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Strategic Considerations

38.     FAO is presently facing an unusually broad range of challenges and opportunities which have naturally influenced the formulation of the proposals in this PWB. This section provides a brief overview of the main strategic considerations in the formulation effort.

Millennium Development Goals

39.     Developments in the international arena have brought an additional perspective to doing business in the UN system in terms of follow-up to the Declaration adopted in September 2000 by the United Nations Millennium Summit, which is of particular relevance to FAO.

40.     The Declaration drew upon the internationally-agreed goals which had emerged from the major summits and conferences of the 1990s, including the 1996 World Food Summit goal of reducing hunger by half by the year 2015. In the months following the Millennium Summit, a number of goals were brought together and crystallised in the set of eight Millennium Development Goals (MDGs), in order to provide an agenda for concerted action and to encourage a sense of urgency.

41.     The MDGs have been generally embraced as a framework with the advantage of incorporating time-bound, measurable and achievable targets, both to help countries address a whole spectrum of development problems, and to encourage efforts by the international community to support them. In addition, the MDG initiative is expected to be a focus for United Nations system support to countries, and is thus closely linked to the ongoing process of UN system reform.

42.     During the first half of 2005, the Secretariat carried out an internal review of the Organization’s response to the MDGs and to UN reform. This included a survey covering all Regular Programme entities for the technical and economic programmes shown as having resource allocations for the 2006-07 biennium in the MTP 2006-11, as well as of a sample of projects funded from extra-budgetary sources, equating to 80 percent of total delivery in 2004.

43.     The survey identified direct contributions to the MDGs using the percentage of resource allocations as a proxy measure of the Organization’s efforts. Considering that the MDGs are interrelated, indirect contributions were also assessed, according to the degree of significance accorded to them by programme/project managers. For example, a direct contribution to the achievement of the goal of eradicating extreme poverty and hunger (MDG 1) could be expected to contribute indirectly to achieving many others goals. While this required a subjective judgement, the survey constituted a first attempt by the Organization to identify the kind and degree of impact which its activities should have on the achievement of MDGs.

44.     In summary, while the PWB proposals continue to adhere to the policy directions in FAO’s Strategic Framework, the review confirmed the high degree of consistency with the Millennium Declaration, and found that FAO’s work is well aligned in substance to those goals to which FAO’s mandate relates. A total of 89% of FAO’s substantive programmes, funded from both the Regular Programme (78%) and extra-budgetary sources (95%), directly addresses the goals. Over half of the total effort is directed to MDG 1, which combines the reduction of poverty and the reduction of hunger. A significant proportion (about one-fifth) is directed to MDG 7 concerning environmental sustainability, with a lesser but still important proportion to MDG 8 concerning agricultural trade. There are smaller direct contributions to MDG 3 (empowering women), MDG 2 (primary education), MDG 4 (child mortality), MDG 5 (maternal health) and MDG 6 (combating diseases), but important indirect effects were generated primarily by work addressing reduction of hunger and malnutrition.

45.     The distribution of Regular Programme contributions to the MDGs is illustrated in the following table:

Substantive Programmes - Distribution of Resources by MDG
MDG Title MP 2.1 MP 2.2 MP 2.3 MP 2.4 MP 2.5 MP 3.1
1 (Poverty) Eradicate extreme poverty l l m l l l
1 (Hunger) Eradicate extreme hunger l l l m l l
2 Achieve universal primary education m m m m m m
3 Promote gender equality and empower women m m m m m m
4 Reduce child mortality m m m m m m
5 Improve maternal health m m m m m m
6 Combat HIV/AIDS, malaria and other diseases l m m m m m
7 Ensure environmental sustainability l l l l l m
8 Develop a global partnership for development l l l m m m
  Non MDG l l l m m l
Legend:  less than US$ 4 million m  
  US$ 4 million to US$ 8 million l  
  more than US$ 8 million l  

46.     In considering the results of this exercise, it should be kept in mind that FAO’s mandate is much wider than assistance to countries in the achievement of the MDGs. As the UN Secretary-General has stated, the MDGs “do not in themselves represent a complete development agenda”. Nevertheless, the Organization appears well poised to contribute to eventual international initiatives to strengthen support to the implementation of the MDGs. It is also clear that the MDGs call for action by countries themselves and that the major effort to help achieve them must take place at the country level. FAO must be ready to respond with adequate technical inputs and further enhancement of its decentralization policy.

Follow up to the Independent Evaluation of Decentralization

47.     The Programme and Finance Committees and subsequently the Council, at their sessions of September and November 2005 respectively, are due to address a further management response to the independent evaluation of decentralization. All of the recommendations have budgetary implications to varying degrees. The budgetary impact of actions would need to be progressively reflected during implementation based also on the feedback to be received from the Committees and the Council. To the extent possible, the present PWB proposals have sought to anticipate the need for additional resources for the country network and efforts have been made to enhance or protect the resource base for the FAORs (Major Programme 3.4). Furthermore, the Supplement to the PWB includes proposals regarding the decentralized structure in response to the recommendations of the independent evaluation.

Regional Dimensions

48.     A long standing principle is that the Programme of Work of the Organization is formulated through close consultations between the concerned headquarters departments and the Regional and Subregional Offices. Improvements continue to be made in the process of consultation, for example through enhanced information systems, video-conferences and analysis of proposals. The Programme of Work is in fact presented in a "unified" manner in the PWB document. Therefore, substantive programmes are in most cases jointly executed by headquarters units and the corresponding outposted teams. However, it is clear that the relative priorities accorded by Members to individual substantive areas or disciplines are not uniform across regions. The fora constituted by the Regional Conferences as well as other forms of consultations at regional level serve to articulate the range of interests specific to each region. The results of these deliberations have been taken into account by all concerned units.

49.     Moreover, FAO needs to respond to the growing trend of regional cooperation and economic integration, and to the special initiatives of Members at regional level with bearing on the food and agriculture sector. In fact, a substantial part of policy advisory services is now channelled through direct cooperation with regional organizations, or in the context of prominent pronouncements at regional or subregional level. A self-evident example is the Comprehensive Africa Agriculture Development Programme (CAADP) which underpins the New Partnership for Africa’s Development (NEPAD). The Supplement to the PWB includes proposals for appropriate adjustments to the distribution of technical staff resources across regions and subregions in order to respond to the growing importance of regional economic integration organizations.

