Cablegate: Usaid/Nicaragua Concurrence Cable On

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 MANAGUA 002097

SIPDIS

AIDAC

AID FOR PEBALAKRISHNAN/FRVIGIL/AMOUSHEY, DCHA/FFP/DP,
RKAHN, LAC/CEN, AWAHAB, LAC/RSD

E.O. 12958: N/A
TAGS: EAID
SUBJECT: USAID/NICARAGUA CONCURRENCE CABLE ON
PROJECT CONCERN INTERNATIONAL (PCI) FY 2006
DEVELOPMENT ASSISTANCE PROGRAM AMENDMENT

Summary. PCI submitted the second phase of the
Development Assistance Program (DAP) amendment
to USAID Nicaragua on March 28, 2005. The
first phase of the DAP amendments for Nicaragua
incorporated the Coffee Relief Activity into
the DAPs. For the second phase, the partners
are proposing programmatic adjustments to the
DAPs including a request for a two year
extension. USAID Nicaragua concurs with PCI's
request to extend the program until 2008 for
the reasons listed below. End Summary.

1. DAP extension and program adjustment for
phase two of the DAP amendment. With the
results and recommendations from the Food Aid
Program and Policy Assessment for Nicaragua,
the credit component review and the Nicaragua
Title II program mid-term evaluation, the Title
II Cooperating Sponsors will make adjustments
to the DAPs to target the most vulnerable
groups through an efficient and effective
program and extend the program until 2008 to
coincide with USAID/Nicaragua's Country Plan
and the Central America and Mexico Regional
Strategy.

2. Program design and progress to date. The
Nicaraguan Title II food aid program focuses on
increasing food availability, food access and
food utilization. The main components are to
link small farmers to markets (Agriculture) and
to improve maternal-child health and nutrition
(Health). There are four PVOs implementing the
program in Nicaragua: ADRA, CRS, PCI, and SCF.
All of them carry out both agricultural and
health activities.

2.1. Agricultural activities focus on
increasing the production of high-value, non-
traditional crops, basic grains production,
increasing higher levels of marketing and
processing of products and promoting
irrigation, storage, reforestation and soil and
water conservation practices. As of September
2004, there were 892 farmers working with the
agricultural team in new technological
activities such as production of non-
traditional crops using certified seeds, and
irrigation systems.

2.2. Health activities focus on integrated
management of common illnesses, improving
prenatal and postpartum care and strengthening
the relationship between target communities and
the local government health facilities. The
number of beneficiaries under the MCH component
for FY 2004 is 3,564.

2.3. The productive component of the DAP is
helping to increase the competitiveness of
smallholder farmers given the challenges and
opportunities posed by the US-Central American
Free Trade Agreement (CAFTA). As the majority
of problems facing smallholder producers lie in
the marketing system, increasing the
competitiveness of small holder farmers by
linking smallholder production to market demand
is essential preparation for CAFTA. PCI has
114 beneficiaries under this component who had
sales that totaled US $ 297,442.60 in FY 2004.

2.4. The marketing component complements the
agriculture activities by facilitating linkages
between farmers and major national and
international buyers. Furthermore, the Title II
partners promote the formation of cooperatives
so that the farmers sell at higher prices and
volumes and to ensure sustainability once the
DAPs come to an end. Higher prices and income
improve household food security by allowing
beneficiaries to be able to buy their own food
supplies.

3. Program extension. The PCI DAP will
consolidate efforts directed to increasing
incomes and reducing the incidence of
malnutrition in up to 6 municipalities in the
Department of Jinotega. In addition, it will
aim at strengthening local capacities, reducing
resilience to shocks and preparing small-scale
farmers to compete in regional and
international markets.

3.1. The DAP amendments for the Nicaraguan
Title II programs include the following: 1) A
two-year extension in the program with
additional funds (FY 2007-2008); 2)
Improvements in the program to broaden their
impact and ensure sustainability; 3) 202 (e)
funds request; and 4) Development Assistance
(DA) funds request in FY 06.

3.2. Regarding the DA funds request in FY 06,
the Mission will modify the Title II partners
Transfer Authorization (TA) to create a Hybrid
TA. The purpose is to enhance the agriculture
and marketing components should a need arise to
scale up efforts to assist small-scale farmers
as a result of the passage of CAFTA. The
Mission is in favor of having a Hybrid TA
because it will provide flexibility for the
Mission to add DA funds to the DAP program in
the remaining fiscal years. This is subject to
funds availability.

