Ghana - Second Oil Palm Development Project

Document of The World Bank ._ FOR OFFICIAL USE ONLY I Report No. 3724-GH STAFF APPRAISAL REPORT GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II May 22, 1984 West Africa Project Department Agricultural Division B 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 Equivalent Currency Unit = Cedi US$1 = /35.00 1 Cedi = US$0.029 Weights and Measures (metric system) Abbreviations ADB Agricultural Development Bank BADEA Arab Bank for Economic Development in Africa CDC Commonwealth Development Corporation CIDA Canadian International Development Agency CMB Cocoa Marketing Board CSIR Council for Scientific and Industrial Research EEC European Economic Community EIB European Investment Bank FAO/World Bank-CP FAO/World Bank Cooperative Program ffb Fresh fruit bunches GOG Government of Ghana GOPDC Ghana Oil Palm Development Corporation lFAD International Fund for Agricultural Development IMC Interim Management Committee IRHO Institut de Recherches pour les Huiles et Oleagineux MOA Ministry of Agriculture ODA Overseas Development Administration (UK) OPRC Oil Palm Research Centre SFC State Farms Corporation UNDP United Nations Development Program WFP World Food Program Fiscal Year January 1 to December 31  FOR OFFICIAL USE ONLY GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II TABLE OF CONTENTS Page No. I. THE AGRICULTURAL SECTOR ............................. 1 A. Background ............................. l B. Agricultural Production ............................. 2 C. The Oil Palm Sub-sector .............................- 2 D. Sector Development Objectives, Strategy and Key Issues. 4 E. Bank Group's Role in Agricultural and Rural Development. 5 II. THE PROJECT AREA.. 7 III. EXPERIENCE WITH THE FIRST PROJECT . . 8 IV. PROJECT RATIONALE AND OBJECTIVES . .11 V. THE PROJECT ........................ 13 A. General Description .................................... 13 B. Detailed Features ...... 14 C. Cost Estimates ...... 18 D. Proposed Financing ...... 19 E. Procurement ...... 21 F. Disbursements ...... 22 G. Programming, Budgeting, Accounts and Audits .... .. 24 VI. MANAGEMENT, ORGANIZATIONANDSTAFFING.24 A. Management ...... 24 B. Organization and Staffing ...... 25 C. The Outgrower Scheme ...... 26 D. Monitoring and Evaluation ...... 27 E. Reporting ...... 27 F. Status of Engineering ...... 28 VII. AGRICULTURAL PRODUCTION AND TECHNOLOGICAL SPECIFICATIONS.... 28 A. Production and Yields ...... 28 B. Cultivation Techniques ...... 29 This report is based on the findings of a reappraisal mission composed of Messrs. S. Husain and L. Campbell (Bank) and Ms. A. de Mautort (Consultant), which visited Ghana in October 1983. The Project was originally appraised in April 1981. The report was prepared by Messrs. L. Campbell, S. Husain, R. Sllivan, A. Chupak and was typed by Z. Akram. 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.  - ii - (Tables of Contents - cont'd) Page No. VIII. MARKETS PROSPECTS, MARKETING, PRICES AND FINANCIAL ANALYSIS * ........................................... 31 IX. BENEFITS AND JUSTIFICATION ................................. 35 A. Project Benefits ...........*...........C..CC...CC...... , 35 B. Economic Rate of Return ................................ 36 C. Sensitivity and Risk Analysis .......................... 36 X. AGREEMENTS REACHED AND RECOMMENDATIONS ..................... 38 Annexes 5.1 Table 1 Summary of Project Costs Table 2 Project Baseline Costs by Components Table 3 GOPDC Operating Surplus (Deficit) 5.2 Proposed Financing Plan 5.3 Illustrative Government Cash Flow 5.4 Table 1 Estimated Schedule of Disbursements Table 2 Estimated Disbursement Profile 5.5 Implementation Schedule 7.1 Basic Assumptions 7.2 Table 1 Input Requirements per hectare of Outgrower Plantings Table 2 Manday Requirements per hectare of Outgrower Plantings Table 3 Cost of Inputs, Services and Labor to Outgrowers (per hectare) 7.3 Design Standards for Feeder and Food Collection Roads 8.1 Illustrative Cash Flow for 1 ha Outgrower Planting 8.2 Table 1 GOPDC Projected Profit and Loss Statements Table 2 GOPDC Projected Sources and Application of Funds Table 3 GOPDC Projected Balance Sheet 9 Assumptions Underlying Economic Rate of Return Calculations Table 1 Production of FFB, Palm Oil and Palm Kernels - Phase I - Smallholders Table 2 Production of FFB, Palm Oil and Palm Kernels - Phase I - Nucleus Estate Table 3 Production of FFB, Palm Oil and Palm Kernels - Phase II Smallholders and Combined Phases I and II Table 4 Economic Millgate Price of Palm Oil Table 5 Economic Millgate Price of Palm Kernel Table 6 Estimated Economic Rate of Return for Combined Phases I and II Table 7 Estimated Economic Rate of Return for Phase II Charts and Maps IBRD Chart No. 23341 Ghana Oil Palm Development Corporation: Proposed Organization Chart IBRD Map No. 16043 Oil Palm Development Project--Phase II Documents in Project File (See list of page iii).  -iii- GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II Selected Documents and Data Available in Project File File Code 129987 A. General Reports and Studies on Sector Al. Ghana: Agricultural Sector Review (3 volumes); World Bank Report No. 1769-GH, April 12, 1978. A2. Oil Palm Development in Ghana; European Development Fund Project No. 4505.031.11, Harrisons Fleming Advisory Services, 1978. A3. Ghana Agro-Industrial Development: Rationalization Based on a Perspective; FAO, November 1978. A4. Ghana: Report of the Agricultural Projects Identifica tion Mission; FAO/World Bank Cooperative Program, September 1980. B. Specific Papers Relating to the Project B1. Ghana: Second Oil Palm Project; Preparation Report, FAO/CP, February 1981. B2. Advisory Service on Oil Palm Breeding in Ghana; Report on the First Visit of IRHO Plant Breeder, March 1977. B3. Advisory Service on Oil Palm Breeding in Ghana; Report on the Second Visit of IRHO Plant Breeder, March 1978. B4. Memorandum on Requirements for Seed Production, Research and Development of the Oil Palm Research Center; Council for Scientific and Industrial Research, Ghana, August 1981. B5. Ghana - Oil Palm Development Project Credit 531GH - Completion Report, 1983. C. Working Papers Cl. Detailed Cost Tables C2. WP No. 1. Agricultural Operations and Feeder Roads C3. WP No. 2. Outgrowers' Cash Flow C4. WP No. 3. Housing and Buildings C5. WP No. 4. Production, Demand, Market Prospects, Marketing and Prices  - iv - GHANA Oil Palm Development Project - Phase II Credit and Project Summary Borrower: Republic of Ghana Amount: IDA Credit of SDR 23.5 million (US$25 million equivalent) Terms: Standard Relending Terms: A total of about SDR 18.4 million (about US$19.6 million) would be onlent to the Ghana Oil Palm Development Corpora- tion (GOPDC) initially at 12.5 percent for 15 years, including 7 years of grace. GOPDC in turn would onlend up to SDR 1.1 million (US$1.2 million) to outgrowers initially at a rate of 12.5 percent per annum for 13 years including 6 years of grace. The interest rate would be adjusted as necessary to reflect the current rate charged by the Central Bank of Ghana for agricultural loans. Project Description The project would provide for consolidation of Phase I development of the nucleus plantation and smallholder/out- grower plantings. It would also increase palm oil production through an additional 2,500 ha of outgrower plantings. The main components include: vehicles, equipment, and building materials for housing for nucleus estate and oil mill employees; inputs, extension services, and credit to smallholders/outgrowers; consultant services; training; and development of an oil palm research program. There are no unusual technical project risks and implementation problems are expected to be minimal since the project would be based on the institutions and experience of Phase I. However, the project faces risks related to (a) the high domestic inflation which, if it continues, could lead to cost overruns, and (b) the avail- ability of foreign exchange to meet recurrent costs of imported farm inputs. However, in view of satisfactory experience with Government contributions under Phase I, and assuming continued efforts by the Government at containing inflation, these risks are significantly reduced.  v Estimated Costs: ---------US$ '000---------- Local Foreign Total 1. Project Hdqtrs. and Management 1.1 1.7 2.8 2. Nucleus Plantation 5.4 7.3 12.7 3. Outgrowers/Smallholders Scheme 1.3 2.9 4.2 4. Palm Oil Mill 0.8 4.6 5-4 5. Training, Consultancy and Research 0.2 2.7 2.9 Base Cost 8.8 19.2 28.0 Physical Contingencies 0.5 0.9 1.4 Price Contingencies 4.5 2.0 6.5 Total Cost 13.8 22.1 35.9 Financing Plan: -____---US$ '000- Local Foreign Total IDA 2.9 22.1 25.0 G0PDC 9.1 - 9.1 Government 1.3 - 1.3 Smallholder/Outgrowers 0.5 - 0.5 Total 13.8 22.1 35-9 Estimated Disbursement: ----------US$ 000- - FY85 FY86 FY87 FY88 FY89 FY90 Annual 1.2 5.1 7.2 6.3 2.8 2.4 Cumulative 1.2 6.3 13.5 19.8 22.6 25.0 Rate of Return: 17%. The ERR for combined Phases I and II includes all costs incurred from 1977 onward and is 12%.   GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II I. THE AGRICULTURAL SECTOR A. Background 1.01 Ghana has an area of about 238,000 km2 and an estimated populaticn cf about 11.8 millicn. With an average density of populaticn cf about 48 per sq. km for the country as a whole there is nc cverall scarcity cf land. About 63% of the pcpulaticn lives in the rural areas. The country's total pcpulaticn grew at an average annual rate of abcut 2.4% during the early 70s, but recent estimates indicate that this growth rate has increased tc about 2.9% per annum in the late 70s and early 80s. 1.02 Abcut 22.7 million ha (or 95% cf total geographical area) is land surface. Approximately 11% of this land area, or about 2.6 millicn ha, is under cultivaticn; nearly 55% (12.3 millicn ha) is under bush fallow and the remaining 34% (7.8 millicn ha) under reserved and unreserved forest. Ecclogi- cally, the country can be divided intc twc main zones: the forest zone, with high-rainfall and semi-deciduous forests covering just over one third of the country, and the savannah zones (coastal and interior/ncrthern) taking up the remaining twc thirds. The fcrest zones have an annual rainfall cf 1,300-2,100 mm distributed in twc rainy seasons and scils are generally suitable for grow- ing tropical crops. The ccastal savannah is characterized by high tempera- tures and moderate rainfall averaging 600-1,000 mm p.a. In the intericr/ ncrthern savannah rainfall averages about 1,100 mm p.a., but rainfall in the northeast part cf this zone averages only 800 mm p.a. Soils vary from heavy clayed vertiscls tc light textured sodic planascls and gleysols. The better soils are used fcr growing fcd crops, sugar cane and tobacco, while the grasslands are devoted tc livestock grazing. Shifting cultivaticn with long periods of fallow is the predominant farming system. 1.03 Basically three major land tenure systems are found: family, com- munal and state ownership. The existing tenurial arrangements are flexible and practical, and individuals can usually acquire usufruct on agricultural lands available within their respective communities. According to the 1970 agricultural census, 68% of holdings in Ghana were less than 2.5 ha, while only about 18% were cver 4 ha. The level of agricultural technology is rudi- mentary, resource utilizaticn is far below potential, and average output per farmer is low. Agricultural production is still smallholder based and large commercial farmers do nct occupy any position cf importance. Use cf hired labor is quite widespread, as nearly 60% of all holdings employ some form of hired laber.  - 2 - B. Agricultural Production 1.04 Sector Production and Ccntribution to GDP. Agriculture, including livestcck, fisheries and forestry, contributes about 51% of GDP and employs 57% of the labor fcree. Crops (excluding ccoa) and the livestcok subsector contribute about 62% of the GDP originating in the agriculture sector, while eocoa, forestry and fishing contribute 24%, 11% and 3% respectively. Cocoa is the most important single crop, accounting for about 73% cf Ghana's merchan- dise export earnings, and 12% of GDP. It has also accounted in the past for cver 30% of Gcvernment revenue. Growth of the agricultural sector, poor since the early sixties, has deteriorated sharply since the mid-1970s. Several years of drought, shortages of farm inputs, detericration of transport ser- vices, unfavorable Gcvernment policies (particularly inadequate producer prices cf industrial crops) and weak institutions have been the main reasons for the deeline. The cocoa sector in particular has declined drastically, with production in 1982/83 hitting a low cf 180,000 tens, which was less than half the average of 400,000 tons in the 60s and early 70s. Projecticns for 1983/84 are even lower at 150,000 tons. 1.05 Available estimates indicate that at present Ghana prcduces about 500,000 tons of cereals annually, compared to about 700,000 tons a decade ago. Maize, constituting about 60% cf total production of cereals, is cul- tivated in all regions, although the bulk of the production comes from the savannahs. Other domestic fcod crops include scrghum (86,000 tons), millet (76,000 tons), and rice (36,000 tons). Annual producticn of starchy staples is estimated at about 4.5 million tons, compared to about 4.6 millicn tons a decade ago. About 55% of starchy staples production is cassava, 16% plantain, and the rest cccyams and yams. Cocoa covers some 50% cf all cultivated land; oil palm grows mostly wild cn about 70,000-80,000 ha; cotton, coffee, and sugarcane are still relatively minor crops. C. The Oil Palm Sub-Sector 1.06 Oil paLm producticn has been important in Ghana for several decades. Apart from producing oil, which is an essential ingredient in the Ghanaian cuisine, leaves and trunks provide material for construction and househeld use; fruits are used in scups and stews and palm "wine" is produced from the sap cf the tree. Palm oil is alsc used industrially for making soap, marga- rine, and cooking fat. Grcundnut cil and coconut cil are the main but less acceptable substitutes for domestically consumed cil in Ghana. Around the turn cf the century, palm cil was the most important export product cf the then Gcld Ccast. Increasing local consumption and attractiveness of cocoa as an alternative crop eliminated palm oil experts. Only parts of southern Ghana have sufficient rainfall for cil palm cultivation, though conditions are not ideal. Yields (13 tons ffb/ha/yr) cn well managed plantations are nct compe- titive with those that can be achieved in the Far East and in many cf the Pacific countries (20-22 tons ffb/ha/yr). Nevertheless they are viable, particularly for' the local market.  - 3 - 1.07 The main sources cf cil palm in Ghana are the natural palmeries (wild groves), small private plantings and large scale plantaticns. Available figures relating to acreage under cultivation and yields of the first twc scurces are cf doubtful reliability. Figures relating to large scale planta- ticns are considerably more reliable. Pure stand farms are usually found cn large-scale plantations while mixed crops and wild stands are generally owned by smallholders. Estimated total palm oil producticn in 1970 was about 20,300 tons cf which about 19,000 tons were consumed as edible cil. 1/ Due to the less cf wild palm trees thrcugh aging, tapping fcr palm wine cr felling for cther reasons, natural regeneration is nct expected tc keep pace with the loss cf trees. Consequently, oil production from natural palmeries is expected tc decrease by 2% yearly through 1990. However, spurred by continuing attractive palm cil prices (para. 8.08), oil output from small holdings is expected to increase by 4% per year through 1990. Based on these assumptions, oil cutput from wild groves is estimated to be about 6,800 tons in 1983, and projected to decline tc 6,500 tons in 1985 and about 6,000 tons in 1990. At the same time, cil cutput from small private holdings (predominantly mixed farms) is esti- mated to be about 14,000 tons in 1983 and projected to increase to about 15,000 tons in 1985 and 18,500 tons in 1990. 1.08 Although smallholders are enecuraged to increase their plantings of cil palm thrcugh extension services of the Ministry of Agriculture and provi- sicn of seedlings, the main thrust cf oil palm development in Ghana has been through the establishment of four large-scale plantaticns: State Farms Cor- poration (SFC) which has about 6,900 ha planted (including about 400 ha under outgrowers) although about 3000 ha need rehabilitation; Bensc (Unilever) which has about 4,000 ha planted with about 900 ha already in bearing; Twifo (CDC), which has a planting target of 6,000 ha, but has achieved only about 3,200 ha so far due tc difficult land acquisiticn problems; and Ghana Oil Palm Develop- ment Corporation (GOPDC), the IDA assisted Project (Chapter III), which by 1983 had planted 5,150 ha out of a total target of about 5,200 ha (including about 1,200 ha under smallholders/cutgrowers). These plantations were cri- ginally designed to be cf the nucleus estate and associated smallholder type with the latter amounting, in general, tc about 25% of the area of the nucleus plantation in each case. Of the plantings achieved so far, however, almost the entire heetarage is nucleus estate type except for the GOPDC plantaticn where the smallholder/cutgrower portion exceeded is target by 12.5%. Only some of these plantings are now in bearing and total current production cf palm oil from SFC, Benso and GOPDC is about 5,000 tons. Ccmbined present annual domestic production cf palm cil in Ghana from large-scale plantations, small private plantings and wild groves (para 1.07) is estimated at about 26,000 tons (Mcre details are given in Chapter VIII). 1.09 Oil Palm Research. Oil palm research is carried cut at the 1,084 ha Oil Palm Research Center (OPRC) situated at Kusi which is about 25 km from Kwae plantation of GOPDC. The center, which was established in 1964, has technical secticns (plant breeding, physiclogy, entomology, pathology and 1/ World Bank, Appraisal cf the Oil Palm Project: Ghana; February 3, 1975.  - 4 - agronomy) and Plantaticn Management and Administration secticns. Ongoing research at the center covers plant breeding, seed production and germination, fertilizer and spacing trials, insect and weed control measures, and nursery practices. Apart from research and seed production, the center provides extensicn advice, publicaticns, in-service training, runs cpen days and pro- vides technical data for the industry. Plant breeding and seed production have been the main activities. About 280 ha cf cil palm under yield trials are in bearing and 40 ha are fcr seed production. OPRC is producing some 1.5 million to 2.0 million seeds annually which is insufficient tc satisfy Ghana's needs. A report by consultants in 1977 on the breeding program concluded that few of the comparative trials are useful and that an improved long-term research prcgram is needed. The report criticized the present seed selecticn methods suggesting that many of the seeds then issued were of poor genetic quality and that after selection improvements in present mother stock perhaps only 1.3 million seeds might have sufficient commercial potential. The situa- tion since 1977 has not changed. However, necessary improvements and new techniques wculd only be possible if facilities were imprcved and equipment provided. Surveys undertaken by the OPRC entomologist in 1980 and 1981 cn insect damage to nurseries and grcwing palms pointed to increasingly sericus damage by insects. Cultural experiments are needed and a pathologist is required to work with the plant breeder on resistance tc disease, particularly Vascular Wilt (Fusarium sp.). Recognizing these deficiences, the Government is constructing a laboratory building to provide facilities for increased research. However, funds for equipment are inadequate. The vehicles, lab equipment and farm equipment available at the Center cannot provide fcr effec- tive operations (paras. 3.08 and 5.13). D. Sector Development Objectives, Strategy and Key Issues 1.10 The development strategy of the sixties and early seventies, which emphasized creation cf large-scale capital intensive industries, with agricul- ture receiving a lower priority, has been modified. Allocaticn to agriculture in the 3-year economic rehabilitation program (1984-86) is about 15% compared tc only 3% of the budget in 1971. The major objectives cf the Government in the agricultural sector are: (a) increased production of food and raw materials for agro-industries; (b) diversification of exports thrcugh promo- tion of nontraditional experts; (c) rehabilitation and expansion cf the declining cocca subsectcr; (d) development cf livestock, fisheries and forestry; and (e) minimizing rural-urban migration, particularly by rural youth, through creation cf employment opportunities in the rural areas and by making farming financially more attractive. However, if rapid recovery of the sectcr (and the economy as a whole) is tc be achieved, fundamental changes in government pclicies with respect to sector institutions, cperations, and input and output pricing policies, among cthers, would be required. The need fcr such policy changes has been recognized, and some action has already been ini- tiated. For example, producer prices for cocoa have been increased substan- tially in the recent past and a mechanism for annual review and adjustment has been introduced under the Export Rehabilitation Project; operational planning, budgeting and policy formulating responsibilities and functions cf the Ministry cf Agriculture (MOA) are being decentralized; private trading in  -5- produce marketing is being enccuraged; commercial ccmpanies have been estab- lished fcr input supply, and seed production; and smallhclder development is being promoted through the Upper Region and the Volta Regicn Projects. Ferti- lizer subsidies have ncw been removed as a means tc raticnalize agriculural price and ccst relaticnships. The Government is trying to establish a set cf priorities fcr the agricultural sectcr. The 1984-86 program calls for in- creased foreign exchange investment allocations tc agriculture, readjustments in Government cutput pricing programs, improved import licensing procedures and the complete phasing cut cf agricultural input subsidies. 1.11 Ccnstraints. Tc date, Gcvernment policies have been relatively unsuccessful in removing constraints tc agricultural growth. Introducticn cf new policies and implementation of instituticnal changes in MOA have proven tc be slcw and difficult. Moreover, cne must recognize that long-term agricul- tural development in Ghana still faces a number cf serious constraints, notably inadequate and uneven supply of inputs (principally fertilizers), problems of transport, storage and distribution cf inputs and farm produce, inadequate feeder and farm access roads, and poor management. A well-defined long-term agricultural development plan is lacking, and there is a shortage cf technical and managerial skills, partly as a result of large-scale migraticn to neighboring West African countries in recent years. Extension staff are inadequately trained, ill-equipped and pocrly supervised. Moreover, the effectiveness and efficiency cf decentralizing MOA operations to the regional level remains tc be assessed and the powers, responsibilities and relaticn- ships between MOA Accra and regional staff need clearer definition. Other important issues that need to be resolved are