50.     An ongoing challenge is to take fully into account the diversity of regional perspectives into the priority setting process and the formulation of programme entities and outputs. Annex II: Regional Dimensions seeks to provide in the first instance an indication of those major substantive priorities, and consequently the planned activities in the Programme of Work of particular interest to individual regions.

Adherence to FAO's Strategic Framework

51.     This PWB continues to adhere to the major policy directions set out in the Strategic Framework. This can be encapsulated into three major aspects: 1) the further application of the new programme model; 2) the relevance of planned work to the five substantive corporate strategies and attendant 12 strategic objectives (SOs); and 3) how the Organization improves the way it works through the Strategies to Address Cross-organizational Issues (SACOIs).

52.     The holistic process of programme formulation followed by FAO units in the context of the medium-term planning exercise, which feeds into the development of the business plan for the next biennium proposed in this PWB, is briefly described below.

53.     In accordance with one of the Council criteria for priority setting (see section on Approach to Priority Setting), a central feature of FAO’s programme formulation and prioritisation process for substantive work is to assess the extent to which a proposed activity supports the strategic objectives. This is undertaken as an integral part of an initial problem analysis, along with identification of the intended end beneficiaries and possible points of intervention, where FAO would have a clear competitive advantage over other actors in the international arena.

54.     Thereafter, detailed programme entity design involves tracing of the chain of cause-and-effect relationships, identification of key external risk factors and potential synergies to be reaped through collaborative partnerships with other organizations. This phase culminates in the identification of one to several major outputs under the entity, as presented in the MTP. These are specific goods and services to be delivered by FAO, each of which is targeted to a clearly identified group of primary users, who are expected to take up FAO’s products and generate a first order level of results, or (major output) outcome. Collectively, the outcomes of all of the major outputs of an entity are intended to be used by a group of secondary users, who are expected to generate a higher, or second order level of results, the (programme entity) objective. Performance indicators, target values and target dates, along with associated means of verification, are specified for both outcomes and objectives. In formulating a two-year business plan and budget consistent with the attainment of the intended six-year MTP outcomes and objectives, emphasis is placed on defining more specific biennial outputs for each programme entity.

55.     As regards relevance of planned activities to the corporate strategies (labelled A to E), an indicative overall distribution of resources, as well as contributions to the twelve SOs, are presented graphically in the following chart and table by each technical major programme. The percentage contributions of individual entities to corporate strategies have not changed from the MTP 2006-11 and, accordingly, the resource distributions are nearly identical to those shown in the MTP, with minor variations owing to the difference in planning time horizons, as well as the refinement of entity level resource estimates during the more detailed budgeting process.

Substantive Programmes - Distribution of Resources by Strategic Objectives
Strategic Objective Title MP 2.1 MP 2.2 MP 2.3 MP 2.4 MP 2.5 MP 3.1
A1 Sustainable rural livelihoods and more equitable access to resources l m m m l l
A2 Access of vulnerable and disadvantaged groups to sufficient, safe and nutritionally adequate food m l m m m m
A3 Preparedness for, and effective and sustainable response to, food and agricultural emergencies l l m m m m
B1 International instruments concerning food, agriculture, fisheries and forestry, and the production, safe use and fair exchange of agricultural, fishery and forestry goods l l l m   m
B2 National policies, legal instruments and supporting mechanisms that respond to domestic requirements and are consistent with the international policy and regulatory framework l l l l m l
C1 Policy options and institutional measures to improve efficiency and adaptability in production, processing and marketing systems, and meet the changing needs of producers and consumers l m m l l l
C2 Adoption of appropriate technology to sustainably intensify production systems and to ensure sufficient supplies of food and agricultural, fisheries and forestry goods and services l m l m l m
D1 Integrated management of land, water, fisheries, forestry and genetic resources l m m l l m
D2 Conservation, rehabilitation and development of environments at the greatest risk l m m m m m
E1 An integrated information resource base, with current, relevant and reliable statistics, information and knowledge made accessible to all FAO clients l l l l l m
E2 Regular assessments, analyses and outlook studies for food and agriculture m l l m m m
E3 Central place for food security on the international agenda m l     m m
Legend:  less than US$ 4 million m  
  US$ 4 million to US$ 8 million l  
  more than US$ 8 million l  

56.     Actions to improve the Organization’s work towards achieving its strategic objectives are planned in the context of the SACOIs on Enhancing Inter-disciplinarity, Broadening Partnerships and Alliances, Ensuring Excellence, Continuing to Improve the Management Process, Communicating FAO’s Messages and Leveraging Resources for FAO and its Members, as selectively described below.

57.     The pursuit of efficiencies and productivity improvements, contributing to several of the SACOIs is also set forth at the end of this section.

Enhancing Inter-disciplinarity

58.     Members have consistently emphasised that one of FAO’s main comparative advantages is its capacity to bring to bear its inter-disciplinary expertise to the solution of recognised problems. This comparative advantage is further sharpened by FAO’s role of knowledge organization in all areas of its mandate.

59.     The Priority Areas for Inter-disciplinary Actions (PAIAs) endorsed by governing bodies via the MTP and the PWB embody significant contributions to implementing the strategy for Enhancing Inter-disciplinarity outlined in the Strategic Framework 2000-2015. Developments regarding PAIAs in the next biennium are explained below. However, there are many other instances of activities involving multi-disciplinary cooperation which will be pursued in the biennium, particularly regarding work at regional and country levels.

60.     In the area of policy assistance, TCA5 and its outposted teams in the regions will continue to draw heavily on complementary inputs from various technical departments and divisions. This is all the more relevant to the share of policy advisory services provided to Members through regional economic integration organizations. TCA will also spearhead field programme development, taking account of the fact that a growing share of field projects formulated and implemented by FAO require multi-disciplinary technical support. Similarly, TCI6 draws, as necessary, on various inputs from technical departments for its project formulation work. To serve both policy advice and field programme development, FAO Regional and Subregional Offices routinely maintain country task forces and multi-disciplinary teams to assess country needs which cut across technical disciplines. The incipient system of national medium-term priority frameworks instituted in follow up to the evaluation of decentralization will also clearly involve multi-disciplinary analyses and inputs from various levels in the Organization.

61.     While prospects for extra-budgetary resources are examined in another section, it may be noted in the context of inter-disciplinarity that there are a number of important global and regional projects financed by donors on the premise of FAO being able to bring multi-disciplinary capacities to support them.