4. Issues letters. The issues letters were
sent by FFP Washington so that the partners
could clarify or respond to questions raised
after the second phase of the DAP amendments
were received. The letter sent to PCI included
threshold and non threshold issues. Threshold
issues focused on the following topics: DA
mission funding, Sustainability Plan for the
Micro finance component, 202 (e) funding, ITSH
funding, warehouse rent, Exit Strategy, FFW
activities and detailed budget. Non threshold
issues focused on the following subjects:
Gender strategy, Gender Methodology Diagnosis,
Collection and Packaging centers sustainability
strategy, 14 month bonus budget line item,
outline of the budget of the monetization
consortium.

4.1. Responses to threshold issues. PCI's
responses to USAID Mission and USAID Washington
threshold issues are: PCI is requesting
$250,000 in DA funds to strengthen the
agricultural component; PCI revised the funding
levels to meet FFP policy for 202 (e) funding;
PCI took ITSH funding out of the budget; PCI
provided an explanation on the reason they have
a warehouse rent line item; PCI detailed how
they will implement an exit strategy for both
the Health and the agricultural components; PCI
mentioned that they will continue working on
road rehabilitation under their FFW component;
and PCI provided a revised detailed budget. The
Mission feels that the above mentioned issues
were properly addressed by PCI.

4.2. Responses to non threshold issues. PCI's
responses to USAID Mission and USAID Washington
non threshold issues are: PCI stated that all
the DAP partners have worked on gender issues
and came up with a set of indicators; PCI will
pay for a gender methodology diagnosis in order
to have a full gender strategy; PCI will
include the sustainability plan for the
collection and packaging centers when they
submit the micro credit sustainability plan;
PCI explained that the Ministry of Labor states
that the 14 month is part of the compensation
that employees receive in Nicaragua once their
contracts end. All the other partners are
required by law to budget for this item; and
PCI outlined the amounts they are receiving for
the administration of the monetization sales.
The Mission feels that the above mentioned
issues were properly addressed by PCI.

5. Micro credit sustainability plan. Sixty
days after the Transfer Authorization is
signed, PCI and the other Title II partners
will submit the micro credit sustainability
plan.

6. Bellmon Certification. The Bellmon
Analysis was updated in January 2005. The
Mission Director certified that there will be
adequate storage and transportation available
in Nicaragua at the time of arrival of Title II
commodities to prevent the spoilage or waste of
these commodities. The Mission Director also
certified that the distribution or sale of
these commodities in the case of Title II
monetization will not result in a substantial
disincentive to, or interfere with, domestic
production or marketing in Nicaragua.

7. Usual Marketing Requirement (UMR). The UMR
for wheat products to Nicaragua has been
established at 48,300 metric tons (MT) and the
maximum for U.S. programming at 101,000 metric
tons (MT). Under the joint monetization
arrangement, ADRA, CRS, PCI, and SCF currently
plan to monetize a total of 27,050 Metric Tons
(MT) of Northern Spring (NS) wheat in FY 2006
to fund the activities proposed in their DAPs.

8. Cooperating Sponsors Capacity. PCI has
demonstrated adequate technical, financial and
managerial capability to design, implement and
monitor the FY 2002-2008 DAP. The DAP explains
how PCI's headquarters, international and
regional personnel will adequately backstop
PCI/Nicaragua during the implementation of the
DAP.

9. Funding levels recommendation.
USAID/Nicaragua recommends that the FY
2002-2008 PCI Title II DAP be funded in FY 2006
at the following levels (Tonnage and section
202 (e) levels):

Commodities are in Metric tons as requested in
Lines 8 and 17 of the FY 2006 Annual Estimate
of Requirements (AER) of the DAP.

Commodity Line 8 Line 17
Corn Soy Blend (CSB) 731 970
Vegetable Oil 4Lt.can 139 150
Long grain rice 330 320
Red beans, small 330 330
Total Metric Tons 1,530 1,770
NS Wheat (monetization) 6,650 6,650

Section 202 (e) Level for FY 2006: US Dols
180,237

10. Environmental Compliance Documentation:
PCI submitted the following documents as part
of the Environmental Appendix: Environmental
Compliance Facesheet; Pesticide Evaluation
Report and Safe Use Action Plan (PERSUAP);
Title II Environmental Status Report Facesheet;
and Environmental Monitoring Plan. The Mission
has reviewed and cleared this Environmental
Appendix.

11. Host Country FFP Agreement. The Mission
Director certifies that PCI can satisfactorily
operate a Title II program in Nicaragua in the
absence of a host country Food for Peace
Agreement. The Mission Director also certifies
that the commodities brought in under the Title
II program for direct distribution will be free
from duties and taxes, and the interests of the
USG can adequately be looked after and
protected.

12. USAID/Nicaragua has reviewed the PCI DAP
amendment and finds it to be consistent with
the food security needs of Nicaragua,
USAID/Nicaragua development priorities, and
USAID's Food Aid and Food Security Policy
Paper. The documentation satisfactorily
reflects guidance from FFP on the submission of
DAP Amendments.

BRENNAN

© Scoop Media