Strictly for internal use eb. 1/2011: Opening Remarks by the Executive Director J. Sheeran, Executive Director

This is indeed a historic moment to be taking the reins in helping lead this noble cause. So, in a way, we open with a bit of a three-part celebration: fifty years, a new Bureau and Valentine’s Day.I remind you that every gift, every penny, every shilling we receive is an act of love. And last I remind you that we are about food. So I am offering each of you a small candy for Valentine’s Day. I cannot promise it is nutritious, but it is special. So, everyone, please take one. That is all the ration provides for.he year before the World Food Programme was created the President of the United States, Dwight Eisenhower, implored the United Nations General Assembly to “solve the paradox of hundreds of millions suffering from hunger and malnutrition” in the wake of World War II and the Korean War, which had left millions facing abject hunger and poverty - and even starvation - throughout Europe, Japan, Korea and beyond. There was a profound realization that peace cannot be built on an empty stomach and a need to therefore build an antifamine mechanism into the global system. A little more than a year later, in December 1961, the General Assembly created the World Food Programme as that mechanism, charged with helping nations protect lives and livelihoods by ensuring access to food for those most in need.

As part of the United Nations High-Level Panel I have read every mandate in the United Nations. Ours is the simplest, the clearest, the most direct and in some ways meets the most profound need that vulnerable individuals can face. Today, our mission is as critical as ever, in a world where risk is the new normal when it comes to food security. After many decades of increasing supply and declining food prices - which helped halve the proportion of urgently hungry in the world between 1967 and 2004 -we have seen an unprecedented volatility in both supply and price leading to historic levels of hunger among the most vulnerable. This year food prices are again soaring at record pace. This comes at a time when unrest is spreading and weather-based disasters are growing - putting this institution and so many others on red alert.

The world is changing but WFP has changed too and as we start this new year together today, I want to discuss three things. One, why WFP has more knowledge and experience than ever before allowing us to deploy the right tool in the right place at the right time with greater accuracy and precision to meet the urgent hunger needs while supporting local food economies. Secondly, how WFP is learning, adapting and improving, thereby increasing effectiveness, efficiency and minimizing risks. Third, the state of hunger in the world today and how together we can address risks and protect this institution so that we can better serve the world’s most vulnerable people.

The good news is that today WFP, thanks to the hard work of this Board and the WFP team, is significantly better prepared to respond than in the last food crisis. Thanks to your support, we have a strategic plan that makes us better prepared;we have reforms that make us better positioned; and we have tools that make us better able to save lives and livelihoods.

Fifty years ago, our tool box was simple. We moved foods from lands of plenty to places of want. We still do that and make no mistake this saves lives as we saw in Haiti, Darfur and beyond. But we also have a few other tools in our tool box: tools enabled by learning from past evaluations and identifying best practices and tools that are enabled by new technologies of a new century. This more robust tool box allows us to intervene in ways that help protect, and even stimulate, local food markets, allowing quicker recovery. That is why our mantra under our new strategic plan is simple and twofold. One, the right tool at the right time in the right place. Two, the right food at the right time in the right place. What is key here is that one size does not fit all when it comes to which tool is best suited or which food is most appropriate. Let me walk you through our four basic scenarios in considering the tool box.

The first are situations where there simply is not enough food and people are urgently hungry. Places like Darfur or Afghanistan. If we brought in cash, people would still go hungry because they cannot eat cash. This is the traditional WFP where we deploy, with excellence, whatever it takes planes, ships, boats, camels, donkeys - to ensure access to nutritious food because that is what is needed and that is what saves lives.

The second scenario is where there is food in a nation or a region but people are cut off due to a disaster or conflict. We saw this in Pakistan during the epic floodingand also in Mozambique during floods. Our response in these cases was to do strategic regional purchases, supported by many of you, moving locally produced food to people in need, thereby investing in the local food economy in a way that helped prevent a second disaster, thatof inactive markets..

The third is when food is available but people cannot afford it. This is the classic description of a famine, as put forth by Nobel Prize winning economist Amartya Sen. In this case, cash and vouchers could be the best tool to meet the urgent needs of the hungry and ensure that they get the right nutritious food they need while helping to jump start a sustainable food economy.