Developments under PAIAs
62.     The MTP 2006-11 included proposals regarding the PAIAs to be active as of the beginning of the Plan period, i.e. implying that the list of current PAIA themes would increase from 16 to 18. This was the consequence of the transformation of an erstwhile PAIA entitled: Strengthening Capacity for Integrated Ecosystem Management (ECOM) into two formally new PAIAs on Combating Desertification (DSRT) and Sustainable Management of Mountains (MTNS), in fact continuing valuable inter-disciplinary work in the latter two areas, and of the introduction of another new PAIA on the Implications of HIV/AIDS on Food and Agriculture (AIDS).

63.     Following on the guidance from the 2005 sessions of the Committees on Forestry and on Agriculture a new PAIA on Bioenergy (ENGY) has been created. It was also deemed pertinent to broaden the scope of the AIDS PAIA to include the impact of other diseases on food and agriculture. The justifications for these two new PAIAs are provided below. Planned achievements for the 2006-07 biennium under all approved PAIAs are indicated in Annex IV, posted on FAO’s Web site.

64.     Bioenergy: Clean and safe energy services are essential for countries to achieve the Millennium Development Goals and to ensure sustainable development. The challenge is particularly important in rural areas of most developing countries where four out of five people are without electricity. The production of energy from biomass, referred to as bioenergy, includes wood energy derived from trees and agro energy derived from crops and from agricultural and animal by-products residues and wastes. The present century could see a significant shift from a fossil fuel to a bioenergy based economy, with agriculture and forestry as the leading sources of biomass for biofuels such as wood, charcoal, pellets, bioethanol, biodiesel and bioelectricity.

65.     The new PAIA ENGY will facilitate inter-departmental cooperation in assisting countries in bioenergy development programmes both from the technical and policy-making perspectives. It will address pertinent aspects such as rural infrastructure, employment opportunities, the food security and poverty dimensions, and diversified roles of bioenergy such as in trade and export. The new PAIA will bring together units involved in: resource and potential assessments, data and information systems, land cover and land use change, forest management, technology, engineering, agro-industries and climate change. Socio-economic aspects to be addressed will include: rural livelihoods and gender, legislation, economic policies, institutions, competing uses of land, payments for environmental services, international trade and impacts on food prices. The PAIA will support partnerships with other institutions, such as the UNFCCC, CBD and UNCCD7 conventions, UN Energy, ECOWAS, IFAD, CGIAR, OECD, IEA and WEC8 and with the private sector, users’ associations and other civil society groups.

66.     Implications of HIV/AIDS and Other Diseases on Food and Agriculture: Infectious human diseases, such as HIV and AIDS, malaria and tuberculosis, are significant health issues in much of the developing world. Increasingly, however, these epidemic diseases have come to be viewed as significant development problems. Various FAO bodies, including COAG, CFS, COFI9 and the two recent African Regional Conferences have urged FAO to analyse the links between these major epidemic diseases and food security and to support affected countries to effectively respond to their negative impact on the agricultural sector. It is recognised that the complex interactions between these epidemic diseases and food and nutrition security require that interventions be inter-disciplinary and effectively coordinated.

67.     Therefore, the new PAIA will coordinate normative outputs, technical assistance and policy guidance given to countries regarding the ways in which the agriculture sector (including fisheries and forestry) can contribute to mitigate the impact of HIV/AIDS epidemic and other diseases. The PAIA will increase the visibility of FAO’s work on HIV/AIDS and other epidemic diseases and will greatly improve the chances of becoming a co-sponsor of UNAIDS10.


68.     The Organization seeks to reinforce existing partnerships and create new ones, based on common objectives and concrete programmes of action, through a corporate framework that guides all units involved in cooperation with partners. In the realm of technical cooperation, an emerging key aim is to support the drive for greater harmonisation and alignment in order to reduce the burden on national governments. FAO also seeks expanded strategic partnerships with the private sector and close relationships with civil society partners concerned with agriculture, rural development, food security and sustainable management of natural resources. The Supplement to the PWB addresses the need for further strengthening FAO’s cooperation with partners, particularly within the UN system and with civil society organizations.

69.     In the latter case, cooperation will continue to be guided by the joint FAO-civil society action plan and its key target areas developed in follow-up to the World Food Summit: five years later as well as the parallel NGO/CSO11 Forum held in June 2002. Emphasis will be placed on: enhancing civil society participation in, and contribution to, global policy fora, including the International Alliance Against Hunger (IAAH); and strengthening NGO/CSO participation in policy dialogue, in particular through the FAO Regional Conferences and the planned Special Forum of the Committee on World Food Security in 2006.

70.     With regard to FAO’s collaboration with the private sector, efforts will continue to identify and attract private sector partners, including through enhanced dialogue and information sharing, better forms of institutionalising cooperation, generating interest in supporting investment in developing countries, and offering opportunities to support specific FAO programmes.

71.     A major aspect is FAO's participation in the UN Development Group (UNDG) and its various working mechanisms. Attention will be given to strengthening the role of FAO as a key actor within the UN development system, in particular as regards FAO’s capacity to support national efforts to achieve the Millennium Development Goals and other relevant international goals. FAO will also aim at supporting the implementation of the Paris Declaration on Aid Effectiveness adopted at the High-level Forum held in 2005. In response to calls for strengthening FAO’s involvement in various UN reform efforts, in particular at the country level, more effective alignment with, and support to, country owned programming instruments and processes will be sought, together with working in the framework of the Resident Coordinator system with other UN system partners. New technical assistance modalities and emerging demands under sector-wide approaches (SWAps) and direct budget support conditions, will need to be matched by adapted procedures.

72.     FAO will further promote the involvement of local administrations from developed and developing countries as new partners in rural development and food security, including cooperation with decentralized entities. The Organization will enhance information exchange with and between these entities, and mobilise their financial resources for joint programmes and projects in developing countries through the decentralized cooperation programme.

Communicating FAO's Messages

73.     During the biennium, guided by the principles of the Corporate Communication Policy and Strategy, FAO will continue to ensure a steady flow of communication to its Members as well as proactive communications with a broad range of audiences. Major factors affecting the context in which this work will take place include:

  • rapid technological change in the digital communication field;
  • competing demands for development resources;
  • diversification of FAO’s stakeholders and audiences;
  • UN Reform and the focus on helping countries achieve the MDGs.
74.     In this context, the Supplement to the PWB presents far reaching proposals to enhance FAO’s communication policy and capacity so as to strengthen its role as a knowledge organization.

