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Table of contents

I Background

II Areas of intervention to be covered by the FAO Trust Fund

III. Contributions

IV. Procedures for use of the FAO Trust Fund

V Administration of funds and reporting by FAO


I Background

The World Food Summit, held in November 1996, was the first global gathering at the highest political level to focus solely on food security. In adopting the Rome Declaration on World Food Security and the World Food Summit Plan of Action, it renewed the commitment of the international community to ensuring food for all. The Declaration enunciates both the ultimate goal and the immediate target: "We pledge our political will and our common and national commitment to achieving food security for all and to an ongoing effort to eradicate hunger in all countries, with an immediate view to reducing the number of undernourished people to half their present level by 2015."

A common thread that runs through the declarations and action plans adopted by the recent series of global conferences is that of national responsibility and international solidarity. The goals defined are goals that only states can achieve, but the multilateral institutions, each within its own mandate and sphere of competence, are called on to help and support them in that effort.

FAO has a major role to play in assisting countries in implementing the provisions of the World Food Summit Plan of Action that fall within its mandate, as well as in monitoring, through its Committee on World Food Security (CFS), overall progress in achieving the Summit's goals.

The State of Food Insecurity in the World (SOFI), using the information collected through the Food Insecurity and Vulnerability Information Mapping System (FIVIMS), has revealed that progress towards reducing by half the number of hungry people is slow and, if the present trend continues, the goal of the World Food Summit will be achieved only in 2030 instead of 2015.

Against this background and in accordance with FAO's Financial Regulation 6.7, the Director-General has established the FAO Trust Fund for Food Security and for Emergency Prevention of Transboundary Pests and Diseases of Animals and Plants1 with an initial target of US$500 million.

This FAO Trust Fund will be an important source of demand-driven funding to supplement the present trust funds, which support key components of the Organization's Field Programme but which have recently developed a focus on emergency operations at the expense of catalytic projects addressing long-term structural needs of the poor (70 percent of whom are in the rural sector) in the basic areas of employment creation and income generation.

II Areas of intervention to be covered by the FAO Trust Fund

The projects to be funded from the FAO Trust Fund will assist Member Governments in initiating, strengthening, accelerating and expanding activities in the following two areas:

II.1 FOOD SECURITY

In most low-income food-deficit countries (LIFDCs) viable and sustainable means of increasing food availability exist but are not realized because of a range of constraints that prevent farmers from meeting their basic needs and from seizing opportunities that arise. By working with farmers and other stakeholders to identify and overcome such constraints - whether they are of a technical, economic, social, institutional or policy nature - FAO's Special Programme on Food Security (SPFS), approved by the 106th session of the FAO Council in 1994, aims at opening the way for improved productivity and broader access to food.

Projects to be funded under the SPFS include pilot activities in small-scale water control, crop productivity, diversification in small animal production, artisanal fisheries and aquaculture, analysis of socio-economic constraints and policy advice. The transfer of technology will be promoted, particularly through the South-South Cooperation scheme, which is a low-cost vehicle for technologically, ecologically and socioculturally appropriate development.

II.2 EMERGENCY PREVENTION OF TRANSBOUNDARY ANIMAL AND PLANT PESTS AND DISEASES

Transboundary animal diseases are epizootic diseases that are highly contagious or transmissible with the potential for very serious and rapid spread, irrespective of national borders. These diseases are of serious socio-economic or public health consequence and can be a major constraint to international trade of animals and animal products. This can have an adverse effect on the food security situation in the countries concerned and also on the food safety of consumers around the world. The same is true for locusts and other migratory pests that can fly over great distances and threaten crops hundreds or thousands of kilometres away from their places of origin.

Through its ongoing Emergency Prevention System (EMPRES), approved by the Council at its 106th Session, FAO is adopting a new approach to an old problem by emphasizing early warning, early reaction and networking of research capacities to ensure the use of more effective and environment-friendly methods. The programme is focusing on strengthening existing surveillance and control in affected countries.

II.3 ASSISTANCE IN PROJECT AND PROGRAMME STUDIES TO INCREASE INVESTMENT

The FAO Investment Centre participates with the international financing institutions (IFIs) in the formulation of feasibility studies of bankable projects for a value of US$2 billion annually. Such activities organized by IFIs should be expanded to include project studies requested by the LIFDCs, least developed countries (LDCs) and small island states (SIS). The preparation of feasibility studies is essential to increase investment in agriculture and rural development by the private sector and national and subregional financing institutions in addition to traditional development partners. Recent studies show that the additional annual investment needed to attain the World Food Summit goal of reducing by half the number of the undernourished by 2015 is approximately US$24 billion. Of the extra financing required, approximately US$5 billion would be for food assistance, around US$3 billion in non-concessional assistance. Of the remaining US$16 billion, developing countries would provide US$8 billion from their national budgets and US$8 billion would come from bilateral assistance and concessional loans from international financing institutions. This extra funding is not to be managed by FAO. It would be disbursed directly to the beneficiaries through the existing relevant bilateral and multilateral institutions.

