valued at a Ghana protected market price For exshyample at Lhe end of 1984 the orice of US corn was $256 per20bushel while the figure used bove puts the value of Ghana

2 1maize at $483 per bushel A second problem with the exchangeformula is that it does not take inr- account the market rate ofthe cedi versus the US do-lar At the time of the barter thecedi was about 50 to 1 Shortly after the arrangement was madethe cedi was devalued to 53 to 1 and before the grain wasshipped the cedi had reachied 57 to 1 The final payments made byWVRO to the GFDC (for theif handling charges) was converted atcedis to the dollar In February of 1987 the

90 cedi had devalued

to 154 to the dollar This issue is important not only in termsof the exchange of maize for rice but will also be seen to afshyfect the transport coscs and handling charges by GFDC

THE TRANSPORTATION OF MAIZE FROM GHANA TO BURKINA FASO AND MALI

The barter agreemett between the USG and the Government of Ghana called for a separate transport agreement to be reached toship the maize from Ghana to the inland countries The negoshytiation costing administering and accounting for the transporshytation is the most complex and confusing cf the Ghana barter

some inconsistency here with the figures given to me by the GFDCwhich wer2 quoted as 13 cedis purchase price for the maize inshyvolved in the barter If the 95 cedis figure is accurate thenthe net benefit to the GFDC noted elsewhere in this paper wouldbe considerably higher In 1984 according to a cable from Accra (19172 24 December 1984) wholesale maize prices ranged fromcedis 3227 to 3755 and wholesale rice prices from 7506 to 3344 for 220 lbs or a ratio of osout 2351

19 It should be noted here that the CCC actually paid $29100 per ton for the rice that was shipped under the agreement

20 USDA Agricultural Prices 1984 Summary June 1985

21 The March 21 price given for number 2 yellow corn from theUS was $120140 per ton delivered Gulf ports and $22200 forThailand white rice 5 fob Bangkok according to the FAO FocdOutlook April 1985 Using this basis the exchange rate should have been 1851

5

agreement In the cable to Washington laying out the terms of the barter 2 2 the proposed language of the barter agreement in Secshytion 15 stated DELIVERY OF THE BARTERED MAIZE AND RICE SHALL NOT COMMENCE UNTIL THE SEPARATE TRANSPORTATION AGREEMENT BETWEEN THE GOG AND THE USG HAS BEEN EXECUTED EXCEPT AS THE PARTIES OTHERWISE AGREE IN WRITING In this cable the cost basis for the inland transpcrt was based on 55 cedis per ton-mile Using this rate and Kumasi as the marshaling point for the maize the cost estimate was $21200 to Mopti (6000 mt) $24800 to Gao (6000 mt and $10300 to Ouagadougou (8000 mt) The esshytimated total cost was $36 million This is based on a shipment rf 20000 metric tons This figure was approved by the Intershyagency DCC Subcommittee on food aid 2 3 and was broken down as $2160000 for inland transport to Mall (Gao and Mopti) and $1440000 for inland transport to Ouagadougou 2 4 In the same cable it was noted that FFP had been in touch with World Vision Relief organization (WVRO) which had expressed it willingness to undertake a feeding program of 10000 mt in CaoMeneka and 2000 mt in Nioro

USAIDAccra on April 30 1985 requested permission to negotiate a fixed price contract with the GFDC for the transportation of the Maize to Mali and Burkina Faso This was stated as a contract with GFDC to assume complete responsibility for the delivery and discharge of the foodgrain at the inland points of entry in both Mali and Burkina Faso25 Later on June 14 REDSO cabled for clearance for this contracting arrangement as well 2 6 This cul-shyminated in a contract that was drawn up in Accra and handled tot cc i AIDREDSO rr Ab djan This contract dated June 21 1985 was for the amount of S350345000 and covered the shipment of the entire 15000 tons as follows

Contract to the GFDC for inland transport based on mileage from Kumasi Ghana

To Ouagadougou Burkina Faso 470 miles To Ansonao Mali 1154 miles

22 Accra 02495 April 4 1985

23 State 114065 16 April 1985

24 Why these rigures were approved is unclear given that the Mission estimated $824000 for Ouagadougou and $2760000 for Mali would be needed

25 Accra 03072 April 30 1985 1

26 Abidjan 10039 June 14 1985 It is interesting that this cable also refers to the complex arrangements for the use of OPIC generated cedis See below for further discussion of this issue

6

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To Bamako Mali 1048 miles To Meneka Mali 1026 miles To Gao Mali 1327 miles

The following rates in US dollars were to apply

CALCULATION OF FREIGHT RATES FOR INLAND TRANSPORT IN US $

Destination Metric Trans- Hand- Total Total Tons port ling per to

per per mt dest ton torl

Ouagadougou 500 1750 700 11350 567500Menera 2509 2510 360 25530 638250Ansongo 1500 28300 360 28660 429900Gao 4030 32550 360 32910 1316400Bamako 2000 25710 360 26070 521400

SUB TOTAL 3473450Freight Forwarding to Ouagadougou 30000 TOTAL CONTRACT 3503450

was Zo -- cie gloading at destination 2 7 The $30000 for freight forwardingservices in Burkina Faso was included at the recommendation ofthe USAID Mission in Ghana 2 8 which felt that the GFDC would have a difficult time handling those duties in Burkine Faso

Prior to signing this contract a separate PA 2 9 was issued forWorld Vision to cover transport costs of 10000 metric tons ofmaize from Ghana to Mali This PA in the amount of $3040000 wassigned by WVRO on June 6 1985 This apparently caused a greatdeal of consternation on the part of the GFDC and it was onlythrough the offices of the US Ambassador to Ghana interveningwith the Minister of Finance that the issue was resolved Theresolution was thein form of a separate contract from the GFDC

27 Appropriation 72-12X4336 Allotment 782-38-099-53-51(Burkina Faso) and 59-51 (Mali) BPC ECCX-85-13830-KG-34 (Burkina Faso) and 35 (Mali) Because WVRO was unable to handlethe grain this fast the 120 day period had to be extended

1

28 Accra 04217 June 14 1985

29 PA 899-950-XXX-5784

7

to WVRO for the transport of the maize to Mali Under the termsof this contract the GFDC reserved the right to transport 5000tons of maize to Burkina Faso aid WVRO paid the $360 per metric ton handling charge to GFDC The transport rate was set at 13cedis per ton mile with 40 paid in cedis and 60 paid in CFA 3 0

The requirement for partial paymenL in CFA francs was pushed bythe Ghanaians due to the need for spares and fuel outside ofGhana The ratio of cedis to francs had been established as afunction of ton of entirethe miles the 15000 metric tons and total distances within and outside of Ghana In order to coverthe grain shipments to Burkina Faso a separate PAPR 3 i was issuedin the amount of $677000 which included 647000 for transportand $30000 for freight forwarding fees in Burkina Faso

It is not clear when or how the original DCC approved amount of$3t million for inland transportation was amended to increasethe total figure by the additional S117000 in the two PAs It was noted earLier that any amount over the $36 million wouldrequire DCC aoproval 3 2 It appears however that this amount wasapproved later when the amendment PA to cover additional costs toWVRO was the Itapproved by DCC is also interesting to notethat the GFDC contracted with WVRO to transport the grain to Mali even though payments for these services went directly from AIDWVRO who in turn paid

to the GFDC for the $360 per ton handling

costs

At this point WVRO engaged the services of Marine Overseas Servshyices (MOS) to organize and handle the shipment of the maize fromGhana to Mali However no funds were available for this se--- Therefore AID issued an amended PAPR 3 3 to cover this as well asWVROs direct costs in Mali This included for example the adshyditional cost of shipping the grain delivered to Bamako on toNioro dL1 Sahel Other items included freight forwarders Burkina Faso and Niger who engaged

in were to facilitate Mali bound

grain shipments through those two countries Finally there was also included an item for unloading of grain at the destination in Mali The total amount of this amendment was $748181 and it was finally approved in June of 1986

The actual transporting of the grain was done with Ghanaian trucks MOS on behalf of WVRO withcontracted Super Scientific Farms Ltd to transport the grain to Mali The rate was 13 cedis 30 The CFA is the West African Franc and is a hard currency

backed by the French Franc

31 PAPR 641-48-0003-5701

32 State 185218 June 18 1985

33 PAPR 899-950-XXX-6784

8

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per ton mile with 40 paid in cedis and 60 paid in CFA The GFDC contracted with the State Transport Corporation to haul 2000tons to Ouagadougou at a rate of 12 cedis per ton mile with 65 paid in cedis and 35 paid in CFA 3 4 The GFDC also contracted with the Progressive Transport Owners Association (PTOA) to transport 3000 tons to Ouagadougou presumably on the same terms as tne State Transport Corporation received

Meanwhile the Mission inUSAID Ouagadougou contracted with SOCOPOA for freight forwarding services in Burkina Faso The conshytract 2200 per cusshywas for CFA ton to (1) pass goods throughtoms (2) cover border crossing costs (3) unload in Ouagadougou(4) recondition broken sacks and (5) survey arrival of grain on a daily and weekly basis At the time this contract was written theexchange rate was approximately 460 CFA to one dollar making the cost $478 per ton MOS contracted SOCOPOA in Burkina Faso forfacilitating grain movement across Burkina Faso in transit fromGhana to either Mali or Nicer and with Nitra in Niger tofacilitate movement of grain across Niger in transit from Burkina Faso to Mali (particularly the grain going to Meneka) SOCOPOA received $]328947 or $133 per metric ton and Nitra received $1573305 or $413 per metric ton for these services It appearsthat MOS received a total of $48889316 for their services inthe Mali shipments or $4889 per metric ton although at onepoint they submitted a summary accounting to WVRO which included their charges of $5i663235

-34 The contracts fo transport 7rordini to officials at the GFCC were written in cedis and apparently the cedi portion ofthe payment was held at the contract rate However payments tcGFDC were made according to dollar amounts so that the GFDC receiied increased amounts of cedis as devaluation occurred Forexample amount tothe contract the State Transport Corporationfor 2000 mt of maize at $10650 per mt was $213000 and tothe Progressive Transport Ownecs for 3000 mt at $10650 permt was $31900 These amounts wee paid to the GFDC We could not verify the GFDCs payments to their contract transporters

35 The evidence for the lower payment is that the PA number 6784which included MOS fees was completely used up in April of 87while the PA 5784 had funds left The difference between MOS sumshymary of costs and actual payments made by AID was $24181320 See cost factors below According to the MOS summary three cshycount items covered the fees to the truckers (1)$110000 lisk-ed as trucking fees presumably within Mali for the Nioro shipments(2) $2155578 as dollar transfers and (3) $868088 as dollar equivelant transfers or a total of $3133666 If WVRO paid MOSthe additional amounts noted theiras in summary of accounts or not is not clear If they did the additional funds had to come from WVROs own funds or other (possibly OFDA) funds from the US

9

finder the original plan of a fixed price contract to rhe GFDCfreight forwarding and handling costs were budgeted includingunloading at destination With the actual operation thereforeit appears tiat both freight forwarding and unloading costs were paid twice first to the GFDC (the CFDC received a total of$71000 for handling costs) and then again to MOS SOCOPOA Ni- ra and WVRO

The basis for contracting the hauling on a ton mile rate was to have been no more than the highest rate permitted by the Governshyment of Ghana On April 4 1985 this rate was quoted as 55 cedis per ton mile3 6 By the time the transport contract was negotiatedwith the SFDC the rate had apparently increased to 13 cedis perton mile During this same period some devaluation had taken place the cedi going from about to501 571 in relation to the US dollar or about a 14 devaluation At the same time the freight rates increased by 230 At the first devaluation which occurred at COB 41-685 setting the rate at 53 cedis to the dolshylar fuel prices were increased effective the following dayparently by 14 (against a 5 devaluation)37 However this

apshycershy

tainly does not justify the large increase in freight rates noted above

By comparison freight rates in the neighboring Francophonecountries were significantly less Iii the Ivory Coast the rate in the spring of 1985 was given as 38 CFA per ton kilometer which would equal from 114 to 137 US cents per ton mile depending onexcl 3 8 - er the period By comparison the rate paidfor Ouagadougou ranged from about US cents 21 to228 vJle the Mali rate would have been from 226 to 245 InBurkina Faso the Baptist Mission paid an average cost of $2078 per metric ton for transport inside of the country or an averageof 4212 CFA per ton kilometer 9 to 10 cents per ton kilometer or 137 to 15 cents per ton mile They did have in their budget45 and 55 CFA francs depending on road although in their reportto USAID they cite figures of 38 CFA on all-paved road haulage40 CFA on hard-surface (presumably laterite surface) and 45 CFA on unimproved roads rhis would translate into ton mile (from ton kilometer) rates of 117 to 1425 123 to 150 and 1395 to 16875 for the three rates depending on the exchange rates over the period Mali rates were controlled by the National Transport 36 Accra 02495 April 4 1985

37 Accra 02994 April 26 1985

38 Adams Robert and WL Benton Hoskins A Report on the Drought Situation In the Republic of Mali and Recommendations for a USG Response Office of Foreign Disaster Assistance AIDWashington DC March 1985

10

ol)

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Office (ONT) and rates for freight were set at 20 CFA for pavedroads 30 CFA fo hard-surface roads and

3 9 40 CFA for sand and bush

roads However the report giving these figures noted that the low rates allowed by the ONT was a major cause of the backlog of cereals in Abidjan waiting shipment to Mali It does seemhowever that the contracts with the Ghanaiarn truckers were at least 4 cents per ton mile higher than those found elsewhere and in some instances could have been double rates paid in neighborshying countries The argument here of course will be made by some that the over-valuation of the cedi required higher rates This would be true except that in this instance the contracts were written in dollar terms and payments were made in dollar amounts at whatever rate prevailed at the time of payment Finally it is also true that the payments were partially made in CFA (60 inthe case of Mali 35 in the case of Burkina Faso It is also true that in several cases the roads were paved for the greaterpart of the trip For example transport to Meneka throughBurkina Faso and Niger would not have to leave paved road until after Ouallam leaving only about 100 miles of unpaved road The route to Gao is paved from Kumasi except for about 150 miles in the north of Mali The Ouai adougou and Bamako routes are paved intheir entirety unless the short-cut from Hamale to Bobo-Dioulasso is used on the way 4 0to Bamako and Mopti However in fairness it should be noted that trucking was in short supply atthe time of the shipments most trips had to be made during the rainy season making any non-hard-surfaced travel difficult and trucks had to dead head back to Ghana Additionally there isample evidence of the difficulties with border crossings and

cited above they noted tha- there were at least 50 cha_lt 1i-between Abidjan and Bamako In addition to causing delays these checkpoints often cost money as well In fact special stickers had to be used on trucks coming to Ouagadougou from Lome in 1985 to assure easy passage and some problems were noted on the Ghana - Burkina Faso border for the shipments made under this trilateral arrangement

