Funding Trends and Their Impact on Operations

As of May, in 2008 WFP needs to assist over 78.7 million of the world's neediest with 4.6 million metric tonnes of food aid valued at just over US$4.4 billion. An additional US$2.97 billion is required for the remainder of the year. This includes US$1 billion to be raised before the end of 2008 to ensure uninterrupted food aid delivery for ongoing activities during the first quarter of 2009.

The overall needs for 2008 have increased dramatically since the last update in mid January. Commodity and fuel price rises are the major reason for the increases, but WFP continues to assist new beneficiary groups around the world.

The largest increase in needs is seen in relief operations; over US$400 million more is required for PRROs compared with January. Just over half of WFP's total operational requirements are for relief operations. Emergency operations need an additional US$205 million. These two project categories have seen over seven million additional beneficiaries since January. Kenya's post election violence required WFP to respond to the needs of over 1.2 million. In Afghanistan, over 2.6 million persons are newly food insecure as a result of increasing food prices. Some 200,000 new beneficiaries are being assisted in Tajikistan due to an extraordinarily harsh winter with ensuing power and crop failures.

The 2008 budget revision exercise

In January 2008, WFP implemented a review and, where necessary, a technical revision of all the budgets of its active projects approved prior to 1 January 2008. The review was in response to several factors that have had an impact on project budgets, particularly the recent marked increase in commodity costs, rising fuel prices and a weakening of the US dollar. The review engaged staff in country offices and regional bureaux, and from the Programme Design and Support Division, the Logistics Division, and the Finance and Legal Division at Headquarters.

Some 104 operations were identified as requiring technical revision, which included a full review of the commodity budget, taking particular account of the type of commodities required for each operation, whether the project was expected to receive in-kind or cash contributions, and whether commodities would be purchased on local, regional or international markets. These factors also have a direct impact on transport and support cost budgets.

Commodity costs for international purchases were updated using commodity rates provided by the Food Procurement Branch. Increased commodity costs for in-kind contributions were provided by the donors, and for local and regional purchases by country offices and regional bureaux.