Ghana - National Livestock Services Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 11058-GBI STAFF APPRAISAL REPORT REPUBLIC OF GHANA NATIONAL LIVESTOCK SERVICES PROJECT NOVEMBER 11, 1992 Agriculture Operations Division IV Western Africa Department This document has a restricted distribution and may be used by reipients oniy in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authonization.  CURRENCY EOUIVALENTS Currency Unit = Cedi (C) US$1.00 = 0 393 (May 1992) e1.00 = US$0.0025 WEIGHTS AND MEASURES 1 metric ton (m ton) = 2,205 pounds Ob) 1 hectare (ha) = 2,47 acres (ac) 1 kilometer (km) 0.62 miles (mi) 1 meter (m) = 3.28 feet (ft) LIST OF ABBREVIATIONS AND ACRONYMS AHPD - Animal Health Production Department APD - Animal Production Department ARI - Animal Research Institute ASRP - Agricultural Services Rehabilitation Project CBPP - Contagious Bovine Pleuro-Pneumonia CLW - Community Livestock Worker CSIR - Council for Scientific and Industrial Research DAES - Department of Agricultural Extension Services EAP - Environmental Action Plan ERP - Economic Recovery Program GIDA - Ghana Irrigation Development Authority GLC - Ghana Livestock Company Ltd. ICB - International Competitive Bidding LCB - Local Competitive Bidding LPIU - Livestock Planning and Information Unit MIS - Management and Information System MMB - Meat Marketing Board MOA - Ministry of Agriculture MTADP - Medium-Term Agricultural Development Program PARC - Pan African Rinderpest Campaign PPMED - Policy, Planning, Monitoring and Evaluation Department PPR - Peste de Petits Ruminants RIMU - Range Improvement and Monitoring Unit TA - Technical Assistants TCV - Tissue Culture Vaccine TO - Technical Officers VLU - Veterinary Livestock Units VO - Veterinary Officers VSD - Veterinary Services Department FISCAL YEAR JANUARY 1 - DECEMBER 31  FOR OFFICIAL USE ONLY REPUBLIC OF GHANA NATIONAL LIVESTOCK SERVICES PRO.JECT STAF'F APPRAISAL REPOR TABLE OF CONTENTS Page No. CREDff AND PROJECT SUMMARY i-iii I. BACKGROUND ...................................... I A. Project Background ................................... I B. Economic Setting .................................... I C. Ile Agricultural Sector .................................. 2 H. THE LIVESTOCK SUB-SECTOR . ............................... 9 ,i. Livestock in the Economy ................................. 9 B. Livestock Production and Constraints .............................. 9 IH. TIN PROJECT . ..................................... 20 sA. Objectives ................................... . . . 20 B. Detailed Project Description . ............................... 22 IV. PROJECT COSTS ..................................... 31 A. Cost Estimates . ................................... 31 B. Proposed Financing Plan ................................. 31 C. Procurement ..................................... 33 D. Disbursement . ................................... 35 E. Auditing and Reporting ................................. 37 The report is based on the fuindip of an apprial mWion which visited Ghana in May IM9, coomprising Meu. S.Belwre (Minion Leaer), L.Campbell (Agricultural Engineer), C. de Haan (Livestock Specialist), Ms. A.McLeod (Live tock Infornuation Specialid), S.R.Singh (Agronomist) and Ms. O.Vela (Procurernet Specidit). Meuns j. CGra (Consultant, Veterinaian), J. Hald (Consultant, Pis and Poultry SpecWixit, and A. Robertson (Conwltant, Forage and Pasture Specialist) contributed to preparation of the report at the preappmnPistahge. Ms. M.L. Ah-Kee pmvided assiAance in the compiling cost tables of the report, and Ms. A.Ahmed anW Ms. A. Colbert provided swccrE support. Mr. C. de Haan was the lead advisor and Mears. A. Brandenburg and M. Sirncon were the peer reviewers. Meurs. J.Joyce and E.Lirn am the manging Division Chief and the Departnmet Director, re petively, for the opemtion. 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.  V. PROJECT IMPLEMENTATION ............................... 38 A. Organization and Management ............................. 38 B. Monitoring and Evaluation (M&E) .......................... 41 C. Technical Assistance ............ ....................... 41 D. Mid-Term and Completion Reviews .................... ..... 42 E. Implementation Schedule and Supervision ...................... 42 VI. BENEFITS, JUSTIFICATION AND RISKS ....................... 43 A. Benefits and Justification ............................... 43 B. Sustainability ........................................ 44 C. Project Risks . ....................................... 44 D. Environmental Impact ........... ....................... 45 VII. AGREEMENTS REACHED AND RECOMMENDATION .... ......... 46 ANNEXES 1. Livestock Production in Ghana .......... ...................... 49 2. Government Livestock Development Policy Statement ................. 57 3. Estimation of Costs and Benefits of Water Development ................ 