Ghana - Agricultural Services Rehabilitation Project

Dowt 0?of The World Bank FOR OFFICIAL USE ONLY CA. 7g / O Report No. 6645-GH STAFF APPRAISAL REPORT GHANA AGRICULTURAL SERVICES REHABILITATION PROJECT April 22, 1987 Western Africa Projects Department Agriculture 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.  GHANA AGRICULTURAL SERVICM.S REHABILITATION PROJECT CURRENCY EQUIVALENTS Currency Unit = Cedi (#) e151 = US$1.00 1/ WEIGHTS AND MEASURES 1 metric ton = 2205 pounds (lb) 1 hectare (ha) = 2.47 acres (ac) 1 kilometer (km) = 0.62 mile (mi) I meter (m) = 3.28 feet (ft) 1/ A dual exchange rate system was established on September 19, 1986 when a foreign exchange auction was instituted for specified transactions. A 090 = 1 US$ rate applies to the first window (cocoa and residual oil exports, petroleum and essential drugs imports, and central government debt service contracted before January 1, 1986); the rate on the second window is established at the weekly auction. The marginal rate at the auction was 0151=US$1.00 in the week ending November 28, 1986. The rates for the First and Second Windows have been merged on February 20, 1987.  FOR OFFICIL USF. ONLY ABBREVIATIONS AfDB - African Development Bank AHPD - Animal Health and Production Department of MOA ARDAC - Agricultural Research Development and Advisory Committee APCC - Agricultural Policy Coordination Committee CFDT - Compagnie Francaise pour le Developpement des Fibres Textiles (French Company for Textile Development) CIDA - Canadian International Development Agency CIDU - Crops Inputs Development Unit COCOBOD - Ghana Cocoa Marketing Board CRI - Crops Research Institute CRIG - Cocoa Research Institute of Ghar- CSIR - Council for Scientific and Industrial Research ERP - Economic Recovery Program ERPS - Economic Research and Planning Services FASCOM - Farmers' Service Companies GCC - Ghana Cotton Company GFDC - Ghana Food Distribution Corporation GGADP - Ghana German Agricultural Development Project GIDA - Ghana Irrigation Development Authority GOG - Government of Ghana GOPDC - Ghana Oil Palm Development Corporation GSC - Ghana Seed Company GTZ - Deutsche Gesellschaft fuer Technische Zusammenarbeit (German Agency for Technical Cooperation) KFW - Kreditanstalt fur Wiederaufbau (Credit Agency for Reconstruction) MFEP - Ministry of Finance and Economic Planning MIST - M'Iinistry of Industry, Science and Technology MOA - Ministry of Agriculture MTD - Mechanization and Transport Department of MOA NORRIP - Northern Region Rural Integrated Program PNDC - Provisional National Defence Council PPMED - Policy, Planning, Monitoring and Evaluation Department SOE - State Owned Enterprise URADEP - Upper Region Agricultural Development Project VORADEP - Volta Region Agricultural Development Project Fiscal Year January 1 - December 31 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 AGRICTLTURAL SERVICES REHABILITATION PROJECT Table of Contents Page No. DOCUNFNTS CONTAINED IN PROJECT FILE iii CREDIT AND PROJECT SUMMARY iv I. INTRODUCTION 1 II. THE AGRICULTURE SECTOR 1 A. Recent Performance in Agriculture 1 Background 1 Policy Environment 2 Output Performance 2 B. Potential for Constraints to Development 2 Potential 2 Constraints 3 C. Key Public Sector Agricultural Institutions 4 Demarcation between Cocoa and Non-Cocoa 4 Parallel and Other Institutions 4 The Economic Research and Plazining Services 4 The Delivery of Fertilizer and Tractor Hire Services 5 The Delivery of Extension and Research Services 5 The Delivery of Veterinary and Irrigation Services 6 Agricultural SOEs 6 D. Government's Objectives, Strategy and Action Program 6 Objectives 6 Strategy 7 The Government's Action Program 7 E. The IDA's Role 8 III, THE PROJECT 9 A. Project Origin, Rationale and Objectives 9 Project Origin 9 Project Rationale 9 Project Objectives 10 This report is based on the findings of an appraisal mission consisting of Messrs. J. Cole and S. Singh and Ms. I. Tsakok (Bank) which visited Ghana November/December 1986. Ms. K. Sesay-Bah provided the secretarial support and figures were checked by Ms. C. DuCran.  - ii - B. Project Description 10 Summary Description 10 PPMED 10 Studies 12 Agricultural Research 12 Agricultural Extension 13 Irrigation Services 14 Veterinary Services 14 Privatization of Fertilizer Operations 15 Privatization of Tractor Hire Services 16 Agricultural SOE Reform Program 16 C. Project Costs and Financing 18 D. Project Implementation 18 Project Management and Technical Assistance 18 E. Procurement 20 Amounts and Methods of Procurement 20 F. Disbursement 21 Summary Disbursement Schedule 22 Project and Special Accounts 23 G. AuditIng and Reporting 23 H. Financial Impact and Project Sustairnability 23 I. Benefits and Risks 24 IV. AGREEMENTS REACHED 24 ANNEXES Annex 1 Key Statistics of the Agriculture Sector Annex 2-1 Agriculture Sector Constraints Annex 2-2 Key Agricultural Institutions Annex 2-3 Government Agricultural Goals and Policies Annex 2-4 Government Statement of Agricultural Policy Annex 3-1 Ministry of Agriculture and Policy Planning, Monitoring and Evaluation Division: Reorganization and Training Annex 3-2 Studies Annex 3-3 Agricultural Research Annex 3-4 Agricultural Extension Annex 3-5 Irrigation Development Annex 3-6 Veterinary Services Department Annex 3-7 Privatization of Fertilizer Operations Annex 3-8 Privatization of Tractor Hire Services Annex 3-9 Agricultural SOE Reform Program  - iii - Annex 3-10 Table 1 - Project Cost Summary Table 2 - Project Cost by Components and Years Table 3 - Project Cost by Categories and Years Annex 3-11 Project Financial Plan Annex 3-12 Project Coordination Unit Annex 3-13 Project Implementation Schedule Annex 3-14 Procurement Procedures Annex 3-15 Table 1 - Estimated Schedule of Disbursements Disbursement Chart Annex 3-16 Special Project Account Annex 3-17 Auditing and Reporting MA? IBRD No. 15116R3: Rainfall and Ecological Zones Documents Available in Project File A. Background 1. Ghana - Agricultural Sector Review; World Bank Report No. 5366-GH, August 6, 1985. B. Project Preparation 1. Restructuring the Ministry of Agriculture in support of Decentralization by C.L. Phocas. UNDP/FAO/Government of Ghana Project GHA/85/005/A/01/12. 2. Agricultural Sector Rehabilitation Credit - Identification/Preparation mission report, FAO/World Bank CP November 15, 1985. 3. Ghana: Fertilizer privatization Study submitted to the Ministry of Agriculture, Accra, Ghana. International Fertilizer Development Center. C. Working Papers 1. MOA's Policy, Planning, Monitoring and Evaluation Directcrate - UNDP Project Document 2. Studies - Terms of Reference 3. Privatization of MOA's Fertilizer Operations 4. Privatization of MOA's Tractor Hire Services 5. Agricultural Extension 6. Agricultural Research 7. Irrigation 8. Veterinary Services, Cost Recovery & Privatization 9. Agricultural Pricing and Trade Policy Framework 10. Import Program & Cedi Liquiditv 11. Project Costs  - iv - GHANA AGRICULTURAL SERVICES REHABILITATION PROJECT Credit and Project Summary Borrower: The Republic of Ghana Implementing Agency: Ministry of Agriculture Credit Amount: SDR 13.3 million (US$17.0 million equivalent) Terms; Standard Cofinanciers: UNDP (US$1.5 million); parallel financing for agricultural inputs by AfDB (US$25.0 million) and KFW (US$8.5 million). Project Description: The objectives are to: (i) strengthen MOA's insti- tutional capacity to formulate and implement agricultural policies and programs and (ii) rationalize and improve efficiency in the delivery of public sector services to agriculture. The project would help prepare and implement action plans and investment programs to strengthen agricultural support services in the fields of research, extension, input supply, veterinary, irrigation and credit. The project includes: (a) the reorganization and strengthening of MOA's work in policy formulation, planning, monitoring and evaluation; (b) the preparation of a national master plan for research and funding of research on cotton and rice (irrigated and valley bottom); (c) the reorganization of MOA's agricultural extension services in 3 regions on a pilot basis, as a forerunner to a national extension oroject, related training and logistical support to the maize-cowpea program assisted by the Canadian International Development Agency (CIDA); (d) the strengthening of the Ghana Irrigation Deve1.opment Authority through a twinning arrangement, the introduction of improved agronomic practices on existing schemes and Investment in six small scale pilot irrigation schemes; (e) logistical support for veterinary services; and (f) studies of the agricultural credit system and of food security. The project includes a program for improving sector management with respect to the privatization of MOA's fertilizer handling operations and of its tractor hire services, divestiture of selected agricultural State Owned Enterprises (SOEs), regular review of the investment program and improved cost recovery from veterinary and irrigation services. Support from the project is in the form of one or several of the following: technical assistance, staff training, logistical support and operating funds; for MOA's planning division, for agricultural research and for extension, veterinary and irrigation support services. It also provides for consultancy assistance for the reform of agricultural SOEs.  -v - Estimated Project Costs: Local Foreign Total ----US$ Million