Food Aid Data - What's on the Menu?

This afternoon I read a blog entry (http://sarahburnett.blogspot.com/2010/07/wanted-data-quality-standard-for-open.html) from a data quality expert in England that commented on the need for standards for accuracy and reliability in goverment-provided data. This blog reminded my of a presentation that I gave at the food aid conference in Kansas City in 2007 entitled "Apply (Free) Government Data to Your Advantage".

The jist of the presentation can be summed up in four points:

- Where is the data?
- What does it tell us?
- How can we use it?
- New challenges

This presentation came at the time of the implementation of the FBES (i.e. online ocean carrier bid system) and the "new challenges" related to some fundamental data reporting changes as USDA moved from a two-round to a one-round bid system.

Very little has changed with the USDA/USAID data in the past three years: some forwarders are publishing freight awards in Excel; the Trade Secrets clauses has made USDA and USAID very prickly about releasing any additional FOIA data than what they proactively publish.

However, I am again holding my breath to see what changes, if any, well accompany the pending WBSCM. We'll see.

News from the annual food aid conference

Earlier this week the annual food aid conference was held in Kansas City, MO. The conference is normally held in April so everyone was dealing with extreme heat when venturing out from the Westin for a morning run or an evening dinner.

One change that appears minor on the surface but is reflective of a larger trend was the insertion of "Development" into the official title of the conference: International Food Aid & Development Conference. This change was reflected in an ever increasing focus on the NGO overseas operations and discussions of public-private partnerships. Long gone are the days when there was open and boisterous debate on arcane applications of cargo preference rules, the merits of monetization of commodities, and instructions on freight and commodity bid mechanics.

There was talk of the Obama administration's Feed the Future (www.feedthefuture.gov) vision for the food aid programs. It sounded to me that essentially the strategy is to work on achievable improvements instead of research and difficult to execute strategies.

I am by nature a numbers guy and I was disappointed to hear very little talk about what to expect in the year(s) ahead. It sounds like the expectation is that volumes will be relatively constant (adjusting for commodity and freight cost fluctuations). The intention is to generally focus on 20 countries (4 in Latin America, 4 in Asia, and the balance in Africa).

USDA distributes statistics on volumes and spend for the previous fiscal year. This year I've compared fiscal year 08 to 09 and found the following:

• Food aid metric ton volumes dropped about 34,000 mt or 1% from 2.84 million MT in '08 to 2.81 million MT in '09.
• There was 70,000 metric tons more of packaged commodities in '08 than '09, raising from 34% of total tonnage to 37%.
• The average commodity cost per metric ton dropped from $463.15 to $340.32 - a 27% decrease.
• The average freight cost dropped from $198.23/mt to $161.44/mt - a 19% decrease.

To me, this is a neglected story of the conference: the recovery from the commodity price and fuel crisis that plagued the market a couple of years ago. The tax payers' money is stretching farther, achieving more. I suspect that this program will always be impacted by macroeconomic issues well outside of the control any of the conference participants. It is still important to work to make this program more efficient and effective but perhaps it is more critical to work proactively towards action plans and collaborative responses for when something on a global basis knocks the wind out of it. It has happened before and it will inevitably happen again.

What's happening with Haiti?

The devastation from the earthquake in Port au Prince, Haiti is no longer grabbing headlines like it did back in January and February but it is still very much the focus on USA diplomatic and humanitarian efforts. Haiti has always been on the radar of the USAID Title II food aid program.



From FY2003 through FY2009, USAID has shipped on average 26,500 metric tons of packaged food aid per year to NGO programs in Haiti. In addition, roughly the same amount of bulk food commodities have been shipped to Haiti by USAID in the same period.



On January 12, 2010, USAID, the NGO community, and the supporting business communities kicked into high gear with immediate response to the magnitude 7.0 earthquake that lay waste to Port au Prince. I had first-hand insight into the chaos because one of my ocean carrier clients had a house barge en route to Port au Prince already when the earthquake hit. In fact, it was only a couple of days outside of Port au Prince coming around the Dominican Republic. Fortunately, everyone put in amazing effort both states side and on the ground in Haiti and containers full of bagged food were discharged off the barge within days of the earthquake. More food aid was already in the supply chain coming from the USA under pre-earthquake contracts.



Since the earthquake, USAID has contracted and shipped (or is in the process of shipping) 142,100 metric tons of packaged food aid through their normal pl480 Title II channels. This doesn't count any MRE rations or food being shipped from overseas by World Food Programme or donated from the USA by non-Governmental sources.



Six different ocean carrier companies have made herculean efforts (see full report here) to service a country that has had its logistics infrastructure decimated, including the razing of the country's only major port .



I expect that Haiti will continue to be a focus for food aid for years to come and it will undoubtedly be discussed at length at the annual International Food Aid Conference in Kansas City, MO in August. It should be; it is a shining example of success in USA response and policy in the global arena.

What is the role of a ship broker in food aid?

There is so much to say about the US Government-sponsored food aid market: so many great things about it, so many things that need improving. It is a 3 million metric ton/$2 billion per year export market. It is a unique blend of government agencies (USDA, USAID, MarAd), NGO's, the World Food Programme, food commodity suppliers, ocean carriers, ports, stevedores, academics, etc, etc, etc.

Before getting into some of these more heady subjects, I want to step back and describe the role of the ship broker in the food aid market. What do we do? What qualifies us to comment on the workings of this intricate and complex supply chain?

Ship brokers (in this market) are, in a nutshell, commission-based sales agents for ocean carriers. We help the ocean carriers:

1. Find cargo opportunities that fit with their market interests, vessel capabilities, and growth strategies.
2. Help evaluate the current market conditions for our client's proposals. Specifically, the appropriate pricing levels, competitive landscape, contractual terms, and optimal bid strategy.
3. Act as an intermediary between the ocean carrier and the cargo interest. This usually means writing and submitting freight offers, negotiating contractual terms, and providing shipment and vessel updates.
4. Assisting the ocean carrier with understanding and performing the operational requirements of the contract. US Gov't-sponsored food aid has a unique set of requirements that don't always resemble those of the commercial world.
5. Considering the impact of regulatory and policy changes on the ocean carrier's operation, advising them on a well thought out position, and representing their voice to the policy-making community.

Most of us have a nearly singular focus on the government markets whereas the ocean carrier is by and large engrossed in the aggregately larger commercial marketplace. Ship brokers are the eyes, ears, nose, taste buds, etc. of the ocean carrier in this unique and highly specialized market.

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