The fourth scenario is where there is no food in markets, but, nearby, a glut of food on small holder farms that may be rotting because there is no way to connect to markets. These very farmers may require food aid themselves, because they cannot sell or save their food. We see this in places like Gulu, Uganda. P4P or local small farmer purchases, which links farmers to the hungry people and make them part of our supply chain rather than dependent on food, is an appropriate newly scaled up type of appropriate tool.

Those are the four basic models that we used to decide which tool, in which place, at what time. This year one of our top priorities is ramping up our ability to deploy these tools at global scale and with state-of-the-art controls. One of our biggest challenges is that we simply have greater demand in some places for these programmes than we have the capacity to currently deliver. We are daily closing this gap by increasing our internal capacity, putting in place controls and operating protocols, as we learn from nations such as Brazil and Mexico, who have already taken these tools to national scale. I want to thank the many nations that are helping us build our institutional capacity, either as teachers or as donors. This is urgently needed.

Let me tell you about some of these tools in action. We are scaling up to reach five times the number of people with cash and vouchers this year than we did just two years ago, and have already deployed in 25 countries. This is not through a budget increase but a change in the type of tool deployed to reach the same identified vulnerable people.

In an innovative programme that I saw last month in Palestine, beneficiaries are able to use this card, which reads “bon appétit” in Arabic, to purchase nutritious food at local markets. All the products in this programme must be produced locally. Nine items can be withdrawn from this swipe card includingmilk, yoghurt and cheese. They have to be nutritious. When I visited the shop, the shop owner was very happy. He had to hire more people because of the new business. The local dairy farmers are very happy. They have a 20 percent increase in production. and the families were very happy and satisfied with the food basket. Last year as we deployed this programme, it resulted in a US$60 million investment in the local economy, while meeting urgent food needs; a win-win situation there. Such types of programmes are now deployed in 25 countries.

I was really excited to learn that the IT platform of this program, which ensures state-of-the-art controls, was designed by a Jordanian firm. As the card is swiped in the store, in real time beneficiary information and what they have withdrawn from their account can be monitored on computers in Jerusalem. This type of software, we believe, can be the supporting software for our global programs.

We have also been prioritizing getting even better at delivering the right food to the right people at the right time. WFP has long had a core responsibility in the United Nations and in the global system for supplemental nutritious food, especially for pregnant and lactating women, children, and HIV/AIDS and TB patients. But this mandate has become more urgent with the scientific consensus reached a few years ago, that a child’s brain is still developing at birth at least through the second year of life and if children do not receive adequate nutrition in those first few years of life their brains and bodies cannot recover. This stunting, according to WFP’s landmark study in Latin America on the cost of undernutrition, costs societies between 6 to 11 percent of GDP.

Each of you should have, and I would like you to take a look at, this picture of a brain scan, available at your desks. In some ways nutrition can seem quite complex. But if we take a look at this we can see the simple message. Young bodies and minds are at risk of permanent damage without sufficient nutrition from conception to, say, two years, a thousand days of life. So if you see on this side, this is two different three-year old children. One was properly nourished while the other was not. You can see thethe diminished brain of the one that was not. The other side of the card shows the lack of development of neurons in the malnourished brain. The burden of knowledge is that this can never be corrected once lost.. In New York last September, more than eight Foreign Ministers gathered and talked about calling on the world to act urgently to fill the nutrition gap and understand the vulnerability of the youngest children.

WFP’s response has been to prioritize children under five in all our interventions. We have strengthened our mother and child health centres through partnerships in the inter-agency REACH programme and we have increased our purchase and production of specialized nutritional food products by seven times since 2009. In 2010, WFP reached 50 times more under two-year olds with special nutrition interventions than we did just two years ago. For a child, who is very young, a simple bowl of grain will not get them through this challenge.

In Niger, as part of our response to the Sahel crisis, we reached five million people with protection rations and supplementary feeding for children under five. In Pakistan, specialized nutritional products such as our high nutrient ready to use chickpea paste, called Wawa Mum, was part of our flood response from the beginning. This ready to use food, produced and developed by WFP, will be ramped up threefold by this July, based on global demand. We are also working with the private sector and some of you to produce a chickpea product like this in Africa.