75.     Throughout the Organization there will be further attention to instilling a genuine communication culture, using established corporate communication and publishing planning processes for the development of well focused and appropriate messages, identification of key audiences and of appropriate vehicles for message delivery.

76.     The primary focus of this communications effort during the period will be countries’ progress towards achievement of the MDGs and FAO’s support in this endeavour. At the same time, 2006 will see the 10th anniversary of the World Food Summit, when nations pledged to reduce the number of the world’s hungry by half by 2015.

77.     All available channels of communication will be tapped to raise awareness and understanding of decision-makers and those who influence them on issues related to FAO’s mandate. There will be continuing development of the FAO Web site, and in particular the Newsroom, as well as emphasis on reaching all sections of the media – print and broadcast. Technologies that facilitate more precise targeting of outreach will be employed, as well as introduction of more sophisticated tools to enable detailed analysis of coverage received. Efforts will continue, as resources permit, to enhance outreach at regional, subregional and country levels.

78.     The annual observance of World Food Day will continue to be used as a major opportunity to focus attention on issues related to food security. The complementary FAO Ambassadors programme and TeleFood campaign will also be supported.

79.     Follow-up to the evaluation of the cross-organizational strategy: Communicating FAO’s Messages will depend on the reactions of the Programme Committee at its session in September 2005.

Human Resources Action Plan

80.     The Human Resources Action Plan, submitted to the Finance Committee in September 2001, outlined areas for priority action that are linked to the strategies on Ensuring Excellence and Continuing to Improve the Management Process, and remain relevant for 2006-07, including:

  • Improvement of corporate HR policy processes through the Human Resources Committee;
  • Review of HR business processes and management models to support the implementation of an integrated Human Resources Management System (HRMS);
  • Analysis of the Organization’s requirements for staff and skills through an enhanced human resource planning capacity;
  • Pro-active and targeted recruitment programmes to meet organizational needs;
  • Development of the skills and competencies of staff to meet current and emerging programme requirements, such as decentralization;
  • Development of a fair, equitable and transparent system of performance management.
81.     Human resource planning and management is particularly important as FAO is a people-intensive organization with staff costs representing around two-thirds of its total Programme of Work, as shown in the table below. During the preparation of the PWB, units may modify their complements of posts according to changes in programme requirements, as described in Annex V: Evolution of Posts. The adjustments in the human resource input mix is partly illustrated by the 108 posts abolished and the 129 new posts created in the biennium under the ZRG scenario. Further changes in the human resource complement are achieved by changing the job descriptions of positions, for example when they fall vacant and are advertised. Moreover, a significant amount of expertise is also acquired through short-term contracts with consultants and other contractual arrangements.

Percentage of Staff Costs
Category 2004-05 % of staff costs ZRG Programme Change 2006-07 ZRG % of staff costs
Technical Units 77.1  0.2  77.3 
Non-technical Units 56.7  (1.4) 55.4 
Total 65.6  (0.8) 64.7 

82.     A major challenge in the biennium will be to acquire staff with the skills needed to keep pace with rapidly evolving technical requirements and ways the Organization is working to address Members’ expectations. As evidenced by the following table, significant turnover of staff due to retirement is foreseen in the next few years.

Staff Turnover on Budgeted Posts
Category Budgeted Posts Mandatory Retirement Potential Turnover Total Turnover % of Budgeted Posts
Technical Units 1206  55  43  98  8.1 
Non-technical Units 2076  79  67  146  7.0 
Total 3282  134  110  244  7.4 

83.     As regards the number, type and level of staff being recruited, a major emphasis will be to better align the requirements of organizational programmes and the competencies acquired externally and developed from within. Key to this effort are both HR planning and information systems which are able to capture data on, and identify the gap between skills possessed (skill inventory) and skills needed. The implementation of the Oracle HRMS will be crucial to furthering this process in a systematic way. At the same time, recruitment will continue to aim at balanced geographical representation and increasing the proportion of women and young professionals.

84.     A further component of Ensuring Excellence is to enable FAO to be an effective learning organization. This will require staff training during 2006-07, greater staff empowerment in using newly acquired skills and a capacity for the Organization to learn from successes and failures.

Implementation of a competency framework
85.     As part of the HRMS project, work will continue on the implementation of a competency framework which supports all aspects of human resources management, job design, recruitment and selection, performance management and staff development. Work will include implementation of competencies for managerial positions and FAORs to support performance management and ongoing development, as well as the completion of technical and professional competencies.

Management development
86.     Participation in the Management Development Centre (MDC), developed in partnership with WFP and IFAD, will be expanded and supported by individualised personal development plans and a wider management development programme. At the same time, management development will need to be better linked to other aspects of HR management, including performance management, career development and succession planning and will need to address the requirements of staff outside headquarters.

Human Resource Management System
87.     The implementation of the HRMS provides a unique opportunity to review and update business processes and the overall way HR is planned, managed and delivered, including a more comprehensive model for human resources management to ensure better service delivery at lower cost, as further described in Efficiencies and Productivity Improvements.

88.     The HRMS will also facilitate implementation of performance management by linking more closely individual performance plans to the Organization’s programme objectives. A revised system will allow for individual expected results to feed into approved programme objectives, career development and training needs and managerial skills requirements.

Extra-budgetary Resources

89.     Extra-budgetary resources facilitate translating FAO’s knowledge into tangible results at regional and country level, and also provide supplementary support to other key areas of the Organization’s work.

90.     To ensure the effectiveness of such support, FAO will strengthen consultations with both recipient countries and donor governments and institutions to ensure that the programmes and projects developed are fully in line with national development strategies, in particular PRSPs and UNDAF12. It will continue to ensure that programmes funded through extra-budgetary resources address the food security concerns of Members and their efforts in attaining the MDGs13.

91.     Enhanced resource mobilisation efforts will build on the Organization’s effectiveness in addressing complex development problems in a multi-disciplinary and result-oriented manner, emphasising national ownership through capacity-building and training. The Organization will broaden its communications strategy to illustrate its role and achievements in the international media (TV, press, Internet, etc.), showcasing success stories in poverty alleviation as a result of cooperation with donor governments and financing institutions.

