Finance Committee

Introduction

1. The Finance Committee at its 93rd Session received and reviewed a paper¹ on the issue of Support Costs. It welcomed the broadly based review initiated in the paper and acknowledged the conceptual framework as a helpful basis for further development of proposals.

2. The Committee requested the Secretariat to provide information on various related areas. This paper deals with the request of the Committee that it be provided with an overall picture of FAO's field programme - interpreted for this paper as the conventional field programme plus any other activities funded from voluntary contributions so as to ensure a comprehensive approach.

Scope

3. The following diagram portrays the range of activities which may result in support costs along with their relationship to the Regular Programme.

Table 1: Matrix of Activities by Funding Source and Type²

4. The shaded boxes in the above table reflect all of the activities where some type of support cost potentially exists. The document provides a profile of these activities based largely on 1998 data although some recent trend data is provided where it is available.

5. A brief description of each of these programmes follows:

Extra-budgetary - National Funding of Technical Assistance

6. Unilateral trust funds (UTF) are funded by the recipient country either directly or indirectly as loans from financial institutions, such as WB, IMF, Regional Banks or EEC. In essence, they are bilateral arrangements where countries choose FAO to manage all or part of the implementation of a given programme or project. This work tends to come to FAO because of its clear comparative advantage most often in areas of recognised technical competence but also, on occasion, because of its reputation for probity of funds.

Extra-budgetary - Donor Contributions to Technical Assistance

7. The essence of these arrangements is that they are tri-partite; that is there is:

• a recipient country whose Government has made a request for technical assistance;
• FAO, who may have formulated the project with the Government, as the executing agency; and
• a donor (Government, IGO, Private Sector or NGO).

The major part of these efforts are carried out under Government Cooperation Programme projects or projects funded by UNDP. Smaller amounts are available from other sources. FAO's comparative advantage is seen in the breadth of technical experience in the areas of its mandate and in its capacity to deliver multi-disciplinary solutions to Members Nations.

Extra-budgetary - Donor Contributions to Emergency Assistance

8. These arrangements are also, in principle, tri-partite although there will be cases where no recognised national authority is available or widely recognised for an agreement to be signed by the recipient Government. The work generally consists of emergency relief and rehabilitation. FAO's comparative advantages include expertise in early warning techniques, its wide multi-disciplinary knowledge of the agricultural inputs required, and its capacity in the field of emergency coordination.

Extra-budgetary - Donor Contributions to FAO's Normative Activities

9. The essence of such contributions is that they directly contribute to a normative activity approved in the Programme of Work and Budget. Donors tend to support such activities because of FAO's comparative advantage as an international forum and centre of excellence in these areas of its mandate. The agreement may be between FAO and a donor and may involve another country or region for pilot work in support of normative activities.

10. This category also includes the various Commissions which FAO services (e.g. the Desert Locust Commissions, European Commission for Foot and Mouth Disease, etc.) as these are seen to be contributing to FAO's normative work.

Extra-budgetary - Jointly Funded Activities

11. Jointly funded activities embody partnership arrangements with UN system, WB, IMF, Regional Banks, EEC or related IGOs (e.g. CGIAR) and NGOs which result in cost sharing financial arrangements. These usually stem from a Memorandum of Understanding which spells out the common purpose (always in support of work falling within FAO's mandate) and the obligations of the partners. Examples include the joint programmes with the World Bank (i.e. investment project formulation), WHO (i.e. food standards work), and the Technical Advisory Committee of CGIAR.

Regular Programme - Technical Assistance

12. This can take a variety of forms for nationally funded projects where FAO uses TCP or SPFS funds as a contributions towards a Government funded technical assistance activity. In the case of SPFS, it includes funding for all of the pilot programmes and subsequent support to national programmes. TCP is also often used to meet Government requests for direct technical or operational support to their unilaterally funded programmes. That portion of technical support services, which are provided to such programmes and which are to be funded from the Regular Programme, also belongs in this category.

