Sticker Shock: Experts Say World Food Program's Afghan Relief Effort Overpriced
Saturday , February 06, 2010
By George Russell
The United Nations’ World Food Program, or WFP, is preparing to launch a mammoth, three-year relief operation in Afghanistan this year for 7.4 million people at a cost of $1.2 billion — but less than half of that amount will actually go to purchasing food for the war-ravaged country.
The majority of the money — nearly $730 million — is being spent on shipping, land transportation, handling, office construction and U.N. staffing and administration costs, according to program documents obtained by Fox News. Outside experts consulted by Fox News say that some of the costs are more than 100 percent higher than they need to be.
WFP’s response is that some of its costs are actually less than in the past, and that higher expenses are required because of the nature of the new relief operation. In other words, they say they’re inefficient because they need to be.
The WFP program is expected to come up for approval at a meeting of WFP’s 37–member Executive Board beginning on Feb. 8 in Rome. By far, the biggest share of the $1.2 billion relief tab is likely to come from the U.S., which picked up 47 percent of the cost of WFP’s previous Afghan relief program.
Just as arresting as the size of the new WFP program is the way the money is being spent. Less than 40 percent of the total is expected to purchase nearly 816,882 metric tons of food for the program, at a projected cost of $474.7 million.
An evaluation report of WFP’s last major Afghan food relief project, done by independent outside consultants and also intended for next week’s executive board meeting, noted that food costs made up 52 percent of the total relief budget in an $878 million effort that covered 390 of 398 administrative districts in the country. (That operation offered relief to about 6.5 million Afghans per year; the new operation aims to help 7.4 million.)
The same report noted that a 52 percent ratio of food costs to total spending was similar to WFP food relief operations elsewhere, and “can be taken as an indicator of efficiency.”
This time, even though its new relief project is very similar in many respects to its previous Afghan program — which ran for more than four years — WFP’s food costs make up 39.5 percent of the total.
In its latest project proposal documents, the organization notes mildly that the “fluid security environment and limited infrastructure in Afghanistan” mean that “operational and support costs are higher than average.”
In response to questions from Fox News, WFP further replied that “moving goods to and within Afghanistan is more expensive due to increased competition and congestion on limited available transportation routes.” It also cited the need to construct additional warehouses and replace 55 trucks in a WFP fleet of 150.
Most of the food itself, WFP said, would be purchased on international markets “through a transparent tendering process.”
Outside shipping and grain handling experts who are familiar with conditions in the region, nonetheless, told Fox News that they consider some the WFP costs, notably for transportation and handling, to be roughly double what is commercially required. The amounts run into tens of millions of dollars.
Moreover, some of the most outsized costs, according to those experts, are incurred outside Afghanistan, where the security and infrastructure issues cited as justification by WFP do not apply.
Among other things, the experts, who are familiar with transportation of grain and other commodities in the central Asian region, pointed to:
— “External transport” costs of $60 million: Essentially, shipping grain and other foodstuffs, mainly to ports such as Karachi in Pakistan and, to a much lesser extent, Bandar Abbas in Iran, for subsequent transit to Afghanistan.
That would work out to more than $73 per metric ton of relief supplies shipped, if all of them came from abroad. In fact, WFP says the shipping costs would be even higher: $101 per metric ton, as the operation intends to buy 92,000 metric tons of local wheat as part of its operation. The relief agency says that its projected prices are actually a saving over the overseas shipping costs of its last operation.
Using their most generous estimates, the experts consulted by Fox News judged that the actual cost of overseas food shipping should run to somewhere between $33 and $50 per metric ton — or between one-half and one-third the price projected by WFP.
— “Landside transport” costs of nearly $60.2 million: Trucking from Pakistan and Iran to centers such as Kandahar, Kabul and Mazar-e-Sharif, plus $74.5 million in anticipated “internal transport, storage and handling” charges as the food moves to much smaller Afghan outposts for distribution.
