ANNUAL SESSION OF THE WORLD FOOD PROGRAM EXECUTIVE

UNCLAS ROME 002620

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FROM U.S. MISSION IN ROME
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USAID FOR A/AID, AA/DCHA, AA/AFR, DCHA/FFP LANDIS, PPC/DP,
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E.O. 12958: N/A
TAGS: EAID EAGR AORC PREF KUNR WFP UN
SUBJECT: ANNUAL SESSION OF THE WORLD FOOD PROGRAM EXECUTIVE
BOARD, ROME, MAY 28-30, 2003

REF: (A) 02 Rome 05308, (B) 02 Rome 05226, (C) Rome 02269

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SUMMARY
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1. The WFP Board annual session took place against the
backdrop of an unprecedented level of emergency needs
(particularly in Africa where 38-40 million people face
starvation). The modalities of WFP assistance to Iraq, which
will represent one-third of WFP's worldwide efforts in 2003,
was widely discussed. The Board considered a policy paper
further outlining WFP policy on donations of foods derived
from biotechnology. Considerable attention was devoted to
reviewing the interim WFP Financial Results for 2002,
information and analysis relative to cash and investment
management issues and information on projects closed to
date, with explanation of the process followed in the
disposition of closed project balances.


2. Overall, WFP's needs are projected to increase from 3.7
million tons delivered in 2002 to 7.7 million metric ton
requirements estimated for 2003. 2003 is proving to be a
daunting year with WFP already extended to the maximum, and
with "worst case" scenarios currently unfolding in both the
Horn and parts of West Africa. End summary.

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Annual Report of the Executive Director
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3. In 2002, WFP food assistance reached 72 million of the
world's poorest by effectively delivering 3.7 million metric
tons of food aid to 82 countries. Donors contributed USD 1.8
billion through WFP in 2002, with the United States topping
the list at USD 930 million (51.4 percent). Of the USD 1.8
billion, USD 1.36 billion constituted cash (75 percent) and
USD 448.5 million was contributed in-kind (25 percent). The
value of in-kind contributions exceeding USD 10 million were
as follows: U.S., USD 356.4 million; European Commission,
USD 19.5 million; Australia, USD 17.1 million; Kenya, USD
12.1 million; and the Republic of Korea, USD 10.7 million.
Six key donors, namely the United Kingdom, Japan, Germany,
The Netherlands, Denmark and Sweden (whose donations
collectively amounted to USD 381.6 million) contributed only
cash to WFP. Norway announced its intention to shift its
donations (presently 14 percent in-kind to WFP) exclusively
to cash by 2007.


4. In his remarks to the Executive Board, WFP Executive
Director Jim Morris discussed Iraq, Ethiopia, southern
Africa, Afghanistan, West Bank/Gaza, private sector
initiatives, financial management, and the appointment of
two new Assistant Executive Directors - in addition
to Policy and Operations - deputy slots have been created
for Fundraising and Administration.


5. Morris noted that as the result of Iraq, WFP foresaw a
2003 programming level of around USD 5 billion. He ran a
brief film clip from ABC News about the immediate and
worsening crisis in Ethiopia and Eritrea and called upon
donors to do more and promptly fulfill their pledges.
Regarding southern Africa, Morris estimated that the serious
food crisis there will end by next year but the impact of
HIV/AIDS will leave the region vulnerable. In Afghanistan
and West Bank/Gaza, access, not resources, is the major
problem for WFP. With a heavy sigh, Morris described access
issues in West Bank/Gaza as "very challenging" in WFP's
effort to feed 570,000 Palestinians. Morris summarized


private sector initiatives over the last year, including a
collaborative volunteer and fundraising campaign with the
Dutch shipping and transportation company TPG which will net
WFP around USD 5 million for its school feeding activities,
as well as advertisement campaigns with Toyota and Benneton.
Note: Benneton's "Food for Life" publicity donation is
valued at USD 15 million. End note. Regarding financial
management, Morris implicitly acknowledged that more needs
to be done to speed up WFP's disbursements and said he hoped
to have better news on progress in this area by the October
Board meeting.