64 4. Training and Technical Assistance Requirements ..................... 66 5. Estimated Project Costs and Credit Disbursement .................... 84 6. Procurement Schedule ...................................... 91 7. Project Implementation Schedule ............................... 93 8. Project Supervision Schedule ........... ...................... 93 9. Key Indicators .......................................... 100 10. Estimation of Incremental Production ............................ 103 11. Financial and Economic Analysis .............................. 114 12. Financial Viability of a Private Veterinary Practice ................... 124 13. Documents Available in Project File ............................ 131 MAM IBRD No. 23827 R  REPUBLC OF GHANA NATIONAL LIVESTOCK SERVICES PROJECT CREDff AND PROJECT UMARY Boffower: Republic of Ghana Beneficia: The Ministry of Agriculture Amount: SDR 15.3 million (US$22.45 million equivalent) ITrms: Standard with 40 years maturity Project Descripin: 7The primary objective of the project is to increase meat, egg and milk production, to raise producer incomes, particularly those of smallholders, and to reduce the financial burden on the Government of services it provides to the livestock sub-sector. This would be achieved through a combination of institutional and policy reforms and investment that would give producers improved access to livestock health services, water and forage resources, improved breeding stock, improved animal production technology and markets. The institutional and policy reforms include: charging full cost recovery prices for government services in an effort to promote privatization of animal health services; closing down non-productive government farms; restructuring MOA's animal production and health services; and community involvement in the development, operation and maintenance of livestock water supplies. Project investments comprise: (a) strengthening animal health services and developing thgir infrastructure (US$9.6 million, 33%); (b) develonling forage Droduction on range and farm lands (US$2.1 million, 7%); (c) developing livestock water supplies (US$4.43 million, 15%); (d) improving livestock breeds (US$4.84 million, 17%); (e) introducing a pilot dairy development scheme (US$1.10 million, 4%); and (f) insitlgion building (US$7.01 million, 24%).  - ii ESTIMATED PROJECT COSIS: % Foreign %Total Project Component Loca Foreign Ttal Exchang Base Costs --- (US$ Million)-- Animal Health Control 2.46 5.60 8.06 69 33 Feed Resource development 0.89 0.89 1.78 50 7 Livestock Water Supply 2.04 1.50 3.54 42 14 Breed Improvement 1.42 2.71 4.13 66 17 Pilot Dairy Development Scheme 0.29 0.65 0.94 69 4 Institution Building Animal Production Services 0.90 1.47 2.37 61 10 Livestock Plan & Information 0.22 0.25 0.47 53 2 Training 0.87 1.35 2.22 61 9 Technical Assistance - 1.14 1.14 100 4 TOTAL BASELINE COSTS 9.09 15.56 24.65 63 100 Physical Contingencies 1.01 1.43 2.44 59 10 Price Contingencies 0.97 1.00 1.97 51 8 TOTAL PROJECT COSTS 11.09 17.97 29.06 62 118 of which: Incremental Recurrent (4.30) (3.51) (7.81) (45) (27) Duties and Taxes (2.24) (2.24) (8) FINANCING PLA: Foreign Local Total -------(US$ Million)----- IDA 17.99 4.46 22.45 Government of Ghana - 5.35 5.35 Beneficiaries - 1.26 1.26 TOTAL 17.99 11.07 29.06 ESTIMATED IDA DISBURSEMENT IDA Fiscal Year FY94 FY95 FY96 FY97 FY98 -------------------------(USS Million Equivalent)-------------------------- Annual 6.6 8.4 4.0 2.0 1.45 Cumulative 6.6 15.0 19.0 21.0 22.45  Prjiect Benets: The project would help generate substantial increase in livestock production and would improve the nutrition, income and standard of living of a large number of rural families through improved animal disease control services and the diffusion of improved technologies in livestock and forage and pasture production and facilitating access to off-farm inputs, credit and markets. Specifically, project benefits should manifest themselves in three main areas of increased livestock production, development of human resources and increasing institutional capacity to cater to the development needs of the livestock industry. Livestock production, estimated for only the veterinary, forage and water improvements on cattle and small ruminants, indicate that the project would result in incremental production of 8,370 tons of meat and 8,770 tons of liquid milk in a period of five years valued at about US$12.65 million in constant 1992 prices. The average annual incremental production is estimated at 1,755 tons of meat and 1,750 tons of milk during the first 5 years. This would increase to 3,210 tons of meat and 7,100 tons of liquid milk in the years 5 to 10. Biska: Possible project risks include: (a) ineffective management and training of personnel; (b) low adoption rates of technical recommendations by farmers; (c) the