USAID/NICARAGUA CONCURRENCE CABLE ON

UNCLAS SECTION 01 OF 03 MANAGUA 002096

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
SAVE THE CHILDREN FEDERATION (SCF) FY 2006
DEVELOPMENT ASSISTANCE PROGRAM AMENDMENT

Summary. SCF 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 SCF's
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 4,230 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 5,030.

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. SCF has
170 beneficiaries under this component who had
sales that totaled US $ 144,974.18 in FY 2004.

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 SCF DAP will
consolidate efforts directed to increasing
incomes and reducing the incidence of
malnutrition in up to 4 municipalities in the
Department of Chinandega. 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.

3.3. Procurement. SCF is proposing to buy one
pick up for the two year extension. SCF and
the other Title II partners have a copy of
STATE 037732 MOTOR VEHICLE SOURCE ORIGIN
UPDATE. These vehicles will be used as part of
the DAP interventions in the areas of
agriculture, health and logistical transport of
commodities. The Mission concurs with SCF's
request.


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 SCF
included threshold and non threshold issues.
Threshold issues focused on the following
topics: Counseling under the Health component,
ITSH funding, Sustainability plan for the micro
finance component, and Exit strategy. Non
threshold issues focused on the following
subjects: Transportation phase out plan,
collection and packaging centers
sustainability, Funding levels and preparation
of a color map.

4.1. Responses to threshold issues. SCF's
responses to USAID Mission and USAID Washington
threshold issues are: SCF presented its plan
for addressing the issues raised by the Midterm
evaluation regarding counseling under the
Health component; SCF is no longer requesting
ITSH funding; and SCF described how its exit
strategy will be implemented according to
timelines set for that purpose. The Mission
feels that the above mentioned issues were
properly addressed by SCF.

4.2. Responses to non threshold issues. SCF's
responses to USAID Mission and USAID Washington
non threshold issues are: SCF explained how it
will phase out its transportation strategy; SCF
detailed how the packaging and collection
centers will be sustainable; SCF adjusted its
annual budgets and included a color map also.
The Mission feels that the above mentioned
issues were properly addressed by SCF.


5. Micro credit sustainability plan. Sixty
days after the Transfer Authorization is
signed, SCF and the other Title II partners
will submit the micro credit sustainability
plan.


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


9. Funding level recommendation.
USAID/Nicaragua recommends that the FY
2002-2008 SCF 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 660 650
Vegetable Oil 4Lt.can 168 160
Long grain rice 325 390
Lentils 207 260
Cornmeal 99 50
Total Metric Tons 1,549 1,510
NS Wheat (monetization) 6,990 6,990

Section 202 (e) Level for FY 2006: US Dols
188,349


10. Environmental Compliance Documentation:
SCF 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 SCF 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 SCF 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