92.     Strategic partnership frameworks outlining broad areas and modalities for long-term collaboration will be developed with a number of interested donors, thereby ensuring predictability and sustainability of FAO’s interventions in accordance with mutually agreeable geographic and thematic priorities. Continued emphasis will be given to attract resources from donor countries, including from the African continent, as well as from financing institutions and the private sector to the FAO Trust Fund for food security and food safety.

93.     In order to ensure clear focus and relevance of FAO’s projects and programmes submitted for the consideration of the international donor community, criteria will be strictly observed in the formulation process. Moreover, through the development of streamlined procedures in a revised Field Programme Manual, the timeliness of project formulation will be enhanced, as well as the transparency and cost-effectiveness of operations.

94.     The results of the last two years already represent a historical high in terms of extra-budgetary project approvals. It is noted, however, that FAO’s field programmes are increasingly concentrated in a limited number of countries and technical areas. Considering the trend towards decentralized decision-making on programming issues, FAO will pursue the strengthening of field programme development and resource mobilisation capacity in decentralized offices.

95.     Another major trend affecting the field programme concerns the ongoing process of harmonisation and alignment of international development assistance efforts at country level. Efforts will not be limited to mobilising resources for programmes and projects under FAO execution but, more importantly, the Organization will play a catalytic role in enhancing the flow of overall resources, from both public and private sources, to the agricultural sector as a whole, in particular for food security, emphasising national ownership which relies on the recipient’s capacity for programme implementation and with FAO playing a supportive role.

96.     Such a catalytic role will be increasingly important as the Organization, relying on donor and International Financing Institutions (IFIs) co-financing, steps up its investment preparation activities. Innovative approaches to programme development are expected to lead to significantly increased investment flows to the agricultural, rural development sectors, in particular in Africa.

97.     Finally, FAO will strive to further strengthen its collaboration with UNDP and other UN organizations and agencies, such as IFAD, WFP, WHO, UNEP, UNESCO, GEF14 as well as the World Bank, in order to join efforts and respective competencies, resources and know-how to tackle emerging global issues calling for international responses.

Planning extra-budgetary resources for 2006-07
98.     When programming the use of Regular Programme (RP) resources in the context of the biennial PWB, units bear in mind the contribution expected to be made to the achievement of the Organization's objectives by Trust Funds (TFs) and Special Funds, as described under the pertinent substantive programmes in Annex I.

99.     The level and distribution of extra-budgetary funding is difficult to forecast up to two and a half years before the expenditure is incurred. It is dependent upon the policies of donors which often respond to geographical and sectoral preferences, as well as demands from Members. Nevertheless, the following table provides the Secretariat’s forecast of extra-budgetary funded programmes for 2006-07, distributed by region and programme.

Extra-budgetary Expenditure by Region and Programme (US$ 000)
  Programme and Major Programme Global Inter-Regional Africa Asia and Pacific Europe Latin America / Caribbean Near East Total
122 Programme Planning, Budgeting and Evaluation 0 783 0 0 0 0 0 783
12 Policy, Direction and Planning 0 783 0 0 0 0 0 783
  Total Chapter 1 0 783 0 0 0 0 0 783
210 Intra-departmental Programme Entities for Agricultural Production and Support Systems 0 3,196 0 0 0 0 0 3,196
211 Natural Resources 6,555 0 13,545 10,481 0 6,572 0 37,153
212 Crops 0 34,299 58,705 7,109 112 1,166 141,936 243,327
213 Livestock 11,289 7,526 7,918 22,766 3,089 5,347 3,842 61,777
214 Agricultural Support Systems 910 0 9,387 9,642 3,228 0 0 23,167
215 Agricultural Applications of Isotopes and Biotechnology 1,118 0 0 0 0 0 0 1,118
21 Agricultural Production and Support Systems 19,872 45,021 89,555 49,998 6,429 13,085 145,778 369,738
220 Intra-departmental Programme Entities for Food and Agriculture Policy and Development 4,226 0 545 361 0 724 181 6,037
221 Nutrition, Food Quality and Safety 0 1,789 12,393 1,626 0 0 0 15,808
222 Food and Agricultural Information 0 1,759 2,287 803 803 803 803 7,258
223 Food and Agricultural Monitoring, Assessments and Outlooks 0 1,673 2,398 51 0 394 714 5,230
224 Agriculture, Food Security and Trade Policy 8,319 3,334 3,649 1,651 0 874 0 17,827
22 Food and Agriculture Policy and Development 12,545 8,555 21,272 4,492 803 2,795 1,698 52,160
231 Fisheries Information 0 1,893 0 0 0 0 0 1,893
232 Fisheries Resources and Aquaculture 2,041 11,450 0 260 3,574 0 88 17,413
233 Fisheries Exploitation and Utilisation 0 1,739 0 237 0 1,570 585 4,131
234 Fisheries Policy 0 24,334 0 0 0 0 0 24,334
23 Fisheries 2,041 39,416 0 497 3,574 1,570 673 47,771
241 Forest Resources 6,848 0 4,565 8,788 685 4,565 0 25,451
242 Forest Products and Economics 185 0 123 0 0 123 0 431
243 Forestry Policy and Institutions 3,115 0 4,153 4,153 1,038 4,153 0 16,612
244 Forestry Information and Liaison 364 0 0 0 0 0 0 364
24 Forestry 10,512 0 8,841 12,941 1,723 8,841 0 42,858
251 Research, Natural Resources Management and Technology Transfer 0 8,088 15,436 1,702 59 754 621 26,660
252 Gender and Population 0 4,824 643 643 0 643 643 7,396
253 Rural Development 5,434 368 2,760 4,233 736 10,122 368 24,021
256 Food Production in Support of Food Security in LIFDCs 0 0 27,151 2,974 0 26,796 2,318 59,239
25 Contributions to Sustainable Development and Special Programme Thrusts 5,434 13,280 45,990 9,552 795 38,315 3,950 117,316
  Total Chapter 2 50,404 106,272 165,658 77,480 13,324 64,606 152,099 629,843
311 Coordination of Policy Assistance and Field Programme Development 1,659 3,455 4,370 948 0 474 474 11,380
313 Legal Assistance to Member Nations 3,448 0 0 0 0 0 0 3,448
31 Policy Assistance 5,107 3,455 4,370 948 0 474 474 14,828
322 Investment Support Programme 0 3,903 0 0 0 0 0 3,903
32 Support to Investment 0 3,903 0 0 0 0 0 3,903
351 Multilateral and Bilateral Agencies 11,645 0 0 0 0 0 0 11,645
352 Civil Society Awareness and Partnerships 0 5,124 0 0 0 0 0 5,124
353 Cooperation Agreements with Member Nations and Support to ECDC and TCDC 2,892 0 0 0 0 0 0 2,892
35 Cooperation with External Partners 14,537 5,124 0 0 0 0 0 19,661
  Total Chapter 3 19,644 12,482 4,370 948 0 474 474 38,392
511 Public Information and Publications Support 810 0 0 0 0 0 0 810
51 Information and Publications Support 810 0 0 0 0 0 0 810
  Total Chapter 5 810 0 0 0 0 0 0 810
  Grand Total 70,858 119,537 170,028 78,428 13,324 65,080 152,573 669,828

