Examination of Witnesses (Questions 240-256
MR JEAN-JACQUES
GRAISSE
11 JULY 2006
Q240 Ann McKechin: Is that the cost
to transport it from the US to wherever it is needed?
Mr Graisse: That is correct. Most
of our contributions today are in cash, except for the United
States. Canada has changed in the past year or two. Our new donors
tend to give us food. When I say "new donors" I refer
to India, for example. We hope to get contributions from countries
like Malaysia. It would not be surprising if Malaysia decided
to give us vegetable oil, for instance, while India basically
provides us with wheat for high-energy biscuits which are prepared
in that country. The new donors, not the traditional ones, very
often are countries with large food resources that they make available
to the World Food Programme.
Q241 Mr Hunt: When the Committee
visited northern Uganda it met a very impressive World Food Programme
officer called Pedro Amalat who was working in Gulu. We saw first
hand the incredibly valuable work that you are doing there at
the IDP[3]
camps. If you are making emergency food provision, often with
food flown in from the United States for example, how do you make
sure that that does not negatively affect the country's long-term
capacity to support itself and develop its own food security?
Mr Graisse: I should not say it,
but you have given me a wonderful opportunity. Uganda is one of
those countries where basically we procure most of our food in
that country. We are by far the largest customer of Ugandan farmers.
I believe that last year we purchased more than $80 million worth
of food in Uganda, mostly for that country but also for the region.
That is the place where we procure food for delivery to our programmes
both in that country and in the region. Seventy-five per cent
of the food that WFP procures with the cash it receives is purchased
in developing countries for national or regional consumption.
Uganda is an excellent example of a country where we have assisted
farmers to get stable prices for their commodities, because we
tend to buy at times when prices are firm, not when we can depress
the market which is always a danger to be borne in mind when procuring
locally. In Uganda we have bought food consistently over years
and years. In other countries, for example Ethiopia, there have
been years during which we have not imported one grain when the
harvest has been good, whereas two years later we may import 200,000
or 300,000 metric tonnes of food depending on availability. The
notion that food aid creates dependency and distorts markets is
simply a series of myths about food aid which were probably valid
for programme food aid of 10, 20 or 30 years ago. Certainly, they
are not valid for project food aid where you target food distribution
on people who basically do not have the resources to go to the
market. If you look at the IDPs in northern Uganda, these are
people who are totally destitute. Even if one had effective markets
in northern Uganda they would not have the resources to buy the
food. We procure food in the fertile parts of Uganda for delivery
in the north to people who could not have procured it anyway.
We have had a number of evaluations, some carried out by national
governments like Denmark, the United States and France. One was
carried out by four donors two years ago: Norway, Canada, Holland
at the beginning and Germany. That looked at the effectiveness
of our development portfolio to see whether there was any truth
in the distortion of markets and all these elements. That evaluation
arrived systematically at the fact that it had not come across
one case where our food aid had distorted markets or changed price
structures. I mentioned at the beginning that emergency operations
have to be approved jointly by the executive director of WFP and
the director-general of FAO. Many people wonder why on earth the
latter would have to look at emergency operations of the WFP.
The reason is simple: all other operations are reviewed and approved
by the executive board. In time of emergency we can approve the
emergency operations on our own. Why is the FAO's endorsement
necessary? It is for only one reason. The FAO, having looked at
our project proposal, determines that there is no risk to farmers
or agricultural production or any distortion of markets in the
country in which we have the emergency operation. That is the
specific reason for the continued endorsement by FAO of our emergency
operations.
Q242 Mr Hunt: To return to northern
Uganda, you talked a lot about the link between emergency food
provision and development assistance. In northern Uganda, for
example, is there not a risk that the fact you are supporting
so well all the IDP camps provides a disincentive for the Government
of Uganda to resolve the situation politically? It has 1.7 million
people in those camps and to a certain extent it does not have
to worry about them. All of the NGOs are coming in, you are helping
to provide food and so on. Is there a danger that an emergency
can become entrenched rather than properly addressed?
