Suiting the action to the word
Activity report 2008

• Prologue
• Introduction
• I Farmers Fighting Poverty: Funding & Expenditure
  • Funding
  • Expenditures
  • Conclusions
• II Projects: the building blocks
• III Advisory services
• IV Achievements
• V Agriterra in 2008
• VI Conclusions and recommendations
• Supplement
• Annexes
• Download Activity Report 2008

I Farmers Fighting Poverty: Funding & Expenditure

Funding

The required core funding of the Farmers Fighting Poverty programme amounts to a total of € 114.500.000 for the period from 2007-2010. In its conception, € 86,1 million was requested from the Dutch government, the back donor of Agriterra. The balance (€ 28,4 million) was to be obtained from the other agri-agencies through their back donors.

On top of the core funding we expected to mobilise some € 11 million on own funds from farmers’ organisations. Besides this we hoped the be able to attract the interest of other donors to invest in the programme via co-financing constructions, mobilising another € 40 million (so-called ‘heat-map’ funds).

Commitments to the programme

At present, we are halfway implementing the programme and it becomes clear that direct commitments to the programme fall short of expectations (see the table below). A total of almost € 83 million has been committed up to now, of which € 66 million is part of the programme’s core funding.

At the start of the programme the Dutch government granted € 50 million through Agriterra. The Dutch government did not invest the full € 86 million as requested in 2006, arguing convincingly that it would be wise to leave room for other donors to come in and fund this important programme. In that way the financial base of the programme would be broadened, now and in the future. To that end, DGIS funded and chaired the conference of 2006 launching Farmers Fighting Poverty. In order to raise new funds, AgriCord started prospecting new back donors, such as Finland, IFAD, the Gates Foundation, and more recently the Spanish Government and the European Commission. Also the Italian government might be a prospect. The Dutch government accompanied AgriCord’s fundraising missions to IFAD and the Gates Foundation, and more recently to the European Commission. Although a considerable effort was made in attracting new funding, still a lot has to be done to secure the € 31 million (table 1, line 1.a) that is lacking.

Unfortunately, after two years of implementation, we have to conclude that the broadening of the funding base did not happen as expected. No new donors invested directly in Farmers’ Fighting Poverty. That does not mean that new donors did not, indirectly, commit funds to our efforts. In the past two years, AgriCord and the other agri-agencies (with funds from their direct back donors) have obtained commitments of more than € 15 million. Considering the goal to raise € 28,7 million, they are well on track. In that way, partially making up for the lack of success mentioned earlier.

The contributions to the programme by farmers’ organisations themselves, raised from their own sources, be it membership fees, services, or income from third parties and donations, is much higher than expected. After two years of implementation, they already contributed far more than expected. We expected them to contribute an additional 14% on top of the annual project budgets, yet in 2008 this percentage was even 20%. Taking into account what third parties contributed via the producer organisations to projects, this share even accumulates to 52%.

The different commitments obtained until of 2008 are summarised and compared with the planning in table 1. Please note, that part of the commitments will be used after 2008, whereas other commitments have been calculated on the basis of expenses.

Although several sources started to contribute to the programme as we had hoped for, we still have a funding problem. This is visible in the lines 1.a and 2 of table 1. The fact that the contributions of other donors are not forthcoming and the lack of co-financing through ‘heat map’ constructions, leaves us with a funding gap. The good news could be that more funds are transferred to farmers’ organisations by third parties. In 2008, €5,2 million of the contribution by producer organisations’ (see table 1, line 3) stems from third parties.

Commitments put to use in 2008

After having illustrated how the funding is build up, we now continue by looking at some of the details of how these commitments were put to use in 2008. It is important to note that the first two years of the programme have been implemented as if the planned total income of € 114.750.000 was guaranteed in its entirety by back donors.

We could put a slightly lower portion to use than the € 16.380.000 from the DGIS commitment originally planned in the second year of Farmers’ Fighting Poverty. This basically has to do with funds earmarked for the IFDC which were allocated in 2008, but will only be used in 2009.

