Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 6818-GH

STAFF APPRAISAL REPORT

GHANA

COCOA REHABILITATION PROJECT

October 19, 1987

Af rica Country Department IVAg riculture Operations Division

his document has a restricted distribution &nd may be used by recipients only in the performance ofeir offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = Cedi t¢)US$1 = ¢ 160¢ 1 = US$0.0063

WEIGHTS AND MEASURES

Unless otherwise stated, all wetghts ard measures used in thisreport are metric.

1 metric ton (m ton) = 2,205 pounds (lb)1 hectare (ha) = 2.47 acres (ac)1 kilometer (km) = 0.62 miles (mi)1 meter (m) = 3.28 feet (ft)

FOR OMCIAL USE ONLY

ABBREVILTIONS AND ACRONYMS

ADF African Development FundAPCC Agricultural Policy Coordination CommitteeARCP Ashanti Region Cocoa ProjectASRP Agricultural Services Rehabilitation ProjectBADEA Arab Bank for Economic Development in AfricaCMC Cocoa Marketing CompanyCOCOIIOD Ghana Cocoa BoardCPC Cocoa Processing CompanyCRETC Cocoa Research and Extension Technicai CommitteeCRIG Cocoa Research Institute of GhanaCRMC CRIG Management ComitteeCSD Cocoa Service DivisionCSSVD Cocoa Swollen Shoot Virus DiseaseDCE Deputy Chief ExecutiveDCO District Cocoa OfficerDFR Department of Feeder Road? . a the Ministrl of Roads and HighwaysDRC Domestic Resource Cost CoefficientED Executive DirectorERCP Eastern Region Cocoa ProjectEPA Extension Field AssistantERP Economic Recovery ProgramFA Field AssistantFTC Farmer Training CenterGHA Ghana Highways Authority Under the Ministry of Roads and HighwaysGIMPA Ghana Instituta of Management and Public AdministrationGOG Government of GhanaGRC Ghana Railway CorporationICD Infestation Control DepartmentILO International Labor OrganizationMCA Ministry of Cocoa AffairsHOA Ministry of AgricultureMRH Ministry of Roads and HighwaysIUV Manufacturing Unit Value IndexRCO Regional Cocoa OfficerODA Overseas Development Administration (U.K.)PBC Produce Buying Company, Ltd.PCR Project Completion ReportPD Procurement DivisionPID Produce Inspection 'ol ArtmentPNDC Provisional National Defence CouncilPPAR Project Performance Audit ReportPPMRD Policy, Planning, Monitoring and Research DepartmentPY Project YearRPC Research Policy CommitteeSAC Structural Adjustment CreditSFA Senior Field AssistantSTA Senior Technical AssistantWAM West Africa MillsWFP World Food Program

FISCAL YEAR

Government January 1 - December 31Ghana Cocoa Board October 1 - September 30

This document has a resticted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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GHANA

COCOA REHABILITATION PROJECT

Table of ContentsLaRe

DOCUMENTS CONTAINED IN PROJECT FILE ........................... i

CREDIT AND PROJECT SUAARYY ................ .... #.... ... ...... ii

I. INTRODUCTION ......... 1........

II. BACKGROUND

A. General Economic Situation.. ................ . 1B. Government Policy...... . ............ .... .. . 2C. The Agriculture Sector .. . ...... 3

III. THE COCOA SUBSECTOR

A. Background. ...................................... 4B. Institutions arA Service......................... 6c. Roas.......ads.6. ... ....... * 14D. Government Cocoa Sector Strategy............. 17

IV. TdE PROJECT

A. Project Orii r.................... 19B. Objectives and Production Strate .... 20C. IDA's Role and Rationale for its Involvement 21D. The Project Area.... ..................... ....... 22E. Project Design and Choice of Components 22F. Summary Project Der tscription 23G. Detailed Features

1. Technical Services for Cocoa Production 232. Extension Services for Improved Technology 243. Seed Production and Distribution 264. Cocoa Swollen Sho't Virus Disease

(CSSVD) Control .............. .28

5. Research. . .. .. . . .. ........... ....... 296. Farm Input Supplyu p p ly............ 327. Internal Marketing. ................... 338. Monitoring and Evaluation. 359. Road Program ............... ........... 37

H. Project Cost and Financing ...... 40I. Project Implementation and Management... 42J. Procurement ....................................... 45K. Disusemnt....................... 46L. Auditing and Reporting............................ 48M. Production, Marketing and Prices.................. 48N. Financial Impact and Project Sustainability....... 500. Environmental Impact. ............................. 51P. Benefits and Risks ................................ 52

V. AGREEMENTS REACHED AND RECOMMNDATIONS................ 53

ANNEXES

3-1 Cocoa Sector Policy Under the SAC4-1 Cocoa Production Technology4-2 Proposed CSD Reorganization Chart4-3 Extension Services Strategy4-4 Disease Control4-5 Research4-6 Subsidy Removal Program4-7 PPMR Charts4-8 Table l Project Cost Summary

Table 2 Project Cost by Components and YearsTable 3 Project Cost by Categories and YearsTable 4 Financial Plan

4-9 COCOOD Structure4-10 Project Implementation Schedule4-11 COCOBOD Procurement Procedures

DFR Procurement Procedures4-12 Table 1 Disbursement Schedule by Categories and Years

Table 2 Disbursement Schedule by QuartersDisbursement Chart

4-13 Special Account4-14 Auditing and Reporting4-15 World and Farmgate Prices Forecast4-16 Financial Analysis

Table 1 Financial and Economic PricesTable 2 Profitability Measures for Cocoa and Competing CropsTable 3 Incremental Caretaker Budgets

4-17 Economic Analysis

MAPS

1. IBRD No. 20146 Cocoa Growing Areas2. IBRD No. 15116R3 Rainfall and Ecological Zones3. IBID No. 18393R1 Great Soil Groups4. IBRD No. 18395R2 Soil Suitability for Crop Production5. IBRD No. 20147 Trunk Road Network in the Cocoa Growing Area

This report is based on findings of (i) a pre-appraisal mission consistingof Messrs. Chupak (mission leader), Baxter, Bunyasi, Campbell (Bark), Tuley(ODA), and Alvim and Sinkinson (consultants), who visited Ghana inJanuary-February, 1987; and (ii) an appraisal mission comprising Messrs.Chupak (mission leader), Bunyasi, Campbell (Bank), and Sinkinson(consultant), who visited Ghana in April - May 1987. Secretarial serviceswere provided by Mmes. Baxevanis, Sesay-Bah, Sunderland and Kail, who alsoprovided computer work. Ms. Ducran also provided computer assistance.

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GHANA

COCOA REHABILITATION PROJECT

Documents Available in Proiect File

A. Background

1. Ghana Cocoa Sector Report 3168-GH2. Ghana Agriculture Sector Review 5366-GH3. Ghana Cocoa Sector: Draft Strategy Paper May 1, 1986

B. Proiect Preparation

1. Project Identification(Mission) Report (FAO/WB-CP) 19/81 GHA.10

2. Cocoa III Project Brief December 31, 19853. Project Preparation Report (FAO/WB-CP) 108-86 CP-GHA 17

C. Working Papers

Volume I1. Extension2. Roads3. Research4. Job Description for Technical Assistance Staff5. Terms of Reference for Studies6. Action Plan for Project Year 1

Volume II7. Detailed Cost Estimate8. Economic Analysie and Detailed Tables

Volume III9. Farm Budgets

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GHANA

GHANA REHABILITATION PROJE^T

CREDIT AND PRO.JECT SUMMARY

Borrower: The Republlc of Ghana

Beneficiaries: The Republic of Ghana and Ghana CocoaBoard (COCOBOD)

Implementing Agencies: COCOBOD and Department of Feeder Roads (DFR)in the Ministry of Roads and Highways

Credit Amount: SDR 31.3 million (US$40.0 million equivalent)

Terms: Standard, with 40 years maturity

Relending Terms: SDR 11.2 million (US$14.3 million equivalent) wouldbe onlent by the Republic of Ghana to COCOBOD, to finance projectinitiatives of COCOBOD's commercial activities (input supply and internalmarketing), at 8.52 over 20 years including 5 years grace; foreign exchangerisk would be borne by COCOBOD. SDR 12.16 million (US$15.5 millionequivalent) to finance project initiatives of COCOBOD's non-commercialactivities (research, extension, training, disease control and management)would be given in the form of a grant.

Cofinanciers: ADF FUA 28.0 million (US$33.0 million equivalent).Possible cofinancing to be confirmed from ODA(U.K.) of Pounds Sterling 5.0 suillion (US$8.0equivalent) and from BADEA of US$10.0 million.

Proiect Description: The project aims at: (i) supporting the policyreforms in the cocoa sector agreed under the first Structural AdjustmentCredit; and (ii) increasing cocoa production and yield to stabilize outputat an anmual level of about 300,000 t. This would be achieved by (i)maintaining producer price incentives; (ii) improving the institutionalefficiency of COCOBOD particularly its extension, seed production, diseasecontrol, functions and by gradual privatization of input supply; (iii)improving cocoa evacuation and quality control; (iv) implementing a roadrehabilitation program in cocoa areas; and (v) strengthening cocoaresearch, especially the breeding program for drought and diseaseresistance and improved yields.

The project would be a naticial project and would be implemented over fiveyears and include the following four main components: (1) TechnicalServices for Cocoa Production which incltMe reorganization of the CocoaService Division (CSD), and the strengthening of extension, seed productionand disease control and gradual privatization of farm input supply. (2)Research including (i) streamlining the Cocoa Research Institute of Ghana(CRIG) to promote its activities in plant breeding and disease control;(ii) the establishment of an off-station unit to conduct on-farm research;and (iii) staff development. (3) Internal Marketing. While the questionof privatization of the buying system is being examined by the study (under

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the SAC) of phased privatization of the total marketing system, the projectwould provide limited support to critically needed storage and transportinvestments to evacuate cocoa, from remote villages in areas with poorinfrastructure, where it is judged that the private sector is unlikely tobe active in the foreseeable future. Apart from these areas, COCOBOD'sshare in internal transport of cocoa would remain below 15?. (4)Essential Road Upgrading Program to facilitate the evacuation of cocoa andthe participation of private haulers. The component would be implemerstedby private contractors, asnd would cover (i) improvement of about 3,000 kmof feeder roads and bridges; and (ii) construction of 60 km of new feederroads, 2 major bridges, and 80 km of tracks.

Estimated Project Costs: 1/Local Foreign Total,..... ........ (US$ Million) ... O.*

Extension and Training 3.8 4.9 8.7Research 1.5 3.8 5.3Seed Production 0.6 0.4 1.0CSSVD Control 7.0 0.5 7.5Input Supply 2.4 18.6 21.0Int. Marketing 6.0 11.3 17.3Roads 13.2 24.7 37.9HQ Monitoring & Eval. 1.7 1.8 3.5

Total Base Cost 36.2 66.0 102.2Physical Contingencies 3.6 6.6 10.2Price Contingencies 11.4 4.2 15.6

Total Project Cost 51.2 76.8 128.0-==~~~~~~~~~~= == = ==

1/ Including duties and taxes of US$16.3 million.

Proposed Financing Plan

IDA 14.2 25.8 40.0ADF - 33.0 33.0Other Cofinanciers - 18.0 18.0Government 16.1 - 16.1COCOBOD 20.9 - 20.9

Total 51.2 76.8 128.0

Estimated IDA Disbursements

FY89 FY90 FY91 FY92 FY93 FY94......... ........... ( S il i n ............ .......(S ilin

Annual 9.9 5.1 6.9 7.9 v 7.3 2.9Cumulative 9.9 15.0 21.9 29.8 37.1 40.0

Project Benefits and Risks: The project would provide a sustainableframework for the development of the cocoa sector. It would (i) increase

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the efficiency of COCOBOD; (ii) ensure on' i.ncentive producer price; (iii)improve income distribution and raise rural living standards; (iv) reducerural unemployment and increase economic activity in the countryside; (v)increase cocoa exports with consequent higher availability of foreignexchange and Government revenue. The risks includet (i) world pricesbeing lower than what is forecast, to which the project is not overlysensitive; (ii) failure of GOG to maintain reasonable real producer priceincentives, agreement on which will be a condition for effectiveness; and(iii) unfavorable natural factors such as unusual droughts and majordisease outbreaks; for facing the latter, the technical capacity is beingstrengthened. There is also the risk of delay in the achievement of theinstitutional development objective of streamlining COCOBOD and theprivatization of input supply and marketing services. This ris'" would beminimized through close monitoring, but would not significantly aftect theproduction benefits.

Economic Rate of Return: 25S

Staff Appraisal Report No. 6818-GH, dated September 1, 1987

.LaPs 1. Cocoa Growing Areas2. Rainfall and Ecological Zones3. Great Soil Groups4. Soil Suitability for Crop Production5. Trunk Road .Jetwork in the Cocoa Growing Area

AF4AGOctober 1987

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GHANA

COCOA REHABILITATION PROJECT

I. INTRODUCTION

1.01 The Government of Gh'na launched a major economic reform programin 1983. In a supportive response, IDA approved a series of short-termcredits to provide critically required imports and immediate rehabilitation.needs for key sectors (cocoa, timber, mining, roads and transport). Inaddition, economic and sector work carried out by the Bank produced anagreed strategy to tackle medium-term adjustment issues which weresupported by a Structural Adjustment Credit. The emphasis of this strategyis on improving incentives and availability of inputs to exploit existingcapacity and promote production. As cocoa is the mainstay of the Ghanaeconomy (it provided 67Z or US$519 million, of 1986 export earnings), andas the success of the Economic Recovery Program depends heavily on thecocoa sector to meet its growth objectives, the Government of Ghanarequested IDA to support a cocoa sector project to increase production andaddress the sector's major constraints.

II. BACKGROUND

2.01 Ghana (area 238,500 km2) has an estimated population of 14million, growing at 32 p.a. It lies between about 50 N and 110 N latitudeand between 10 E and 30 W longitude. It is bounded by Cote d'Ivoire on theWest, Burkina Faso on the North, Togo on the East and the Atlantic Ocean onthe South.

A. General Economic Situation

2.02 According to most indicators, there was a progressivedeterioration in the Ghanaian economy from 1970 to 1982, with GDP declniingat an average rate of 0.5Z per annum and real per capita income falling by30?. Export earnings dropped 52? and the value of exports was reduced from21? to 4? of GDP during this period. The consumer price index increased atan average annual rate of 80X from 1975 to 1980, by 117? in 1981, 22? in1982 and 122? in 1903. The per capita GNP was about US$310 in 1983.

2.03 The falling per capita income over this period resulted ingreater incidence of absolute poverty, groving unemployment and emigrationof skilled professionals. Deterioration in the roads, railways,electricity supply, telecommunications and the transportation fleet wasalso very evident.

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2.04 Since 1983, the Government has launched a number of policyreforms aimed at reversing the steady decline of the economy. Thesereforms included a series of devaluations (from ¢ 2.75 to US$1 in 1983 to 090 in 1986 and about 0 150 in 1987); the introduction in September 1986 ofa dual excha.nge rate and its unity, in February 1987, under the market(auction) rate; several increases ir. cocoa prices from 0 12,000/ton in 1983to 0 85,000/ton in 1986 and 0 140-150,000/ton in 1987; reduced pricecontrols; increased interest rates; increased fiscal stringency and greaterprivate sector involvement.

2.05 These measures, combined with better weather conditions since1984, have led to an upturn in the economy with an 8.62 increase in realGDP in 1984 and a further increase of about 5.12 for 1985 and 5.3X for1986. The consumer price index rose by 40? in 1984 and only 102 and 20? in1985 and 1986, respectively. Exports rose by 292, 122 and 202 in 1984,1985 and 1986, respectively. For 1984, the balance of payments showed acurrent account deficit of US$221 million (2.4? of GDP), down from thedeficit of US$356 million in 1983. However, the deficit increased againto US$283 million in 1985 and is projected to reduce to US$193 million in1986 and go up to US$331 million in 1987.

2.06 Continued development of the econorqy is couistrained at present bythe poor state of basic infrastructure, the need for further sectoralreforms, the weak institutional framework, shortage of foreign exchange,shortage of skilled personnel, insufficient inter-skill wage differentialsand/or performance incentives, inadequate private sector involvement andweakness of the financial and banking sector.

B. Government Policy

2.07 As part of its economic recovery program, GOG has decided tofurther improve and deepen the economic structural reforms aiming at thefollowing four major objectives:

(i) Ensure and sustain economic growth through further improvementsin incentives accompanied by sector rehabilitation. Theprincipal instrument to attain the growth objective is theexchange rate and trade policies. Market forces wouldincreasingly play a larger role in the determination of prices,quantities, imports, etc.

(ii) Stimulate a substantial increase in the level of saving andinvestment. This would be done mainly by (a) restoringconfidence in the financial system and banking institutions,through tax policies that encourage savings; (b) reducing bankoperating costs; (c) taking measures to improve the financial andmanagerial structure of state-owned banks; (d) ensuringconfidentiality in the relationship between banks vis-a-vis theirclients; and (e) providing and securing positive real interestrates for deposits.

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(iii) Improve the balance of payment and place it on sound ground.This would be mainly achieved through Government exchange rateand trade policies and by pursuing a prudent borrowing strategy.

(iv) Improve the management of resources in the public sector. Theprincipal instrument to achieve this objective would be thepublic expenditure program and the reforms of the stateenterprise sector.

C. The Agriculture Sector

2.08 Agriculture is the backbone of the Ghanaian economy. It absorbsnearly 602 of total labor force; contributes about 53? of GDP and suppliesup to 77? of total merchandize exports. Despite its importance, fromIndependence through the early 19809 the sector did not receive the policyand institutional support it needs for sustained development.

2.09 The main features of agriculture in Ghana are: it is primarilyrainfed, most producers are smallholders and productivity is generally low.Agricultural production is particularly risky and the task of providingvast numbers of small farmers with improved techniques, incentives andmarketing services is of central importance to agriculture's development.Cultivable land is relatively plentiful: only 302 of the 10 millionhectare of cultivable land is actually cultivated. However, only 0.07? oftotal cultivable land is irrigated, although the Government accorded highpriority to irrigation in the last decade. Most farmers practice shiftingcultivation as land is abundant, and mixed cropping is the common responseto reducing the risks of rainfed agriculture. However, there are moredensely populated areas in the north and the south, where permanentcultivation has to be adopted and where maintenance of soil fertility is ofparticular concern since over the longer term, given Ghana's populationgrowth rate estimated at 3? per annum, the pressure on land would onlyintensify.

2.10 Institutional support for Agriculture is divided between cocoaand non-cocoa sectors. Ghana Cocoa Board (COCOBOD) is responsible forcocoa, coffee and sheanuts and the Ministry of Agriculture (MOA) isresponsible for all other crops. Coordination between MOA and COCOBOD toharmonize policies need to be strengthened, particularly in the areas ofextension services, training and farm input supply. This need has alreadybeen recog-4.zed by IDA and the Government, leading to the establishment,under the A ricultural Services Rehabilitation Project (ASRP, Cr. 1801-GH),of an Agricultural Policy Coordination Committee (APCC). The APCCcomposition which includes representatives of MOA, COCOBOD, Bank of Ghanaand the Ministries of Finance and Economic Planning, Industrie-, Scienceand Technology, Trade, Land and Natural Resources, Local Government andTransportation and Communication, would help ensure a better coordinationof support activities and development of a consistent set of policies.

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III. THE COCOA SUB-SECTOR

A. Background

3.01 Cocoa is the most important subsector in Ghana's economy,providing 65? of the export earnings, 9z of GDP and 23Z of Governmentrevenues in 1985. It employs some 24X of the labor force; occupies wellover a third of the land under cultivation; and about 0.5 millionhouseholds or 1/3 of the estimated total farm families, are engaged incocoa production.

3.02 In the 1960s Ghana was the world's leading producer of cocoa,with a record production of 566,000 tons, about one third of the world'ssupply in 1964165. Since then, production has declined from an average ofover 400,000 tons in the sixties and early seventies to about 300,000 tonsin 1976177 and even more drastically in the early 1980s to a mere 158,000tons in 1983/84.

3.03 The root cause of the decline was undoubtedly the poor producerprices for cocoa which brought in their train, neglect of farms, smuggling,shift to other crops, abandonment, fire, disease, migration of youth tooccupations other than cocoa cultivation and slowing down of replanting.More serious than the loss in production has been the severe erosion of thesector's long term potential caused by the neglect of cocoa farms and lackof regular replanting. The negative impact of the decline in production onGhana's economy was exacerbated by a significant fall in internationalprices of cocoa between 1977 (US$3,790/ton) and 1981 (US$1,800/ton).

3.04 The area under cocoa has been reduced drastically since 1979 dueto drought, fire, disease and abandonment of farms, or their replacementwith foodcrops. Although the data base is poor, the general consensus inCOCOBOD seems to be that there are at present approximately 1.1 million haof viable cocoa in Ghana, about 152 of which consists of hybrids. However,more than 402 of the existing cocoa is over 30 years old and declining inyield. On average, about 20,000 ha are also probably going out ofproduction (assumed to occur when a stand of cocoa is around 10 years old)each year. Furthermore, much of the existing cocoa stock is in a generallyneglected state with widespread capsid damage, infestation with weeds andmistletoe, lack of shade control, blackpod disease and progressivelyincreasing incidence of Cocoa Swollen Shoot Virus Disease (CSSVD).

3.05 Production Technology. Ghana is a low cost producer of cocoa.The traditional farming system is low technology, planting seed directly inthe field at close spacing (2,500 or more plants/ha) using up to five seedper hole and thinning to one plant. Seeds are from low yielding diseasesusceptible trees. Cultural practices are minimal with little or noattention to pest control, pruning or underbrushing, and average annualyields are about 250 kg/ha at most. Given better husbandry including CSSVDeradication these common Amelonado types yield between 400 kg/ha and 450kg/ha annually at full production. Improved seed from higher yielding

hybrids with some swollen shoot tolerance could average annual yieldsbetween 550 kg/ha and 600 kg/ha but only if farmers improved culturalpractices. Failing this, yields from hybrids are unlikely to exceed 360kg/ha and may average nearer 320 kglha. They could however be raised tobetween 700 kg/ha and 900 kg/ha if in addition to practicing better insectpest control, underbrushing and pruning trees farmers would manage the soilfertility with fertilizer applications, control black pod disease androdents, regulate shade intensity and give plants a good start by preparingthem in nurseries befo-e planting out at optimum spacing and crop geometry.

3.06 In terms of returns to labor, hybrid cocoa managed atintermediate level of teclmology offers most benefit to farmers.Replanting with hybrids is not an option for increasing production in theshort to medium te.n. Rapid increases would have to come from managementimprovements on existing trees rather than from new plantings.Rehabilitation of traditional varieties as well as hybrids through theapplication of moderate technology, involving regular manipulation of shade(normally shade thinning), spraying against capsids, mistletoe removal,pruning (to improve canopy architecture), more frequent harvesting andregular brushing offers the quickest method of boosting yields atreasonable cost. The main thrust of the Board's current program istherefore to promote this technology through inputs and extension services.

3.07 The number of cocoa farm owners has been recently determined tobe about 265,000. The average age of cocoa farmers, presently around 55 to65 years, has been increasing due to rural to urban migration of youngpeople and increased life expectancy. Since most farmers own two or moreparcels of cocoa and use sharecroppers to manage the extra farms, the totalnumber of cocoa growers is estimated to be around half a million. Atypical farm would consist of 1-2 ha of cocoa in 2 or 3 parcels and another1 or 2 parcels of foodcrops. The foodcrops, mainly plantain, maize,cassava, cocoyams and yams, are grown primarily for subsistence. Plantainsand cocoyams and yams, are grown as nurse crops for cocoa. Over 75Z ofcocoa farmers are caretakers or sharecroppers receiving one third of theproduce according to the 'Abusa' system or half the produce under the'Abunu' system. Under the low producer price of recent years these systemsdid not provide adequate incentive for improvement in field management.

3.08 With the reforms in the cocoa subsector and the progressivedevaluation of the Cedi introduced by the Government since 1983, theproducer price of cocoa has gone up progressively as followst

Year 1982183 1983/84 1984185 1985/86 1986/87 1987188

Price (¢/ton) 12,000 20,000 30,000 56,000 85,000 140,0002 Increase - 67 50 87 52 65Real Cocoa ProducerPrice Index 11 49.4 38.6 42.8 61.5 93.4 104.9

X of World (current)Price 27.9 31.5 27.2 27.6 29.1 41.2

1/ CPI adjusted, taking cocoa price of 1970 as 100.

The cocoa farmer's share of the actual export sale price has, however, notgone up as spectacularly on account of devaluations. As a proportion ofthe world price, it represents about 432 of the expected FOB price.However, the 1986 producer price of ¢85,000 was announced only after themain crop had been purchased and so would benefit only to the light crop(about 3? of the main crop) of 1986. The main crop purchased in 1986 waspaid for at the 1985 price of ¢56,000/ton. Thus, the producer share of theworld price (and sales income) was actually in the range of 25.8?(US$540/t) for the 1985/86 crop. This also means that the 1985/86 maincrop cocoa would have received a higher price if smuggled to Ivory Coast(US$815/ton) or Togo where the price was twice of that in Ghana.

3.09 Nevertheless, the above producer price increases combined withsome improvements in COCOBOD's internal marketing operations, reducedsmuggling and better weather conditions, resulted in increased cocoaproduction in 1984185 (170,000 tons) and 1985/86 (205,000 tons). It isclear that to reestablish the historical production levels (para 3.02),producer prices will play a crucial role.

B. Institutions and Services

3.10 Institutional support for cocoa production is provided by COCOBODthrough its divisions and subsidiaries as follervs:

(a) The Cocoa Research Institute of Ghana (CRIG)

3.11 CRIG is responsible for research into all aspects of cocoaproduction and primary processing. Its mandate has been widened in recenttimes to include research on other tree crops - coffee, cola, sheanut andtallow' tree. CRIG is a long-established research institute with wellqualified staff and impressive facilities. It has a well established mainstation covering 287 ha at Tafo and substations at Afosu, Bunso and Bolewith their own offices, stores and staff houses. Much of these facilitiesand equipment are in poor state of repair and require rehabilitation orreplacement. The Institute is managed by a Director assisted by two DeputyDirectors and consists of 4 administrative divisions and 6 researchdivisions.

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3.12 CRIG has been well recognized in the past for its high qualityresearch results although recent economic circumstances have adverselyaffected this performance. However, much of these results were not beingwidely applied because of the disincentives experienced until recently bycocoa farmers in Ghana. Response by farmers to recent pricing arrangementsis good. As !mprovements in marketing arrangements are made and pricesbecome more attractive, farmers are expected to accelerate theresuscitation rate of cocoa production. This would stimulate the demandfor and appliction of improved technologies to raise yields and productionefficiencies. The role of CRIG in this process is critical. The industryis faced with serious technological problems which would requireintensified efforts by CRIG scientists to resolve. The main problems arein the management of pest, diseases and soil fertility, and the developmentof new varieties resistant or tolerant to the 'Swollen Shoot" virus andwith potential for high yield and quality. While CRIG has maintainedrelatively high scientific standards in its work, some of the technicalproblems tackled are not of immediate relevance to the problems of thecocoa farmer. A more satisfactory mechanism is critically needed fo-ensuring such relevance and for further improvements in contacts with theextension services of CSD. Similarly, improvements are needed insystematic attempts to draw from the results of research published eachyear as to their practical implications for the farmer or the extensionservices. Other problems besides the needed improvements in theprogramming and management of research, whose elimination would increasethe effectiveness of CRIG's research are:

(i) the absence of cost-effectiveness considerations in designing andapproving research projects;

(ii) poor maintenance and recording by CSD of off-station trials;

(iii) inadequate attention to trials in the new cocoa areas of WesternGhana, partly due to lack of transport; and

(iv) poor maintenance of buildings, shortages of vehicles, equipmentand spare parts, inadequate contacts with sister institutionsabroad and reduced availability of publications, resulting inpart from impractical mechanisms for the release of budgettedfunds.

The problems identified above would be addressed by the project (paras 4.27to 4.34).

(b) The Cocoa Services Division (CSD)

3.13 CSD is responsible for providing extension, training, pest anddisease control, seed production and input distribution services to cocoafarmers. Six regional offices serve the Eastern, Ashanti, Brong Ahafo,Western, Central and Volta regions. The regions are divided into 99districts, each with its own District Office. CSD employs a total of some19,300 staff.

3.14 Following are the main problems whose resolution would improveCSD operations and would be addressed by the project (paras 4.15 and 4.16):

(i) poor supervisory capacity and lack of adequate mobility which isbeing exacerbated by the excessive number of districts and staff;and

(il) inadequate monitoring and evaluation system.

3.'.5 Extension. At the farmer level, each district is divided intoExtension Units (EUs), each manned by an Extension Field Assistant (EFA)and four 'extension" laborers. An EFA is supposed to serve about 1,200 haof cocoa (an average of about 600 farmers), providing extension and inputsupply services. There are 1,652 EPAs at present, technically supervisedby Senior Technical Assistants (STAs), but reporting administratively tothe District Cocoa Officer (DCO) through the SPA.

3.16 Until recently, the extension services of CSD were mainlyconcerned with carrying out brushing (weeding), spraying (when insecticideand transport were available), harvesting, lining and pegging for farmersagainst nominal fees. After CSD's restructuring, new policy was to havaextension workers concentrate on providing advisory services and inputs tofarmers rather than on doing things for them. In practice, EFAs have notyet adjusted to these new functions and still tend to use their gangs oflaborers to perform the same services for farmers, albeit on a reducedscale.

3.17 Following are the major problems whose resolution would permitthe extension services to fulfill their new role effectively and would beaddressed by the project (paras 4.17 to 4.20)s

(i) the excessive numbers of "extension" laborers and EFAs;

(ii) lack of transport to enable EFAs to visit farmers regularly;

(iii) lack of structured, supervised work programs and too much

emphasis on the distribution of inputs;

(iv) lack of regular training of EFAs to fit them for their newrole and the dilapidated state of Bunso Cocoa College andits facilities which prevents such a training program frombeing started;

(v) inadequate research-extension communication; and

(vi) lack of capacity to produce extension and publicitymaterials;

3.18 Disease Control. The regulatory activities of CSD areprincipally CSSVD survey and treatment. Surveys for disease are carried

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out by a field staff of about 730 Field Assistants (FAs) assisted by about1,600 laborers (one FA and two laborers/team). In addition, about 470 FAsand 990 laborers are employed in initial treatment, reinspection andretreatment procedures. The FAc are supervised by a total of 220 SeniorField Assistants (SFAs) and the overall operation at the district level ismanaged by the District Officers.