100.     Beyond the extra-budgetary resources channelled through FAO, it may be noted that the Organization plays a key role in the generation of investment for food and agriculture through its Investment Centre (nearly US$ 3,200 million in the year 2004). It is also instrumental in tracking resources earmarked for agricultural and rural development as part of External Assistance to developing countries (e.g. a provisional estimate can be given for the year 2002 as close to US$ 9,600 million).

Efficiencies and Productivity Improvements

101.     The pursuit of efficiencies remains an on-going management process. However, it cannot be divorced from enhancing organizational effectiveness. Both aim ultimately to enhance FAO’s contribution to its strategic objectives and the MDGs, through strengthened internal results management, and stronger partnership with UN agencies, governments and other stakeholders.

102.     Improving efficiency and effectiveness will require a process to systematically learn from success and failures, share results and eliminate low value-adding activities, while continuing to simplify and streamline processes.

103.     For a learning organization such as FAO, effectiveness is greatly facilitated by its ability to continuously adapt to an increasingly uncertain environment, and develop competences to cope with future changes. This will require timely learning feedback and more systematic incorporation of the Organization’s accumulated knowledge and experience for the benefit of Members. Accordingly, the cross-organizational strategy Ensuring Excellence will give particular emphasis to the formation of an agile learning organization, based on more active knowledge management and support of best practice across all its activities.

104.     The scope of work for improving efficiency will be all-inclusive, covering the entire Organization, as there are no areas which a priori lend themselves to being exempted from value adding or streamlining process reviews. Consistent with current best practice, three broad themes will be pursued:

  • Efficiencies: focusing on inputs, as defined by the FAO Council at its 110th Session as “reductions in the cost of inputs without material negative impact on the outputs 15”;
  • Cost recovery improvements: ensuring FAO is adequately reimbursed for its services, where appropriate, also in accordance with the expectations of the Council; and
  • Productivity gains: focusing essentially on increases in outputs without increasing the cost of inputs.
105.     It is noted that the scope of efficiency savings outlined above extends beyond the areas normally sought by the governing bodies. While the focus of the governing bodies and the Organization’s resultant reporting has hitherto been on efficiencies and cost recovery improvements (in accordance with the definitions of the Council), productivity gains have not received recognition in the past. Measures will be initiated to include productivity gains in a framework for future action.

Establishing a framework for efficiencies and productivity improvements
106.     Following current best practice, a framework for efficiencies and productivity improvements will, therefore, be set up in the next biennium which will explicitly address the need for a longer-term perspective. The framework will spell out the principles, goals and incentives of the initiative, and an outline of areas for consideration is provided below.

107.     In 2006-07, FAO will define a target for efficiencies and productivity improvements. An aggregate target in the order of 1.0 – 1.5% p.a. would be typical in the public sector. If applied to FAO, these savings might appear small when compared to the efficiencies realised by the Organization in previous biennia and reported to the governing bodies. However, the significant achievements of the past will not materialise again indefinitely, and even the more modest levels of savings will require substantial investment or readiness to incur transitional costs if more complex process changes are to be implemented. Moreover, several members of the Finance Committee have acknowledged the difficulties in achieving further savings, and the Programme Committee requested in its May 2005 session that efficiency savings targets for 2006-07 should be realistic.

108.     An important principle is that productivity improvements and efficiencies should be independent of the budget level and not a tool for negotiating budgets. Budget negotiations will need to be related to programmatic guidance and expression of choices from Members. Efficiency savings, on their part, are inextricably linked with enhancing the Organization’s effectiveness - improved efficiency and greater effectiveness go hand-in-glove.

109.     Sustainable efficiencies, and their full integration into day-to-day processes, will have to be fully owned by managers to harness their commitment. Managers will need a stable framework with clearly elucidated principles and incentives to proactively re-examine the simplification and sustainability of core business processes, including cross-cutting ones, through re-engineering rather than fine-tuning. Although the framework will evolve over time, best practices adopted elsewhere will be examined for their applicability in FAO. For example, it would be appropriate to provide incentives to managers. One approach could be to withhold on average an annual 1% of their budgets, as a sort of “efficiency tax”, but allowing managers the opportunity to earn back a part or all of the funds held back, based on sustainable efficiencies achieved. Another approach to be considered, could be to create an “innovation fund” by channelling, say, 1% of the Regular Programme budget into a centrally managed fund which would permit investment in process changes addressing innovative cross-cutting ways of improving the Organization’s efficiency or productivity.

Productivity enhancements, indicators and benchmarking
110.     As noted above, to date the Organization has not built up a systematic record to demonstrate its productivity enhancements, although there are examples of improvements in the administrative and technical programmes.

111.     Productivity gains in the administrative area have included the processing of payments to suppliers, with the average time taken to process payments, once clear documentation is received, reduced from 7 to 10 days to 2 to 3 days. In FAO’s technical work, evidence of productivity improvements is apparent in the area of Statistics, where the successful implementation of information technology has led to considerable improvements in productivity in recent biennia. The Statistics Division has transformed the production of food balance sheets from being a highly labour-intensive job involving 40 clerical staff, to one involving about 20 clerical staff currently (i.e. an efficiency saving), whilst in terms of the output, the balance sheets now include about 5 times the statistical data that they used to (an unquantified productivity gain). With the implementation of FAOSTAT16 2, this trend will continue and staff will be pushed to the higher end of the value-chain.