In 2008, the other agri-agencies planned to mobilise an amount of € 4.100.000 for Farmers Fighting Poverty, to be obtained from their back donors. The realised amounts were as high as € 8.319.639 (= 203%). This shows that an enormous effort has been made by all agri-agencies and their supporting donors, being:

• UPA-DI with support from their back donor ACDI/CIDA;
• FERT, supported by FERT/Unigrains and European Commission, France Export Céréales, Conseil National de l’Enseignement Agricole Privé (CNEAP);
• AFDI with their own funding, and support from Collectivités Territoriales Françaises, the French Ministry of Foreign Affairs; the French Ministry of Agriculture and the European commission;
• IVA/TRIAS and the Belgian Government
• SCC supported by SIDA
• AgriCord with funding from IFAD and the Finnish Government.

To highlight the importance of the contribution through the programmes of the agri-agencies, we refer to our activity report of 2007. It turned out that in that year it was only 59% of the budgeted amount. However, after the activity report was finalised, updates were made on agro-info.net. This already delivered a different picture. They actually put to use 92% of what was planned in 2007 (see table below). Moreover, their contribution in 2008 even went above and beyond the plans. So when adding up the first two years of the planning and realisation, we see that the agri-agencies even mobilised an overall 55% more than planned for the first two years. Table 2 summarises this.

Table 3 gives the absolute and relative contributions of the different agri-agencies, which demonstrates the importance of UPA-DI and FERT for the programme, with the relatively new kids on the block, SCC and TRIAS, as runners-up.

Adding up the funds entrusted to us by DGIS and the funds of the other back donors, table 4 presents us with the following overall picture of the the funding used out of the core funding of the programme in 2008.

Expenditures

In the previous section we explained which part of the obtained commitments of the core funding was put to use in 2008 by the different agri-agencies. However, funds obtained from DGIS could also be used for clients of other agri-agencies. So, from its turnover of € 15.864.903 (see table 4), Agriterra net contributed almost € 2 million to projects managed by other agri-agencies. This is according to the programme plan, and resulted in a expenditure of € 13.946.779 (see table 5).

Besides the expenses of the agri-agencies, the grand total of expenditures was complemented by the producer organisations’ (€ 3.277.698) and those of third parties (€5.247.323). The grand total amounts in this way to € 32.659.513.

Plans and realisation

In order to make a comparison with the plans, we examine only three categories of users of the funds: Agriterra and its clients; agri-agencies and their partners; and the producer organisations using own funds. This comparison delivers a positive picture: our total turnover was 23% higher than planned. As said before, the agri-agencies substantially increased their contribution and proportionally their expenditures. But, also Agriterra spent more than planned. The picture becomes even more positive when we add the contribution of the farmers’ organisations. Their expenditure is substantially higher than planned (72% higher). Table 5 reflects this situation.

As was mentioned briefly, Agriterra’s expenditure was higher than planned. Observing this expenditure was drawn from a slightly lower DGIS budget (see table 4), this entails that the contribution from the DGIS budget to the other agri-agencies was lower than planned. They were therefore more dependent on their own back donor funding. This is also depicted in the following chart (in which contributions by producer organisations are not included).

Chart 1: Planning and realisation in 2007 and 2008

Source: http://www.agro-info.net/

Comparing realisation of 2008 with 2007

It is also worthwhile to compare the volume of our operations in 2008 with the volume of 2007, the year we were not so positive on how we started our programme. Let’s remember that the grand total expenditure in 2007 was € 17.073.470, as compared to the expenditure in 2008 when the grand total amounted to € 32.659.513. This amount includes, as said, the contributions of Agriterra, agri-agencies, producer organisations and third parties.

