Ghana - Agricultural Subsector Services Investment Program Project

Report No. PID7734 Project Name Ghana-Agricultural Subsector Services (+) Investment Program Region Africa Sector Rural Development Project ID GHPE968 Implementing Agency Ministry of Food and Agriculture Date of PID April 14, 1999 Preappraisal Date September 10, 1999 Board Date April 1, 2000 Country and Sector Background 1. The Republic of Ghana, with and area of 238,500 sq. km, lies between latitudes 5 and 11 degrees North and between longitudes 1 and 3 degrees. It is bounded by Cote d'Ivoire on the West, Burkina Faso on the North, Togo on the East and the Atlantic Ocean on the South. Its population is estimated at 17 million and growing at the rate of 35 per annum. Agriculture is central to Ghana's economy, providing employment to the majority (60%) of the working population, particularly women, and virtually all the nation's food. The sector contributed 39 percent of GDP and 46 percent of export earnings in 1997, which totaled about US$ 693 million, including canned foods and beverages. Cocoa and timber dominate, with US$464 million and US$172 million, respectively, in 1997. Non-traditional exports have increased rapidly in recent years, but still amounted to only about US$ 57 million in 1997. 2. Since 1983, Ghanaian agriculture has recovered from almost total collapse. Successive macroeconomic reforms have improved the incentive framework through exchange rate reform, liberalization of trade and substantial public sector withdrawal from agricultural production, input distribution and commodity processing and marketing. GOG initiated a number of investment programs from the mid-1980s onward to rehabilitate basic agricultural services, culminating in the formulation of a medium-term agricultural development strategy in 1990, which aimed at achieving sectoral growth of 4 percent p.a. The sector has responded well, but growth has been uneven across subsectors and, in aggregate, not as rapid as is both desirable and possible. Liberalization in the agricultural sector, particularly in cocoa marketing, has been slow. Cocoa farmers have been heavily taxed. The macro-economic environment of high inflation, high interest rates and rapid depreciation of the Cedi during most of the 1990 decade has not been favorable to agricultural development. Project Objectives 3. The project is the major instrument for implementing the strategy of the Government of Ghana (GOG) for accelerated agricultural growth and rural development. GOG intends to increase the pace of the sector's growth from the current annual average rate of 3-4% to 5-6% in support of attaining the goals set in its Vision 2020 program of social and economic development. The strategy is predicated on the premise that such a high rate of growth should  be private-led and export-oriented. The role of the public sector will be to create the enabling environment for the private sector to boost agricultural production and diversification, agro-processing and exports. The overall development objectives of the project are to: i. increase agricultural production and diversification at a rapid pace so that rural incomes will be raised, rural poverty reduced, food security improved and the basis for accelerated overall growth in the economy established; and ii. promote farming systems and practices that will ensure sustainable use of the natural resource base. Project Description 4. In order to achieve these objectives, the project will strengthen the technical, financial and managerial capacities of the sector ministries, departments, agencies and the district assemblies as well as those of key players in the private sector in support of GOG's decentralization policy; and promote partnership between the public and private sectors as well as linkages with civil society. 5. The project will have four major components: (i) agricultural technology generation and diffusion; (ii) development of farmers' organizations; and (iii) capacity building. Agricultural Technology Generation and Diffusion 6. Appropriate agricultural technologies, which address constraints in the commodity production-distribution chain and that will conserve the agricultural resource base will be sourced from the national and international agricultural research systems as well as agribusiness and disseminated widely to farmers. Key requirements of such technologies would be solving the felt needs of farmers, food processors, input suppliers, commodity traders, processors and exporters while at the same time making possible sustainable intensification of resource use. Policies, rules and regulations governing the generation, importation, and distribution of improved varieties of crop seeds, planting materials and animal breeds, fertilizers, herbicides, pesticides and veterinary drugs will be reviewed and revised in order to remove bottlenecks that impede or restrict these activities. Programs would be initiated to encourage farmer to farmer production and dissemination of improved seeds, planting materials and improved breeds of livestock. Wide spread distribution of inputs will be promoted and innovative ways of financing their stocks will be sought in order to facilitate access of inputs to farmers. 