3.19 The main tasks of the FAs as currently defined are to spotoutbreaks of the disease, mark and cut out the visibly infected trees alongwith adjacent trees which could harbor the disease. Once an outbreak hasbeen thus treated, arrangements are made for an ex gratia payment to thefarmers and the Rdjoining cocou is reinspected 6-monthly for 24 months inorder to detect and treat any further infections. In the area ofmass-infection (AMI), where the disease is most widespread, the approach isto persuade farmers through incentives (¢ 67,000/ha presently) to cut outall cocoa and replant with resistant/tolerant hybrids in blocks of at least1 ha, leaving a cocoa-free cordon around the perimeter. The cordon may beput under coffee or colanut. If it is left to bush alternative, hosts ofthe CSSV must be removed.

3.20 The present constraints, which would be addressed by the project(paras 4.25 and 4.26), are largely concerned with the lack of qualifiedstaff for monitoring of both the technical and operational aspects of theprogram and the lack of funds with which to make the incentive orinducement payments to farmers for infection control efforts.

3.21 Input Distribution. The third major area of CSD's activities isthe supply of implement and production inputs. Imported inputs, mainlymistblowers, handsprayers, spare parts for sprayers, insecticides,fungicides, polythene bags, matchets, pruners and petrol-oil mixture formistblowers, are distributed by CSD, but procured by the ProcurementDivision (PD). The insecticide requirements are obtained from the chemicalformulation plants at Tema and Abuakwa and the fuel-oil mixture from theTema oil refinery.

3.22 Farmers are provided with most of these Inputs at subsidizedprices. Thus, at the exchanige r:te of 160 cedis to the dollar, the currentselling price of mistblowers carries a subsidy of 90?, handsprayers 74?,sprayer spares 100X, insecticides 84-90?, fungicides 662 and polythene bags1002. Petrol/oil mixture, matchets and pruners are sold without subsidy.Recent decisions of COCOBOD/CSD include, however:

ti) the elimination of all subsidies on inputs over a 3 year period;

(ii) the dropping of matchets and pruners from its list of inputssupplied to farmers, and;

(iii) the transfer of the fuel/oil mixture supply service to the oilcompanies and their dealer networks.

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3.23 The main problems connected with the input distribution which ifeliminated would have a favorable impact on quality of farm services are:

(i) poor telecommunications between COCOBOD headquarters and CSD,between CSD and its warehouse at Tema, and between CSD and itsregional and district offices;

(ii) failure of the Procurement Division (PD) of COCOBOD to keep CSDinformed of cargo arrivals or non-arrivals and progress onclearing customs, etc.; new procedures being adopted by PD wouldovercome this problem;

(iii) inadequate transport capacity (especially in regard to thedistribution of seed pods - see para 3.24 below), sometimesresulting in delays in the delivery of inputs; transportdifficulties also result in poor supervision of CSD's fieldprogram;

(iv) poor road infrastructure;

(v) delays in obtaining import licenses, opening letters of credit,etc.; and

(vi) high costs of providing subsidized mistblower repair services.Host of the above issues could be resolved by increasinggradually the role of the private sector in the input supplysystem. This objective is a key element of the project (para4.35).

3.24 Seed Production and Distribution. Seed production anddistribution services are provided by CSD through its seed gardens, managedby a coordinator based at Tafo. There are 17 seed gardens distributed over5 regions. They are associated with the cocoa stations but areadministratively controlled by the regional officers. They consist ofabout 40 ha of monoclonal and 70 ha of older biclonal productive seedgardens. These seed gardens, over 60X of which have trees over 25 yearsold, are badly managed (some even showing visible symptoms of CSSVD);however, they are still expected to produce over 2 million seed pods in1985/86, adequate to plant about 28,000 ha.

3.25 The main problems which would be addressed by the project (paras4.22 to 4.24) in CSD's seed production and distribution services are:

(i) poor management (lack of supervision, poor performance bypollinators (250-400 pollinations/day), lack of basicphytosanitary controls in the seed gardens, inadequate labellingand maintenance, etc.);

(ii) limited availability of seed at times during the year when demandamong farmers (for direct seeding) is greatest.

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(iii) lack of overall seed garden policy, planning, and evaluation;

(iv) inadequate transport for pod distribution as well as for use bysupervisory staff;

(v) lack of a pipeline of fully tested successful replacement parentclones for future use; and

(vi) insufficient seed garden area to cater to the needs of theWestern Region.

(c) The Produce Buying Company. Ltd. (PBC)

3.26 PBC is responsible for the purchase and evacuation of cocoa,coffee and sheanuts. It is a wholly owned subsidiary of COCOBOD, enjoyinga monopoly buying concession for cocoa and operating 3,218 Buying Centers(Societies) distributed across 134 buying districts of the cocoa growingregion. The number of Buying Centers has declined (from 4,300 in 1981) inrecent years in response to reduced production and to the introduction ofthe Akuafo 1/ cheque system of payment. Some 17,860 staff are employed byPBC.

3.27 The PBC is also responsible for having the produce graded by theProduce Inspection Department (PID), bagging and storing it at centraldepots and transporting it to Tema and Takoradi ports by rail or road,using private haulers as well as its own fleet of trucks. Cocoa is storedin the port in warehouses leased from the Ports Authority and becomes theproperty of the Cocoa Marketing Company, Ltd., the trading subsidiary ofCOCOBOD which is responsible for its export. All handling of the cocoa inthe ports is by the Cargo Handling Corporation, wholly owned by Government.

3.28 In common with other divisions and subsidiaries of COCOBOD, PBChas problems arising from poor communications. However, the most seriousconstraints to its operation which would be dealt with by the project(paras 4.37 to 4.42 and 4.46 to 4.48) are as follows:

(i) the lack of consistent political backing for PBC's efforts torationalize (closing down non-viable buying centers) the buyingsystem in order to reduce buying costs;

(ii) inadequate storage capacity in the Western Region;

(iii) lack of mechanical handling facilities, particularly at the portsand railway sidings;

(iv) poor condition of the feeder road system, import restrictions and

1/ The word means 'farmer.' The check can be cashed in any bank.

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financial constraints, all of which prevent private haulers fromparticipating in societies-to-depot evacuation while at the sametime hampering the operations of PBC's transport fleet;

(v) lack of a proper accounting system;

(vi) inadequate transport for supervisory staff; and

(vii) duplication of services among PBC, CSD, PID and ICD at regionaland district levels; this applies especially to accountingservices, transport, communications, security and building andvehicle maintenance.

(d) The Produce Inspection Division (PID)

3.29 PID operates a relatively independent system which is found to beadequate. PID service aimed at ensuring that standards are maintained inthe quality of cocoa, coffee and sheanuts intended for export. The work ofPID involves inspection, grading and sealing every bag of produce at PBC'sBuying Centers (Societies), checking the quality of grading done bypurchase clerks by sampling bagged cocoa depots and rechecking consignmentson arrival at port and before shipment. Operating from its headquarters atAccra, PID employs over 2,000 staff, it is effective and has a justifiedreputation overseas for its grading work. The main constraints are similarto those affecting the operations of PBC, but special mention must be madeof the lack of adequate transport for its supervisory staff. Out of 23vehicles which could serve for this task, 7 are not roadworthy and all but3 of them are over 5 years old.

(e) Infestation Control Department (ICD)

3.30 The ICD, operating out of its headquarters in Accra and with astaff of about 200 persons, treats all storage premises by frequentinsecticidal fogging when the produce is stored and residual insecticidaltreatment when the warehouses are empty. Further treatment of cocoaconsignments is effected at the ports and there is complete disinfestationwith methyl bromide prior to loading. If necessary, ships' holds are alsofumigated. Originally, ICD was in the private sector and could revert inthe long run to a similar status; meanwhile it should be run on commerciallines. The constraints to its operation are similar to those affecting PBCand PID.

(f) Other COCOBOD Subsidiaries, which provide other services to thesector, includes

3.31 - Plantations. Ltd., which runs the Board's 92 cocoa (53) andcoffee (39) plantations and employs some 17,000 staff andlaborers. these plantations were established between 1976-78aiming at increasing national production of both thesecommodities. However, by mid-1978 it had already become evidentthat progress with the development was disappointing. Since

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then, several studies have been carried out which resulted in thedivestiture, already being implemented, of 52 non-viableplantations (32 cocoa and 20 coffee), inc'Luding laying-off 10,000employees. As agreed under the SAC, Annex 3-1, the future of theother 40 plantations (21 cocoa and 19 coffee) is pending furtherconsideration through a feasibility study to be undertaken byCOCOBOD and completed in late 1987.

Ablakwa Formulation Plant, Ltd. The plant, which wascommissioned in 1980, formulates insecticida, "Unden 20," fromimported ingredients for spraying against capsids. The plant iscapable, with shift work, of attaining output levels in the rangeof 4 to 5 million liters per annum. However, as the annualconsumption is about ' million liters, there was no need toutilize the entire plant capacity and, consequently, since itsinception the plant's actual output has never exceeded 25Z of itsannual (5 million liters) capacity. With this low utilizationand overstaffing, production cost is quite high and itscompetitiveness with imported insecticide is questionable.However, with better management and a commercially-orientedapproach the plant could be diversified into other chemicalproducts, its efficiency improved and its cost reduced. COCOBODis pursuing a change of ownership and management to undertake thenecessary changes and improve plant performance.

Cocoa Processing Company. Ltd.- (CPC). The company operates threefactories, two at Takoradi (West Africa Mills (WAM) and Taksi)and one at Tema (Portem), which produce a range of cocoaproducts: cocoa liquor, cake, and butter for export, and cocoapowder and chocolate for domestic consumption. The threefactories are said to have a combined nominal processing capacityin excess of 80,000 tons of raw beans per annum. However,utilization capacity in recent years !.s about 202 mainly becauseof: (i) old equipment (the factories are quit' old - W.4M wasestablished in 1947, Taksi in 1964 and Portem in 1965 - and neverrehabilitated); (ii) chronic lack of spare parts; and (iii)inadequate supply of raw beans. Due to low utilization and heavyoverstaffing, CPC is operating at a loss which, in the a.,ence offinancial figures, cannot be determined.

Cocoa Marketing Company (CMC). CMC is solely responsible for theentire external marketing of the country cocoa production, coffeeand sheanuts. CMC maintains a liaison office in London (CMC UK).The company earns half of one percent (112X) on CIF values of allthe sales as commission, which is adequate to cover all costs(recurrent and capital), pay taxes (about 22X of its budget) andleave some surplus. The CMC 1986/87 (October 1, 1986 toSeptember 30, 1987) budget is estimated at US$2.5 million.

C. Roads

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3.32 Road conditions throughout Ghana are extremely poor, particularlyin the west of the country where LJcoa yield is highest. Large areas arecompletely isolated in the wet season. Transport costs and vehicle attri-tion are excessive. Evacuation of cocoa from village store (Society) todepots, and thence to either railhead or port, is carried out by theProduce Buying Company (PBC) using road transport. Transportation fromdepots to railhead, or to port, is almost wholly by private haulers undercontract to PBC. The condition of feeder roads giving access to societiesis such that private haulers do not operate on them. Haulage on societyfeeder roads is by PBC using ad hoc methods of small trucks ortractor-trailer combinations, at high cost.

3.33 Southern and central Ghana is traversed by a skeletal network ofsealed surface primary roads with conditions ranging from good to severefailure. The main cocoa evacuation trunk roads from Brong Ahafo, Westernregion and West Ashanti region to railhead at Awaaso, main depots atKumasi, or port at Takoradi are gravel-paved and in medium to severefailure condition. Feeder roads connecting village societies and depotsare in very bad condition. In addition to poor alignment, there arefrequent collapses of temporary bridges and culverts. The project wouldaddress the above-mentioned deficiencies (paras 4.46 to 4.48).

3.34 An ongoing IDA-financed Road Rehabilitation and MaintenanceProject (Credit 1601-GH) is addressing the problem of institutional supportand longer-term development of labor-intensive spot improvement and roadmaintenance methods. A proposed Transport Rehabilitation Project willincrease road rehabilitation and periodic maintenance, but will excludecocoa feeder roads.

3.35 Ghana's road sector is administered by the Ministry of Roads andHighways (MRH) which oversees road investments and maintenance. Tnreeagencies operate under MRH, (a) Ghana Highway Authority (GHA), anautonomous body overseeing construction and maintenance of trunk roads(primary and secondary roads); (b) Department of Feeder Roads (DFR)handling construction and maintenance of feeder roads; and (c) Departmentof Urban Roads (DUR) which is not yet autonomous of GHA. Prior tomid-1986, the Cocoa Marketing Board (COCOBOD) had its own budget forrehabilitation and maintenance of any roads under cocoa traffic,irrespective of their classification as either GHA or DFR responsibilities,and for the construction and/or maintenance of low-standard feeder roads tovillage societies. With effect from January 1, 1987, PNDC instructed DFRto assume full responsibility for cocoa feeder roads. Funding of ¢2.6billion (about US$16.2 million) would be provided by COCOBOD for fiscal86/87. For subsequent years, minimum funding would be not less than 02.6billion in real terms, with a maximum of 6Z total cocoa sales.

3.36 Road inventories in the cocoa-growing areas of the 6 cocoaregions are:

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Region GHA (km) DFR (km) SocietyTrunk Roadsll Feeder Roads2/ Feeder Roads3/

Western 1,528 1,615 ?Brong-Ahafo 1,835 1,117 7Central 1,251 218 7Ashanti 1,408 2,718 7Eastern 1,821 2,002 7Volta 1,532 592 7

Total 9,375 8,262 3,900est. April 87

1/ Estimated 5,800 of GHA roads are under cocoa traffic.2/ Inventoried 1980. Estimated 80 (6,610 km) are under cocoa traffic.3/ -.stimate April 1987 based detailed inventory of 3 districts.

A detailed inventory is in progress.

3.37 Cocoa Production. Cocoa production generally increases from Eastto West:

OutputRegion 85/86 86/87 (to 16 Apr. 1987)

tons tons X

Western 59,556 29.3 72,541 33.3Brong-Ahafo 35,391 17.4 31,654 14.5Ashanti 50,237 24.7 54,655 25.0Central 25,666 12.6 25,656 11.9Eastern 31,764 15.6 31,695 14.5Volta 855 0.4 1,806 0.8

Total 203,469 100.0 218,007 100.0

Further significant increases from Western region can be achieved bygaining road access to some 1,200 sq.km between the Bia River and the Coted'Ivoire border. Output from this area is currently head-portered toIvoire.

3.38 Cocoa Evacuation Traffic. Evacuation of cocoa from societies todepots and ports occurs from November through June. Haulage to depotscommences by mid-November using PBC vehicles, ranging from 9-ton 4x2 trucksto 2-ton tractor/trailer combinations. Onward movement from depots tolarger depots, railhead or port is by private haulers under contract toPBC. A small element (15X) is moved in PBC trucks. From the depots, 35?is transported to railheads on the Western line from Kumasi to Takoradi atKumasi, Awaaso and Insu. The balance is hauled by road to port at Takoradior Tema, an average haul of 250 km.

3.39 Haulage Costs. There is no data available on the prrasent cost oftransporting cocoa from societies to depots by PBC vehicles. It may be of

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the order ¢ 15-20 per ton km. For onward transportation from depots,private contract haulers are paid ¢ 9.9 per ton km with a 20? increment forthe bad standard of gravel surfaced roads predominating in the west. Thehaulage industry considers the increment is grossly inadequate.

3.40 Department of Feeder Roads (DFR). The Directorate isconsiderably understaffed (381 of establishment in post), and isinadequately experienced to plan, manage and supervise any increase overits present activity level. There is a conspicuous deficiency ofmiddle-management grades with practical experience. Current fieldactivities and practices are generally inappropriate to low-cost roadworkresulting in excessive costs, low productivity and subsequent highmaintenance cost.

3.41 Technical assistance to improve DFR planning and project manage-ment capability is provided currently by the ongoing Road Rehabilitationand Maintenance Project (RRMP) Credit GH-1601, and will be continued as acomponent of the proposed Transport Rehabilitation Project (TRP) (AppraisalApril 1987). Further management assistance is to be provided by aNetherlands-financed team for two years commencing June 1987. Despitethese inputs, it is unlikely that DFR could ever undertake full managementcontrol of the Cocoa Roads component without additional technicalasaistance, substantial staff increases, and intensive training.

3.42 COCOBOD Civil Works Department. This department has beenresponsible for past work on cocoa roads in addition to its other buildingresponsibility. Its resource for managing the road activity has beentotally inadequate, resulting in bad planning, massive cost and timeoverruns, and gross deviations from specification. Under the project,COCOBOD will appoint a competent officer to liaise with GHA and DFR duringthe project, ensuring adequate data flow between Produce Buying Company(PBC), Cocoa Services Division (CSD) and DFR for assessing priorities, workprogramming, and monitoring progress and costs.

3.43 Road Construction Industry. Contracts for road work are preparedby DFR on a schedule of rates, and awarded to a selected contractor. Thisis an unsatisfactory system. MRH is implementing a pre-qualification andannual registration system for road contractors which is acceptable to IDAand will become operative in January 1988. Thereafter, only pre-qualifiedand registered contractors can tender for work. Simultaneously,competitive tendering will be obligatory.

3.44 There are 6 international-standard civil engineering companiescurrently operating in Ghana. None have been involved in gravel roadreinstatement or maintenance, due to the petty nature of previouscontracts, and payment uncertainties. All now show considerable interestin this project component. They have no serious problem over iMportationof plant, spares and materials, and have adequate staff and labor resource.The domestic road construction industry has, in the past, receivedtechnical assistance under IDA-financed highway projects, but individualcontractors are still generally small firms, with limited technical,

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managerial and financial skills. Further development of this industrialsector is needed before major projects can be undertaken. Some 30 domesticGhanaian contractors are working for DFR on cocoa roads. All contractorsare under-equipped with ageing, and often, unsuitable plant. Fivecontractors are working to good standards, each have an annual capabilityof 60-70 km spot-improvement given improved management and reliable,relevant plant. A further 7 are borderline standard with improvementpossibility.

3.45 The Condition of Roads. Primary and secondary roads constructedprior to the mid-60's were well-aligned and engineered, and their geometricstandards remain adequate for current traffic. Culverts are generallyadequate in size and condition, but timber bridges are deteriorated. Dueto cumulative lack of maintenance, drainage has ceased to function. Waterhas become impounded on the road formation causing scour, gulleying anderosion on gradients, quagmires on level sections, and creating mud wallowsat culverts, where seasonal stream* frequently have by-passed the culvertand freeflow across or down the road rurmation. Roads constructed sincethe mid-60's have suffered from many changes of geometric specification,excessive geometric standards and gradients are commonplace. Feeder roadshave usually developed from the logging roads of timber companies, andconsequently are less well-engineered. The society feeder roads areusually roughly-dozed spur accesses to individual village societies, andare relics of the lowest standard of logging track.

3.46 Work Standards. Work standards and unit costs of currentreinstatement and construction are not satisfactory. The main impedimentto achieving quality, progress and acceptable cost levels is theinexperience of DFR field staff in effective planning and specification oflow cost road construction and improvement. Survey and contract documenta-tion are unnecessarily detailed. There is no appreciation of topography inalignment selection. Geometric specification is excessive, despite recentrevised specifications by DFR, and drainage structures are inadequatelydesigned. There is insufficient site supervision, and control of materialsand compaction is weak. This situation is remediable by training and goodexample. There is ample evidence that the best domestic contractors canproduce acceptable standards of earthwork and gravel pavement whenadequately supervised, but progress is erratic due to plant and managementunreliability. The quality, and progress rate, of concrete work onculverts and drainage structures is uniformly poor, and is a seriousrestraint on progress. There is little current activity on routine andrecurrent road maintenance, and its quality is variable.

D. Government Cocoa Sector Strategy

3.47 The Government of Ghana gives high priority to rehabilitation ofthe cocoa industry. The Structural Adjustment Program (SAP) which is theframework for GOG policy (para 2.07), is relying heavily on improvedperformance in the cocoa sector to meet its overall growth objectives.The cocoa sector has the medium term potential for improved production andproductivity which, if adequately exploited, could increase foreign

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exchange earnings and Government revenues as well as have a major impact onreduction of rural poverty, particularly in the cocoa growing areas. Themajor objective for the cocoa sector under the SAP is to increase cocoaoutput from about 205,000 tons in 1985/86 to 258,000 tons in 1988/89 andproduce at least 303,000 tons by 1995. While significant progress has beenmade in motivating production by increasing returns to cocoa farmers,strengthening COCOBOD management capacity, and streamlining its services tococoa producers, much more remains to be done. The Government's sectoralstrategy, details of which are given in Annex 3-1, aims to overcome theconstraints discussed in Chapter MII. Within this context the Governmenthas adopted the following action program to achieve its sector objectives:

(i) further real increase in return to farmers, with farmgate pricesreaching up to 55X of cocoa FOB price;

(ii) reduce the share of cocoa revenues that currently accrue toCOCOBOD from about 25Z of the FOB price to an indicative targetof 15Z in 1988/89; at the same time COCOBOD will be divestingitself from many of the commercial services which can beefficiently provided by private enterprise;

(iii) initiate removal of barriers to greater private sectorparticipation in providing services to the cocoa industry (para2.07);

(iv) reevaluate the present system of cocoa taxation to ensure itsconsistency with the objective of ensuring adequate producerincentives; and

(v) strengthening extension services, adaptive research, and diseasecontrol including a massive campaign to control the cocoaswollen shoot virus disease (CSSVD); and

(vi) improving the road infrastructure, the lack of which poses amajor constraint to increased access to growing areas and adisincentive to private sector participation.

As part of its cocoa sector strategy, government has also endorsed COCOBODcommittments to:

(a) confining its activities to those which cannot be done moreefficiently b, other institutions or the private sector;

(b) laying off excess staff in phased programs; and

(c) preparing a three-year rolling corporate plan to ensure asteady progress in line with (a) and (b) above.

Based on the commitments above, COCOBOD will aim to become over the mediumterm a service organization to the cocoa industry involved primarily in

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marketing support, extension, research, quality control and diseasecontrol. In the short term it will:

(1) progressively shed off responsiblity for input supply, andencourage the private sector to take it over;

(2) handle internat. buying and haulage, but COCOBOD's share inhauling would be reduced to about 10 in the next three years;

(3) divest itself of ownership of commercial activities such as theinsecticide formulation plant at Abuakwa, and ito cocoaplantations;

(4) relinquish the responsibility for construction of feeder roads incocoa areas to the Department of Feeder Roads in the Ministry ofRoads and Highways;

(5) explore alternative ways of improving the efficiency of internalmarketing and scope for greater private sector participation;

(6) continue to restructure its organizational framework to improvedecision-making and performance monitoring mechanisms; and

(7) promote extension, research, seed production for rehabilitationand new plantings and launch a massive campaign to cut out CSSVDinfected trees.

The Cocoa Rehabilitation Project would provide essential policy, financial,institutional and technical support to COCOBOD and the industry to achievethese stated objectives in a timeframe consistent with the structuraladjustment program.

IV. THE PROJECT

A. Proiect Origin

4.01 The Government of Ghana has requested IDA to extend its economicsupport by funding a cocoa sector rehabilitation project. In reference toa cocoa sector study carried out by the Bank in 1980, a project was firstidentified in 1981 and followed by a prefeasibility study undertaken byconsultants. However, due to an unfavorable economic environment andunresolved issues resulting from prevailing Government policies, theproject preparation process had to be suspended.

4.02 In 1983 the Government introduced a series of policy reforms,including the cocoa subsector, aimed at removing constraints and promotingthe export earning industries. These reforms were supported by IDA throughthree projects: (i) First Reconstruction Import Credit (Cr. 1393; US$40million in 1983); (ii) Export Rehabilitation Project (ERP, Cr. 1435; US$76

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million); and (iii) Export Rehabilitation Technical Assistance (ERTA; Cr.1436; US$17.1 million) in 1984. These credits, mainly to meet essentialimport requirements of the Ghana Cocoa Board (COCOBOD) and technicalassistance, were tied to further sectoral reforms - involving producerprice increases atid restructuring of COCOBOD - which have paved the way forfurther project assistance to the cocoa industry. This process has beenfurther advanced by the first Structural Adjustment Credit (SAC). Theproposed project was reidentified by the Bank in 1985 and prepared in 1986by an FAO/ODA team, through the FAO/World Bank Cooperative Program.

B. Objectives and Production Strategy

4.03 The project aims at (i) supporting the policy reforms in thecocoa sector agreed under the first Structural Adjustment Credit; and (ii)increasing cocoa prnduction and yield to stabilize output at an annuallevel of about 300,000 tons. This would be achieved by (i) maintainingproducer price incentives; (ii) improving the institutional efficiency ofCOCOBOD particularly its extension, seed production, disease control, andby gradual privatization of input supply; (iii) improving cocoa evacuationand quality control; (iv) implementing a road rehabilitation program; and(v) strengthening cocoa research, especially breeding for drought anddisease resistance and improved yields.

4.04 Production Strategy. The production strategy which forms thebasis for the project is:

- to maximize production in the short to medium term by promotingthe rehabilitation of existing cocoa farms through improvedcultural practices, and anti-capsid spraying (as described inAnnex 4-1 for Technology Level III); and

- to launch a massive 10-year planting/replanting program (basedlargely on hybrids and building up to 40,000 ha/year) along witha vigorous CSSVD control program in order to reestablish a cocoastock that could produce at least the 300,000 t of cocoa peryear, considered as the project's long-term target. It isexpected that nearly 90Z of the new areas planted each yearduring the project period and beyond, would be hybrids and thatabout two-thirds of this would be using moderate culturalpractices (as described in Annex 4-1 for Technology Level IV) andat least 52 (perhaps 10%) would use improved husbandry(Technology Level V).

4.05 The project would assist with gradual adoption of improvedtechnologies through upgrading of extension and associated R and D work,disease control, input supplies and other services such as marketing, roadsand transport etc. It is projected that by year 5 (from the commencing ofthe project) about 300,000 ha of existing cocoa would have beenrehabilitated while new areas or replanting would have reached 57,000 ha.If these targets are achieved, the total production of cocoa could be up toat least 260,000 t by PY5 (1993). In addition, the project would have set

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the base to allow growth of replanting to reach about 25,000 ha a year byPY7 (1995), which would be about the equilibrium replanting level for theindustry.

C. IDA's Role and Rationale for its Involvement

4.06 For the past several years, IDA has helped Ghana to implementprojects and programs designed to increase production and export. Based onlessons derived from earlier experience and past project implementation,IDA's approach is to focus ont (i) improving incentive and economicenvironment to reverse the steady deterioration in economic performancesince 1970 and establish sustainable economic growth; (ii) rehabilitatinginfrastructure; and (iii) streamlining institutions. This is in line withthe Government Economic Recovery Program (ERP) which was introduced inApril 1983 and is being supported by a series of IDA-financedprojects/programs. IDA's role has been to help Government rehabilitateproductive assets, lay the basis for sustaining growth, mobilize andcoordinate donors' aid in support of a market and export-oriented strategy.

4.07 In support of the ERP, IDA has financed two Import ReconstructionCredits, two Export Rehabilitation Credits (one for Technical Assistance),and a Structural Adjustment Credit. It is developing v StructuralAdjustment and a Technical Assistance Credits as well as a PublicEnterprise Project. These macro level operations are complemented bysector level operations: the Industrial Sector Adjustment Credit;rehabilitation projects in public infrastructure (roads, power, ports),health and education, agricultural services; and the proposed cocoarehabilitation project.

4.08 Lessons from Previous Cocoa Projects. IDA financed two cocoaprojects in Ghana: The Eastern Cocoa Projact (Credit 205-GH, US$8.5million) and the Ashanti Cocoa Project (Credit 1181-GH, US$14.0 million)which were implemented between 1970-79 and 1975-82 respectively. Bothprojects were designed to replant and rehabilitate about 50,000 ha ofcocoa. The principal problem that affected both projects was low farmerparticipation owing to inadequate returns at prevailing producer prices.In both Government had to undertake most of the rehabilitation, replantingand maintenance work on behalf of the farmers; this led to delays inachieving targets and increasing costs. The main lesson learnt from thosetwo projects is that unless broad sectoral and incentive issues wereresolved, successful implementation of localized or regionalized projectsis almost impossible (PPAR No. 3526 dated June 24, 1981 for the EasternCocoa Project and PCR No. 5092 dated May 24, 1984 for the Ashanti CocoaProject). These lessons have been taken into account in the design of thisproject.

4.09 While diversification of the economic base is important, givenGhana's overwhelming reliance on cocoa for foreign exchange earnings, therehabilitation of the cocoa industry remains a priority in Ghana's plansfor economic recovery. Without cocoa rehabilitation and the consequentimprovement in foreign exchange earnings, further deterioration of the

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economic situation in the country is certain. Ghana has a strongcomparative advantage in tree crops including cocoa. Commercial lendingunder Ghana's present economic situation, would be inappropriate due to itshigh cost, while other bilateral lenders have yet to develop acomprehensive sector involvement and do not have funds to support theentire sector.

4.10 As a sequel to the Export Rehabilitation Project and the SAC, theproject would not only help implement key policy agreements already reachedbut also address the sector's major investment and institutionalconstraints (para 3.10 to para 3.45) by ensuring producer price incentives,strengthening cocoa research, reorienting and improving extension services,increasing seed production, facilitating cocoa evacuation, increasinginstitutional efficiency, and creating a better ground forcommtercialization and the progressive privatization of COCOBOD functions.Without IDA support to the project, rehabilitation of the cocoa industryand thus Ghana's economic restructuring would probably take longer.

D. The Proiect Area

4.11 Geographic Location. The Cocoa Rehabilitation Project, unlikeearlier projects, would cover the entire cocoa growing area of Ghana. Thisincludes nearly the whole of the Western and Central Regions (excepting thecoastal strips), and major parts of the Brong Ahafo, Ashanti, Eastern andVolta Regions as shown in Map 1. Ilne actual distribution of cocoa farms asit existed in 1981 is shown in Map 2.

E. Project Design and Choice of Components

4.12 A national approach has been taken in the design of this projectbecause an area based project is ill-suited to address sector-wide issues.However, different interventions, under the project, are likely to beconcentrated, as needed, in specific areas. The choice of components isdetermined by the need to overcome the major constraints, discussed inChapter III on the provision of effective support services to cocoaproducers. These include research; extension and training; provision ofimproved seed; control of cocoa swollen shoot virus disease (CSSVD); roads;supply of inputs and internal marketing, including produce inspection andinfestation control. All these oervices except roads 1/ , input supply andinternal marketing would remain 'permanent" functions of Ghana Cocoa Board(COCOBOD), while the latter two services are of a commercial nature andtherefore destined for eventual privatization under the Government's andBoard's accepted policy.

1/ (Already transfered to the Department of Feeder Roads (DFR) in theMinistry of Roads and Highways (MRH).)

