LRP. What is it? Who is promoting LRP initiatives? How’s it being used? What are the advantages?...

LRP

What is it?Who is promoting LRP initiatives?

How’s it being used?What are the advantages?

Challenges?Examples?

Do No Harm – Food Aid

Potential negative impact of food aid on local markets

• Food aid displaces commercial food sales• Food aid deliveries increase supply faster than they increase

demand, thus depressing the food prices received by producers and traders

• Low prices translate into a disincentive for producers to invest in improved technologies or for marketing agents to bring in commercial supplies or invest in storage and transport capacity

• The receipt of food aid may cause households to reduce their labor supply, discourage household investment in agricultural production and crowd out private transfers and community level safety nets.

Do No Harm – Cash/vouchers

Potential negative impact of cash/vouchers on local markets

• If the increase in demand is not matched by increased supply, prices will increase, affecting both beneficiaries and non- beneficiaries

• Reinforcing non-competitive market structures

Main reasons for LRP

1. Reduce delivery costs, delays and market distortion.

2. Increase procurement flexibility while providing economic opportunities for small farmers/cooperatives.

Mechanisms for Implementation of Local Purchase

TendersVouchers

Cash for WorkVouchers for Work

Food for WorkFood Coupons

Others?

• Cash transfers – the provision of cash to food insecure beneficiaries who lack economic access to food stocks that are readily available in the local markets of the affected country. Key is functioning market system.

• Food vouchers - the provision of vouchers that are redeemable for food to food insecure beneficiaries who lack economic access to food stocks that are readily available in the local markets of the affected country.

History of Local/Region Procurement

• World Food Program

• 2008 Food Conservation and Energy Act orFarm Bill (Authorizing legislation for US food aid)

• USDA LRP Pilot Program

• GAO Study (2009)

• USAID/EFSP Program

CRS Local/Regional Purchases2000-2008

• 20 Countries• Over $9.8 million• Over 22,400 metric tons• Over 114 transactions

Donors: CRS-HQ, USAID/PEPFAR, USAID/OFDAUSDA/FFE, Church of Jesus Christ of Latter Day SaintsVarious CARITAS members, Government of UK (DFID)Government of Ireland, Government of GermanyWorld Bank, MCC, Concern Universal

Recent US Funded LRPfor CRS

• 8 Projects

- Guatemala, Nicaragua, Benin, Burkina Faso, Niger (2), Mali, Afghanistan

• Total value of approximately $18 million

Trends, Current Status of C&V

• Food for Peace– Overall budget: $1.2 billion– LRP, C&V: $300 million (25%)

• ECHO– 2007: 2% food assistance budget on C&V, 12% projects– 2010: 20% food assistance budget on C&V, 42% projects

• WFP– 2009: $54 million in cash and voucher programs– 2010: $123 million in cash and voucher programs

• USDA– LRP Pilot: $60 million over 4 years– LRP and vouchers, no cash

USDA LRP Pilot

• 4 Phases - Study, Guidelines, Projects, Evaluation• $60 Million over 4 years• 3 Goals - Emergency, Development, Do No Harm• USDA LRP Development Interventions

GAO Study – May 2009

• GAO = Government Accountability Office (US)• Why GAO did the study• What GAO found• GAO Recommendations

USAID Emergency Food Security Program (EFSP)

• FY 10/11 Congressional Budget Justification• Request for Emergency Food Security funding• Included LRP – food vouchers/cash transfers

- April 2010 – APS- April 2011 – APS that requested a response with Title II resources, LRP (vouchers/cash) or a combination of both

Comparing Cash and VouchersBenefits of Vouchers•Gives beneficiaries varying levels of choice,

while still having some control over how the transfer is used.

•Vouchers can be targeted within the household, so it can potentially give more decision-making power to females (Sustainability?)

•Ability to learn more about consumer/beneficiary preferences and demand. This information can be used in future programming.

Comparing Cash and Vouchers

Disadvantages of vouchers vis-à-vis cash• Higher administrative costs for vouchers than cash• More decisions on programmatic design, e.g.

number of vouchers/distribution, voucher denominations, criteria for and number of participating vendors

• Vouchers can be exclusionary, particularly with respect to small vendors that are difficult to include in voucher schemes. Do no harm principles.