7. Agricultural Research Services: The governance of the national agricultural research system will ensure stakeholders' participation in setting agricultural research policies, priorities and resource allocation so that it responds adequately to the needs of its clientele. Research- extension linkages will be strengthened to reinforce this. Agro-ecological perspectives and sustainable intensification of agricultural production will be emphasized in the identification and prioritization of research problems and multi-disciplinary teams made up of scientists in the CSIR system, universities and MOFA will seek the resolution of these. Bio-technology - 2 -  applications and methods will feature prominently in plant breeding and propagation, phytosanitation, including integrated pest management and the development of vaccines, animal feed, and bio-conversion of agricultural waste into useful products. The competitive research grant scheme will be expanded for enhancing excellence in research. Alternative sources of financing agricultural research would be pursued vigorously in order to reduce the burden of financing agricultural research on the Treasury (e.g. voluntary contributions and endowments from industry and farmers' organizations, research levy and commercialization of research results). 8. Agricultural Extension Services: Ghana is operating a unified agricultural extension system (UAES) using a modified training and visit approach. Important institutional changes are taking place with the decentralization of MOFA's operations and the envisaged merger of Cocoa Board's extension services with those of MOFA. These have far reaching consequences on the functions of various cadre of field staff as well as important implications for staff recruitment, in-service training, program planning and implementation, supervision, monitoring and evaluation. Furthermore, more community oriented and participatory approaches to rural development are being implemented with good effect in other countries in the West-African sub region, particularly in soil and water conservation and agro forestry development. The UAES will be reviewed and modified to respond to these changes and take advantage of community oriented and participatory approaches. Appropriate technology that enhance labor productivity, especially those of women farmers and food processors will be aggressively introduced by implementing the recommendations of the recently concluded animal traction and appropriate technology studies under the ongoing National Agricultural Extension Project. 9. Extension service to women farmers has not been effective. Appropriate steps would be taken to address this imbalance, particularly in getting male extension agents to be actively involved in gender issues. Implementing the recommendations of the recently concluded study under the same project will intensify the use of mass media. Besides the NARS, the UAES will form partnerships with NGOs, input suppliers, artisans, equipment manufacturers, agro-processors, marketing agents, exporters and rural finance institutions to accelerate the diffusion of agricultural technologies and improve farmers' access to market information and finance. The management of the UAES will be strengthened at national, regional and district levels and a vigorous training program will be developed and implemented to enable staff carry out these functions effectively as well as assist the health authorities in creating AIDS awareness among the rural community. Strong farmers' organizations and commodity processors producing and marketing high valued cash commodities and products will be encouraged and assisted to establish their own extension service to reduce the cost burden on the Treasury. 10. Livestock Services, emphasis would be on: (i) achieving a stable epidemic disease situation, manageable levels of tsetse challenge and ready access to clinical services on a financially sustainable basis; (ii) providing access to improved livestock breeds that are appropriate to dry conditions and disease prevalence, especially in local small ruminant and pig breeds; and (iii) overcoming the limitations of the natural resource base, through access to water and production of better qualify fodder, especially in communal areas. Active participation of farmers will be sought in the multiplication and distribution of improved breeds of animals and forage - 3-  species. 11. The major issue and challenge for AgSSIP would be to institutionalize systems and build capacity for animal health services that can be sustained within an affordable resource envelope. Both central and local governments would in principle withdraw from the provision of clinical services as soon as is feasible, through accelerated promotion of veterinary private practice in towns and peri-urban areas and by the further development of the successful community livestock workers scheme, pioneered under the ongoing National Livestock Services Project. A key policy in this regard is the establishment of mechanisms to contract out the delivery of public sector tasks such as meat inspection at slaughter houses and vaccination of epidemic diseases to private practitioners. 12. Fisheries Services will focus on: (i) enhancing the legal and policy environment for private sector participation; (ii) co-management of both marine and inland fisheries resources with users; (iii) promotion of aquaculture development; (iv) development of infrastructure for small scale ports and landing sites managed by user groups; (v) regular and systematic assessment of fisheries stocks to update management plans; and (iv) ensuring users compliance with fisheries laws by improving the monitoring, control and surveillance system. 