6. USDEL's Lauren Landis recognized the extraordinary
efforts of WFP during this past year in responding to the
southern Africa drought emergency which threatened the lives
of 14.4 million in Lesotho, Malawi, Mozambique, Swaziland,
Zambia and Zimbabwe. In particular, USDEL singled out WFP's
extensive linkages with both international and local non-
governmental organizations (NGOs). She emphasized our
serious concern with the overall food insecurity situation
in sub-Saharan Africa, with some 38-40 million Africans in
2003 living with the threat of starvation and another 156
million who suffer quietly this year from chronic hunger.
She noted that the Evian (France) G8 Summit presented a
unique opportunity to cement a broader political commitment
on the issue of African hunger. Finally, she commented that
the 2002 "U.S. Farm Bill" authorized the new "George
McGovern-Robert Dole international food for education and
child nutrition program" for the next seven years and
favorably noted that the Canadian International Development
Agency (CIDA) had also decided to provide Canadian dollars
75 million (over a period of three years (2003-2005)) to
support WFP school feeding efforts in five African
countries.
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WFP Policy on Donations of Foods derived from Biotechnology
revisited
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7. The Board discussed a paper that further outlined WFP
policy on donations of foods derived from biotechnology.
(This policy was initially discussed at the October 2002
Board session - refs A and B.) The Director-Generals of the
World Trade Organization (WTO),Food and Agricultural
organization (FAO),and World Health Organization (WHO) -
were independently consulted on this paper and expressed no
objection to it. Note: treatment of WHO's position is
further discussed ref C. End note. This paper reaffirmed
that WFP essentially acts as a broker in food aid shipments,
with the policies of the governments involved prevailing. In
order to function, WFP must operate on the assumption that
governments exercise due diligence in setting national
regulations with regard to exports and imports of food.


8. Despite considerable "posturing" from several European
donors, the Board was generally satisfied that WFP's job was
to "provide food and not food policy" to needy people.

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Ambassador Hall's intervention on Biotech food
-------------- -


9. Ambassador Hall highlighted the following for the WFP
Executive Board:

-The U.S. position on foods derived from biotechnology is
clear. People around the world have been eating biotech food
for years. Biotech foods help nourish the world's hungry
population, offers tremendous opportunities for better
health and nutrition and protects the environment by
reducing soil erosion and pesticide use. This position is
fully endorsed by the recently issued joint biotech report
from the national science academies of the United Kingdom,
the United States, Brazil, China, India, and Mexico;

-All of the food donated by the United States has passed our
rigorous food safety and environmental impact testing, and,
in fact, is eaten daily -- and has been for years -- by
millions of Americans;

-Our common goal should be to work closely with all food-
insecure countries to better understand the facts and
science of biotech foods so that misunderstandings and
misperceptions do not lead to delays and blockages which
endanger the lives of millions of people;

-On the Cartagena Protocol, USDEL agreed fully with WFP's
statement that World Food Program "does not have the legal
mandate to impose unilaterally any of the Protocol's
provisions upon transactions involving other parties."


10. In conclusion, Ambassador Hall quoted former President
and Nobel Laureate Jimmy Carter: "if imports like these
biotechnology crops are regulated unnecessarily, the real
losers will be the developing nations. Their countries could
suffer for years to come. It is crucial to reject the
propaganda of extremist groups before it is too late."

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WFP Financial Issues
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11. WFP reviewed its present financial management practices
(finding them cumbersome) and recommended that individual
contributions be controlled at the project level rather than
the individual cost component level to permit increased
flexibility of resource use under existing policies.
Enhancing the number of emerging donors through twinning was
mentioned, as was tapping private sector resources using as
a framework the "Guidelines on Cooperation between the
United Nations and the Business Community" launched by the
UN Secretary-General in 1999. Given accelerating emergency
needs, revisions to the Immediate Response Account and the
General Fund were touched on - with concrete proposals to be
presented to the October 2003 Board. Finally, a strategy for
regularizing Host Government Cash Contributions (GCCC) was
propounded.


