VZCZCXRO3773
PP RUEHROV
DE RUEHKH #0775/01 0870615
ZNR UUUUU ZZH
P 280615Z MAR 06 ZDK
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 2092
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS SECTION 01 OF 04 KHARTOUM 000775 
 
SIPDIS 
 
AIDAC 
SIPDIS 
 
STATE FOR AF/SPG, PRM, AND ALSO PASS USAID/W 
USAID FOR DCHA SUDAN TEAM, AF/EA, DCHA 
NAIROBI FOR USAID/DCHA/OFDA, USAID/REDSO, AND FAS 
USMISSION UN ROME 
GENEVA FOR NKYLOH 
NAIROBI FOR SFO 
NSC FOR JMELINE, TSHORTLEY 
USUN FOR TMALY 
BRUSSELS FOR PLERNER 
 
E.O. 12958:  N/A 
TAGS: EAID PREF PGOV PHUM SOCI KAWC SU
SUBJECT:  USAID MEETING WITH FOOD SECURITY AND 
AGRICULTURE PARTNERS IN SOUTHERN SUDAN 
 
 
------- 
Summary 
------- 
 
¶1.  On March 9 and 10, USAID Bureau for Democracy, 
Conflict, and Humanitarian Assistance (USAID/DCHA) and 
USAID Sudan Field Office (USAID SFO) staff met with 
USAID/DCHA food security and agriculture partners and 
USAID SFO livelihoods partners in Rumbek to discuss the 
current status of the sectors in Southern Sudan, future 
USAID funding, transition of the food security and 
agriculture sector from relief to development, and the 
priorities of the Government of Southern Sudan (GoSS) 
Ministry of Agriculture and Forestry (MAF).  Michael 
Roberto Kenyi, MAF director for planning, represented 
both the MAF and the GoSS Ministry of Animal Resources 
and Fisheries (MARF).  The meeting included four panel 
discussions: agriculture and livestock production; 
community development and infrastructure; marketing and 
cooperatives; and microfinance and business development 
services.  Each panel used three questions to focus 
discussions: 1) What are the key programs, best 
practices, and activities that should be continued during 
the transition from relief to development?  2) How do 
these programs tie into and address GoSS priorities? and 
3) What are the next steps to help the GoSS take 
activities beyond the humanitarian focus? 
 
--------------- 
Opening Remarks 
--------------- 
 
¶2.  USAID opened the meeting by explaining that with the 
establishment of the GoSS, the creation of the Multi- 
Donor Trust Fund (MDTF), and the expansion of trade and 
local economies in the south, humanitarian efforts should 
begin to transition to longer-term assistance mechanisms, 
particularly in the food security and agriculture sector. 
As USAID assistance for Southern Sudan shifts under the 
new country strategy from relief and development to 
stabilization, much of the support for this sector will 
need to come from the GoSS itself, with the participation 
of mechanisms such as the MTDF. 
 
¶3.  In response, Mr. Roberto presented GoSS priorities 
for the food security sector in the coming year.  The 
priorities include improved input supply, agricultural 
extension, agricultural processing and post-production 
systems, agricultural marketing for regional and foreign 
markets, agricultural research, coordination of actors in 
the sector, and environmental protection.  In particular, 
the MAF would like to encourage modernization of the 
sector, stressing farmer savings programs and farmers' 
associations to help small holders increase collective 
bargaining power. 
 
¶4.  The MAF budget for April 1 to December 31 is planned 
at USD 45 million.  The MAF Director for Planning 
emphasized that donor support of this sector is critical 
and should increase, especially given the volume of 
returns and the fact that conditions in Southern Sudan 
are tenuous and in many cases remain at emergency levels. 
 
--------------------------------------------- 
Panel 1: Agriculture and Livestock Production 
-------------------------------------------- 
 
¶5.  The panel identified key activities that should 
continue in order to transition the agriculture and 
livestock sectors from relief to development.  The panel 
and session discussion highlighted such interventions as 
improved access to seeds; introduction of improved 
technologies with a focus on reducing adoption risks for 
farmers; production marketing and agribusiness via 
establishment of farmer associations; the development of 
linkages between agriculture and livestock systems; and 
increased livestock production. 
 