Mr Graisse: It is certainly a
preoccupation in WFP. In the case of Uganda, if the Government
could get rid of the problem it would do so because it is certainly
a heavy burden on President Museveni. We have an incredible situation
involving the Lord's Resistance Army that nobody seems to be able
to handle militarily. The fact that it has been assisted probably
by Sudan for a long time can explain part of it, but it is just
an incredible and miserable situation. President Museveni himself
moved to the north of Uganda for a long time trying to sort it
out militarily, but that has not yet been done. I do not believe
that food aid enabled the continuation of the crisis. One can
look at a number of places where we have had big programmes. Angola
is a country to which we provided massive assistance for years.
We are now shrinking our assistance to the point where basically
we are planning to phase out totally of Angola by the end of 2007.
We believe that by then we should totally close down our operations
in Angola. People talk about dependency on food aid, but how could
we have closed country after country and graduated them from food
aid? The last three countries that we closed down in 2004 and
2005 were Morocco where we had programmes to assist basically
the education of girls in school, the Dominican Republic where
we had basically a school-feeding programme and China which we
closed down in December 2005. In Morocco and the Dominican Republic
the programmes continue and are being taken care of entirely by
the Governments. In China our massive food-for-work programmes
which have brought people from destitution to what they call middle-class
level are another signal that with food aid one can gradually
pull out and eliminate the need for it. We have now demonstrated
it in about 30 countries since 1996 when I joined the World Food
Programme. There is a long list of countries in Latin America,
Asia and even in Africa where basically we have walked away, congratulating
governments for having graduated from food aid. Many of them have
been very gracious; they have given us wonderful farewell receptions
and sent us nice letters to say that they are pleased. One of
them was from Vietnam. They said, "We are happy that you
can leave us and trust that we will remain very good commercial
partners", because we now buy a lot of rice in that country.
Q243 Richard Burden: I should like
to continue the same line of questioning but specifically about
food aid in situations where there is not an emergency. A number
of agencies, our own Department for International Development
among them, increasingly look at things like safety nets and social
protection mechanisms as an alternative to food aid in chronic
situations. In DFID's document about working in partnership with
WFP[4]
it says: "In non-emergency situations food aid should be
provided only after careful consideration. It is usually less
suitable than other resource transfers." You said that you
gave careful consideration to these matters, but do you agree
that it is usually less suitable than other resource transfers?
Mr Graisse: It depends entirely
on the agricultural production in the country itself, the efficiency
of the market and the existence or non-existence of a banking
system. We make some interesting comparisons in Sri Lanka, Georgia
and Malawi. We are now carrying out experiments of cash versus
food. In some cases it works. We have tried it also in Ethiopia,
and I believe that DFID has also tried it in Zambia and other
places. The evidence never points clearly in one direction or
the other. It depends totally on the efficiency of the market.
In countries like Sri Lanka, which has a good banking system,
money is distributed to the beneficiaries in those places where
we previously distributed food and if the market functions very
well and the harvest has been good it works extremely well. The
point is that very rarely does the WFP operate in those types
of countries any longer. The countries where we have only development
activities per se, with no emergency or any protracted
relief, now number about 45 to 50. Those are countries with a
GNP of less than $900 where the stunting of children under five
is above 25%. These are fairly extreme cases. In many of those
countries food is still the best modality because of the dire
situation. But if one talks about middle income countries with
well functioning markets unquestionably there is no need to bring
your own food. We are trying various things. Immediately after
the tsunami in Sri Lanka there was plenty of rice available in
the market. We stopped including rice in our food basket and replaced
it with cash because people could buy rice locally; we did not
have to do it ourselves and distribute it. We are trying experiments
of this type whenever we can. The debate is very much alive in
WFP and partners like Oxfam, IFPRI and many other organisations
with an interest in food aid.
Q244 Richard Burden: Referring to
your last point, I should like to ask a supplementary question.
Clearly, you have a lively debate within WFP about these assessments,
but in relation to other partners how does the dialogue take place?
Over the past two to three years have there have been many occasions
when you have come to different conclusions; and, if so, what
are they?