greater competition in the marketing and distribution of agricultural inputs and outputs, reduction in the public service work fcrce and increases in incentives in rural areas to ensure greater production. Although many of the issues are gradually being affected by the reforms mentioned in para 1.10, full rescluticn of these issues will take a number of years to acocmplish. E. Bank Group's Role in Agricultural and Rural Development 1.12 The main objective of the Bank's lending cperations in agriculture in Ghana is tc assist the country in achieving increased production of food and raw materials for agro-industries, and to arrest and reverse the decline of the major subsectors of cocca and timber. Total sectcr lending over 1969-83 amounted to US$105.5 million and comprised 8 projects. Ccnsistent with the general deterioration in Agriculture the Bank's experience has not been en- couraging. While reasons for this situation vary from project to project, all have suffered from the country's poor economic management in the 70s, bureau- cratic inertia, shortages cf foreign exchange and basic commodities and repeated breakdowns in the public services such as power, transport and com- munications. 1.13 The first agriculture-related project, a Fisheries Project (Cr. 163-GH, 1969, US$1.3 million) did nct reach its targets due in part to problems in management and project design. Its economic rate cf return (ERR)  - 6 - was 10% compared to 50% at appraisal. 1/ The Eastern Regicn Cocoa Project (Cr. 205-GH, 1970, US$8.5 millicn) achieved most of its physical targets but at a high time and cost cverrun and with very little farmer participation because of lcw producer prices fcr cocoa (ERR 12%, compared with 26% at appraisal). 2/ Similar problems have faced the Ashanti Cocoa Project (Ln. 1181-GH, 1975, US$14 million) despite good Ghanaian management. About 91% cf the planting target was achieved.by the loan closing date cf December, 1982, and four years behind schedule. A draft project cempleticn repcrt (PCR) has been prepared and it estimates an ERR of 5%-13%, depending on the impact of price changes. This is compared with 21% at appraisal. A Sugar Reha- bilitation Project (Cr. 354-GH, 1972, US$15.6 million) was adversely affected by droughts, official indifference and fcreign exchange shertages, and ended in failure in 1978. The rate cf return was negative. 3/ The Livestock Devel- cpment Project (Cr. 500-GH, 1974, US$2.0 million) suffered because cf manage- ment and financial problems. The project closed as scheduled cn June 30, 1981.. Its objectives were not achieved resulting in a negative ERR although it is expected to have a financial rate of return of 12%. 4/ The country's first experiment with integrated agriculture, the Upper Region Agricultural Development Project (Ln. 1291-T-GH, 1976, US$21.0 million) suffered from pcor management, bureaucratic inertia and serious shortages cf local funds, materials and basic commodities. In order tc ensure financing of the Rinderpest campaign and import of fertilizers from the remaining portion of the loan, the loan closing date has been extended from December 31, 1981 to September 30, 1984. The Phase I Oil Palm Development Project (Cr. 531-GH, 1975, US$13.6 million) is the most successful agricultural project in terms of meeting its planting targets and institutional, financial and economic objec- tives in Ghana (Chapter III). A PCR has been prepared and it estimates an ERR of 12% compared to about 16% at appraisal. Implementation of the Volta Regicn Agricultural Development Project (Cr. 1009-GH, 1980, US$29.5 million) is in its early stages following a year s delay in credit effectiveness due tc slow Gcvernment action in fulfilling the conditions. The project has suffered from a nLmber of problems and an in-depth review is now in progress. 1.14 In addition tc the projects mentioned above, a multi-sectcral Export Rehabilitation Project (ERP) was recently approved. The project includes cocca, timber and gold mining components and provides fcr inputs, equipment and materials for the rehabilitation of these sub-sectors. Substantial tech- nical assistance will also be provided to the instituticns respcnsible for implementing these cempcnents thrcugh the ERP Technical Assistance Project, approved by IDA along with ERP. 1/ Project Performance Audit Report No. 2794 dated December 28, 1979. 2/ Project Performance Audit Report Nc. 3526 dated June 24, 1981. 3/ Project Performance Audit Report No. 3525 dated June 24, 1981. 4/ Project Performance Audit Report Nc. 3972 dated June 16, 1982.  - 7 - II. THE PROJECT AREA 2.01 Location. The project area is lecated in the Kade area, after the name of the nearest town, (latitude 06'05'N and lcngitude 0