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4.13 Privatization of input supply and internal marketing activitieswould reduce costs and increase the efficiency of these services. However,given the prevailing poor condition of the road infrastructure and theweakness of the private sector, too hasty an attempt to privatize inputsupply and cocoa buying and evacuation systems could result in a breakdownof these services at a time when they are needed most to supplement theother measures being taken to boost production. Therefore, it is proposed,to provide limited support to COCOBOD to maintain these services at asatisfactor- level of performance while progressively promotingcommercialization, implementing a phased program of privatization in inputdelivery and creating the conditions which encourage privatization in cocoamarketing. To promote the privatization process and in light of thecontinued dialogue between the Government and IDA on these issues, anannual comprehensive review of these two components (farm input andinternal marketing) would be carried out. Assurances to this effect wereobtained during negotiations (para 5.01 (d)).

F. Summary Project Description

4.14 The project would be a national project and would be implementedover five years. The main components are: (1) provision of technicalservices for cocoa production which include reorganization of the CocoaService Division (CSD); (2) strengthening of extension services to promotean improved production technology; (3) seed production; (4) improveddisease control; (5) strengthening of research including (i) streamliningthe Cocoa Research Institute of Ghana (CRIG) to promote its activities inplant breeding and disease control; (ii) the establishment of anoff-station unit to conduct on-farm research; and (iii) staff development;(6) privatization of farm input supply; (7) internal marketing capacity:(8) monitoring and evaluation; and (9) maintenance of minimal upgrading ofroads to facilitate the evacuation of cocoa and the participation ofprivate haulers in internal marketing.

G. Detailed Features

1. Technical Services for Cocoa Production

4.15 The Cocoa Services Division (CSD) of COCOBOD is responsible forextension, seed production, disease control and input supply. In additionto specific intervention in each of these areas (see para 4.25 to 4.29),the project would support, through a reorganization plan, the broadinstitutional development of CSD to enhance its ability to handle its keyresponsibilities in cocoa development. The reorganization plan aims at (i)improving CSD efficiency; (ii) ensuring effective supervision; (iii)allowing a better use of the limited skilled staff; (iv) promotingspecialization; and (v) reducing cost.

4.16 Under the reorganization plan CSD activities would be implementedat three levels (in addition to the farm level): Headquarters; Region(6); and District (about 39, a reduction from the present 101), assurancesto this effect were obtained at negotiations (para 5.01 (e)). The proposed

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reorganization chart is shown in Annex 4-2. Most first-line supervisors(senior field technical assistants (SFA/STA)) would be stationed away fromtheir District Headquarters. Under the COCOBOD Monitoring and Evaluation(M&E) unit (to be established), a suitable M & E system for CSD(field/farmer) activities would be organized. Under the CSD-strengtheningcomponent the project would incorporate the following:

(i) Preparation of a comprehensive manpower development program,including staff training needs, and the prepara-ion of jobdescriptins for each position. (To be done by either local orinternational consultants, 12 man/months.); and

(ii) Training of staff.

2. Extension Services for Improved Technology

4.17 Extension operations under the project should be seen in alonger-term perspective than implied by the five-year projectimplementation period. After a period of neglect and poor management, thecocoa sector is undergoing fundamental change, b . in terms of farmers'interest in cocoa and the objectives and operations of CSD. These changesinclude significant developments for extension. The previous involvementof "extension' staff in direct services to farmers and in inputdistribution and sale, by a heavily-manned service, would be replaced by afocus on providing appropriate technical advice to farmers, and by arelatively small, highly trained professional extension service. Thiswould ensure that the provision of the farm services is responsive to theneeds of cocoa farmers. Simultaneously to the strengthening of extensionunder this project, extension operations in the Ministry of Agriculturewhich focus on crops other than cocoa would be reorganized and supportedalong similar lines under the Agricultural Services Rehabilitation Project.Experience of both these projects with extension strengthening could be asignificant input into a more comprehensive national strategy of extensionreform and strengthening (Annex 4-3). A separate extension service forcocoa is justified, in the interim, by the more advanced state of the CSDreorganization process and the urgent need to address sector issues (suchas disease control and production techniques).

4.18 Building on progress to-date, the extension service for cocoafarmers would be further modified and strengthened. The basic objective ofthe extension service is to advise farmers how to increase the productionand profit of their farms, and to keep other farmer services (especiallyresearch and input suppliers) informed of farmers' concerns and needs. Theproject would resolve the constraints to effective extension as noted inpara 3.16. Key features of the project extension operationswould include:

(i) a focus on technical advice to farmers and feedback to farmersupport services;

(ii) systematic field activities by EFAs, and systematic supervision

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by SPAs and others;

(iii) development of technical specialization at District, Regional andHeadquarters levels;

(iv) regular (monthly) training and work review sessions for EFAs andSTAs that would focus on farmer-relevant topics;

(v) regular (each four months) workshops of CRIG and senior extensionstaff to discuss messages for extension staff and farmer reactionto earlier messages;

(vi) specialized training of all levels of staff;

(vii) the use of extension-operated demonstrations, individual andgroup farmer contacts, and mass media support to enchance boththe specific technical and general informational roles ofextension;

(viii) monitoring and evaluation of extension field and trainingactivities; and

(ix) an end to direct service activities by extension staff and theirdirect involvement in the s4le and distribution of inputs.Assurances to this effect were obtained at negotiations (para5.01 (f)).

4.19 These features of the extension service would be achieved largelythrough the redeployment and reorganization of existing staff resources.Following are the extension sub-components:

(i) Training - regular in-services, special and overseas courses, andstudy tours.

(ii) Equipment - equipment for field staff and trainers (includingaudio-visual support and reference materials) and furniture forstaff houses, Bunso Cocoa college and the former Farmer TrainingCenters.

(iii) Civil works - renovation and re-equipping of (a) Bunso CocoaCollege, (b) Farmer Training Centers (to be used for extensionstaff in-service training), and (c) 150 houses for Region andDistrict staff and STAs.

(iv) Transport - provision of (motorcycles to EFAs, STAs (if needed)and M&E staff, all on a loan/purchase basis, (b) one 4-WD vehiclefor extension supervision and technical support in each Districtand Region and two at headquarters, (c) one 4-WD vehicle for H&Esupport at headquarters and one in each of five Regions, and (d)one 40-seat bus for Bunso cocoa College.

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(v) Technical Assistance - 24 staff months for extension fieldoperations, 18 staff months for training needs analysis andcourse development, and 6 staff months for the development oftechnical messages and EFA/STA reference materials.

(vi) incremental operating costs - for all field and trainingactivities (including transport and building maintenance).

4.20 The CSD extension service would perform its intended functionthrough a number of actions, including improved work programming andsupervision, an emphasis on direct contact with farmers, the instigation ofregular and frequent in-service training, the forging of close two-waylinks with cocoa research, and the establishment of a field-orientedextension monitoring and evaluation system. Four other important featuresof the project are: (i) field-level extension support to cocoa farmers inVolta Regior. would be provided by the Ministry of Agriculture extensionservice rather than by CSD; (ii) CSD extension staff would handle allextension (i.e., of activities elsewhere the responsiblility of MOA) in onecocoa-producing Region; (iii) CSD extension staff would advise farmers onagro-forestry rather than solely on cocoa (and coffee, as appropriate); and(iv) there would be a comprehensive mid-term review of CSD extensionactivities in 1990/91 in order to determine what, if any, changes should bemade to improve their effectiveness. During negotiations, assurances wereobtained for (i) and (ii) above (para 5.01 (g)), and for (iv) (para 5.01(d)).

4.21 The cost of the extension component is estimated at US$7.0million (t 1.1 billion), of which the foreign exchange is about 48Z.

3. Seed Production and Distribution

4.22 An accelerated replanting and new planting program is estimatedto require during peak years about 3.2 million pods to supply enough seedof improved varieties. Capacity of existing seed gardens whenrehabilitated is about 2.93 million pods per year. However, more than 552of this would be from the area of mass infection of the Swollen Shoot virusin the Eastern Region and would not be used for planting in the lowinfection or clean areas especially in the West. New sources of improvedplanting material in virus free areas would be required. Replanting or newplantings of hybrids in the next five years would depend entirely on seedfrom existing seed gardens. Proposed new seed gardens cannot be expectedto produce significant amounts of pods before at least five years. Themanagement of nurseries also would require improvements to ensure maximumproduction.

4.23 The following would be supported by the project:

(i) Increasing production on existinR seed gardens (110 ha) throughprovision of equipment, materials, incremental salaries andtransport as follows:

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- equipment (mistblowers and spares; and their operatingcosts); materials and inputs (fertilizer, insecticidesand fungicides);

- salaries and allowances for an additional seniortechnical assistant (to work under the Coordinator of SeedGardens at Tafo). Thirty additional pollinators would beredeployed from CSD staff but they would not be financed bythe project;

- transportation (three 4-WD cars, 3 motorcycles and their0 & M costs) 2/

(ii) Establishment of a new cocoa station and 80 ha of seedgardens in the Western Regions

- buildings and furniture (field barn, quarters, and officeblock);

- land clearing, lining, holing, nursery costs. plantingsand infilling for 80 ha of seed gardens;

- operating costs.

(iii) Irrigated seed pod production on a pilot scale to determineif pod production could be increased at time of greatest demand.

- a drip irrigation system (pump set, pump house, piping,nozzles, etc.) for 1 ha; operating and maintenance costs.

(iv) Training:

- training (2 man-months of training for the seed gardencoordinator in another cocoa producing country and local inservice training of 17 EFAs);

The total project cost for seed production and distribution is estimated atU5$1.3 million of which investment is US$0.9 million and incremental recur-rent over 5 years is US$0.4 million.

4.24 Organization of Seed Production and Distribution. The Chief CocoaOfficer (CSD Head Office) would have overall responsibility for the seedgardens. He would be assisted in the management and coordination of seedgarden activities by the present Seed Garden Coordinator at Tafo and asecond Coordinator to be appointed under the project for the Western, Brong

2/ Improved transportation for seed pod distributon is provided for underthe Input Supply and Marketing Components.

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Ahafo and the western part of Ashanti Regions. The clonal material to beincluded in the new seed gardens (80 ha) would be chosen in agreement withCRIG breeders. Cocoa station managers would have responsibility for theday-to-day activities of the seed gardens. Seed would be distributed bythe Seed Garden Coordinators to the Districts from where District Coordina-tors (DCOs) would distribute to farmers. Seed distribution should belimited to farmers who intend to adopt better cultural practices includingpreparation of seedlings in nurseries with polybags and be sold at a pricenot less than the prevailing market price for equivalent dry weight ofbeans presently estimated at ¢ 16Ipod. Assurances to this effect wereobtained at negotiations (para 5.01 (h)).

4. Cocoa Swollen Shoot Virus Disease (CSSVD) Control

4.25 The swollen sbhot disease is the most serious technical problemaffecting cocoa in Ghana and a cure for it has not yet been found. Somemeasures are available however, for reducing its incidence. The mosteffective and practical is the eradication of sources of infection. In thelast twenty years the program of inspection and eradication has not beensustained and the build up of the disease has been large, particularly inthe Eastern Region. The proposals are to revive the inspection program andto step up eradication to deal with the backlog, estimated at over 17,000ha, during the first three to four years of the project and then settledown to maintain adequate inspection and a rate of eradication which isexpected to level at about 150 ha per year. The project would support theoverall strategy introduced by CSD in 1986 to deal with CSSVD. The subcomponents to be financed are:

(i) Incentive payments to farmers at the rate of ¢ 67,000/ha(assuming a loss of 90 kg/ha of cocoa for 5 years at a price of0150/kg) for:

- cutting out and replanting grants in the scattered outbreakarea for 10,930 ha and 12,330 ha respectively (the latterfigure includes the replanting of some areas to be cut outbefore the project commences);

- cutting out and replanting grants in the area of massinfection (7,000 ha and 5,000 ha, respectively).About 372 of the payment is made in the first year of cuttingand if farmers replant, the remaining 63? would be paid in twoequal amounts in the 2nd and 3rd years.

This rate of 0 67,000/ha is presently adequate but would be reviewedannually to adjust for possible economic changes.

(ii) Technical supervision of the control program would be supportedby financing the following:

- salaries and allowances of one senior officer and oneassistant project officer;

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- consultancies totalling 39 man-months (10 man-months of acocoa rehabilitation expert, 9 man-months of an economist, 10man-months of an epidemiolog4.st and 10 man-months of amanagement consultant) to assist in assessing effectiveness ofcontrol measures, their costs in relation to benefits, and inthe review of strategy and management of the program;

- trials to test feasibility of eradication by contract andfarmer CSSVD reporting;

- replacing vehicles, spare parts and equipment.

Total costs of this component of the project is estimated at US$11.2million of which US$11.1 million is for the cutting out program.

4.26 Organization of CSSVD Control. The project's CSSVD controlprogram would be managed by CSD staff under the present organizationalarrangements except for the following changes: (a) the senior CEVDofficer would set up and operate a system of monitoring regional CSSVDcontrol activities, with particular emphasis on ensuring that thecompensation grants reach the farmers for whom they are intended; (b) aSpecial Projects Group would be established in CSD to work closely withCRIG and to supervise and manage all field activities concerned with CSSVDcontrol. (c) Annual assessments preferably in May would be made on (i) theprogress of CSSVD control; (ii) CSSVD losses and the profitability of thetreatment; and (iii) staff allocations and duties, methods of work andarrangements for making grant payments. These would be carried out withthe assistance of consultants. More details on CSSVD are given inAnnex 4-4.

5. Research

4.27 The objective is to provide assistance to strengthen the capacityof CRIG to deliver the necessary scientific and technical support inrestoring the cocoa industry to its former position in the internationalcocoa trade, to reach an annual production level of about 300,000 t by theturn of the century and to ensure standards of technical efficiency capableof sustaining the increased production and high quality of product.

4.28 The present main deficiencies (paras 3.11 and 3.12) of CRIG are(a) a research program which is not sufficiently responsive to theimmediate problems of the industry particularly in production operations,(b) poor state of repair of laboratories, other facilities and equipmentand (c) inadequate linkages with extension workers and farmers. Theproject would assist CRIG to improve its organization and facilities andstrengthen its capacity to meet the needs of a reviving cocoa industry. Thetechnical assistance would consist of the following main activities:

(a) Staff Development;

(b) Rehabilitation and upgrading of facilities; and

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(c) Establishment of an "on-farm" research unit.

4.29 Staff Development. Provision is made for post graduate trainingof the less experienced graduates and for technical training of some of thelaboratory and field technicians. A total of 29 man years of trainingabroad would be funded. They include 24 man years for post graduatetraining of one to two years abroad each for some of the more recentgraduates, and five man years of training periods of three to six monthseach for technical support staff. CRIG has selected for the proposedpost-graduate training program eight graduates who have successfullycompleted their probation period and are confirmed or the permanent staff.A skills gap analysis of the technical support staff will be undertakenduring the latter half of 1987 with assistance of DDA to determine thetraining needs and to prepare an appropriate program. For on the jobtraining provision is made for 78 man months of consultancies in variousdisciplines including coffee agronomy, virology, plant breeding and pestand disease management, farming systems research etc. Funds are also beingprovided for special overseas visits by staff to sister institutions, andattendance at conferences to update themselves on subject matter relevantto their work. Total costs of the proposed staff development is estimatedat US$3.2 million of which US$2.0 million would be for consultants for onthe iob tiaining.

4.30 Rehabilitation and Upgrading of Facilities. The project wouldsupport the upgrading of the physical plant and field facilities byproviding for:

(a) upgrading of laboratories by replacing obsolete equipment,including standbv electricity generator, and repairing orrehabilitating serviceable items, providing new print shop andcomputer equipment, and improving library acquisitions;

(b) constructing a plant quarantine house;

(c) acquiring vehicles and spares for staff and materialstransport, wheel tractors, equipment and spares formaintenance of grounds and infrastructure, and machine shopequipment for maintenance of plant and equipment;

(d) importing new germ plasm materials including improved coffeevarieties, laboratory chemicals, fertilizers and pesticides;

(e) salaries and allowances for one Agricultural Economist to beadded to the staff; and

(f) incremental operating and maintenance costs.

The total investment cost is estimated at US$3.1 million and theincremental recurrent cost at US$1.5 million over fIve years.

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4.31 Faming Systems (On-Fam) Research. Support would be providedfor establishing a Farming Systems Research Unit by funding the requiredstaff, transport equipment and their operating costs. The consultant willdraw up and initiate a work program and assist in local st.ff training.The estimated capital cost is US$66,000 and the incremental recurrent overfive years is US$64,000.

4.32 Research Organization. The present organizational structure ofCRIG have some limitations particularly at senior .anagement level and inlinkages with extension personnel and farmers for inputs in researchprograms and local testing and application of improved technologies. Thisproject would support measures to correct these limitations. The presentExecutive Director has given notice of her desire to retire and would notwish to hold the post beyond the end of 1987. The appointment of the newExecutive Director would be a condition for credit effectiveness (para 5.02(a)). The appointment of a full CRIG Management Committee (CRMC) is to befinalized and the committee made to function in taking important decisionsor settirg guidelines on research policies and priorities, approving workprograms, budgets, funding, staff appointments and terms of service, andensuring proper liaison with other institutions and farmer contacts.Membership of this committee should be broadly based and comprise thefollowing:

- the Deputy Chief Executive of COCOBOD (A,P & QC);

- the Executive Director of CRIG;

- the Executive Director of CSD;

- three representatives of CRIG staff and workers nominated bystaff and workers' association;

- three trmers nominated by by farmers' association; and

- one representative each from the Government of Ghana, theuniversities and the Council of Scientific and IndustrialResearch.

4.33 CRMC would establish a Research Policy Sub-Committee (RPC)comprising of the Executive Director and Deputy Directors (2) of CRIG, theExecutive Director of CSSD, the Deputy Director of CSD responsible forextension, two regional CSD officers and one farmer. It will be chaired bythe Executive Director of CRIG and the Scientific Secretary of CRIG willserve as its Secretary. It would advise CRMC on policies and priorities inline with national development goals and should meet at least once a year.Assurances were obtained during negotiations to have the RPC fullyoperational by June 30, 1988 (para 5.01 (i)). The existing Cocoa Researchand Extension Technical Committee (CRETC) will be strenghtened and takefull responsibility for interagency coordination and advising on technicalmatters affecting the orderly management of CRIG. Its membership shallinclude the Executive Director of CSD (Chairman), Deputy Directors (2) of

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CRIG, Heads of Divisions (6) of CRIG, the Director of PPMR, aRepresentative of the Produce Inspection Section, Regional Cocoa Officers(6) of CSD, and the Coordinator of Seed Gardens. It would meet at leastthree times a year. It would pay particular attention to fostering thelinkages between extension services and farmers. In this regard it wouldassume a special responsibility for organizing workshops in which thesenior research staff of CRIG would meet with cocoa extension staff toreview current status of the industry, highlighting problems requiringattention and to be briefed on progress with ongoing research programs andfuture plans. These seminars lasting one to two days, would take placethree times a year. They would represent an important forum from which toacquaint research workers with cocoa industry problems and to informextension staff on new developments from research, technology packagesbeing formulated and tested, particularly the farming systems researchwork, and the status of results for practical applications. Day to daycontact between CRIG and the extension service would be through (a) theresearch and extension workshops to be organized three times a year (b)periodic field visits on request to advise on special problems and (c)regular visits to CRIG organized for benefit of extension workers andfarmers. Details on the 2esearch component are given in Annex 4-5.

4.34 CRIG management should seek impartial reviews of the scientificand technical content of the approved research program, the quality of itsconduct, its relevance to farmers' and the industry's problems and thesoundness of the results. The project is to support the establishment of anindependent review body comprising internationally recognized high caliberscientists who would meet periodically to assess the research program andto advise the RPTC on the extent to which its recommendations are beingimplemented and to indicate where changes in policies and programs may benecessary. The first review should take place during the early part of1988, the first year of project implementation and followed by another atabout the mid-term (1990/91) and thereafter at least every five years.Assurances were obtaine&aat negotiations for this periodic review (para5.01 (j)).

6. Parm Input Supply

4.35 The COCOBOD is the main supplier of farm inputs to cocoa farmers(para 3.21). For some of the inputs such as insecticides, fungicides andmistblowets, COCOBOD has vertically integrated operations from impo;ting toretail distribution. The Government, through COCOBOD, has agreed inprinciple (under the SAC) to the removal of subsidies and the privatizationof farm input supply and distribution. The project would help COCOBOD toadopt a subsidy removal and privatization program similar to the one agreedupon for other r.on-cocoa inputs under the Agricultural ServicesRehabilitation froject (ASRP). GOG, through COCOBOD, has announced (May1987) the first step of a three-year subsidy removal program. Atnegotiations, agreement was reached on the elimination of subsidies overthe next two years, 1988 and 1989 (para 5.01 (k) and Annex 4-6). Impact ofsubsidy removal on cocoa producer incentives is discussed in para 4.69.Alongside the subsidy removal, a privatization plan has been agreed to in

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principle during appraisal. A gradual process of privatization is plannedto allow time for the private sector to develop a wide retail network witha minimum disruption in the supply system. The proposed program wouldfirst privatize retailing, then wholesaling and finally importation.Privatization would fit well into the divestiture program that GJG started,increase competition and would be consistent with the marketingarrangements under the ASRP.

4.36 The distribution of tools (matchets, knives, etc.) would havebeen privatized prior to project start-up, or as soon as existing COCOBODstocks are sold out. In the first year (1988) the project would introduceprivate retailing in the Eastern Region. COCOBOD would continue to deliverat regional level or other 'bulk delivery' points. Retailers would sell atuniform prices and they would buy at prices that allowed them a negotiatedmargin. The experience gained would be used for designing a nationalretailing network. In the second year (1989) the retailing would beprivatized in the Central and Volta Regions as was done in the Eastern,with due modifications in response to lessons learnt. COCOBOD wouldrelinquish bulk delivery in the Eastern, Central and Volta Regions. Theprices would be higher, reflecting reduced subsidy levels, and would thusbe variable from region to region. In the third year (1990) both bulkdelivery and retailing in Ashanti and Brong-Ahafo Regions would beprivatized. The faster pace of privatization at this stage should bepossible given the experience gained in the Eastern, Central and VoltaRegions. All inputs would be sold at market prices in all regions. In thefourth year (1991) both the bulk delivery and retailing activities would beprivatized in the Western Region. The private sector would now be fullyinvolved in all the regions. In May 1991, COCOBOD would announce thatstarting the following year (1992), the private sector would be allowed toimport approved inputs for the cocoa industry. The announcement wouldindicate clearly estimated annual requirements and existing stocks (ifany). The entire progress report on the implementation of the Programwould be provided to IDA by COCOBOD annually by March each year.Assurances to this 5-year plan were obtained at nagotiations (para 5.01(1)). The total cost of this component would be US$25.0'million of whichUS$16.6 million would be for imports of agro-chemicals.

7. Internal Marketing

4.37 This component consists of the following five major activities:Buying, storing, hauling, grading and inspection, and infestation control.The first three activities are carried out by the Produce Buying Company(PBC) and the last two by the Produce Inspection Division (PID) andInfestation Control Department (ICD) respectively (para 3.26 to 3.30).

4.38 The efficiency of the marketing system would be best improved byintroducing a commercial approach and encouraging competition to thepresent system as discussed in para 4.09 for the short and long termstrategy. However, the poor condition of the economy and infrastructureand the resultant weakness of the private sector do not permit progress

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towards privatization as rapidly as desired, the commercialization processcould and should be introduced to PID, ICD and PBC.

4.39 The project would therefore provide short term technicalassistance (9 man months) to put in place an appropriate cost accountingsystem and train staff and management in operating and using it. Toprovide the cocoa sector with a smooth evaucation system, maintain its highquality control and grading operation and ensure that all consignments areexported free from deleterious organisms, the project would also provide:(a) additional storage capacity, mainly in the western region, of about10,000 tons (10 warehouses), improvement to existing sheds and limited newconstruction at society level, provided rental of suitable sheds is notavailable; (b) replacement, on declining scale, of transportationfacilities for PBC, ICD and PID mainly for supervision and evacuation ofcocoa from societies to regional depots; (c) equipment and materials; (d)recruitment of two international caliber specialists, one for three yearsand the other for 18 months to train counterpart staff and manage theworkshop and the logistic program and the workshop, respectively; (e) stafftraining in various areas such as accounting, administration, management,and vehicle and plant operation and maintenance, both through in-servicetraining and specialized training courses, and (f) 2 man months ofconsultant assistance for a feasibility study concerning the use ofsemi-mechanized methods of handling the vast quantities of produce passingthrough ports and large depots. Total cost, including contingencies, ofthe internal marketing elements over the five-year project period isestimated at US$20.7 million of which the foreign exchange is US$13.1million.

4.40 Organization. ICD, PBC and PID would be responsible, each in itsown area, to COCOBOD management for the implementation of the project'sinternal marketing program. In conformity with the policy ofcost-reduction through rationalization and streamlining of the buyingsystem, the project would assume the following actions to be completed bythe second year of the project (1989):

(1) All buying centers (societies) with annual purchases of less than25 tons (about 656 societies) would be closed down;

(2) all buying centers with annual purchases between 25 and 50 tons,about 830 societies, would be converted into sub-societies(mobile buying units to visit the 'closed society" once a week).

Assurances to this effect were obtained during negotiation (para 5.01 (m)).

4.41 Action on each buying center would be taken only after a carefulstudy on the following criteria, among others:

- Average purchases over the past three years;

- future expectations for next 2-3 years regarding new farms, firedamage or cutting out, etc.;

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- condition of roads/accessibilIty.

Arising from this lower number of buying centers, a correspondingstreamlining of districts would have to ensue, reducing their number byapproximately 35 to a new total of about 95.

4.42 Through the above rationalization, the number of full societies(buying centers) would be reduced from 3,218 at present to about 1,730which, based on 1985/86 crop, would achieve an average of 118 tonsannually. However, the number of buying points would be considerablyhigher, about 2,700. Since the average productivity at the buying centers(full societies) would still be low, it is expected that the buying team,where possible, would on one or two fixed days per week, do the purchasingin their sub-society(ies).

8. Monitoring and Evaluation

4.43 The project would help to strengthen the overall policy analysiscapacity and would establish a project Monitoring and Evaluation Unitwithin the Policy Planning, Monitoring and Research Department (PPMRD) ofCOCOBOD. M&E units would also be established in CSD and PBC. Given theimportance of cocoa in the economy and the fact that all aspects of themanagement of the cocoa industry are under the control of COCOBOD, ic isnecessary to have an internal capacity to articulate the policyimplications of changes in the macro and global economy. COCOBOD alsoneeds to monitor and evaluate the implementation of specific policy actionsand programs. The project proposes a reorganization of PPMRD to enable itto concentrate on three main areass (i) Policy Analysis; (ii) ProgramMonitoring and Corporate Planning; and (iii) Management Information Systemsand Data Bank. The policy analysis function would inzlude studies of (a)optimal pricing and taxation, given government's macro economic objectivesof revenue and foreign exchange earnings; (b) effect of changing farmgateprices on producer incentives; (c) Ghana's comparative advantage in cocoaproduction as well as the competitiveness of cocoa versus other tree andfood crops; and (d) resource use patterns at farm level especially land andlabor. The program monitoring and corporate planning function wouldinclude (a) collating and monitoring of the COCOBOD's work program; (b)coordinating the preparation of the corporate plan; (c) monitoringconformity to the corporate strategy; and (d) preparation of progressreports. The management information system and data bank function wouldinclude (a) the production of periodic information for managerialdecision-making; (b) abstracting from the findings of the policy analysisunit, those aspects of operational relevance; (c) maintaining of a databank on all aspects of the cocoa industry; (d) managing a library; (e)liaising with all the divisions of COCOBOD on the production of qualitydata; and (f) preparing all periodic reports to external agencies incluAdingthe Government, Bank of Ghana, World Bank, etc. PPMR has an adequateestablishment of higher level staff; 3 positioLs for managers (one vacant);4 for principal officers (3 vacant); 6 for senior officers (4 vacant) and 2for officers (1 vacant). The filling of the vacant slots should provide anopportunity for a new skills mix in line with changing needs. The existing

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and proposed organization charts are shown in Annex 4-7, Charts 1 and 2.The project would provide equipment including 2 micro computers, 2 wordprocessors, a photocopying machine and equipping a library.

4.44 The COCOBOD complex has an extensive system of data collectionfor all its divisions as well as the headquarters. The capacity tointerpret data for day-to-day management decisions seems weak. For theheadquarters as well as for industry-wide data analysis, the proposed PPMRUnit in charge of the MIS and Data Bank would help fill the void byrecruiting specialists for MIS and for Monitoring and Evaluation. For CSDand PBC, Monitoring and Evaluation Units would be set up. CSD wouldrecruit two people (preferably agricultural economists) to help thedistrict, regional and headquarter managers to draw up detailed workprograms and to establish a system of monitoring the work program as wellas the extension impact generally. An additional agricultural economistwith farm management specialization, would also be recruited and be basedat CSD headquarters to liaise with the PPMR and to monitor farm levelincentives (a function previously done by PPMR). All the three peopleshould report to the Executive Director of CSD. PBC operations are largeand complex. There is a need for careful monitoring. It would recruit twopeople (preferably a statistician and transport economist) to help monitorits work program and to develop data for costing of the purchasingoperations. The two people would report to the Managing Director of PBC.They would provide a link to the corporate planning function of PPMRD. TheDirector of PPMRD would have overall intellectual responsibility for theM&E function. Technical assistance support would be provided for a totalof 2 man years to help set up the system.

4.45 Studies. Several studies are envisaged: three of them would bedone under the CRP and two others under separate IDA financing. All termsof reference for the studies are provided in Working Paper 8. A cocoasurvey would be done by CSD, assisted by PPMRD, in order to updateinformation on the tree stock. The study would seek to update all thetechnical aspects of cocoa including: age-distribution, condition, inputuse, yields, disease control, etc. Thereafter, the PPMRD would develop asystem for routine maintenance of the data through a farm monitoringsystem. Little information exists on the socio-economic aspects of cocoafarming. A separate study would be done to ascertain farm level dynamicsin response to the level of producer prices (cocoa and non-cocoa), impactof extension, attitudes towards the disease control strategy, adequacy ofinput supply system, need for credit, estimation of household income andexpenditure, use of labor (hired and family), land tenure arrangements,share-cropping arrangements, etc. Routine maintenance of the informationwould be done through the farm monitoring system. The third study woulddeal with the question of streamlining the COCOBOD. Major structuralchanges have taken place (for instance, divestiture of some plantations,staff retrenchment, and budgetary restraint). The Head Office was not muchaffected by the structural changes. Under the CRP, a study would beundertaken to define an appropriate organizational structure; assessmanpower needs and skill gaps; identify training needs, prepare a masterplan for the upgrading facilities (office technology, space,

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communications, etc.); propose on improved personnel management system andprepare a retrenchment plan for the headquarters. Under the SAC, a pricingstudy is proposed (its terms of reference are in Working Paper 5). Thestudy (see para 4.69 also) will focus on improving producer incentives;assessing the revenue implications of alt.ernative producer prices and theforeign exchange implications of different pricing strategies andrecommending a methodology to guide the determination of the annual cocoaprice to farmers. A marketing seminar to review comparative experiences ofother cocoa producing countries (such as Nigeria, Cote d'Ivoire, Brazil andMalaysia) in the role of and benefit from privatization a part or all ofthe marketing functions would be organized by the Government with theassistance of the Bank in December 1987. Assurances to this effect havealready been obtained in the SAC. Depending on the outcome of thediscussions a study of the marketing options for Ghana would be done duringcalendar 1988.