112.     However, the Organization’s outputs are not sufficiently defined and recorded in a way to make them comparable over time and, resources permitting, a system of more rigorous measurement and comparison with standards will be developed. During 2006-07, clear outputs and measurable indicators will be identified for each major efficiency or productivity improvement sought. For example, the economic benefits through use of electronic signatures, which would streamline human resource management but deliver the same output, would be quantified; the extent of increased cost recovery achieved through revised reimbursement rates for emergency services and implementation of budget formulation guidelines would also be quantified.

113.     FAO benchmarks would be progressively developed on a sector-by-sector basis in a manner which facilitates comparison against similar processes in the public sector and, where appropriate, the private sector. This major undertaking will require some time to build up the necessary benchmarks. However, a number of specialists in this field have been identified and will be approached to assist the Organization in arriving at relevant sector-specific benchmarks. Where possible, departments will also be assisted in setting for themselves, medium-term stretch targets, based on benchmarks from comparable service-providing institutions.

Current initiatives
114.     The vigorous pursuit of efficiencies has been under way in FAO since January 1994 with well-documented efficiency savings over the previous five biennia, estimated at US$ 60 million per annum compared with 1994. Improvements in productivity, which have entailed increases in output without any increase in the cost of inputs, are largely excluded from this figure. The current efficiency initiatives can be broken down into two types: those which are of an institutional nature and are driven from the top, as they cut across all spheres of the Organization’s work; and those which concern a business process under the direct influence of a single manager.

Current institutional efficiencies
115.     Cross-sectoral reviews: Building on the results-based model already implemented by FAO, but with particular attention to the need to better integrate linkages between headquarters and decentralized work (particularly at country level) and better leverage the Organization’s knowledge assets, the Organization would seek to formulate the expected results at the highest possible aggregation level. Examples of areas of review include:

  • formulation of expected results above the programme entity structure, taking due account of inter-disciplinary work programmes;
  • a simplified, more regular monitoring process, no longer focusing on variance analysis (comparing budgets with actuals), but on the actual progress achieved in servicing the agreed results chain;
  • more real time feed-back from knowledge and learning sharing and ongoing timely evaluations about what works and what doesn’t with respect to the expected results;
  • strengthened results-based service-level agreements with a clearer definition of accountabilities; and
  • a simplified chart of accounts, to reduce administrative effort in entering data of marginal utility.
116.     The Human Resources Management Model (HRMM): In conjunction with its implementation of the HRMS the Organization will significantly reformulate the way human resources services are delivered by implementing a Human Resources Management Model, which will enhance the value of human resources services by shifting work from transaction processing towards strategy and advice, and improve responsibility and accountability.

117.     A single system and sole single source of all HR information through the HRMS will provide a homogeneous service delivery process, reduce the number of errors and cut the time needed to handle transactions. The implementation of the HRMS will eliminate double-entry of data and duplication of roles in human resources service delivery. The use of “electronic workflow”, coupled with a reduction in routing steps, by having no more than one initiator and two approvals, will streamline transaction processing (for example, six sign-off steps are currently needed to process leave-without-pay). A “self service” approach, whereby staff and managers are able to electronically execute actions that previously required intervention by other FAO HR staff, will also improve efficiency.

118.     The proposed HRMM will seek to concentrate HR transaction processing functions in one place and reduce the need for non-HR staff to perform HR services. The new processes will decrease the total number of staff needed and will also allow the realignment and redeployment of HR personnel from transaction processing activities towards more value-adding activities such as HR strategy and development. Current estimates suggest that only about 18% of HR staff is actually working on such activities compared with closer to 42% in the proposed model.

119.     Headcount savings are expected to be realised through natural attrition and staff retirements. Hence, there is a need to provide additional training for existing staff. The full benefits of the new HRMM will be reached by 2009.

120.     Streamlining of regional and country level administrative activities: The follow-up to the Independent Evaluation of FAO’s Decentralization will progressively yield cost reductions in a number of cross-cutting areas as steps to implement a more efficient and effective decentralized structure are taken throughout the biennium. Actions already foreseen include the conversion of 12 International Administrative Officer posts to National Administrative Officer posts, which will yield biennial net savings of US$ 0.9 million, but cannot translate into savings in the budget as the network is under-funded following real reductions totalling US$ 5.2 million in the current biennium. Greater delegation of administrative and operational responsibilities to country offices will also improve response time in the provision of services.

121.     Improved support cost recovery: Non-recovered variable costs of providing administrative and operational support (AOS) services or technical support services (TSS) to extra-budgetary projects are effectively borne by the Regular Programme budget, thereby straining the Organization’s capacity to implement its regular Programme of Work.

122.     In accordance with the principles already approved by the FAO Council, the Finance Committee, at its last session in May 2005, encouraged FAO to continue efforts towards full recovery of indirect variable costs for emergency operations. Currently, the ceiling rate for such projects is 6.5%. However, a new ceiling rate for emergency and rehabilitation projects of 10% is needed to assure that the Organization’s ability to recover its indirect variable costs is not compromised. The new ceiling will be proposed to the Finance Committee at its session in September 2005.

123.     The Organization will also seek to improve recovery for technical services performed for extra-budgetary projects. This will require, inter alia, improved budget formulation practices for full implementation during 2006-07. Impediments to cost recovery, including complex administrative procedures which discourage managers from submitting claims for reimbursement for services rendered, will also be removed.

124.     Registry management: The review of registries which commenced in mid-2003 has now been completed and has resulted in significant changes to the methods of work with the introduction of digitisation. The FAO records management process can now be benchmarked against the International Organization for Standardization (ISO) 15489 standard, which is an essential component of new accountability and quality management standards.

125.     The ensuing structural and staffing changes are expected to yield savings of US$ 0.6 million, net of the purchase of required licensing software. This is in addition to the net savings of US$ 0.4 million, realised in the PWB 2004-05 and the unquantified time saved by managers and support staff searching for documents.

Current Budget Holder driven efficiencies
126.     Information Technology: A number of initiatives are currently being pursued by the AFI17 to improve Information technology (IT) governance within the Organization. The division is seeking to find efficiencies within its current operation by establishing corporate standards for IT throughout the house, thereby reducing maintenance and migration costs.