Mr Graisse: The example that I
have just quoted, Sri Lanka, was the subject of a study carried
out with Oxfam which is presently being reviewed by the Washington-based
International Food Policy Research Institute (IFPRI). That is
reviewing the results of the Sri Lanka experience. The question
we are considering is: if in certain situations cash, vouchers
schemes or whatever are better than the direct distribution of
food, should we or someone else do it? Should the WFP be involved
at all if there is no food involved? Some people say that the
WFP should continue because it has the expertise to determine
vulnerability and the habit of working at village and district
level. Why would WFP not do it? Others with more traditional views
of WFP say that if there is no food involved it should be left
to others. The debate is very much alive. What is interesting
is that we have not so far had any large-scale demonstration of
a very effective cash programme. Most of it has been done on a
small scale pilot basis, say 2,000 families here or there. It
is not something from which we shy away. As I said, unfortunately
the amount of resources devoted to these programmes in a development
situation is so limited nowadays that it would not make or break
the organisation anyway. We want to have a totally open mind.
Q245 Richard Burden: Are there any
recent examples of areas where you have come to conclusions radically
different from those of other partners?
Mr Graisse: I do not believe that
other partners will disagree with us when we say that it all depends
on the situation in the country in question. What may be true
in part of one country may not be true in another. If one has
markets that do not function properly, there is high inflation,
there is not much of an incentive to travel hundreds of kilometres
to try to sell cereals or products like corn soya blend, which
traders do not normally sell, and one does not have all the conditions
that are required, why would cash work better?
Q246 John Barrett: I should like
to explore how the WFP may improve the way it actively engages
with recipient governments and beneficiaries. The Committee had
a very interesting visit to Malawi during which it established
that DFID had set up its own programme to supply food at $100
per tonne compared with $240 per tonne which was the rate at which
WFP supplied it, saving about $30 million. That allowed the distribution
of an extra 70,000 tonnes of food. Clearly, there was a concern
there. Although we discussed it with the head of the WFP in country
who said that it was not exactly comparing like with like, there
appeared to be a huge discrepancy in the cost of delivering aid.
That makes one think about the effectiveness of aid and whether
the maximum amount is getting through and whether costs are being
monitored. There is a range of issues there. One of them is that
the WFP had set up a programme which did not really involve the
Government of Malawi. It was doing its work and delivering food
but at a very expensive rate which resulted in a reduction in
the volume of food for the amount of spend.
Mr Graisse: Malawi is the one
country where that problem has been greatest in the past year.
We do not distribute food without involving government. Incidentally,
a very large contribution came from the Government of Malawi which
in turn was thanks to budget support from the United Kingdom,
the EU and so on. But the money was channelled by the Government
through WFP, so the Government understood what we were doing and
was certainly involved because we were using its own money. There
are many ways to distribute food. Some do not necessarily mean
that one tries to cover the most difficult places where one needs
special trucks to travel much further distances. There is also
a benefit from all the work that WFP has done in terms of assessing
the ability of people, crops and availability of food in given
regions. A lot of the work that we do is done at cost and others
benefit from that; in other words, they do not have to do the
same thing that we do. In Malawi it was perhaps a little extreme
because of the fact that this was a regional operation covering
six countries where maybe there were cross-subsidies. It may be
that Malawi was paying a lot more in subsidising an operation
in remote places in Lesotho or elsewhere.
Q247 John Barrett: The World Food
Programme did reduce its costs in the end but said that it could
not absolutely justify what it was doing and how, so there must
have been an acceptance by the WFP that it had not quite got it
right?
Mr Graisse: We did indeed work
hard to get things right there. We also changed regional land
transport, storage and handling prices as opposed to national
ones in the six areas.
Q248 John Barrett: Were lessons learned
there that could be applied in other regions?
Mr Graisse: Definitely.
Q249 John Barrett: If it is not put
right there presumably similar problems could arise elsewhere?
Mr Graisse: Definitely.
Q250 Chairman: As a supplementary,
DFID also told us it felt that WFP had not done enough to support
capacity building within the Government of Malawi which sadly
had a recurrent requirement for food aid, and part of the reason
the department set up its own competitive one-off programme—about
which it assured us—was because it felt it wanted to help
to do that. Do you acknowledge that there is a responsibility
on WFP not only to ensure that food gets through but to develop
the capacity within the host country at least to participate in
that?