13. Small Scale Irrigation Services: . Irrigation schemes were primarily designed for irrigated rice production which is uneconomic at current price regimes and are presently operating at extremely low levels of efficiency due mainly to the deteriorated infrastructures, management weaknesses of the Ghana Irrigation Development Authority and a lack of sense of ownership by the beneficiaries. The objectives of irrigation development to be supported under AgSSIP would be to rehabilitate existing irrigation schemes for about 2,000 ha with beneficiary so that they would take responsibility for maintenance of the irrigation facilities and broaden and diversify production of commodities, particularly vegetables and fruits for both local consumption, export and as source of raw material for the emerging agro- processing industry. Farmers' Organizations Development. 14. AgSSIP will support revitalization of services to promote the development of strong farmers' grassroots organizations. Farmers' organizations would be assisted to stock and distribute inputs and to store and market farm produce. While the Department of Cooperatives will be strengthened to oversee the proper formation and registration of farmer's organizations, NGOs and private sector firms will be encouraged and supported to provide promotion, animation, training and audit services. The extension services will be strengthened to provide assistance and information on the technical aspects of the core business of the farmers' organizations (e.g. specification and determination of quantities of inputs such as fertilizers and agro-chemicals, irrigation or processing equipment, etc.). Assistance will be provided to the Cooperative Training College to revise the curricula, upgrade staff and the teaching environment. Capacity Building 15. Public Institutions. Policy and administrative responsibility for - 4 -  agriculture is spread over a number of ministries and agencies. A formal mechanism to coordinate development policies and implementation would be established. An institutional assessment of MOFA and the Department of Cooperatives has been completed and that of the national agricultural research system has been done in conjunction with the National Agricultural Research Project. The recommendations of these assessments would be implemented under AgSSIP. GOG has decided to merge cocoa extension currently being provided by COCOBOD with that of MOFA. GOG's policy of decentralizing administrative functions to the district level is progressing and is a key element of its rural development and local capacity building strategy. MOFA has decentralized its operations, in effect giving the responsibility of planning and implementation of agricultural programs to the District Assemblies and Regional governments. AgSSIP will support appropriate programs for capacity building in these institutions. 16. Policy formulation, planning, monitoring and impact evaluation functions of the central directorates of MOFA will be strengthened in order to effectively backstop the regions and districts in the planning and implementation of their agricultural development programs. The current system of collection, compilation, analysis and dissemination of agricultural statistics and information is extremely weak. This would be addressed with technical assistance of FAO and donors in the design of the system, training of staff and its implementation. The Irrigation Development Authority will be strengthened to provide technical assistance to water users' associations in water management and to monitor the impact of water abstraction on shallow aquifers, especially those that lie along the coastal plains and are susceptible to sea water intrusion. 17. Civil Society. Agricultural colleges managed by MOFA and faculties of agriculture of the four Ghanaian universities will play an important role in training manpower required by both the public and private sectors. Limited funds would be made available under AgSSIP for enabling them reorient their curricula to the manpower and skill needs of the accelerated agricultural growth and rural development strategy and upgrading their laboratories and equipment for effective training. 18. The Private Sector. A significant portion of the AgSSIP proposals would be implemented by the private sector, especially those in the informal sector, which need to be supported in sharpening their tools of trade. A skill gap analysis will be conducted to identify their needs and training programs will be organized in business organization and management, finance and accounting. Such training will be provided by the private sector and the Ghana Institute of Management and Public Administrations, in collaboration with other organizations and NGOs which are interested and proactive in this field. Project Financing 19. Project costs are tentatively estimated at US$105 million over five years of which IDA would finance about US$75 million. The rest would be financed by other bilateral and multilateral cofinanciers, the Government of Ghana and project beneficiaries. Project Implementation 20. The Ministry of Food and Agriculture (MOFA) will be the lead government - 5 -  agency for AgSSIP, working closely with the Ministries of Environment, Science and Technology (MEST), Lands and Forestry (MLF), Local Government and Rural Development (MLGRD), Finance (MF), and Education and the Department of Cooperatives. MOFA will also collaborate with other government agencies, the private sector and civil society in implementing the project. 21. The Agricultural Research component will be implemented by the Council for Scientific and Industrial Research (CSIR) of MEST, which coordinates agricultural research in collaboration with the four national universities, MOFA and regional and international cooperators. In line with the decentralization policy of GOG, most of the services envisaged under the AgSSIP will be implemented at the grass roots level by staff of the District Assemblies, whose capacity will be strengthened under the project. 