The comparison learns us that we experienced a 91% increase in our total volume of operations between 2007 and 2008. Specifically, for Agriterra the increase in operations was 54% as can be derived from its annual account of 2008. Yet, the farmers’ organisations used 126% more funds, including the funds put at their disposal by third parties. But again, relatively the biggest leap forward came from the other agri-agencies, whose involvement in Farmers Fighting Poverty was almost three times as large as compared to 2007

Breakdown per budget category

Several aspects stand out when looking at the budget categories. The percentage of resources spent on AgriPool missions is only 55% of the planned expenditure. The number of AgriPool experts that participated in missions is also lower, but relatively less (82%, see chapter III). This implies –as a positive aspect- that the costs per mission were lower than budgeted. This is also the case when we make a comparison with 2007. The total resources spent on AgriPool missions increased with almost 10%, but the number of experts participating in missions increased with almost 15%, leading to the conclusion that the average costs of a mission decreased during 2008. The opposite occurred with consultants: their average costs were higher than planned.

The spending on missions by agri-agency personnel is higher than planned. This can be ascribed to the increase in the volume of operations which entailed a higher number of executed missions. Yet, in chapter III we also argue that liaison officers could focus more on mobilising AgriPool experts, instead of going on mission themselves.

In a similar vein, we notice that the expenditure on advise days is higher than planned. This is amongst others caused by UPA-DI staff that lives and works in the field (mostly Africa). In their projects, relatively a larger amount is spent on advise days (31%) and a smaller percentage is transferred to the farmers’ organisation (53%). This issue has been on the agenda of the AgriCord board meeting in Montreal. They concluded that in the end it is the result that counts. The UPA-DI approach focuses on building economic ventures from scratch in which support on the spot contributes to a higher success rate, with that justifying this input distribution.

The funds transferred to farmers’ organisations were higher than planned in absolute terms, but slightly lower in relative terms. However, if we would take into consideration the funds the farmers’ organisations attracted themselves and add these amounts both to the planned and realised totals, the relative share of projects would increase to 71% of the total.

The administrative costs are much lower than expected. A word of caution is in order though, to avoid rapid and favourable conclusions on our efficiency in project handling. This lower expenditure on administration can also be attributed to the fact that the other agri-agencies contributed relatively more than foreseen to the total realised amount spent on projects. Nevertheless, because the agri-agencies do not administer their administrative costs separately, but include them in project or advise costs, the costs of administration are correspondingly lower. Thus, overspending in advice and underspending in administration costs could therefore be two sides of the same medal. This issue will be monitored closely in 2009.

Expenditures per continent

The distribution of the expenditures per continent followed the plans very closely. The target of 60% of the funds to be spent on projects in Africa has been virtually reached. Already during 2007, Africa was clearly the most important recipient. During 2007 55% of the total expenditure was directed at Africa and in 2008 this percentage already reached 59,4%. This increase is the result of measures taken, such as the recruitment of new, specifically Africa-oriented, liaison officers to intensify efforts on the continent. AFDI, FERT and UPA-DI’s main focus was on Africa as well. This is shown in table 7.

Conclusions

In conclusion, we see some contradictory developments. In spite of the rhetoric of world leaders about the importance of farmers’ organisations, the agri-agencies seem to lack the attraction to mobilise the resources needed to continue implementing Farmers Fighting Poverty. The core funding for 2009-2010 is still not secured.

This situation, affected the other agri-agencies already in 2008. They received less resources compared to plan from the DGIS allocation when in December 2008 Agriterra put a brake on approving projects from new clients of the agri-agencies’.

Agriterra needed to decide whether this lag in mobilisation of other direct back donors should have consequences for implementation in the coming years. Do we adjust the number of staff? Or do we still think to be able to raise funds according to the original plan?

Eventually, we have chosen for a minor downscaling of the plans for 2009. This entails the risk that the remaining DGIS funds for 2010 would just cover the institutional costs of Agriterra, leaving no room for advisory missions or project funding.

The importance of agriculture, and specifically of organised farmers, in the fight against poverty has finally been recognised globally. This is one of the elements that make us confident about the possibilities to draw in new back donors. We become even more confident because our results prove that we are doing a good job. This is what we will show you in the rest of this report.

In the following chapters we will present the results on the basis of our two main instruments: project funding and advisory services.