TIMING AND SPEED OF SHIPMENTS

Once the DCC approved the barter in April the movement of grain was able to begin fairly soon Some delay was experienced due primarily to the cumbersome shipping agreements noted in a preshyvious section Negotiating this agreement took about six weeksa-id was not finalized until June 21 However shipments startedimmediately and 167 trucks in 14 convoys carrying 5290 tons of

39 Adams and Hoskins Ibid March 1985

40 Note that a cable from Ouagadougou 01244 of March 11 1985 says that the HamaleOuessa border point to Bobo road 146 kms of 188 kms had recently been improved

11

maize were sent to fourthe destination points in Mali in JuneThe Mali shipments were held up after this mainly because WVROin Mali was unable to handle the shipments at this rate Conshysequently WVRO requested a delay and shipments were not resumeduntil late September and were completed by November 23

For the 5000 metric tons of maize shipped to Burkina Faso thefirst shipments arrived on July 12 and the last arrived onAugust 3 Thus it was fairly clear that the GFDC was capable oforganizing and moving the grain expeditiously

It is difficult however to determine if the timing of thebarter arrangement was faster than would have been the casebilateral PL 480 proqram For example the

of a shipment of the ricein the barter was accomplished in a little over 6 weeks Oneshipment was sent out of Freeport Texas and the other out ofLake Charles Louisiana Both shipments were loaded by the 4th ofOctober and the ship arrived in Tema Ghana on the 15th of Novemshyber Hypothetically we could assume that the same trucks thathauled maize to Burkina and Mali would have been organized toevacuate the rice (or corn if that had been the food shipped) then the US shipped grain could have been in Burkina Faso in 8to 10 weeks from US poits and in Mali in 8 to 14 weeks

However neither the barter arrangement nor the direct bilateral arrangement take into account the time factors prior to the apshyprovals and agreements In the case of the barter we haveevidence of discussions

q a reports and requests dating to the ende s - mo t s-o o e

leat3 mon s D~ -e DC aproval was oocainec Inthe case of bilateral aid we note that calls forward fromJanuary ere not expected to arrive in Lome before mid-March andFebruary calls were expected in mid-May The timing seems to be very close to the same by these dates

THE JUSTIFICATIONS FOR THE BARTER ARRANGEMENT

Several arguments have been put forward to justify the barter arshyrangement undertaken in West Africa in 1985 The primary one wasthat the ports available to Mali and Burkina Faso of Dakar Abidshyjan and Lome were congested and delays would be experienced whenshipping grain through them In the case of Mali 80 of thefreight traffic was being sent through Abidjan because of thedeteriorated condition of the Dakar to Mali railroad both in terms of the line and the rolling stock The OFDA report citedabove reviewed a UNDP report on deliveries of food aid toAfrican countries They noted that over

West a 5 month period only 13of the food aid requested for Mali Senegal Niger and Burkina

Faso could be delivered In the previous year tonnage of food aidhandled at the three most commonly used ports were Dakar 102000Abidjan 118095 and Lome 40508 (Lome figures were only for a 3 month period)

12

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Generally however the studies did not indicate that it was theports themselves that were the problem In the case of Abidjanthe UNDP noted that the maximum offtake rate of the port was beshytween 5000 and 6000 metric tons per week which was double thecurrent usage The backlogs rather occurred at EMACI(Enterprise Malien au Cote Ivoire) who operated under the direcshytion of ONT in Bamako In early 1985 they had a backlog of 60000to 80000 tons of freight in warehouses in Abidjan of which25000 mt was cereals I Evacuation of cargo was taking placeat the rate of about 4000 mt per week to Mali The UNDP notedthat this is primarily due to the extremely low trucking ratespaid to truckers by ONT to carry Malien goods For example set rates for Malian goods were 20 CFA per tonkilometer comparedwith an Ivory Coast rate of 38 CFA per tonkilometer on pavedroads while Malian rates for laterite roads were 30 CFA and 40CFA on sand and bush trails In addition EMACI had to conform to a ratio of 2 Malian truckers for each non-Malian trucker engagedVery few of the truckers were interested in hauling food aid atthese rates Foreign Aid Missions in Mali had tried getto theGovernment of Mali raise ratesto these but this was rfused Ithese rates were raised then the Government would be required to pay higher rates on government imported goods

From Dakar the only transport available to Mali is the railroadMali has about 185 extremely worn out freight cars (versus 338for the Senegalese) EMASE (Enterprise Malien au Senegal) conshytrols shipping from Dakar under the supervision of ONT Theirfirst resoonsibilitv to - ois shio goods required co- inrby Malien ies flt i s J - o n iorn- Th i s Sc n1z Wi a or3amp s _ha Senegal cargo of 20 CFA per ton kilometer on the same line Thusgenerally the Malians operate at a loss and cannot maintain their line nor replace their rolling stock

In the case of Burkina Faso the main ports of entry are via the port of Abidjan and then by rail through Bobo-Dioulasso Ouagadougou and through the port of Lome

to and then by truck

north Most grain coming by rail will be offloaded in Ouagadougouand trucked north to the chronic grain deficit areas such as Yatenga and Dori

SLortage of railcars and heavy demand for the use of the railroad to haul exports for Ivory Coast often cause bottlenecks on theAbidjan - Ouagadougou railroad In 1985 much of the food aid wasbeing sent through Lome and trucked north Burkina Faso had afreight rate structure similar to that of Mali but yieldedthe demands of foreign donors to

to raise rates sufficiently to comshypete with private cargo Burkina almost doubled its rates and

41 The WFP on 2101985 cited 52800 mt total freight in Abidshyjan

13

the result was that the congestion in the port of Lome was eliminated in a few weeks

Another argument advanced for the use of trilateral arrangementsis that food more preferred to the taste of the local populationswill be made available In this case that would mean that Ghanaian white maize would be preferable to US maize or sorshyghum For this particular case the argument is weak Most of the grain sent to Mali and Burkina Faso went to the northern parts of those countries The maize producing and consuming regions of the two countries are in the south The north consumes primarily milshylet with some sorghum eaten where climate and soils permit its growth (although in Burkina Faso most sorghum is made into a loshycal fermented drink) Therefore it would seem that the taste ofwhite maize would be as foreign as red sorghum to the recipieLtpopulations

THE IMPORTANCE OF US GOVERNMENT OWNED CEDIS

Several references are made to the US Government owned cedisparticularly those that had accumulated through an OPIC guaranteed investment in Ghana as a factor promoting the trilateral arrangement On June 1 1981 the GOG and Firestone Tire Company of Akron Ohio signed an agreement for the sale of the companys shares in Firestone Ghana Ltd and Ghana Rubber Esshytates Ltd the The was by notesto GOG sale covered 20 of $359400 each bearing an interest rate of 65 payable to theOverseas Private Investment Corporation (OPIC) The first note was paid in cedis in Seotember 1982 As of March 31 1985 there were outstanding notestwo other due There was therefore$1078200 in cedis supposedly available to use for the Ghana grain transaction The balance of tothe funds plus interest were be paid at OPICs request in dollars

In addition to the OPIC cedis there were cedis being accumulated through the repayments of loans from Title I sales and other loshycally managed cedis from favr s a 7o mmoCation and sales proceeds special deposit accounts and iosz counzry contrQtions to the Peace Corps There seemed to be some concern primarily on the part of the US Embassy and USAID Mission in Ghana that the Treasury Department would declare Ghana an Excess CurrencyCountry 4 2 There was also some concern that a demand from the US for repayment in dollars of outstanding debts would have adshyverse effects on Ghanas Economic Recovery Program (ERP) in which economic policies promoted by the US the IMF and the World Bank were beginning to be implemented The US Embassy in Ghana

42 A country can be declared an Excess Currency Country where the US owns more local currency than needed for normal requireshyments in twothat country for fiscal years following the year in which determination is made by the Treasury

14

felt that the trilateral arrangement offered a viable alternative to dispose of some of 4 3the excess cedis in USG accounts It was suggested that the portion of the transportation of Ghanaian maize that was to be paid in cedis (estimated to be $16 million) be paid from the OPIC account

The actual holdings of cedis by the USG were apparently conshysiderably less at the time of the trilateral agreement than was presumed by the US Embassy In late June balances in the OPIC account 4 4 were 11021473 cedis 4 5 and the Treasury account conshytained 2363650793 cedis 4 6 The two accounts withtogetherother US Government owned cedis totaled approximately 42 milshylion ce dis ($US 840000 at 501) This amount was evidently the level set in agreements by AID for use by WVROMOS for local transport as MOS confirms this in a telex to USAIDGhana in Ocshytober They noted at that time that it had agreed to use 42 milshylion cedis and had already spent 33 million Therefore theyplanned to take 9 million additional and purchase any further cedis on the open market

There is evidence in cable traffic notes and reports that the cedi question was of importance to the Ambassador as far back as mid-1984 How much influence it had with the DCCs decision to approve the trilateral transaction with Ghana is not clear The best we can say is that it appears to have provided a vehicle bywhich Treasury was able to get rid of a large amount of cedis that were rapidly devaluating for a purpose that the US Government would fund in any case

BENEFITS TO THE VARIOUS PARTIES TO THE TRANSACTION

In assessing the benefits accruing to the various parties the stated advantages or disadvantages or pros and cons of thetransaction were used as the basis of consideration In this sense- we l-ok at the individual gairns andor losses rather than the compL-e3 -_nia~zion h-l l pl-3s mamp be crear than total minuses The total transacion iile di3cujs summaryin to temper comments made individually

The recipients of the food aid andMali Burkina Faso of coursegained in that they both received food at little or no cost to 43 US Embassy working document entitled OPIC

COLLECTION OF NOTES May 15 1985

44 Accra 05185 June 24 1985

45 Account 20FT 470

46 Account 20FT 400

15

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the respective governments and very little cost to the populationreceiving the food aid With current policy in Mali the nationalgrain company experienced no costs as they were not required tohandle or store the grain that was tosent Mali Under normalbilateral food aid programs OPAM the national cereals companyreceives the grain and stores it Then as PVOs request food OPAMreleases it themto for distribution In the Ghana - Mali arshyrangement the grain was consigned to WVRO and OPAM had no rolein the transaction Therefore WVRO did not have adequate storagefor all the maize it was to receive fromGhana 4 7

In Burkina Faso OFNACER the government grain agency officiallyreceived the grain as would be the case in a normal bilateral arshyrangement However in this case it was immediately sent to thewarehouses of PVOs who distributed the grain In une sense wecould say that OFNACER lost thisin arrangement In mostbilateral food shipments grain would be sent to OFNACER whowould distribute it to deficit areas OFNACER would sell thegrain and itsrecoup operating costs from the sales As this inshycome is the sole source of operating funds for OFNACER it is imshyportant for them to maintain a certain level of flows of comshymodities through their system each year Thus aidfood thatbypasses OFNACER meet needshelps food in the country but conshytributes nothing to maintaining the agency 4 8

In terms of the PVOs WVRO was the greatest winner as AIDcovered its expenses in the transaction and it helped them to esshytablish a presence in Mali where they had previously done littlework it also enhanced their ocsition to a certain extent in

h altho he negative i hei raspot agreementwith AID as seen by the GFDC probably offset those gains InBurkina Faso the three PVOs involved apparently covered their own costs from agency budgets so that there was neither gain orloss in terms of this arrangement versus a straight bilateral arshyrangement that would have consigned food to them from USThe Baptists for example spent a

the total of $14528658 for inshyternal handling and transport costs of 69918 metric tons offood which included the 30009 mt of Ghanaian maize or $2078

per mt But this money would have been spent regardless of the mechanism by which food was sent to them

47 In fact WVRO apparently rented space from OPAM on one occashysion to handle the maize

48 See Warren Enger An Analysis of the Marketing Position ofthe National Cereals Office (OFNACER) Upper Volta RONCO Conshysulting Corporation 1981 theBecause national grainfood comshypanies in West Africa for Ehe most part are funded from a pershycentage of the sales receipts of food there is a need to havelarqe and regular flows of food through their system and a tenshydency to overstate the need for food

16

Benefits to Ghana

The Ghanaian Food Distribution Corporation (GFDC)

The transaction had clear benefits to Ghanaian GFDCthe In disshycussions with the GFDC several important benefits were mentioned

1 The GFDC was able to sell stored maize for which the market was weak at a good exchange rates

2 The sale emptied warehouses of grain that could conceivably hPve spoiled

3 The sale of rice used in the exchange vastly improved the liquidity of the GFDC

4 The GFDC was able to meet commitments to commercial banks and

5 The GFDC was able to undertake further commodity buying camshypaigns from proceeds of rice sales

To demonstrate the impact of forthe maize rice exchange and subshysequent sales rice theof on financial situation of the GFDC we

nefis These are low and high lrmace jures for purchase cost of maize

e give overshy

head handgt g and s _gtje of maize and sales prices for riceused for the calculations were furnished by the GFDC but we were not able to inspect GFDCs accounts for verification 4 9

The figures used for overhead handling storage and distribution costs of the rice are estimated from two sources The first figure is the negotiated cost for handling paid to GFDCthe for the maize sent to Burkina Faso or $700 per metric ton The second figure is the calculated overhead figure 8100of cedis per metric ton given as an overhead handling and storage cost for the maize to the GFDC (this figure was 45 of purchase cost of grain) The figure used for transportation 1625 cedis perton is based the cedis per set withon 13 ton mile USAID for the WVRO transport and an average haul of 125 miles from the port ofTema The 125 miles would include the cities of Takoradi Secondi and Kumasi as well as Accra and the lower lake region and should

49 In fact we suspect some figures may not have been for theperiod of the transaction in 1985 For example the figure for maize used in calculating the exchange ratio was 95about cedis per kilogram and we were told the cost to the GFDC was 18 cedis However the magnitudes of financial benefits will remain

17

cover almost all of the rice sales zone

The following would give estimates of the net benefit to the GFDC according to the assumptions made above

ESTIMATED COSTS AND RETURNS TO GFDC FROM TRILATERAL FOOD AID - 1985

Low High (in cedis per mt)

Purchase cost of maize by GFDC 18000 130-OH storaae handling (45a) 8100 81 -

Ex sz22 2s oz rnaizc 26-j 2510

Value of rice sales 2800 cedis50kgs 56000 56000

Less handling Terra port to distrib point 20]7 8100Net return for rice sales 53983 46275

