National Smallholder Producers Engagement Session 15 May 2014 Pretoria – South Africa WFP Lesotho Initiative

WFP Procurement Principles Fair competition Invite at least 3 potential suppliers for competitive bidding. Exceptionally, the waiving of competition may be authorized Transparency All steps in the procurement/contracting process are accurately documented Separation of Duties No one individual is in charge of the entire procurement process Ethics All staff must maintain an impeccable standard of integrity in all business relationships Accountability Staff are accountable to the Executive Director for their actions in managing WFP resources

Import Parity WFP procures on the basis of import parity which means that a comparison of all potential options against one final destination is made. Even when there are donor restrictions regarding the potential origin of the commodities WFP procures, the concept of import parity is still applied within the country / countries in which WFP is allowed to procure. Additional costs such as transport, storage, packing, inspections services, port / border operations, commodity transformation (i.e. milling) are added to offers received so that the comparison between offers can be made.

What WFP Purchased

Purchase For Progress (P4P)  WFP’s pro-smallholders initiative in 20 Countries (4 in SADC)  Pilot Period:  Built on 3 pillars: Demand, partnership, learning & sharing  400,000 MT (USD 106 million) procured during the pilot period Innovative buying modalities:  Competition: Pro-smallholder tenders, commodity exchanges, cereal fairs  Direct contracting  Warehouse receipt system  Forward contracting  Processing opportunities

The Lesotho Initiative  DIRCO Donation: ZAR180 million (approx USD 18 million) for Lesotho  Estimated number of beneficiaries: 226,000 people yearly (for 2 years).  Estimated total quantity of food: 17,212 metric tons (USD 10.5 Million).  Estimated tonnage to be purchased from smallholder farmers: 3,900 MT.  Achieved smallholders’ food purchases: 268MT (USD 71,366).  Duration: February 2013 to November  All food commodities to be purchased must be of South African origin.  WFP should endeavor to source a target of 40% of cereals (about 3,900 MTs) from South African smallholder farmers (SHFs), while ensuring that the critical and timely food needs of target groups in Lesotho are not compromised.  WFP plans to buy 3,500 MT (3,000 MT of Maize and 500 MT of beans) in 2014 from 8 Provinces  Capacity building of smallholder producers in 8 Provinces

Procurement Process  Identification of SHFs: DAFF/PDOA  Registration of SHFs  Competitive bidding – Receiving offers from SHFs  Evaluation of offers and approval of contract award  Quality and Quantity Inspection  Contracting – contract signing  Delivery – Uplift of commodity (Incoterms 2010)  Invoicing and supporting documentation  Payment Details of the process is in the “Lesotho Initiative Smallholder Farmers Food Procurement Process Guidance Note 1”.

Smallholder Farmers Registration NoProvince Number of Smallholder Producers Registered in WFP Suppliers Roster 1Free State20 2North West13 3Mpumalanga4 4Gauteng10 5Limpopo19 6Eastern Cape2 7KwaZulu Natal0 8Northern Cape0 Total68 NoProvince Number of Smallholder Producers Qualified for Registration in WFP Suppliers Roster 1Free State0 2North West0 3Mpumalanga2 4Gauteng25 5Limpopo9 6Eastern Cape0 7KwaZulu Natal1 8Northern Cape1 Total38

Smallholder Farmers Capacity Building  Identification of needs  Stock-taking – mapping needs with the right CB activities  Identification of existing expertise  Sourcing of required CB expertise and equipment  Identification of beneficiaries  Implementation of CB activities  Exit/handover Long term goal: To transform the smallholder farmers into viable marketing groups who can profitably engage with the big buyers and sellers in the value chain (e.g. Millers).

Thank You! End!