Purchase for Progress is also now deployed in more than twenty nations. It is very much in demand, and was a part of my discussions with the new Agricultural Minister of Southern Sudan. A tool like this could be very helpful in building the potential of overcoming food insecurity there. We are looking at ways to learn from this programme and scale it up in the future. Currently, a mid-term review is being conducted by an excellent team out of London.

No group or agency can respond to these historic challenges alone. Rome-based collaboration remains a key focus for the World Food Programme. This includes the successful collaboration on the three priority pilot areas identified in November 2009: the transition from relief to recovery in protracted crises, information systems for food security and joint advocacy.

We are also determined to ensure that the revised Committee on Food Security, with the three Rome agencies collaborating, will be an important component in creating better coordinated global support for nations, for food security and nutrition. As determined by you, WFP stands ready to be a full member of the Secretariat, equally sharing the management and cost burden.

WFP continues to be a leader in the humanitarian cluster system, with the WFP-led logistics and emergency clusters being a backbone for the global system in last year’s mega emergencies.

As further evidence of increased Rome-based collaboration, the world has launched the co-led FAO, WFP global food security cluster that will help us ensure both food security and agricultural tools are deployed as needed following an emergency. These are both critical to early recovery and to handover and will be embedded in the first hours of discussion after an emergency. The cluster allows for the separate deployment, as needed, on the ground for food assistance run by WFP or agriculture run by FAO.

The world is changing before our eyes faster than ever. That is why it is so critical to constantly learn and change, adapt and respond to ensure that we maximize the impact of every meal, every programme, every intervention and every donation.

Let me start with the Office of Evaluation. I want to congratulate Caroline Heider on being reappointed Director of the Office of Evaluation. She was the first Director of Evaluation. She was selected, under the Board-requested process that included the Board in the selection process and out of a field of many impressively qualified candidates, I was proud to select her and we congratulate her on this appointment. (Applause)

Operations must also self evaluate and they have recently completed an impressively comprehensive lessons learned report on Haiti. This was the most extensive such exercise WFP has ever conducted and I thank Amir Abdulla and his entire team for this effort. A similar review is already underway for our response to the floods in Pakistan. Based on these reports and the growing threat and occurrence of what Valerie Amos of OCHA terms mega emergencies, I have ordered a complete review of our emergency response capabilities. We are also enacting a number of critical reforms and, with the support of Australia, are currently conducting simulationexcercises with national governments in Asia to train and prepare for disasters in high-risk areas,including Manila, Philippines, Kathmandu, Nepal and Jakarta, to ensure greater capacity on the ground to meet urgent food needs

Second, we are assessing and upgrading our supply chain and training from start to finish, including the incorporation of new tools such as cash and vouchers when appropriate, and other such new technologies that can make delivery more efficient and more effective. Working with Switzerland and others, we are increasing our understanding and capabilities regarding protection issues in emergencies. We are also deploying in places like Darfur state-of-the-art biometric systems to ensure control over distributions of food. I want to thank David Kaatrud, Amer Daoudi and others throughout our system, who have supported this effort and David for leading it.

I also want to thank Gina and her team for their efforts, and each of you for your support in making WFP more open, transparent, accountable and efficient. We have a robust system of internal controls, performance and risk management and accountability systems well underway and are further strengthening in each of these areas. We have established as you know, a landmark financial disclosure policy and our Ethics office - one of the first in the United Nations, has increased disclosures from staff to over 1,200 last year.

These targeted tools and supplemental food solutions could not have come at a better time as the world reels from weather-related, political and financial shocks. From rising food prices that evoke memories of 2008 to historic floods and droughts, 2011, unfortunately may be one of the most challenging in our fifty-year history. We know that the 2007/2008 food crisis sent the hunger MDG into reverse, with hard-won gains being lost as the three Fs, food, fuel and financial crises threw an additional 140 million people into abject hunger.

Now we have to ask whether we are in another food crisis. The analysis of this question is quite a bit different for WFP than for any other institution. For WFP, we first divide the world into those nations and communities with capacity and resiliency to withstand shock.Intervention in these nations and communities isnot part of our mandate. And then there are those countries who cannot cope with the impact of dramatic market swings, cannot ensure secure access to food and do not have secure food safety nets.It is these highly vulnerable nations and communities that we look at in determining whether or not there is a crisis.