Estimates of rice handling

Transport at 13 cediston mile 1625 1625OH storage handling ($7 mt) 392 OH storage handling (45) 8100

Total handling costs 2017 9725

Net returns to GFDC from exchange

Gross cost of maize X 150000 mt 391500000

High return to rice X 9229 mt 498209110

Low return to rice X 9229 mt 427071980

18

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Net return in cedis (high) 106709110

Net ret rn in cedis (Low) 35571980

Value in US dollars at 57 cedis = 1 dollar

High return $187208960

Low return $ 62406982

The high benefit values to the GFDC come mainly thefrom factthat the exchange of maize for rice was based on the Ghanaiancost of maize and US price for rice rather than on the Ghanaianbuying or selling price for both commodities

Benefits to the economy of Ghana and the GOG

Direct benefits accrued to the Ghanaian economy several ways

1 The economy saved a coniderable amount of foreign exchange byreceiving rice at no FX cost to it If we use as an internashytional price FOB Bangkok for Thai rice at per$21000 plus shipping costs of $5000 per

ton ton the cif price Temawould be $26000 per ton That would make the costFX of

9229 mt of rice $2399540 This FX value accruesdirectly to Ghana as it would not have received the food unshyd a LiL 3 file -- oro-a wio he trilateral arshyrangement

2 The above savings would have to be offset by the quantity ofmaize that would have gone out of Ghana through clandestine exports into CFA zone Ifthe we estimated 2000 mt 5 0 would have moved in this way in the absence of thetrilateral arrangement at a value of 10000 per mt at anexchange rate of 57 cedis = 1 dollar then the loss in FXwould be $350877 Reports by both the GFDC and OFNACER that Ghana maize was selling on the market in Burkina Faso would support this assumption The volumes can only be guessed at

3 The national fleet oftruc Ghana was greatly improved Thehigh total payments made in CFA to contracted truckers apshy

50 There is some indication in reports arl cables that the GFDCdid not have in storage the entire 15000 mt Some appears tohave been purchased after the barter agreement was signed This open market grain would have been available to private tradersfor shipm--t north Sanctioned commercial exports required an exshyport permit

19

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proximately $2155578 allowed the truckers to purchase spare parts new tires etc as well fuelas for which little foreign exchange wa- available without the transacshytion

4 The Government of Ghana was able supportto the price of maize at the farm level without large inputs of cash In adshydition the government benefited from the liquidation ofgrain stocks for which there was little or no market Infact the GFDC was concerned that the maize in store would have spoiled without the transaction

5 The GOG was able to reduce some of its debt obligations tothe US Government with the money going directly back intothe economy of Ghana This refers to the $868088 worth of payments made in cedis from US held cedi accounts In factthe transport contract as originally negotiated called for payments of $153L255 in cedis (81156515 based at thattime on 531) out of a total of $3473450 which exceeded the amount of USG owned cedis5 1 However additional cedis were to be paid ip o USG accounts in August in the equivshyalent of $441000

Benefits to the US Government

Benefits to the USG are difficult to quantify In fact giventhe cost of the operation that is the portion that is contained in the inland transport cost of maize the USG generally lost a great amount At least $100 per mt on the Mali shipment of10000 mt would be a reasonable estimate From other perspecshytives it is more difficult to judge It is probably safe to saythat in Mali and Burkina Faso the US neither gained nor lostusing the trilateral arrangement as opposed to a bilateral arshyrangement The Secretary General of Ministry directly respon- le for

the Ministry of Commerce the grain marketing and food aid inBurkina Faso did express certain positive feelings for using

regional sources of food in emergency situations However this may have been more a strong concern for the surplus position of Burkina Faso in 1987 than any strong position about the 1985 arshyrangement

In Mali the trilateral food aid of 1985 was of little concern tothe Government other than that it provided food aid in the northshyern regions during a period massiveof shortages However theGOM had absolutely no involvement in the transaction other than

51 Accra 05648 August 9 1985

52 Paris 32523 from RAMC August 13 1985 and State 134706 May8 1985

20

permitting the maize to enter the country

In Ghana the trilateral produced the most spectacular gains fcr the USG particularly from a foreign relatio1s perspective It was emphasized that prior to the 1985 trilateral Ghana - US relations were if not strained certainly only luke warm The trilateral produced results because of the financial gains to the Ghana Government in foreign exchange savings reducing surplusmaize supplies refurbishing a large part of the national truck fleet producing profits to the GFDC and reducing the cedi balances in USG accounts It was also clear when talking to Ghana officials that there was a degree of satisfaction in having been able to be a partner in assisting their neighborsBoth US and Ghanaian officials noted that relations had imshyproved a great deal after the trilateral Whether or not that imshyprovement was worth the cost or could have been obtained at a lesser cost must be answered elsewhere

The overall impact of the trilateral would have to be judgedpositive There is however a distinct difference in the cost between the shipments to Burkina Faso and Mali The most negative part of the transaction is the high cost of the inland transportand the Mali portion is the highest per ton of all

21

CASE STUDIES - SOUTHERN AFRICA - 1985-1987

Summary

In September of 1985 USAIDMaputo recommended a trilateral transaction of 40000 metric tons of white maize from Zimbabwe and Malawi The amount was subsequently reduced to a request for 10000 mt1 5

After approximately nine months--on June 13 1986--an agreement was signed between the USG and the Government of Zimbabwe (and countersigned by World Vision) 1 6 which provided for the provision of 7000 tons of Zimbabwe white maize to Mozambique This transactions came to be known locally as Tripartite Round I Grain deliveries from the GOZ Grain Marketing Board to World Vision began five days later

Slightly later on July 24 3986 a similar agreement involving 3000 tons was signed among the USG the Government of Malawi and World Vision reflecting a ten-month decision-making and approval process Deliveries from ArMARC the COM grain marketing board to World Vision of 90 or approximately 2700 mt were supposed to begin immediately In the event as will be seen deliveries of Malawi white maize under this agreement were still being made to end-users in Mozambique in February 1987 when the study team was in the field and in April at the time of writing this report

Based primarily on the successful and speedy implementation of the Zimbabw2-MIozambique portion of Round I (see Figure ) and the continnc eme rgency situation in Mozambique the DCC approved a second USG-Zimbabwe-Mozambique trilateral December 24 1986 Negotiations with the GOZ about the terms of the wheatmaize swap under this transaction took about two months


16 in Round II as will be seen World Vision was left out Even in Round I it was not clear at first whether it was appropriate for a PVO to sign as a party to the agreement The Malawi tripartite agreement also included World Vision as a signatory on a separate line A point raised by most posts visited was the fact that in none of thesu arrangements is the recipient country a signatory to the agreements So technically they are not legally obliged to receive the commodities specified and are not bound in any other way to honor the agreements In these instances this has not apparently proved to be a problem but relates to the questions raised at the end of the West African case study annex concerning ownership and title and when and where they transferred

67

The agreement was signed on February 20 1987 and delivery bythe Grain Marketing Board was tc begin in three days In this case World Vision was not included in the agreement and the GMB was to be charged with delivery to the appropriate GPRM agencies

On September 26 1986 a trilateral agreement between the USGand the Government of Kenya was signed for the provision ofKenya white maize for emergency feeding programs in SudanAlthough this trilateral is not included as a case study here ithas had an impact on the approval of a subsequent trilateralinvolving Kenya and Mozambique whose background decision-making process is discussed in what follows

By February 1987 there was considerable discussion and cable traffic concerning a further trilateral transaction among theUSGZimbabwe and Mozambique However there anwas equalamount of discussion about whether or not Kenya could beatZimbabwes maize prices and also decrease the delivery time to affected areas in Mozambique--and attendant transport costs--bysending its maize by ship down the coast from Mombasa Thesediscussions were taking place during the teams visit to the field and in fact REDSOESA requested that the team visitNairobi to get the details on the Kenya case for cheaper and more prompt delivery

Shortly after the team returned to Washington in March the DCC approved a 22000 ton trilateral transaction to provide whitemaize for emergency feeding in Mozambique Despite the case thatZimbabwe had made regarding its ability to provide all or part ofthis maize the decision was to use Kenya as the exportingcountry It is only fair to note that this possibility wasdiscussed during eaan ieL visit of A-- fici Is toKenya and that the DCC approval p in)lace close proximity to a visit to the US by Kenyas President Further at the timethis decision was made relations between the US and Zimbabwe were still poor and the bilateral AID program had still not been restored

With the exception of the problems experienced with delivery ofMalawi maize on schedule which will be discussed in furtherdetail below these trilaterals have been relatively simple toimplement once approval has bees given by the DCC and agreementshave been signed with the respective exporting countries Inwhat follows we will discuss particular issues of timeliness arid cost the role of PVOs in two instances as well as discussingthe implications on these issues of the lengthy up-frontdecision-making and approval process

Background

Two years before Round I--the first trilateral among the USZimbabwe Malawi and Mozambique--was broached a trilateral

68

agreement had been concluded among the USG the GOZ and Zambiain March of 1983 That agreement called for the exchange of20000 net metric tons of bulk US No 2 wheat for 31000 netmetric tons of Sagged A-B Quality Zimbabwe Wh-ite Maize Thus theratio was 155 tons of maize fo each ton of wheat The maize was to be delivered to the Government of the Republic of Zambia(GRZ) through NAMBOARD at Karoi Free-On-Road and the wheat was to be delivered to Durban Free-in-Elevator The estimated export market value of the wheat was $3420000 and estimated ocean and inland transportation cost for the wheat were $3140000

In commenting on a cable from another Mission describing thisearly Southern Africa trilateral USAIDHarare seeks to refutethe impression that the 1983 triangular exchange was terriblydifficult and of questionable management effectiveness

This is not the Missions view It is true thatnegotiations were protracted and time-consuming Howeverthis was expected as the tripartite exchange between thethree parties was unprecedented Zimbabwe and Zambia tookthe transaction very seriously hence negotiations were detailed This is in part why the exchange went very well after the negotiations and signing It would be misleadingto leave the impression that the work was not worth it We would do it again and the Zimbabwe Ministry of Agriculture would gladly do it again

we already have an official request from Minister ofAgriculture for similar triangular programs and with the success of the earlier program we are confident that theGrain Marketing Board and the Ministry of Agriculture would move expeditiously and responsibly to complete negotiationsand assure early maize delivery (Harare 1743 March 27 1985)

in a sense this sets the scene for what became to a large extent a field-based initiative to launch further trila teral arrangements in the region Reauing through the fairlyvoluminous cable traffic on this matter gives one the impressionthat a dialogue was really going on among the regional USAIDsand with some commentaries from AIDW To a considerable degreethis dialogue was initiated and orchestrated by the Regional Foodfor Peace Officer based in Zambia It is worth citing at somelength the text of an introductory cable drafted by him and sentto a number of posts in the region This cable makes the generalcase for trilateral (tripartite) transactions as follows

In 198485 Zimbabwe grew enough maize to provide for domestic consumption and keep a security sto-k of 900000mt for 8687 The country also has at present in excess of600000 mt for export The GOZ is currently seeking buyers

69

for that exportable surplus

USAIDZimbabwe AIDWFFP and RFFPO are very interested in the possibility of entering into tripartite Title II arrangements involving Zinbabwe maize for the following reasons

(A) if Zimbabwe is unable to dispose of its surpluses the decision may have to be taken (forpragmatic economic reasons) to curtail production byreducing producer incentives It would appear to us that our most promising option (since the USG cannot purchase Zimbabwe maize directly) is the tripartite barter arrangement

(B) Zimbabwe is centrally located in Southern Africa and for various reasons can be expected to producemarketable surpluses in reasonable years when most neighboring countries will only be able to satisfydomestic requirements or more likely be in an import posture Accordingly surpluses in Zimbabwe are in many ways tantamount to regional food securitystocks and have been used as such in the past by WFP the EEC and USAID which have usedall Zimbabwe white maize in feeding programs in third countries it is in the interest of the USG especially insofar as indications are that the Southern Africa drought cyclehas several more years to run despite good weather in 8485) to encourage Zimbabwe to continue to play this role

(C) Zimbabwe white maize is better adapted to feeding programs in East and Southern Africa than US yellow corn as there is no unfamiliarityacceptability problem

(D) Zimbabwe maize can in many cases be moved to locations in East and Southern Africa faster and at less cost than corn from the US

It is obvious that the ability of the USG to help moveZimbabwes exportable maize surplus through PL 480 Title II tripartite arrangements is quite limited (Lusaka 2513 May 25 1985)

Other posts were asked to comment and to indicate interestspecifying tonnages that might be needed for Title II activitiesincluding commodities approved and Asnot yet called forward appropriate the cable indicated that AIDW would be informed that the possibility for a trilateral arrangement had been identified and negotiation approval then sought byUSAIDZimbabwe Project design was to be a collaborative effort

70

among all concerned parties

The cable also made the point that obviously tripartite programswere necessarily more complex than straight bilateral programsand that the difficulties may appear at first glanceinsurmountable However tripartite programs have worked wellthe past especially those involving Zimbabwe the

in as GOZ

approach is very professional indeed Logistics and managementconsiderations are real and will be dealt with to ensure apractical and workable program design and effective implementation We request that addressee posts not dismiss thisinitiative out of hand as unworkable or too complex (ibid)

There was considerable responce from addressee posts Inreplying USAIDMalawi indicated that it accepted the RFFPOsoffer to explore the possibility of including Malawi in tripartite programs indicating that the GOM was very concerned about a large surplus which might go from the current 200000 mt to 40000 mtby SeptemberOctober of 1985

At least one post USAIDKinshasha raised a policy issueconcerning producer price supports and then-current USAID policyOthers were quite supportive of the general idea wellas as ofthe particular proposal to do another trilateral arrangement withZimbabwe as the source of white maize was toThis felt beparticularly appropriate given Zimbabwes role in SADCC (theSouthern Africa Development Coordinating Committee) as responsible for food security planning17

Although this planning for isrole Zimbabwe broadly recognized asappropriate within the SADCC region there is also a certain amount of latent hostility toward Zimbabwe surpluses along thelines of the big brother sort of reasoning This came out in many of the teus discussions both in Zimbabwe and in other countries in the region On the other hand when suggestionsbegan to be made that Kenya maize was cheaper and could be delivered more chea-ply and expeditiously to Mozambique thanZimbabwe maize the SADCC ideology was raised as crucial from adevelopmental point view itof and was pointed out by some of