¶6.  Discussions highlighted overarching principles to 
apply in the sector, such as the importance of needs 
 
KHARTOUM 00000775  002 OF 004 
 
 
assessments and establishment of baselines, matching 
planned activities to local conditions and preferences, 
and follow-up evaluations to measure impact.  Wherever 
possible, activities should incorporate local sourcing of 
inputs and cost recovery programs to help promote 
sustainability.  These principles are in line with MAF 
priorities. 
 
¶7.  Participants pointed out that food aid can play a 
role in transitioning the agriculture sector by helping 
to stabilize food security conditions in areas of food 
deficit and protect seed stocks from consumption. 
Nonetheless, shifting from outside commodities to local 
food purchases will be important in stabilizing local 
agricultural markets. 
 
¶8.  Despite significant attention on transitioning the 
agriculture sector to longer-term solutions, participants 
underscored the fundamental and critical need to maintain 
focus on subsistence farmers, who still make up the vast 
majority of the sector.  The group agreed that 
coordination of the sector must come from the GoSS, which 
must create a policy environment conducive to growth. 
Sector stakeholders must continue to maintain the 
capacity to respond to emergencies during this 
transitional period in Southern Sudan. 
 
--------------------------------------------- ----- 
Panel 2:  Community Development and Infrastructure 
--------------------------------------------- ----- 
 
¶9.  The panel identified many key issues for the 
development of the sector.  Participants stressed the 
primary importance of drawing ideas for community 
development and infrastructure improvements from 
beneficiary communities, rather than non-governmental 
organizations (NGOs), donors, or even the GoSS.  The 
panel focused in part on mechanisms for assessing needs 
and encouraging dialogue at the community, payam, county, 
and state levels, including existing NGO coordination 
groups such as the Livelihoods Action Forum and local 
government institutions such as the county development 
committees.  In addition, technologies, materials, and 
designs for community development and infrastructure 
improvements should be in sync with local capacities. 
 
¶10.  An important issue for community development in 
Southern Sudan is access to land, especially for 
returnees.  It will be difficult for central authorities 
to address this issue at the local level as land access 
issues are bound closely to local contexts.  It will be 
critical to form mechanisms that link community, payam, 
county, and state levels in coordination, communication, 
and information sharing. 
 
¶11.  Panel members pointed out several key policy issues 
that may prove problematic in making infrastructure 
investments during the transition period.  Difficulties 
are anticipated not only with the collection of taxes, 
but also with the flow of tax revenues from counties to 
the central government and back to counties again.  It is 
unclear whether county or state governments will have the 
authority to raise their own tax revenues.  Ensuring 
infrastructure programs involve local communities will be 
critical to avoiding local resentments, tensions, and the 
perception of political motivations behind such 
interventions.  The "hidden hand" of local officials 
often operates behind the scenes in infrastructure and 
other decisions on community activities.  This 
complicates project work in communities and may not 
accurately represent community interests.  Community 
development, infrastructure, and information management 
all depend on good governance, which depends heavily on 
transparency in investment decision-making processes.  To 
date, the dissemination of information from authorities 
is still slow to begin, and adequate communication 
systems linking remote locations to state processes are 
not yet in place. 
 
------------------------------------ 
Panel 3:  Marketing and Cooperatives 
 
KHARTOUM 00000775  003 OF 004 
 
 
------------------------------------ 
 
¶12.  The panel highlighted the need to consider the 
effect food aid and other relief assistance can have on 
local markets.  Although the continued need for relief 
assistance was widely acknowledged, participants stressed 
the importance of shifting to local food purchases in 
order to stabilize and help support local market growth. 
The panel also pointed out the need for more control over 
the timing of food aid distributions so as not to cause 
unfair competition in local markets. 
 
