Ghana - Upper Region Agricultural Development Project

Report No. 1061a-GH FILE COPY Appraisal of Upper Region Agricultural Development Project Ghana June 3, 1976 Western Africa Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$1 = 0 1.1538 0 1 = us$ o.8667 WEIGHTS AND MEASURES 1 ton = 2240 lb = 1.016 metric ton 1 acre = 0.405 hectares 1 mile = 1.609 kilometers FISCAL YEAR July 1 - June 30  FOR OFFICIAL USE ONLY ABBREVIATIONS ADB Agricultural Development Bank APMU Agriculture Projects Management Unit (of Western Africa Region IBRD) CaDB Cattle Development Board CDB Cotton Development Board CIDA Canadian International Development Agency CRI Crop Research Institute CSC Christian Services Committee FDC Food Distribution Corporation FSC Farmers Services Company (UR) Ltd. GBC Ghana Broadcasting Corporation GDB Grain Development Board GGADP Ghanaian -German Agricultural Development Project GHA Ghana Highway Authority GIHOC Ghana Industrial Holding Corporation GWC Grain Warehousing Company ISSER Institute of Statistical, Social and Economic Research MA Ministry of Agriculture MTI Ministry of Trade and Industry NRC National Redemption Council NIB National Investment Bank PCC Project Coordinating Committee PEMD Planning, Evaluation and Monitoring Department PTC Project Technical Committee RDU Research and Demonstration Unit RMU Rice Milling Unit RMWA Resident Mission in Western Africa (IBRD - Abidjan) SWCA Soil and Water Conservation Working Account SWCD Ministry of Social Welfare and Community Development URADPEC Upper Region Agricultural Development Project Executive Committee URPMU Upper Region Agricultural Development Project Management Unit URDECO Upper Regional Development Corporation This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   GHANA APPRAISAL OF UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ............................... i-iv I. INTRODUCTIONera .... . ................ *..... .......... .. 2 II. BACKGROUND o ...o.....o....e*..... ..o.. 2 A. General ....0. .o...o.o.....*.. 2 B. Agricultural Sector ........... ......... ,. 2 - General 0.-................ .... 2 - The Upper Region ............. ........ 5 C. Education and Communications .................... 5 D. Institutions * * * ....... . . ....... . ........... . 6 III. THE PROJECT AREA ......... . . ................ .......... ........... 7 A. General .... ............. ........ ................................. 7 B. Agriculture ................................... 0 .....0.......... 8 C. Farm Services ... .... . . . . .................. ....... .0. .... 8 IV. THE PROJECT ................... ...oo ......... 9 A. Description ....* ... . ....... ..........* 9 - Farm Development ..... .. .. .. .... .... . ..... O.. 9 - Physical Infrastructure ... -.............. 10 - Institutional Support . ..... ... ............... 10 - Development Planning .... .................. ... 11 B. Detailed Features ....o... ..... o .......... 11 - Farm Development .. ..... ....... 11 - Physical Infrastructure ... .....0 ............ 13 - Institutional.Support .. ...o ....o......... 14 V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS ....o ........... 16 A. Project Costs ... ................................ O....... 00 ... .0..... 16 B. Proposed Financing .... * ..... . . . . . . . ..........-..o. . 17 C. Procurement ,, .... .*.......... 0-0-.......*** 21 D. Disbursement ... . ............ . . . . ............... . -... 22 E. Budgetary Control, Funding Procedures, Accounts and Audits ..o ...... 23  -2- Page No. VI. ORGANIZATION AND MANAGEMENT ................................ 23 A. Institutions .......... 23 B. Staffing ................. . .................. 26 C. Staff Training ...................... , 27 D. Farm Inputs: Procurement and Distribution and Credit Procedures .............., ** ... 27 VII. PRODUCTION, MARKETS AND PRICES, FARMERS BENEFITS AND FINANCIAL IMPLICATIONS TO GOVERNMENT ........ o ............... 29 A. Production ..... * . . * . * . . . . . . . ............ .... .... . ... * .... 29 B. Markets and Prices ............................ 30 C. Farmers Benefits .......... ...* .......... ... .* 31 D. Financial Implications ............. . ........... 32 VIII. ECONOMIC BENEFITS AND JUSTIFICATION ........ ............. 33 IX. RECOMMENDATIONS .... ...............**.. ..........*...** 35 ANNEXES 1. Marketing, Markets and Prices 2. Farm and Crop Development 3. Organization and Staffing 4. The Project Area 5. Livestock Development 6. Commercial Services 7. Seed Multiplication and Research 8. Communications and Training 9. Land Development 10. Evaluation, Monitoring and Planning, Including Planning of Onchocerciasis-free Areas 11. Project Costs, Financial Tables and Economic Analysis MAPS IBRD 11821 Project Area IBRD 11822 Soil Classification IBRD 11820 Language Distribution  GHANA APPRAISAL OF UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. The Government of Ghana has requested Bank assistance in financing an agricultural development project in the Upper Region of Ghana. The Proj- ect was prepared by the staff of the Resident Mission for Western Africa with Ghanaian staff of the Ministry of Agriculture and other relevant agen- cies. This report is based on the findings of an appraisal mission that visited Ghana during November 1975. ii. Ghana has recently been making strenuous efforts to diversify its agricultural sector. Rice production has increased significantly, and em- phasis is now being placed on expansion of cotton, oilseeds and livestock products which are currently imported. iii. Agricultural production in the Upper Region is a complex matrix of annual crops and livestock competing for a limited area of land. This is further compounded by the loss of good arable land