17 SADCC is comprised of nine member states--Zimbabwe Malawi Zambia Botswana Lesotho Mozambique and Swaziland As was noted in a recently delivered paper on food aid ntrashyregional trade and economic development in SADCC The SADCCcountries have agreed in principle to formulate a common foodsecurity strategy Zimbabwe beenand has charged with the responsibility of formulating a food security programmeHowever national considerations still dominate the internal pricing decisions of each country There still is yet to be a common definition of what food security means and leastthe cost method of attaining it for the region as a whole (Nziramasanga 1986)

71

the same people that Kenya was not after all a member of SADCCand that therefore the price consideration even if real should not necessarily be determinant of intra-SADCC policies issues and actions18

Round I

After the Regional Food for Peace Officer (RFPPO) based in Lusaka sent out his cable describing the logic behind trilateraltransactions in regionthe there was a high response rate fromaddressee posts Most were supportive althoughUSAIDKinshasha was quite criticalf the policy basis for thetrilateral proposal with Zimbabwe USAIDMalawis response was very positive indicating a desire for Malawi to be included in any trilateral that was to be put forward

The issue of Malawis participation seems to onehave been thatshifted ground over the months At some points it is now saidthere was a question whether Malawi actually had enough of amaize surplus to participate effectively But there was also thetroubled question of Malawis tacit support for the MNR(Renamo) insurgents who were using southern Malawi as a staging area for incursions into Mozambique A number of thoseinterviewed in the field indicated that the GRM did not want tobe party to an agreement that would included Malawi as a source of food aid commodities unless this policy changed19

USAIDMalawi however persisted and at one point enlisted the support of a USArmy General who was visiting Malawi and withwhom the apparent reLuctance of others to include Malawi in theproposed trilateral was discussed As the Mission pointed out in one cable his contacts in Washington were high and wide(Lilongwe (]ts31 ) A subsequent cable indicates the General did in fact bring the

that USAIDs message back to

Washington apparently in persuasive terms ( Lilongwe 04951)

In the end Malawi was included but as the source of only 3000tons of maize with Zimbabwe providing 7000 tons The twoagreements were signed within month eacha of other--Zimbabwes coming first--and deliveries were to begin immediately in eachinstance In the case of the Zimbabwe transaction this occurredand there were relatively few problems encountered in the course

18 For detailed discussions of food security policy and agricultural policy in SADCC see Eicher and Mangwiro 1986

19 This is one of the areas in which it is probable that more information exists in the record but is classified Anumber of assertions about happened madewhat were by variouspeople interviewed but most of them asked not to be quoted

72

of implementation (see Section V) Due to significant staffingchanges in ADMARC the Malawian grain board deliveries were delayed from July until late September

In both agreemerts World Vision was to be the intermediary andwas a signatory to the agreement USAIDZimbabwe seems to havehad relatively good luck with World Visions implementation TheMaputo AID Office however was not pleased theirwith per form ance--par tly because their Mozambique management staff were based in Harare--and USAIDMalawi evaluates them relativelynegatively in its narrative for this report in terms ofutilization of available staff and maintenance of close contactwith ADMARC during the problem period before deliveries started (see Lilongwe 01039)

Discussions with VisionWorld staff in Harare and in Maputoindicated that the variety of difficulties being encountered indelivery of Title II commodities both from the bilateral and thetrilateral with Zimbabwe in Mozambique may have meant that thedelays in the Malawi deliveries were Ist -s well Thisproposition is however partially negated by fact thethe thatMNR--having been told to leave Malawi--moved into nwany of the areas where WVI was supposed to deliver the Malawi maize MoregeneralLy other-donor representatives and the AID FFPOinterviewed in Maputo indicated that there was more in the way offood aid donations than the system would be able to handle ifthey all arrived on time and that delays were sometimes quite beneficial

In its Operational Plan for FY 1986 World Vision had doneplanning for 10000 tons of maize be

the to made available through a

trilateral arrangement with the GOZ When Malawi was officiallyincluded for 3000 tons the operational plan had to be revisedThis however was done very quickly What caused delays thenwere the problems caused by the insurgency in Mozambique andrelated transport difficulties rather than anything intrinsic tothe crilateral nature of the transactions The possibleexception here is the routes the Malawi and Zimbabwe maize had to follow from ports of entry to the end-users The costimplications of these transport problems are discussed in SectionIV and in Annex D

As in the case of West Africa it is not always easy to howtell much the USG paid altogether for the emergency relief processof which these two trilaterals are a part Zimbabwe paid the

inland forocean freight and freight the wheat destined forZimbabwe Malawi made the arrangements for the inland freight ofits wheat but the USG paid for ocean and inland freight Forthe Zimbabwe maize the GOZ the USG and World Vision all contributed to the transport and delivery costs

The USG also paid CARE with a $2000000 grant for its work to

73

strengthen and assist the Department of Natural Calamities of theGRM (DPCCN) part of which might be attributable to the costs ofdelivering the maize from these trilaterals to the end-users The Red Cross also made a contribution coward covering these costsas did the GRM since a considerable amount of this maize wascommercialized and local currency sales proceeds deposited inWorld Vision or USG-managed accounts until the monetization issues raised for the AID program overall could be resolved20

By the time of writing despite persisting problems affectingdeliveries of Malawi maize to end-users in Mozambique WorldVision had received all of the 3000 tons from Malawi This means that about nine months have passed since the Malawi agreement was signed and all the maize has not yet reached theintended beneficiaries This is not persuasive as an example ofthe timeliness of trilateral arrangements as has been noted in Sections IV and V of the report

Round II

The Zimbabwe trilateral on the other hand may serve as a modeland as has been noted Round II with Zimbabwe--a government togovernment arrancement without a PVO intermediary outsideMozambique--has gone equally smoothly All deliveries of maizehad been made to the GRM by late March 1986 three months nearlyto the day from the date that the DCC approved the trilateral for3372 fiit of wheat against 3000 mt of maize

20 The USG is presently in receipt of a very large amount of Mozambiqan medecais and has in the words of theRepresentative been in trouble for not having programmed themsince 1985 Other donors are in a similar situation All ofthem want to program these cournterpart funds for developmentprojects but almost all such projects need a foreign exchangecomponent for which the foreign exchange is completely lackingMeanwhile with the new World BankIMF guidelines it is likelythat these funds are best taken out of circulation and kept outaccording to some views The AID Representative was alsointerested in seeing whether in future the GRM would be a partyto trialteral agreements and would be willing to put up thelocal currency up front before the maize was delivered Thiswould perhaps cause a small delay but would help attain theobjective of using normal commercial conduits since at presentwhere everything is donated the GRM cannot get a handle on whatthings cost and what is coming in and going out AIDW hadsuggested that a team of consultants should visit Maputo to carryout a thorough study of the local currency and monetizationissues This visit was to take place shortly after that of the study team

74

There is still a possibility that Zimbabwe may be included in aRound III AIDMaputo requested 45000 tons of maize in Juneof 1986 as the AID Representative indicated with someasperity and had still not received an answer from AIDW and the DCC by early March In fact about a week after our discussionswith hiin in Maputo 22000 mt was approved but for a trilateral with Kenya not Zimbabwe Subsequently it appearsthat Kenya may not be able to deliver any or all of this amount so there is a possibility that recourse tc Zimbabwe will again bemade either for some of this amount or for a further amount in the context of Maputos original 45000 ton request

75

-------------------

ANNEX D

THE COST OF THE GHANA BARTER ARRANGEMENT AND COST EFFECTIVENESS

The Commodity Credit Corporation (CCC) incurred costs of thetrilateral transaction with Ghana Mali and Burkina Faso for theUS commodity ocean freight for the US commodity to TemaGhana and inland transport from Ghana to Mali and Burkina Fasoof the Ghanaian commodity According to CCC records the followingcosts WeLe incurred in the cransaction

9207 metric tons of US rice $268800000 Transport of rice from USgulf to Tema 50296400Inland freight and handling charges

10000 mt maize Ghana to Mali $304000000

74818100500 mt maize Ghana to Burkina Faso 67700000 TOTAL COST $765614500

As of April 13 1987 payments made by AID against the Purchase Authorizations for inland transport were as follows

INLAND TRANSPORTATION COST DATA FOR GHANA TRILATERAL

Basis 10000 MT to Mali Total Dollars Dollars MT

PAPR 899-950-XXX-5784 $304000000 $30400Payments against 5784 297034990 29708

Unused balance 6915010 692

PAPR 899-950-XXX--6784 $ 74818100 $ 7482 Payments against 6784 74818088 7482

Unused balance 12

Basis 5000 MT to Burkina Faso

PAPR 641-48-000-5701 $ 67700000 $13540Payments against 5701 54516320 10903


Payments made according to the above figures may not be completeAccording to records of USAIDAccral a total of $57516320 had

1 Accra 07651 15 October 1985 7

been authorized for payment against PAPR 5701 On the otherhand a cable from Abidjan indicates that the figure of $54516320 was correct according to four vouchers approved for2payment Bills in question against 5701 for inland transport toBurkina Faso include the payments to SOCOPOA who was contracted by USAIDOuagadougou to handle customs clearances reconditionshying rebagging and unloading in Burkina Faso Records indicatethat an invoice for 12276450 FCFA was submitted to USAID on Ocshytober 17 1985 and a final invoice for 1794546 FCFA was subshymitted on June 11 1986 However a cable from Ouagadougou dated July 16 1986 indicate that the payments have yet to be made Th2 se invoices were to have been included under the $3000000 included in the inland freight calculations made by USAIDAccraand included in their PIOT Cable traffic indicates that the bill to SOCOOOA could not be paid as the cost had increased byabout $550000 due to the decline of the dollar against the franc 3 which would have Lo come out of the residual funds in 57(31 It is interesting that the authorized amount shown aboveand the expended amount differ by $3000000 This may be onlycoincidence but it may indicate either that SOCOPOA has not beenpaid or that payments have not been documented in AID accountsAnother invoice was noticed in the files from a C Gurineau for marine surveyors services for inspection of the arriving Ghana maize It was unclear if this is included in the SOCOPOA contract or was a separate contract and if so has the invoice been inshycluded in the expended funds to date The invoice was for 1100000 CFA

The accompanying Table breaks down the shipments of maize from Ghana to the four points in Mali toand the separate shipmentsOuagadougou The mileage figures are based on the contract termswith GFDC and the tons shipped on the actual records of disshypatches The ton-miles figures were then calculated and comparedwith PAPR authorizations for inland transport and with actual eltpenditures as of 41387 to arrive at cost per ton mile ofshipping These figures can be compared with estimates of cost oer ton-mile for bilateral food aid shipments to the two countries by other routes and transport modes

The previous l ] rtvear m08 of rice were sent to Mali under aTIZdle --i program where zne cost of ocean frelght and inland trasport from the port of Abidjan to Bamako was $2930000004Iis figure of $29300 per ton for total transport costs compareswith the Mali shipment at a cost for inland transport of $34856

2 Abidjan 4764 January 27 1986

3 The contract with SOCOPOA was denominated as 2200 FCFAmt

4 Transfer Authorization AIDNo 688-XXX-000-4618 dated June 15 1984

2

using a prorated cost of trucking and overhead for the portionshipped to Bamako For the Burkina Faso shipment the cost was$10903 per ton To these figures should beadded the ocean shipshyment equivalent to that charged for the to Temashipping riceThat cost was $5450 per ton Comparative costs are therefore$40306 for Bamako shipments from the US under the trilateral versus $29300 from the previous year to Bamako under thebilateral We do note here that the issue of cost may be lessrelevant if we consider the nrob] -m encountered with shirments

tto Mali from either the porc - d-an anf then by road fromor - - - ] h

rates permitted truckers from

flow of Abijan to Mali have impeded thefood aid through Abidjan By the same token the freightrates used on the Mali-bound freight from Dakar over the railline would indicate a low inland freight cost However that railline and its rolling stock are in such poor condition that usingit as a cost comparison is almost an non-issue

The cost comparison of a bilateral program versus the actualGhana to Mali program becomes somewhat moot Because shipmentsfrom Ghana to Mali are not controlled by the Mali governmentUSAID could contract for Ghanaian trucks at competitive rates fordelivery to Mali Bilateral shipments through either Abidjan orDakar can only be transported at Mali dictated rates The fairconparison then has to be relative to truck rates in neighboring countries

Another point should be made on the cost of transport of theGhana trilateral The ocean freight paid by the CCC for 9229metric tons of rice to Ghana was approximately $5500 per tonThis is about $8000 per ton less than is usually paid for shipshyments to West African ports on American bottoms According toUSDA the normal cost on US bottoms would be about $13500 perton The savings on the entire shipment to Ghana was about $73832000

For shipments to Burkina Faso the most economical mode is byrail from Abidjan to Ouagadougou This route costs only about$3000 per ton However given that much of the food aid shippedunder bilateral programs goingwere through Lome it was clearthat in 1985 shipments through Abidjan onwardand by rail were not an easy option We can only conclude that the cost of theshipment of the Ghana maize to Ouagadougou was reasonable albeitslightly higher than was the prevailing rate for Burkanabe truckshyers

3

THE COST OF THE MALAWI - ZIMBABWE - MOZAMBIQUE TRILATERAL

The Commodity Credit Cocporations contributions to the MalawishyZimbabwe-Mozambique trilateral included the following costs

Zimbabwe

Commoditv (wheat) value $103403900

Malawi

Commodity (wheat) value $ 14945400Ocean Transport 14298305Inland Transport 21000000

The actual quantity shipped to Zimbabwe was 979213 mt ofwheat in bulk at an average purchase cost of $10560 per metric ton ($288bushel) Actual shipments to Malawi were 14087 mt at an average cost of $10150 per metric ton ($277 per bushel)Inland transport costs paid by the CCC for the Malawi shipmentwere $14907 per metric ton ($404 per bushel) Again in the Malawi case we have a situation where inland transport cost are more than the value of the commodity and about 72 of the commoditys cif value in Durban

Inland transport costs for the Zimbabwe shipment were picked upby the Zimbabwe government Actual arecosts detailed in the acshycompanying Table If we add the port handling Ernc c charges they paid $ZW to(of 2183) the new freight rates andadd service charges we have a total rst of delivering the wheat ex ship Durban to Harare of $ZW8856 At the current exchangerate at the present time of $ZW159 $100 USto the cost would be equivalent to US$5570

In the case of Malawi and Zimbabwe the costs are very little difshyferent than be casewould the with a direct bilateral food aid program For the case of Mozambique the situation is moreobscure In this case costs incurred by the governments of Zimshybabwe and Malawi for transporting the local maize to pointswithin Mozambique were picked up by the US government and PVOsLocal freight rates are quoted below for rail and boat transport

