WFP School Feeding Model Study

1. WFP School Feeding Model Study June 7, 2007 Tracy Cheung Mayuresh Oke Michael Perling Danae Ringelmann

2. Model Comparisons Supply Chain Assessment Recommendations WFP Model Agenda Value-Add of WFP model WFP Overview Comparison of central versus local purchasing Comparison of processed versus non-processed staples Benefits to stakeholders in value chain Review of supply chain of WFP food basket commodities Methodology Industry supply chain sustainability analysis Viability of current and potential suppliers Recommendations for GSFP integration 2

3. Corn soya blend (fortified) • Palm oil • Iodized salt • Domestic agro-processors • Currently reaching 35,000 students in 76 schools in 3 northern regions • Goal to reach 100,000 students in approximately 250 schools by 2010 • 740 cedis per student per meal Model Comparisons Supply Chain Assessment Recommendations WFP Model Food Basket World Food Program Model Procurement Students & Schools Cost 3

4. Model Comparisons Supply Chain Assessment Recommendations WFP Model Processed WFP Community-Based Milling Landscape Centrally Procured Locally Procured Centrally Procured Perishables GSFP Emphasis Non-Processed 4

5. Agro-Processed/ Centrally-Procured Locally Procured Community-Processed/ Locally Procured Nutrition Cost & Economies of Scale Impact on Community Model Comparisons Supply Chain Assessment Recommendations WFP Model Nutrition Cost & Economies of Scale Impact on Community • Micronutrient fortification • Protein • Energy (calories) • Meets GSB standards • Consistency of quality • Opportunity to purchase in bulk • Reduction in handling and transport costs • Direct benefits to local farmers and producers • Assurance of reaching surrounding community Comparative Model Assessment 5

6. Model Comparisons Supply Chain Assessment Recommendations WFP Model WFP model benefits all stakeholders along the value chain Local Farmer Agro-processor Warehouse Schools WFP Value Chain and Benefits • Training • Inputs • Better crop yields • Price and volume stability • Brand association • Expertise & knowledge transfer • Stable business • Nutrition • Reduced exposure to price and supply fluctuations of local markets Model requires sustainable industries… 6

7. Model Comparisons Supply Chain Assessment Recommendations WFP Model Supply Chain Analysis - Methodology Factory visits and interviews with management teams at existing/potential suppliers Interviews with officials in Ghanaian Government Ministry of Local Government Ministry of Agriculture Ghana Health Services Food Standard Bodies and Research Institutes Food Research Institute Ghana Standards Board Food and Drugs Board WFP Staff Program Directors, Procurement, Food Technologists 7

8. Model Comparisons Supply Chain Assessment Recommendations WFP Model • Agro-processing of cereals is in early stages of development • 13% of cereal consumption is agro-processed • Remaining amount is milled locally • Suppliers vulnerable to maize price volatility and competition from imports • Scaled and robust agro-processing industry can help stabilize prices (e.g. cocoa), which would benefit farmers • Blended food markets remain limited in Ghana, however several suppliers are launching brands • Market opportunities within specialized segments including: HIV patients, WFP Supplementary Feeding Program, pregnant women and children Cereals: Maize and Soya • Educational campaign around nutritional benefits of fortification extended beyond wheat and vegetable oil • Utilize school feeding as a catalyst to spur growth of agro-processing industry 8

9. Model Comparisons Supply Chain Assessment Recommendations WFP Model • Well developed industry • Mature end market, twelve main Ghanaian producers • Commodity market with low price variance among domestic producers • Not subject to major substitute product threats at current price level • Industrial usages and bio-fuel demand driving global prices higher • Quality and safety concerns associated with cottage industry producers (e.g., Sudan red) • Financial contribution is secondary to knowledge transfer and implicit endorsement due to low WFP share of aggregate revenues Palm Oil • Therefore, select medium processor to ensure quality • Therefore, WFP should select suppliers based on commitment to out-grower schemes and emphasize non-monetary transfer of value • Find substitute oil solutions (e.g., soy bean oil) if prices escalate 9

10. Model Comparisons Supply Chain Assessment Recommendations WFP Model • Highly fragmented industry with large disparity in execution of iodine fortification • 4-5 large scale producers supply over 50% of salt consumed in Ghana • Over 1,000 small-scale “cottage” producers representing 30%-40% of industry • Mostly non-iodated, lower quality salt • Continued growth in domestic market dependent upon stricter enforcement of salt iodization standards among producers and educational campaign among consumers • Opportunity for significant expansion into the export market, particularly in West Africa • Land usage rights in Ghana hinder stable development of large-scale producers Iodized Salt • WFP/GSFP should source from large producers to ensure quality in near-term, and experiment with salt banks to act as catalyst for change in business practices of cottage producers in long-term 10

11. Model Comparisons Supply Chain Assessment Recommendations WFP Model • Leverage existing WFP model and supplier relationships • Stringent selection process of suppliers with processes and systems that ensure local procurement of raw materials • Use suppliers as agents to implement out-grower schemes • Scale and widen program incrementally by first building confidence in the utility of WFP food basket through targeted approach that educates primary stakeholders and stabilizes agro-processing industry growth • Communities in greater need • Younger students who benefit most from nutritional components • Lean season • Across time • Other commodities (e.g. rice, soy oil) • Pilot similar models using processed, locally-procured foods • Community-based milling and fortification • Salt banks Recommendations for GSFP Integration 11