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Cost Recovery in Monetization TOPS Knowledge Sharing Nov 2012

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

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Cost Recovery in Monetization TOPS Knowledge Sharing Nov 2012

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  1. Cost Recovery in Monetization TOPS Knowledge Sharing Nov 2012

  2. Overcoming Obstacles • Current Trends and Issues: • Rising fuel prices have slowed or hindered commodity shipments • Organizations are seeking innovative solutions to reduce costsand 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

  3. 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

  4. 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

  5. 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

  6. 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 $163-177/MT vs. rate of $215/MT)

  7. Case Study 3: Consolidation • USDA FFPrTNSKenyaApril 2012 - Mombasa 11,000 MT bulk HRW @$177.00/MT 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 wheat @ $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.

  8. Case Study 4: Coordination CDSO Combo - April 2012 • 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 • $562,500for 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).

  9. 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

  10. 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?

  11. Example Matrix of Port Dates

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

  13. Interested? • Contact: • Matthew Smith, Commodity and Program Manager; MHSmith@landolakes.com; (202) 370-1665 • Website: www.idd.landolakes.com • Twitter: @LandOLakesIDD • Facebook: www.facebook.com/LandOLakesInternationalDevelopment

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