Freight rates for bagged maize

Mutare to Chimio (Eastern Zimbabwe to Western Mozambique) byrail $1223 per mt

Mutare to Beira (Eastern Zimbabwe to Mozambique coast) by rail $2064 per mt

4

Chicualacuala to Chokwe by rail $1344 per mt

Incomatiport to Maputo by rail $744 per mt

Beira to Inhambane by boat $1250 per mt

The problems with rail transport have made this mode somewhat unshy

reliable That unreliability caused WVRO and the local governshyments to use truck transport for most of the 1986 maize shipments from both Malawi and Zarnbabwe In fact WVRO noted in its 1986

operations report that the Western areas of Tete and Manica

Provinces had to be supplied from Zimbabwe as these areas are

for all intents and purposes cut off from the rest of Mozambique5

by the activities of the insurgents

Figures supplied by World Vision show inland transport costs of

African purchased maize ranging from $2778 for deliveries from

Rusape to $4500 per ton for deliveries from Mutoko By comshyparison their figures for deliveries of US bilateral aid from South African ports to Mozambique points of entry are $8900 per

metric ton(6 Considering that the cost structure for Zimbabwe

destined wheat noted above brought us to a total of $5570 all

inclusive from Durban to Harare and add to thac the $4500 for

Zimbabwe to Mozambique points of entry we would have a comshyparable cost of $10070 or $1170 more than direct South African

ports to Mozambique points of entry That is to say that the cost

per ton on a trilateral would be about $1170 per metric ton

higher than a bilateral program On the other hand if rail could

be used for at least part of the Zimbabwe to Mozambique shipshy

ments then the cost of a trilateral could be made equivalent to

the bilateral costs

5 Bruce Menser Mozambique Program Director World Vision Intershynational May 7 1986

6 World Vision International working document Mozambique using FY 1986 prices Table This table compares USAID bilateral aid

costs with trilateral costs of commodities financed by the EEC ADAB and CIDA

5

BIBLIOGRAPHY

Donaldson Graham Food Security and the Role of the GrainTrade American Journal of Agricultural Economics vol 66 no 2 May 1984 pp 188-193 World Bank Reprint Series Number 304

Eicher Carl andK Fidelis Mangwiro Chapter Two A Critical-Assessment of the onFAO Report SADCC Agriculture

Eicher Carl K and Mandivamba Rukini Developing a SADCC Foodand AgricultuLe Strategy Objectives Components and Process paper aprepared for SADCC meeting of Permanent SecretariesChief Economists Food and Agriculture Sector Coordinators and Ministers of Agiculture Harare July 24-26 1986

Eicher Carl K and Mandivamba Rukuni The Food SecurityEquation in Southern Africa Chapter 1 Harare UZMSU FoodSecurity Project Department of Agricultural EconomicsUniversiy of Zimbabwe 1987

Embargoes Surplus Disposal and US Agriculture A SummaryEconomic USResearch Service Department of AgricultureAgriculture Information Bulletin No 503 November 1986

Evaluation de lOivation Test de Pereqciation are Senegal in 1985

Evaluation of the African Emergency Food Assistance Program 1984shy85 Synthesis Report Bureau for Food for Peace and VoluntaryAssistance Agency for International Development Washington DCJuly 1986

Famine in Africa Second Report from the United Kingdom House of Commons Foreign Affairs Committee Session 1984-85 April 24 1985

Gilmne Judith Morocco Food Aid and Nutrition Education AID Impact Evaluation No 8 August 1981

nfc - - o - n b Wirld FoodProgra ican Development Bank Seminar on Food Aid forDevelo--rc in Sab-Saharan WFP Committe Food AidPolicies and Programmes Twenty-second Session Rome 20-31 October 1986

The Japanese Experience Review of selected national experiencewith food aid policies and programmes WFP Committee on Food andPolicies and Programmes Twenty-second Session Rome 20-31 October 1986

Joshi Lalit Note on Triangular Transactions in Food Aid The-Zimbabwe Experience WFP-ADB Seminar of Food Aid for Developmentin Sub-Saharan Africa 8-11 September 1986 July 1986

Jost M Stephae Reunion du Resian pour preven1in des crisesalimentaires dans Sahlel Etudele - dEvaluation Prospretive October 1985 Les Politiques Cerealieres Dans Les Pays Du Sahel Colloque deMindelo Requblique de Cap Vert 16 Decembre 1986

LeFrank Elsie Social Impact Analysis Hillside AgricultureProject PP USAID Jamaica December 1985

Lipton Michael South Africas Role in Agricultural Productionand Marketing in Southern Africa Overseas Development CouncilThe Political Economy of Southern Africa September 1986

Newberg Richard Harmon David and Alice Morton PL 480 PilotCase Studies Tunisia Title I and Mali Title II Section 206RONCO Consulting Corporation January 1985

Nziramasanga Mudziviri Food Aid Intra-Regional Trade andEconcinic Development in SADCC September 1986

PAiL HH Nu Master No Mortgage No Sale The foreignpolicy of Zimbabive in Shaw and Landon eds RegionalDevelopment International Levelat the (Lanham University Press of America) 1985 pp 219-264

Destabilization Policy Reviewin ofinternational Affairs Vol XXXVII 1986

Offical Government of the European Communities No L3521-Council Regulation (EEC) No 333182 of 3rd December 1982 onfood-aid policy management and amending Regulation (EEC) No 275075

Official Journal of the European Communities No L1657 - CouncilRegulation (EEC) No 175584 of 19th June 1984 on theimplementation in relation to food of alternative operations in place of food-aid deliveries

Official Journal of the European Communities No L3701 - CouncilRegulation (EEC) NO 397286 of 22nd December 1986 on food-aid policy and food-aid management

337een t he)F th( - ssion of rj- i nsFAOCoimttee ul Pooa Aid PoLicies and Programmes WEP Rome 16-27 May 1983

Statistical Appendix theto Annual Report of the Executive Director 1985 Annual report of the Executive Director on thedevelopment of the Programme WFP Committee on Food and Policiesand Programmes Twenty-first Session Rome 21 May to 6 June 1986

TABLE OF CONTENTS

ACRONYMS

I EXECUTIVE SUMMARY iii iI BACKGROUND 1

The Multi-lateral Concerns 2 Other Donors Experience 3 WFP

3 USG Concerns 6 Magnitudes

10 The West African Trilaterals 11 The Southern Africa Trilaterals 13

III TIE PROS AND CONS OF USG EXPERIENCES WITH TRILATEFPLS

16 Background

16 The Pzos

17 Cost

19 Development Considerations--Domestic Policy and Trade Implications 21 Market Development Impacts 25 Nutritional Apprcpriateness and Taste Preference 26 Infrastructure Development 27 The Cons

30 Immediate Issues 31 Loss of US Identity of Food Aid Commodities 32 The Complexity Attributed to Trilateral Negotiations 35

IV PROGRAMMING USG TRILATERAL FOOD AID 40 Approval Trends 40 Design

40 Uegotiations

44 Implementation

45 Washington tpproval 49 The Fact Situation 49 Developing Country Perceptions 54 USAID Missions Perspectives 55

V CONCLUSIONS AND RECOMMENDATIONS 58

ANNEXES




BIBLIOGRAPHY



GOM REDSOESA

PID PP GPRM

TDY AIDMSEROPTRANS

Acquisitions DPCCM

WVI SHM UDI


OPAA

FOR

UN IEER GOG

ACRONYMS










du Mali


i


EECEC USDA USAID

ODA

SADCC

ECU CILSS








ii


I EXECUTIVE SUMMARY

Background



period

Issues Addressed





iii









iv



General Conclusions






V







vi














vii

Recommendation



viii

II BACKGROUND






I

-------------------------------------------------------------------------------------

-----------------------------

----- --------------------------------------------------------------------------------

TABLE 1


(In Thousand Tons)







Southern 1110 841 7 2113 288 169 7 1649 Africa



Western


shy- - _

deficits












2









WFP






3





Club du Sahel




4

Beneficiary

Direct aid Somalia

Zimbabwe

Nicaragua

Zambi a

TAnzani a

Mozambique

Indirect aid

C

Totals (

(

1 ECU Europea

Product

White maize

5000

_

Jhite maize

Millet

Riceequiv

cereals

Totals


Currency Units

TAB LE 3a



of delivery

2200 Malawi 6 484 Avril 36 15000 26 484 Nov 8



2600

000

i11960

80760

V1

1


05

448

178

698

179

190

--- ------------------------ -----------------------------------------------------------

--- -----------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

----- -------------------------------------- --------------------------------------

TABLE 3b



1000 tons (MECU

approx)


Totals 1727 2904 1665 4569










France





5



United Kingdom





USG Concerns



6

- -

FIGURE I



APRIL Establishment

budget mark









AUGUST




NQ









7 - 8









9






Magnitudes




19856


10

-----------------------------------------------------------------------

------------------- ------------------------------------------------------

----------------------------------------------------------------------------

-----------------------------------------------------------------------------

------------------------------------------------------------------------

---------------------------------------------------------------------------

TABLE 2








TBE 4 a







EEC Triang trans

Local purch

France Triang trans

Local pueh

CermenyrR Trinr tan

Local urcn

Italy Local purch

Japan Triang trans


Local purch I






Local Surch

WFP Triong on

Local iurci

TOTAL Triang trars

Local purcn

CRAJO TOTAL

Niger

(enya ihnbgihwe

udjr

Malawi imboiwe


Cote dvoire Scnegal


Cote divoire Kcnya

MalawiTogo Zimbabwe


MaliNiqtr3ne aISdan

Sudon

zimbolwc

Zimoehswe


I nibnhli


Mali

KcnnirmbWw

Malaw Zimliwe

44mu

7iier Snhiln Afri

lu13tel Wvc t


tons


Mozanhque 5 050 3 3 000 Sudan 6 950 3




Moli Nirjtr ulun




u0111 13 000

7mnhink 9 900 -

Mazninbique 15 0003


lihtw nin 1 750


Mli 2 2w0



65 000


ZU6 8JU 56 M 327 320 3 563



--------------------------------------------------------------------------------------

TABLE 4b


SHIPMENT OR


(tons grain

equivalent)




(tons grain

equivalent)

Laos

Lebanon

Liberia

Madagascar

Malawi

Maldives

Mali

Mali

Mali

Mauritania

Morocco

Mozambique

Nepal

Nicaragua

Niger

Niger

Philippines

Philippines

Philliopines

Thailand


Thailand

Local purchase

Burma

Pakistan

Pakistan

Burma

Thailand

Thailand

vurma

Thailand

Surinam

Thailand

Burma

Pakistan

Thailand

Burma

Japan

ICRC purchases

Japan

Japan

WFP purchases

Japan

Netherlands

United Kingdom

Japan

Japan

Japan

Japan

Italy

Switzerland

Italy

Japan

S-tzerland

Switzerland

Switzerland

42790

1180

5050

108680

1350

17310

29000

17850

39290

90240

29330

158980

2000

3000

50000

54110

15000

5000

23180

JulyampSept85

198586



November 1985



March 1986



Senegal

Sierra Leone

Sierra Leone


ThailandUNCR

Togo

Vietnam

VietnamNGO


Tnailand

Thailand

Burma

Thailand

Pakistan

Thailand Thailand

Thailand

Thailand

Burma

Burma


Japan

Japan

Japan

Japan

Switzerland


EEC

Japan

EEC

EEC


17360

100010

33800

3500

3600

i0000 4500

34480 122670 34480

150000

42250

25000

20000

10000 25000 20800 10800


February 1986

July85-Feb86



Total 3146103


3146103

k


SHIPMENT OR


ALLOCATION PERIOD





12000 5040 3000 4300





40000 15900 65000 40000

173000 110000 47700 48000 15000





20000 3900 380

22600 1490

36000 60000 5000 4480 6290

150000 2000

60000 66000 13500 16000

120000





100000 145000 90000



Zimbabwe Malawi



50500 11000 50000 2600 1000

25000 30670 50000 43950






Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Sudan


Local purchase

Kenya

Local purchase

Local purchase

Local purchase

Kenya

Zimbabwe


Netherlands

Netherlands

Austria

Switzerland

WFP purzhases

WFP purchases

ICRC purchases

55000 1800

110000 28000 75000 15000 80000

380000

250000

20000

69500

20000

150000

14000

5000



March 1986


Tanzania

Uganda

Uganda

Zambia

Malawi


EEC

EEC

ICRC purchases EEC

100000

29800

1650

200000


198586


Zambia

Zambia

Zimbabwe

Malawi

Zimbabwe

Zimbabwe

Local purchase


Germany Fed Rep

2000

6600

8540

18000

July 1985



Total 3766190


3766190

-------------------------------------------------------------------


-------------------



equivalent)

Cape Verde Chile


Local purchase

Local purchase

Argentina


5000 34

4000 2700 1945 4000 5000


Total 22679


22679


($ MILLIONS)


Section 416

FY ]981 a

7934 (919) 7683

15617

FY 1982 a

7926 (1230) 6239

14165

FY 1983 a

8495 (1394) 5995

14490

FY 1984 a

8500 (980) 7240 b

15740

FY 1985

10997 c (1195)-

1 0600 dl 2T597

FY 1986

9887 (1170) 7587 e

FY 1987

9289 f (870)-5341

Z77414630

FY 1988 h

8520 (950) 5350

13870


Total Food Aid

15362 17381

915

24149

-_

18938 14630 13870




-Total Food Aid 292









11

II




Burkina Faso


Amount PVO






Mali

12








13

FIGURE II
















-





USAID










14






15




Background




16





The Pros







17







18



Cost


more for equivalent








19




analysis


20



Total 10113










21








22




















24









25









26







27









28






29


The Cons






30


Immediate Issues







31








32





33



trilateral




Harmon op cit)