possible inability of Government and/or donors to sustain the long-term commitment required to achieve durable improvements in the effectiveness of livestock support services; and (d) unfavorable output:input price ratios. The structure of animal production and health services is not conducive and its management needs improvement for effective implementation of the project. Improved management of livestock services is expected as a result of the improved organization, training, monitoring and evaluation, and technical assistance to be provided under the project. Decentralizing decision making by conferring more authority and responsibility at the regional level would improve management. The station and on-farm research support provided by the National Agricultural Research Project and the strong research/extension linkage in planning the research and extension program built into the National Agricultural Extension Project should reduce the risk of low adoption rates. The annual review of work plans and budgets, as well as the mid-term implementation review, will provide good opportunities for program review and enhancing long-term Government and donor commitment. Use of improved technology and increased access to inputs and produce markets would help in reducing the cost of production as well as the spread between wholesale and farm gate prices. Economic Rate of Return: 52 percent MaM: IBRD No. 23827   REPUBLIC OF GHANA NATIONAL LIVESTOCK SERVICES PROJECT STAFF APPRAISAL REPORT I. BACKGROUND A. Project Background 1.1 The project, for which an IDA Credit of SDR 15.3 million (US$22.45 million equivalent) is proposed, was identified as part of Ghana's Medium Term Agricultural Development Program (MTADP), prepared with the assistance of IDA. It supports the government's objective of increasing livestock production and improving farm income and nutrition. To achieve this objective, government plans to rationalize, improve and privatize services for supporting the private sector in the production and marketing of livestock. A project proposal was prepared under the IDA financed Agricultural Services Rehabilitation Project and submitted by the Borrower to the Bank in March 1991. It was appraised in May 1992. B. Economic Setting 1.2 Past Performance. Inappropriate macro-economic policies, compounded by weak overall economic management and a series of adverse external circumstances resulted in negligible growth during the 1970s. Between 1980 and 1983, the situation worsened as real GDP declined at an average annual rate of 5 percent. The Cedi was significantly overvalued, producer prices were low and Government controls and participation in the economy excessive. Agriculture, particularly smallholder production, was virtually neglected resulting in a steady decline in the production of food. Cocoa, the leading export crop, was subject to high net taxation and poor producer incentives leading to a dramatic and steady decline in both production and export. The unfavorable economic situation was exacerbated by drought and consequent bush fires in 1982-83. The declining food production and exports widened the food supply gap and contributed to a galloping inflation prompting the Government to launch sweeping policy reforms under the Economic Recovery Program (ERP) started in 1983. 1.3 Present Situation. The key policy reforms under the ERP included: devaluation of the Cedi, liberalization of internal and external trade, and reduction of subsidies and price controls. In agriculture, farm gate prices of cocoa were increased, marketing of inputs and outputs were selectively liberalized, supply of inputs, notably fertilizers, was increased, and a serious effort was initiated to rationalize and rehabilitate agricultural support services. The performance of the economy has improved steadily since the introduction of the ERP. Real GDP has grown at an annual average rate of 5.4 percent between 1983 and 1991 and is projected to improve to 6.1 percent in 1994. Annual rate of inflation dropped from 40 percent in 1987 to 18 percent in 1991. A sizeable overall balance of payments surplus has been maintained between 1987 and 1991.  -2 - C. The Agricultural Sector 1.4 Performance of the Sector. Agriculture is the dominant sector of the Ghanaian economy, contributing nearly half of the GDP and about three quarters of export earnings. It provides a livelihood for about 70 percent of the population. The nascent industrial sector depends on agriculture as a source of raw materials. Agriculture is an important source of public revenues and has direct and indirect influences on public savings and investment and on private savings. Food prices account for significant component of household expenditures. Hence, agriculture has substantial influence on the general level of prices and is key to overall macro-economic performance. 