DC Velocity - May 2011

for its food investment buck, and that the food supply chain functions as predictably as possible given the enormous obstacles in its way. The stakes are high: Each night, nearly 1 billion people go to sleep malnourished, according to estimates.

His challenging job is bound to get more so. Global food prices hit record highs in January, the U.N. reported, and are expected to climb 30 percent this year from already-elevated levels. The global population is expected to reach 9 billion people by the year 2050. And a host of issues from geopolitical unrest to climate change to natural disasters show no signs of receding from the world landscape.

The Irish-born Cahill spoke recently with DC VELOCITY Senior Editor Mark B. Solomon about the myriad challenges facing WFP, and how he manages the enormous, and often life-saving, task in front of him.

QIn a nutshell, can you describe your mission statement?

ATo feed the hungry poor by getting the right commodity to the right place, at the right time, and at the lowest cost.

QDo you ever wake up and say to yourself, “The lives of thousands of people—even the fate of governments and nations—may depend on how I do my job today”? AIn some ways, yes. Fortunately, we usually keep three months of in-country stock at any one time to provide a safety net for emergencies. We also have, on average, 30 vessels afloat on any given day that can be used as “floating stock” and can be diverted quickly. I focus more on the fact that, for every dollar saved, we can feed four additional children, and with our annual shipping budget of $250 million, there is a lot of scope to push for additional savings and efficiencies. I also want to ensure that

we’re getting the best possible value for our money. The difficulty, on a personal level, is measuring the potential cost savings against risks of delays that can directly impact people’s lives.

QGrain commodity prices have spiked in recent months, and few expect pressures to abate any time soon. How much of this increase is due to traditional sup-ply-demand factors—the needs of a growing global population outpacing production levels—and how much is related to supply chain and logistics challenges?

AI think there are a number of reasons for this. Demand is certainly afactor, with the increased buying power of emerging countries like India and China. However, increased commodity speculation is also a factor. Also, since 2008, financial markets have been very much on edge, so even relatively minor climatic or political events can have a dramatic effect on prices. Further, export restrictions have made the flow of food supplies erratic and unpredictable. This has also impacted prices.

From a supply chain perspective, the market volatility is difficult to deal with, and it has been a negative for the cargo owners and the transporters. Long-term rate stability is essential for owners to invest with confidence and at the same time give shippers the ability to plan properly.

QWhat are the biggest problems you face in getting foodstuffs to market? And how does the tight supply situation make your work more difficult?

AWe do not think in terms of “markets.” Our focus is on our beneficiaries and the difficulties in reaching them. We work in some of the most remote and difficult places in the world. We are very visible in countries like Somalia, Afghanistan, Haiti, and Democratic Republic of the Congo. In many of those countries, the infrastructure is very poor, and the security situation is often unstable. Bureaucratic red tape is an obstacle, especially as it concerns cargo clearance.

Also, more than 70 countries impose some form of export restrictions that hamper our supply chain. For example, last year when Ukraine imposed an informal export ban, we suddenly had to change our preferred area of supply for Sudan and the Horn of Africa by sourcing from Northern Europe. This increased our lead times considerably.