9. Road Program

4.46 The road program specific objectives are to (i) improve cocoaevacuation efficiency; (ii) significantly reduce haulage cost; and (iii)increase private haulers' interest in playing larger role in cocoaevacuation. The objectives would be achieved by improving the standard ofroads subjected to cocoa haulage traffic, and maintaining the higherstandard.

4.47 The road program consists of the following 7 sub-componentss

(a) Spot Improvement Program. Remedial improvements to some 3,000 kmof primary, secondary and feeder roads and bridges, predominantlyin Western Brong Ahafo and Ashanti regions, which carry cocoatraffic from village society to port or railhead. The programwould be planned and supervised by consultants. Spot improvementprogram would be:

88189 89/90 90/91 91/92 92/93 Total

300 650 800 800 450 3,000

Approximately 25Z of the program will be executed bylabor-intensive domestic contractors currently undergoingtraining under RRMP by an ILO team. DFR, assisted by ILO, willsupervise this element of the program.

Total cub-component cost is estimated at US$36.8 million of which US$24.3million (66Z) is foreign exchange.

(b) Routine and Recurrent Maintenance Program. Road maintenancewould comprise (a) routine maintenance, i.e., the day-to-dayrepair of potholes, ruts and drain clearance; and (b) recurrent

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annual mechanized maintenance. Throughout the cocoa regionsthere is a starting inventory of 1,300 km of road constructed, orreinstated, since 1984 by COCOBOD and DFR, which is in adequatecondition for normal maintenance procedures. This inventorywould increase annually by the spot improvement program.Recurrent plant-intensive maintenance would be implemented by,ontractors. Routine maintenance would be carried out bylabor-intensive community effort where possible, applyingpractices currently being developed by the RRMP (Credit 16u1-GH).IDA will periodically review this activity with the DFR and ILOteam, and CPR will provide the vehicle for implementing anddisseminating their methods throughout the cocoa-growingDistricts. There is budgetary provision for hand tools andsupervisory staff vehicles. GOG will fund both routine andrecurrent maintenance operations.The project makes no provision for periodic maintenance, whichshould be programmed under normal DFR budgetary procedure afterproject completion. Recurrent maintenance program would be:

88/89 89/90 90/91 91/92 92/93

No. of contracts 2 3 4 6 7Kms 600 900 1,200 1,800 2,100

Total sub-component cost is estimated at US$4.4 million of which US$1.1million (25%) is foreign exchange.

(c) New Road Construction. 60 km of new road and 2 major bridgeswould be constructed to DFR specification in the area between theBia River and the Cote d'Ivoire border, to intercept cocoa whichis being transported into Cote d'Ivoire. The area has novehicular access to Ghana, and is reputed to yield some 4,000tons of cocoa. The road would be supplemented by some 80 km oftrack suitable for tractor/trailer combination access tovillages. Consultants would be engaged to plan and preparecontract documents for LCB, and supervise construction. Theproposed program is:

88 89 90 91 Total

New road km 0 20 20 20 60Tracks km 0 25 30 25 80

Total sub-component cost is estimated at US$1.9 million of which US$1.1million (58Z) is foreign exchange.

(d) Technical Assistance

(i) Consultancy:

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Planning the rehabilitation and spot improvement programwill be by consultants engaged and financed by REMP. CRPwill provide the following consultancy:

Spot Improvement Supervision - 500 mm localNew Constrt- n and Bridging - 12 mm international

67 mm local

(ii) Headquarters - DFR

TPR will provide a Contract Administrator and ProcurementAdviser for 24 man months commencing September 1988, and aTraining Adviser for 12 man months commencing mid-1988.

(iii) DFR Field Staff

UNDP will fund 2 volunteers with civil engineeringbackgrounds to assist in site supervision and contractadministration of labor-intensive contracts, and 1 volunteerwith mechanical engineering experience to advise DFR andcontractors on equipment and plant management.

(iv) Roads Adviser

A Roads Engineer of international caliber will be appoitnedto COCOBOD under TOR agreed with IDA for the projectduration to coordinate all activities related to the roadscomponent. Appointment of the Roads Adviser will be acondition of credit effectiveness (para 5.03 (a)).

(v) DFR Staff

In order for DFR to obtain full benefit from the technicalassistance, recruitment of the following staff would be acondition for disbursement against the road component (para5.03 (a)):

3 training instructors1 procurement/contract administrator3 contract supervisors as counterparts to volunteers.

(e) Ecuipment for DFR. The project would supply vehicles, minorsurvey and materials testing equipment, materials and radio, forfield operations and site supervision of project activities.

4.48 During negotiatiorns, assurances were obtained that (i) DFR'sannual approved budget and work program, for its cocoa road plan, would besubmitted by August 31, four months prior to each fiscal year, for IDA andCOCOBOD review (para 5.01 (n); (ii) the work program would include economicevaluation based on criteria comprising vehicle operating cost savings,quantity of cocoa to be evacuated, and the rehabilitation cost involved

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(para 5.01 (o); these criteria would be used to rank roads on the basis ofthe Economic Rate of Return (ERR) and Net Present Values (NPV); and (iii)DFR's consultant and senior staff with qualifications and experienceacceptable to IDA would be appointed on agreed terms and conditions (para5.01 (p).

H. Proiect Cost and Financing

4.49 The total project costs over the five year development period areestimated at US$128.0 million (equivalent to $ 20.5 billion) of whichUS$76.8 million or about 60X is foreign exchange. The base costs areestimated using prices obtained during appraisal in May 1987 and adjustedto levels expected to prevail at time of negotiations estimated to be inOctober 1987. The costs include (i) a physical contingency equivalent to10? of base costs on all items; and (ii) price contingencies calculated onbase costs plus physical contingencies and compounded annually as follows(a) for all locai costs, 15Z (1988), 10? (1989), 7.5 (1990 to 1992); (b)the price contingency on the costs to be incurred in foreign exchange costs(applying MUV Index), 1.3? (1988 to 1990); 3.5? (1991 and 1992). Totalcontingencies are equivalent to about 25Z of base costs or 20? of totalcosts. Project costs are summarized in Annex 4-8, Tables 1 to 3 anddetailed in the working papers. The table below highlights components andtheir respective cost. The costs are all incremental except the cost ofinsecticides for the first year of the project which includes totalrequirements. This was found to be essential to assure timely supplies(para 4.35). Subsequent costs of insecticides as well as the costs offertilizer and fungicides are all incremental. The use of a constantexchange rate despite a differential in foreign/domestic inflation ratesprojected in the project's early years would not lead to over-commitment ofIDA financing since it would finance mainly foreign exchange costs and theCSSVD incentive payment which is closely related to the world cocoa prices.

Project Cost(including contingencies)

US$ Million

Local Foreign Total x

Research 2.0 4.5 6.5 5.1Extension & Training 5.2 5.7 10.9 8.5Seed Production 0.9 0.4 1.3 1.0Input Supply 3.4 21.6 25.0 19.5Internal Marketing 7.6 13.1 20.7 16.2CSSVD Control 10.6 0.6 11.2 8.8Head Office & Management 2.5 2.0 4.5 3.5Road Program 19.0 28.9 47.9 37.4

Total Project Cost 51.2 76.8 128.0 100.0

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4.50 The proposed IDA credit of US$40.0 million represents 35.8? oftotal project costs excluding taxes and duties, and it would cover 52? ofthe foreign exchange cost. The balance of US$88.0 million would be fundedas follows: cofinanciers (foreign exchange balance) US$41.8; the Governmentof Ghana would meet all the local costs on the road component amounting toUS$18.9 million and COCOBOD would finance the remaining local costsamounting to US$27.3 million. During negotiations, assurances wereobtained that COCOBOD would include in its annual recurrent and capitalbudgets adequate funds to finance project activities excluding roads (para5.01 (a)). IDA credit would be made available to GOG of which US$10.2million would be allocated to the road component under DFR and the balanceof US$29.8 million to project components under COCOBOD. About US$15.5million of the COCOBOD allocation would be applied, in the form of a grant,to COCOBOD non-commercial activities including headquarters strengthening,research, extension, training, disease control and seed production; thebalance of US$14.3 million would be on-lent by GOG to COCOBOD, under asubsidiary loan agreement drawn up between them, for COCOBOD's commercialactivities including internal marketing and input supply. The period ofthe on-lending would not exceed 20 years including 5 years grace period,and the interest rate would at least be 1.1 times the IBRD prevailing rate.COCOBOD would assume the foreign exchange risk. There are no comparablerates in the financial markets in Ghana which would be used as a benchmark.IDA and GOG are in the process of developing a financial sector adjustmentpackage which would include agreement on an interest rate structure.Assurances would be sought that any amendments needed to achieveconsistency with the agreed financial sector policy would be made byDecember 1988. Signing of the subsidiary loan agreement would be acondition of credit effectiveness (para 5.02 (b)). The balance of US$10.8million would be used by GOG to finance DFR for the cocoa road program.Fulfillment of the conditions precedent to the effectiveness of thecofiranciers credit would be a condition of effectiveness of IDA credit"(para 5.02 (c)).

The proposed financing plan is summarized below:

Proposed Financing Plan(US$ Million)

Local Foreign Total X

IDA 14.2 25.8 40.0 31.2ADF - 33.0 33.0 25.8Other Cofinanciers - 18.0 18.0 14.1Government 16.1 - 16.1 12.6COCOBOD 20.9 - 20.9 16.3

Total 51.2 76.8 128.0 100.0

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There is a strong likelihood of attracting cofinancing: ODA has expressedan interest by sending one of their staff to join preappraisal mission.Other potential cofinanciers are being contacted. In the event thatadequate cofinancing to fill the gap has not been committed within 6 monthsafter board approval, GOG and/or COCOBOD will undertake to finance theshortfall. Assurances to this effect would be sought at negotiations (para5.02 (a)).

I. Proiect Implementation and Management

4.51 While the Government of Ghana through its Ministry for CocoaAffairs would be responsible for ensuring that the project would be carriedout in accordance with the Credit and Project Agreements, Ghana Cocoa Board(COCOBOD) would have direct responsibility for implementing all projectcomponents except Roads which would be undertaken by the Ministry of Roadsand Highways (MRH) and implemented by its Department of Feeder Roads (DFR).

4.52 The project would be implemented through existing institutions:COCOBOD and DFR (paras 3.10 to 3.46 and Annexes 4-9 and3-2, respectively). No special project management unit would beestablished and the overall responsibility for the project (excludingroads) would rest with the Chief Executive of COCOBOD. EachDivision/Department or subsidiary (CRIG, CSD, ICD, PBC, PIO and COCOBODHeadquarters with its departments) would be responsible for its respectiveproject component(s). COCOBOD and DFR (for the cocoa road program) wouldsubmit along with their annual budget, an annual work plan approved by therespective authorities for (a) roads; (b) research, seed production, CSSVDcontrol, extension, PBC, ICD, PID, PPMR; and (c) procurement at least fourmonths prior to each fiscal year for IDA review. Assurances to this effectwere obtained at negotiations (para 5.01 (n)). The project would be4mplemented over five years; starting in March 1988 with completionexpected by July 1993 (Annex 4-10). The road program would be performed inapproximately equal tenders over the five-year implementation period. TheIDA credit would be disbursed over a period of 6 years of which about 901by PY5 (CY 1992). As the project would be implemented through existinginstitutions it is expected to be completed on schedule.

4.53 To establish the basis for a dynamic cocoa industry, specificactions were agreed at negotiations. They would include measures to: (a)improve and maintain throughout the project period cocoa producerincentives; this would be a condition for credit effectiveness (para 5.02(d)); (b) mid-term review on all project components, to assess progress andensure adjustment to prevailing conditions and policy, would be undertakenin PY3 (1990/91); and (c) annual review of (i) COCOBOD's corporate plan,(ii) farm input privatization plan, and (iii) internal marketing includingpolicy issues such as the use of private storage, increase of railways andprivate hauling share in cocoa evacuation, and in particular COCOBOD'smarketing role; and (iv) CSSVD incentive payments. Assurances to (b) and(c) above were obtained at negotiations (para 5.01 (d)). Agreement at themid-term review on internal marketing strategy and its work program of

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internal marketing would be a condition for disbursement against thiscomponent (para 5.03 (b)).

4.54 Assurances were obtained at negotiations that during the projectimplementation period COCOBOD and DFR would employ consultants and thefollowing officers, with qualifications and experience acceptable to theGovernment and IDA (para 5.01 (p)): Executive Directors (ED) for: CSD andCRIG; Managing Director for PBC; Directors for Finance/Budget, Audit,Policy Planning, Monitoring and Research (PPMR). Any change in the postsof COCOBOD Chief Executive, its Deputy Chief Executives and the Dire"tor ofDFR would be undertaken in consultation with IDA. Conditions of crediteffectiveness would be that the DCE for Finance and Administration and theED for CRIG would be in post (para 5.02 (e) & (a)).

Technical Assistance

4.55 The need to streamline COCOBOD operations and to achieve projectobjectives requires strengthening of the management and operationalsystems. There are various areas where technical assistance is essential.The project would, therefore, provide the followings

(i) CSD(a) Senior Agronomist operating as DeputyExecutive Director (Operation) for the entire projectperiod;(b) 18 man-months for curriculumt development and training;(c) 6 man-months for development of technical messages;(d) 24 man-months for extension field system operating asTechnical Manager (Extension).

(ii) CRIG(a) up to 2 man-years of an agriculturalEconomist/Farming Systems Specialist to assist withorganising and establishing the CRIGICSD Farming systemsunit, initiating its work program and training the two youngAgricultural Economists to be recruited for Farming Systemswork and Research Appraisal.(b) 78 man-months of short term consultancies, according toCRIG's needs, during the next five years to assist in theResearch program in different disciplines including, cocoaagronomy, plant breeding, virology, soils, entomology, plantpathology and biochemistry.

(iii) PBC(a) 9 man-months to put in place anappropriate cost accounting system and train staff andmanagement in operating and using it;(b) 2 man-months for a feasibility study concerning the useof semi mechanized methods of handling the vast quanititiesof produce passing through ports and large depots;(c) 3 man-years to manage and rationalizethe logistics system and to train counterpart staff (HaulageManager and consultant support);

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(d) 18 man-months to manage the workshop and traincounterpart staff.

(iv) COCOBOD Headquarters(a) Management Information Systems Specialistfor 2 man-years (Head of MIS and Data Bank);(b) Monitoring and Evaluation Specialist for2 man-years (Head of M&E Unit); and(c) 12 man-months to strengthen theaccounting system, introduce computer and train accountingstaff.

(v) Road Program(a) Road engineer for the project duration to coordinate andsupervise the activities of COCOBOD and DFR; and(b) technical assistance provided through DFR which isdescribed in (para 4.49).

To increase its effectiveness the technical assistance staff would beoperating in line positions. An indigenous counterpart should be assignedto work closely with and be trained by the respective technical assistant.To ensure a better selection the technical assistant would be involved asmuch as possible in the selection of his/her counterpart. Prior to externalrecruitment of the required technical assistants, an effort would be madeto select suitable Ghanaian candidates with experience and qualificationsacceptable to GOG and IDA. The appointment of suitable persons withexperience and qualifications acceptable to the Government and IDA to fillthe following positions would be a condition of credit effectiveness (para5.02 (f): (a) CSD Deputy Executive Director (Operations); (b) TechnicalManager Extension; (c) PBC Haulage Manager; (d) Deputy Director PPMR incharge of MIS; and (e) Head of M&E Units (COCOBOD Headquarters).

Corporate Plan

4.56 Restructuring of COCOBOD and streamlining its operations are theguiding principles for the three-year rolling corporate elan agreed underthe SAC. This plan would be based on COCOBOD's long te.m strategy. Inbrief, COCOBOD would aim to progressively restrict its involvement tomarketing, quality control, extension, research and disease control. Underthe SAC, the corporate plan would be reviewed annually, this would becontinued and extended to cover the entire project period; assurances tothis effect were obtained during negotiations (para 5.01 (q)). Also,assurances were confirmed at negotiations that the following terms agreedunder the SAC would be carried out (para ,v.11 (r)):

(i) Plantations. The study concerning the viability of the remaining40 plantations would be completed as scheduled (September 1987) and actionswould be taken on its recommendations;

(ii)Cocoa Processing Plants. Rehabilitation of any of the cocoaprocessing plants would take place only after feasibility studies financedby COCOBOD have been undertaken in consultation with IDA, oD. theirviability;

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(iii) Abuakwa Formulation Plant. COCOBOD would continue its efforts toenter into joint venture arrangement for the Abuakwa Formulation Plant andreports on progress made would be submitted quarterly.

J. Procurement

4.57 Procurement arrangements are summarised as follows:

Amounts and Methods of Procurement(IDA share in parentheses)

(US$ Million)

ProcurementCategory ICB LCB Other Total

1. Buildings 5.4(0.5) 5.4 (0.5)2. Works 13.8 (9.4) 26.9 0.2 40.9 (9.4)3. Vehicles i.2.7 (4.0) 12.7 (4.0)4. Equipment and 18.5 (5.0) 0.2 18.7 (5.0)

Materials5. CSSVD Incen ive 10.0(5.0) 10.0 (5.0)

Payments6. Farm Inputs 16.7 (7.5) 16.7 (7.5)7. Technical Assist., 11.7(6.8) 11.7 (6.8)

Training & Studies8. Recurrent Costs _ _ 11.9(1.8) 11.9 (1.8)

Total 61.7(25.9) 32.5(0.5) 33.8(13.6) 128.0(40.0)

4.58 Procurement of all goods, including feeder roads, works andservices financed under IDA credit would be procured in accordance with IDAprocurement guidelines. All contracts exceeding US$100,000 for vehicles,equipment, works and farm inputs wou,d be procured through InternationalCompetitive Bidding (ICB), since contracts of lesser value are unlikely toattract international bidders. Whenever possible, purchases would begrouped into packages of at least US$100,000. Purchases valued at lessthan US$100,000 but above US$60,000 would be procured through LocalCompetitive Bidding (LCB). Purchases for group of items valued at lessthan US$60,000 would be made through international or direct competitiveshopping on the basis of at least 3 quotations. A margin of 15Z of thec.i.f. bid price or actual customs duties, whichever is less, would beallowed for domestic preference to manufacturers. For roads constructed ona turnkey basis and for other civil works, subject to ICB and LCB, aprequalification process would be followed in accordance with IDAguidelines and a margin of domestic preference of 7.51 would be allowed tobona fide domestic contractors. Procurement under ICB and LCB would amountto US$94.2 million. Procurement of consultancy services,

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internationally-recruited staff, staff training and studies (US$11.7million) would be done in accordance with IDA guidelines for the selectionof consultants. Other procurement largely financed by the Government andCOCOBOD such as: (i) the construction of minor civil works on forceaccount (US$0.2 million); (ii) local shopping for operating and generalservices including salaries and allowances, vehicle and equipment operationand maintenance, other operating cost like seed garden maintenance, libraryacquisitions, building/houses maintenance, and purchase of stationery andsupply (US$11.9 million); and (iii) incentive payments to farmers forcutting out infected trees (CSSVD) and replanting (US$10.0 million).COCOBOD existing procurement guidelines summarized in Annex 4-11, have beenreviewed and found to be acceptable. All bidding packages, aboveUS$200,000 for goods, works &nd services, would be subject to prior reviewby IDA and would represent 802 of the total value of procurement.

K. Disbursement

4.59 The IDA Credit amounting to US$40.0 million would be disbursedover six years beginning about the first semester of IDA PY89 through FY93.The disbursement schedule is provided in Annex 4-12, while being shorterthan that for the Ghana historical disbursement profile of eight years foragricultural and rural development projects is considered realistic for thefollowing reasons:

(a) the proposed project would be implemented by the existingorganization thus avoiding problems associated with organizational startup, rivalry and the learning process.

(b) COCOBOD has had recent experience under various IDA credits whichshould prove useful in implementing the proposed project.

(c) COCOBOD has no4, a better corporate vision than before, it isfinalizing the preparation of a Corporate Plan and should thus be in a goodposition to implement the proposed actions (under the project) all of whichare in support of the corporate strategy.

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Summary Disbursement Schedule

Amount of Credit X of ExpenditureCategory allocated to be financed

(USS Million) 1002 of foreign exchangeDFR COCOBOD Total for all categories, and

the following percentagesif procured locally

1. Buildings 0.4 0.4 702. Works 7.8 0.4 8.2 703. Vehicles 0.2 3.4 3.6 754. Equipment and Materials 4.1 4.1 705. CSSVD Campaign Payment

to farmers 5.0 5.0 506. Farm Inputs 6.8 6.8 907. Technical Assistance,

Studies & Training 0.5 5.6 6.1 1008. Operating Costs

and General Services 1.5 0.3 1.8 409. Unallocated 0.8 3.2 4.0

Total 10.8 29.2 40.0

4.60 Reimbursements for approved expenditures of (i) small civil worksamounting to less than the equivalent of US$50,000; (ii) purchases dulybatched and yet less than US$20,000; (iii) operation and maintenance costswould be made on the basis of statements of expenditure (SOE); and (iv)CSSVD campaign payment to farmers. All supporting documents for SOEs wouldbe 1,eld by COCOBOD or DFR as appropriate in a readily available form and bemade available for inspection upon request by the IDA. Whenever possible,withdrawal applications would be aggregated in amounts of at leastUS$20,000 prior to submission to IDA for reimbursement out of creditproceeds. IDA reimbursements would be made to the Special Accounts ifappropriate or the COCOBOD or DFR respective account. Retroactivefinancing would be allowed for expenditures incurred after January 1, 1988as follows: (i) up to SDR 200,000 (US$250,000 equivalent) on TechnicalAssistance (Category 7 of the disbursement schedule); and (ii) up to SDR320,000 (US$400,000 equivalent) on contracts for the road component(Category 2 (c) of the disbursement schedule).

4.61 Special Accounts. At negotiations, assurances were obtained thatGOG through DFR would establish for the cocoa roads program a projectaccount (DFR cocoa account) with a local commercial bank. This account(account No. 1) would receive the government contributions and be used topay for goods and services required for implementation of the cocoa roadprogram; GOG would pay its contribution, as would be stated in the approvedannual budget, quarterly and in advance into DFR (cocoa) account (para 5.01

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(b)). GOG would deposit in the said DFR account 0160 million (US$1.0million) which represents the estimated local operating and capital costsfor the first six months of the project, as a condition of crediteffectiveness (para 5.02 (g)). In addition DFR and COCOBOD would eachestablish a special account (Account Nos. 2 and 3, respectively) for theirproject components into which IDA would make an initial deposit of US$0.2million in COCOBOD account and US$0.5 million in DFR account to be used toprefinance goods and services reimbursable under the credit. The specialaccounts would be operated under terms and conditions acceptable to IDA andIDA would, at its discretion, hold back their replenishment in the absenceof adequate financing by GOG and COCOBOD of the respective project compo-nents. Assurances to this effect were obtained during negotiations (para5.01 (c)). The accounts would be managed by DFR and COCOBOD respectivelyand should any disbursement made from these account(s) be found ineligiblefor financing, GOG would deposit the corresponding amount into theaccount(s) prior to submission of any further replenishment applications.Special account procedures are given in Annex 4-13.

L. Auditing and Reporting

4.62 All accounts related to the project including SOEs, and allaccounts related to COCOBOD subsidiaries/Divisions including itsconsolidated one, would be audited annually by independent auditorsacceptable to IDA. The auditors report and statements of account would besubmitted to IDA within six months of the end of the fiscal year of COCOBODor GOG as applicable. COCOBOD and DFR would submit quarterly progressreports to IDA and later a report on the project implementation andachievements with six months of the project's closing date. Details ofreporting requirements are in Annex 4-14. As agreed under the SAC, COCOBODaccounts, including its subsidiaries' accounts, would be audited asfollows: (i) all years up to September 30, 1985, by June 30, 1987; and(ii) year ended September 30, 1986, by December 31, 1987. Submission of1985 and 1986 audited reports, for COCOBOD and its subsidiaries, would be acondition of credit effectiveness (para 5.02 (h)).

M. Production, Marketing and Prices

4.63 Annual cocoa production in Ghana is expected to rise from about225,000 tons in 1986/87 to about 263,000 tons in 1992/93 after which itwould rise relatively fast to about 310,000 tons in 1999 and reach a levelof about 333,000 ir 2002. The production growth would come from newplantings started in the 1980s which will come into full bearing in themid-1990s. Within these total production estimates, the incremental annualproduction attributable to project activities would be about 20,000 tons byPYS (CY 1992) rising to approximately 105,000 tons by PY15 (CY 2002). Thiswould bring Ghana's total production to 255,000 tons and 353,000 tons in1992 and 2002, respectively.

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4.64 World cocoa production is forecast 31 to grow at an average of1.7? per annum through the year 2000, by which time production is expectedto reach 2.5 million tons. Ghana's share of global cocoa production aboutthe year 2000 is expected to rise from the 1986/87 level of 12? to about16t. The increased production of Ghana cocoa is forecast to have only amarginal impact on world market prices: estimates 3/ show that the drop inthe world market prices attributable to increased production from Ghanacocoa would amount to 2.62 in 1995, rise to 3.6? in 1997, then decline to2.5? in 1999. The prices are expected to level off thereafter asproduction stabilizes (Annex 4-15, Table 1). Ghana cocoa commands aquality premium equivalent to about 10? above the world market price. Itscocoa is in strong demand and it is thus expected that the incrementaloutput would be easily absorbed on the world market.

4.65 Cocoa prices are forecast to remain close to the present levelsuntil 1990 and to rise gradually through 1995 (Annex 4-16, Table 2). Newplantings are ezpected to slow down more in countries such as Brazil andMalaysia where the producer share of world price is higher than in Africanproducing countries. If this scenario were realized, the period 1990-95would be characterized by a reduced production growth rate and a consequentincrease in prices in real terms. The market shares of the major producingcountries are expected to change in response to improved producerincentives. African countries like Cameroon, Cote d'Ivoire and Ghanacurrently paying 30-502 of world prices have a larger potential forproduction increases than, say, Brazil, which is already paying producers60-70? of world prices. The low world.s market prices that are expected toprevail in the next decade should not adversely affect Ghanaian producersbecause existing producer prices are low in comparison to f.o.b. prices andthus provide room for more producer price increases.

Cocoa Producer Prices

4.66 In the long run, cocoa producer prices in Ghana should be linkedto the world price and be determined by market forces. Export taxes shouldultimately be replaced by income taxes. Input subsidies are already beingremoved and should be eliminated in May 1989. Other measures include theprivatization of farm input supply and marketing systems and thestreamlining of extension to improve efficiency. These measures wouldimprove resource use efficiency. However, in the short to medium termcovered by the project, account must be taken of the fact that: (i)privatization of farm input supply and marketing systems must be undertakengradually and carefully if no undesirable disruption is to occur; (ii)COCOBOD's streamlining and budget reduction is a continuing process andtakes time; and (iii) Government is substantially dependent on revenue fromcocoa. It is, therefore, prudent during this period to continue fixing

31 "Price Prospects for Major Primary Commodities,' World Bank,Commodities and Projections Division, Revised July 1987.

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producer prices at incentive levels taking into account changes in theexchange rate, the need to compete with other crops and with neighboringcountries; providing adequate incentives for replanting and rehabilitatingcocoa farms, and as .,ch as possible, and to create confidence amongfarmers concerning the long term prospect of cocoa by establishing a clearpolicy.

4.67 Government's intention is to increase cocoa producer pricesgradually from nearly 30X of long run world price to about 55Z of same by1988/89. However, this should be considered as a preliminary stage and amore systematic method should be developed. Therefore, GOG and IDA haveagreed, under the SAC, to develop a pricing methodology to guide thedetermination of the annual cocoa price to farmers. The new pricingframework would have the following three broad objectives: (i) improvefarmers' real returns from cocoa to provide sufficient incentives forrehabilitation and replanting so as to maximize Ghana's strong comparativeadvantage in cocoa; (ii) increase foreign exchange earnings from cocoa; and(iii) increase Government revenue. Agreement on the cocoa producer pricearrangement would be a condition for credit effectiveness (para 5.02 (d)).

N. Financial Impact and Proiect Sustainability

4.68 The Project would generate substantial revenues for GOG andCOCOBOD. On the basis of the proposed cocoa revenue sharing formula(0.55 farmer, 0.30 GOG, and 0.15 COCOBOD), incremental export revenue andlocal cost contribution of GOG/COCOBOD would be as follows:

GOG US$ Mn (¢ Bn)

PYl PY2 py3 Py4 PYS

Revenue - 0.6(.09) 2.4(.39) 6.4(l.02)Contribution 2.0(.32) 2.4(.38) 3.3(.53) 5.4(.86) 3.0 (.48)

Net Revenue -2.0(.32) -2.4(.38) -2.7(.43) -3.0(.48) 3.4 (.54)

COCOBOD US$ Mn (¢ Bn)

Revenue - 0.3 (.05) 1.2(.19) 3.2 (.51)Contribution 5.3 (.85) 5.2 (.83) 4.2 (.67) 3.0(.48) 3.2 (.51)

Net Revenue -5.3 (.85) -5.2 (.83) -3.9 (.62) -1.8(.29)

Although the project would require contributions from GOG and COCOBOD,expected revenues would cover the costs starting from PY5 for both GOG andCOCOBOD. The project's annual recurrent costs from PY6 onwards amount toUS$2.7 million (¢ .43 billion) for GOG and US$3.0 million (0 .48 billion)

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for COCOBOD. Revenues thereafter would rise and would in any case be farlarger than the level of total recurrent costs. The project as it isproposed is sustainable.