• Tradeoff between increased consumer benefit/vendor inclusion and administrative costs,

Delivery Mechanisms

• Cash/paper voucher distributions• Microfinance Institutions/Banks• Barcodes• Smart cards• Mobile phones

Opportunities of new methodologies

• Provide more choice and dignity to the beneficiaries that we serve

• Respond quicker and more efficiently• Support local market actors and local production• Integration of emergency food security responses

with longer-term food security programming, e.g. increasing agricultural productivity, linking farmer groups to markets, improving food quality standards, support to small traders and businesses

Advantages of LRP

• Timeliness• Cost• Management• Adaptability to local tastes and conditions• Empowerment of Beneficiaries• Priming Markets for Smallholder Farmers• Link from Producers to Markets

Challenges with LRP• Better Understanding local/regional markets, Market analysis• Food Quality and Safety Issues (Do No Harm)• High Level of Monitoring required• Timeliness in following agency procedures• Unfamiliarity of sellers with agency buying procedures• Timeliness of delivery• Market distortion concerns• Local government regulations/taxes• Price fluctuations/budgeting• Limited supply base (food insecure areas)• Co-ordination with other agencies in the market

Food Quality and Safety Testing

• Testing of Mycotoxins - Lab or field test? Cost?• Conform to laws and standards in each country

at minimum• Only 14 African countries have standards for

aflatoxins• Moisture meters/REVEAL tests for outlying areas• Capacity of National Laboratories• WFP’s Blue Box (P4P)

Group Exercise – Case Studies

• Context – Why do we need a response?• Target beneficiary group(s)• Size of grant/procurement (MT)• Mechanism used for response

(cash, voucher, FFW, etc.)• Results/Sustainability• Other important elements to note?

Case Study 1 – CRS Guatemala

• Response to drought and tropical storm Agatha• 3,000 HH / 18,000 Individuals (EFSP)• Corn, Black Beans, Incaparina• Semi-competitive bids accepted from farmer-

based and commercial organizations• Agreement signed 9/20/2010• First distribution to beneficiaries in Santa Rosa

on 10/25/2010

Case Study 2 – Burkina Faso

• Response to food insecurity among school aged children in target zone (Development)

• Students, Producers (Coops and CFGs), PTAs• One year pilot for $985,965 (USDA)• Vouchers, Tender• Cost and Time efficient, increased capacity of

local producers, boost in local economy• Video

Case Study 3 – CRS Niger• 1st voucher program in Niger (USAID EFSP)• Followed up by USDA LRP Emergency program• Total of 300,000 beneficiaries and $8 million• 25% Female Head of Household• Vouchers for 6 commodities (added gari and

sugar in second project) for approved vendors• Wholesalers and Retailers• Consumers not covered under voucher program

may have paid more due to delays?

Cost Comparison – CRS MALICommodity PRICE/Kg - $ MT Cost

Locally Procured

Millet $0.41 35.14 $14,522

Rice $0.82 2.5 $2,060

Cowpeas $0.74 7.53 $5,593

TOTAL $22,175

Imported from US

Corn Meal $1.88 35.14 $66,063

Rice $2.26 2.50 $5,650

Split Peas $2.67 7.53 $20,105

TOTAL $91,818

Cost Savings $69,643

Percent Savings 76%

Cornell Component

• Benefit of partnership between development organizations and universities

• Lead role in developing tools for data collection and analysis

• Increased evidence base• Better data to analyze impact/raise awareness

of issues• Improved advocacy efforts for LRP

Focus of Cornell Analysis

• Pilot tools for monitoring and collection of market price data that enable uniform data processing and analysis that will ensure high quality results reporting, review and analysis of overall results for all programs.

Price Impact Timeliness Cost-Effectiveness

Recipient Satisfaction

Tools to Design Interventions

• MIFIRA – Market Information and Food Insecurity Response Analysis (Cornell)

• EMMA – Emergency Market Mapping Analysis• EFSA – Emergency Food Security Assessments• LEGS – Livestock Emergency Guidelines and

Standards• SSSA – Seed System Security Analysis

LRP Leaning Alliance

LA Goal

• To coordinate monitoring of price data to ensure that LRP programs do not negatively affect local and regional markets, and to coordinate data analysis among the various programs.

LRP LA Main Activities

• Trainings (online and regional)• Database development• Database management• Data analysis• Reporting

LRP LA Meeting Nairobi

• Closer Look at Global Indicator Framework (monitoring, pre/post procurement, post

distribution indicators)• Future activities• Advocacy Day in DC for partners/donors• Presentations to influence next Farm Bill

LRP – Way Forward

What could be next steps for advancing this topic?Examples: • LRP Programs have positive food security impacts

for the duration of the program. But how can we improve the sustainability of these impacts?

• Strengthening the evidence base• New donor policy• Task force/Working Groups

Recommended LRP Reading• GAO Study (May 2009)• CARE White Paper (2006)• WFP’s “Revolution: From Food Aid to Food

Assistance”• 2006 OECD Study “The Development

Effectiveness of Food Aid: Does Tying Matter?”• Michigan State University – “Local and

Regional Food Aid Procurement”