1.5 As with other sectors, agriculture was severely hampered by the adverse economic policies of the 1970s and early 1980s. Food and cash crop output declined, which combined with a rising population, resulted in a decline in the per capita food production index from 100 in 1974-76 to 62 in 1983. The measures adopted under the ERP have resulted in significant improvements: agricultural output as measured by sectoral GDP has grown in real terms for five successive years and in 1988 achieved its highest level since 1974. Growth in agricultural GDP averaged about 1.9 percent between 1984 and 1989 and about 4.2 percent in 1989. However, it fell by 6.7 percent, due to late rains, in 1990. Agriculture's share of total GDP has fallen from 55 percent in 1982 to 47 percent in 1988 as growth in other sectors has been more rapid. 1.6 In the past, cocoa contributed almost 30 percent of agricultural GDP, but this has declined to about 15 percent in recent years. The gap has been filled by roots and tubers and by plantain. Cereals have also shown a steady increase in output, with total production in 1988 reaching a twenty year high. At present, the breakdown of agricultural GDP is approximately 60 percent roots, tubers and plantain; 13 percent cocoa; 9 percent livestock and fisheries; 7 percent cereals; and 11 percent forestry and miscellaneous products. 1.7 Characteristics of the Sector. The total land area of Ghana is about 22.4 million ha, of which 12 percent is cultivated and 7 percent is under perennial tree crops (cocoa, oil palm, and rubber). Ghana's agriculture is predominantly smallholder, traditional and rain-fed. The mean farm size is less than 1.6 ha (4 acres). Small and medium sized farms of up to 10 ha account for 95 percent of all cultivated land. Of the total 2.37 million farms operated in Ghana by smallholders, about one quarter produce mainly for subsistence, about 55 percent sell up to half of their produce and less than a quarter market more than half of their produce. This signifies the importance of smallholders for family, regional and national food security and for achieving sustained growth in agricultural production.  1.8 Traditional farming systems have developed over time as adaptations to the six major agro-ecological zones in Ghana. These zones are: Rainfall Ara Percent of Zone (nm o.a.) '000 h) Total Am Rain Foest 2,200 750 3 Deciduous Forest 1,500 740 3 Transition 1,300 6,630 28 Guinea Savanna 1,100 14,790 63 Sudan Savanna 1,000 190 1 Coastal Savanna 8OO 580 2 Total 2.8 100 Source: MOA/FAO Project GHA/84/003 1.9 Ghanaian agriculture is well diversified. In the two forest zones, tree crops are significant with cocoa, oil palm, coffee and rubber being of particular importance. The food crops in this area are mainly inter-cropped mixtures of maize, plantain, cocoyam and cassava. The transition zone is characterized by mixed or sole cropping of maize, legumes, cocoyam or yam, with tobacco and cotton being the predominant cash crops. Cotton and tobacco are also important in the savanna zones, where the food crops are mainly sorghum, maize, cowpeas and yam in the wetter areas, whilst sorghum, millet and cowpeas predominate in the drier north. Rice is locally important in all zones, grown in seasonally flooded valley bottoms. Livestock are important in all zones, though small ruminants and poultry predominate in the south, where trypanosomiasis is a constraint to raising cattle. The cattle population is concentrated in the northern Guinean and Sudan savanna zones. 1.10 Common factors in Ghanaian agriculture are the use of bush fallow to restore soil fertility, mixed cropping to minimize risks and in the north of the country, the widespread integration of livestock into the farming systems. Women, forming the head of 30 percent of rural households and producing about 70 percent of the total food production, play an important role in the sector, and often make decisions about the type and area of crop to be planted, as well as having a key role in weeding, harvesting and processing. Even in male - headed households, women take care of poultry, small ruminants and calves. There is little use of purchased inputs and land preparation is manual in most areas, though ox-ploughing is important in the north and mechanization is used by some large enterprises. Average yields are low throughout the country. Irrigated agriculture is not well developed. Only 9000 ha of land is being mostly surface irrigated, representing less than 10 percent of the 120,000 ha potential. 1.12 Potential and Constraints. The key to accelerated growth and increased competitiveness in agriculture lies in improving the incentive framework - maintaining a market-based exchange rate, removing remaining trade restrictions, reducing export levies on cocoa and improving marketing efficiency through free pricing and greater competition. There is also great scope for reducing production and marketing costs through public investment in transport and communications infrastructure. 