127.     In addition to this, FAO is part of the ICT network, an inter-agency IT strategy body which seeks to establish IT standards across the UN agencies and, amongst other initiatives is assessing the feasibility of a joint UN payroll system and using shared service centres, for example the UN International Computing Centre (ICC) in Geneva. FAO has already taken advantage of this by outsourcing its mainframe computer environment to them. The intention now is to move to a larger mainframe at the ICC, where FAO applications would share this resource with applications from other Rome-based UN agencies. The savings foreseen for 2005 will be utilised to fund the consolidation of activities, but from 2006 onwards, savings of approximately US$ 60,000 per year are anticipated.

128.     Beyond outsourcing, the Organization is also embarking upon “off-shoring” administrative and information systems development work as related to the HRMS project, to the less costly location of the Regional Office for Asia and the Pacific, in Bangkok, where the infrastructure in terms of office accommodation and management support is well established. Savings to the HRMS project are estimated around US$ 750,000 despite some additional telecommunications expenditure to provide improved links between Bangkok and Rome. If successful, off-shoring could be contemplated for other administrative areas of the Organization.

129.     It may also be noted that under the Capital Budget for 2006-07, the Organization is taking some initial steps to replace its telephone equipment and examining the adoption of emerging voice technologies, especially Voice-Over-Internet Protocol (VoIP) in 2009 or possibly earlier if justified by the net savings of this new technology.

130.     Document and publication management: In June 2005, a new internal charging mechanism was approved for implementation for the distribution and storage costs of all FAO publications and meeting documents. Currently, these costs are paid centrally by AFS18, whereas from January 2006 the budget for these costs will be placed, as far as possible, with the internal client divisions which have some influence over the costs through their decisions on the quantity of publications to distribute and store. It is anticipated that savings of US$ 0.7 million will be realised over the biennium as a result of the ensuing behavioural changes. However, these will not translate into budgetary savings in 2006-07 as the activity is significantly under-funded following the budget reductions in the current biennium.

131.     Changes in printing technologies have reached a level of maturity whereby most of the distribution activity (i.e. handling, packing and labelling of publications) can be automated as is already being done in large private sector companies. The Organization is investigating whether a substantial portion of FAO publications could be produced and inserted into addressed envelopes directly by upgrading in-house printing facilities or by using properly equipped external printers. The Organization could reap biennial savings of about US$ 0.5 million in the distribution of publications, although this proposal may require some initial investment costs.

132.     Containment of travel costs: Working with other UN system agencies in Rome, FAO will begin to negotiate directly with airlines to make most use of the combined purchasing power of the agencies. It is expected that the ability to leverage individual airlines through concerted action will more than offset the loss of airline commission from which the Organization presently benefits in the present contract with its travel agency.

133.     Efficiencies and savings in governance: Aside from reducing the duration of the forthcoming Conference from 9 to 7 days, as approved at the 32nd session of the Conference, the length of the sessions of the Committees on Commodity Problems (CCP) and on Agriculture (COAG) was reduced in 2005 as requested by the Council19, which may well lead to savings. The Organization is also seeking to contain interpretation costs by critically reviewing the number of Regional Groups' meetings held. Furthermore, the Supplement to the PWB acknowledges the need for streamlining the meetings of statutory bodies at both global and regional levels, as well as internal Committees.

134.     Following calls from the governing bodies, FAO is seeking to reduce the length of most of its meeting documents, while strengthening their results focus. Initially, the aim is to reduce by 10% the total volume of documentation for all governing body meetings, which, indeed, was one of the reasons for shortening the SPWB and full PWB documents. Achievement of the target is a shared responsibility with the governing bodies, who are the primary recipients of such documents. The governing bodies may, therefore, wish to exercise further selectivity in their requests to the Secretariat for additional information or new documents, and encourage the Organization to shorten existing meeting documentation.

135.     In seeking to find innovative ways to generate further savings in governance, the Organization is also looking at practices in other UN agencies. The elimination or more efficient production of verbatim records, which are very expensive to produce, is one area of investigation. Other organizations using verbatim records are IFAD, ILO and UNESCO20. Recognising that verbatim records are a requirement of FAO’s Basic Texts, other less costly methods are being considered, such as audio/video recordings of governing body meetings. UNCTAD and WTO21 have experience in making such recordings available on their Web sites.

136.     Whereas it is estimated that the implementation of such measures will generate savings of approximately US$ 300 000 per annum, some of these savings will be required as an initial investment in technological infrastructure.

137.     Use of efficiency savings achieved: The efficiency savings achieved will be reported on and will be applied to areas of programme priority. However, while budgetary resources can be more freely allocated to areas of highest priority, the use of efficiency savings is more restricted as a part will be used to fill funding gaps of previously under-funded programmes and another part will be needed, as laid out in this section, to provide incentives to budget holders.

5 Policy Assistance Division

6 Investment Centre

7 United Nations Framework Convention on Climate Change (UNFCCC); Convention on Biological Diversity (CBD); United Nations Convention to Combat Desertification in those Countries Experiencing Serious Drought and/or Desertification, particularly in Africa (UNCCD)

8 Economic Community of West African States (ECOWAS); International Fund for Agricultural Development (IFAD); Consultative Group on International Agricultural Research (CGIAR); Organisation for Economic Co-operation and Development (OECD); International Energy Agency (IEA); World Energy Council (WEC)

9 Committee on Agriculture (COAG); Committee on World Food Security (CFS); Committee on Fisheries (COFI)

10 The Joint United Nations Programme on HIV/AIDS

11 Non-governmental Organization (NGO); Civil Society Organization (CSO)

12 Poverty Reduction Strategy Papers (PRSPs); United Nations Development Assistance Framework (UNDAF)

13 Millennium Development Goals

14 United Nations Development Programme (UNDP), International Fund for Agricultural Development (IFAD), World Food Programme (WFP), World Health Organization (WHO), United Nations Environment Programme (UNEP), United Nations Educational, Scientific and Cultural Organization (UNESCO), Global Environment Facility (GEF)

15 CL 110/REP, para. 24

16 Corporate Database for Substantive Statistical Data

17 Information Systems and Technology Division

18 Administrative Services Division

19 CL 127/REP, para. 23

20 International Fund for Agricultural Development (IFAD); International Labour Organization (ILO); United Nations Educational, Scientific and Cultural Organization (UNESCO)

21 United Nations Conference on Trade and Development (UNCTAD); World Trade Organization (WTO)

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