USAID/NICARAGUA CONCURRENCE CABLE ON CATHOLIC RELIEF SERVICES (CRS) FY 2006 DEVELOPMENT ASSISTANCE PROGRAM AMENDMENT

UNCLAS SECTION 01 OF 03 MANAGUA 002093

SIPDIS

AIDAC

AID FOR PEBALAKRISHNAN/FRVIGIL/AMOUSHEY, DCHA/FFP/DP,
RKAHN, LAC/CEN, AWAHAB, LAC/RSD

E.O. 12958: N/A
TAGS: EAID
SUBJECT: USAID/NICARAGUA CONCURRENCE CABLE ON CATHOLIC RELIEF SERVICES (CRS) FY 2006 DEVELOPMENT ASSISTANCE PROGRAM AMENDMENT

Summary. CRS submitted the second phase of the
Development Assistance Program (DAP) amendment
to USAID Nicaragua on March 28, 2005. The
first phase of the DAP amendments for Nicaragua
incorporated the Coffee Relief Activity into
the DAPs. For the second phase, the partners
are proposing programmatic adjustments to the
DAPs including a request for a two year
extension. USAID Nicaragua concurs with CRS'
request to extend the program until 2008 for
the reasons listed below. End Summary.


1. DAP extension and program adjustment for
phase two of the DAP amendment. With the
results and recommendations from the Food Aid
Program and Policy Assessment for Nicaragua,
the credit component review and the Nicaragua
Title II program mid-term evaluation, the Title
II Cooperating Sponsors will make adjustments
to the DAPs to target the most vulnerable
groups through an efficient and effective
program and extend the program until 2008 to
coincide with USAID/Nicaragua's Country Plan
and the Central America and Mexico Regional
Strategy.


2. Program design and progress to date. The
Nicaraguan Title II food aid program focuses on
increasing food availability, food access and
food utilization. The main components are to
link small farmers to markets (Agriculture) and
to improve maternal-child health and nutrition
(Health). There are four PVOs implementing the
program in Nicaragua: ADRA, CRS, PCI, and SCF.
All of them carry out both agricultural and
health activities.

2.1. Agricultural activities focus on
increasing the production of high-value, non-
traditional crops, basic grains production,
increasing higher levels of marketing and
processing of products and promoting
irrigation, storage, reforestation and soil and
water conservation practices. As of September
2004, there were 3,474 farmers working with the
agricultural team in new technological
activities such as production of non-
traditional crops using certified seeds,
irrigation systems and greenhouses.

2.2. Health activities focus on integrated
management of common illnesses, improving
prenatal and postpartum care and strengthening
the relationship between target communities and
the local government health facilities. The
number of beneficiaries under the MCH component
for FY 2004 is 11,652.

2.3. The productive component of the DAP is
helping to increase the competitiveness of
smallholder farmers given the challenges and
opportunities posed by the US-Central American
Free Trade Agreement (CAFTA). As the majority
of problems facing smallholder producers lie in
the marketing system, increasing the
competitiveness of small holder farmers by
linking smallholder production to market demand
is essential preparation for CAFTA. CRS has
3,474 beneficiaries under this component who
had sales that totaled US $ 2,187,642.27 in FY

2004. CRS implements the program through local
partners FIDER and CARITAS, which has been
effective because the results are excellent.

2.4. The marketing component complements the
agriculture activities by facilitating linkages
between farmers and major national and
international buyers. Furthermore, the Title
II partners promote the formation of
cooperatives so that the farmers sell at higher
prices and volumes and to ensure sustainability
once the DAPs come to an end. Higher prices
and income improve household food security by
allowing beneficiaries to be able to buy their
own food supplies.


3. Program extension. The CRS DAP will
consolidate efforts directed to increasing
incomes and reducing the incidence of
malnutrition in up to 101 communities in the
Departments of Matagalpa, Estel and Jinotega.
In addition, it will aim at strengthening local
capacities, reducing resilience to shocks and
preparing small-scale farmers to compete in
regional and international markets.

3.1. The DAP amendments for the Nicaraguan
Title II programs include the following: 1) A
two-year extension in the program with
additional funds (FY 2007-2008); 2)
Improvements in the program to broaden their
impact and ensure sustainability; 3) 202 (e)
funds request; and 4) Development Assistance
(DA) funds request in FY 06.

3.2. Regarding the DA funds request in FY 06,
the Mission will modify the Title II partners
Transfer Authorization (TA) to create a Hybrid
TA. The purpose is to enhance the agriculture
and marketing components should a need arise to
scale up efforts to assist small-scale farmers
as a result of the passage of CAFTA. The
Mission is in favor of having a Hybrid TA
because it will provide flexibility for the
Mission to add DA funds to the DAP program in
the remaining fiscal years. This is subject to
funds availability.