III. Contributions

This FAO Trust Fund shall be financed by voluntary contributions made by governments, intergovernmental organizations, non-governmental organizations and the private sector.

Contributions shall be used only for projects and programmes approved in the Programme of Work and Budget of the Organization, as specified in II.1, II.2 and II.3 above.

IV. Procedures for use of the FAO Trust Fund

Project requests for financing by the FAO Trust Fund should be demand-driven and emanate specifically from beneficiary countries. Projects to be funded from the FAO Trust Fund will be formulated by FAO with the governments concerned, in close cooperation with all relevant parties at the country level. Donors will be closely involved in the preparation of the projects to be financed with their contributions, in particular with one of their experts participating in the formulation team.

A Central Unit will be designated at FAO headquarters to ensure the coordination and integration of the elements in the project cycle. This unit will also be responsible for the overall monitoring of activities and for the preparation of the Director-General's progress reports to FAO's Governing Bodies.

IV.1 CRITERIA FOR THE APPROVAL OF PROJECTS

  • projects must be clearly related to the three areas indicated above and shall be fully integrated with national food security plans, Common Country Assessments (CCAs), the United Nations Development Assistance Framework (UNDAFs), Poverty Reduction Strategy Papers (PRSPs) and other important development frameworks at the country level;
  • priority shall be given to the needs of LIFDCs, LDCs and SISs;
  • projects shall aim to have a direct impact on food security at the national and household levels;
  • projects shall build or reinforce national capacities to ensure continuity of action, promote sustained self-reliance and manage natural resources effectively;
  • projects shall promote broader partnership, particularly at the country level, between UN and other specialized agencies, financing institutions for development, bilateral partners, academic and research institutions, the private sector and non-governmental organizations;
  • projects shall ensure continuing interaction between FAO's normative and operational activities so that these are mutually supportive;
  • projects shall be based on strong national commitment, which should be expressed by financial and in-kind government contributions;
  • projects shall be of a catalytic nature, preparing the ground for larger technical assistance and investment programmes supported by other agencies or filling a vital gap in relation to the government's ongoing or planned development activities in line with the scope of this programme.

IV.2 FORMAT AND CONTENTS OF REQUESTS

Requests for assistance funded from the FAO Trust Fund should contain the following basic information:

  1. a short description of the background and nature of the problem to be addressed as well as its relationship to relevant development frameworks at the country level (see criteria above);
  2. the immediate objectives to be achieved by the proposed project;

FAO shall assist the government in completing the request with:

  1. an itemized statement of the assistance requested in terms of expert services, subcontracts, equipment, supplies and training, including the specific work programme of specialists, specification of equipment, the quantities of supplies needed and all other relevant indications concerning inputs;
  2. an indication of the way in which the government intends to use the inputs requested; the timing of execution; the designation of the agency or organization locally responsible on behalf of the government for the project; a description of the local support facilities and arrangements, including national staff whom the government intends to provide; arrangements made by the government for the accommodation of experts and consultants and the tax-free importation of items to be provided; storage, transport and handling of inputs within the country by the recipient government.

IV.3 EVALUATION AND APPROVAL OF REQUESTS

The appraisal of requests for assistance will be coordinated by the designated unit and will involve all relevant technical and operational units, both at headquarters and in the field. FAO shall undertake adequate consultations with the donor and seek its concurrence before finally approving projects using funds contributed by that country.

IV.4 PROJECT AGREEMENTS

Each project will be covered by a plan of operation or project agreement to be signed both by the government and by FAO. The basic purpose of a project agreement is to outline the objectives of the assistance and to determine clearly the obligations incurred by the two parties in carrying out the project. The project agreement shall be concise and contain the following elements:

  1. Project summary
  2. Background and justification
  3. Specific objectives of the assistance to be provided
  4. Work plan
  5. FAO inputs
  6. Reporting requirements and follow-up arrangements
  7. Government's contribution, in cash or in kind, and supporting administrative arrangements
  8. Budget sheet

For small-scale actions, such as project identification, formulation and appraisal missions (e.g. FAO Investment Centre missions), other short-term consultancies and the provision of urgent supplies and equipment, a short form of agreement may be used. It should briefly state the specific objectives and the purpose for which FAO's assistance is sought.

Responsibility for the preparation of project agreements in final form shall rest with FAO. However, it would be useful if the government concerned, in cooperation with the FAO Country Representative, were to prepare, to the extent possible, the information for ii to vii above in draft form. A government request already accompanied by a draft project agreement would considerably facilitate the evaluation and approval process at FAO headquarters. A sample project agreement will be prepared for the FAORs.

IV.5 ASSIGNMENT OF OPERATING RESPONSIBILITY

Responsibility for implementation and supervision will be assigned in accordance with FAO procedures. In cases where projects are subcontracted to national institutions, FAO offers technical supervision.

