The case of the $6.7 million phantom cocoa improvement project, part III

Let me start this post by once again commending the Embassy of Finland

(yay, Finland!)

for believing in the power of local non-profits in Indonesia to effect positive change.  Their Local Community Fund (LCF) project is supporting JMD’s 31 cocoa farmers, their families and their communities during a 3-year project in Aceh Timur.  JMD covers the cost of most of its administration (although LCF kicks in direct service salaries and a percentage of agency operating costs.  The total amount? About $45,000, or $15,000 a year.

Imagine, then, what $6.7 MILLION could do for smallholder cocoa farmers in Aceh!

Here’s where our story begins:

In March of 2012 I sent Robert (yes, poor Robert, the guy I send to the middle of several Nowheres a year) to investigate future sites for parallel coffee farmer projects.  JMD's goal, after all, is to establish a network of farmer associations that could band together to form a real coca “bloc” in Aceh Timur, put it on the map as the go-to spot for cocoa, and at the same time show communities—and the world—that mining and palm oil plantations are not nearly a tenth as appropriate in and near protected forests as organic cocoa.

So off Robert trudged . . .

Here he is . . . trudging across a river.  Happily, I might add.  He adores working in the field, bless him.

And he found a great area, on the border of Aceh Utara (to the east) and still out of the “territory” of our . . . well, let’s just say extremely large rival, SwissContact.  (Swisscontact does not think of JMD as a rival, by the way.  I do believe they think of us as a tiny little flea on the backside of the hippopotamus that is their NGO.)

Anyway, Robert comes back and reports on this cocoa-rich area, in which farmers are desperate for training and assistance . . . but there are several villages into which we cannot go because there has been a local NGO there before, and its name is Keumang, which apparently means Mud in Bahasa, because Keumang is so disliked and distrusted in that area that any agency saying “Hi, we’re here to help” will be run out of town faster than a wild boar with a snoutful of cocoa pod.

But I thought: somehow, this community has got to know that not all local NGOs are like  that.  Heck, until I’d heard of Keumang I thought that JMD was the only sustainable livelihoods agency left in the province.  Robert did some more digging, along with other JMD staff, and found out that Keumang’s offices were closed, and that apparently they went out of business.  We tried to find them but they were in the wind.

Robert however is a congenial lad, and he had earlier made friends with the guys from the Forestry Department, who told him that Keumang had partnered with an international NGO for a very big cocoa project, but nothing had ever come of it.

So I did a little research and found that in 2008 an agency called Action Aid Australia had received $6.7 million from the remaining EDFF funds to implement a project called Improving Competitiveness of Aceh Cocoa Value Chain to Increase Farmers Income, Create Jobs and Alleviate Poverty.  I looked them up on line and wrote them the following note:

Dear ActionAid Australia: 

I’m looking for some information about a project you funded through a subcontract with the Keumang Foundation in Aceh province, Indonesia under the EDFF multi-donor fund.  The project assisted 1,100 cocoa farmers in Aceh Timur district via training, materials (tools) delivery, and the establishment of a cocoa nursery.  Our agency is one of the donors of a small NGO in Aceh that has been implementing similar projects in the same district since 2009.  Staff have contacted various provincial ministries (forestry, agriculture, etc.) regarding the project and its final reporting.  We feel that this data could be extremely useful to other cocoa farmers in the area and their ability to form a unified organization and thus strengthen their ability to effectively produce and market their cocoa.  However, the ministries report that there seems to be no documentation regarding this project, its beneficiaries, or the data that was collected (although several representatives remember the project).

Well, a representative wrote me back and said (this was in 2013) that they were just finalizing their report and would send me the salient bits.

Months passed.

I wrote again, and received a 67-page summary. I cannot begin to tell you how many questions I wrote in the margins of this report, or how many discrepancies that I alone found, and I wasn’t even the one to do the field investigation.  JMD staff spoke with NGOs in the area, government representatives, farmers, and current co-op members in Pidie district, where the project was to be centered.

VERY briefly, this is what we discovered:

One of the project goals was to organize 4,500 farmers (including 634 women) into 7 “primary” cooperatives in Pidie, Aceh Utara and Aceh Timur. 

One “secondary” co-op was to be established in Pidie that would act as administrator and seller/buyer of cocoa. 

There was to be a training center and demonstration plot in Pidie.  There was also to be a cocoa processing factory to make cocoa butter and other products—again in Pidie.

There were to be 7 cocoa warehouses built.

Out of all these objectives, only two primary co-operatives were started—and as of March 2013 they remain only 50% complete, with no funding to complete them. Nothing else was ever constructed.