4.69 The financial feasibility of different investment scenarios wasassessed on the basis of per hectare crop budgets using unsubsidizedprices. The database for building farm models is weak but the informationon yields and input levels is adequately reliable. The data on returns permanday and per hectare (Annex 4-16, Table 2) suggests that strongincentives exist for replanting. The use of nurse crops (plantain andcocoyam) in the first 3 years enhances the financial internal rate ofreturn. The gross margins for select years (8 and 10) for the differenttechnologies show returns that are in excess of the wage rate. The lowestreturn in year 8, is three times the wage rate. The incremental incentivesfor caretakers are similarly attractive. For replanting, the returns permanday would range from 0 598 to 0 870 (or slightly above twice to threeand a half times the estimated wage rate). Most caretaker6 use familylabor for about 25X of their needs. On the basis of that estimate thereturns per manday of family labor would range from 0 1,643 (Technology IV)to 0 2,732 (Technology V). The incremental returns per manday forrehabilitating mature stock would be 0 725 for Technology III and 0 1,023for Technology IV, both of which offer adequate incentives forrehabilitation (Table 3). The returns per hectare from the hybrids arehigher than for competing crops (oil palm; maize/plantain/cocoyam; andmaize/cassava) when the hybrids are managed at technology levels IV and V(which are the major target levels under the project). The effect onfarmer incentives of the removal of subsidies is expected to be small: theestimated subsidy on the 1986/87 cLop is 0 4,536 ($28.35) per ton, whilethe cocoa price increase announced in May 1987 was 0 54,000 per ton($337.50). The subsidy is only about 8Z of the price increase. Theanalysis shows that using unsubsidized prices, the financial incentives forrehabilitation (Annex 4-16) are likely to be botter and adequate under theprice policy to be pursued.

0. Environmental Impact

4.70 The rehabilitation and expansion of cocoa is unlikely toadversely affect the environment. It would promote better use of the landin the medium to high rainfall belt of Ghana and offer greater prospectsfor protection of soil against erosion. It would improve the hydrologicbehavior of the catchments which have beer. badly affected by clear fellingof trees and growing of food crops without adequate anti-erosion measures.The proper management of cocoa with its associated shade trees and nursecrops requires conditions comparable to that provided by the naturalvegetative cover and would improve the current unsatisfactory catchmentconditions where the vegetative cover has been indiscriminately removed andmuch of the soil exposed periodically to direct impact of rainfall undershifting cultivation. With regard to the use of chemicals the only risk tothe environment from the project could be that associated with possiblewidespread use of insecticides for control of capsid bugs (cocoa mirids).The two insecticides currently in use are Gammalin (gamma isomer of benzene

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hexachloride, gamma BHC or Lindane) and Unden (Propoxur). The former is achlorimated hydrocarbon and is the best known compound for control ofcapsids while the latter is a carbomate which is more expensive. Neitherare among the list of compounds excluded for use in Bank projects.

4.71 (apsid resistance to gamma-BHC and related compounds has beennoted in Ghana and other countries. The strategy used to overcome this isto alternate between Gamma-BHC and Propoxur every 2 or 3 years in adjacentregions. At the same time research continues to focus on new approaches tothe problem including biological control, cultural control and integratedpest control as well as possible new and better insecticides. GRIG hasbeen assessing the effects of insecticides both in terms of build up ofresistance as well as effects on other insects particularly predators orparadites of potential major pests to give necessary advance signals andtake corrective action.

4.72 CRIG has also been monitoring residue accumulation in cocoa beansto satisfy market specifications. In association with the COCOBOD HealthDepartment, workers involved with applications of pesticides are givenperiodic physical checks. CRIG has started to establish laboratoryfacilities to initiate a program of monitoring pesticide residues in soilsand water supplies. Assistance will be provided by the project incompleting the laboratory facilities, establishing the analytic proceduresand training staff to run it. The Health Department of COCOBOD will extendto farmers the monitoring of effects on health and will cooperate with CRIGwhere necessary for analytic services. COCOBOD has strongly supported andgiven assurances that monitoring of pesticide use and effects on theenvironment and human health will be adequately undertaken to guard againstpotential ill effects. Confirmation to this effect was obtained atnegotiations (para 5.01 (s)). The project is unlikely to cause seriousenvirnonmental hazards but could bring major benefits to improvements incatchment conditions if the replanting procedures follow recommendedpractices for land preparation and crop management. The adoption of goodcocoa replanting practices and sound management of cocoa growing lands willdepend largely on the incentives received by farmers, particularly asatisfactory price for the cocoa. The extension service will besubstantially strengthened to be in a position to provide the technicalinformation farmers will require to apply the recommended practices, mostof which are simple and easy to adopt.

P. Benefits and Risks

4.73 The project would (a) increase cocoa production and consequentlyforeign exchange earnings and government revenue (para 4.69); (b) improvefarmers' incomes (Annex 4-16); (c) complement the macro-economic reformsbeing implemented, by instituting technical measures to help realize theproduction potential of the industry; (d) complement the reform measuresinitiated under SAC aimed at improving COCOBOD efficiency and thus loweringthe marketing costs; (e) establish a better link between research andextension (paras 4.29-4..2) and assist farmers to adopt improved cocoahusbandry practices (paras 4.13-4.17); and (f) open up inaccessible areas

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thus benefiting cocoa and other food crops through easier evacuation (Annex3-1).

4.74 The economic rate of return (ERR) of the project is estimated tobe 25 percent with a net present value (at 102 discount rate) of ¢ 33.7billion (US$210 million). The economic benefits would be derived fromincreased production due to improved husbandry practices (frequent weeding,underbrushing, spraying and harvesting) in combination with replanting andrehabilitation of some of the existing stock. The ERR is quite robusts alag in the benefit stream by one year reduces it to 21Z and by three yearsto 152; a 502 increase in costs accompanied by a 202 decline in benefitswould lower it to 11Z. Benefits would have to fall by about 492 or costsincrease by 97? to reduce the ERR to zero. The ERR is also robust if oneassumes implementation delays: if the Ghanaian historical disbursementprofile for agricultural projects were to apply, the ERR would be 202,Annex 4-17. Financial results are discussed in paras 4.70 and 4.71.

4.75 The main risks facing the project include: (i) failure by GOGand COCOBOD to maintain real prices at levels that provide reasonableinc3ntives to farmers; (ii) lower world cocoa prices than what is forecast;(iii) delay in the process of streamlining COCOBOD, removal of inputsubsidies and the privatization of the input supply system; and (iv)unfavorable natural factors such as unusual drought and major diseaseoutbreaks.

4.76 The first risk, failure to maintain and improve the level of realprices is being addressed by requiring that a pricing study, already agreedupon under SAC, be completed and a pricing formula be agreed upon as acondition of loan effectiveness. GOG has already agreed to the annual in-crease of producer prices to reach an indicative level of 55 percent of theF.O.B. price by 1988/89. The second risk, drop in international prices towhich the project is not overly sensitive; the rate of return falls to19.92 and prices are 202 lower than forecast in the entire 25-year period.The third risk, failure to remove input subsidies and carry through theprivatization of input supply is being addressed already by GOG: in May1987 a series of price increases were announced that reduced subsidies byas much as half. Over the next two years the remaining subsidies will beeliminated (paras 4.38 and 5.01 (o), and Annex 4-6, Table 1). Under theproject, GOG's willingness to undertake the privatization reforms would beformalized through an agreement at negotiations on an action plan for theprivatization of farm inputs distribution (paras 4.39 and 5.01 (p)). Thedelay in the process of streamlining COCOBOD would be minimized throughclose monitoring, but would not significantly affect production benefits.

V. AGREEMENTS REACHED AND RECOMMENDATIONS

5.01 During negotiations for the proposed credit, the followingprincipal issues were discussed and agreement reached with GOG, DFR, and

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COCOBOD, and specified as conditions in the Development Credit and ProjectAgreements:

Financial Conditions

(a) COCOBOD would include and provide in its annual current andcapital budgets adequate funds to finance project activities(excluding roads), and in the event that adequate cofinancing tofill the financing gap is not available GOG/COCOBOD wouldundertake to finance the shortfall (para 4.50);

(b GOG, for the road component, would open at a commercial bank aDFR (cocoa) account to be used to pay for goods and servicesrequired for the implementation of the cocoa road component, andwould pay into it quarterly and in advance, its annual share asstated in the DFR (cocoa) approved annual budget (para 4.61);

(c) The Special Accounts for DFR (cocoa) and COCOBOD would beoperated under terms and conditions agreed with IDA and IDAwould, at its discretion, hold back replenishment in case ofinadequate financing by GOG/COCOBOD of relevant projectcomponents (para 4.61);

Project Administration Conditions

(d) Progress on the privatization of farm inputs and internalmarketing and the level of CSSVD incentive payments would bereviewed annually with IDA. Also a mid-term review on allproject components, to assess progress and ensure adjustment toprevailing conditions and policy, would take place by November1990 (paras 4.13, 4.20 and 4.53);

(e) Not later than January 1, 1990, the number of Districts operatedby CSD would be reduced to 39 (para 4.16);

(f) Extension staff would be relieved of their duties to be involvedin the distribution of farm inputs (para 4.18);

(g) Two pilot operations to experiment with different extensionapproaches would commence by January 1989: (i) in CY 1989 MOAwould be responsible for cocoa extension in 50Z of CSD districtsin Volta Region. At the end of the year the performance would bereviewed and based on that review, steps would be taken to enableMOA to handle extension in the entire Region; (ii) CSD wouldfollow the same process and timetable for non-cocoa crops inBrong-Ahafo Region (para 4.20);

(h) Seed or seedlings would be sold at a price nLot less than theprevailing market price for equivalent dry ireight of beans (para4.24);

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(i) A Research Policy Committee (RPC) with TORs agreed with IDA wouldbe appointed by June 1988, comprising of the Executive Director(Chairperson) and Deputy Directors (2) of CRIG, CSD ExecutiveDirector, 2 CSD Regional Officers, a farmer and CRIG ResearchSecretary serving as Secretary (para 4.33);

(j) CRIG would undertake periodic external assessments of itsresearch program; the first assessment would be undertaken byMarch 31, 1988, and the second by June 30, 1991 and thereafter atleast every 5 years (para 4.34);

(k) Government and COCOBOD would reduce cocoa farm input subsidies inthree annual steps and eliminate them in a phasing to be agreedwith IDA by December 31, 1989 (para 4.35);

(1) Farm input distribution system would be gradually privatizedaccording to a schedule agreed with IDA. This program would bereviewed annually by COCOBOD. The results of the first reviewwould be provided to IDA by March 1989 (para 4.36);

(m) PBC, in rationalizing its operation, would by January 1, 1990:(i) close down all buying centers with annual purchases of lessthan 25 tons; and (ii) convert all buying centers with annualpurchases between 25 and 50 tons into sub-societies which wouldbe visited once a week by a mobile buying unit (para 4.40);

(n) COCOBOD and DPR (for the cocoa road program) would submit alongwith their annual budget, an annual work plan approved by therespective authorities for (a) roads; (b) research, seedproduction, CSSVD control, extension, PBC, ICD, PID, PPMR; and(c) procurement, at least four months prior to each fiscal yearfor IDA review (paras 4.48 and 4.52);

(o) Feeder road program (as mentioned above) would be submitted toIDA and COCOBOD annually and would include economic evaluationbased on criteria including vehicle operating cost savings,quantity of cocoa to be evacuated and the rehabilitation cost.These criteria would be used to rank roads on the basis of ERRand NPV (para 4.48);

(p) Any changes in the posts of COCOBOD Chief Executive, its DeputyChief Executives and the Director of DFR would be undertaken inconsultation with IDA. Consultant and new appointments of seniorCOCOBOD staff with qualifications, and experience agreed with IDAwould be appointed on agreed terms and conditions of employment;senior staff will include CSD and CRIG Executive Directors, PBCManaging Director, and the Directors of Audits, PPMR, and Financeand Budget (paras 4.48 and 4.54);

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(q) The three-year rolling COCOBOD corporate plan would be reviewedannually with IDA and continued throughout the project period(para 4.56);

(r) Agreements reached under the SAC concerning the divestiture andspecial feasibility studies relating to plantations, cocoaprocessing plants, the Abuakwa Formulation Plant, accounts/auditand financial control would be reconfirmed (para 4.56); and

(s) Arrangements satisfactory to IDA would be made by COCOBOD for themonitoring of pesticides use and status of residues in bean,soils and water supplies in treated areas, as well as the effecton workers and farmers involved in the application of pesticides(para 4.72).

5.02 Proposed Conditions of C-edit Effectiveness

(a) The CRIG Executive Director with qualifications and experience,acceptable to IDA, would have been appointed (paras 4.30 and4.54);

(b) A subsidiary loan agreement between GOG and COCOBOD acceptable toIDA has been signed (para 4.50);

(c) All conditions precedent to the effectiveness of the cofinancierscredit agreements of those cofinanciers included in the agreedfinancing plan had been fulfilled (para 4.50);

(d) Agreement would have been reached on producer price arrangementscovering the entire project period and on the specific pricelevels for 1988 (paras 4.53 and 4.67);

(e) DCE for Finance and Administration with qualifications andexperience acceptable to IDA would have been appointed (para4.54);

(f) The appointment of suitable persons with experience andqualifications acceptable to the Government and IDA to fill thefollowing positions: (a) CSD Deputy Executive Director(Operations); (b) Technical Manager Extension; (c) PBC LogisticsManager; (d) Head of MIS and Data Bank; and (e) Head of M&E Unitsin COCOBOD Headquarters (para 4.55);

(g) GOG would have made its initial contribution of ¢ 160 million(US$1.0 million) into the DFR (cocoa) account (para 4.61); and

(h) COCOBOD and its subsidiaries accounts for September 30, 1985 and1986 would have been audited (para 4.62).

5.03 Conditions of Disbursement

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(a) The following would be conditions for disbursement against theroad component:

(i) the appointment of a Road Engineer in COCOBOD under TORagreed with IDA (para 4.47); and

(ii) the recruitment by DFR of the following staff to understudytechnical assistance advisers: three training instructors;one procurement contract administrator; and three contractsupervisors as counterpart to volunteers (para 4.47);

(b) Agreement at the mid-term review (November 1990) on internalmarketing strategy and its work program would be conditions fordisbursement against the internal marketing component(para 4.53).

5.04 On the basis of the above assurances and conditions, the projectis suitable for IDA credit of SDR 31.3 million (US$40.0 million equivalent)to the RepublJc of Ghana.

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Annex 3-1

GHANA

COCOA REHABILITATION PROJECT

Extracts of Cocoa Sector Policy Agreed Under the SAC

Policy Statement

Agreed and formally submitted to Government and IDA.

Producer Price

(a) Lona-torm obiective

Government's preliminary intention (pending incentives study) isto move producer price gradually from nearly 30? of long-run world price toan indicative target of 55? of same by 1988/89.

(b) Incentive study

TOR agreed. Study expected to be completed by November 1987 soit can be applied to announcement in May 1988 of producer price for1988/89.

Distribution of Sector Revenues

Shares

Producer share to rise per above. COCOBOD share to decline frompresent 30? of FOB price to target of 15, net of retrenchment costs.

COCOBOD Role/Restructuring

General principles agreed:

1. COCOBOD to attempt to confine itself to activities whichcannot be done more efficiently by other institutions or private sector.

2. COCOBOD will progressively shed all activities not directlyrelated to purchasing, marketing, extension and research.

3. COCOBOD will eliminate in a phased program all remainingexcess staff.

4. In effecting cost reductions, care will be taken to protectessential functions relating to COCOBODIs buying and extension and researchfunctions.

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Acknowledged also that extension, procurement and marketingrequire major efficiency improvements.

Corporate Plan and Performance Agreement

Interim guidelines for content of three-year rolling corporateplan to be prepared annually agreed and submitted formally to Governmentand IDA. First draft of corporate plan covering 1987/88-1989190 to be sentto IDA first week of April 1987. final version to be completed by June1987. Plan to be finally submitted to IDA by September 1987. To beimplemented starting October 1987. Implementation of plan to be supervisedby reconstituted COCOBOD Board of Directors and to come under performancemonitoringlevaluation system of State Enterprise Commission. Performanceagreement between Government and COCOBOD to be signed by December 31, 1987.

Plantations

COCOBOD to divest itself by March 31, 1987, of 52 plantationsconsidered to be non-viable. COCOBOD will continue to review its ownershipof the remaining 40 through a study expected to be completed by September30, 1987, and will divest itself of the remaining farms if the study sorecomends.

Tnput SupRly

Progressive reliance on the private sector to be included incorporate plan. Progressive elimination of input subsidies, consistentwith incentive study recomendations, to be included in corporate plan.1986/87 budget provides for drastic reduction of input subsidies throughlarge price increases.

Haulage

Progressive reliance on private sector to be included incorporate plan.

Formulation

COCOBOD will enter into a joint venture arrangement for theAbuakwa Formulation Plan by April 1, 1987. Its budget for 1986/87 providesfor expenditures only up to this date. 1/

Staffing and Retrenchment

11 Although considerable efforts have been made to privatize thisoperation, COCOBOD has not yet been able to finalize a joint venturearrangement with private interest but negotiations are continuing.

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No further hirings except in the higher grades; where considerednecessary, approval to be sought from Board of Directors. 13,200 to beretrenched in 1986/87 as follows: COCOBOD sent notices in December 1986 tosome 10,000 plantation workers who will be off payroll by end-February1987. Another 3,200 (CSD) to be discharged (or sent notices) by June 30,1987. Identification of remaining excess staff and phased plan for theirretrenchment to be included in corporate plan.

Feeder Roads

Responsibility transferred to Department of Feeder Roads as ofJanuary 20, 1987.

Accounts/Audit

Complete accounts and audits for COCOBOD and all subsidiariesfor:

1. All years to September 30, 1985, by June 30, 1987

2. Year ended September 30, 1986, by December 31, 1987.

Financial Control Systems and MIS

1. COCOBOD's external auditors will help streamline financialcontrol systems by July 1, 1987. 2/

2. Computerization of payroll and manpower audit both to becompleted by June 30, 1987. 3/

3. System for monitoring all credit transactions with farmers to beestablished by March 31, 1987. 3/

4. Mechanized monitoring of purchased product quantities andmovement of cash to be explored.

5. Only COCOBOD itself may (as of February 27, 1987) incur debt(other than trade debt) with a maturity of more than 30 days.

6. Capital expenditures in excess of ¢ 10 m will require priorapproval of a finance subcommittee.

2/ This has not yet been completed and is being made a condition for CRPeffectiveness.

3/ There has been some slippage in timing but it is in progress and wouldbe monitored by SAC and CRP supervision.

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7. An lnnual foreign exchange budget and financing plan willcontinue to be prepared and agreed with the Ministry of Finance andEconomic Planning and Import Program Monitoring Committee. Financing planfor COCOBOD's 1987/88-1989/90 foreign exchange expenditures includingdisbursements from all external financial assistance to be included incorporate plan.

8. Financial restructuring plan for COCOBOD's domestic debt to beincluded in corporate plan.

Marketing

Government has asked IDA to evaluate the lessons for Ghana of theexperience of other countries in liberalizing the internal and externaltrade in cocoa. Government will discuss the findings of the review withIDA at a meeting in Ghana by the end of 1987 with a view to studying in1988 the pros and cons of liberalizing Ghana's trade in cocoa.

Reporting

IDA will be supplied with reports on implementation of COCOBODrestructuring program, including budget vs. actuals and receipts andexpenditures of the five accounts, by May 31 and November 30 each yearstarting Htay 31, 1988, in a format to be agreed with IDA.

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Annex 4-1

GHANA

Cocoa Rehabilitation Project

Cocoa Production Technology in Ghana

A. Introduction

1. This annex reviews farmers' agronomic practices and considersproposals for upgrading field operations in rehabilitation, replanting andnew plantings. It examines the reasons for the low productivity of cocoafarming in Ghana and stresses the need to improve current levels of tech-nology, especially with regard to field husbandry. Past increases in cocoaproduction in Ghana were due almost exclusively to expansion of the culti-vated area. However, the need to raise farm income by increasing produc-tivity per unit area is now regarded as essential to strengthen the economyof the cocoa sector.

B. Productivity Constraints

2. Productivity of cocoa farms in Ghana is generally estimated atbetween 160 and 250 kg/ha/yr. This is less than 1/3 of the average produc-tivity of farmers in Brazil (700 kg/ha/yr) and around 1/6 of the averageproductivity commonly obtained in well-managed farms all over the world(1,000 - 1,200 kg/ha/yr).

3. Productivity is affected by agronomic as well as by socioeconomicfactors. The socioeconomic constraints in Ghana include a) low prices paidto farmers; b) land tenure system in which caretaker farmers, who consti-tute over 75% of cocoa producers, receive only one-third to half of theproduce; c) aging of the cocoa farming community caused by out-migration ofyoung people who do not see a future in cocoa farming; d) poor extensionservices in which regular contact aimed at teaching farmers is almostnon-existent and extension agents lack training in both subject matter andcommunication skills; and e) poor accessibility of newly planted areas forboth distribution of inputs and buying and evacuation of cocoa.

4. The agronomic factors most frequently mentioned in Ghana asresponsible for the low productivity are diseases and pests, especiallyswollen shoot and capsid damages. Very little attention is given to otheragronomic factors, such as poor farm husbandry, which impose serious con-straints to higher yield. Problems such as excessive shade, poor methodsof establishing new plantings, inadequate weed control, among others, arealso contributing as much as diseases and pests,to reduced yield and, needto receive more attention. In order to emphasize the importance of upgrad-ing agronomic practices in Ghana, a brief review will be made of theunderlying principles associated with high yield in cocoa.

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C. Crop Physiological Factors

5. Research on the physiology of yield variability stresses threefactors as the main determinants of productivity in any crop: (a) the sizeor area of the leaf canopy, usually expressed by the ratio of leaf surfaceto ground surface, or the "leaf area index" (LAI); (b) the rate ofphotosynthesis per unit leaf area, also known as "net assimilation rate"(NAR); and (c) the allocation of assimilates between the fruits and otherparts of the plant, or the "harvest index."

6. To obtain high productivity form a crop, the first rule is to usecultural practices which will increase light interception by the cropcanopy, that is, which will promote a fast growing LAI. There are manymethods of promoting canopy development for greater light interception.These methods either promote rapid leaf growth or prevent premature leaffall (or increase leaf duration). As a rule, most agronomic treatmentswhich increase LAI will also increase crop yield. This is what happens,for instance, in the case of fertilizer application, irrigation, control ofleaf diseases or leaf damaging insects, etc. Genetically superiorcultivars normally exhibit higher leaf canopy development than unselectedones. The development of LAI is also much affected by planting distance,this being the main reason why close planting greatly favors early economicreturns in cocoa growing. It must be emphasized that this beneficialeffect of close planting occurs only during the first 4-8 years afterplanting. In a mature and well managed cocoa plantation with completelyclosed canopy, close spacing has practically no effect on LAI or on produc-tivity per unit area.

7. Spacing deserves special atte cion in Ghana, where farmers plantat very high density, often using as mady as 6,000-8,000 cocoa seedlingsper ha. Unfortunately this practice is used even by farmers plantingscarce hybrid seeds and supposedly supervised by CSD extension agents.Such wasteful practice is obviously placing a major constraint upon achiev-ing the desired target for replanting 20,000 ha/yr of improved varieties.High density planting has also an undesirable effect on tree architecture.It stimulates vertical growth and inhibits the development of lateral("fan") branches. As a result the plants become too tall for harvestingand spraying, besides being less productive, as will be explained later.Greater effort should be made to adopt the planting distance recommended byCRIG (2.5 x 2.5 m or 1,600 plants/ha).

8. With regard to the second yield determinant, the photosyntheticrate or NAR, the possibility of selecting cocoa cultivars geneticallysuperior in terms of photosynthetic efficiency has not yet been fullyexplored by plant breed'-is. However, since cocoa is usually grown under theshade of larger plants, the relationship between yield and shade has beenthe subject of much research in most producing countries, and this isobviously related to photosynthesis. It is now generally accepted that thebenefit of shade in the cultivation of cocoa is not to provide a low lightintensity considered optimal for growth and yield. Its main function is to

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counteract unfavorable ecological factors, such as low soil fertility, winddamage, excessive transpiration leading to moisture deficiency and in-creased insect attack, especially capsids and thrips. If all such unfavor-able factors can be controlled by methods other than by use of shade, thehighest production of cocoa is obtained without shade. From a practicalpoint of view, however, moderate shading is generally considered as thesafest and most economical method of counteracting unfavorable conditionsin most regions, especially in areas where soil and rainfall distributionare not entirely satisfactory. Excessive shade is a common problem howeverin Ghana and should be avoided. Besides decreasing yield because of lowerphotosynthetic production, it contributes greatly to increasing the inci-dence of black-pod disease.

9. With regard to the third factor, the "harvest index", it isrecognized that additional research is needed to develop practical methodsof modifying the division of photosynthates between fruits and vegetativegrowth in the cocoa tree. It has been experimentally demonstrated that handpollination substantially increases the harvest index, especially inself-incompatible cultivars. This method undoubtedly finds practicalapplication in seed gardens as a way to increase productivity. Someauthors have also demonstrated that pollination and yield can be increasedby blowing the flowers with forced air from a spray machine (Soria, 1980),but this technique has not found practical application among farmers. Caremust be taken to avoid "excessive" pollination as this is known to causeheavy defoliation which greatly reduces yield the following year. Death oftrees may also occur when excessive pollination is used for two or threeconsecutive years.

10. There are good indications that the harvest index will increasewhen pruning is used for the purpose of reducing plant height and promotinglateral growth of "fan" branches. This is accomplished by periodic elimi-nation of orthotropic ("'chupon") branches so as to prevent the formation ofmore than two or three branching sites or "jorquettes" on trees. Thispractice is traditionally used by cocoa farmers in other countries, wheretrees are spaced at 3x3 m and plant height is seldom allowed to reach morethan 4-5 m, or about half the height of cocoa trees in Ghana. The highdensity planting system commonly used in Ghana has the disadvantage ofinducing premature shedding of fan branches, stimulating excessive growthin height and diameter, of the main trunk. Besides creating obviousdifficulties for some cultural practices such as spraying, mistletoeremoval, harvesting, etc., this type of husbandry renders the trees lessefficient in intercepting solar radiation (reduced leaf area index atmaturity) and also reduces the number of productive flower cushions perunit area.

D. Production Technologies

11. The production technologies currently being practiced by farmersin Ghana have been classified into five groups, which may be described asfollows:

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12. TechnololLevel I. This is the most common method and comprisesthe following: after felling and burning the forest (or other naturalvegetation) at the onset of the dry season (November/December) the land isused to grow food crops (usually cocoyam, plantain, and cassava) atirregular spacings and plant density. Cocoa is planted at stake, also atirregular spacing, using unselected seeds from the farm. Frequently asmany as 6,000 - 8,000 seeds are planted per ha, sometimes more (spacing of1.0 - 1.Sm, often using 2-3 seeds per hole). Cocoa seeds are often plantedbefore food crops are sufficiently developed to provide the necessaryshade. The farm is brushed only infrequently and no pruning is done.Little or no spraying is used against capsid bugs or blackpod disease.Misletoe is not removed relglarly and rodents are not controlled. Shade isnot controlled until it has grown extremely excessive. Yield at fullproduction is estimated at no more than 250 kg/ha, but could averagebetween 160 and 210 kg/ha.

13. Technology Level II. This category adopts the same practices asdescribed for Technology level I, except that hybrid seeds are used insteadof unselected seeds. Some farmers who have had their farms planted byproject labor under the Eastern and Ashanti Region Projects may have usedbetter planting methods (regular spacing and 1,600 plants/ha). Under thesepoor maintenance practices the annual yields should average between 300 and320 kg/ha although in exceptional cases they may reach 360 kg/ha.

14. Technology Level III. In this category, farmers are growingunselected cocoa (Amelonado types) under moderately advanced husbandrypractices, such as regular brushing, shade control, spraying against capsidbugs (2 to 4 times/year), rodent control, pruning of dead branches andunwanted chupons, removal of mistletoe, and spraying against blackpod incases of severe outbreak. Annual average yields are estimated at between400 and 450 kg/ha.

15. fTechnology Level IV. In this category similar practices as aboveare practiced, except that hybrid seedlings from polybag nurseries areplanted in rows at 2.5 m x 2.5 m spacing (1,600 plants/ha). Annual averageyields, at full production are estimated at between 550 and 600 kg/ha.

16. Technology Level V. This is based on the results of CRIG trialsand on examples from other cocoa producing countries. It includes at leasttwo additional treatments besides the ones used in Technology Level IV:better control of shade by the use of planted shade trees (Glyricidia andothers) and correction of soil mineral deficiencies by the use of fertiliz-ers. It is estimated that an annual average yields of between 700 and 900kg/ha or even higher may be obtained with this technology. The economicsof fertilizer use is expected to be favorable but this is to be reviewedand verified by CSD and CRIG. However, even with good returns, the rate offertilizer use is expected to be gradual because of the advanced nature ofthe practice for small farmers in Ghana.

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17. In terms of returns to labor, hybrid cocoa managed at intermedi-ate level of technology (Technology Level IV) appears to offer mostbenefits to the farmer. However, replanting with hybrids is not ar. optionfor increasing production in the short to medium term. Rapid increaseswill have to come from management improvements on existing trees ratherthan from new plantings. Rehabilitation of traditional varieties as wellas hybrids through the application of moderate technology, offers thequickest method of boosting yields at reasonable cost. This involvesregular manipulation of shade (normally shade thinning), spraying againstcapsids, mistletoe removal, pruning (to improve canopy architecture), morefrequent harvesting and regular brushing. The main thrust of the Board'scurrent program is therefore to promote this technology through inputs andservices.

18. High input technology, similar to that applied elsewhere in-volves, in addition to the practices applied in Technology Level IV,starting seedlings in polybag nurseries, applying chemical fertilizers,planting shade, and sometimes prophylactic spraying against blackpoddisease. Experience elsewhere has shown that these technologies - espe-cially the use of fertilizers combined with shade thinning - are veryeffective in increasing yield, often doubling it within a relatively shortperiod. Because of costs and lack of experience in the use of fertilizerin Ghana, these practices are unlikely to find wide acceptance by farmersbefore results are clearly demonstrated in different parts of the country.As an initial step, it is proposed that such demonstrations be undertakenearly by the CRIG/CSD "on farm" research unit to be established at Tafo.

19. In the long term, production increases must come from new plant-ings of hybrids. While from a technical point of view it would be desir-able to maintain these plantings at least at a moderate level, particularlykeeping capsid damage to a minimum, in practice, farmers would do this onlyif they perceive it to be in their own interest. Calculations of thereturn per man-day suggest that farmers would find it more attractive toexparnd their holdings rather than adopt moderate or high level technolo-gies. Furthermore, caretaker farmers would be extremely reluctant to adoptsuch practices which require high additional inputs of labor. Only inareas where land is limiting for absolute or artificial reasons or insituations where farmers would wish to capitalize on substantial priceimprovements are they likely to choose intensification as a means ofincreasing incomes.