What may not be a food crisis in some parts of the world, could be devastating to the 80 percent of the world population that remains without food safety nets. WFP’s vulnerability assessment monitoring, VAM, with more than 150 people deployed throughout the world collecting data at the household level, forms the core of the global analysis on geographic identifictation of, and the impact on, poorest households. Today, three big drivers are threatening food security in these most vulnerable communities. The first, of course, are record food prices, FAO’s food price index in fact is at a record high, higher than 2008. Second, weather related disasters caused by one of the strongest la Niñas on record, has triggered devastating droughts and floods throughout the world. Third, the fast-moving political changes that we see from Sudan to Côte d’Ivoire to Yemen, Egypt, Tunisia are also factors. Today, we seem to be entering a period when the food price situation is extremely precarious and will have a significant impact on our cost structures and our beneficiaries. Not only are food prices climbing, for example corn prices have soared 88 percent in the past year and wheat is up 76 percent, but fuel prices are on their way back up to US$100 a barrel, a trigger where food is often converted to fuel at a large scale. As a result, allfarm inputs, such as fertilizer and diesel, take a big hit.

Regarding our cost structures, the good news is that we have put in place some mitigating measures since 2008. In 2007, WFP was monitoring and adjusting prices on a biannual basis. Today we monitor these prices on a daily basis. We have created a budget that has anticipated part of the upward trendand has been key inmitigating some of the impact.Our procurement team has been working double time to control costs through strategic purchases and movement of our food basket where possible. I will note here that the forward purchasing mechanism authorized by the Board in November is exactly the type of tool that can also be helpful when it is deployed at scale and we are actively doing so.

Therefore, we have weathered this price climb without a debilitating hit to our budget – so far. But it is important to note that as a general rule, every 10 percent increase in the price of our food basket, it costs us an additional US$200 million a year to reach the same amount of people with the same amount of food as before. Gina will talk about this in detail when she presents the update to the Management Plan tomorrow.

But if prices continue to rise, or even stay at these record highs for the rest of the year, we will face a serious hit to the budget and we will be back making the same types of painful decisions that we faced together in 2008, reducing rations from the cup of food for children, decreasing the number that get food or seeking additional resources. The Strategic Resource Allocation Committee is another important new process for ensuring that flexible resources are targeted for top priorities and during a food crisis, new vulnerabilities can open very quickly. I want to thank nations that give us the flexibility with the budgets to be able to respond as emergencies evolve.

Rising food prices impact every nation. Most importantly, is that in our vulnerability analysis for families, for people living on less than US$1.25 a day, most spend at least 80 percent of their household budget on food. Even a small increase can force a terrible choice between food or healthcare, sending girls to school or to beg or worse. And I will just say last month, when I visited the Palestinian Territories in Jordan, people were on high alert in both areas and were telling me that women now were feeding their infants tea instead of milk in their bottles and all of the schoolchildren I met in Hebron said that they had not had any food before the WFP date bar and milk served at school.

These weather patterns have been a driver, I do not want to go into detail on this, but we have seen many nations at this Board suffering including Australia, the United Kingdom, Colombia, the Philippines, Saudi Arabia, Brazil, Sri Lanka, Bosnia, Montenegro, Chad, Vietnam, Thailand, Benin, Nigeria, DPRK and of course, Pakistan. The global damages that Munich Re estimates are a US$130 billion but certainly one of the biggest hits is right on food security.

We now, of course, have heard the news from FAO of the debilitating drought in China which has affected wheat production. Australia has lost US$1 billion in wheat alone due to flooding and Pakistani farmers suffered US$500 million in agricultural losses due to the rains and floods. I mention all of these things because as we saw in 2008, it is a perfect storm of factors that come together to put us on high alert and I do think this institution and this Board need to be on high alert.

