Food Aid Leakage Study Bangladesh

1. Food Aid Leakage StudyBangladesh

2. Study Background - Concerns • Targeted participants of food-assisted interventions do not get their designated share of their entitlement • $ 2 mil. demurrage problem in Mongla during Flood Relief Operations 1998 • Previous studies and monitoring activities were undertaken by different agencies in an un-coordinated manner, and findings, frequentlywere not agreed upon or adopted by GoB.

3. Study Background • Food aid donors in Bangladesh together with GoB decided to undertake a new, joint and comprehensive study. • Decision taken as per GoB commitment at the WFP Executive Board Annual Session in May 2001.

4. Study Implementation • Managed by the joint GoB-donors Steering Committee, co-chaired by ERD and WFP • Coordinated by WFP • Funded by USAID, AusAID, CIDA, EC & WFP • Undertaken by the International Food Policy Research Institute (IFPRI), USA • Started: October 2002; Final report: October 2003

5. Study Objectives • Assess the capacity and efficiency of the food distribution system under targeted food aid interventions in Bangladesh; • Identify problems in the whole food distribution system starting from the entry port to the house of the project participants; • Determine the level of leakages, both in quantity and quality, and other lapses at various stages; • Recommend solutions in order to minimize food leakage.

6. Sub-Studies • Discharge in Harbours • Public Food Distribution System (PFDS) • Distribution at Beneficiary Level

7. Methodology: Analytical Approach Institutional Analyses Comparison of contractual and administrative procedures with actual practice Spatial Analyses Analyses of public procurement, movements, and stock rotation GIS analyses of food balance and nutritional status Behavioral Analyses Quantitative and qualitative assessment of activities of various agents (implementers and end-users)

8. Methodology: Data Collection Interview of stakeholders Survey of Silos, CSDs, and LSDs Survey of various agents in the food distribution channels (stevedores, carrying contractors, millers, UP chairmen, CBOs, etc.) Survey of beneficiary households Compilations and analyses of secondary data Focus group discussions (port and CSD laborers, transport agencies, CNI trainees, etc.) Development of GIS database Spot checking/weighing during ration distribution

9. Major Findings:Sub-Study-1: Discharge in Harbour Average difference between Bill of Lading and Final Discharge Report quantities = 1.55 percent of Bill of Lading quantity ‘unavoidable’ or handling loss less than 0.05 percent, 1.50 percent Pilferage

10. Key Major Recommendations: SS-1 All parties honor the BL quantity as the reference quantity Switch to one single port (Chittagong, more efficient than Mongla)

11. Findings: PFDS Losses (SS-2) Finding 1:Both transit and storage losses have declined substantially in recent years.

12. PFDS Findings: SS-2 Finding 2:Despite under-utilization of storage facilities, the movement of PFDS foodgrain from one local supply depot (LSD) to another LSD within a district is high—17 to 48 percent of total PFDS foodgrain offtake. Very inefficient. Finding 4: Food aid arrivals frequently coincide with GOB’s domestic procurement seasons, leading to higher losses due to more movements and higher stock rotation time. Finding 3:35 percent of the foodgrain distributed to beneficiaries is more than nine months old. Costs of quality deterioration can be substantial: an estimated $19 million for 2001/02!

13. Recommendations: SS-2 • GIS-based commodity movement/tracking system to be developed for key decision-makers. • 2. Revise permissible limits of losses (currently 0.4 percent) downward. • Arrival of food aid during the procurement season can adversely affect PFDS stock management. Therefore, food aid arrivals may be scheduled so that they do not coincide with the GOB’s procurement season.

14. Findings & Recommendations: (Cost & Benefits) SS-2 Finding 5:Given recent changes in the national food policy, such as the closure of the Food-for-Education (FFE) and downsizing of the Food-for-Work (FFW) programs, the current national food security stock level of 800 thousand metric tons appears to be high. Recommendation:Based on current level of PFDS operations (i.e. an annual distribution of about 1.35 million metric tons), the national security stock level may be revised downward from 800, 000 mt to 600 ,000 mt. Finding 6:Confusion - contributions to internal transportation, storage and handling (ITSH)vary widely among donors to GoB. Recommendation: The GOB and donors should consider a uniform cost sharing arrangement to cover ITSH.