20. Increases in production could arise in the short to medium termthrough farmers presently practicing Technology Levels I and II shifting toTechnology Levels III and IV, respectively, that is, through intensifica-tion involving the use of greater material and labor inputs. Longer termproduction increases could come from increase in area under cocoa and/oradoption of higher yielding technologies by farmers. Thus, farmers usingTechnology I could increase production by shifting, with replantings or newplantings, to Technology II, if they do not wish to invest much more cashor labor, or to Technologies III, IV or V if they wish to intensify produc-tion and maximize their returns per hectare. Para 4.21 to 4.26 of the main

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report describes the production strategy and arrangements for seedproduction and distribution to meet the replanting needs.

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Annex 4-2

GHANA

Cocoa RehabilitationfProject

Cocoa Services Division

Proposed Organization at Headquarters. Reayon and District

HEADQUARTERS

EXECUTIVE DIRECTOR

*~~~ ~~~ I _ I ____ ____A_ HEAD M&E DY.EX. DIR. (A&F) DY.EX.DIR. (OPS) MANAGER MANPOVER & TRAINING

* Chief Accountant a Manpower Planning

3 Stores Manager a _T_ * Training Spec./Planning

o Admin. Manager a Buoso Cocoa College

* Gen.Services Mgr. * Techn. Specialistsc Tech.Mgr. Extensiono Tech.Mgr. CSSVDa Tech.Mgr. Inputso Tech.Mgr. Seed

Region$ o Sech.Mgr. Cocoa* Tech.Mgr. Other Crops

REGIONS (6)

