BULGARIA REQUEST FOR FY06 USDA PL-480 TITLE I

UNCLAS SOFIA 001565

SIPDIS


DEPT FOR EUR/NCE - W.SILKWORTH, EB/TPP/ATT
USDA FOR FAS/EXPORT CREDITS/ M.CHAMBLISS/
R.CROUSHORN/ K.NAYLOR

E.O. 12958: N/A
TAGS: ECON EAGR EAID BU
SUBJECT: BULGARIA REQUEST FOR FY06 USDA PL-480 TITLE I
FOOD FOR PROGRESS GRANT

REF: SECSTATE 139203

This is a joint USDA / STATE / USAID Cable

Post requests a USD 4 million PL-480 Food for Progress
grant for FY06 to assist the agricultural sector to
compensate farmers and other agricultural producers for
losses caused by recent heavy flooding and to provide
support for the spring planting in 2006. Funds also
will be used to develop irrigation and flood control
systems aimed at preventing another such catastrophe as
described in ref cables....

FAS, STATE, and USAID fully support this proposal which
will provide 15,000 MT of Soybean Meal to the Bulgarian
Ministry of Agriculture to implement the above
mentioned projects.

Following is the proposed Plan of Operation in the
format requested by USDA/Export Credits.

Plan of Operation, FY2006


1. Name and Address of Applicant

Government of Bulgaria

Contacts:
Brian Goggin
Agricultural Attache
Sofia Bulgaria
Telephone: (3592) 939-5704
Email: Brian.goggin@usda.gov


2. Country of Donation

Bulgaria


3. and 4. Kind and Quantity of Commodities Requested
and Delivery Schedule

Commodity Use of Quantity Package Delivery at
Commodity Metric Size U. S. Port
Tons (MT)
Soybean Meal Monetization 15,000 Bulk February 06

TOTAL Monetization 15,000 Bulk February 06


5. Program Description

(a) Activity Objectives

The proposed monetization program will address the need
to increase agricultural productivity and improve the
competitiveness of the Bulgarian agricultural sector.
The 15,000 MT of soybean meal will be monetized and
local proceeds estimated at $4 million will be used to
compensate farmers and other agricultural producers for
losses caused by floods; to provide certified seeds for
the spring planting in 2006; and to improve watershed
management infrastructure such as improved dikes, dams,
irrigation canals, retention walls, and erosion control
in order to prevent crops and livestock losses caused
by reoccurring floods. The project will be managed by
Bulgarian Ministry of Agriculture (MoA) jointly with
FAS in-country staff.

Bulgaria has many farmers who intensively cultivate
small plots of land as their only source of income and
sustenance. Hundreds of thousands of these small
farmers cultivate plots located along the flood plains
and are therefore susceptible to heavy rains and
flooding. During the summer of 2005 flooding caused
the destruction of hundreds of thousands of acres of
cultivated land as well as displacing 70,000
residential and public building; damaging 1,000 km of
roadways, more than 210 critical bridges, over 165
water pipes, demolishing 626 supporting walls,
activating 718 landslides, as well as causing billions
of dollars in damage.

Monetized proceeds will primarily be used to compensate
farmers for lost income and to help repair damaged

small scale irrigation infrastructure and to improve
the overall management of flood control systems. The
project will improve flood control infrastructure
thereby protecting the homes, lives and livelihoods of
thousands of low-income Bulgarian peasants. Solutions
will focus on simple, low-cost flood prevention and
control infrastructure to recover lost land and to
protect future crops from flood related damage.

In addition to compensation and flood control measures,
this project will provide support for
distribution and purchase of certified planting seeds,
primarily for corn and sunflower, for the spring
planting in 2006.

The proceeds from the monetization will be managed by
the Agricultural Attache, US Embassy and the Minister
of Agriculture or their designees. The specific use of
funds (such as target beneficiaries, best methods of
flood control, selection of contractors, etc.) will be
approved upon consensus by the Agricultural Attache and
the Minister of Agriculture and funds will be disbursed
only after joint signatures by representatives of both
U.S. and Bulgarian governments.

The duration of the project is 18 months following the
monetization of the commodities.

(b) Method of Choosing Beneficiaries

Beneficiaries will be farmers or other agricultural
producers who suffered the most severe damage in
regions of Pazardjik, Plovdiv, Vratza and Pleven.
These regions are widely known and have historically
suffered damage during years of above average rainfall.
The most susceptible land is owned by the most
vulnerable populations. Simple low-cost control and
conservation methods will advance agricultural
productivity and protect and maintain rural incomes.

Benefiting villages and residents will be selected
based on need, vulnerability and potential impact.
Beneficiaries will be residents of the poorest and most
vulnerable communities that posses the highest
potential for a successful project intervention.

(c) Program Administration

The Bulgarian Ministry of Agriculture, with support and
oversight by FAS Office, will receive and monetize the
commodities and create a special project account for
the funds generated from the sale of the soybean meal.
MoA will be responsible for the overall coordination of
the project with representatives of US Embassy, MoA,
and office of Agricultural Attache.

The Ministry of Agriculture will provide personnel
dedicated to managing the project. MoA staff in
regional offices will provide logistical and technical
support needed for implementing the project, while
office staff in Sofia will provide clerical, financial
and logistical support services.

(d) Activity Budgets

The estimated $4 million in monetized proceed will be
used primarily to cover the compensation of farmers; to
purchase planting seeds and plant protection chemicals
for the spring planting and
to cover the costs of construction materials, equipment
and machinery. MoA will contribute human resources
dedicated to managing and administrating the project
and technical resources in the area of identification
of farmers who need compensations; and in the area of
flood control, irrigation and crop production. FAS
will support the project with in-country staff that
will coordinate and oversee implementation.

