Mitigating Commodity Losses: A PVO Perspective

1. USDA/USAID FOOD AID CONFERENCE VIII April 16TH – 18TH 2007 Kansas City, Missouri MITIGATING COMMODITY LOSSES, A PVO PERSPECTIVE Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

2. INTRODUCTION • Food Aid commodities are high value and therefore it important to mitigate losses as much as possible • When handling food, proper systems must be put in place to • ensure minimal or no losses occur. • Food losses can be broadly categorized in two • 1. External Losses – Occur while food is under the custody of • third party ( Donor/supplier ). • 2. Internal Losses - Occur while food is under the custody of • PVO’s. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

3. TYPES OF LOSSES – EXTERNAL • MARINE LOSS • Occur from the time the Bill of lading is issued by the shipping company up to the time the shipping company hands over custody and control of the food to the PVO. • It is the difference between stated quantity on the bill of lading and quantity discharged when shipping company turns over custody and control of the food to the PVO. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

4. TYPES OF LOSSES – INTERNAL 2. PORT LOSS - Occur at the port. 3. TRANSIT LOSS - Occur during transportation from port to destination. 4. WAREHOUSE LOSS - Occur in the warehouse during storage 5. DISTRIBUTION CENTER LOSS - Occur during distributions or at distribution center. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

5. MITIGATION OF LOSSES • MARINE LOSSES • Clear shipping terms with penalties incase of loss. • Proper packaging by suppliers for protection from sea water & vessel moisture as well prevention of moisture loss. • Supervision by competent personnel during loading to ensure. • - proper storage in ship’s decks. • - Separation of cargo by consignee / type. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

6. MITIGATION OF LOSSES • 2. PORT LOSSES • Obtain all port clearance documents in advance prior to arrival of vessel to minimize any delays at the port. • Use competent port surveyors with clear contractual terms. • Port supervision by competent and adequate staff. • Ensure PVO presence through out the discharge operation. • Availability of repackaging materials incase a need for repackaging arises. • Track weather conditions from load date to discharge. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

7. MITIGATION OF LOSSES • 3. TRANSIT LOSSES • Have clear agreements and contracts with transporting companies- “water tight contracts”. • Supervision\inspection by competent staff at loading and discharge time. This is to ensure; • - Separation of commodities to avoid contamination. • - Trucks are well covered with tarpaulins among others. • Use reliable transporters. • Weigh bridge reports at dispatch and destination to detect any differences in weight/quantities. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

8. MITIGATION OF LOSSES • 4. WAREHOUSE LOSSES • Having competent staff managing the day to day operation of the warehouse. • Good warehouses and security practices e.g apply FIFO. • Regular inspection of food and storage facilities. • Proper warehouse and warehouse inventory accounting procedures. Clear policies incase losses occur. • Carrying out physical inventories ( by non-warehouse staff) on a regular basis. • Immediate separation of spoilt/infested commodities. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

9. MITIGATION OF LOSSES • 5. DISTRIBUTION CENTER LOSSES • Proper planning and communication to have the right people at the right time during distributions. • Having competent staff managing distribution centers. • Check conditions at distribution centers before dispatching commodities. • Proper training of staff / community members on handling of food. • Clear standards / policies on what to do incase losses occur. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

10. GENERAL RECOMMENDATIONS • Be honest – Don’t hide or cover up your losses. • Invest in a good Commodity Tracking System. • Invest in quality staff- most valuable asset. • Have sufficient stocks of re-bagging material. • Include penalty clause in transport contracts for all losses – above local market value. • Treat food aid commodities as you would treat cash. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

11. GENERAL continued… • Maintain a proper loss register. • For delivery to insecure areas – try to send trucks in convoys. • Adopt a “First-in-First-out” (FIFO) warehousing practice. • Don’t let claims build up! Keep up-to-date. • Be precise, accurate and timely in reporting claims. • Follow up claims regularly (Original and 2 reminders) • Lastly the 3 P’s – Presence, Presence, Presence. Loss Mitigation/Kansas/2007

12. WV FY O5 LOSSES In FY 05 the overall loss percentage was 0.19%. % losses per category were as shown in the graph below Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

13. WV FY O6 LOSSES In FY 06 the overall loss percentage was 0.16%. % Losses per category were as shown in graph below. Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007

14. END • THANK YOU Loss Mitigation/Kansas/2007 Loss Mitigation/Kansas/2007