Mr Graisse: Unquestionably. We
had programmes in 75 countries and have closed down nearly 30,
presumably because governments have had the capacity to continue
on their own programmes that we used to fund. It is interesting
to note that the programmes we used to fund did not disappear
after we left; they continued. We had a number of reviews 10 years
later to see what happened to programmes that we were funding
in Brazil until 1996. They are still alive today. Yes, we make
efforts to do that when conditions permit. Not all governments
unfortunately have the capacity, resources or budgets to allow
them to become very effective in that regard.
Q251 Mr Singh: Can you tell the Committee
a little more about the insurance policy that you have just contracted
with AXA? I believe that that is unique. What has made you go
down that road? It seems fairly expensive. Is it a price worth
paying?
Mr Graisse: That is a very good
question. It is a pilot programme that we have been authorised
to carry out in Ethiopia alone which in a sense makes it a bit
unusual because we are insuring one risk. Therefore, the donors
that have contributed and paid the premium to AXA realised that
these were not normal commercial circumstances in which insurance
was undertaken. But it was an attempt to demonstrate that with
properly functioning meteorological stations available in the
country one could have a mechanism that permitted insurance and
payments whenever rainfall did not reach a certain level. Payment
by the insurance company would then be automatic and would not
have to wait for further assessment of the consequences of drought,
the ability of people and so on. All of that has been done in
advance. Therefore, the simple fact that rains have failed triggers
payments, but that is only in fairly exceptional situations which
occur in Ethiopia on average every seven years or so.
Q252 Mr Singh: They pay out $7 million.
How would that claim be settled? Do you have to make an application
on an insurance form?
Mr Graisse: Everything has been
foreseen with such clarity and precision that the 28 meteorological
stations providing daily reports continue to function regularly.
Once the drought level has been reached payment is automatic.
The process is all foreseen. Will it happen? Will AXA decide not
to continue the programme after two years during which it has
been a lucky beneficiary? We and the two or three donors who have
paid for this still believe that it is something worth researching
to see whether that is truly a better way to answer natural disasters
than the classical way of waiting for disasters to happen. I do
not know whether or not it will be conclusively demonstrated because
the executive board is very hesitant about giving us the green
light to proceed to other countries which would make the example
much more valid. If one was insuring against drought in 10 countries
in Africa, it would occur in some and not others and certainly
the principle of insurance would be more easily demonstrable,
but I believe it is something that is well worth trying. I understand
that other attempts are being made in the IFC in Washington in
relation to hurricanes in Central America and the Caribbean which
may or may not be piloted by that organisation. I believe it is
something that needs to be explored among international organisations
and we are happy to have been able to do so.
Q253 Mr Singh: In terms of risk transfer
in relation to food aid, are there any other options available,
such as the futures market or insurance through the World Bank?
I do not know whether or not that is possible. Are there any avenues
that can be or have been explored? Are you looking at them, or
have they been rejected?
Mr Graisse: We are exploring a
number of alternatives, for example hedging. We are now considering
a programme in South Africa where we will do hedging on future
purchases of commodities; in other words, looking at commercial
approaches, we try to bring about a satisfactory solution which
decreases the cost of food aid as such. Unfortunately, it is something
that governments are hesitant to let us try too much. Not many
donors are coming up with the resources that we need to try the
experiment. So far it has cost American and Danish taxpayers about
$1 million.
Q254 Mr Singh: What is DFID's attitude
to this approach?
Mr Graisse: DFID has not contributed
to it. I believe that like other executive board members it is
watching the situation. We are to report back to them in November.
The executive board had a good but inconclusive discussion last
June. It wanted more analysis and proof before it would allow
us to embark on an expansion of the pilot project to other countries.
Q255 John Battle: I want to ask about
UN reform. Proposals have been made to make changes. For example,
the UK has led the way in suggesting that, for example, there
might be just one expanded Central Emergency Response Fund. I
am thinking particularly about greater coordination in emergencies.
