Donors have pledged an unprecedented amount — over half a billion dollars — for malnutrition treatment this year, garnering attention for a topic that advocates have long felt was neglected.
Yet effectively deploying all the funding — even in the midst of a global food crisis — is a huge hurdle for a supply chain system used to money flowing in fits and starts.
In July, the U.S. Agency for International Development announced a grant of $200 million for ready-to-use-therapeutic foods, or RUTFs, a high-calorie peanut paste, coupled with $50 million from private philanthropy. It was the largest single amount of money ever raised for the substance, which helps children recover from the most severe form of malnutrition, known as wasting.
“These are numbers that in 20 years I’ve never seen before.”
— Saul Guerrero Oteyza, senior adviser on financing for child nutrition and development, UNICEFThen, barely two months later, USAID Administrator Samantha Power announced the agency had raised another $280 million for RUTFs from governments, philanthropies, and private donors. Jaws dropped when she said the figure aloud at an event in September at the headquarters of UNICEF, which would program the money as the U.N. agency tasked with delivering treatment. Meanwhile, UNICEF was already working out how to move the previous grant through the system as quickly as possible.
The much-needed influx of cash comes as severe hunger is spiking due to the intersecting effects of COVID-19, climate change, the war in Ukraine, and other conflicts — but also as the facilities that manufacture RUTFs say they need more time to effectively scale up their production to spend the recently announced funds. Meanwhile, delivery costs have soared.
“We can’t absorb all this,” said Claire Fehrenbach, special adviser to the general manager at RUTF manufacturer Nutriset, of the multiple crises hitting the industry at once. “It will be more and more difficult to supply, it will be more and more expensive.”
Even though effective treatment for severe acute malnutrition exists in the form of RUTFs, coverage has never reached more than around 25% of the children suffering from it, and the current production capacity is not enough to supply all who need it.
The new pledges will drastically increase coverage, but it will take time for RUTF manufacturers to be able to translate dollars into treatment. Advocates say they also want to build capacity sustainably so that they're able to maintain production levels long after the current cash influx has been spent.
Getting treatment to children as swiftly as possible is vital: UNICEF is estimating that the total number of children who will need wasting treatment through December 2023 will top 10 million — and that only covers the 50 worst-affected countries.
Saul Guerrero Oteyza, UNICEF’s senior adviser on financing for child nutrition and development, said that in 2021 the agency treated around 5.4 million people in about 60 countries. Somalia has already seen a 300% rise in admissions over the first six months of this year, he said, and Ethiopia and Afghanistan are expected to each have over a million children in need of treatment through next December.
“These are numbers that in 20 years I’ve never seen before,” Guerrero said. “We are talking about a subset of those countries [we served] last year this year — or at least the 18 months or so — challenging us to do something for which there is no real precedent in terms of the speed and the scale of the treatment response.”
That scaling has long been difficult for RUTF manufacturers because of the challenging planning of their supply chains: Funding for their product comes through a humanitarian system whose finances are constantly in flux. Money flow can change based on malnutrition needs, national aid budgets, and other factors.
While there are drastic improvements in the supply chain from 15 years ago — there are now 22 RUTF factories globally — producers still find themselves at the whims of donors. Some facilities are run by small and medium-sized enterprises, while others are by nonprofits.
“Nobody can give RUTF producers more than a 12-month horizon on how many orders will come through, because it is unpredictable by virtue of the fact that financing is unpredictable,” Guerrero said. “The number of shifts that producers have is not a reflection of ‘how do you produce enough to meet the global demand.’ It is a reflection of ‘how much funding is there for the product in any given year.’”
To deploy the new financing as quickly as possible, RUTF facilities have been introducing additional shifts for employees, such as overnight or on weekends, to ramp up capacity. Other producers have been adding additional equipment.
Different-sized producers also have different abilities to scale up quickly, Guerrero said, noting that larger factories aren’t necessarily more nimble. UNICEF’s priority is to support businesses that are already operating, before considering whether additional factories may need to be built, he said.
The global supply chain is so intertwined, Fehrenbach said, that even if the price of a commodity Nutriset doesn’t use in production goes up, it could affect the availability and cost of other RUTF ingredients as other manufacturers look for cheaper substitutes for their unrelated products. Nutriset was forced to adapt to the pandemic, experiencing a shortage of containers and ships to move products to where they needed to go.
Now, high inflation coupled with high demand to spend all the new RUTF funding is further stressing the production system.
“Doing everything at the same time — I mean using the full capacity on current equipment plus extending, [our production hours] plus supplying raw materials, which are 30% higher than usual — all this is a challenge,” Fehrenbach said.
Manufacturers are also limited in the amount of RUTF they can make in advance and stockpile for when demand soars. Fehrenbach said that while the shelf life is two years, most customers do not want to buy the sachets after four months because they want them when they are as fresh as possible.
“We can’t make stock,” Fehrenbach said, noting that manufacturers also face payment delays.
“The maximum between the order from the customer and the payment we receive, it can be up to five months. It’s a lot of cash flow to advance.”
This restricts Nutriset’s ability to cope with the 30% increase in raw materials prices, hire and train people, and buy new equipment all at the same time.
Delivery has also gotten more expensive because of high fuel costs. William Moore, chief executive officer at the Eleanor Crook Foundation, which pledged $20 million over three years toward the RUTF scale-up, said philanthropy has a role to play in supporting local ministries of health as well as UNICEF and World Food Programme to be sure health workers are trained to deliver treatment most efficiently. They must also provide funding for it to get “down to the last mile and into kid’s mouths,” he said.
The large amount of money announced for RUTFs this year will help both manufacturers and UNICEF figure out how to get the most product to the most people as quickly as possible, Guerrero said. They must also consider supply chains of other products produced at the same factories, such as ready-to-use supplemental foods and other hunger treatments.
He said UNICEF has changed its planning because of the new funding so it can project supply and demand further down the road. The agency has also spent a lot of time coordinating with WFP and USAID to determine how best to coordinate the production and delivery of all commodities used for malnutrition treatment, Guerrero said.
Even as the system figures out how to deploy all the money that has been pledged, advocates argue the funding levels must be sustained if increased coverage is to be sustained.
“The worst thing that could happen is that we spend all this time and effort and resources to double coverage of treatment and then we just drop off a cliff edge back to baseline coverage levels in 12 to 16 months’ time,” Moore said.