REGIONAL COCOA OPFICER

~~~~~~IIDistricts Dy.R.C.O. Dy.R.C.O. Dy.R.C.O Admin. Stores

(Extension) (Agron.,Seed,Cocoa Stus.) (CssvD) Inputs

DISTRICTS (C. 39)

DISTRICT COCOA OPPICER

1 1 Dy.D.C.O. IC.O. Dy.DC.O Adsin. Stores

(Extension) (CSSVD) (Agron.,Seed,Cocoa Stn) Inputs 21

STA (av.31dist) SPA (av.4jdist) ST )3

EFA (av.81STA) 11 PA (av.l/SPA) A F 1( La? rer .1

Laborer (av. lIPA)

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Annex 4-3

GHANA

COCOA REHABILITATION PROJECT

Extension Services Objective and Strategy

Objectives

1. The basic objective for strengthening agricultural extension inGhana is to facilitate increased agricultural productivity and ruralincomes by the establishment of an efficient and cost-effective serviceresponsible for all the agricultural extension needs of farmers.

2. The attainment of this objective entails the development of anextension service that is able to advise: (i) farmers how to increase theproduction and/or profit of all their farm-based production activities,including crops, livestock, agro-forestry and farm fisheries; and (ii)agricultural research and other agricultural support services of farmers'needs and priorities. Obviously such needs vary over time and place, whichaccounts for the intrinsic organizational flexibility and support required.

3. While the organization of the service should be flexible toaccommodate production and cultural conditions, there are principles ofeffective extension operation on which there is little room for compromisewithout jeopardizing its basic role and effectiveness. These include:

(a) Advice on all farmers' productive activities should be theresponsibility of a single extension service; locally importantactivities should be handled by local extension staff who receiveappropriate training and technical specialist support.

(b) Extension's sole commodity is knowledge and its work takes placeprimarily in the field and with farmers: extension'sorganization, work programs and evaluation should reflect this,as should complementary activities, such as mass media programs.

(c) As important as extension's advice to farmers is its advice onfarmers' concerns and priorities tc other agricultural supportservices--research, input supply, credit, marketing, rural roadsand water supply, and so on. 1/

1/ An effective extension service can help develop the efficiency ofother agricultural services by keeping them informed of farmers' needsand by putting pressure on them to be responsive to these needs.However, these services themselves often require fundamental reform inparallel with extension's strengthening, particularly given theincreased demand on these services that usually results from strongextension work.

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4. An extension service organized to fulfill these principles shouldbe able to serve effectively the vast majority of Ghana's farmers whomainly practice smallscale mixed farming. The work of this service woula,however, be complemented by other agencies. For example, extension supportfor plantation crops and other highly commercial operations might beprovided by a private or perhaps cooperative body responsible for theextension of a particular crop, as well as for its input supplies andmarketing. Input suppliers and other commercial organizations couldundertake some advisory work. Any constructive non-government participationin extension is to be encouraged, and there should be close coordinationbetween such agencies and the basic extension service.

5. A reasonably efficient unified extension system should beestablished in five to ten years. (As explained below, much of the firstfive years would be taken up with determining an appropriate extensionsystem, and the subsequent years with its progressive implementation.)Once the basic system is established, however, it will need to becontinuously upgraded to meet the changing needs of Ghana's farmers.

Current Extension Situation

6. The present coverage and quality of extension operations in Ghanais highly variable. This is to be expected given that they are carried outby about fifteen organizations (Appendix 1). These organizations operatein different areas for different crops, within a variety of institutionsand supported by a number of financial sources; there is littlecoordination in policy, objectives or operations between the organizations.Our knowledge of the activities of the agencies involved in extension isincomplete. With some notable exceptions, however, in general it may besaid that they are over-staffed, under-financed and poorly-organized; thatthey work with little technical purpose or focus; that there is littlecontact between extension staff and either farmers or research; and thatthe three principles of effective extension noted above (para 3) are notimplemented. Despite the number of organizations involved, there has beenlittle attempt to establish effective extension services outside particularRegions, although the need to do so is acknowledged in the Ministry ofAgriculture (MOA) and Cocoa Services Division (CSD), the two largestextension organizations.

7. Support for extension from external organizations has centred onselected Regionai. The Bank has worked through the Upper and Volta RegionAgricultural Development Projects. It has not analyzed comprehensivelyextension objectives or operations in Ghana, nor attempted to establish astrategy for its support to extension nationwide, although it has nowaccepted the need for such national-level analysis and acticni. The othermain development organizations involved with agricultural extensionactivities in Ghana (see Annex 1) have been so in much the same way as theBank; they have had little impact on national extension policy orcoordination, nor on the broader upgrading of extension's role and effec-tiveness. The Bank and others have recently given attention to the

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function and organization of the Ministry of Agriculture and thus in ageneral sense to extension (through, for example, the Agricultural ServicesRehabiliation Project); this interest has yet to be reflected insignificant changes in the institution.

Extension Strengthening Strategy

8. Experimentation. The first step to the objective of establishinga comprehensive agricultural extension service is not to unify but ratherto experiment. This is necessary in order to determine Government andextension and related staff's opinions on the matter, and to determine anextension system appropriate to Ghana's agro-economic and culturalconditions and its staff capabilities and interests. Moreover, there issufficient urgency in strengthening extension operations for both cocoa andother crops that such work should commence without the delay entailed inthe establishment of a unified extension service.

9. Experimentation will take place over the coming three to fiveyears on three fronts: cocoa extension services supported by the CocoaRehabilitation Project (CRP); the Ministry of Agriculture under theAgricultural Services Rehabilitation Project (ASRP); and, also supported byASRP, in Volta Region as a continuation of work under the Volta RegionAgricultural Development Project (VORADEP, Credit 1009-GH). None of theseexperimental activities are contrary to the principles of effectiveextension noted above, and they are valid and productive in their ownright. Details of extension strengthening work on these three frontsfollow.

10. The extension service of CSD (which is also responsible forcoffee, a minor crop) is a significant operation given the importance ofcocoa to the Ghanaian economy. Until recently, CSD "extension" wasprimarily a direct service operation for farmers and had little technicalorientation or content. Some reform of the extension service has begunwith the restructuring of COCOBOD. Under the Cocoa Rehabilitation Projectthe cocoa extension service will be reorganized with the objective ofproviding farmers, for the first time, with efficient technical support forcocoa production.

11. The main changes that are being undertaken prior to or as part ofthe Cocoa Rehabilitation Project are:

(a) an end to direct services for farmers (and hence the redundancyof about 10,000 laborers);

(b) an immed4ate reduction in the number of the lowest level exten-sion agents by about 45% (to 900);

(c) an end to extension staff being directly involved in the sale anddistribution of inputs;

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(d) the design and implementation of feasible and monitorable workprograms for all extension staff;

(e) the establishment of regular contacts with research and ofregular in-service training and work-review sessions for allextension staff; and

(f) the building-up of technical expertise (in cocoa agronomy,disease control, seed production, input support and exten-sion/communication) at regional and headquarters levels of theCSD extension service.

12. The need for these changes has been identified during projectpreparation, and their implementation is the basic objective of theproject's extension component. Due to uncertainty over some features ofthe cocoa subsector (e.g., the number and location of active cocoa farmers,farmer response to improved price incentives, and the number of extensionstaff required by level and location), there will be an in-depth mid-termreview of the extension component in Project Year II and provision for itsmodification in light of review findings.

13. As part of this effort to establish an efficient extensionservice for cocoa farmers in conditions of considerable uncertainty, twoexperiments will take place under the project. First, field level cocoaextension activities in one Region (Volta, the least important for cocoaproduction of the six Regions where cocoa is grown) will be handledexclusively by the VORADEP extension service, with technical supportprovided by CSD. That is, cocoa farmers will be served by one extensionworker who will advise them on all their farm operations; the extensionworkers will be trained in cccoa production by CSD technical specialists.Second, as the converse to the Volta Region experiment, CSD extension staffin one Region will assume in a phased manner the responsibility forextension support for all agricultural activities. They will receive theappropriate training and specialist support for this role from MOA. TheRegion for this experiment has yet to be selected; Western Region could beappropriete given the expansion of cocoa production there and its currentthin coN rage by MOA staff. In addition to these two experiments, CSDextension staff in the five Regions where they will operate will be trainedand advise farmers on agro-forestry in order to encourage wider planting ofappropriate trees on land owned by individuals.

14. Parallel to the strengthening work with the cocoa extensionservice as described above, the Ministry of Agriculture extension servicewill be supported in two ways under the ASRP--in an extension strengtheningpilot program in a number of regions, as well as in Volta Region wheresupport of VORADEP's extension activities would continue following thatCredit's closing in December 1987.

15. Except where they have been seconded to a project structure as inVORADEP, MOA staff are now barely active in extension. One importantreason for this (and that given great weight by MOA staff) is a lack of

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funds. Whatever the reason, while MOA is the obvious institutional "home"of a national extension service, it is not clear whether, even in theabsence of significant resource constraints, MOA staff at all levels wouldbe sufficiently interested and able to provide effective extension support.Consequently, a major objective of the ASRP extension strengthening pilotprogram is to determine how MOA as an institution can best be organized tosupport extensiot. and also the interest and ability of MOA in extension --and so ultimately its appropriateness as the home of a unified service.

16. The ASRP extension strengthening pilot program aims at establish-ing a unified extension service for non-cocoa, non-plantation crops in upto three Regions. Beginning with one Region in Year I and depending onimplementation experience, pilot program activities would commence in adifferent Region in each of the project's first three years in an iterativeprocess in which program activities of any one year will closely reflectearlier experience (both inside and outside the pilot program). Theobjective of the pilot is to provide a precise definition of issues andorganizational alternatives entailed in extension strengthening. Theon-hands experience of the program should lead to practical ways toovercome specific problems in organization, research linkages andtechnology identification. The program would build on the experience ofall other extension activities in Ghana, and would include a preliminaryreview of the training programs and resources available an agticulturaltraining institutions. It would also provide for logistical support to MOAstaff working with the Ghana Grains Development Project in selected Regionsto enable them to operate more effectively prior to the nationalreorganization of extension services.

17. Ashanti Region has been selected by MOA as the Region in whichthe ASRP pilot program would start. This is appropriate in light of theextremely weak links of MOA and particularly of its extension staff withagricultural research in Ashanti (as much as anywhere) and the location ofthe Crop Research Institute in the Region. Further, an improvedmaize/cowpea technology is available, and the importance of cocoaproduction in the Region will force consideration of how best to serve thenon-cocoa extension needs of cocoa farmers.

18. Progress is being made under VORADEP in establishing a broadlyfocussed field extension service. VORADEP extension staff are responsiblefor animal husbandry as well as crops, and there is reasonable coordinationof the agricultural extension and rural home economics services. Extensi,nstaff are examining ways to include agro-forestry and farm fisheries intheir brief. Given the basically sound organizational structure of theVORADEP extension service, the decision to have it responsible for cocoaextension in the region (see para 13) should be a useful test of how cocoaand non-cocoa extension operations can be integrated. ASRP support ofVORADEP extension activities, and associated research and training, willenable their further refinement and improvement while an appropriatenational program of extension support is being developed.

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19. Evaluation. The proposed extension strengthening activitiesunder the Cocoa Rehabilitation Project and the Agricultural ServicesRehabilitation Project will require two or three years' implementation tobegin to provide useful indications of broader relevance. This time willnot be ill-spent. At least six of Ghana's ten Regions will be covered byone or more activity under the two projects. Important basic issues thatwill be tackled include: determination of Ghanaian farmers' and Governmentstaff's expectations of extension; practical ways of integrating non-cocoaextension services, including some that are not the direct responsibilityof MOA; ways of developing effective two-way linkages with agrlculturalsupport services (i.e., particularly, but not only, research); and,appropriate forms of extension field operation, field/media interplay andtechnology identification and development.

20. The CRP and ASRP extension strengthening activities will beclosely monitored. The purpose of this monitoring is to improve theirability to meet their particular objectives and to establish theirrelevance to the proposed unification of extension services. The CRPextension component will undergo a comprehensive review before the end ofProject Year II (1989), and will be adjusted as needed in view of thereview's findings. ASRP includes provision for a study, also in ProjectYear II (1989), of the organization of agricultural extension and trainingin Ghana. That study would cover the extension pilot operation supportedby ASRP (and also ASRP support of the Ghana Grains Development Projecttechnology and VORADEP), and would also review all major extensionoperations and their related training. For all intents and purposes, thestudy would serve as a preparation analysis for more comprehensive supportof extension strengthening in Ghana.

21. From regional to national intervention. Establishment of aneffective agricultural extension system throughout Ghana will requireresolution of a number of issues that the Cocoa and Agricultural ServicesRehabilitation Projects are unable, and not designed, to resolve. Theyinclude national-level mechanics of unification and comprehensiveresearch-extension linkages, and extension staff training, motivation andmanpower development which need to be addressed by national policy andprograms. The objectives and components of a national project that couldbe a suitable vehicle should be designed in the light of experience withthe extension operations described above. It is possible to say now,however, that it is likely to be an "extension project" though withparallel support (either in the projec-, or otherwise) for agriculturalresearch and training; while being "national", it need not coversimultaneously all of Ghana with a field extension service; and it shoulddeal adequately with the extension needs of women farmers (on which a startis being made by VORADEP).

22. The timing of this national intervention is not yet clear. Anational extension project is currently in the lending program as FY9OL.Given the experimentation planned under ASRP and CRP and the mid-termreviews that will take place in 1989, the project could conceivably be ayear or so later than now planned; this would not unduly delay significant

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extension restructuring and would provide time to evaluate further theexperience of CRP and ASRP extension operations, as well as of relatedactivities (such as the proposed reorganization of MOA and preparation of aBank-supported agricultural research project). On the other hand, thewide-ranging nature of extension-related issues that cut across all Regionsand the proposed ASRP/CRP interventions emphasizes the need for a nationalapproach. In that a national extension project will itself attempt toresolve issues not handled by the currently-proposed programs, an earlystart with a fundamentally sound national program would be advantageous.For the time being, however, the matter of timing of this national projectshould be left open until the operations proposed above are underway.

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ANNEX 4-3

Page 1GHANA

ORGANIZATIONS INVOLVED IN AGRICULTURAL EXTENSION

A PROVISIONAL LISTING

Form of ExternalCrop Area Involvement Fund

Organization Responsibility Jurisdiction in Extension Source Remarks

1. MOA Mon-irrigated All Regions Input Nonefood crops except Volta delivery &

and Northern advice

2. MOA/VORADEP Food crops Volta Region Advice IBRD,IFAD

3. MOA/GGADP Food crops Northern Primarily IFAD & Two separateRegion advice CIDA/GTZ projects

4. MOA/URADEP Food crops Upper Advice IBRD, Closed 9/84Region ODA

5. MOA/UNDP Food crops 2 districts Integrated UNDP Includesin Ashanti support to credit,Region cooperative mect.,

"block" marketing,farms input

supply

6. Grains and Primarily All regions Inputs, CIDA Under-MOA;Legumes maize and except advice for agency forDevelopment cowpea; also Western demon- GGDP demon-Board intercropped strations strations

cassava

7. Bast Fiber Fibers National Inputs, None Under MOADevelopment advice,Board direct

services,marketing

8. Irrigation Crops on Irrigation Inputs, Various Under MOADevelopment irrigation projects advice, bilateralsAuthority projects (90% (c. 5000 ha direct (Chinese,

rice, 10% irrigated) services Koreans,vegetables) EEC, etc.)

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ANNEX 4- 3APPENDIX 1Page 2

9. Ghana Cocoa Cocoa, coffee, National Inputs, IBRD

Board/Cocoa shea nuts advice,

Services Div. directservices,marketing

10. Ghana Cotton Cotton National As above None Private/

Company govt.company

11. Ghana Oil Oil Palm Plantations As above IBRD

Palm Dev. and small-Company holders

12. Pioneer Tobacco Smallholders Inputs, Private

Tobacco advice, sector

Company directservices,marketing

13. Internat. Tobacco Smallholders As above Private

Tobacco sector

Ghana Ltd.

14. Twifo Oil Oil Palm Plantations As above EEC Private/

Palm Oil and small- GOGholders

15. MOA/Global Foodcrops Upper Wert Inputs Global Under MOA

2000 Region and advice 2000

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Annex 4-4

GPANA

Cocoa Rehabilitation Project

Disease Control

1. Swollen Shoot Disease is the most serious technical problemaffecting cocoa in Ghana. It is caused by a virus, of which more than onestrain has been identified. The vectors are several indigenous species ofthe mealy bug which infests cocoa as well as forest trees and other woodyplants. Several of these vectors, including the main one in Ghana(Plancoccoides njalensis) are tended by ants which feed on the honeydew themealy bugs produce. They construct protective tents from soil which cangive shelter from contact insecticides. The adult males are winged butcannot transmit the CSSU. The virus is spread only by the wingless femaleswhich walk from tree to tree through connecting brances and leaves ofadjacent trees or when blown by wind. Several strains of the virus areidentified according to their vectors, host range and symptoms on cocoa.The most virulent are those which occur througlout the mass infection areasin the Eastern Region and elsewhere. The .lamage to the trees by thedisease eventually leads to death and can represent substantial loss to thefarmer particularly in the areas of mass ir,fcction where it is difficult tocheck. However, the spreading rate of the virus is not rapid and thisallows time to apply sanitation measures for controlling the incidence.

2. Measures for curing the disease have not yet been developed, andbecause of the nature of the organism a solution of this type may be a longway off. In the meantime, a number of measures can be applied to reducethe disease incidence and its effects on the industry. These include (a)using varieties which have some degree of resistance or tolerance to thevirus; (b) controlling the mealy bug vector by biological means orinsecticides; (c) protecting susceptible cultivars by innoculation withmild strains of virus; and (d) eradicating sources of infection. The mosteffective of these is the eradication of sources of infection. Thisrequires comprehensive inspectton programs and cutting out of visiblyinfected trees in outbreak area- together with trees within a susceptiblerange, depending on the size and duration of the particular outbreak. Thismeasure appears drastic and farmers do not cooperate readily in applying itespecially when they do not appreciate the seriot-sness of the problem andthey are not appropriately compensated for loss of income from thedestroyed trees. In the last twenty years efforts at eradicating infectionsources have not been sustained and the build up of the disease incidencehaf been large particularly in the areas of mass infection in the EasternRegion where a more virulent strain of the virus is present. The proposalsare to revive the inspection program and to step up eradication to dealwith the backlog, estimated at over 20,000 ha, during the first three tofour years of the project and then settle down to maintain adequateinspection and rate of eradication which is expected to level at about 150ha per year.

3. Although the technical methods or details have not yet beenworked out, the protection of susceptible high yielding hybrids by

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innoculation with the mild strains offers strong possibilities for futuremanagement of the disease. Similar applications on vJ.rus diseases of othercommercial tree crops are successfully undertaken as general practice.Should the method be verified as effective for CSSVD the practical detailsof implementing it on a large scale will have to be worked out. Theprogram of work at CRIG for CSSVD control has this approach high on itslist of priorities for attention. The search for greater resistance to thevirus is also being accelerated by CRIG in its breeding program forimproved varieties.

4. Apart from project activities described in the wain text (para4.27 and 4.28), CRIG's research program will pay special attention todeveloping for the longer term alternative control measures which willinclude:

(a) breeding and testing of resistant or tolerant varieties;

(b) testing the techniques of innoculation of young plants witha mild strain of the virus to build up some degree ofimmunity;

(c) control of the vector; and

(d) simple techniques for earlier identification of infectionsand to reduce the cost of the eradication process.

5. Black Pod Disease. This disease occurs in Ghana and is moreprevalent under wet humid conditions. It can cause serious losses cf beansfrom infected pods but in general it is not a major limiting factor toefficient production under conditions of high management standards. Theincidence of the disease can normally be kept within acceptable normsthrough normal cultural practices which incorporate good sanitationprocedures. These includes regular underbrushing, sensible prunning ofcocoa as well as shade trees and eradication of infected pods. Controlmeasures with copper fungicides are also effective but the treatments maynot be cost effective unless the field managment technologies are high andfactors of production are at their optimum. In addition to culturalpractices to deal with this disease, CRIG recommends the use of thosevarieties which have demonstrated greater tolerance to the fungusparticularly in areas with very high humidity. The economics andtechnology of chemical control would be an important component of the CRIGwork program particularly in the farming systems studies to be initiated.

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Annex 4-5

GHANA

Cocoa Rehabilitation Project

Research

1. Cocoa Research in Ghana was started about 50 years ago at theCentral Cocoa Research Station established at Tafo in the Eastern Region.At one time (1944-1962) the research program covered the problems ofNigeria and Sierra Leone as well. The institution was then designated theWest African Cocoa Research Institute (WACRI). Since 1962 when it became anational institution, and renamed the Cocoa Research Institute of Ghana(CRIG) it has concentrated on the problems of cocoa in Ghana only, althoughit is interested in maintaining links with other institutions involved incocoa research in neighboring West African countries and elsewhere.

2. Responsibility for CRIG has been shifted periodically betweencentral government Agencies and it is now under the Cocoa Board whichprovides funding, appoints staff and approves work programs and budget.Over the years CRIG and its predecessor organizations have experiencedvarious evolutionary changes, some of which have been brought on by econom-ic and political circuwF6tnces. in the last ten or so years the severeeconomic difficulties in the country and the downturn in revenue from cocoahave had their adverse effects even though CRIG has managed much betterthan other research institutions in Ghana, most of which are under theCouncil for Science and Technology which answers to the Ministry of Indus-try and Science. It has been able to retain most of its experiencedresearch staff and while funding was limited, particularly foreign curren-cy, it was able generally to pay salaries on time and maintain a researchprogram without undue interiuption. The responsibilities of CRIG have beenexpanded to include research in some other tree crops and presently theyinclude coffee, Colanut and Sheanut, all of which are purchased andexported by the cocoa board. They are also concerned with developingalternative oil tree crops such as the tallow tree (Pentadesma butyraega).

3. The main aspects of its work which have suffered rely on foreigncurrency. In particular the equipment and physical facilities havedeteriorated and many components or items have either become inoperative orare obsolete and inefficient. This had tended to reduce on the output ofstaff and new important programs of work have been postponed. The projectwill assist CRIG to remedy its current deficiencies by providing fundingfor acquiring or rehabilitating essential equipment and to secure technicalassistance particularly for staff training. The objective is to provideassistance to strengthen the capacity of CRIG to deliver the necessaryscientific and technical support in restoring the cocoa industry to itsformer position in the international cocoa trade, to reach an annualproduction level of about 300,000 t by the turn of the century and toensure standards of technical efficiency capable of sustaining theincreased production and high quality of product. Para 4.29 to 4.37 ofthe main text describes the deficienci's of CkIG and sets out theassistance which will be supported by the project.

- 81 -

4. The staff of CRIG have an ongoing review process for the researchwork in progress and for the planned programs. Arrangements are being madefor independent reviews by internationally recogaized scientists who willadvise CRMC on the appropriateness of the program, the adequacy of theexperimental designs and techniques and quality of their implementation.The findings of these reviews would be taken into account by the managementof CRIG in determining its priorities and allocation of funding and staffresources.

5. Cocobod recognizes the importance of research as a supportservice to the industry and has generally provided adequate local fundingfor staff salaries and other operational costs. It has however not beenable to satisfy the needs of foreign currency to acquire essential equip-ment, materials and services which are available only abroad. It also hasnot always met adequately the needs for basic service buildings and otherfacilities but this is now being redressed.

6 CRIG has succeeded better than other research institutes in Ghanain maintaining a strong core group of well qualified and experienced plantand soil scientists despite the many factors restricting their output. Ithas an ongoing program of staff recruitment to meet its work targets. Thenewer recruits are generally at the first degree level and they are putthrough an in service training program during a probationary perlod of twoto three years after which it will be determined whether they have thecapacity for pursuing a career in research and to meet the requirements ofCRIG. Their subject specialization is then strengthened by appropriate postgraduate training. Much of this training has been undertaken of late inGhana but it is limited by the ability of the local institutions to providethe training at the required level in all the specializations. The presentprogram for post graduate specialist training to be undertaken abroadincludes the subject of Agronomy, Agricultural Economics and FarmingSystems Research, Computer Science Entomology, Plant Pathology, SoilScience, Plant Physiology, and Biochemistry. Attention will focus in thenext few years on the new unit for farming systems research in which staffof CRIG and of r&D will be associated and have the interaction of theresearch scientists', the extension workers' and farmers' concerns. CRIGmanagement will continue to monitor the staff skills level and distributionin relation to the needs of its work programs and made due allowances fortraining in the gaps which are identified.

7. Farming Systems Research. CRIG has been testing under differentecological conditions in the cocoa and coffee growing zones the results ofexperimental work at the Tafo and Bunso stations. This work, however, isnot generally done in the context of farmers' practices or of economicconsiderations. CRIG is not organized to undertake comprehensive "on farm"testing of its research findings before deciding on the appropriateness ofparticular technical packages for promoting to farmers. A major step toimprove the linkages between the research and extension workers and farmerswill be the establishment of a Farming Systems Research unit to test outindividual research findings under different ecological and culturalconditions or farm environment and also to test complete promotional

- 82 -

packages incorporating new technologies to ensure they are sufficientlypractical and acceptable economically. The unit will be staffed byofficers from both CRIG and the Extension Services of CSD. TheAgricultural Economists to be appointed by CRIG will have key roles in thisunit. They will first have to be trained in techniques of farming systemsresearch and provision is being made for technical asrdistance to start theunit, to develop the investigational techniques and procedures and to drawup a program of work.

- 83 -

Annex 4-6

GHANA

COCOA REHABILITATION PROJECT

FARM INPUT SUPPLY

Subsidy Removal Program

Retail Price (% Cost Recovery) 1/1986 May Levels April

Item Unit Costs 2/ Price 3/ Subsidy 1987 1988 1989¢ e % Price(S) Price(S) Price(S)

Unden liter 1*272 130 90 600(47) 840(66) 10272(100)Gammalin -20 liter 908 130 86 600(66) 840(93) 908(100)Fungicides kg 1,264 200 81 700(55) 1,000(79) 1,264(100)Fertilizers-Npk 15-15-15 kg 15 15 0-TSP kg 16 16 0-MOP 4/ kg 15 15 0

Arboricides kg 1,920 0 100Fuel Oil Mix liter 55 55 0 55(100)Mistblowers 5/ each 43,000 5,000 88 23,000(53) 33,000(77) 43,000(100)Mistblowers Maint. 143 0 100 143(100)Mistblowers Hire days 50 0 100 50(100)handsprayers each 8,316 1,300 4,500(54) 6,400(77) 8,316(100)Polythene Bags kg 112 0 100Tools each 0Matchets each 0Pru Knives each 0Roes each 0Cocoa Seed pod 100 10(100)Cocoa Seed seedling 100 5(100)Plantain Suckers CCocoa Yams Corms 0

1/ Expected retail price and percent of cost recovery in constant 1987prices.

2/ Estimated unsubsidized cost in May 1987.

3/ Actual price paid by farmer.

4/ MOP - Muriate of Potash.

5/ Average price of two makes used in the cocoa industry.

GHANACocoa Rehabilitation ProjectCurrent Oragnizational Chart

Policy Planning, Monitoring and Research (PPMR)

DIRECTORPPMR

DEPUTYDIRECTOR

PPR

r~~~~~~~~~~~~~~~~~~~~~~~~~RESEARCH RESEARCH | RESEARCHMANAGER MANAGER MANAGER

(AGRONOMY) (MARKET RES.) CORP. PLAN

PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL LIBRARIANADMINSTRATIVE OFFICERS (2) OFFICER (1) OFFICER (Vacant) (1)

ADMINISTRATIVE SENIOR SENIOR SENIOR ASSISTANTOFFICER (1) OFFICERS (2) O;FFICERS (2) OFFICERS (2) LBRARIAN

. 1.~_ I __ _ I _

OFFICER (0) OFFICER (1) OFFICER (1)__ __ I ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~rtN

JUNE 1987

cakW3 1 257-1

GHANACocoa Rehabilitation ProjectProposed Organization Chart

Policy Planning, Monitoring and Research (PPMR) Departmaent

I DIRECTORPPMIIR

DEPUTYDIRECTOR

PPUIR

POLICY PROG. MONIT MIS &ANALYSIS & CORPORATE DATA BANK

ZYLI __~~~I-

ADMINISTRATIVE 4 3 4OFFICER PROFESSIONAL PROFESSIONAL PROFESSIONAL

STAFF JSTA~FF STAFF

SUPPORT 1 1 SUPPORT SUPPORTSTAFF j [ STAFF STAFF

ir|cak\W31257-2 N -

COCOA REHADILITATION PROJECTPROECT COST SUMMY

(CEDIS '000) (U=3 '000) X Total_----- -Z Foreign Base

Local Foreign Total Local Foreign Total Exchange Costs

A. RESEARCH 232t203.7 617.252,8 849t456,5 1,451,3 3,857.8 5t309.1 73 5B. EXTENSION AND TRAINING 613#800,0 782M178.3 1s395s49783 3J836,3 4,888.6 8,724.9 56 9C. SEED PRDWUCTION 102,262.5 56t245.4 158P507.9 639.1 351.5 M90.7 35 1B. INPUT SUPPLY 336,200.3 2s971*996.7 3W358u197M0 2,413.8 18S75.0 20,988.7 $8 21

E. INTERNAL MARKETING 957*367,0 1,805,722.0 20763,089.0 5*983.5 11,285#8 17t26?.3 65 17F. CSSVD CONTROL 1,124,076.2 84t580.8 1,203,657.0 7*025.5 523.6 7,S54.1 7 7S. head office and aonitoring I evaluation 273t553.7 281,619,3 555s473,0 1W7097 1760.1 3U469.8 51 3H. ROADS COPENT 24105*205.1 39550712*9 640604918.0 13*157.5 24.723.2 3730.7 6S 37

Total SINE COSTS 5714#M89-5 10)555W35082 16*3499976.7 36P21607 65,970.7 102)187,4 65 100Phesical Continrencies 579r466#9 19055,530*8 1,634.997.7 362 ..? 6,597.1 10,218.7 65 10Price Contingtecies 1#822,706. 667s47046 2N490l77,4 11P391.9 4p1?!.7 15,563.6 27 15

Total PROJECT COSTS 8*1964842.2 12*278.309,6 20,4754151.8 51*230,3 76M7M?.4 127*969.7 60 125

September 10 1987 14:381-3

0X

COCOA REDAILITATION PCTPtoJect Coenmts bi era

Totals Including Contingwcies Totals Irteludir5 ContinsenCies(CEDIS '000) (US$ '000)

t988 1989 1990 1991 1992 Total 1988 1989 199 19 I992 Total

A. RESEOC 401*46440 194,828.0 163,289.2 136o436.1 1360.77 1,032,793.1 2W50W.2 1,217.7 1.020.4 857.7 854.8 6.455.0B. EXTENSION AND TRAINING 662l559.6 395*450.6 283,502.2 203,455,0 202,594.4 1747#561.7 4,141.0 2,471.6 1)771.? 1W271.6 1W266.2 10922.3 0C. SEED pODuCTIEa 77,019.1 73,481.6 17s994*9 18MM98.5 20,145.1 207s639.2 481.4 459.3 112.5 118.7 125.0 1,297.7D. IDiMT 9tIY 14840,806.6 180,758.9 484,438.7 712,760.1 784.205.2 4*0020969.7 11*505.0 1*129.7 3*027.7 40454.8 4.901.3 25.018.6E. INTR METING 909.4778 784,111.9 570j,657.4 517.132.3 534*508,6 3,316,089.9 5S684.2 4W901#9 3.566,6 3,232.1 3,340.7 20*,25.6F. CSSVD CONTROL 355,447.5 400,978.9 491,657.8 256*873.1 284,141,4 1.789O098.6 2P221.5 2.506.1 3.072.9 1*605.5 1,775.T 110181.9S. head office and mmitoring a evaluaion 157*579.2 298.489#8 1954551#5 49s244.3 15953.1 7164817.9 984.9 I,65.6 1*222,2 307.8 9.7 4A480.1Hs mOAD IEIIT 786O329,1 1.563*239,8 1.901.331,6 2.044.725.0 1,366S56.3 7.662,181.8 4*914.6 9,770.2 11t883.3 12,77.5 8*541.0 47*888.6

Totl PRO}JECT CSTS S.90684*7 3.891.539,4 4.108.423.4 3.939.624.5 3,3446879.8 20*475.151.8 32,441#8 24t322.1 25v677.6 24.622.7 20,905.5 127,969.7

SePte0be 10, 1987 14:37

(OD

cacm RNtLITATION PROJCTSusar yCCOi by Yo

otals InciludirM Contlfetsi Totslh Includirn Caritinseio(CEDIS '000) (US$ '000

1988 1989 1790 1991 1972 total 1988 1939 1970 191 1?92 TotalC~SU 88882:3:::2 :_~ZU# :2ZaSuz u21g~2 zu:: W# 2 :::2 8::: 3ZZ _g2:;_ :2__-

I. MJESTNCIET COSTS

A. MILDJES 283.782.1 382867,6 16: 70,3 17.834.? 18,998.0 865,2678 b.7n3.6 2#392.9 19C11.2 Ill.S 119.7 5.407.9B, mOmES 612,454.8 1,8,976,1 1710,08.7 1.7M2229.?2 1043.376.9 6521,345.6 3,827.8 8,643.6 10,63?.4 11#076.4 6,5*1,1 40.758.4C. TRMtATIO FACILITIES 8B5,507.5 490*156.9 295.049,0 175.509.6 1728,55.4 2.025*878.4 5*534.4 3*063.5 1}849.1 1,096.9 1,117.8 122661.7D. OUWImT 572.849.2 337*864.6 665,203.2 680,390.1 707.272.3 29963p57n.3 3,580.3 2,111.7 4,157.5 4,252.4 4,420.5 18.522.4El SitRIAS 5*779.9 5#914.4 4,073.7 4#198.7 4,368.3 24.335.0 36.1 37.0 25.5 26.2 27.3 152.1F. TEOINICL ASISTNhCE TRAINIIS * STUDIES 580,217.8 543s364.0 305,844.3 247,379.9 204,063.3 1,880,869.3 3.626.4 3,376.0 1.911#5 1,546.1 1.275,4 11.755.4B. CSSID INCEIE PAYICTMS 309*852.0 360i893.8 456,384.1 225611.5 251494.9 1#603*936.3 1*936.6 2,255.6 2.852.4 1.410.1 1*570.0 10024.6

Total INVESTMENT COSTS 3*250,443.3 3,504*037,4 34599.448.2 3#123,153.7 2M408*129,2 15,885.211.9 20.315.3 21s90.2 22.496.6 19.519.7 15,050.8 ?9.982.6

11. ffO COSTS

A. SAY AnD taOm .1525,9 12S46.5 14,071.6 15,127.0 16,261.5 69.932.4 72.0 80.7 87.9 94.5 101.6 437.1P. wMRTII AND rAINTIMI 102.398.?2 172166.3 227,351.7 306s959.3 361,102.1 1#169s977.6 640.0 1,076.0 1.420.? 1l918.5 2.256.7 7.312.4C. VEINlE OFERATION 4N rAINTENMCE 68,937,0 126,839.7 150v470*4 257,B59.0 166,564,4 670*670.5 430.9 792.7 940.4 986.6 1,041.0 4,191.70. tWTS 1,757,380.4 75s549.4 117.081,5 3365252.5 392,22.7 2679n359.s 10,983.6 472.2 731.8 2.103.3 2,455.1 1674.8.0

Total REMRW COSTS 1,940.241.5 387,502.0 508,975.1 816,470.8 936*750.6 4,589.939.9 12,126.5 2421.9 3,181.1 5.102.9 5854.7 28,6S7.1

Total PRO.CT COSTS 5C190a684.7 3,8914539.4 4,108,423.4 3,939,624.5 33444879.8 20,473S151.8 32,441.8 244322.1 25.677.6 2462.7 20,905.5 127,96.7

SkPtober 10. 1"7 14136

M M

- 89 _

Annex 4-8Table 4

GHANA

COCOA RHABILITATION PROJECT

Financn l~anCUSS Hillion)

PYi FY2 FY3 PY4 FY5 Total ZProiect Costs

IDA 11.7 6.3 6.9 8.7 6.4 40.0 31ADF 8.8 647 7.2 5.1 5.2 33.0 26Other Cofinanciers 4.7 3.7 4.1 2.4 3.1 18.0 14COG 2.0 2.4 3.3 5.4 3.0 16.1 13COCOBOD -5.3 5.2 4.2 3.0 3.2 20.9 16

Total 32.5 24.3 25.7 24.6 20.9 128.0 100

- 90 -

ANNEX 4-9

GHANA

COCOA REHABILITATION PROJECT

Ghana Cocoa Board (COCOBOD) Structure

I. INTRODUCTION

1. The purpose of this Annex is to summarize briefly the mainfeatures of the new structure of the Ghana Cocoa Board (COCOBOD). By aletter dated March 16, 1983, the PNDC Government instructed the GhanaInstitute of Management and Public Administration (GIMFA) to mount aseminar on "the restructuring of the Ghana Cocoa Marketing Board/CocoaSector." This seminar, which was attended by representatives of allinterested agencies, took place in May 1983 and led to the publication of a"Consensus &aport," in which detailed recommendations were made fororganizational reforms and staff reductions. This document formed thebasis for the restructuring exercise which has been in progress over thepast two years.

II. THE GHANA COCOA BOARD

2. The structure of COCOBOD was set 3ut in a Government memorandumprepared after the publication of the 'Consensus Report." The Board wasdefined as a commercial profit-making body which would operate as a holdingcompany to which would be attached the following divisions andsubsidiariess

- Cocoa Services Division (CSD), respouisible for pre-harvestactivities, particularly for agricultural extension, disease andpest control, input supply and seed production;

- Cocoa Research Institute of Ghana (CRIG), responsible for allaspects of research into cocoa production and processing, as wellas for research on coffee, cola and sheanuts;

- Produce Inspection Division (PID), responsible tor producequality control at all stages of purchasing and evacuation;

- Infestation Control Department (ICD), responsible fordisinfection of cocoa storages to ensure that all consignmentsare exported free from deleterious organisms;

- Plantations, Ltd., which owns and operatee the Board's cocoa andcoffee plantations;

- 91 -

Produce Buying Company, Ltd. (PBC), responsible for purchase andevacuation of the cocoa, coffee and sheanuts;

Cocoa Marketing Company, Ltd. (CMC), which handles theinternational sale of the cocoa crop on behalf of the Board;

- Abuakwa Formulation Plant, Ltd., which formulates insecticidesfor use in the capsid control program, using importedingredients;

- Cocoa Processing Company, Ltd. (CPC), which consists of threeprocessing factories - West African Mills, Takoradi; CocoaProcessing Factory, Tema; and Cocoa Processing Factory, Takoradi.

Each of the divisions and subsidiaries has its own Management Committee orBoard of Directors.

The Head Office

3. COCOBOD is currently run by a Chief Executive who reports to theOffice of the PNDC Coordinat'ng Secretary (equivalent to the Office of thePrime Minister). The restructuring, however, calls for the establishmentof a Board of Directors consisting of:

- 3 persons to be nominated by the Government, one of whom shall bethe Chairman;

- 4 farmers' representatives;

- 3 COCOBOD workers;

- Governor of the Bank of Ghana or Deputy Governor (Foreign) asalternate;

- Secretary of Finance and Economic Planning (or alternate);

- Secretary of Agriculture 'or alternate);

- Secretary of Trade (or alternate);

- Chief Executive, COCOBOD.

4. Reporting to the Chief Executive are 3 Deputy Chief Executives:

- DCE (Agronomy, ?roduction and Quality Control), responsible for:

- Plantations, Ltd.;- Cocoa Services Division;- Cocoa Research Institute of Ghana;- Produce Inspection Division;- Infestation Control Department.

- 92 -

- DOE (2peratAons), responsible for:

- Produce Buying Company, Ltd.;- Cocoa Processing Company, Ltd.;- Abuakva Formulation Plant, Ltd.;

- DCR (Finance and Administration), responsible for all Head 0ficesupport functions.

Also reporting directly to the Chief Executive are:

- The Cocoa Marketing Co.;- Audit Department;- Public Relations Department;

Legal Department;- Policy Planning, Monitoring and Research Department.

For a sumary of the organizational arrangements, see Chart 1.

Staffing

5. An Implementation and Monitoring Committee (1KCO) was appointedto oversee the restructuring of the Board, and particularly to assess staffrequirements and make arrangements for retrenchment. by setting upsub-committees at -vrious levels, establishing clear selection guidelines,treating each staff member on a case-by-case basis and offering quiteattractive redundancy payments, IMO has successfully and smoothlycompleted the first phase of the retrenchment program, which covered 5divisions/subsidiaries. A total of almost 17,000 staff, moat of whom wereat junior level, have been declared redundant, leaving about 60,000 actualemployees as follows:

COC0B0D HQ 2,195CSD 19,900PID 1,890FBC 17,860CRIG 1,800ICD 250cm10 160CPC 1,600Plantations 16,500

Total 62,155

13,200 employees are due to be retrenched in the let half of 1987; 10,000plantation staff and 3,200 from CSD.

6. The main problems affecting the Board's costs and its capacity toserve the industry include:

- 93 -

Range of Responsibilities. COCOBOD remains responsible for anumber of activities which might eventually be managed withgreater efficiency and at less cost to growers by private sectorinterests. Such activities include input distribution,equipment, repair, haulage, cocoa and coffee plantationoperation, and cocoa processing. If these operations were to bedivested, there would be a need for further structural changesand staff reductions at Head Office.

Over-manning. While it is clearly not possible to estimatemanpower requirements accurately until COCOBOD's future role isdefined, there continue to be many visible symptoms ofover-manning, both at Head Office and in the field. Unless theratio of junior to senior staff (currently around 39:1) isnarrowed, supervision is bound to be light and effectivework-time and productivity low.

Staff Skills. Although COCOBOD is insisting that all newrecruits for professional and technical posts are appropriatelyqualified, opportunities for recruitment are bound to be limitedduring a period of shrinkage. Many of the key middle-level postsare occupied by staff who do not have the requisite skills butwho have been promoted on the basis of years of service ratherthan performance.

Management Style. In spite of the largely commercial nature ofTts business, COCOBOD continues to operate in civil servicestyle, with little concern for costs or transaction speed. Thereis little effective delegation of authority with the result thatmuch senior staff time is taken up in dealing with minorpersonnel problems rather than the brcader mspects of management.

- Information. The lack of reliable information on the state ofthe Board's operations, its stocks and its finances alsocontributes o an environment in which corrupt practices caneasily go undetected.

7. A broad framework for the medium to long term developmentstrategy of COCOBOD has been agreed upon under the SAC. In brief, COCOBODwould aim to become a service organization to the cocoa industry, involvedprimarily in marketing, extension, pest and disease detection and control,seed production, research, price regulation, and produce inspection. TheHead Office would be concerned principally with:

- developing policies and planning for the cocoa subsector,including setting of produce prices;

- monitoring performance of its divisions and subsidiaries (as wellas of any private operators) and reporting to the Government onthe state of the subsector;

- promoting inter-divisional coordination, and coordination withother Government Departments and agencies;

- 94 -

overseeing the implementation of incentive and subsidy programs;

assisting or representing the Government in internationalnegotiations on cocoa production and trade;

providing central support services to its divisions andsubsidiaries, particularly for:

- Budget, Accounts, Audit- Personnel, including payroll maintenance and training- Procuremsnt and Importation- Legal Affairs- Computer Services- Design and Supervision of Major Civil Works Contracts- Public Relations.

- 95 - Annex 4- 9Chart 1

am

... o. . * . t.n

b.tdof 0l44.t.e

Cl_itt. .

mromm,olff PrOjoatS"S"hasnt gos"iet 110~

Aorapaq, Prodootlon ~d gotlons . m Plotoan s Coon IotEotlon

_lmt.tloae Ld. C..... Irouoolao (no P d g.t

01,10.,1_P_ant

bomti.o 01 rent.,-oo"laaCo

b.atsloo lot,- bah.s

Di i _" iblleloe _r*

Wolotes" (oP13)i CrIvor~bMMvisUeft on* clof vtn o

GHANACOCOA REHABIUTATION PROJECT

Implementation Schedule

PreyYew 1`-4folec 1 2 3 4 5 6 7en II PM Ff89 FM9 - f9M 92 F93 FP14 - FMS

CY 198t1 86/8 .89/90 93990/91 91/92 __ 94

Qia 1 2 41l2l-3l4 12 3 4 r 1 2l3 4 1 2 3 4 1 2 4 2 134 11 -4

1.1 N1goflotlon 0

.i2 Board PeresettIn 011

1.3 8EMcttwvee

II Corpeto~ Date Ju,kne 30. 1993

1.5 Closing Date A" 3DI 1994

2.1 InputvPtlzation

CDis. (Region) -Eastern Cent. + Vol As. + BA Wser

knport

22 Input IIbsidy I im 1ovl 22 02 2 ^ ll l 156 l 10 1~~~~~~~2@2 % &fItdy 0 00

2.3 Roads km rnew 2 20

Spt lrrT rNemetEO_T RecWurent Maint. 660 900 120D 10 2100

2.4 Wok Program Submite toBank

2.5 Reports

Quartedy 6 e 00 O 0 41Cornpleion

Vehice Equoipent & Plant

World Bank--30¶11160

- 97 -

Annex 4-11

GHANA

GHANA COCOA III PROJECT

COCOBOD Procurement procedures

1. In general, three methods of obtaining quotations for externalprocurement are used by COCOBOD, namely:

- international competitive bidding (ICB),- international shopping, and- direct contracting.

International Competitive Bidding

2. All requirements with an allocated value of US Dollars 100,000 ormore are procured by International Competitive Bidding (ICB), whenever thetime available prior to the goods being required is sufficient to allow forthe administration involved in this method of procurement. If insufficienttime is thought to be available, it requires the collective decision of theExternal Purchases Committee (EPC) to waive the bottom limit for ICB: thisdecision is recorded in the minutes of the committee meeting and is subjectto approval by the Chief Executive.

Notification and Advertising

3. Under ICB, in order to provide timely notification of biddingopportunities to potential suppliers, the invitation to bid should beadvertised in the local press at least three times in the thirty dayspreceding the availability of the bid documents, and, depending on thevalue of the contracts to be awarded, advertising in a newspaper(s) withwide international circulation.

International Shopping

4. This method is based on comparing price quotations obtained fromat least three different suppliers, who are invited directly by COCOBOD tosubmit bids. Bid documents would normally contain the following minimuminformation:

- detailed specifications of the goods required,

- a full description of the factors to be taken into accountin evaluating the bids received, and how these factors areto be applied

- a short introductory invitation to quote prices and deliveryfor the goods required.

- 98 -

In general, international shopping is used only where the allocated valuefor the goods required is less than US Dollars lOOtOOO0

Direct Contracting

5. Direct contracting to a specific supplier without competition isused under the following circumstances:

- when the required item is proprietary and can only beobtained from one source, and

- when COCOBOD have adopted a policy for the standardisationof equipment or spare parts, to be compatible with existingequipment, which justifies additional purchases from theoriginal supplier.

Decisions to contract one supplier directly are made collectively by theEPC and recorded in the minutes of the committee meeting and are subject tothe approval of the Chief Executive.

Bid Documents

6. The bid documents are required to contain all the informationnecessary for a prospective bidder to prepare a bid for the goods to beprovided. While the detail of the bid documents may vary according to thenature of the goods to be procured, the documents would contain referenceto the following:

- invitation to bid,- deadline for submission of bids,- validity of bids and bid security,- governing language for bids,- conditions of contract,- procedures for conversion of bids expressed in different

currencies into a single currency for the purpose ofcomparing bids,

- documents establishing bidders' qualifications to bid,- documents establishing goods' eligibility and conformity to

specifications,- limits on disbursements, for example, to go-Is provided from

eligible sources,- procedures for evaluation and comparison of bids,- terms and methods of payment,- performance security,- documents to be supplied to COCOBOD on shipment of goods,- technical specifications.

Bid Opening

7. The time and the place of the bid opening is specified in the biddocuments. Bids must always be opened in the presence of the External

- 99 -

Purchases Committee, and, depending on the value of the contracts, inpublic. The total amount of each bid and the manufacturer's name should isread aloud and the details recorded. The original copy of each bid issigned by the chairman of the External Purchases Committee and one othermember.

Bid Evaluation

8. The purpose of bid evaluation is to determine the cost of eachbid to COCOBOD in a manner which will permit a comparison of bids on thebasis of their evaluated cost. The bid with the lowest evaluated cost, butnot necessarily the lowest price is selected. The bid documents specifythe relevant factors, in addition to price, to be considered in bidevaluation, and the manner in which they will be applied for the purpose ofdetermining the bid with the lowest evaluated cost. Factors which are betaken into account include all or some of the following:

- CIF price of goods,- price of spare parts,- delivery schedule offered,- availability of local service,- quality, adaptability and reliability of the goods offered,- compatibility with existing equipment, and- past performance of suppliers in supplying goods to COCOBOD.

The factors used in the bid evaluation should be given relative weightingsin order that all bids can be compared on the same basis.

Approval of Bid Evaluation

9. Whatever method of procurement is used, the Procurement Managerpresent the results of his bid evaluations to the EPC. These evaluationsmust be governed by the bid evaluation factors and weightings stated in therelevant bid documents. He must also list separately those bids which havebeen rejected, together with the reasons for the rejections. On the basisof these evaluations, and by examining as many of the quotations which havebeen submitted as are deemed necessary, the EPC must decide which suppliersshould be awarded contract. The results of their decisions is forwardedfor approval (if required) to the external funding agencies involved (ifany), together with the bid analysis and any other information which may berequired to support the choice of supplier. The Chief Executive is also beadvised of the suppliers to be awarded contracts by way of a copy of theminutes of the committee meetings. The details of the order values and thesuppliers are entered on to POPS by the procurement progress clerk. Arecord of the bids received for each requirement, the names of eachsupplier and the bid analysis must be kept by the Procurement Departmentfor future reference.

- 100 -

Comments on the Cocobod Procurement Procedures

10. The COCOBOD procurement procedures are generally acceptable butthe following aspects of the bidding procedure requires modification:

(a) the length of time for advertising prior to issue of biddocuments should be treated flexibly and be increased fromthirty to 45 days if thought to be advisable; and

(b) the threshold value beyond which the advertisement wouldhave to be placed in the international press should bespecified.

- 101 -

Annex 4-12Table 1

GHANA

COCOA REHABILITATION PROJECT

Disbursement Schedule by Categories and Years (US$ Million)

FY89 FY89 FY91 FY92 FY93 FY94 Total

1. Buildings - 0.3 0.2 - - - 0.5

2. Works - 0.8 2.0 2.2 2.6 1.8 9.4

3. Vehicles 1.7 0.4 0.8 0.8 0.3 - 4.0

4. CSSVD Incentive Payment 1.0 0.8 0.8 0.8 0.8 0.8 5.0

5. Equipment and Materials 0.9 0.5 0.9 1.3 1.4 - 5.0

6. Farm Inputs 4.4 0.5 0.3 1.0 1.3 - 7.5

7. Technical Assistance.Studies and Training 1.6 1.5 1.6 1.5 0.6 - 6.8

8. Operating Costs 0.3 0.3 0.3 0.3 0.3 0.3 1.8

TOTAL 9.9 5.1 6.9 7.9 7.3 2.9 40.0

Cumulative 9.9 15.0 21.9 29.8 37.1 40.0

August 1987

Annex 4-12- 102 - Table 2

GHANA

COCOA REHABILITATION PROJECT

Disbursement Schedule by Quarters1'(US$ Million)

Cumulative % ofCumulative Hist. Diabrmt.

IDA Fiscal Year Cumulative Disbursement Profile of Agric,and Quarters Disbursement Disbursement as X of Credit in West Africa

FY88 4th Qrtr.- 0 0 0 0

FY89 1st Qrtr. 2.0 2.0 5 02nd " 2.5 4.5 113rd " 2.5 7.0 18 24th " 2.9 9.9 25

FY90 1st " 1.6 11.5 29 62nd " 1.3 12.8 323rd " 1.2 14.0 35 124th " 1.0 15.0 38

FY91 1st " 1.5 16.5 41 192nd " 1.7 18.2 463rd " 1.9 20.1 50 274th " 1.8 21.9 55

FY92 1st " 1.6 23.5 59 362nd " 2.1 25.6 643rd " 2.1 27.7 69 45rth " 2.1 29.8 75

FY93 1st " 1.3 31.1 78 552-d " 2.0 33.1 833rd " 2.0 35.1 88 644th " 2.0 37.1 93

FY94 lst " 0.5 37.6 94 722nd " 0.9 38.5 963rd " 1.0 39.5 99 794th " 0.5 40.0 100

FY95 Ist "90

2nd "3rd "95

4th "

FY96 1st " 982nd "3rd " 100

1/ Credit effectiveness and closing date assumed to be April 1, 1988,and June 30, 1994, respectively.

2/ For West Africa, Agricultural and Rural Development Projects FY76-85as per PPD memo of October 3, 1985.

GHANACOCOA REHABIUTATION PROJECT

DISBURSEMENT CHART100

80 /Y

70~~~~~

so / A~~~~~

/ / ________ Cumulative Disbursement

/ 0/ with Effectiveness date

Z 40 / / assumed at April 1, 1988

/ ~/30 / Historical Disbursement

Profile for West Africa/ / Agricultural and Rural

20 / Development Projects/ ~~~~~~~~FY7 6-85

10 7

qf fF F ~~~~F ew r e eLlonth 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 G 9 12 3 6 9 12 3

CY 88 89 90 91 92 93 94 95 96

- 104 -

Annex 4-13

COCOA REHABILITATION PROJECT

Special Proiect Accounts

1. Separate Special Accounts would be established by GOG through DFRand by COCOBOD at a commercial bank. The accounts would include: (i)Sipecial Account #1 to be opened by GOG through DFR in which GOG woulddeposit its contribution to be used to pay for goods and services requiredfor the implementation of the cocoa roads program. COG would deposit inthe said account ¢160 million (US$1.0 million) which represents theestimated local operating and capital costs of the cocoa roads componentfor the first six months of the project. Thereafter GOG would pay itscontribution quarterly in advance into Special Account t1; (ii) GOG throughDFR would also establish a Sgecial Account #2 into IDA would make aninitial contribution of US$0.5 million to be used to pre-finance theforeign exchange cost of goods and services reimbursable under the IDAcredit; (iii) COCOBOD would also establish a Special Account #3 into whichIDA would make an initial contribution of US$0.2 million for the financingof non-cocoa road components of the project.

2. The Special Accounts Nos. 2 and 3 would be maintained in U.S.Dollars and operated by DFR or COCOBOD under terms and conditionsacceptable to ID. Replenishment would be conditional on GOG quarterlyreleases to DIR, or evidence of adequate financing by COCOBOD of itsproject components. The Accounts would be replenished on the basis ofmonthly withdrawal applications submitted by DFR or COCOBOD. Theseapplications would be prepared promptly after receipt of monthly bankstatements from the commercial bank holding the Accounts. Applicationswould be supported by: (a) an annotated copy of the bank statement,cross-referenced to the items appearing on the replenishment application;(b) summary sheets together with full supporting documentation for itemswhich do not qualify for disbursement on the basis of SOEs, or certifiedSOs for expenditures authorized on this basis; (c) a reconciliationstatement which confirms that an appropriate balance remains in the SpecialAccount; and (d) a statement disclosing the quarterly contributions made byGOG to the DIR project account. Should any disbursement from theseAccounts be found ineligible for financing, GOG or COCOBOD as the case maybe would be required to deposit into the Account a sum equivalent to theIneligible amount, prior to the submission of any subsequent claims forreplenishment.

- 105 -

Annex 4-14

GHANA

COCOA REHABILITATION PROJECT

Auditing and Reporting Requirements

1. COCOBOD and the Department of Feeder Roads (DFR) would each keepfinancial records in accordance with sound accounting practices to reflecttheir financial status. They would ensure that their respective accountsas well as the special accounts and the Statements of Expenditures (SOEs)were audited annually by a firm of independent external auditors acceptableto IDA. The audited accounts and the auditors report including a statementcertifying whether or not IDA funds had been used for their intendedpurpose, would be submitted to IDA within six months of the end of theirfiscal years.

2. COCOBOD and DFR would each prepare a separate annual plan andwork program that would clearly show proposed project related activities.A procurement program would also be prepared to reflect proposed purchasesfor the following year, detailing the items, unit costs, quantities,timing, sources of funding and procurement methods (whether ICB, LIB andother). This program would be submitted to the IDA for information. Forprocurement this procedure would be additional to any specific requirementsfor procurement under IDA credits (see Annex 4-13). On the basis of theannual plans, work program and procurement program, COCOBOD would earmarkfunds in its budget, and the Government would make its contributions, forIts share of road financing, quarterly in advance.

3. COCOBOD and DFR would each submit quarterly reports to IDAcontaining at least the following information achieved (in quantitativeterms); objectives for the subsequent period(s) and major issues/problemsencountered or likely to arise in a subsequent period. The quarterlyreports would contain a summary of current expenditure and a cumulativerecord. After project completion, COCOBOD and DFR would each prepare aProject Completion Report analyzing project implementation and achievementsin relation to its objectives and would submit them to IDA within sixmonths of project closing date.

GHANA

COCOA REHABILITATION PROJECT

WORLD AND FARMGATE COCOA PRICES FORECAST 1/

1987 1988 1989 1990 1991 1992 1993 1994 1995 on wards

Cif UK Ports US$/ton 2,000 2,000 2,000 2,000 2,085 2,173 2,264 2,360 2,460Freight tTS$/ton 84 84 84 84 88 91 95 99 103Insurance (2Z af)US$ 40 40 40 42 43 45 47 47 49FOB Tema US$ 1,876 1,876 1.876 1,876 1,955 2,039 2,124 2,214 2,308FOB Tema ¢/ton 2/ 300,160 300,160 300,160 300,160 312,800 326,240 339,840 354,240 369,280Tema Port Charges

plus Evacuationto Port e 3/ 15,945 15,945 15,945 15,945 15)945 15r945 15,945 15,945 15,945

Farmer Storageand Transport toBuying Point 4/ C 1.580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580

Export ParityPrice at Farmgatefton 282,635 282,635 282,635 282,635 295,275 308,715 323,745 336,715 351,755Farmgate priceC per kg 283 283 283 283 295 309 324 337 352

1/ Based on World Bank Commodity prices forecasts October 1986, inconstant 1986 prices.

2/ Converted at US$1.00 = C160.

3/ Based on a financial cost of ¢18,150 per ton, with 30 percent foreignexchange component. Local costs adjusted by a SCF - 0.79.

4/ Based on a financial cost of C2,000 per ton, 100 percent local costs,SCF - .79.

- 107 -

Annex 4-16

GHANA

COCOA REHABILITATION PROJECT

Farm Budgets

Financial Results

1. The financial feasibility of different investment scenarios wasassessed on the basis of per hectare crop budgets. Such analysis shouldhave been based preferably on whole or even partial farm budgets. Howeverlittle accurate data exists on which to build farm models. The existinginformation is adequate for assessing the different options facing thefarmers. The key decisions facing the cocoa farmers are (i) whether torehabilitate an existing cocoa farm or not; and (ii) if to rehabilitate,whether (a) to replant or rehabilitate existing cocoa trees; or (b) replacethe cocoa with food crops or oilpalm. The relative returns to land andlabor are among the main factors that may guide the farmers investmentdecisions, depending on the relazive scarcity of the two factors. Bothsituations seem to exist in different cocoa growing areas.

2. Using non-subsidized prices shown in Table 1, the returns permanday and per hectare are summArized in Table 2 for owner operators.In general, replanting is more attractive than rehabilitation of maturetrees. In the first five years returns from replanting are enhanced byinterplanting with plantain (for shade in the first three years of growth)and cocoyam. The returns per manday exceed the wage rate for all thetechnology assumptions. By the eighth year, the lowest return per manday,for all labor, is about three times the wage rate. The returns per hectarefrom hybrid cocoa managed at intermediate or higher management levels, aregenerally higher than for competing crops: oil palm; maize/cassava;maize/plantain/cocoyam.

3. The rehabilitation c' the cocoa farms will depend to a largeextent on the adoption of recommended husbandry practices by caretakers.Table 3 presents the returns for caretakers. The returns per manday forreplanted/planted cocoa (Tech 1 to V) are in all cases higher than the wagerate by a range of at least twice, to as much as thrice. If one assumesthat caretakers supply 25 percent of total labor requirements, the range is2.5 to 10.9 times more than the rural wage. The incentive forrehabilitating mature trees is less strong; the returns per manday is about1.5 the wage rate for the traditional variety Tech VI, and 1.8 the wagerate for the hybrid, Tech VII. Asswming that caretakers use family laborto the tune of say 25 percent of total incremental labor requirements, therespective returns for the traditional and hybrid varieties would be 2.9and 4.1 times the prevailing wage.

- 108 -

Annex 4-16Table 1

GHANA

COCOA REHABILITATION PROJECT

Financial and Economic Prices (Cedis)

Unit Financial Economic 1/Non- Output

Subsidized Subsidized P-ice

Outputs

Cocoa kg 150 282.0

Plantain kg 15 11.9

Cocoa Yam kg 9 7.1

Maize kg 15 11.9

Cassava kg 6 4.7

Oil Palm kg FFB 10 7.9

Inputs

NPK 15-15-15 kg 28 15.7 2/

Triple phosphate kg 35 34.3 2/

Muriate potash kg 26 25.5 I/Poly thin bass kg 112 0 104.9

Hand sprayer each 8,900 6,099.2

Hybrid cocoa seed pod 10 0 .2

Plantain suckers each 10 4.7

Cocoa yam coma each .5 23.7

Fungicide liters 1,050 1,028.0 1/

Arboricide liters 1.920 0 1.0

Gamma 20 liters 908 130 888.9 2/

Unden liters 1,272 130 1,245.3 IMistblower each 43,000 5,000 46307.0 3]Petrol oil mix liters 55 67.1

Land use fee each 125

Rat bait 100 cubes 1.5 0 1.3

Labor manday 250 197.5

1/ SCF - .79 except for cocoa whose CF = 1.88, see Annex 4-18.

2/ FE = 90 percent, SCF = .79.

- 109 -

Annex 4- 16

GHANA

COCOA REHABILITATION PROJECT

Profitability Measures for Cocoa and Competing Crops

A. Cocoa

Net incremental return per manday 1/ (¢)

Project Year8 10

Replanting Tech I 755 1343Replanting Tech II 1566 1720Replanting Tech III 2208 2398Replanting Tech IV 845 1545Replanting Tech V 1078 1608Rehabilitation Tech VI 1011 1024Rehabilitation Tech VII 1262 1275

Net Return per hectare 2/ (¢)

Project Year8 10

Replanting Tech I 7547 13426Replanting Tech II 21920 27676Replanting Tech III 19871 38363Replanting Tech IV 26624 50209Replanting Tech V 36976 66748Rehabilitation Tech VI 21238 21496Rehabilitation Tech VII 24613 24871

B. Oil Palm - Net Return/MD, ¢1420; Net Return/ha, 049500.

C. Maize/Plantain/Cocoyam - Net Return/MD, 0316; Net Return/ha, 037600.

D. Maize/Cassava - Net Return/MD, 0128; Net Return/ha, 017300.

1/ Undiscounted.

2/ Assumes 100 percent hired labor.

GHANA

COCOA REHABILITATION PROJECT

Unit Activity Budget (1.00 ha)

Incremental Caretaker Budget at PYIO 1/

Physical Unit I II III IV V VI VII

Incremental Output kg 37 72 3 145 262 67 73

Incremental InputsLabour man-days 10 16 18 23.5 42.5 21 19.5Mist-blower NoMist-blower Maintenance 20% valueMiscellaneous tools andequipment lumpsum

Financial Unit Unit price,

Value of incremental kg 150 5500 10800 540 21750 39300 10050 10950Production - =min * =

Incremental costsLabour man-days 250 2500 4000 4500 8125 10625 5250 4875Mist-blower depreciation No 43,000 717 717 717 717 717 717 717Mist-blower maintenance 20% value 717 143 143 143 143 143 143 143Miscellaneous tools andequipment lumpsum 1,400 1400 1400 1400 1400 1400 1400 1400Shared-Land use fee 45 45 45 45 45 45 45Total 4805 6305 65 10430 12930 7555 7180

m=C === ==5 =1nsw I=s= inin m#m

1/ Caretakers retain about one third of the production. The landower OQprovides all chemicals which the caretakers applies.

W 4-

I II III IV V VI VII

Net return/ha (100% hired labour) 745 4495 8735 11320 26370 2495 3770met return/ha (25% family labour) 1570 5595 9860 13351 29026 3808 4989Net return/ha (100% family labour) 3245 8495 13250 19445 30995 7745 8645

Net return/MD all labour 325 531 736 598 870 369 443Net return/MD 25% family labour 548 1399 2191 1643 2732 725 1023

o A

- 112 -

Annex 4- 17

GHANA

COCOA REHABILITATION PROJECT

Economic Analysis

1. The project's ERR is about 23 percent (25 percent if the costs ofresearch, extension and training are excluded). The discounted net presentvalue is 033,708 million at the estimated opportunity cost of capital inGhana of 102. The detailed assumptions are shown in para 3 below. The ERRis quite robust to declines in benefits and increases in costs: a 20percent drop in benefits and a simultaneous increase in costs of 20 percentwould lower the ERR to about 16 percent. If benefits were to lag threeyear (costs remaining constant) the ERR would fall to about 21 percent.Tables 1 and 2 show the detailed results.

ERR Assumptions:

(a) With and Without

2. For purposes of economic analysis it was assumed that projectactions should help the farmer who is rehabilitating to achieve higherreturns (than without project) through the adoption of project recommendedactions. Plantings under technology I and II would essentially be thecurrent levels of technology, and are not included in the incrementalproject output. The project would assist farmers to move to higher yield-ing technologies as follows: adopting either of technologies III, IV or Vby replanting cocoa; and or rehabilitating existing cocoa with technologyIII or IV. For a description of the various technologies see Annex 4-3.Incremental output from technology III, IV, V, VI and VII was adjusteddownwards to attribute part of the increase to a price response. Theadjustment factor was derived from an assumed short run price elasticity ofsupply of .5 and a price increase in real terms of 76 percent over the lastthree years.

(b) Other Computational Assumptions

(i) the life cycle of a tree is assumed to be 50 years;

(ii) the project life is cut off at 25 years as being adequate toprovide a reliable indicator of yield potential of the tree.

(iii) a standard conversion factor of 0.79 is assumed, given theofficial exchange rate of US$1 - ¢160 expected to be ineffect at negotiations;

(iv) the conversion factor of 0.79 was used; for labor;

- 113 -

(v) duties are netted out and subsidies are adjusted to reflecteconomic prices. Cutting out grants are included becausethey cover real resource costs of cutting out and of produc-tion foregone;

(vi) a farm-gate export parity price for cocoa is used; andimport parity prices are used for all importables. Annex4-17;

(vii) incremental production and incremental farm cost streams areobtained by aggregating crop budgets adjusted to economicprices;

(viii' costs of internal marketing are excluded from the ERRcalculations because they are included in the derivation offarm-gate prices.

(ix) the economic Rate of Return was estimated including andexcluding the costs of (a) Research; (b) Extension andTraining;

(x) all the costs of the road component were included becausethe roads will be used principally for cocoa related activi-ties (evacuation, input distribution, etc.);

COC EMILITATIN PF0Cn

EcaoC RATE OF NOW

199 18 1990 I9M 1992 1sY3 194 1995 1996 Im 19 19t9 2000 2001 2002 2003 2004 2005 2006

ST IA.E IIF 11tt11Ot - TECO III -9.7 13.7 41.4 69.1 58.0 70.8 -28.7 -21.5 52.7 136.0 217.2 200.4 317.2 326.4 326.4 326.4 326.4 326.4 32641T WU.E Or PROUCTION - TEQIIV -60.5 84.4 230.2 325-6 380.4 23.9 168.4 388.3 912.6 2440.9 193.4 2258.2 2444.7 2519.3 2519.3 2519.3 2519*3 251.3 2519.3£ET WLIIt Olr lICTION - TECH V -20.2 30.7 14.1 62.4 121.2 57.9 12P.0 251.8 379.1 484.4 589.7 686,2 74-.0 26.6 026.6 826.6 826.6 826.6El WIlE OF P03IJTION - TECH VI - 105.3 454-5 1161.8 2400.3 4047.0 5673.9 6935.8 7M2.0 77m. 722.0 77M.0 7m2. 77m.0 22.0 7m.0 7722.0 77m.0ET VALUE or fdIltom - TEc Vii - 7. 315.9 761.7 1302.2 1997.2 2632.5 3088.8 3084.8 3098.8 30E8.e 308.8 3008.8 308.8 3008.8 308.8 3088.8 308.0

TUT. EEI£FIT5 -70.2 77.9 495.4 1179.2 2424.3 4478.9 6241.8 8002.2 11241.7 12774.7 13443.8 13939.1 14258.9 14430.5 14483.1 14483.1 14483.1 1443.114483.1

cTs

01 61*11651 COS - TECH III 17.9 42.6 70.7 81.4 86.4 37.0 25.7 26.3 36.4 42.0 44.6 38.1 43.7 47.3 49.9 49.8 49O9 41.7 44.3S"MTAL 89 com - TE IV 106.2 248.0 388.9 501-8 571.4 341.5 298.6 341.3 426.4 513.2 542.3 527.5 531S 528-6 554.8 590.3 565.4 497.7 529.5SMAIL ETINS COSTS - TECH 9 - 37.4 47.7 92.7 113.1 57.0 69.7 92.8 121.8 152.9 158.3 156-0 158.1 165.8 171.4 176.0 176.0 160-5 146.8MISTOTAL 893411i6 COSTS - TEmu VI 287.4 582.1 958.3 139.2 1845.2 1344.4 1555.4 1700.7 1843.7 1949.4 IM.3 1633.1 IM.7 1814.7 2897.3 1953.0 1982.7 1629.5 1751.4SUMAOTAL 0813CTI OStS - TECH VII 138.7 215.5 307.8 446.6 670.6 467.4 565.2 613.2 644.5 65 719.0 5n.5 22.1 434.B 651.6 672.5 711.9 567.5 629.2

TOTAL COSTS 5S0.2 1125.6 17n.4 2523.7 32M6.7 2247.3 2504.6 27M2.3 3072.8 326.0 3462.5 2926.2 3090.7 31m1.2 3325.0 3431.6 3485.9 2905.9 3.2 I

It IEIEJT1 -620.4 -1047.7 -1278.0 -1334.5 -62.4 2231.6 3737.2 6019.9 8168.9 9448.7 1981.3 11012.9 11168.2 11239.3 1110.1 11051.5 1097.2 11577.2 11361.9

cam

Sm 91031a0 51.0 44.0 11.0 11.0 11.0 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9,5 9.5 9.5 95 9.5 9.5 9.5 36907 SlOtY 1712.3 140.0 429.3 616.1 651.9 325.4 325.4 325.4 325.4 325.4 325.4 325.4 325,4 325.4 325.4 325.4 X54 325.4 325.4£5018 aLNIIS. 249.0 250.0 283.0 140.0 144I0 120,0 120.0 120.0 120.0 120.0 120.0 120.0 120.0 120.0 120.0 120.0 120.0 I20.0 120.0lXt6 Z IISE 134.0 209.0 111.0 32.0 9.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 So 5.0 fD X80819 55t.0 1050.0 1235.0 1270.0 794.0 126.0 126.0 126.0 126.0 126.0 126.0 126.0 t26.0 126.0 126. 0 0 126.0 126.0 126.0511*108 312.0 156.0 128.0 10t.0 95.2 29.2 29.2 29.2 29.2 29,2 29.2 29.2 29.2 29.2 29.2 29.2 29.2 29.2 29.2 V2DIIEEISIIOI MAD lk*6 472.0 276.0 181.0 121.0 113.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0M0L COMST( (ttl6 RESEAMR EXIEIISW4 1t4li3N) 2697.3 1693.0 2069.3 2069.1 1609.9 585.9 5S5.9 565.9 585.9 5t5.9 95.9 595.S 585.9 585.9 595.9 585.9 535.9 565.9 585.9TOTAL COSTS ICI. RESEARCH NO DETIMON I TRAINW 3481.3 2125.0 23783 2291.1 1818.1 689.1 689.1 489.1 689.1 689.1 68 689.1 689.1 689.1 689.1 689.1 689.1 689.1 689.1

MET aEFITS (EXCL. RESE£C MS EXTENSION 5 11RA121) -3317.7 -2740.7 -3347.3 3403.6 -2472.3 1645.7 3151.3 5434.0 7583.0 0962.8 SZ95.4 10427.0 10582.3 1053.4 10572.2 104656 10411.3 109.3 10776.0MET 5(1T1 (IKL. REEAlH AND EXTEMNION S T11tIlt) -41017. -3172.7 -3656.3 -3625.6 -26.5 152.5 3048.t1 50.8 7479.8 85.6 92.2 0323.8 10479.l 14550.2 1069.0 102.4 S0301 1003.1 10672.3*=*=_ _ s_S_ _ _ _ _ _ _ __n_ _ __me amm ~4=mM==mm =m e= am ==

COcOA NEIffLITATION PRO.WCt

EsOmRC RATE Of RETUt

200? 2008 200? 2010 20tl 2012 20t3 2014 2015 2016 2017

IICWITS

NET 9lltUE or rOtICl - TECM II 326.4 326.4 326.4 326.4 326.4 326-4 26.4 326,4 326.4 323.4 317.2MET VALUE W lROXTION - TECCV 2519.3 2519.3 2519.3 2519.3 251T.3 2519.3 2519.3 2519.3 2519.3 2519.3 2479.8ALT VALVE Or DUR lCTIU - TECK 9 826.6 826.6 826.6 826.6 826.6 826.6 826.6 826.6 826.6 826.6 826.6NET VALUE r PRODCTION - TE VI 7722.0 7722.0 7722.0 7722.0 722.0 7M22.0 7476-3 7070.9 6505.8 s5s.5 5019.3ArT VAUE f0 PROJCtIl2l - TEnH Vll 3068.8 38.8 3088.8 30088s 3088.8 2913.3 2702.7 2457.0 2141.1 1684.8 1604.8

TOTDL ITS 14483.1 14483.t 14483.1 14483.1 14483.1 14307.6 13851.3 13200.2 12319.2 1159.6 10327.7

COSTS

SU3TOTA.L TU40 COSTS - TEC IIII 47.0 4s.s 50.1 49.9 41.4 44.3 47.3 49.9 47.3 42.5 26.1WTOTAL 0tl*S COSTS TECH I 563.4 5W.7 545.4 560.4 532.6 534.5 528.6 554.8 565.4 23.0 419.9SUTAL EPATI CtOStS - TECf V 168.4 171.4 176.5 176.0 16.0 166.8 168.9 171.4 176.0 176.0 169.5SUBTOAL RTIN COSTS - ff02 91 1818.3 1881.7 1949.4 1991.3 1633.1 1735.7 114.7 187.3 1953.0 1982.7 1617.7SUBTOTAL ERATDtN COStS - TEN VII 638,9 644.5 66.5 719.0 571.5 612.2 613.1 616.1 619.2 632.9 488.5SEEII PNROITION 9.5 9.5 9.5 9.5 9.5 9.5 9.5 . 9.5 9.5 9.5?ltPW SWPLY 325.4 325.4 325.4 325.4 325.4 325.4 325.4 325.4 325.4 325.4 325.4CSSWm 1RIL 120.0 120.0 120.0 120.0 120.0 120.0 10 120.0 120.0 120.0 120.0NoS MD AKE 3.0 s.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 ¶.0 5.0Rm 126.0 126.0 126.0 126.0 126.0 126.0 126.0 126.0 126.0 p26.0 126.0CHEARC 29.2 29.2 29.2 29.2 29.2 29.2 29.2 29.2 29.2 29.2 29.2

EXTENSION AND TRAN 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0

TOTA. COSTS (EXCLDING8 RES EXESION I TRAININ) 3219 3893.1 375.8 4089.5 35335 3679.4 3758.5 3075.4 3946.8 3943.0 3307.6TOTA. COSTS (INLXUDING RESEtACI AND EXTENSION I TRAINUS) 3925.1 3996.3 40N.0 4192.7 3636.7 3702.6 3061.7 3978.6 4850.0 4046.2 3410.8

MET GElFITS (EXLUIN REARCH AS EXSION I TAINI) 10661.2 10590.0 10507.3 10393.6 10949.6 10620.2 10092.8 9324.8 8372.4 7216.6 7020.1lEtT xENriTs ft(INlDWIN RESEARC tAND EXTENSI t TRAINING) l1s08.0 104R.8 10404.1 10290.4 10846.4 1053.0 9989.6 9221.6 8269.2 7113.4 6916.9

g _ _ = == t _:

Jtm 24# 1987 1133

Internal Rates of btwn of Aet Stros

W.T0T1 25.036TW02 23.022

Prest Vlue of Stres At 1o.002

llttOtl 68 3?t.19t1if ~ *,U 0

P1ESElt VMU OF IlET STeA AT A DISCO1 RATE C 10

itOTI UP81T U202 UPSU M 102 M 20102 S0 LAS TEAR LAS 2 YEASLA 3 EARS

CUS1t1 33.707.?2 404U.4 47P383.5 67*892.9 26,870.1 20033.0 -478.3 27*4t9.7 21*841.2 16*704.3TiN Io2 30.240.? 37*078.0 43915.1 64.426.5 23,403.7 169566.6 -3.944.7 244025-3 18C374.8 13t238.0UP ,V 26vr74.5 33*611.6 40,448.7 60.960.1 IS.937.3 13.100.2 -7.411.1 20.558.9 14.903.4 9m771.6UPN 5OS 16.375.3 3*212.4 30*049.5 50,560.9 9538.2 2.701.0 -17*810.3 1OI15.7 465".2 -27.6M. 10 37*1'3.6 44*010.8 50*347.9 71*359.2 30.336.5 23,499.4 2.988.0 30*958.1 25.107.6 20*170.7t( 2M2 40,640.0 47*477.2 54*314.3 14.B25.6 33,802*9 26t965.0 6*454.4 34.424.5 28.774.0 23s637.1tlow 52 51*039.2 57*676.3 6MO713MS 855224.8 44*2M.1 37?365.0 16P853.6 44*823.7 39.173.1 34*036.3.46 1 TEAP - - 30.643.0 2492.4 t9,855.6

Il. 2 YEARS - - - 27.857#2 22.720.4L 3 EARS - - - - - - - - - 25324.8

INTERAL RATES OF RETURN OF MET STREM

IRTFT1 Ub 102 UP 20M UP S O 102 OM202 M N S0 LAS I TR LA 2 TEARS LAS 3 TEAS

(TOht 25.026 27.281 29.396 35.103 22.600 19S958 9.689 20.731 17.699 15.430LIP 1W 22.8 25.026 27.082 32.613 20.457 17.862 7.500 18.M49 16.189 14.113'I .2I 20M66 23.018 25.026 30.409 28.536 15,971 s.3n 17.343 14.819 12.913Ue sf 15.971 18.044 19.958 28,026 13.691 11,123 -1.535 13.2?3 11.316 9.831('GUN t02 27-522 29.850 32.038 37.955 25.026 22.31t 12.018 22.733 19.386 16.894ONt 203 30.409 32.827 35.103 41,274 27.822 25-026 14.574 25.022 21.29M 18.546PWM 502 43.155 46.018 48.723 56.094 40.107 36.837 25.026 34*811 29.44 25.372LAO I TUA - - - - - - - 25.026 20.731 17.699LAG 2 YEWS - 25.026 20.731LAB 3 YEARS - 25.026

3tbtD a

w*._

X-AP SECTION

3r BURKINA FASO "nSoduo _ v,wdvev* Ba aGH IIt r Kodo"at,Og.". Bak~o~ r.~'GHANABURKINA FAS *_ugou _o fuogodougu ? -- * w* v 5t t COCOA GROWING AREAS*,

,> O mj Nvrongo aft Mass infection (CSSVD) area10" 42S2Qg o <> ~ ~ if , Cordon sanitaire

.ILGATANGA Cocoa growing areae s t 17-~~j '/ Perimeter of cocoa gomwing area

atwra .Upper Region ' East Region * _ Incidence of(CSSVD)outbreaksUpper Region N ~ ~~~~~ ( N-Roads

Gomboga g Railways

/ ~~~~~~~~~~~~~~~~~~~~~~~~Rivers.? \ /,,3\ (,,/ (A % I I R~~~~~~alewale\ , * ~ X_ fWolewole 0 National cap.tols

0, Region capitals

N /3Wo 31 *--..- Region boundaries_J ~ ~ ~ ~ ~ ~ ~ ~ ~~// 'international boundaries10- ~ 10*-

,\ ?~~~~~~~~~~~~~~~~~(4 _ _ _ _ __(afr..2 0a*0 20 406 80 100

0 20 40 60

\ ) Dab o | . _ .%) KMiles

TAMALE Ye~~~~~~ndi

Buunu Bridge aj Sbr\._Mi~~~ r Sow 10 niL A S ~~~~~~~Domongo- \N Palbe(

Ro, e\g io n o r t h e rtn )Bimbio )| COTE \ \. (< 7S, lalaga

D'IVOI RE

To 80~ '!r ~~ TO0GO0

/ Atebubu \.j~~~~~~~2Kete Kor*chf<'

/ w ://'''t~~~~ 1 *z'~~~/'/ / / / / ~~Kpandu ok i 7t

\ / 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4Ny~~~~~~~~nahrn ~~~~~~~~~~~~Anyira

Jabaso Ny-nbir

Ado~~

MALI BURKINA FASO

RA~ ~ I . !BENIN

s.Half Assini

Talcoradi ~~~~~F~.,c Cowvo't.o. rh. d. . .d .d O.. Sd.-dr~ hSO- nn0 P.~ 00 0

P of fl. WOOd ea' -nd ft. W.-A"0n ro,,O CodO.o C?n~..s005,o&. et ft o,.' n*y or on,. wmft.no , =.

21~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

IBRD 15 1 16R3

BURKINsA FASO /--; 1l- r---4-* t *--T--*-- / ~~~~G H A N A l

1 1 Z - ,0 ~~~~~UPPER BogtnoJRAINFALL AND: / ~UPPER} WEST EAST , ECOLOGICAL ZONES

\ / / <5 ~~~~~~~REGION...... 3,,..... HIGH fORESt ZONE

>/ ~~~REG10ON i. jEquotorioli Romn forest

, 8/) ;/ t - olqaSlo ^ ( ~ ~~~ Moist Semri -deciduous

'°' \ / " r i P , ~~~~~~~~~~~~~~~~~~Guineo Sova°nn°h 1-|[> ; { , . ~~~~~~~~~~~~~~~~~Woodland

\ a a ... ~~~~~~~~~~ . ! \ .~~~~~~~Sudan Savonnoh\ U _f~~~~~~~~ I , ' ' ~~~~~~~~Woodland

\* l- \ ~~~~NO RT H E RN R E G I O N G CroasSslondThce nn X Tomole r t s~~~~~~~~~ Mongroves

; ODamongo S U ~~~~~~~~~~~~~~~~~~~~~~RoinfollI (mm.)9* ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Region Boundories

\ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Internotion°l

COTE Solopo z N.

D'IVC)IRE < 8 -- a f \ < XJ Ot

/ i ~~~~~~~ ~ ~~~Atebubu i/ ,.' ~~BRONG AHAFO- REGION',t . T O G O

| .Sunyont,\ -Eur I 0 ~'")Ra-3

7t't'f T ~~~~~~~A S H A N T I' /) tx J _w lrs 7

> V { Kurnosl - )C~ {> ' KuH.r;

I ~~~~s- i ~~~R E G I O N /7 ',f r

\< %>s) ~~~~~~~J EASTERN '

t>- | *;i- 5> -- - L<- \- R E G I O N . K~~~~~~~~Yofor zduo t64

9, - ; . ~~~~~C E N T R A MlIv.?-1_

,- itr-. h j- R G I l N,N ACCRA GIE

Axtrn>,,,~~ ~ ~ ~ 1 ooot0 20 30 40 50 KtMEIES

t , ? 1 2- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~FfEBRUARY 1987

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _IB R D 18393R 1

2' ~~~~~~~~~~~~~~~~020BURKINA FASOGHN10

GREAT SOIL GROUPSFOREST ZONE

E~ Forest Ochrosols

LI1Forest OxysolsForest Ochr.,sol-Oxysol

intergraides

____Forest Rubrisol-Ochrosollntergrodes

10 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 5~~~~~~~fl: ~~~~~~~~~~~~Forest Lithosols 11

INTERIOR SAVANNAH ZONESavonnah OchrosolsSavannoh Ochrosols with

4 ~~~~~~~~some Litho5ols andBrunasals

Grovndwater Laterites andGroundwater toterite-Ochrosol inlergrodes

j J Tropical Block Earths 90-

Acid Gleisols

COASTAL SAVANNAH ZONECOTE ~~~~~~~~~~~~~~~~~~~mSovannah OchrosolsRegosolic Groundwater

D'IVOIRE ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Tropical Block Earths

Sodium Vieisols

en ~~~~~~~~~~~~~~~~~~0Tropical Grey Earths -

Acid GleisoisSavannah LIthosols

Regosols

-- Region Boundaries

-- International Boundaries

L/

010 20 30 4So MILES 5

Axim '~~Tkorodi 0 2 410 60 80 KILOAAMETR

5* tdwe NWiadwk*v* A* tOt 16W Amw,i of TMe W5*1 am* Md goi kVmiIInaFtic 0eMS5*i fte ditofw*5aew uNd NO 91*91*01w8*1*" Mon OUt* M oW jest

AUGUST 1986

IBRD 18395R2

:rBURKINA 2*FASO GHANA

tQp 5fr~~~~ SOIL SUITABILITY FORCROP PRODUCTION

L AHIGH RAINFALL FOREST Ctu

INDUSTRIAL CROPS:Qilpalm, Rubber

EXPORT CROPS,Black Pepper

100-L ;SEMI-DECDUOUS FOREST-¾uS ~~~~~~~~~~~~~~~~~~~~~~~~~FOOD CROPS Maize, Cassava.

-t ~~~~~~~~~~~~~~~~~~~~~~~~~~Plantain, Cacoyom. FruitINDUSTRIAL CROPS:

Olam, RubberEXRPTOR CROPS.

Cocoa. Coffee

TRANSITIONAL ZONEc]COASTAL SAVANNAH

FOOD CROPS Maize, Sorghum,~~~~t. mo ~~~~~~~~~~~~~~~~~Millet, Cassava. Yam,

91 Groun~~~~~~~~~~~~~~~~~~~~~dnutR , Cowpeo,Mng_

Cotton, To`-'cico, Kenaf

ICOASTAL SAVANNAtHFOOD CROPS- Rice

COT ~~~~~~~~~~~~~~~~~~~~~~~~~~INDUSTRIAL CROPS:

fl'i~~~~~~ifliDC o~~~~~~~~, ~~~4 - ~~~INTERIOR SAVANNAHD'IV OIRE&. FOOD) CROPS Sorghum, Millet,

Cossavo. Yam, Groundnut,Cowpeo. Mango

INDUSTRIAL CROPS:80 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Cotton, Tobacco, Kenaf 8"-

AINTERIOR SAVANNAHPasture

'~COASTAL STRIPEXPORT CROPS: Coconut

f. ~~~~VALLEY BOTTOM*FOOD CROPS. Rice

70 ~ ~ ~ ~ ~ ~~~~~~~~/24 ~ []FOREST RESERVE/GAME ERV7- - -- Regian Boundaries

- ->.~~~~~~ *r'~~~~~ International Boundaries

-6*~ ~~ ~~~~~~~~~~~~~~~~~~t6

