Cost Recovery in Monetization TOPS Knowledge Sharing Nov 2012

Overcoming Obstacles -Current Trends and Issues:  Rising fuel prices have slowed or hindered commodity shipments  Organizations are seeking innovative solutions to reduce costs and increase cost recovery  Is there a role for a scaled up/more formal version of what these organization are currently doing? -Land O’Lakes’ Solutions:  Consolidating shipments saves freight  Follow monetization sales contract

About Us -Land O’Lakes International Development founded in 1981; acts as a not-for-profit division of Land O’Lakes, Inc. -Implemented 275 programs in 80 countries -Focused largely on agricultural development, enterprise partnerships -Monetize commodities for USDA, USAID and other organizations

Case Study: Liberia -Issue: Large shipment planned for Liberia -Action: Coordinate shipments -Result: “Recovery costs [95%] are very good relative to many other monetization programs,” Alliance for Global Food Security

Case Study: Madagascar -Issue: Small shipment (7,000 MT bulk HRWW) and high rates; Buyer wanted to drop price by $25/MT -Action: Land O’Lakes identified cargo going into Mombasa and advised lead agency on possibility -Result: Cargo shipped in bulk as per sales agreement

Case Study: Consolidation -Issue: Multiple agencies and donors shipping to multiple countries, worked to consolidate costs -Action: Consolidated shipments going to different countries -Result: Saved an estimated $1.7 million (actual $ /MT vs. rate of $215/MT)

Case Study 3: Consolidation 1.USDA FFPr TNS Kenya April Mombasa 11,000 MT bulk ocean (free out). 2. USAID Prepo $162.67/MT -Mombasa Prepo 5,000 MT bulk Sorghum ocean (berth terms) + $20.00/MT bagging/stacking. -Durban Prepo 10,000 MT bulk Sorghum ocean (berth terms) + $44.25/MT bagging & stacking into warehouse. 3. USAID Title II CRS Madagascar 10,000 MT bulk $163/MT 4. Mercy Corp for Tanzania (FFPr) 6,340 MT bulk HRW wheat. 5. CRS for Burundi (Title II) 3780 MT bulk HRW wheat.

Case Study 4: Coordination CDSO Combo - April Issue: Tonnage small making freight rates costly -Action: Land O’Lakes working in Mozambique and Madagascar- advised lead agency on combo possibility -Result: Cost savings  $562,500 for Malawi Program over actual rates or $803,000 over budgeted rate $270/MT for 4,500 MT to Maputo vs. earlier quote Basis 4,500 MT = $395 per MT).  $528,750 for Madagascar Title II ($270/MT for 2,350 MT vs earlier quote of Basis 2,500 MT = $495/MT).

Other Steps We Took -Discussed with NGOs and their freight agents -Communicated between USDA/USAID -Provided more shipment and offloading oversight -Communicated more with NGO “partners” on sailing of vessels

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

Example Matrix of Port Dates

Worth the Extra Effort -Additional resources would allow additional commodity to be shipped -No programmatic delays due to shipping -Increases actual cost recovery

Interested? -Contact:  Matthew Smith, Commodity and Program Manager; (202)  Website:   Facebook: