Far from the traditional image of humanitarian agencies flying in food from far-off lands, the World Food Programme (WFP) sources more than 60% of its US$3.5 billion in supply chain costs for food, goods, and services in locations where we operate.
Whether it is sorghum in Mali and Sudan, maize meal in the Democratic Republic of Congo, or large transport contracts in Darfur, WFP “buys local”, or at least regional, wherever possible. As the largest purchaser of staple crops in Africa, WFP also increasingly purchases from smallholder farmers.
Globally, WFP buys US$40 million in commodities every year from smallholders, with plans to triple that in the coming years.
In Afghanistan, WFP is supporting 26 industrial mills to participate in a Government-led nationwide flour fortification programme. In addition to providing technical guidance, fortification formulas and equipment, WFP has signed long term agreements with six selected local mills to produce fortified wheat flour for its programmes. In five years, together we have grown our wheat flour production from nothing to 70,000 metric tonnes, and source 20% of it from local farmers. We also support the millers to grow their businesses into sustainable ventures, and commercialize their production, so that they can access markets beyond WFP.
Even in the depth of crisis, we turn to local suppliers, thereby supporting local economies. In Syria, in spite of the conflict, we purchase 100% of the salt we need for our operations from national producers, whom we have helped raise quality to meet international procurement standards.
To fulfil its mandate to combat hunger, every year WFP buys more than 2 million metric tons of foodstuffs – mainly cereals, pulses and specialized nutritious foods – for a value of just over US$1 billion. For our cash assistance operations, we purchase an annual value of some US$700 million in cash-based transfers, which is spent in local retail markets.
But for this food to be transported and delivered, we also need to procure an array of goods and services, ranging from fuel to vehicles and spare parts, ICT equipment and services, temporary and permanent infrastructure, storage, insurance and others.
To secure the availability of quality food, achieve on-time deliveries and reduce costs, WFP commodity experts – who come from backgrounds including economics, business, procurement, and market intelligence analysis – design sourcing strategies that look at demand for the following 12 months and suggest how best to serve it.
Factors like seasonality, market intelligence and the choice of the best type of contract can produce important savings, allowing WFP to maximize the number of people it can assist. Buying specific foods right after the harvest season, when supply is highest and prices lowest; identifying opportunities for the purchase of large quantities of main commodities at favourable prices; and using contracts that allow WFP to obtain bulk purchase discounts – all result in the ability to obtain good quality products at competitive prices.
As well as supporting its own operations for the benefit of millions of people around the world, WFP’s experience and expertise in procurement can also be valuable to others, including governments – whose supply chains and social safety net programmes serve many more food insecure people than WFP alone – as well as the private sector and other humanitarian agencies.