13. In the case of the technical assistance funded by a donor (i.e. not by the recipient country government), TCP projects may be used to support urgent actions pending donors completing their internal approval procedures and releasing funds. Similarly SPFS activities can be carried out on a complementary basis using Regular Programme funds in support of donor-funded activities. That portion of technical support services, which are to be funded from the Regular Programme, also belongs in this category.

Regular Programme - Donor Contributions to Emergency Assistance

14. The availability of TCP resources at short notice can facilitate a very quick response to emergencies, albeit on a very limited scale. This can provide the crucial responsiveness that is often not possible for external donors and TCP can bridge the situation pending the release of donor funds. Examples in the past have included FAO's initial response to the New World Screwworm emergency.

Financial Profile of the Field Programme

Recent Trends

15. Recent historical field programme expenditure data by funding source is summarized below, excluding the Jointly Funded Activities for which historical trend data is not readily available. Similarly, the breakdown between normative and other activities is not available over the three year period but is provided below where the profile of the 1998 field programme is examined in more detail. The following trends are highlighted:

Table 2: Field Programme (US$ million)

* The distinction between FAO Execution and FAO Implementation is that the latter occurs where FAO is invited to implement part of a project that has been designated for "national execution".

UNDP

16. UNDP accounted for almost 90% of FAO field programme delivery in 1970 but UNDP-funded field projects experienced a precipitous decline in the 1990s. UNDP-funded activities have shrunk from a level of US$ 108.3 million in 1993 to US$ 28.6 million in 1998 for projects that are executed or implemented by FAO. Delivery in 2000-01 is expected to stabilize at about US$ 28 million per year.

17. The share of the execution and implementation of the UNDP programme by the "Big Five" UN Agencies (FAO, UNDESA, UNIDO, UNESCO and ILO) has declined from US$ 127 million in 1995 to US$ 94 million in 1998. This is one of the direct consequences of the UNDP priority for "National Execution" of projects which increased from US$ 637 million in 1995 to US$ 1,460 million in 1998. The effect on FAO's share is seen in the following chart.

Table 3: FAO Share of UNDP Funded Field Programmes

18. Moreover, FAO's share in UNDP expenditures for the "Big Five"³ UN Agencies has also shown a downward trend falling in 1998 to 30% (versus 46% in 1995). This trend will be analyzed and followed up with UNDP with the view to ensuring that agriculture, fisheries and forestry sectors are given priority in the allocation of UNDP resources for Field Programme.

Table 4: FAO/UNDP Delivery vs. UNDP Total Execution via the Big Five UN Agencies

19. UNDP's Support for Policy and Programme Development (SPPD) and Support for Technical Services (STS) has remained stable at between US$ 3.5 million and US$ 4 million per annum.

Trust Funds

20. Non-emergency Trust Fund project expenditure has declined in 1997 and 1998 to levels below US$ 130 million, after experiencing small increases in 1995 and 1996. It is expected that this will recover during the 2000-01 biennium to levels similar to those reached during 1996.

21. Trust Fund emergency activities, normally carried out by FAO's Special Relief Operations Service (TCOR), vary with circumstances. Between 1993 and 1995, work of the Emergency Centre for Locust Operations (ECLO) and the Screwworm Emergency Centre for North Africa (SECNA) resulted in expenditures of approximately US$ 30 million each year. As these emergency programmes declined, or were completed, emergency assistance expenditure reached a low of US$ 15.8 million in 1996. The large increase in 1997 and 1998 is related to the Iraq Food for Oil programme which accounted for US$ 35.2 million expenditure in 1997 and US$ 66.9 million of the total US$ 78.3 million delivery in 1998. High levels of emergency activities are expected to continue through 2000-01, as the Iraq Food for Oil programme is expected to continue, together with the provision of emergency supplies to conflict-affected areas in the Balkan states.