All costs for this program not covered by resources
provided by the Commodity Credit Corporation will be
borne by the Government of Bulgaria.

(e) Recipient Agency

The recipient agency is the Bulgarian Ministry of
Agriculture (MoA). Use of all proceeds will be
decided by a joint decision of the representatives of
US Embassy, MoA, and office of Agricultural Attache.
An attempt will be made to reach a consensus regarding


the use and distribution of program funds, however if
such consensus can not be reached in a reasonable
timeframe, the US government retains the right to
determine the use of the proceeds. All decisions
rQarding the use of project funds will be recoQed and
must be approved in writing. Funds will be disbursed
for the special project account only with joint
signatures from Agricultural Attache and Ministry of
Agriculture.

GOB will adhere to its laws in allocating, disbursing
and auditing use of project funds. The distribution
and use of funds will also include a procurement of an
independent professional audit. US PVOs, as well as
local NGOs, and contractors will be eligible to receive
funds or bid on contracts. GOB will require recipient
organizations or sub-contractors to demonstrate
experience and accountability in order to be eligible
for a sub-contract.

The recipient agency has extensive experience in
monetization. Given the fact that MoA has committed to
this project they will facilitate the process by
providing the necessary permits and waivers to allow an
effortless and cost-effective importation and
monetization of the commodities.

(f) Governmental or Nongovernmental Entities

The Ministry of Agriculture will participate in the
project. The project will provide an opportunity to
compensate farmers for losses and prepare them for
upcoming crop year. In addition, small scale flood
control and irrigations projects will be implemented to
improve agricultural production. The project will rely
on US expertise and will serve as a model for further
GOB interventions in other aspects of US-Bulgarian
cooperation.

Sub-contracts will be awarded on a competitive basis.
International PVOs, as well as local NGOs, will be
eligible to bid on different aspects of project
implementation such as community organization, flood
conservation, construction, or agricultural education.

(g) Method of Educating Consumers

Upon approval of the donation GOB will publicly
recognize the USG for the assistance in the mass media
and will post banners and signs on project worksites
acknowledging the USG as the source of the donation.
Distribution of certified seeds and plant protection
chemicals for the spring planting, as well as
compensation to farmers will be recognized by the MoA
press and communication to media and at major
agricultural events/trade shows. Individual works,
such as dikes, recovered farm land, and irrigation
canals will be inaugurated in specific communities and
the press will be invited to report on the outcome of
the project and report the USG as the source of the
donation.

(h) Criteria for Measuring Progress

Timeframe For Food
Activity Implementation Tonnage
(months from (MT)
monetization)
Public Tender to January 2006 ---
sell Commodity
Ship Commodity March 2006 15,000
Identify target Nov. 05 - March ---
communities 2006
Implement project March 06 -June. ---
07
Evaluation, June - Sep. 07 ---
reporting
Project end Date September 30, ---
2007


6. Use of Funds or Goods and Services Generated

(a) Quantity and Type of Commodities

Commodity


Soybean Meal
TOTAL


(b) Impact on Other Sales

There will be no negative impact on commercial sales.
Bulgaria is a net-importer of Soybean meal with nearly
all of the imports coming from South America. Given
the damage to crops caused by the 2005 floods and other
factors, Bulgaria faces a shortage of vegetable protein
for both human and livestock consumption.

The importation of 15,000 MT will not affect normal US
exports nor displace local production. The Ministry of
Agriculture has expressed both their permission for the
importation of this commodity as well as their strong
desire for this commodity based on the aforementioned
shortage of vegetable protein. FAS/Sofia has analyzed
normal trade patterns and assures that no market
disruptions will occur and no US sales will be affected
from the importation of the requested commodity. ASA
has been consulted and fully supports the commodity
donation.

(c) Amount of Sale Proceeds Anticipated

Commodity


Soybean Meal
Anticipated Interest Earned*
TOTAL
*Interest earned will be used in program activities;
estimated at 3.5% on unused balance over 12 months.

(d) Private Sector Participation in the Sale of the
Commodities

GOB and FAS have identified and spoken to dozens of
potential buyers willing to participate in a public
tender. Given the vegetable protein deficit that
exists, poultry and animal breeders as well as
importers and producers, have expressed interest in
bidding on the soybean meal. The number of potential
buyers ensures a competitive bidding process that will
yield a competitive price equal to or near market
value.

GOB, with the support and supervision of FAS in-country
staff, will hold a competitive public tender selling
the commodities to the highest bidder(s). The
commodity donation will be announced publicly in
several daily newspapers inviting potential buyers to
participate in an informational meeting where the terms
of reference for the tender will be discussed. The
terms-of-reference will describe the commodity
specifications, import conditions, minimum price,
transportation requirements, obligations of the buyer,
and procedures for the tender.

Monetization will take place at an open bid at Sofia
Commodity Exchange based on the experience generated
from previous USG programs in Bulgaria. The outcome of
the tender will be recorded and the commodity will be
sold to the highest bidder(s). The MoA will support
the sales with technical staff and supervision from its
legal team.

(e) Uses of Sales Proceeds

The proceeds from the monetization of the commodity
will be deposited into a special project bank account
and administered by MoA for uses determined by the
inter-agency committee. The proceeds will go directly
into compensations for farmers; purchasing of seeds and
plant protection chemicals and implementing program
activities aimed at conserving and improving
agricultural production in impoverished communities in
high-risk flood areas.

The cost of managing and implementing the program will
be absorbed by the MoA.

Administrative Expenses and Internal Transportation,
Storage and Handling (ITSH)