34








35










III





in put

the to

case of the DCC

the the

following September


have mentioned we


37























39

ltV






Approval Trends




Design


40










41






42









43

FIGURE III












FIGURE IV















Negotiation





withtowas to




Ak3



it The




Implementation


45








46







47






48


Washington Approval


The Fact Situation







I

further













50




51









54








55








56









57


General Conclusions







58








however





59






60

Recommendation


61

ANNEX A

STATEMENT OF WORK




Pro s






Cons





68

















69






Timing


70

Annex B

Methodology

A Purpose


B Objective


C Aoproach






62








63







64


E Caveats








65


66

117~

-----------------

ANNEX C


SUMMARY





Metric Tons PVO


984 Essor Familial




2 TA number 688-XXX-000-5622


1

-----------------







costs

5 Contract 641-00-C-00-5 ]]1-lj





2


BACKGROUND






11 Accra 02994 26 April 1985



3

-----------------








16 Bamako 2638 25 April 1935



4











5





22 Accra 02495 April 4 1985

23 State 114065 16 April 1985


25 Accra 03072 April 30 1985 1


6

-----------------











1

28 Accra 04217 June 14 1985

29 PA 899-950-XXX-5784

7





costs






31 PAPR 641-48-0003-5701

32 State 185218 June 18 1985

33 PAPR 899-950-XXX-6784

8

------------------





9



apshycershy



37 Accra 02994 April 26 1985


10

ol)

-----------------









11












12

-----------------









13







14








44 Accra 05185 June 24 1985

45 Account 20FT 470

46 Account 20FT 400

15

------------------









16

Benefits to Ghana










e give overshy




17
















18

-----------------















19

-----------------









51 Accra 05648 August 9 1985


20




21


Summary







67






Background


68







69









70



in as GOZ






71


Round I









72










73



Round II



74


75

-------------------

ANNEX D












Unused balance 12





1 Accra 07651 15 October 1985 7







2








3



Zimbabwe


Malawi








4






















the bilateral costs




5

BIBLIOGRAPHY

























ANNEXES




BIBLIOGRAPHY



GOM REDSOESA

PID PP GPRM

TDY AIDMSEROPTRANS

Acquisitions DPCCM

WVI SHM UDI


OPAA

FOR

UN IEER GOG

ACRONYMS










du Mali


i


EECEC USDA USAID

ODA

SADCC

ECU CILSS








ii


I EXECUTIVE SUMMARY

Background



period

Issues Addressed





iii









iv



General Conclusions






V







vi














vii

Recommendation



viii

II BACKGROUND






I

-------------------------------------------------------------------------------------

-----------------------------

----- --------------------------------------------------------------------------------

TABLE 1


(In Thousand Tons)







Southern 1110 841 7 2113 288 169 7 1649 Africa



Western


shy- - _

deficits












2









WFP






3





Club du Sahel




4

Beneficiary

Direct aid Somalia

Zimbabwe

Nicaragua

Zambi a

TAnzani a

Mozambique

Indirect aid

C

Totals (

(

1 ECU Europea

Product

White maize

5000

_

Jhite maize

Millet

Riceequiv

cereals

Totals


Currency Units

TAB LE 3a



of delivery

2200 Malawi 6 484 Avril 36 15000 26 484 Nov 8



2600

000

i11960

80760

V1

1


05

448

178

698

179

190

--- ------------------------ -----------------------------------------------------------

--- -----------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

----- -------------------------------------- --------------------------------------

TABLE 3b



1000 tons (MECU

approx)


Totals 1727 2904 1665 4569










France





5



United Kingdom





USG Concerns



6

- -

FIGURE I



APRIL Establishment

budget mark









AUGUST




NQ









7 - 8









9






Magnitudes




19856


10

-----------------------------------------------------------------------

------------------- ------------------------------------------------------

----------------------------------------------------------------------------

-----------------------------------------------------------------------------

------------------------------------------------------------------------

---------------------------------------------------------------------------

TABLE 2








TBE 4 a







EEC Triang trans

Local purch

France Triang trans

Local pueh

CermenyrR Trinr tan

Local urcn

Italy Local purch

Japan Triang trans


Local purch I






Local Surch

WFP Triong on

Local iurci

TOTAL Triang trars

Local purcn

CRAJO TOTAL

Niger

(enya ihnbgihwe

udjr

Malawi imboiwe


Cote dvoire Scnegal


Cote divoire Kcnya

MalawiTogo Zimbabwe


MaliNiqtr3ne aISdan

Sudon

zimbolwc

Zimoehswe


I nibnhli


Mali

KcnnirmbWw

Malaw Zimliwe

44mu

7iier Snhiln Afri

lu13tel Wvc t


tons


Mozanhque 5 050 3 3 000 Sudan 6 950 3




Moli Nirjtr ulun




u0111 13 000

7mnhink 9 900 -

Mazninbique 15 0003


lihtw nin 1 750


Mli 2 2w0



65 000


ZU6 8JU 56 M 327 320 3 563



--------------------------------------------------------------------------------------

TABLE 4b


SHIPMENT OR


(tons grain

equivalent)




(tons grain

equivalent)

Laos

Lebanon

Liberia

Madagascar

Malawi

Maldives

Mali

Mali

Mali

Mauritania

Morocco

Mozambique

Nepal

Nicaragua

Niger

Niger

Philippines

Philippines

Philliopines

Thailand


Thailand

Local purchase

Burma

Pakistan

Pakistan

Burma

Thailand

Thailand

vurma

Thailand

Surinam

Thailand

Burma

Pakistan

Thailand

Burma

Japan

ICRC purchases

Japan

Japan

WFP purchases

Japan

Netherlands

United Kingdom

Japan

Japan

Japan

Japan

Italy

Switzerland

Italy

Japan

S-tzerland

Switzerland

Switzerland

42790

1180

5050

108680

1350

17310

29000

17850

39290

90240

29330

158980

2000

3000

50000

54110

15000

5000

23180

JulyampSept85

198586



November 1985



March 1986



Senegal

Sierra Leone

Sierra Leone


ThailandUNCR

Togo

Vietnam

VietnamNGO


Tnailand

Thailand

Burma

Thailand

Pakistan

Thailand Thailand

Thailand

Thailand

Burma

Burma


Japan

Japan

Japan

Japan

Switzerland


EEC

Japan

EEC

EEC


17360

100010

33800

3500

3600

i0000 4500

34480 122670 34480

150000

42250

25000

20000

10000 25000 20800 10800


February 1986

July85-Feb86



Total 3146103


3146103

k


SHIPMENT OR


ALLOCATION PERIOD





12000 5040 3000 4300





40000 15900 65000 40000

173000 110000 47700 48000 15000





20000 3900 380

22600 1490

36000 60000 5000 4480 6290

150000 2000

60000 66000 13500 16000

120000





100000 145000 90000



Zimbabwe Malawi



50500 11000 50000 2600 1000

25000 30670 50000 43950






Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Sudan


Local purchase

Kenya

Local purchase

Local purchase

Local purchase

Kenya

Zimbabwe


Netherlands

Netherlands

Austria

Switzerland

WFP purzhases

WFP purchases

ICRC purchases

55000 1800

110000 28000 75000 15000 80000

380000

250000

20000

69500

20000

150000

14000

5000



March 1986


Tanzania

Uganda

Uganda

Zambia

Malawi


EEC

EEC

ICRC purchases EEC

100000

29800

1650

200000


198586


Zambia

Zambia

Zimbabwe

Malawi

Zimbabwe

Zimbabwe

Local purchase


Germany Fed Rep

2000

6600

8540

18000

July 1985



Total 3766190


3766190

-------------------------------------------------------------------


-------------------



equivalent)

Cape Verde Chile


Local purchase

Local purchase

Argentina


5000 34

4000 2700 1945 4000 5000


Total 22679


22679


($ MILLIONS)


Section 416

FY ]981 a

7934 (919) 7683

15617

FY 1982 a

7926 (1230) 6239

14165

FY 1983 a

8495 (1394) 5995

14490

FY 1984 a

8500 (980) 7240 b

15740

FY 1985

10997 c (1195)-

1 0600 dl 2T597

FY 1986

9887 (1170) 7587 e

FY 1987

9289 f (870)-5341

Z77414630

FY 1988 h

8520 (950) 5350

13870


Total Food Aid

15362 17381

915

24149

-_

18938 14630 13870




-Total Food Aid 292









11

II




Burkina Faso


Amount PVO






Mali

12








13

FIGURE II
















-





USAID










14






15




Background




16





The Pros







17







18



Cost


more for equivalent








19




analysis


20



Total 10113










21








22




















24









25









26







27









28






29


The Cons






30


Immediate Issues







31








32





33



trilateral




Harmon op cit)





34








35










III





in put

the to

case of the DCC

the the

following September


have mentioned we


37























39

ltV






Approval Trends




Design


40










41






42









43

FIGURE III












FIGURE IV















Negotiation





withtowas to




Ak3



it The




Implementation


45








46







47






48


Washington Approval


The Fact Situation







I

further













50




51









54








55








56









57


General Conclusions







58








however





59






60

Recommendation


61

ANNEX A

STATEMENT OF WORK




Pro s






Cons





68

















69






Timing


70

Annex B

Methodology

A Purpose


B Objective


C Aoproach






62








63







64


E Caveats








65


66

117~

-----------------

ANNEX C


SUMMARY





Metric Tons PVO


984 Essor Familial




2 TA number 688-XXX-000-5622


1

-----------------







costs

5 Contract 641-00-C-00-5 ]]1-lj





2


BACKGROUND






11 Accra 02994 26 April 1985



3

-----------------








16 Bamako 2638 25 April 1935



4











5





22 Accra 02495 April 4 1985

23 State 114065 16 April 1985


25 Accra 03072 April 30 1985 1


6

-----------------











1

28 Accra 04217 June 14 1985

29 PA 899-950-XXX-5784

7





costs






31 PAPR 641-48-0003-5701

32 State 185218 June 18 1985

33 PAPR 899-950-XXX-6784

8

------------------





9



apshycershy



37 Accra 02994 April 26 1985


10

ol)

-----------------









11












12

-----------------









13







14








44 Accra 05185 June 24 1985

45 Account 20FT 470

46 Account 20FT 400

15

------------------









16

Benefits to Ghana










e give overshy




17
















18

-----------------















19

-----------------









51 Accra 05648 August 9 1985


20




21


Summary







67






Background


68







69









70



in as GOZ






71


Round I









72










73



Round II



74


75

-------------------

ANNEX D












Unused balance 12





1 Accra 07651 15 October 1985 7







2








3



Zimbabwe


Malawi








4






















the bilateral costs




5

BIBLIOGRAPHY



























GOM REDSOESA

PID PP GPRM

TDY AIDMSEROPTRANS

Acquisitions DPCCM

WVI SHM UDI


OPAA

FOR

UN IEER GOG

ACRONYMS










du Mali


i


EECEC USDA USAID

ODA

SADCC

ECU CILSS








ii


I EXECUTIVE SUMMARY

Background



period

Issues Addressed





iii









iv



General Conclusions






V







vi














vii

Recommendation



viii

II BACKGROUND






I

-------------------------------------------------------------------------------------

-----------------------------

----- --------------------------------------------------------------------------------

TABLE 1


(In Thousand Tons)







Southern 1110 841 7 2113 288 169 7 1649 Africa



Western


shy- - _

deficits












2









WFP






3





Club du Sahel




4

Beneficiary

Direct aid Somalia

Zimbabwe

Nicaragua

Zambi a

TAnzani a

Mozambique

Indirect aid

C

Totals (

(

1 ECU Europea

Product

White maize

5000

_

Jhite maize

Millet

Riceequiv

cereals

Totals


Currency Units

TAB LE 3a



of delivery

2200 Malawi 6 484 Avril 36 15000 26 484 Nov 8



2600

000

i11960

80760

V1

1


05

448

178

698

179

190

--- ------------------------ -----------------------------------------------------------

--- -----------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

----- -------------------------------------- --------------------------------------

TABLE 3b



1000 tons (MECU

approx)


Totals 1727 2904 1665 4569










France





5



United Kingdom





USG Concerns



6

- -

FIGURE I



APRIL Establishment

budget mark









AUGUST




NQ









7 - 8









9






Magnitudes




19856


10

-----------------------------------------------------------------------

------------------- ------------------------------------------------------

----------------------------------------------------------------------------

-----------------------------------------------------------------------------

------------------------------------------------------------------------

---------------------------------------------------------------------------

TABLE 2








TBE 4 a







EEC Triang trans

Local purch

France Triang trans

Local pueh

CermenyrR Trinr tan

Local urcn

Italy Local purch

Japan Triang trans


Local purch I






Local Surch

WFP Triong on

Local iurci

TOTAL Triang trars

Local purcn

CRAJO TOTAL

Niger

(enya ihnbgihwe

udjr

Malawi imboiwe


Cote dvoire Scnegal


Cote divoire Kcnya

MalawiTogo Zimbabwe


MaliNiqtr3ne aISdan

Sudon

zimbolwc

Zimoehswe


I nibnhli


Mali

KcnnirmbWw

Malaw Zimliwe

44mu

7iier Snhiln Afri

lu13tel Wvc t


tons


Mozanhque 5 050 3 3 000 Sudan 6 950 3




Moli Nirjtr ulun




u0111 13 000

7mnhink 9 900 -

Mazninbique 15 0003


lihtw nin 1 750


Mli 2 2w0



65 000


ZU6 8JU 56 M 327 320 3 563



--------------------------------------------------------------------------------------

TABLE 4b


SHIPMENT OR


(tons grain

equivalent)




(tons grain

equivalent)

Laos

Lebanon

Liberia

Madagascar

Malawi

Maldives

Mali

Mali

Mali

Mauritania

Morocco

Mozambique

Nepal

Nicaragua

Niger

Niger

Philippines

Philippines

Philliopines

Thailand


Thailand

Local purchase

Burma

Pakistan

Pakistan

Burma

Thailand

Thailand

vurma

Thailand

Surinam

Thailand

Burma

Pakistan

Thailand

Burma

Japan

ICRC purchases

Japan

Japan

WFP purchases

Japan

Netherlands

United Kingdom

Japan

Japan

Japan

Japan

Italy

Switzerland

Italy

Japan

S-tzerland

Switzerland

Switzerland

42790

1180

5050

108680

1350

17310

29000

17850

39290

90240

29330

158980

2000

3000

50000

54110

15000

5000

23180

JulyampSept85

198586



November 1985



March 1986



Senegal

Sierra Leone

Sierra Leone


ThailandUNCR

Togo

Vietnam

VietnamNGO


Tnailand

Thailand

Burma

Thailand

Pakistan

Thailand Thailand

Thailand

Thailand

Burma

Burma


Japan

Japan

Japan

Japan

Switzerland


EEC

Japan

EEC

EEC


17360

100010

33800

3500

3600

i0000 4500

34480 122670 34480

150000

42250

25000

20000

10000 25000 20800 10800


February 1986

July85-Feb86



Total 3146103


3146103

k


SHIPMENT OR


ALLOCATION PERIOD





12000 5040 3000 4300





40000 15900 65000 40000

173000 110000 47700 48000 15000





20000 3900 380

22600 1490

36000 60000 5000 4480 6290

150000 2000

60000 66000 13500 16000

120000





100000 145000 90000



Zimbabwe Malawi



50500 11000 50000 2600 1000

25000 30670 50000 43950






Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Sudan


Local purchase

Kenya

Local purchase

Local purchase

Local purchase

Kenya

Zimbabwe


Netherlands

Netherlands

Austria

Switzerland

WFP purzhases

WFP purchases

ICRC purchases

55000 1800

110000 28000 75000 15000 80000

380000

250000

20000

69500

20000

150000

14000

5000



March 1986


Tanzania

Uganda

Uganda

Zambia

Malawi


EEC

EEC

ICRC purchases EEC

100000

29800

1650

200000


198586


Zambia

Zambia

Zimbabwe

Malawi

Zimbabwe

Zimbabwe

Local purchase


Germany Fed Rep

2000

6600

8540

18000

July 1985



Total 3766190


3766190

-------------------------------------------------------------------


-------------------



equivalent)

