1. (SBU) The USA Rice Federation in its letter dated July 30
questioned the "transparency" of World Food Program
procurement tendering practices recommending that
information such as WFP registered commercial vendors,
tenders, awards, purchase prices, and country of origin
should be made public information and made available on
WFP's web site. In its 29 August 2003 response to the USA
Rice Federation, routed through the US Mission, WFP lists a
number of conditionalities and constraints that other donors
place on their cash grants to WFP. In US Mission's view,
both WFP Executive Director Jim Morris and Chief of Staff
Mike Stayton (both American citizens) bring extensive
experience from the U.S. private sector and are very much
focused on improving the organization's business practices.
End summary.



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



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


Text of WFP letter dated August 29, 2003 addressed to
Ambassador Tony P. Hall, U.S. Mission to the United Nations
Agencies for Food and Agriculture, in response to USA Rice
Federation letter dated July 30, 2003


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



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





2. (SBU) Herewith the text of WFP's letter: (quote)

"Excellency, reference is made to your letter dated 7 August
2003 in which you were kind enough to forward the letter
from the President and CEO of the US Rice Federation
regarding the purchases of rice undertaken by the World Food
Programme in the year 2002.

(SBU) As WFP is a voluntarily funded organization, and
strives to maintain the lowest overhead in the UN system at
just 7 percent, WFP must use donor funds as efficiently as
possible. Therefore, in an effort to maximize procurement
efficiency, we tender by invitation only to registered
suppliers who have been pre-screened. In line with standard
tendering practices used by NATO and the OECD, we do not
publish requests for tenders in newspapers or trade
journals.

(SBU) WFP is making every effort to ensure that the
registration of commercial vendors is as open and
transparent as possible. We take the US Rice Federation
comments on this topic to heart and will review our current
registration process and look into ways in which we can make
the registration process easier on the Internet for any
supplier who wishes to register as a commercial vendor with
WFP. In the meantime, we welcome any US food commodity
supplier to approach WFP to be registered as a potential
supplier. We would advise interested suppliers to log onto
WFP's public website (www.wfp.org); under "Contact WFP" and
"Procurement" where they would be directed to send an e-mail
to Procurement@wfp.org, after which they would be sent a
Vendor Registration Package. Once submitted, this
information is reviewed by the Vendor Selection Committee
within approximately two weeks. The supplier is then
subsequently informed if he has been added to the
Procurement Roster.

(SBU) While we try to ensure that the tendering process is
open and transparent, price information submitted by
suppliers is kept confid ential between the buyer and seller,
as is the case in all commercial transactions. This
process, which is highly monitored, is certified by both
internal and external auditors and the Joint Inspection Unit
of the United Nations. We will however, review if more
communication with vendors would be helpful to them and
invite your office to contact our Procurement Branch for HOLMES, EUR/WE,
IO/EDA RBEHREND AND SKOTOK,
E FOR CPENCE
USDA/FAS FOR U/S PENN, RREIMENSCHNEIDER, MCHAMBLISS AND
RTILSWORTH
USAID FOR ADMINISTRATOR NATSIOS, AA/DCHA WINTER, D/DCHA/OFDA
BMCCONNELL, D/DCHA/FFP LANDIS
NSC FOR JDWORKEN


more information.

(SBU) As you are aware, the US is our top donor providing
more than 50 percent of WFP's total contributions, and for
this we are most grateful. In fact, USAID's Food for Peace
Office and USDA are the primary food aid offices within the
US Government and account for roughly 95 percent of the US
contributions to WFP, generously providing in-kind US
commodities to meet humanitarian food needs. What this
means is that for 95 percent of the US contribution, the US
Government directly purchases commodities from US suppliers
to be used for WFP programs. In 2002 for instance, together
with in-kind contributions and international purchases,
81,000 metric tons of rice for US farmers was shipped to WFP
operations all over the world.

(SBU) Many donors exercise varying conditions governing
contributions to WFP. Canada, for instance, which the USA
Rice Federation highlights in the letter, provides cash with
the condition that the funds be used to purchase commodities
in Canada only. While this is essentially an in-kind
contribution, when recorded, it appears as a cash
contribution. This also explains why Canada appears as the
largest recipient of commodity awards. Moreover, our donors
also indicate conditions on the use of cash in other ways.
For instance, many donors like the European Union, specify
that their cash donations are to be used either for
international purchases from European Producers, or for the
local or regional purchase of commodities such as rice, if
the region for which it is ultimately intended is a rice
producing area. It is widely believed that local purchases
foster the agricultural sector while maximizing the cash
contributions received, resulting in both timely and cost
effective purchases as it substantially reduces the
transport time and cost as compared to importing from more
distant areas. To put this into perspective, in 2002, WFP's
total contributions amounted to U.S. dollars (USD) 1.8
billion. Of this, only USD 307 million were made available
for commercial food purchases, and for the reasons mentioned
above, 66.5 percent (in value terms) of WFP's total
purchases were for commodities originating in developing
countries.

(SBU) In terms of WFP's procurement of rice in 2002, the
amount of rice procured represented 9 percent of the overall
1.5 million metric tons (mts) of various food commodities
purchased by the Program. Local purchases of rice amounting
to 46,649 mts were undertaken in 16 different countries, the
three largest purchases of which occurred in Nepal, Myanmar
and Cambodia. A second tranche of 46,819 mts was the result
of a directed contribution whereby the donor specified the
procurement modalities. The remainder of 50,884 mts was
procured as a result of international or regional tenders,
which were concluded as follows:

(SBU) Origin: Destinations:

-India (24,146 mts rice) - Bangladesh, Sri Lanka, Indonesia,
Yemen, Palestinian Territories;
-Pakistan (12,483 mts rice) - Iran, Iraq, Palestinian
Territories, Congo, Djibouti;
-Thailand (7,098 mts rice) - Laos, Indonesia, Palestinian
Territories;
-Vietnam (4,137 mts rice) - Indonesia, Palestinian
Territories;
-USA (3,020 mts) - Honduras/Haiti

(SBU) In the spirit of transparency, WFP distributes
information about its procurement activities regularly at
its Executive Board sessions and makes other general
information available upon request to its member countries.
On various occasions, the Procurement Branch has
participated in nationally sponsored trade shows or aid
seminars where it has presented topics on "How to do
Business with WFP".

(U) I hope that the responses above adequately address the
USA Rice Federation's concerns outlined in their letter.
Should the USA Rice Federation have any additional
questions, comments or recommendations, please have them
contact Judith Lewis, Director of our WFP Washington Office
at (202) 653-0010, or e-mail at Judith.Lewis@wfp.org and we
will do what we can to ensure that the US Rice Federation
has the information they need to do business with us.
Sincerely, Michael Stayton, Chief of Staff, Director, Office
of the Executive Director and Administration." End text of
WFP letter.



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


Comment


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





3. (SBU) The U.S. Mission remains very much engaged with WFP
in assisting this vital UN organization to improve its
efficiency and overall effectiveness. Both WFP Executive
Director Jim Morris and Chief of Staff Mike Stayton bring
extensive experience from the U.S. private sector and are,
in our view, very much focused on improving the
organization's business practices. Hall


NNNN
2003ROME04035 - Classification: UNCLASSIFIED