¶13.  Panel members pointed out several key policy issues 
that may prove problematic in making gains in this 
sector.  Ensuring safe road transport will be critical, 
especially in the Equatoria region, still plagued by the 
Lord's Resistance Army.  In addition, agricultural 
cooperatives and the marketing of surpluses cannot work 
without a functioning, reliable market information 
system, including crop conditions, prices, and weather 
data by region.  In general, the opening up of towns and 
expansion of local populations will serve as major 
incentives for farmers to open up more land and produce 
greater surpluses.  This in turn can serve as an 
incentive for returnees to stay in rural areas where they 
may be able to find farm labor.  However, it will be 
important to examine the rural labor market as it grows 
and changes in order to effectively support this process. 
 
¶14.  Participants acknowledged that cooperatives fail 
frequently throughout the world, but in Southern Sudan 
the failure has been due to government interference and 
inclusion of outsiders as cooperative members.  In order 
to succeed, cooperative members must feel they have full 
ownership of their enterprise and local authorities must 
allow these groups to form organically.  By focusing on 
reestablishing associations that existed before the war 
and providing support to these groups, the panel felt 
that cooperatives have a vital role to play in developing 
the agriculture sector. 
 
¶15.  To date, little work has been done with livestock 
cooperatives in Southern Sudan, but the panel stressed 
the importance of building the productivity of livestock 
through cooperative management and marketing of products 
such as milk and hides.  Current best practices include 
tapping Kenyan expertise and building an understanding of 
current marketing systems now dominated by private 
traders. 
 
--------------------------------------------- ----------- 
Panel 4:  Microfinance and Business Development Services 
--------------------------------------------- ----------- 
 
¶16.  The panel identified key activities that should 
continue in order to expand the microfinance and business 
development sector.  The discussion highlighted current 
best practices including the establishment of six 
training centers by USAID that will be transferred to the 
GoSS; small business development focusing on transition 
from grants to microfinance; business development 
approaches that employ former soldiers; formation of self- 
help groups for vulnerable households; support to small 
agro-processing ventures; and local capacity building in 
management and technical skills. 
 
¶17.  Certain overarching principles were seen to apply in 
this sector.  Programs should emphasize demand-driven 
training, earnings rather grants, capacity building 
towards competitiveness, the use of business plans, an 
understanding of supply chain opportunities and skill 
constraints, and microfinance programs that operate on a 
self-sustaining basis.  Ongoing activities should 
continue and expand to emerging markets formerly under 
Government of Sudan (GOS) control, particularly Wau, 
Malakal, and Aweil. 
 
¶18.  These best practices and guiding principles fit GoSS 
priorities for the sector, especially MAF priorities for 
building capacity, creating employment and wealth, 
linking producers and consumers, and encouraging private 
 
KHARTOUM 00000775  004 OF 004 
 
 
sector contributions to economic growth and poverty 
alleviation programs.  Financial services are a necessary 
component of any developing or developed society and will 
be a key factor in sustaining peace. 
 
¶19.  The panel identified several next steps to help the 
GoSS take activities in this area beyond a humanitarian 
focus, including government buy-in to training processes, 
the need to strengthen legal systems to promote a level 
playing field for small businesses, and the 
discouragement of subsidized lending or grants for 
business activities.  The GoSS needs to formalize and 
regulate the microfinance sector by developing policies 
favorable to growth and provide access to services for 
the poor while protecting them from abuse.  The panel 
stressed the need to improve the socio-economic status of 
vulnerable groups, especially women, through educational 
initiatives.  It is important for the GoSS to create a 
policy environment that will attract Sudanese skilled 
workers and intellectuals living abroad as well as 
foreign investors, taking into consideration the issues 
of low wages, corruption, and mismanagement that came to 
characterize government structures in GOS areas during 
the war. 
 
---------- 
Conclusion 
---------- 
 
¶20.  In FY 2007 it is highly likely that USAID will not 
have humanitarian funds to continue food security and 
agriculture programs at FY 2006 levels.  Coupled with the 
fact that USAID development assistance for Sudan will 
focus more on stabilization efforts, this means that 
alternate mechanisms for funding the key sector 
activities outlined in this cable must be operational and 
partners in this sector must be actively seeking other 
sources of funding, ideally through the GoSS, the MDTF, 
or other development-oriented donors.  Otherwise, it is 
likely that there will be a gap in support to this 
sector. 
 
 
STEINFELD