Cape Verde Chile


Local purchase

Local purchase

Argentina


5000 34

4000 2700 1945 4000 5000


Total 22679


22679


($ MILLIONS)


Section 416

FY ]981 a

7934 (919) 7683

15617

FY 1982 a

7926 (1230) 6239

14165

FY 1983 a

8495 (1394) 5995

14490

FY 1984 a

8500 (980) 7240 b

15740

FY 1985

10997 c (1195)-

1 0600 dl 2T597

FY 1986

9887 (1170) 7587 e

FY 1987

9289 f (870)-5341

Z77414630

FY 1988 h

8520 (950) 5350

13870


Total Food Aid

15362 17381

915

24149

-_

18938 14630 13870




-Total Food Aid 292









11

II




Burkina Faso


Amount PVO






Mali

12








13

FIGURE II
















-





USAID










14






15




Background




16





The Pros







17







18



Cost


more for equivalent








19




analysis


20



Total 10113










21








22




















24









25









26







27









28






29


The Cons






30


Immediate Issues







31








32





33



trilateral




Harmon op cit)





34








35










III





in put

the to

case of the DCC

the the

following September


have mentioned we


37























39

ltV






Approval Trends




Design


40










41






42









43

FIGURE III












FIGURE IV















Negotiation





withtowas to




Ak3



it The




Implementation


45








46







47






48


Washington Approval


The Fact Situation







I

further













50




51









54








55








56









57


General Conclusions







58








however





59






60

Recommendation


61

ANNEX A

STATEMENT OF WORK




Pro s






Cons





68

















69






Timing


70

Annex B

Methodology

A Purpose


B Objective


C Aoproach






62








63







64


E Caveats








65


66

117~

-----------------

ANNEX C


SUMMARY





Metric Tons PVO


984 Essor Familial




2 TA number 688-XXX-000-5622


1

-----------------







costs

5 Contract 641-00-C-00-5 ]]1-lj





2


BACKGROUND






11 Accra 02994 26 April 1985



3

-----------------








16 Bamako 2638 25 April 1935



4











5





22 Accra 02495 April 4 1985

23 State 114065 16 April 1985


25 Accra 03072 April 30 1985 1


6

-----------------











1

28 Accra 04217 June 14 1985

29 PA 899-950-XXX-5784

7





costs






31 PAPR 641-48-0003-5701

32 State 185218 June 18 1985

33 PAPR 899-950-XXX-6784

8

------------------





9



apshycershy



37 Accra 02994 April 26 1985


10

ol)

-----------------









11












12

-----------------









13







14








44 Accra 05185 June 24 1985

45 Account 20FT 470

46 Account 20FT 400

15

------------------









16

Benefits to Ghana










e give overshy




17
















18

-----------------















19

-----------------









51 Accra 05648 August 9 1985


20




21


Summary







67






Background


68







69









70



in as GOZ






71


Round I









72










73



Round II



74


75

-------------------

ANNEX D












Unused balance 12





1 Accra 07651 15 October 1985 7







2








3



Zimbabwe


Malawi








4






















the bilateral costs




5

BIBLIOGRAPHY


























EECEC USDA USAID

ODA

SADCC

ECU CILSS








ii


I EXECUTIVE SUMMARY

Background



period

Issues Addressed





iii









iv



General Conclusions






V







vi














vii

Recommendation



viii

II BACKGROUND






I

-------------------------------------------------------------------------------------

-----------------------------

----- --------------------------------------------------------------------------------

TABLE 1


(In Thousand Tons)







Southern 1110 841 7 2113 288 169 7 1649 Africa



Western


shy- - _

deficits












2









WFP






3





Club du Sahel




4

Beneficiary

Direct aid Somalia

Zimbabwe

Nicaragua

Zambi a

TAnzani a

Mozambique

Indirect aid

C

Totals (

(

1 ECU Europea

Product

White maize

5000

_

Jhite maize

Millet

Riceequiv

cereals

Totals


Currency Units

TAB LE 3a



of delivery

2200 Malawi 6 484 Avril 36 15000 26 484 Nov 8



2600

000

i11960

80760

V1

1


05

448

178

698

179

190

--- ------------------------ -----------------------------------------------------------

--- -----------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

----- -------------------------------------- --------------------------------------

TABLE 3b



1000 tons (MECU

approx)


Totals 1727 2904 1665 4569










France





5



United Kingdom





USG Concerns



6

- -

FIGURE I



APRIL Establishment

budget mark









AUGUST




NQ









7 - 8









9






Magnitudes




19856


10

-----------------------------------------------------------------------

------------------- ------------------------------------------------------

----------------------------------------------------------------------------

-----------------------------------------------------------------------------

------------------------------------------------------------------------

---------------------------------------------------------------------------

TABLE 2








TBE 4 a







EEC Triang trans

Local purch

France Triang trans

Local pueh

CermenyrR Trinr tan

Local urcn

Italy Local purch

Japan Triang trans


Local purch I






Local Surch

WFP Triong on

Local iurci

TOTAL Triang trars

Local purcn

CRAJO TOTAL

Niger

(enya ihnbgihwe

udjr

Malawi imboiwe


Cote dvoire Scnegal


Cote divoire Kcnya

MalawiTogo Zimbabwe


MaliNiqtr3ne aISdan

Sudon

zimbolwc

Zimoehswe


I nibnhli


Mali

KcnnirmbWw

Malaw Zimliwe

44mu

7iier Snhiln Afri

lu13tel Wvc t


tons


Mozanhque 5 050 3 3 000 Sudan 6 950 3




Moli Nirjtr ulun




u0111 13 000

7mnhink 9 900 -

Mazninbique 15 0003


lihtw nin 1 750


Mli 2 2w0



65 000


ZU6 8JU 56 M 327 320 3 563



--------------------------------------------------------------------------------------

TABLE 4b


SHIPMENT OR


(tons grain

equivalent)




(tons grain

equivalent)

Laos

Lebanon

Liberia

Madagascar

Malawi

Maldives

Mali

Mali

Mali

Mauritania

Morocco

Mozambique

Nepal

Nicaragua

Niger

Niger

Philippines

Philippines

Philliopines

Thailand


Thailand

Local purchase

Burma

Pakistan

Pakistan

Burma

Thailand

Thailand

vurma

Thailand

Surinam

Thailand

Burma

Pakistan

Thailand

Burma

Japan

ICRC purchases

Japan

Japan

WFP purchases

Japan

Netherlands

United Kingdom

Japan

Japan

Japan

Japan

Italy

Switzerland

Italy

Japan

S-tzerland

Switzerland

Switzerland

42790

1180

5050

108680

1350

17310

29000

17850

39290

90240

29330

158980

2000

3000

50000

54110

15000

5000

23180

JulyampSept85

198586



November 1985



March 1986



Senegal

Sierra Leone

Sierra Leone


ThailandUNCR

Togo

Vietnam

VietnamNGO


Tnailand

Thailand

Burma

Thailand

Pakistan

Thailand Thailand

Thailand

Thailand

Burma

Burma


Japan

Japan

Japan

Japan

Switzerland


EEC

Japan

EEC

EEC


17360

100010

33800

3500

3600

i0000 4500

34480 122670 34480

150000

42250

25000

20000

10000 25000 20800 10800


February 1986

July85-Feb86



Total 3146103


3146103

k


SHIPMENT OR


ALLOCATION PERIOD





12000 5040 3000 4300





40000 15900 65000 40000

173000 110000 47700 48000 15000





20000 3900 380

22600 1490

36000 60000 5000 4480 6290

150000 2000

60000 66000 13500 16000

120000





100000 145000 90000



Zimbabwe Malawi



50500 11000 50000 2600 1000

25000 30670 50000 43950






Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Sudan


Local purchase

Kenya

Local purchase

Local purchase

Local purchase

Kenya

Zimbabwe


Netherlands

Netherlands

Austria

Switzerland

WFP purzhases

WFP purchases

ICRC purchases

55000 1800

110000 28000 75000 15000 80000

380000

250000

20000

69500

20000

150000

14000

5000



March 1986


Tanzania

Uganda

Uganda

Zambia

Malawi


EEC

EEC

ICRC purchases EEC

100000

29800

1650

200000


198586


Zambia

Zambia

Zimbabwe

Malawi

Zimbabwe

Zimbabwe

Local purchase


Germany Fed Rep

2000

6600

8540

18000

July 1985



Total 3766190


3766190

-------------------------------------------------------------------


-------------------



equivalent)

Cape Verde Chile


Local purchase

Local purchase

Argentina


5000 34

4000 2700 1945 4000 5000


Total 22679


22679


($ MILLIONS)


Section 416

FY ]981 a

7934 (919) 7683

15617

FY 1982 a

7926 (1230) 6239

14165

FY 1983 a

8495 (1394) 5995

14490

FY 1984 a

8500 (980) 7240 b

15740

FY 1985

10997 c (1195)-

1 0600 dl 2T597

FY 1986

9887 (1170) 7587 e

FY 1987

9289 f (870)-5341

Z77414630

FY 1988 h

8520 (950) 5350

13870


Total Food Aid

15362 17381

915

24149

-_

18938 14630 13870




-Total Food Aid 292









11

II




Burkina Faso


Amount PVO






Mali

12








13

FIGURE II
















-





USAID










14






15




Background




16





The Pros







17







18



Cost


more for equivalent








19




analysis


20



Total 10113










21








22




















24









25









26







27









28






29


The Cons






30


Immediate Issues







31








32





33



trilateral




Harmon op cit)





34








35










III





in put

the to

case of the DCC

the the

following September


have mentioned we


37























39

ltV






Approval Trends




Design


40










41






42









43

FIGURE III












FIGURE IV















Negotiation





withtowas to




Ak3



it The




Implementation


45








46







47






48


Washington Approval


The Fact Situation







I

further













50




51









54








55








56









57


General Conclusions







58








however





59






60

Recommendation


61

ANNEX A

STATEMENT OF WORK




Pro s






Cons





68

















69






Timing


70

Annex B

Methodology

A Purpose


B Objective


C Aoproach






62








63







64


E Caveats








65


66

117~

-----------------

ANNEX C


SUMMARY





Metric Tons PVO


984 Essor Familial




2 TA number 688-XXX-000-5622


1

-----------------







costs

5 Contract 641-00-C-00-5 ]]1-lj





2


BACKGROUND






11 Accra 02994 26 April 1985



3

-----------------








16 Bamako 2638 25 April 1935



4











5





22 Accra 02495 April 4 1985

23 State 114065 16 April 1985


25 Accra 03072 April 30 1985 1


6

-----------------











1

28 Accra 04217 June 14 1985

29 PA 899-950-XXX-5784

7





costs






31 PAPR 641-48-0003-5701

32 State 185218 June 18 1985

33 PAPR 899-950-XXX-6784

8

------------------





9



apshycershy



37 Accra 02994 April 26 1985


10

ol)

-----------------









11












12

-----------------









13







14








44 Accra 05185 June 24 1985

45 Account 20FT 470

46 Account 20FT 400

15

------------------









16

Benefits to Ghana










e give overshy




17
















18

-----------------















19

-----------------









51 Accra 05648 August 9 1985


20




21


Summary







67






Background


68







69









70



in as GOZ






71


Round I









72










73



Round II



74


75

-------------------

ANNEX D












Unused balance 12





1 Accra 07651 15 October 1985 7







2








3



Zimbabwe


Malawi








4






















the bilateral costs




5

BIBLIOGRAPHY


























I EXECUTIVE SUMMARY

Background



period

Issues Addressed





iii









iv



General Conclusions






V







vi














vii

Recommendation



viii

II BACKGROUND






I

-------------------------------------------------------------------------------------

-----------------------------

----- --------------------------------------------------------------------------------

TABLE 1


(In Thousand Tons)







Southern 1110 841 7 2113 288 169 7 1649 Africa



Western


shy- - _

deficits












2









WFP






3





Club du Sahel




4

Beneficiary

Direct aid Somalia

Zimbabwe

Nicaragua

Zambi a

TAnzani a

Mozambique

Indirect aid

C

Totals (

(

1 ECU Europea

Product

White maize

5000

_

Jhite maize

Millet

Riceequiv

cereals

Totals


Currency Units

TAB LE 3a



of delivery

2200 Malawi 6 484 Avril 36 15000 26 484 Nov 8



2600

000

i11960

80760

V1

1


05

448

178

698

179

190

--- ------------------------ -----------------------------------------------------------

--- -----------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

----- -------------------------------------- --------------------------------------

TABLE 3b



1000 tons (MECU

approx)


Totals 1727 2904 1665 4569










France





5



United Kingdom





USG Concerns



6

- -

FIGURE I



APRIL Establishment

budget mark









AUGUST




NQ









7 - 8









9






Magnitudes




19856


10

-----------------------------------------------------------------------

------------------- ------------------------------------------------------

----------------------------------------------------------------------------

-----------------------------------------------------------------------------

------------------------------------------------------------------------

---------------------------------------------------------------------------

TABLE 2








TBE 4 a







EEC Triang trans

Local purch

France Triang trans

Local pueh

CermenyrR Trinr tan

Local urcn

Italy Local purch

Japan Triang trans


Local purch I






Local Surch

WFP Triong on

Local iurci

TOTAL Triang trars

Local purcn

CRAJO TOTAL

Niger

(enya ihnbgihwe

udjr

Malawi imboiwe


Cote dvoire Scnegal


Cote divoire Kcnya

MalawiTogo Zimbabwe


MaliNiqtr3ne aISdan

Sudon

zimbolwc

Zimoehswe


I nibnhli


Mali

KcnnirmbWw

Malaw Zimliwe

44mu

7iier Snhiln Afri

lu13tel Wvc t


tons


Mozanhque 5 050 3 3 000 Sudan 6 950 3




Moli Nirjtr ulun




u0111 13 000

7mnhink 9 900 -

Mazninbique 15 0003


lihtw nin 1 750


Mli 2 2w0



65 000


ZU6 8JU 56 M 327 320 3 563



--------------------------------------------------------------------------------------