21. Under the coordination and supervision of the office of the Chief Director, MOFA, the technical directorates of the ministries involved will be responsible for implementing the policy and institutional reforms and for providing technical and training support to the regional governments and district assemblies. The Project Finance and Procurement Unit of MOFA, will be reconstituted to provide efficient procurement, disbursement and accounting services A national project steering committee with strong representation of the private sector and civil society will have advisory and monitoring roles. The detailed implementation arrangements will be agreed upon during the appraisal of the project. Project Sustainability 23. In the medium to long-term, AgSSIP should make it possible for the government to generate additional revenue from the increased production and value added through the development induced by the program. The government would be able to gradually increase its contribution to public expenditure in the agriculture sector. The ongoing public expenditure reform program under PUFMARP is introducing medium-term expenditure framework, tying expenditures to programs and outputs. This is expected to result in more rational allocation and use of public funds in the sector 24. Government will provide a range of technical services under AgSSIP. Some of these services are amenable to cost recovery or cost sharing. These services such as clinical treatments, supply of improved varieties of crops and forage and breeds of animals would be identified and a policy of full cost recovery will be implemented. Beneficiaries of agricultural research of export and industrial commodities will be encouraged and given incentive to partially fund research through endowments and voluntary contributions and levies. Farmers' organizations and large agri-business firms will be encouraged to provide extension services to their clientele. 25. The combination of all these measures would result in eventually reducing the financial burden of the government in providing agricultural services. Lessons Learnt From Past Operations 26. Past agricultural projects heavily depended on public intervention, resulting in slow development of the private sector and low ownership of the programs by the beneficiaries. The private sector will be encouraged to provide services in input supply, animal disease control and treatment, marketing and processing by introducing policies and support that will create - 6 -  the enabling environment. Similarly, civil society and community-based organizations will be encouraged to participate in co-management of natural resources, irrigation schemes, water supplies, markets, storage facilities, etc. and in empowering rural communities to take decisions and participate more fully in their economic and social development. 27. Centralized and parallel programs run from the national capital had wasted resources and impeded development. The programs envisaged under AgSSIP will be managed in a decentralized fashion, most of the planning, implementation and decision being made at the district level. While decentralized management places heavy responsibilities on district assemblies, their capacity has in the past been low. Measures will be taken to build their capacity so that they will rise to the challenges of decentralized rural development in harmony with other Bank and donor assisted programs. 28. Research, extension and livestock services had heavily depended on the Treasury and donor funding. The AgSSIP program will promote diversifying funding from the private sector through voluntary contribution by the industry and farmers' associations, through industry-consented levies and privatization of certain services, such as animal health care. Contract and competitive research grants will be used increasingly to promote excellence in agricultural research. 29. External training of manpower at the Ph. D. and M.Sc. levels Manpower training has been very expensive, limiting the number of trainees that could benefit from the available training resources. Such training will be restricted to the local universities, except in very few disciplines in which the graduate programs are not available locally. Environmental Aspects Category: B 30. Major: Intensification of agricultural production will require the use of chemical fertilizers, pesticides, fungicides, herbicides and other chemicals. Where irrigation is practiced residues can be washed into streams, rivers and lakes affecting domestic animals, wild fauna and fisheries. These chemicals can also cause bodily harm if farmers are not taught on their proper handling. Irrigation from shallow aquifers in coastal areas can cause the intrusion of sea water , which can damage ground water sources. The potential environmental impacts of intensification of agricultural production envisaged under the AgSSIP will be assessed and mitigating measures taken. Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending May 28, 1999. -7 -  Annex Because this is a Category B project, it may be required that the borrower prepare a separate EA report. If a separate EA report is required, once it is prepared and submitted to the Bank, in accordance with OP 4.01, Environmental Assessment, it will be filed as an annex to the Public Information Document (PID) . If no separate EA report is required, the PID will not contain an EA annex; the findings and recommendations of the EA will be reflected in the body of the PID. -8-