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### Viewing cable 05MANAGUA2097, USAID/NICARAGUA CONCURRENCE CABLE ON

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05MANAGUA2097 | 2005-07-20 20:35 | 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 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

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