IV.6 RECRUITMENT OF EXPERTS AND CONSULTANTS

The attention of Member Governments is drawn to the need for speedy clearance of experts and consultants proposed to undertake a particular assignment. Unless formal procedures in this respect are accelerated, the effectiveness of assistance will be compromised in many cases. Maximum use will be made of specialized FAO staff at headquarters and regional offices and of experienced national staff for supervisory and advisory services to projects.

IV.7 EQUIPMENT AND SUPPLIES

For the procurement of equipment and supplies needed for the projects to be funded from the FAO Trust Fund, local sources or the nearest supply point within the region will be used as far as possible. In the case of local purchases of equipment and supplies, governments shall provide assurance of tax-free procurement. In the case of imported items, it shall be the government's responsibility to ensure speedy customs clearance and to waive or pay any duties that may apply. Specific arrangements made by the government in this respect should be mentioned in the request and in the project agreement.

IV.8 NATIONAL INSTITUTIONS

In line with FAO's overall development policy, the greatest possible use will be made of national institutions for the execution of the projects to be funded from the FAO Trust Fund. The term "national institution" refers to any specialized governmental, semi-governmental or private entity in the recipient country which is professionally competent to carry out work in a particular field. Normally this would include government or university research institutes, foundations and also private consulting firms either alone or in association with a similar firm in a developed country. Where national institutions are proposed by the government for the execution of projects, their general capability to carry out the project effectively in terms of facilities, transport, preparation of reports and accounts, etc. must be ascertained. Where necessary, limited supplementary assistance may be made available in order to strengthen national institutions in this respect.

IV.9 LOCAL ADMINISTRATIVE RESPONSIBILITY

As a matter of routine, all administrative matters pertaining to the implementation of projects funded from the FAO Trust Fund will be arranged by or through the office of the FAO Representative. This includes administrative actions such as the clearance of experts, the customs clearance and importation of equipment, the issuance of tickets, arrangements for local travel and transport, typing of draft reports and arrangements for the internal distribution of supplies.

IV.10 PROJECT AMENDMENTS AND EXTENSIONS

Unforeseen developments that become apparent only in the course of implementation may require the amendment or extension of projects. The need for such amendments can be minimized if the work plans for particular projects as well as their objectives are spelled out and agreed upon in sufficient detail prior to the project's approval. Nevertheless, each project budget shall incorporate an appropriate margin for unforeseen and miscellaneous requirements.

IV.11 OVERHEAD COSTS

Overhead costs shall be fixed in accordance with the rules and regulations established by FAO's Governing Bodies for trust funds.

V Administration of funds and reporting by FAO

V.1 ACCOUNTING AND REPORTING

For each donor, FAO will establish and maintain an account for the purposes of recording:

  1. all funds received from the donor to the FAO Trust Fund;
  2. transfers of funds to all projects financed from the FAO Trust Fund;
  3. related interest credits on cash.

The account will be operated in the following manner:

  • The Organization will allocate funds to the individual projects or programmes.
  • Interest arising on the overall cash balance attributable to individual donors will be recorded in the account.
  • The Organization will provide donors with periodic financial statements showing details of receipts, funds allocated and interest credited.

V.2 Deposit of funds

Funds shall be deposited in one of the bank accounts listed below. An appropriate reference must be recorded when the deposit or transfer is made so as to facilitate FAO's recognition and recording of the funds received in the bank account.

FAO/UN Trust Fund US Dollar Account
No. 490650/67/72
Intesa BCI S.p.A.
FAO Branch
Viale delle Terme di Caracalla
00100 Rome, Italy

Or:

FAO/UN General Account
Account Number 949-1-029915
Bank Routing Number - 021000021
Chase Manhattan Bank
International Agencies Banking
270 Park Avenue 43rd Floor
New York - USA

V.3 AUDITING

The financial statements of the projects funded from the FAO Trust Fund will be subject exclusively to the internal and external auditing procedures as set out in FAO's financial rules and regulations.

V.4 MONITORING, REVIEWS, EVALUATION AND REPORTING

Due recognition will be given to contributors to the FAO Trust Fund through the clear identification of the sources of financing, by formal notification where relevant, involving the Ambassador or local representative of the donor and by reference being made in all public relations material prepared in relation to the FAO Trust Fund. The donor countries will also be directly involved in the monitoring and evaluation of the projects concerned.

FAO will organize joint project reviews, involving all parties concerned, and particularly the donors. The organization, terms of reference, timing and venue of such reviews will be decided in consultation with these parties.

Furthermore, towards the completion of project activities, joint evaluation missions will be organized to allow for an in-depth and comprehensive examination of all key aspects of the projects concerned. In order to provide an objective assessment, such joint exercises will be carried out by independent teams, involving representatives of the recipient countries, FAO and the donors. Any of these parties may call for evaluation at any stage of a project if deemed necessary.

The Director-General will submit to the Council, through its Programme and Finance Committees, annual reports on the operations of the projects funded from the FAO Trust Fund.

1 Hereafter referred to as the "FAO Trust Fund"

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