4. Issues letters. The issues letters were
sent by FFP Washington so that the partners
could clarify or respond to questions raised
after the second phase of the DAP amendments
were received. The letter sent to CRS included
threshold and non threshold issues. Threshold
issues focused on the following topics: DA
mission funding, Micro finance sustainability
plan, counseling under the Health component,
Gender strategy and 202 (e) funding. Non
threshold issues focused on the following
subjects: Exit strategy under the Health
component, exit strategy for the packaging and
collection centers, disaster management
strategy capacity and plan, detailed budget,
and the use of SODIS, a water purification
method. The training for the SODIS method is
easily implemented and low cost.

4.1. Responses to threshold issues. CRS's
responses to USAID Mission and USAID Washington
threshold issues are: CRS is requesting
$250,000 in DA funds to strengthen the
agricultural component; CRS described how they
will address the recommendations from the DAP
Mid Term Evaluation in regards to counseling
under the Health Component and in the Gender
strategy; and CRS revised their annual budgets
to be consistent with FFP policy. The Mission
feels that the above mentioned issues were
properly addressed by CRS.

4.2. Responses to non threshold issues. CRS's
responses to USAID Mission and USAID Washington
non threshold issues are: CRS explained how
they will carry out their exit strategy for the
Health component; CRS made clear how they will
implement the exit strategy for the community
packaging and collections centers; and CRS
illustrated their disaster management strategy
and capacity to carry it out. The Mission
feels that the above mentioned issues were
properly addressed by CRS.


5. Micro finance sustainability plan. Sixty
days after the Transfer Authorization is
signed, CRS and the other Title II partners
will submit the micro finance sustainability
plan to USAID/Nicaragua and to FFP/Washington.


6. Bellmon Certification. The Bellmon
Analysis was updated in January 2005. The
Mission Director certified that there will be
adequate storage and transportation available
in Nicaragua at the time of arrival of Title II
commodities to prevent the spoilage or waste of
these commodities. The Mission Director also
certified that the distribution or sale of
these commodities in the case of Title II
monetization will not result in a substantial
disincentive to, or interfere with, domestic
production or marketing in Nicaragua.


7. Usual Marketing Requirement (UMR). The UMR
for wheat products to Nicaragua has been
established at 48,300 metric tons (MT) and the
maximum for U.S. programming at 101,000 metric
tons (MT). Under the joint monetization
arrangement, ADRA, CRS, PCI, and SCF currently
plan to monetize a total of 27,050 Metric Tons
(MT) of Northern Spring (NS) wheat in FY 2006
to fund the activities proposed in their DAPs.


8. Cooperating Sponsors Capacity. CRS has
demonstrated adequate technical, financial and
managerial capability to design, implement and
monitor the FY 2002 - 2008 DAP. The DAP
explains how CRS' headquarters, international
and regional personnel will adequately backstop
CRS/Nicaragua during the implementation of the
DAP.


9. Funding levels recommendation.
USAID/Nicaragua recommends that the FY 2002 -
2008 CRS Title II DAP be funded in FY 2006 at
the following levels (Tonnage and section 202
(e) levels):

Commodities are in Metric tons as requested in
Lines 8 and 17 of the FY 2006 Annual Estimate
of Requirements (AER) of the DAP.

Commodity Line 8 Line 17
Corn Soy Blend (CSB) 877 730
Vegetable Oil 4Lt.can 155 140
Long grain rice 270 250
Lentils 270 260
Total Metric Tons 1,572 1,380
NS Wheat (monetization) 7,320 7,320

Section 202 (e) Level for FY 2006: US Dols
180,000


10. Environmental Compliance Documentation:
CRS submitted the following documents as part
of the Environmental Appendix: Environmental
Compliance Facesheet; Pesticide Evaluation
Report and Safe Use Action Plan (PERSUAP);
Title II Environmental Status Report Facesheet;
and Environmental Monitoring Plan. The Mission
has reviewed and cleared this Environmental
Appendix.


11. Host Country FFP Agreement. The Mission
Director certifies that CRS can satisfactorily
operate a Title II program in Nicaragua in the
absence of a host country Food for Peace
Agreement. The Mission Director also certifies
that the commodities brought in under the Title
II program for direct distribution will be free
from duties and taxes, and the interests of the
USG can adequately be looked after and
protected.


12. USAID/Nicaragua has reviewed the CRS DAP
amendment and finds it to be consistent with
the food security needs of Nicaragua,
USAID/Nicaragua development priorities, and
USAID's Food Aid and Food Security Policy
Paper. The documentation satisfactorily
reflects guidance from FFP on the submission of
DAP Amendments.
BRENNAN