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### Viewing cable 05MANAGUA2094, USAID/NICARAGUA CONCURRENCE CABLE ON

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05MANAGUA2094 | 2005-07-20 19:49 | 2011-08-19 20:00 | UNCLASSIFIED | Embassy Managua

`

    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 002094

    SIPDIS

    AIDAC

    AID FOR PEBALAKRISHNAN/FRVIGIL/AMOUSHEY, DCHA/FFP/DP,
    RKAHN, LAC/CAM, AWAHAB, LAC/SPO

    E.O. 12958: N/A
    TAGS: EAID
    SUBJECT: USAID/NICARAGUA CONCURRENCE CABLE ON
    ADVENTIST DEVELOPMENT AND RELIEF AGENCY (ADRA) FY 2006
    DEVELOPMENT ASSISTANCE PROGRAM AMENDMENT

    Summary. ADRA 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 ADRA'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 2,815 farmers working with the agricultural team in new technological activities such as production of non- traditional crops using certified seeds, irrigation systems and greenhouses.

    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 6,721.

    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. ADRA has 111 beneficiaries under this component who had sales that totaled US $349,076.00 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 ADRA DAP will consolidate efforts directed to increasing incomes and reducing the incidence of malnutrition in up to 154 communities in the Departments of Nueva Segovia and Madrz. 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.

    3.3. Procurement. ADRA is proposing to buy four pick ups and a tractor for the two year extension. ADRA and the other Title II partners have a copy of STATE 037732 MOTOR VEHICLE SOURCE ORIGIN UPDATE. These vehicles will be used as part of the DAP interventions in the areas of agriculture, health and logistical transport of commodities. The Mission concurs with ADRA's request.

    ¶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 ADRA included threshold and non threshold issues. Threshold issues focused on the following topics: DA mission funding, Environmental Documentation Appendix, Exit Strategy for the Health and the Agricultural Component, Gender strategy, 202 (e) funding, Sustainability Plan for the Micro finance component and FFW activities. Non threshold issues focused on the following subjects: Procurement of a tractor using DA funds, Wheat type and ITSH funds.

    4.1. Responses to threshold issues. ADRA's responses to USAID Mission and USAID Washington threshold issues are: ADRA is now requesting $250,000 in DA funds for FY O6 instead of $400,000 to strengthen the agricultural component; the IEE has been revised to include floriculture activities in the DAP; ADRA presented a plan for improving counseling activities under the Health component; a plan to address gender issues is also presented; ADRA revised the funding levels to meet FFP policy for 202 (e) funding; and ADRA is no longer implementing food for work at the organic fertilizer production facility. ADRA stated that they will continue to adhere to FFP and the Mission's recommendations and regulations. The Mission feels that the above mentioned issues were properly addressed by ADRA.

    4.2. Responses to non threshold issues. ADRA's responses to USAID Mission and USAID Washington non threshold issues are: ADRA revised the budget to stay in line with the Mission procurement policy and will buy vehicles that are produced in the U.S. ADRA has also included the environmental considerations of the tractor in the Environmental Appendix; the Title II partners and the lead PVO concluded that Northern Spring Wheat is the wheat that they will request; and ADRA is not requesting ITSH funds. A column was marked incorrectly. The Mission feels that the above mentioned issues were properly addressed by ADRA.

    ¶5. Micro finance sustainability plan. Sixty days after the Transfer Authorization is signed, ADRA and the other Title II partners will submit the micro finance sustainability plan to USAID/Nicaragua and to FFP/Washington.

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

    ¶9. Funding levels recommendation. USAID/Nicaragua recommends that the FY 2002 - 2008 ADRA 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)        712        400
    Vegetable Oil 4Lt.can       146         90
    Long grain rice             437        320
    Lentils                     437        320
    Total Metric Tons         1,832      1,130
    NS Wheat (monetization)   6,091      6,090

    Section 202 (e) Level for FY 2006: US$109,707

    ¶10. Environmental Compliance Documentation: ADRA 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 ADRA 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 ADRA 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

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