There are a few differences from 2008 I just want to point out. This time we know it will not be a silent tsunami. Already the world is on high alert and high focus. The Secretary-General has convened the high-level task force on food several times to ensure we are prepared system-wide. The IMF and the World Bank announced at the meeting with the Secretary-General a few days ago that they have already redeployed their food crisis tools of 2008 and FAO has certainly stepped up its monitoring and analysis and announcements on prices and baskets. WFP has also stepped up and, we have been monitoring the impact in more than sixty nations and feeding that into global analysis in partnership with FAO. Our regional directors will brief you case by case on how this is already impacting our operations in many countries.

Just on risk, I would like to say, certainly a food crisis is one of those big risks but we are also increasingly risking working in high-risk environments and one of our biggest learning curves, we need to traverse together is to assess how much risk we are willing to bear in any given situation. We know that in many of the places where we operate, the risks are obvious, they are not hidden: the risk to staff lives, to staff safety and to the security of our supply chain. These risks are critical and often are essential in our effort to protect the lives of the most vulnerable people.

I would like to propose two immediate areas to try to address this challenge. One is that we institute quarterly operational briefings that will provide updates on critical operations and their financing situation and will highlight the risks associated with those operations for a candid discussion.. Secondly, I have asked that we design and include a much more detailed section of potential risks into every WFP project plan and country strategy document that we bring to this Board.

The first such operational briefing to the Board will be focussed on the risks associated with rising food prices and also on Afghanistan and we are proposing this be held in the next few weeks. Tomorrow we will be discussing the External Auditor’s report on Somalia and the Management Response. We are fully committed to implementing all 26 recommendations and in many cases, are well on our way. We will continue to report regularly on the progress. Working in a place like Somalia, is not a risk WFP can take on alone. I recently, received an urgent call from the Prime Minister of Somalia saying the situation is dire and requires action.We will decide if and how we move together.

In conclusion, in this very significant 50^th year, let us remind ourselves again of why we were founded: building peace requires the world to make an effort to ensure that people can have hope and walk into another day. Last year, despite the financial crisis and tight budgets, almost a hundred nations and funding sources came together to tell the world’s most vulnerable people that they are not forgotten. I thank all of you for your generosity. We were able to raise together US$3.81 billion, not as much as the assessed needs but higher than what we budgeted forand what we had planned. The private sector was our sixth biggest contributor, providing a record US$143 million last year. Fifteen nations provided WFP with the highest amount they had ever given in more than a decade including Algeria, Nepal, Syria, Andorra, Brazil, El Salvador, Oman, the Russian Federation, Thailand, Canada, Japan, Sweden and the United Kingdom, as well as the multi-donor funds such as ASEAN and CERF. We thank you for that. We have exciting new partnerships, Russia is supporting our operations in Armenia, WFP opened a new centre of excellence in Brazil to share best practices, south-to-south, in food safety nets such as school feeding. And our new partnerships where we twin or match donor cash to support in-kind contributions from developing nations have enabled us to unlock contributions from nations such as Thailand and Brazil and elsewhere. I spoke with the Secretary-General of the United Nations last week and he underscored that twinning must be a key part of the United Nations response to the food crisis, enabling all nations to be able to contribute. In 2010, such twinning or as we called it, our handshake for the hungry, helped us extend our reach and encourage nations such as Bangladesh, Algeria, Thailand and Kenya to share the burden of reaching the world’s most vulnerable people. Commodities from these countries were matched with a total of US$21 million in cash contributions from New Zealand, Switzerland, Luxembourg, Spain and others.

I want to highlight the critical role that predictable multi-year support plays and thank all of you who do that. It is important and critical that we can plan. I also want to especially thank President Lula who on his last day of office donated 510,000 metric tons of food to the World Food Programme ensuring Brazil’s place as one of our top ten donors. We are actively seeking twinning donors who can help us unlock this generous gift to move it to those most in need.

Faced with rising food prices, erratic weather patterns, unpredictable political changes and unrest, WFP is doing all it can to be readyandwe thank you for your support. Let us remember how far we have come in the past few years in developing and implementing a new strategic plan and control frameworks that have moved us to be a leader in food assistance. This is a huge accomplishment and I remind my staff who are looking at the steep road ahead, that this is nothing short of the type of transformation from a mainframe computer to a Google-like operation that can move quickly and use the right tools as appropriate.