- ~~~~ ~Keto,

Axirn /{Av ' Takoradi 0~~~~~~~~~ 20 4'0 60 80 KILOMETERS

Cull e!'~~C n V nbmPWWb TThe WO awaseo# "ai* fo Wcvowc,o

br*.. an fm Pat of The . a SfW* siu h*Wn*bxwi fla.e Onpoteton sNV plwmd1" Dm~~~~~~o wata a sirn b NVtAy or NW sianScMat Or aocepts of as:h b&nwdaot

JANUARY 1987

IBRD 2014

BURKINA FASO 10 00 '° 20

_1 ]4 t _ , ' '' - *. \ gTi t N G H A N Af CIWChIJII9O /5ATA I !TRUNK ROAD NETWORK

IN THE COCOA GROWING AREA

; AjWA * ' tet/ 100

Wupu

9 0 1---I ~~~~~~~~~~~~~~~~~~~Cocoa Growing Area

~~'\, \ } )> > ~~~~~~~~~ n 4t>80,4G~~~~~~ushigo

~~11. Pe ~ ~ ~ aa~Primary Roads-.---- Major Secondary Roads

Other Secondary RoadsCOTE 1 7 .\ teSeodrRos ) \ 1 itnve~ S oh60-o- 1Railroads

DJ IVOIRE i \ \ 2 j 6 * \ / 0 Region Headquarters\lone @0 National Capital

- - >, <ototu;,~> 2 P ; A * Region Boundaries

.< 1 . / \ t / s \ ,\ ( _ International Boundaries-8° daf0">¢ | oty *"} / A \ tft<t }' .!. ~~~~~~~~~~~Ports

B a :RE 7Z rTI - . -s '_.> tiTOGO r

%~~ ~ ~~ 00_, r W%

6 WES'ERNmo

-o O 1 0 30 4,10 C MILES

Ajrim ~~ Talkoradi II0 20 40 6O 80 KILOMETERS

'r; , bee -rgo',ed by T VEU ie* SW ftaklhW WAs f C atVW" OfAs redue en is 0enoA ibr #W #Wd* we of Bdl V0 W fs 1 od Ca nt

*4*. on As pW of Th0 WbOWf B* End As hOt naef**Ce8 Crowemau & e,Aamwnon A wet eh or eit way or W .,di otr ecoAwI of dh bew'd t

.0 9A 1987

APRIL 1987