1.13 Since the launching of the ERP in 1983, there have been fundamental changes in macro-economic policy, especially the exchange rate depreciation which has improved  - 4 - production incentives for tradable goods, and the freeing of trade policy which has increased competition to domestic producers. However, in the agricultural sector, price and trade liberalization has been only partial, at best. In recent years, free markets have existed for basic foods (roots, tubers, vegetables), but there has been significant government interference in grain purchasing and storage and, more important, the marketing of cocoa, cotton, coffee and oil palm (the main sources of cash for the rural economy) has continued to be controlled. Far-reaching changes in these policies are now under way and, when fully implemented, will have an important impact on the investment and growth potential of the rural sector. This impact will be strengthened by other changes which have recently taken place in the liberalization of input supply and the creation of a more favorable environment for private sector participation in grain storage and agro-processing. There is no price control of livestock and livestock products. The limited intervention of the parastatal, Meat Marketing Board (MMB), competing with private importers and wholesalers of meat is too small to affect market prices. Nonetheless, consistent with its declared policy of privatizing production and marketing activities, Government has closed MMB and is in the sprocess of liquidating it. 1.14 In general, crop yields are very low, and through relatively simple changes in crop husbandry (contour plowing, timely planting and weeding, plant spacing, composting, manuring and fertilizer application) quite dramatic increases in yield are possible. In the livestock sub-sector, where services are weak and infrastructure very poor, significant gains in productivity could be expected from relatively modest improvements in the provision of drinking water and health care and from supplemental feeding of crop by-products and planted forage. 1.15 Government Objectives. Government's long-term objectives for the agricultural sector include food security, higher employment and incomes in rural areas, balanced regional growth and a greater contribution of the sector to GDP, foreign exchange earnings and government revenue. To achieve these objectives, the Government has formulated the MTADP with the assistance of the Bank. The strategy is predicated on the premise that Ghanaian farmers will respond to suitable incentives by increasing production of both cash and food crops. It would focus on promoting the production of commodities in which Ghana has a clear comparative advantage. 1.16 The strategy for the promotion of growth of crops is based on increasing productivity, using improved technology through the use of improved varieties of crops and pest control measures, while maintaining soil fertility through composting, manuring and fertilizer use and soil conserving cultural practices. The irrigation strategy would focus on the development of small-scale and micro-scale schemes, improved management of flood plains, and an optimum use of existing irrigation facilities. Emphasis would be given to the implementation and management of the schemes by the farmers themselves by establishing farmers' groups and training them in soil and water management and in agronomic practices for irrigated crops. 1.17 In the livestock sector, the strategy would be based on increasing productivity through improved animal health, nutrition and water supplies and, in the longer term, breed improvement. The focus of action under the strategy would be the small scale livestock producer. Cross breeding to improve the potential of local breeds has been undertaken by using breeds from the sub-region. However, the program has so far benefitted a limited number of farmers primarily due to lack of breeding stock and effective extension work to  - 5 - increase farmers' awareness. The supply of improved breeding stock would be augmented. Farmers would be trained in rearing improved breeds, the use of animal traction and techniques of increasing forage production both from natural and planted pastures. Fattening of animals would be promoted under the animal husbandry extension program of the National Agricultural Extension Project. In the fisheries sector, emphasis would be on the development of inland fisheries, both on the Volta Lake and in aquaculture; and on the rehabilitation of marine facilities in support of tuna fishing. A comprehensive program for the development of aquaculture, including the rehabilitation of hatcheries for the supply of fingerlings, would be undertaken. 