There is some criticism that the UN's organisations are a bit
unwieldy, long established and locked into silos. What would be
the view of the World Food Programme on reform? Would it be willing
to go as far as seeing the WFP become the logistics arm, for example,
of another agency, or is it holding on to its silo?
Mr Graisse: I believe that Hilary
Benn has been the main actor so far in encouraging reform of the
humanitarian sector. The Chancellor is also looking at broader
issues of development, humanitarian aid and so on. I believe that
the expansion of CERF in New York into a fund which so far has
received pledges of $280 million for 2006 is good. It is a system
that will permit perhaps sectors other than food aid to benefit
from CERF. The reason I say that is that on the whole WFP in the
past has been reasonably successful in resourcing its emergencies
better than other UN organisations, in part because food is more
understood as something that one cannot afford to do without,
while sanitation for example is perhaps less understood as an
immediate and essential need. Clearly, water is perceived as being
in the same category as food. WFP welcomes the expansion of CERF.
It has received some $35 million from CERF since the beginning
of the year for various operations in Sudan, Chad and a few other
places mostly in Africa. We believe, however, that reform which
centralises matters much too much is probably not the best answer.
The best answer remains to have a number of highly effective organisations
that know how to do their job. The more one pays for coordination
or the management of central resources the less money one has
available to reach the beneficiaries. We have to be careful not
to create a bureaucratic monster somewhere that sucks out resources
which otherwise would go directly to the beneficiaries. I am sure
that Mr Egeland, who I believe has also been a witness before
the Committee, is very concerned about it. We have recently discussed
with him the possibility of simplifying a lot of the administrative
work that is now carried out. Each time a loan is approved there
is a long memorandum of understanding. We have suggested that
we sign one general memorandum with him so that whenever an emergency
strikes there is a much simplified format because all the main
elements do not have to be repeated over and over again. We also
hope that it does not create an additional burden on reporting.
We are concerned by the fact that apart from Hilary Benn and a
few other enlightened donors many do not see this as an answer
in the long-term because they can never associate it directly
with a given crisis. I will take the example of your neighbours
in Ireland. When a big crisis arose we asked if they could help
us. They said, "No. We gave you all the money we had at the
beginning of the year for you to handle." But the minister
would come and tell us, "I need some visibility here. How
do I explain to my taxpayers that they have given you a cheque
at the beginning of the year but there is no Irish flag on the
bags of food that are sent to this particular crisis?" Many
donors are hesitant about contributing to CERF, as we have seen,
for the reason, amongst others, that no longer will the US flag
or Japanese flag appear on every single bag of wheat because it
cannot be associated with a given donor for the particular emergency.
It remains to be seen whether or not CERF can develop into the
$1 billion fund that Gordon Brown now envisages in UN reform.
Personally, I have some doubts about that because the largest
contributors, at least to the World Food Programme, the United
States, the European Union and Japan, are not at all favourable
to the concept of a central funding mechanism. It remains to be
seen. But it has certainly considerably helped other sectors which
traditionally have not been as well funded as the food aid sector.
That is encouraging, because if one has a case of total destitution
and the only thing that people receive is food they will by definition
sell some of it in order to buy whatever they need, whether it
is shoes, drugs or something. Therefore, if they have nothing
else but food because other sectors have failed some of it will
be sold in order to buy something else. That is not a wise investment
in the cost of food. In short, I do not believe that it will help
food but I think it will help other sectors which traditionally
have done less well in being resourced.
Q256 Chairman: The UK is sufficiently
enlightened that in Pakistan we saw that it was prepared to see
a Norwegian flag on a project which was funded 55% by DFID. We
are certainly not guilty of flagging.
Mr Graisse: But many are.
Chairman: Thank you very much for coming
here and giving us your views. We are seeing Jan Egeland next
week when we will be able to explore those points further with
him.
Mr Graisse: You will have a very
upbeat view of CERF.
Chairman: We have met him once before.
3 Internally Displaced Persons. Back
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DFID, Working in Partnership with the World Food Programme,
April 2006, http://www.dfid.gov.uk/pubs/files/dfid-wfp-institutional-strategy-2005-08.pdf£search=%22dfid%20wfp%23%22 Back
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