As with hundreds of other disasters, both natural and man-made, in the last half century, the World Food Program (WFP) has been the lead player among the myriad international organizations that rushed in or expanded its operations in an effort to get food to victims of the Jan. 12 earthquake in Haiti. The WFP has set up 16 main food distribution points and begun providing food rations to hundreds of thousands of displaced persons without the resources to buy food for themselves. Large-scale emergency operations will continue at least through 2010.
The WFP is very much in the public eye in such times, as it uses its superior capacities in procurement, logistics and distribution to get food and other supplies to where they are needed most, at the same time as it seeks to raise the extra cash contributions from both governments and the private sector to sustain its surge in activities.
What is the WFP and what is its significance to grain traders and millers around the world? A simple answer is that it is the United Nations agency with the mandate to fight hunger, and that it distributes nearly 4 million tonnes of food commodities every year, 90% of which are grain or pulses, or grain-based foods like wheat flour, maize meal or nutritional blended foods.
Donor governments, mainly developed countries, provide both cash and in-kind contributions of food commodities to the WFP, with the proportion of cash increasing in the past decade. Several years ago, Europe switched completely from food contributions to cash, as did Canada more recently.
Consequently, the U.N. agency has steadily increased its procurement of grains and other commodities on open markets. They amounted to 2.8 million tonnes in 2008, boosted by a one-time unrestricted donation of $500 million from the Kingdom of Saudi Arabia as the global food price crisis peaked. Procurement fell back to 2.6 million tonnes in 2009, but that was still up 73% from 1.5 million tonnes in 2002.
As for non-cash contributions, Allan Jury, head of the agency’s Washington, D.C. Bureau, explains, "The U.S. government is WFP’s single-largest donor, providing more than 40 percent of our resources in a given year. Most of the food component is given in kind."
In 2008, U.S. giving was the highest ever, he said, with over $2 billion given out of a total budget exceeding $5 billion.
Despite the U.S.’s record of generosity, the policy of inkind contributions is often subject to criticism from within and outside of Washington. The General Accounting Office, an independent watchdog agency of the U.S. government, has issued reports calling for reform of the practice, since 50% to 75% of the allocated funds for food aid went to transportation costs from the U.S. to distant and remote locations. For the most part, the powerful farm lobby has resisted major changes to U.S. food aid policy, which provides guaranteed overseas markets for a broad mix of commodities from wheat and lentils to vegetable oil and powdered milk.
Nevertheless, Jury notes a gradual shift. "For 2009, 14 percent of the total $1.76 billion U.S. government contribution was cash for the purchase of food and the support of humanitarian operations."
DISTRIBUTION REACHES 100 MILLION
Compared to the combined international trade in wheat, maize (corn) and rice in excess of 200 million tonnes per year, a few million tonnes of grain and other food may not seem like that much. Noteworthy, however, is the immense scope and diversity of both the procurement and distribution of food undertaken by WFP, which has been called the world’s largest humanitarian organization, thanks to its 9,000 employees. Food distributed by the WFP reaches over 100 million people in over 80 countries, at least 60% of whom are children.
Though they capture the attention of the media, emergency operations like those in Haiti, or in the aftermath of the Asian tsunami and the cyclone in Myanmar, represent just one part of the food distributed by the WFP every year. There are about 30 countries where emergency food operations now take place. Generally, they run for three to 12 months but can be extended to 24 months. Often they are in response to slow onset disasters like tropical drought.
A second type of assistance, termed Relief and Recovery, typically targets refugees and returning refugees, and may provide cash or food for those who work to rebuild damaged infrastructure. Such assistance goes no longer than three years. A third area is development aid that often supplies school feeding programs or provides take-home rations to rural girls in order to keep them in school. This aid sometimes also includes nutritional interventions like fortification of staple foods with micronutrients.
Sudan for several years has been the beneficiary of the largest distribution programs. Between 5 million and 6 million people have been fed — over half of them in Darfur, and most of the rest in the previously war torn southern part of the country.
Some donors argue that the WFP should confine itself to emergencies. Nancy Roman, director of public policy, counters, "For every disaster, there is a phase when communities need to rebuild and recover…food and nutrition safety nets, such as those provided by school meal programs, food-forwork programs, or food-for-training programs, provide essential support that is otherwise lacking."
She adds that, "The U.S. and all European countries have safety nets. However, much of WFP’s work takes place in developing countries that do not."
PROCUREMENT IN 92 COUNTRIES
WFP headquarters in Rome, Italy handles the largest purchases of wheat, maize, rice and other foods via international tenders. Regional and country offices have their own tendering systems. These have been strengthened in recent years in line with the "buy local" strategy.
The procurement mix shifts from year to year. In 2009, wheat accounted for 880,000 tonnes, or 34% of the total, and 40% if wheat flour is included. Maize at 19% and rice at 13% follow in importance (see chart on page 36). In 2008, wheat and maize were even at about 610,000 tonnes, or 22% each of the total, with wheat flour and maize meal also even at 4% each.
Ukrainian suppliers managed to win most of the wheat tenders in the last year, shipping 440,000 tonnes of commodities in 2009, tripling its business from the previous year and outranking all other countries in total tonnage sold to WFP. In 2008, South Africa sold 472,000 tonnes, mainly maize, to be the number one supplier.
In 2008, over 1 million tonnes of food, or the biggest share of the food bought for Africa (excluding U.S. food donations) was procured locally or regionally on the continent. WFP procurement is just as spread out as distribution, with food purchases in 92 countries in 2009, up from 85 the previous year. Thanks to this persistent effort to develop local supply chains, logistical costs have gone down in many regions.
Uganda is frequently cited as a success story. Its thriving commercial food sector has been providing over 100,000 tonnes per year of maize meal, wheat flour, vegetable oil and sugar to the WFP. About 60% of the food bought there in 2009 was used locally for displaced persons and domestic feeding programs. Neighboring countries took the rest.
A new global initiative to stimulate buying from smallholder farmers is called Purchase for Progress (P4P). In Uganda, it provided assistance with the creation of a warehouse receipts system which permits farmers to get money for their crop without a forced sale at harvest. The P4P strategy involves direct procurement contracts in 19 countries with over 350 farmers’ organizations that include several hundred thousand members. In its first year, P4P met its goal of buying 40,000 tonnes of food from these groups.
PORTS IN EAST AFRICA
The logistical arm of WFP is a major user of a number of grain ports in East Africa. Kenya’s Mombasa port is the top entry point for WFP commodities. In 2009, it handled 805,000 tonnes of commodities, arriving on 266 vessels, double the volume of just two years before. There are bagging operations for the rice, maize and wheat that comes in bulk. Trucks and trains transport the commodities to distribution points in Kenya, Burundi, eastern Congo and southern Sudan. Commodities are also trans-shipped in smaller vessels to Somalia. Djibouti, to the north, was another major port of entry, handling over 520,000 tonnes in 2009, and Dar es Salaam accommodated 168,000 tonnes.
David McKee is a grain industry consultant providing market research and other services to companies seeking to initiate business in new markets. He can be reached by e-mail at