1.18 The strategy would also emphasize the strengthening of agricultural support services including research and extension, marketing and storage, fertilizer and seed supply, and intersectoral links in processing, and feeder roads improvement. The process of determining research priorities, would be improved by increasing the role of the Ministry of Agriculture and farmers in that process as well as in the allocation of resources. In extension, the strategy will seek to rationalize and streamline the organization of the service, upgrade its technical competence and forge much stronger linkage with research through the implementation of the National Agricultural Extension and National Research Development projects. 1.19 Sustainable use of natural resources is also an important objective for Government and to this end the Environmental Protection Council has prepared an Environmental Action Plan (EAP). The EAP will be an important policy document affecting development in many sectors, including agriculture. An important ingredient of the strategy in the sector is greater reliance on the private sector for the provision of commercial services, like marketing of inputs, and production and distribution of seeds. Public Services would concentrate on policy planning and guidance, extension, research, and in other support services where Government has comparative advantage. 1.20 Bank/IDA Sector Assistance Strategy. Since the launching of Government's ERP, IDA's strategy has been to continue supporting improvement of the policy environment at both the macro-economic and sectoral levels. Structural adjustment credits and infusion of funds for the rehabilitation of key sectors were the main instruments for implementing this strategy. Agriculture, which is the dominant productive sector, has been an important beneficiary of this strategy. Total lending by IDA to the agricultural sector in Ghana for the period 1986-91 has been US$261.3 million, equivalent to 11.4 percent of total IDA lending to Ghana during that period. A number of projects are being financed within the agricultural sector to overcome particular constraints. These include: (a) two Credits for the re- establishment of essential agricultural support services, the Agricultural Services Rehabilitation Project (Cr. 1801-GH, FY87) and the Cocoa Rehabilitation Project (Cr. 1854- GH, FY88); (b) a Forest Resources Management Project (Cr. 1976-GH, FY89); (c) two Credits to support the private sector, the Rural Finance Project (Cr. 2040-GH, FY89) and the Agricultural Diversification Project (Cr. 2180-GH, FY91); (d) a National Agricultural Research Project (Cr. 2247-GH, FY91); (e) a National Agricultural Extension Project (Cr. 2346-GH, FY92); (f) an Agricultural Sector Adjustment Credit (Cr. 2345-GH, FY92); and (g) a Natural Resources Management Project (Cr. 2426-GH, FY93). 1.21 Future Strategy for Agriculture. The profound changes which are now under way in agricultural policy are fully supported by the Bank, and they provide an opportunity to assist  -6 - sectoral development in an unprecedented way. Assistance from IDA will be sought for virtually all phases of development through investment, technical assistance and policy-based lending. The key component is the removal of trade restrictions on the main cash crops and the liberalization of input and output marketing, storage and agro-processing, which form the basis of the Agricultural Sector Adjustment Credit. Investment and technical assistance operations are now under preparation for presentation to IDA over the coming few years, covering rural roads, rural marketing and small-scale irrigation. In each case, the aim is to keep the assistance simple and well focussed within the management capacity of the sector institutions. This capacity will itself be the subject of detailed scrutiny and reform under the MTADP, and also with support from the Agricultural Sector Adjustment Credit, the National Agricultural Research development, National Agricultural Extension projects and this project. Lessons Learnt from World Bank Lending for Livestock Development in Sub-Saharan Africa 1.22 Ghana. The only livestock development effort that IDA financed in Ghana was a small credit of US$2.0 million for the Ghana Livestock Development Project (Cr. 500-GH) during 1974-1981.1/ The objective of the project was to lay the foundation for the development of a commercial cattle industry in Ghana through the development of three parastatal ranches, managed by the Ghana Livestock Company Ltd. (GLC) and 50 privately owned herds of about 100 head each, in areas surrounding the three ranches. The project was designed to produce improved breeding stock and slaughter cattle and included preparation of a second stage project. 