Experts consulted by Fox News calculated that the WFP shipping estimates were roughly 100 percent more expensive than required — and once again, that did not factor in local grain purchases, which would lower the landside and internal transportation costs even further. Moreover, current international fuel costs have declined substantially since their sky-high price hikes of 2007, which should also moderate costs. The same declines have also helped to cause a substantial moderation in international food prices.
WFP’s response is that its new program requires building seven new sub-offices, atop eight already in existence, to handle its expanded distribution, and said some of the additional transportation funds would be used to buy 55 new trucks for its operations. It also argues that its operations are substantially different than in the past, due to its local food purchases and additional security needs.
Local security is a deadly serious matter for WFP: One of its security guards was killed in a terrorist bomb blast in the southern Afghan city of Kandahar in late December. But $15 million in local security costs allocated for the new food relief program in Afghanistan do not form part of the transportation, storage and handling totals in the new proposed plan, but are itemized separately.
WFP also said some of the high prices would result from diversifying its “transport corridors” for funneling food into Afghanistan via a “northern corridor” — a veiled reference to a shipment through Iran. Its project documents, however, say that the alternative corridors “may” be used, but only "depending on the cost efficiency of local transporters and overall conditions.”
Indeed, the documents say that precisely because of increased traffic on those corridors, they are unlikely to replace traditional overland transport routes.
— Staffing: U.N. staffing costs are $57 million, as compared to local staffing costs of $36.2 million. The 115 U.N. staffers planned for the operation are also eligible for “hazard pay and hardship allowance,” which adds another $26.3 million to their cost, bringing the total for U.N. employees salaries and allowances to $83.3 million.
That is more than the entire budgeted cost for “internal transport, storage and handling” of the food involved. According to an official with a highly respected U.S. aid group that also works in Afghanistan, WFP salaries for staffers are “double” what the U.S. agency pays.
By contrast, the international staffing plans for the first three years of its previous food aid program in Afghanistan — which aimed to help about 6.6 million Afghans, or nearly 90 percent of the number targeted in the new plan — ran to only $22.5 million, including hazard pay.
— Helicopters: Rental costs for six helicopters during the life of the program run to more than $118 million, or more than half a million dollars per helicopter per month. The WFP budget contains an additional $14.5 million for actual running costs, meaning mainly fuel. Total: $132.5 million.
WFP justifies the cost in its program documents by arguing that the machines “will allow WFP staff to travel more frequently and rapidly and will improve performance measurement and allow continuous oversight, ensuring a proper level of accountability and transparency to all stakeholders.”
“Except for the space shuttle, helicopters are the most expensive form of transportation on the planet,” rejoins a transportation expert consulted by Fox News. Nonetheless, he estimated that rental, maintenance and operating costs, including fuel, for “medium-sized” helicopters should be no higher than $78.2 million.
Overall, one of the experts consulted by Fox News estimated that the total cost of the food transportation, handling and delivery portion of the program ought to run to no more than $100 million — and even then, he added, “there is so much fat in [the estimate] that I can’t make it more.”
Instead, the total for those items in the proposed WFP budget comes to $195.56 million, with “direct support costs” — meaning WFP’s staffing costs, equipment, communications and office space, plus equipment leasing and security — adding another $318 million.
Click here to see WFP's proposed cost breakdown
All told, the WFP plan calls for spending an average of about $1,474 for each metric ton of food aid delivered, even though world grain prices have eased dramatically from their sudden peaks in 2007-2008, and a bumper harvest is expected in Afghanistan in 2009-2010. The previous WFP aid plan averaged $848 per metric ton delivered over its four-year span. But within that total, costs were also escalating: The last three months of the previous plan, slated to cover from January to March 2010, are planned at an average $1,026 of total costs per metric ton.
WFP says such comparisons are invalid, due to the differences between the current and previous plans.
Part of the bill for the proposed new food operation in Afghanistan is a 7 percent levy on the gross cost — common to all WFP projects — that adds up in this case to $78.8 million. That money goes back to WFP’s Rome headquarters to pay for its central and regional overhead.
By the levy’s very nature, the bigger the overall cost for WFP operations, the bigger the dollar amount of the headquarters 7 percent share.
