Cost Recovery in MonetizationTOPS Knowledge Sharing Nov 2012

Overcoming Obstacles

- Current Trends and Issues: Rising fuel prices have slowed or hindered commodity

shipments Organizations are seeking innovative solutions to reduce

costs and increase cost recovery Is there a role for a scaled up/more formal version of

what these organization are currently doing?- Land O’Lakes’ Solutions:

Consolidating shipments saves freight Follow monetization sales contract

About Us

- Land O’Lakes International Development founded in 1981; acts as a not-for-profit division of Land O’Lakes, Inc.

- Implemented 275 programs in 80 countries- Focused largely on agricultural

development, enterprise partnerships- Monetize commodities for USDA, USAID and

other organizations

Case Study: Liberia

- Issue: Large shipment planned for Liberia- Action: Coordinate shipments- Result: “Recovery costs [95%] are very

good relative to many other monetization programs,” Alliance for Global Food Security

Estimated Shipment schedule for Liberia - FY 2012

Partner Commodity Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12OICI Parboiled rice CF 5500 MTLand O'Lakes Parboiled rice Tender/CF 11,000 MT Tender/CF 6600ACDI/VOCA Parboiled rice CF 4540 MTACDI/VOCA Vegetable oil CF 200 MT

CF (Call Forward date)The above dates are estimates. The dates will depend on FFP and USDA's call forward schedule.

Case Study: Madagascar

- Issue: Small shipment (7,000 MT bulk HRWW) and high rates; Buyer wanted to drop price by $25/MT

- Action: Land O’Lakes identified cargo going into Mombasa and advised lead agency on possibility

- Result: Cargo shipped in bulk as per sales agreement

Case Study: Consolidation

- Issue: Multiple agencies and donors shipping to multiple countries, worked to consolidate costs

- Action: Consolidated shipments going to different countries

- Result: Saved an estimated $1.7 million (actual $163-177/MT vs. rate of $215/MT)

Case Study 3: Consolidation

1. USDA FFPr TNS Kenya April 2012 - Mombasa 11,000 MT bulk HRW @$177.00/MT ocean (free out).2. USAID Prepo $162.67/MT- Mombasa Prepo 5,000 MT bulk Sorghum ocean (berth

terms) + $20.00/MT bagging/stacking. - Durban Prepo 10,000 MT bulk Sorghum ocean (berth terms)

+ $44.25/MT bagging & stacking into warehouse.3. USAID Title II CRS Madagascar 10,000 MT bulk wheat @ $163/MT4. Mercy Corp for Tanzania (FFPr) 6,340 MT bulk HRW wheat.5. CRS for Burundi (Title II) 3780 MT bulk HRW wheat.

Case Study 4: Coordination

CDSO Combo - April 2012

- Issue: Tonnage small making freight rates costly- Action: Land O’Lakes working in Mozambique and

Madagascar- advised lead agency on combo possibility

- Result: Cost savings $562,500 for Malawi Program over actual rates or $803,000 over

budgeted rate $270/MT for 4,500 MT to Maputo vs. earlier quote Basis 4,500 MT = $395 per MT).

$528,750 for Madagascar Title II ($270/MT for 2,350 MT vs earlier quote of Basis 2,500 MT = $495/MT).

Other Steps We Took

- Discussed with NGOs and their freight agents

- Communicated between USDA/USAID - Provided more shipment and offloading

oversight- Communicated more with NGO “partners”

on sailing of vessels

Ideas for Scaling Up

- Compile annual synopsis of U.S. Port dates for all programs Where would it be housed? Would compile it? What are the security concerns?

- What else?

Commodity Consolidation Matrix (CCM) Monetization Bulk Commodity Last updated: / /2012

At US Port Pgm Commodity Tonnage Gov’t/INGO/NGO

Destination POC

3/10/12 FFPr HRWW 11,000 TNS Kenya M Smith 202 370 1665 mhsmith@landolakes.com

12/13/12 FFPr HRWW 10,530 TNS Kenya Monet agent M Smith 1/15/12 FFPr CDSO 6,100 Land O’Lakes Mozambique M Smith 202 370 1665

mhsmith@landolakes.com 3/15/12 TII HRWW 10,000 CRS Madagascar Frank O 12/20/12 FFPr SBM 12,250 TNS Honduras Monet agent M Smith Monetization Processed

At US Port Pgm Commodity

Tonnage Gov’t/INGO/NGO Destination POC

1/1/13 FFPr Milled Rice Bagged

10,500 Land O’Lakes Liberia M Smith

1/15/13 TII Milled Rice

Bagged 5,500 ACDI Liberia B Elkin/M Tupac

Distribution/Emergency

At US Port

Pgm Commodity Tonnage Gov’t/INGO/NGO Destination POC

11/1/12 TII HRWW 10,500 Land O’Lakes Kenya M Smith 202 370 1665 mhsmith@landolakes.com

1/15/12 M-D CDSO 940 Land O’Lakes Pakistan M Smith 202 370 1665 mhsmith@landolakes.com

3/15/12 TII Sorghum 5,000 USAID Prepo Kenya USAID 1 800 USAID Trans 3/15/12 TII Sorghum 10,000 USAID Prepo Durban RSA USAID 1 800 USAID Trans

Example Matrix of Port Dates

Worth the Extra Effort

- Additional resources would allow additional commodity to be shipped

- No programmatic delays due to shipping

- Increases actual cost recovery

Interested?

- Contact: Matthew Smith, Commodity and Program Manager;

MHSmith@landolakes.com; (202) 370-1665 Website: www.idd.landolakes.com Twitter: @LandOLakesIDD Facebook:

www.facebook.com/LandOLakesInternationalDevelopment