TCP and SPFS

22. Finally, the field programme includes the Regular Programme-funded projects under the Technical Coopration Programme (TCP) and Special Programme for Food Security (SPFS). The volume of delivery directly reflects the appropriation as approved by the Conference whereas demand for both programmes exceeds the available resources.

Composition of 1998 Field Programme Expenditure

Breakdown of Delivery by Category

23. A breakdown of 1998 resources by the matrix of activities introduced above is shown in the table below. As the categorization is not the same as that included in the accounting systems of the organization (e.g. "normative" projects are not accounted separately from other projects), the data is derived statistically. However, the figures are considered useful as alternative policies for reimbursement rates will be developed using these categories and the amounts are sufficiently reliable to allow the impact of alternatives to be evaluated in financial terms.

Table 5: Matrix of Activities by Funding Source and Type

(Estimated amounts in US$ million based upon 1998 experience)

24. The relevant programmes can be further broken down by source of funds. GCP and emergency (OSRO) trust fund projects have the largest proportion of 1998 field programme expenditure, 32 % and 29% respectively, while UNDP and Regular Programme (TCP/SPFS) each represent 12% of the total.

Table 6: Share of Field Programme Delivery by Source of Funds

Breakdown of Delivery by Region and Geographical Location

25. All Field Projects are shown under the five regions (namely Africa, Asia and the Pacific, Latin America and the Caribbean, Near East and North Africa, and Europe) according to their country of execution. In addition, Global and Inter-regional projects may serve more than a single region.

Table 7: 1998 Field Programme Delivery by Region and Category

26. The Near East and North Africa region had the largest 1998 expenditure, amounting to over US$ 82 million. This was due to emergency activities under the Iraq Food for Oil programme, which accounts for almost US$ 67 million.

27. The countries with the largest field programme in 1998 (excluding Iraq's Food for Oil programme) are illustrated below, and cover four regions, namely Africa (Senegal, Niger, Mozambique, Burundi), Asia and the Pacific (Afghanistan, India), Latin America and the Caribbean (Brazil, Bolivia), and Near East (Yemen and Saudi Arabia).

Table 8: Top Ten Countries in terms of Project Delivery

Breakdown of Delivery by Donor

28. The following chart shows those extrta-budgetary sources of funds which exceeded US$ 5 million in contributions during 1998.

Table 9: Major Donor Contributions in 1998

Breakdown of Projects by Project Size

29. In terms of size about 64% of projects active in 1998 had a lifetime budget within the range of US$ 100,000 and US$ 500,000. Projects with total budgets of US$ 500,000 and higher constitute 31% of the total.

Table 10: Projects by Size of Budget, 1998 (Percent of Total)

Table 11: Percentage Distribution of Projects by Duration Chart, 1998

Breakdown of Projects by Duration

30. The following chart shows a breakdown of project by duration. However, this relies on project length as foreseen when approved which can be misleading as many projects are subject to a series of extensions which reflect a number of "phases" of the project. Therefore the effective distribution by duration will tend towards longer projects than portrayed in this chart.

Breakdown of Delivery by Technical Programme

31. FAO Governing Bodies have consistently recognized that the Regular and Field Programmes are intertwined both in structure and functions, and have underlined the importance of the synergies between the two. The following table compares, for every programme area within the Technical and Economic Programmes, the resources spent under the Regular and Field Programmes in 1998.

Table 12: FAO Programme Delivery by Technical Programme Area, 1998

32. It may be noted that within the Field Programme, there is an increasing number of Trust Fund projects that directly support Regular Programme normative work. In 1998, they amounted to US$ 24.7 million.

Conclusions

33. The analysis given above is designed to enlighten the Committee about the general features of the field programme funded from extra-budgetary and Regular Programme sources as well as the extent of other activities which are funded from voluntary contributions. The document is for information only and no decision is sought.

Annex I

LIST OF ACRONYMS

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1  FC 93/4

2  A list of acronyms is included as an Annex to this document.

3  The "Big Five" agencies were the five largest agencies in terms of UNDP funded delivery at the time of the support cost successor discussions in 1992