WFP POST-DELIVERY LOSSES IN BANGLADESH

UNCLAS ROME 002493

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E.O. 12958: N/A
TAGS: EAID EAGR AORC PREF KUNR WFP UN
SUBJECT: WFP POST-DELIVERY LOSSES IN BANGLADESH

REF: (A) 02 ROME 02673

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SUMMARY
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1. (SBU) WFP has issued a copy of a 2002-2003 draft food
loss report conducted by the International Food Policy
Research Institute (IFPRI) entitled "Food Aid Leakages in
Bangladesh," supported by funding from the U.S., Australia,
Canada, and the European Community. Preliminary findings are
disturbing. Food grain losses in Bangladeshi harbors
resulting from pilferage and other forms of misuse is
estimated at 1.5 percent. Equally, there are problems
associated with transportation and handling of grains for
distribution at beneficiary level. The overall leakage in
the Vulnerable Group Development (VDG) program (WFP's
flagship undertaking in Bangladesh) is estimated at 8.01
percent. In US Mission's view, although WFP has taken recent
steps to tighten program accountability, intensified follow
up efforts with the GOB are required. End summary.

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Background
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2. (SBU) In May 2001, the WFP Secretariat informed the
Executive Board of a major dialogue with food aid donors
(U.S., Canada, others) to address the problem of suspected
food leakage to non-targeted beneficiaries through
unauthorized distribution channels. WFP's initial misgivings
came from a 1997 request it made to the International Food
Policy Research Institute (IFPRI) to carry out a preliminary
study to investigate the magnitude of the problem of food
aid leakages and develop a monitoring methodology. In 1998,
a comprehensive food commodity tracking system appraisal was
carried out. In 1999, the WFP country office established a
food transport and storage monitoring unit. Since then,
efforts have been made to inform vulnerable group and
emergency operation beneficiaries, as well as the public at
large, of their rights and entitlements related to rations.


3. (SBU) The latest IFPRI study began in October 2002 and
fieldwork was concluded by March 2003. A first draft of the
findings has now been issued. US Mission is informed that
there is an active, ongoing effort within the GOB to review
the draft report and provide suggestions, comments,
criticisms, etc. Donors and the WFP leadership appear to be
convinced that this process cannot be rushed in order to
assure complete GOB ownership of the results. The final
report will be published in late July 2003 after a Policy
Dialogue Session is held. The purpose of this session will
be to formally confirm the findings and recommendations,
and, perhaps more importantly, to develop a common plan of
action aimed at effectively reducing leakage.
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Preliminary rack up on losses
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4. (SBU) Preliminary findings of the draft study are as
follows:

a) Food grain losses at harbours, defined as the difference
between the Bill of Lading (BL) quantity and the final
discharge report of the stevedores, is estimated to be 1.55
percent of the BL quantity for all arrivals. Operational
loss due to normal handling and spillage at the port is

estimated to be 0.05 percent. The loss due to pilferage and
other forms of misuse is therefore estimated at 1.50
percent. Losses due to pilferage appear to be associated
with the involvement of numerous agencies, the absence of
appropriate legal mechanisms to transfer incentives to the
right group, the presence of unhealthy unions, and
collusion;
b) While losses in the Public Food Distribution System
(PFDS) have substantially declined in the 1990s, it is
suggested that PFDS transit losses can be further reduced.
First, private flour millers do not incur any transit loss
in transporting their grain, as they operate under an
arrangement where transporters assume sole responsibility
for delivery of full invoice quantity. If the storage
facilities are well connected, the GOB can adopt the same
strategy for transportation by road. Second, by introducing
hundred percent weighing in water transportation (except
unavoidable cases at Mongla port),high permissible limits
of losses (currently 0.4 percent) can be revised downward;

c) There are problems associated with transportation and
handling of grains for distribution at the beneficiary
level. The draft study estimates average leakage in the VGD
program due to short ration to be 7.53 percent, or 2.25 kg
per month per beneficiary. Leakage due to under coverage
(when the actual number of beneficiaries is less than the
officially determined number for whom food was allocated)
was 0.48 percent. Hence, the overall leakage in the VGD
program is estimated at 8.01 percent of the total wheat
allotment. This leakage estimate corresponds to food
distribution from the Local Storage Depots (LSD) to the
programme beneficiaries. Moreover, about 10 percent of the
VGD cardholders reported that Union Parishad (UP) members
made them "share" their VGD card with a non-cardholder
woman, and thus received only one half of their ration
entitlement;

d) Lastly, leakage within the Integrated Food Security (IFS)
programme is worrisome in the case of Training and Nutrition
Centres (TNC) where beneficiaries received 18.64 percent
less than their full entitlement. The surveys reveal that
the relatively high leakage in TNC was mainly due to
malpractice by a Community Based Organization (CBO) assigned
to support TNC user committees.

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WFP management steps taken to address leakages
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5. (SBU) Concrete recent WFP in-country actions include:

a) In 2001, WFP began decentralizing its staffing and office
set-up. To date, 38 qualified field staff (all recruited
locally) are posted in six offices established in strategic
locations throughout the country;

b) In 2002, with extensive technical support from the German
Government's GTZ, WFP adopted a comprehensive Monitoring and
Evaluation (M&E) system for its food targeting and
distribution activities;

c) WFP Bangladesh has initiated an extensive program of
training/briefing for key GOB and NGO staff involved in the
planning, implementation and monitoring of WFP activities at
the central, district, sub-district and union levels.
Resources from monetized funds, together with the planning
of the second phase of the Strengthening the Institutions of
Food-Assisted development (SIFAD) project are aimed at
improving the capacity of program partners to more

effectively monitor;

d) The commencement of distribution of micronutrient-
fortified wheat flour (funded by Canada),presently covering
138,000 beneficiaries - where lifting of the wheat from GOB
stores, milling, fortification, packaging and distribution
to the distribution sites is done by NGO partners - has
dramatically reduced leakage. Similar success has been
achieved with micronutrient-fortified biscuits targeted
presently to one million primary school children.

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Other measures
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6. (SBU) Other measures to be actively pursued include:

a) A broader acceptance of problems inherent in the present
system and their root causes is the key to positive results
in combating post-delivery losses;

b) Involving more NGOs to deliver food aid rather than
relying heavily on government would most likely result in
reduced leakage;

c) WFP plans to conduct a detailed assessment of "carrying
costs" incurred by Government in the process of moving food
from the local storage depot to the distribution sites to
determine whether the current rate of compensation is
adequate.

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Comment
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7. (SBU) The recently concluded WFP Executive Board Annual
Session (May 28-30) looked at WFP's post delivery losses
worldwide (including a special report on Bangladesh
presented by Country Director Doug Coutts) and concluded
that every case of commodity hemorrhaging in today's
constrained budgetary environment has to be swiftly and
vigorously addressed. Food leakages in Bangladeshi ports, to
non-targeted beneficiaries through unauthorized distribution
channels, and under-deliveries to targeted beneficiaries -
have constituted a long-term problem for the WFP program.
While WFP is to be given due credit for identifying the
problem, given the sizable amounts of commodity leakage
involved, WFP, the GOB and the principal donors now need to
fix what has been well documented (by the highly-respected
IFPRI) to be broken. It is expected that the July Policy
Dialogue workshop will provide the platform for the
immediate enactment/endorsement of remedial actions to
firmly establish a credible oversight system in Bangladesh.
WFP in our view is committed to institutional reform and is
pursuing the delicate task of public accountability with a
constancy of vision and a tenacious single-mindedness.
Hall
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2003ROME02493 - Classification: UNCLASSIFIED