TABLE 4b


SHIPMENT OR


(tons grain

equivalent)




(tons grain

equivalent)

Laos

Lebanon

Liberia

Madagascar

Malawi

Maldives

Mali

Mali

Mali

Mauritania

Morocco

Mozambique

Nepal

Nicaragua

Niger

Niger

Philippines

Philippines

Philliopines

Thailand


Thailand

Local purchase

Burma

Pakistan

Pakistan

Burma

Thailand

Thailand

vurma

Thailand

Surinam

Thailand

Burma

Pakistan

Thailand

Burma

Japan

ICRC purchases

Japan

Japan

WFP purchases

Japan

Netherlands

United Kingdom

Japan

Japan

Japan

Japan

Italy

Switzerland

Italy

Japan

S-tzerland

Switzerland

Switzerland

42790

1180

5050

108680

1350

17310

29000

17850

39290

90240

29330

158980

2000

3000

50000

54110

15000

5000

23180

JulyampSept85

198586



November 1985



March 1986



Senegal

Sierra Leone

Sierra Leone


ThailandUNCR

Togo

Vietnam

VietnamNGO


Tnailand

Thailand

Burma

Thailand

Pakistan

Thailand Thailand

Thailand

Thailand

Burma

Burma


Japan

Japan

Japan

Japan

Switzerland


EEC

Japan

EEC

EEC


17360

100010

33800

3500

3600

i0000 4500

34480 122670 34480

150000

42250

25000

20000

10000 25000 20800 10800


February 1986

July85-Feb86



Total 3146103


3146103

k


SHIPMENT OR


ALLOCATION PERIOD





12000 5040 3000 4300





40000 15900 65000 40000

173000 110000 47700 48000 15000





20000 3900 380

22600 1490

36000 60000 5000 4480 6290

150000 2000

60000 66000 13500 16000

120000





100000 145000 90000



Zimbabwe Malawi



50500 11000 50000 2600 1000

25000 30670 50000 43950






Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Sudan


Local purchase

Kenya

Local purchase

Local purchase

Local purchase

Kenya

Zimbabwe


Netherlands

Netherlands

Austria

Switzerland

WFP purzhases

WFP purchases

ICRC purchases

55000 1800

110000 28000 75000 15000 80000

380000

250000

20000

69500

20000

150000

14000

5000



March 1986


Tanzania

Uganda

Uganda

Zambia

Malawi


EEC

EEC

ICRC purchases EEC

100000

29800

1650

200000


198586


Zambia

Zambia

Zimbabwe

Malawi

Zimbabwe

Zimbabwe

Local purchase


Germany Fed Rep

2000

6600

8540

18000

July 1985



Total 3766190


3766190

-------------------------------------------------------------------


-------------------



equivalent)

Cape Verde Chile


Local purchase

Local purchase

Argentina


5000 34

4000 2700 1945 4000 5000


Total 22679


22679


($ MILLIONS)


Section 416

FY ]981 a

7934 (919) 7683

15617

FY 1982 a

7926 (1230) 6239

14165

FY 1983 a

8495 (1394) 5995

14490

FY 1984 a

8500 (980) 7240 b

15740

FY 1985

10997 c (1195)-

1 0600 dl 2T597

FY 1986

9887 (1170) 7587 e

FY 1987

9289 f (870)-5341

Z77414630

FY 1988 h

8520 (950) 5350

13870


Total Food Aid

15362 17381

915

24149

-_

18938 14630 13870




-Total Food Aid 292









11

II




Burkina Faso


Amount PVO






Mali

12








13

FIGURE II
















-





USAID










14






15




Background




16





The Pros







17







18



Cost


more for equivalent








19




analysis


20



Total 10113










21








22




















24









25









26







27









28






29


The Cons






30


Immediate Issues







31








32





33



trilateral




Harmon op cit)





34








35










III





in put

the to

case of the DCC

the the

following September


have mentioned we


37























39

ltV






Approval Trends




Design


40










41






42









43

FIGURE III












FIGURE IV















Negotiation





withtowas to




Ak3



it The




Implementation


45








46







47






48


Washington Approval


The Fact Situation







I

further













50




51









54








55








56









57


General Conclusions







58








however





59






60

Recommendation


61

ANNEX A

STATEMENT OF WORK




Pro s






Cons





68

















69






Timing


70

Annex B

Methodology

A Purpose


B Objective


C Aoproach






62








63







64


E Caveats








65


66

117~

-----------------

ANNEX C


SUMMARY





Metric Tons PVO


984 Essor Familial




2 TA number 688-XXX-000-5622


1

-----------------







costs

5 Contract 641-00-C-00-5 ]]1-lj





2


BACKGROUND






11 Accra 02994 26 April 1985



3

-----------------








16 Bamako 2638 25 April 1935



4











5





22 Accra 02495 April 4 1985

23 State 114065 16 April 1985


25 Accra 03072 April 30 1985 1


6

-----------------











1

28 Accra 04217 June 14 1985

29 PA 899-950-XXX-5784

7





costs






31 PAPR 641-48-0003-5701

32 State 185218 June 18 1985

33 PAPR 899-950-XXX-6784

8

------------------





9



apshycershy



37 Accra 02994 April 26 1985


10

ol)

-----------------









11












12

-----------------









13







14








44 Accra 05185 June 24 1985

45 Account 20FT 470

46 Account 20FT 400

15

------------------









16

Benefits to Ghana










e give overshy




17
















18

-----------------















19

-----------------









51 Accra 05648 August 9 1985


20




21


Summary







67






Background


68







69









70



in as GOZ






71


Round I









72










73



Round II



74


75

-------------------

ANNEX D












Unused balance 12





1 Accra 07651 15 October 1985 7







2








3



Zimbabwe


Malawi








4






















the bilateral costs




5

BIBLIOGRAPHY

































iv



General Conclusions






V







vi














vii

Recommendation



viii

II BACKGROUND






I

-------------------------------------------------------------------------------------

-----------------------------

----- --------------------------------------------------------------------------------

TABLE 1


(In Thousand Tons)







Southern 1110 841 7 2113 288 169 7 1649 Africa



Western


shy- - _

deficits












2









WFP






3





Club du Sahel




4

Beneficiary

Direct aid Somalia

Zimbabwe

Nicaragua

Zambi a

TAnzani a

Mozambique

Indirect aid

C

Totals (

(

1 ECU Europea

Product

White maize

5000

_

Jhite maize

Millet

Riceequiv

cereals

Totals


Currency Units

TAB LE 3a



of delivery

2200 Malawi 6 484 Avril 36 15000 26 484 Nov 8



2600

000

i11960

80760

V1

1


05

448

178

698

179

190

--- ------------------------ -----------------------------------------------------------

--- -----------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

----- -------------------------------------- --------------------------------------

TABLE 3b



1000 tons (MECU

approx)


Totals 1727 2904 1665 4569










France





5



United Kingdom





USG Concerns



6

- -

FIGURE I



APRIL Establishment

budget mark









AUGUST




NQ









7 - 8









9






Magnitudes




19856


10

-----------------------------------------------------------------------

------------------- ------------------------------------------------------

----------------------------------------------------------------------------

-----------------------------------------------------------------------------

------------------------------------------------------------------------

---------------------------------------------------------------------------

TABLE 2








TBE 4 a







EEC Triang trans

Local purch

France Triang trans

Local pueh

CermenyrR Trinr tan

Local urcn

Italy Local purch

Japan Triang trans


Local purch I






Local Surch

WFP Triong on

Local iurci

TOTAL Triang trars

Local purcn

CRAJO TOTAL

Niger

(enya ihnbgihwe

udjr

Malawi imboiwe


Cote dvoire Scnegal


Cote divoire Kcnya

MalawiTogo Zimbabwe


MaliNiqtr3ne aISdan

Sudon

zimbolwc

Zimoehswe


I nibnhli


Mali

KcnnirmbWw

Malaw Zimliwe

44mu

7iier Snhiln Afri

lu13tel Wvc t


tons


Mozanhque 5 050 3 3 000 Sudan 6 950 3




Moli Nirjtr ulun




u0111 13 000

7mnhink 9 900 -

Mazninbique 15 0003


lihtw nin 1 750


Mli 2 2w0



65 000


ZU6 8JU 56 M 327 320 3 563



--------------------------------------------------------------------------------------

TABLE 4b


SHIPMENT OR


(tons grain

equivalent)




(tons grain

equivalent)

Laos

Lebanon

Liberia

Madagascar

Malawi

Maldives

Mali

Mali

Mali

Mauritania

Morocco

Mozambique

Nepal

Nicaragua

Niger

Niger

Philippines

Philippines

Philliopines

Thailand


Thailand

Local purchase

Burma

Pakistan

Pakistan

Burma

Thailand

Thailand

vurma

Thailand

Surinam

Thailand

Burma

Pakistan

Thailand

Burma

Japan

ICRC purchases

Japan

Japan

WFP purchases

Japan

Netherlands

United Kingdom

Japan

Japan

Japan

Japan

Italy

Switzerland

Italy

Japan

S-tzerland

Switzerland

Switzerland

42790

1180

5050

108680

1350

17310

29000

17850

39290

90240

29330

158980

2000

3000

50000

54110

15000

5000

23180

JulyampSept85

198586



November 1985



March 1986



Senegal

Sierra Leone

Sierra Leone


ThailandUNCR

Togo

Vietnam

VietnamNGO


Tnailand

Thailand

Burma

Thailand

Pakistan

Thailand Thailand

Thailand

Thailand

Burma

Burma


Japan

Japan

Japan

Japan

Switzerland


EEC

Japan

EEC

EEC


17360

100010

33800

3500

3600

i0000 4500

34480 122670 34480

150000

42250

25000

20000

10000 25000 20800 10800


February 1986

July85-Feb86



Total 3146103


3146103

k


SHIPMENT OR


ALLOCATION PERIOD





12000 5040 3000 4300





40000 15900 65000 40000

173000 110000 47700 48000 15000





20000 3900 380

22600 1490

36000 60000 5000 4480 6290

150000 2000

60000 66000 13500 16000

120000





100000 145000 90000



Zimbabwe Malawi



50500 11000 50000 2600 1000

25000 30670 50000 43950






Sudan

Sudan

Sudan

Sudan

Sudan

Sudan

Sudan


Local purchase

Kenya

Local purchase

Local purchase

Local purchase

Kenya

Zimbabwe


Netherlands

Netherlands

Austria

Switzerland

WFP purzhases

WFP purchases

ICRC purchases

55000 1800

110000 28000 75000 15000 80000

380000

250000

20000

69500

20000

150000

14000

5000



March 1986


Tanzania

Uganda

Uganda

Zambia

Malawi


EEC

EEC

ICRC purchases EEC

100000

29800

1650

200000


198586


Zambia

Zambia

Zimbabwe

Malawi

Zimbabwe

Zimbabwe

Local purchase


Germany Fed Rep

2000

6600

8540

18000

July 1985



Total 3766190


3766190

-------------------------------------------------------------------


-------------------



equivalent)

Cape Verde Chile


Local purchase

Local purchase

Argentina


5000 34

4000 2700 1945 4000 5000


Total 22679


22679


($ MILLIONS)


Section 416

FY ]981 a

7934 (919) 7683

15617

FY 1982 a

7926 (1230) 6239

14165

FY 1983 a

8495 (1394) 5995

14490

FY 1984 a

8500 (980) 7240 b

15740

FY 1985

10997 c (1195)-

1 0600 dl 2T597

FY 1986

9887 (1170) 7587 e

FY 1987

9289 f (870)-5341

Z77414630

FY 1988 h

8520 (950) 5350

13870


Total Food Aid

15362 17381

915

24149

-_

18938 14630 13870




-Total Food Aid 292









11

II




Burkina Faso


Amount PVO






Mali

12








13

FIGURE II
















-





USAID










14






15




Background




16





The Pros







17







18



Cost


more for equivalent








19




analysis


20



Total 10113










21








22




















24









25









26







27









28






29


The Cons






30


Immediate Issues







31








32





33



trilateral




Harmon op cit)





34








35










III





in put

the to

case of the DCC

the the

following September


have mentioned we


37























39

ltV






Approval Trends




Design


40










41






42









43

FIGURE III












FIGURE IV















Negotiation





withtowas to




Ak3



it The




Implementation


45








46







47






48


Washington Approval


The Fact Situation







I

further













50




51









54








55








56









57


General Conclusions







58








however





59






60

Recommendation


61

ANNEX A

STATEMENT OF WORK




Pro s






Cons





68

















69






Timing


70

Annex B

Methodology

A Purpose


B Objective


C Aoproach






62








63







64


E Caveats








65


66

117~

-----------------

ANNEX C


SUMMARY





Metric Tons PVO


984 Essor Familial




2 TA number 688-XXX-000-5622


1

-----------------







costs

5 Contract 641-00-C-00-5 ]]1-lj





2


BACKGROUND






11 Accra 02994 26 April 1985



3

-----------------








16 Bamako 2638 25 April 1935



4











5





22 Accra 02495 April 4 1985

23 State 114065 16 April 1985


25 Accra 03072 April 30 1985 1


6

-----------------











1

28 Accra 04217 June 14 1985

29 PA 899-950-XXX-5784

7





costs






31 PAPR 641-48-0003-5701

32 State 185218 June 18 1985

33 PAPR 899-950-XXX-6784

8

------------------





9



apshycershy



37 Accra 02994 April 26 1985


10

ol)

-----------------









11












12

-----------------









13







14








44 Accra 05185 June 24 1985

45 Account 20FT 470

46 Account 20FT 400

15

------------------









16

Benefits to Ghana










e give overshy




17
















18

-----------------















19

-----------------









51 Accra 05648 August 9 1985


20




21


Summary







67






Background


68







69









70



in as GOZ






71


Round I









72










73



Round II



74


75

-------------------

ANNEX D












Unused balance 12





1 Accra 07651 15 October 1985 7







2








3



Zimbabwe


Malawi








4






















the bilateral costs




5

BIBLIOGRAPHY

























STUDY OF TRILATERAL FOOD AID TRANSACTIONS

Documents

Transcript of STUDY OF TRILATERAL FOOD AID TRANSACTIONS