This is not the first time that WFP’s transportation and handling costs have seemed significantly oversized in relation to the program they are supporting. Last July, Fox News pointed out that WFP project documents for planned relief operations showed average “external” shipping costs of $206.90 per metric ton of food aid that was supposed to be delivered to North Korea — an amount that was nearly 50 percent of the planned food purchase involved, and which an expert on bulk shipping consulted by Fox News termed “absolutely ridiculous.”
Part of that money — WFP did not reveal how much — was apparently destined to pay for shipping from China to North Korea on vessels controlled by the government of North Korean dictator Kim Jong-Il. The North Korean government is under United Nations sanctions, including financial sanctions, that have so far been dramatically unsuccessful in forcing the communist nation to put a brake on its burgeoning nuclear weapons program.
Questions Are Raised About Who Profits from U.N. Aid to North Korea
In the end, only 18 percent of that food program was ever funded by WFP donors, due to North Korea’s intransigence over its nuclear weapons program and its refusal to allow full inspection of its food delivery sites.
WFP’s partner in the upcoming Afghan food aid program is the government of Afghanistan, led by President Hamid Karzai, whose various ministries will be working with WFP in virtually every phase of its program. The corruption of the Karzai administration has been a subject of open discussion among the governments now showering Afghanistan with aid.
As recently as last November, President Obama personally urged Karzai to clean up his government and bring some of its more blatantly corrupt senior officials to justice.
For his part, Karzai has admitted that “Afghanistan has been tarnished by administrative corruption” and promised to lead a clean-up campaign.
Goodly portions of WFP’s food aid program are also taking place in parts of the country where battles have raged with the fundamentalist Taliban — who the U.S. and other allies have now decided to begin wooing, at least to some degree.
When asked how WFP proposed to keep food aid out of the hands of actively hostile Taliban members, the agency replied only that “in line with humanitarian principles, WFP food assistance is targeted to hungry people who are assessed as needing our food assistance.”
There is little doubt that Afghanistan is in dire need of the kind of help that WFP provides. As the WFP project documents report, the country, which has been a battleground for the past 30 years, has a badly undernourished, under-educated population of about 26 million; 3.1 million of them still live in refugee camps in neighboring Pakistan and Iran.
About 59 percent of Afghans suffer from malnutrition, and 33 percent are underweight. Afghanistan also has the dubious distinction of the world’s highest rate of active tuberculosis, averaging 213 cases per 100,000 population; about 40,000 new cases are added every year.
Most of WFP’s planned new program of food aid — as it was in its previous program — is aimed at the most vulnerable members of Afghan society: children, pregnant and nursing women, refugees. Many of the aid programs are aimed not merely at feeding the chronically malnourished but also, in collaboration with other U.N. agencies, at encouraging women to remain in school —most leave after the fifth grade — as well as supporting anti-tuberculosis campaigns.
Some of the food aid will to go support community and agricultural improvement projects, such as low-tech irrigation. In addition, as it underlined in its responses to Fox News, WFP is also aiming to help subsistence farmers who have managed to grow extra crops get better prices for their surpluses.
Click here to see WFP's entire proposal.
Indeed, the Afghan government seems to prefer that WFP buy food even when it is available for free.
According to a 2009 food security update published by USAID in November, the neighboring Indian government offered the Karzai administration 250,000 tons of wheat — the main Afghan staple — as a donation. The Afghan government “postponed” the offer, according to USAID, over fears that such large amounts of free grain might depress prices for local farmers.
If past experience is any guide, the $1.2 billion estimate for WFP’s Afghan food aid project may only be the beginning. The proposed program is a follow-on to an emergency feeding project in Afghanistan that began in January 2006 as a three-year effort to assist 6.6 million Afghans with 520,000 metric tons of food—at a total cost to WFP of $360 million. By the time the program ends next March, it will have lasted 39 months, purchased 1,000 metric tons of food — and climbed in cost by nearly 250 percent.
George Russell is executive editor of Fox News.
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