to onchocerciasis (riverblindness), trypanomiasis (sleeping sickness) and rapidly increasing soil erosion. The Project would complement the ongoing onchocerciasis erad- ication scheme and would assist in arresting soil losses from erosion. Be- cause of the complexities in production systems and their interdependency, proposals were put to Government by a Bank identification mission in October 1974 that the Region be developed as a whole, with initial emphasis being placed on sustainable agricultural production and improved farm incomes. The proposed Project sets out to achieve these objectives. iv. The Project covers some 27,300 km2 supporting 10% of Ghana's popu- lation including 125,000 farm families and 40% of Ghana's livestock popula- tion. The Region is susceptible to occasional drought, which although never disastrous, can considerably reduce yields. The Project would benefit most of the farmers in the Region. v. The Project would provide physical infrastructure, support ser- vices, radio broadcasting and farm inputs. The Project's design would nei- ther unduly disrupt existing Government services, nor leave a void after the development period (1976/77 - 1980/81). The Project would develop around 90 service centers that would provide improved extension and management services to the Region's farmers; it would, through farm loans and improved supply of inputs, improve production of 108,000 ha of land (30% of total arable) cur- rently under cultivation including traditional mixed millet and sorghum, dwarf sorghum, maize, groundnuts, yams, cotton, rice, cowpeas and tomatoes; it would provide improved onfarm grain storage, better animal health and husbandry services, and would establish ten 2,000 ha cattle ranches; it would develop seven applied research and demonstration units and ensure proper seed multiplication; it would develop a pilot adult functional lit- eracy scheme (10% of the present population is literate); it would expand Ghana Broadcasting Corporation's facilities in the Upper Region; it would  - ii - improve human nutrition and would train development staff inside and outside Ghana. It would construct 120 new dams and rehabilitate 100 existing dams to provide water for livestock, dry season (irrigation) farming and for general water conservation purposes; through new soil conservation measures it would protect a minimum of 160,000 ha of land, including the catchment areas of dams; it would assist farmers in constructing 700 village wells; and stores, offices and houses for Project staff would be constructed at the service centers. It would provide vehicles for Project staff and would construct two 9,000 ton/annum cotton ginneries. Plans for the future development of onchocerciasis-eradicated areas in the Upper and Northern Regions would be prepared. Institutionally, the Project would establish the Farmers Services Company (UR) Ltd. to provide farm inputs; strengthen the Regional Branch of the Agricultural Development Bank and the Regional Development Corporation; and strengthen and train the Regional staff of the Ministry of Agriculture. vi. The Project would be controlled by the Upper Region Agricultural Development Project Executive Committee (URADPEC), established under a special Government Order, and would be managed by the Upper Region Agri- cultural Development Project Management Unit (URPMU), established at BolgatanRa. vii. The proposed IBRD loan of US$21.0 million to the Government of Ghana would be on Third Window terms at 4.85% over 25 years including a seven-year grace period for principal, during which interest and commitment charges would be paid. The loan would cover 38% of total Project costs, estimated at US$54.6 million, and 65% of the foreign exchange costs estimated at US$32.5 million. Of the US$21.0 million, US$3.8 million would be onlent to the Farmers Services Company (FSC) at 8.85% for 25 years, with seven years grace for principal, for the purchase of incremental seasonal inputs; US$2.2 million would be onlent, at 8.85% for 25 years with seven years grace for principal, to the Agricultural Development Bank for medium and long term loans; US$0.4 million would be onlent, at 8.85% for 15 years with five years grace for principal, to the Cotton Development Board for the purchase of saw gins; US$0.5 million would be equity for the Farmers Services Company to assist in its establishment; US$0.5 million would be granted to Ghana Broad- casting Corporation (GBC), for the establishment of a broadcasting network; US$8.0 million would be for the establishment and operations of URPMU; and US$5.6 million would be for contingencies. Seasonal, medium or long term loans to farmers would bear interest plus service charges if any of not less thaan 12% per annum. viii. The United Kingdom would, under parallel financing arrangements, finance 20% of total costs equivalent to 34% of foreign exchange costs-- US$11.0 million--comprising a loan of E Stg 4.0 million 1/ and a grant for technical assistance of approximately f Stg 1.0 million. Local sources would finance the remaining 42% of Project costs including the Ghanaian Government, US$13.7 million (25%) and the banking institutions, US$8.9 million (17%). 1/ f Stg 4.0 million would finance preselected and competitive (see para ix) UK manufactured goods which at the time of cost estimation, June 1975, were valued, including contingencies, at US$8.7 million, when E Stg 1 was equivalent to US$2.2.  - iii - ix. Procurement of radio telephones, broadcasting equipment, cotton ginnery equipment and buildings, heavy plant and equipment for land develop- ment, four-wheel drive vehicles, trucks, spare parts, pumps and pipes for wells, cotton sprayers, insecticides and fungicides, totaling