15. Sub-Study-3: Distribution at Beneficiary Level WFP-assisted GoB Programmes ($ 67 m. annually, 14 m. beneficiaries over five years) covered: Vulnerable Group Development (VGD) Programme Integrated Food Security (IFS) Programme Food for Asset creation (FFA) Training and Nutrition Center (TNC) Community Nutrition Initiative (CNI)

16. Household survey sites and sample size Beneficiaries surveyed

17. Defining Leakage: From LSDs to Beneficiaries Leakage is defined as the unintended diversion of allocated food for officially listed beneficiaries. The difference between the quantity of VGD and IFS food disbursed and the quantity of food actually received by program beneficiaries measures the extent of leakage in the system. Total leakage has two components: Undercoverage and short ration.

18. Leakage Estimates(TNC uses less than 1% resources)

19. VGD Leakage Estimates: Method Matters

20. Composition of 8.01 % VGD Leakage (weighed rations)

21. Explaining Leakage Estimates All shortfalls from the entitlements cannot automatically be interpreted as leakage: Some of the food received by distribution operators is used to cover legitimate expenses related to transport and handling of foodgrains. Some of the food is distributed on ad hoc basis to the needy poor at distribution centers. Inexact and “Piecemeal” weighing during distribution, partially causing short ration.

22. Involuntary/voluntary Sharing of VGD Rations

23. Recommendations: SS-3 Transportation and handling costs from the LSD to distribution centers should be assessed for each Union. Based on this information, transportation and handling allowances should be allocated in advance to each Union from Dhaka.

24. Recommendations: SS-3 Weighing of rations at distribution sites should be replaced by standard volume measures when distributing wheat rations. The use of clearly calibrated and tamper-proof metal buckets that indicate the amount of grain appears to be the most cost-effective and accurate option in the Bangladesh context.

25. Recommendations: SS-3 Steps should be taken to eliminate sharing practice. Expansion of the VGD programme to cover more beneficiaries. Ensure net weight of commodities excluding the weight of the gunny bag The GOB and WFP to intensify and improve monitoring to be more aware of unauthorized activities in food distribution at the beneficiary level, and take strict disciplinary actions whenever such activities are detected.

26. Follow-up Steps • An Action Plan agreed in the policy dialogue session of 24 July 2003 with funding donors and Steering Comm. • Recommendations and actions are agreed and owned by all stakeholders, particularly GoB. • Joint GoB-donors Steering Committee will continue and follow-up on the implementation of the recommendations and actions – co-chaired by WFP and ERD

27. Follow-up Steps • Special task forces have been formed within line Ministries • A joint Technical Committee has been formed to deal with inter-ministerial and cross cutting issues • A project to test the use of metal bucket for distribution has been piloted in Tangail (all Upazilas) and Rangpur districts (2 Upazilas)

28. Follow-up Steps • All Task Forces and the Technical committee will report to the Steering Committee regularly and the Steering Committee will meet quarterly • An senior international WFP Logistics Officer has been posted to follow-up and assist in the implementation of the recommendations • Progress will be reported in subsequent meetings of the WFP Executive Board

29. Cross-cutting Issues - First time commitment/ownership by GoB to results and agreement on action managed by Steering Group – Gov’t Task Forces are very active; accountability is being forced by the Steering Group and the Task Forces are “rising to the occasion”. - Ministry of Food/ERD, providing main leadership - Task Forces created to review applying recommendations to all food assisted programmes, including Gov’t to Gov’t – • - Major next step is to introduce the reforms to the Gov’t food-assisted programmes, i.e. VGF, FFW, Food/Cash for Education and/or to transfer GoB resources to these monitored, targetted operations, i.e. VGD, Nutrition for Education SFP.

30. Cross-cutting Issues COMPAS – a “real time” commodity tracking system is being set up in WFP office and will eventually expand to Min. of Food to assist Gov’t in managing all food commodities in country. Renewed commitment by Finance Min. to allocate funds to local level for food transport, management, distribution, Losses are low due, in part, to M & E through the system; women’s empowerment at the union level to hold programme managers accountable.

31. Cross-cutting Issues Pre-packing of rations, cuts out skimming, spillage, and short-rationing -> fortification of food aid = zero leakage. Key supporters: USAID, EU, AusAID, CIDA Major Realisation by GoB, now specifically quantified = Long term storage of food commodities leads to quality and nutritional deterioration – better stock management necessary and important!

32. “in service to the hungry poor” - Thanks