However, the report states that all 5 other proposed co-op sites, and 7 warehouse sites, were rented by AAA/Keumang, for a period of 5 years beginning 2010, with their rents paid in full.

No one has ever heard of this arrangement, and no one knows where these “rented” spaces are.

7 Small Businesses for women were supposed to be established to create materials for the cocoa farmers such as organic pesticides. There are no such businesses.

AAA explained in their report that the reasons for not constructing any of these facilities was a combination of unobtainable land use agreements, time constraints, and the slow reaction of the PMU staff from World Bank.  But still: the money was spent . . . somewhere.

Another goal was to establish 300 new HA of cocoa plantations, which involved 564 farmers (186 women). 100HA were supposed to be rehabilitated in Aceh Timur, and 64,000 trees were to be rehabilitated.

No one can show or tell us where.

The project reported that with regard to the establishment of co-operatives, they discovered that there was an extraordinary lack of capacity.  AAA reports not being aware that this would be a problem, and says nothing about the training that did take place regarding co-op administration.

The report states that all the machinery, office supplies and vehicles were delivered to the beneficiaries at the appropriate co-ops (or “virtual” co-ops.) and the warehouses.

JMD staff could find none of this machinery or vehicles. 

The factory was disallowed by the PMU at World Bank, and this was a sizeable amount of money.  The report states that it took all the money from that and transferred it to “training,” which already had a large budget.  However, the report shows that very little training actually occurred outside of Pidie, and there doesn’t seem to be any indication that farmers outside the area (in Aceh Timur, for example) could travel to the training site.

  

 “The project team worked with local and provincial Aceh Government staff to develop their capacity and that of the farmer members of the cooperatives in cocoa production, processing and marketing. Capacity development was increased through multiple practical and theoretical training sessions.”

No one that JMD spoke with, including government reps, remembered any of this ever happening.

A large part of the project (and one of the largest reported challenges) centered around the method by which farmers would be paid by the Secondary co-op for cocoa that they sold.  AAA developed a working capital (WC) fund plan in partnership with Bank Mandiri and World Bank.  The project placed a startup amount of working capital with the secondary co-op and “cooperatives could take loans against the collateral funds.”   

This was a very complex component and ended badly for everyone.  World Bank refused to grant AAA a second tranche of money, and AAA blamed the complexity of World Bank’s “unhelpful” regulations for this component’s failure.  However, AAA also admits that the handling of cash by the co-ops was “poorly managed.”  In the end, the activity was cancelled and “the funds were returned to the government.”  Which makes absolutely no sense, because the funds came from EDFF, not the government, and AAA had reported that it had spent and accounted for 95% of its over $6 million, so what was there to “give back?”

This whole component begged the question of World Bank/EDFF’s funding of the project in the first place, if they were not confortable with it. 

(Oh!  Oh!  May I answer?? Please, pick me!! Is it because they didn’t want to be bothered with having to allocate smaller amounts of funding to local agencies who would implement necessary projects at a fraction of the budget, and take a bit longer but not cause the $6 million loss that was incurred by just this one project????)

Moving on: AAA contended that it purchased 360,000 seedlings.

First off, there is nowhere in the province that 360,000 seedlings exist for sale, and second: where are they now???  Robert did report that the district head did say that a new training had been done “by the government” in Pidie about a year ago that involved new seedlings—perhaps some of this “government” training and seedling distribution was really part of this AAA/Keumang project.

The report states that Aceh Timur groups in the co-ops below all received an equipment package: “grafting tool, tree pruning scissors/saw, garden shears, a fermentation basket, and rolls of plastic for spreading the cocoa beans to dry under sunlight.”  

They also received 400MT of fertilizer. Aceh Timur farmers report receiving no tools, no fertilizer.  Other target areas report the same. 

The project promised that through an agreement with UNSYIAH Universitas Syiah Kuala / Syiah Kuala University, AAA would be replaced when the project completed. However, University reps stated that there was never any agreement to take over the running of the co-ops after the project ended.  AAA had asked the university to work with it to get a grant for more money to do so, but the grant was not written, or else it was rejected.  Currently, only the GTZ-supported co-op is still running, and the University assists there.

Finally, the amount of very expensive “junkets” taken (or given) to government representatives to other parts of Indonesia and SE Asia that presumably were for “education purposes,” but which did not appear to have any benefit for the target population. 

These discrepancies and unanswered questions went on and on.

Next: I’ll tell you abut the demise of Keumang, my communications with AAA, and their reaction to JMD’s request to perform an activity they said they just never got around to: a monitoring and evaluation visit.

Can you say lead balloon?