12. The Board viewed the Financial Policy review and the
Comprehensive Financial report as works in progress and
supported the incorporation of future reviews of these
policies in WFP's strategic and management planning
processes (which are slated for presentation at the October
2003 Board).


13. USDEL commented that the Secretariat's recommendation
that individual contributions be controlled at the project
level rather than the individual cost component level,
needed to be taken up on a case-by-case basis with
individual donors. U.S. law governing food aid donations is
quite precise on what budget items funds can be spent. USDEL
suggested that there needs to be more aggressive monitoring
of budgets at all levels within WFP and that Headquarters
should institutionalize monthly budget reviews of land-side


transport, shipping and handling (LTSH),direct support
costs (DSC) and other direct operational costs (ODOC)
requirements and actual expenditure for each country office.
Further, USDEL looked forward to the further elaboration of
WFP's strategies on twinning and "retooling" (modernization)
of its cash advance facilities, such as the Immediate
Response Account (IRA) and the Operational Reserve. The
formidable challenge remains whether and where additional
funds can be found to meet the needs of sharply rising
humanitarian aid requirements. Finally, on the issue of Host
Government Cash Contributions (GCCC),USDEL noted that WFP
management has seriously neglected this vital source of
program funding, where developing countries need to pay
their "fair share" of program support.


14. On the vital issue of sizable cash balances, USDEL
pointed to a comment by the UN's Advisory Committee on
Administrative and Budgetary Questions (ACABQ) (February
2002),which underlined that, to the extent that WFP carries
out its mandate efficiently, there should be no accumulation
of sizable cash balances. USDEL further commented that WFP
management had assured us that these balances were not in
fact U.S. donations, so that USDEL was making its
intervention on behalf of all WFP's cash donors.

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Other issues
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15. The Board approved the WFP office of evaluation work
plan for 2003-2004 and took note of an information paper on
Results-Based Management. Note: Michael Usnick (Amcit) has
been put in charge of the Result-Based Management portfolio.
End note.


16. WFP presented its strategy paper on "Food Aid and
Livelihoods in Emergencies." The proposed strategy notes
that while saving lives is WFP's first priority in an
emergency, it must also focus on how to accommodate
livelihoods into its emergency operations (EMOPs),mitigate
disruption to the local economy, and strengthen partnerships
with FAO, UNHCR, UNICEF, other international organizations
(IOs),and non-governmental organizations (NGOs). Donor
remarks were largely positive, calling upon WFP to
coordinate more effectively with its partners and host
governments, building local capacity, and cautioning from
the USG reference "targeting" efforts.

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Comment
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17. Through May 2003 contributions to WFP total USD 1.4
billion, compared with USD 631 million at this time last
year. Canada's stepped up contributions this year -already
USD 65 million - have reversed a half-dozen years of
declining support. The Russian Federation announced a first
time ever cotribution of USD 11 million (in cash) - USD 10
mllion for DPR Korea and USD one million for Angola.While
the Iraq and Afghanistan food assistance oerations for the
present appear under control, the situation in the Horn
(Ethiopia and Eritrea) remains exceedingly worrisome. All in
all, needs have reached unprecedented levels (from 3.7
million tons delivered in 2002 to 7.7 million metric ton
requirements estimated for 2003). A number of European
donors question how WFP will be able to cope with huge
volume increases, while at the same time remaining focused
on executing programs aimed at lessening the recurrence of
such crises in the future. 2003 is proving to be a daunting


year with WFP already extended to the maximum, especially
with "worst case" scenarios currently unfolding in both the
Horn and parts of West Africa. Hall
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2003ROME02620 - Classification: UNCLASSIFIED