1.23 The main development on the ranches was land clearing, fencing, provision of water, pasture improvement and the purchase of breeding cattle. The 50 private cattle producers were to be provided with finance for improved breeding stock and where necessary, for spray races, fencing materials, land clearing and pasture improvement and extension services by the management of the three parastatal commercial ranches. The project was expected to build up the commercial ranch herds to a total of 14,000 head and increase the private herds from 5,000 to 13,000 head. An innovative feature of the project was cofinancing by a consortium of four local banks, which were to finance 21 percent of the US$4.5 million total cost of the project. 1.24 The project was plagued with numerous problems as it was being implemented during a period when Ghana was going through political and economic turmoil. Foreign exchange shortages restricted the importation of breeding cattle to only 967 head. Rampant inflation, distorted cost-price relationships, shortage of supplies and poor macro-economic environment were not conducive to effective implementation of the project. Project implementation was held up initially due to delays in fulfilling conditions of effectiveness. Subsequent land acquisition problems, delayed appointment of management staff and cost escalation led to a major project revision in 1976. The number of ranches was reduced from three to two and the number of participating private ranches from 50 to 20. Physical development was delayed substantially. Herd build-up was much lower than expected. A major mistake was committed by locating one of the ranches in a tsetse infested area. Political interference, irregularities in A urall muppont of US$1.6 million wu provided to AHPD under the Agricultural Services Rehabilitation Project.  - 7 - financial management, inefficient support services, shortage of counterpart funding and low staff morale became major problems in project implementation. 1.25 Like all ranching projects in Sub-Saharan Africa, this project performed very poorly as its impact was extremely limited and the estimated rate of economic return was negative. GLC built up its cattle herd to only 2,100 compared with 14,000 expected at appraisal. Except for the distribution of about 450 head of breeding cattle to local farmers, the private herd component was not pursued, and a follow-up project was not prepared. Of the US$2.0 million IDA credit, US$0.465 million was canceled at the closing date, June 30, 1982. 1.26 Lessons which emerged from the project's implementation experience include: (a) land acquisition is a lengthy and protracted process that should be completed before project implementation is started; (b) technical experts should make rigorous investigation with respect to pasture productivity, water availability and prevalence of diseases before choosing ranch sites; (c) a commercial ranching company is not a suitable vehicle for channeling credit and technical advice to the private sector and (d) a favorable macro- economic and political climate is essential for successful implementation of projects. 1.27 Sub-Saharan Africa. During the period 1962-1987, the World Bank provided approximately US$11.7 billion (in constant 1983 dollars) for livestock development worldwide. Of this, US$1.3 billion or 11 percent was provided for livestock projects in Sub- Saharan Africa. In 1985, the Operations Evaluations Department (OED) of the Bank completed an audit of 121 livestock projects worldwide, of which 49 were in Sub-Saharan Africa. While noting that the potential for livestock development in Sub-Saharan Africa is high and that in several countries livestock development appears crucial to overall economic development and, in others, it would have a high positive impact, the audit concluded that livestock projects in Africa performed poorly. Three-fourths of these projects had ERR of less than 10 percent. The most important causes mentioned for these failures include overall macro-economic constraints (including, declining farm gate prices due to rigid domestic price controls, overvalued exchange rates, worsening world markets, and escalating input shortages and prices); attempts to transfer inappropriate technology to smallholders with inadequate understanding of smallholder farming systems; project designs inappropriate to the local conditions, and weak government institutions (parastatal ranches and dairy farms and complex pastoral development components). 1.28 The Bank has been incorporating these lessons in the livestock projects and components designed since 1983. Changes have been made from heavy emphasis on parastatal ranching and provision of infrastructure to government services in the early seventies. Bank livestock lending has now moved towards an emphasis on macro-economic policies and to the development of smallholder and pastoral production and institution building especially in the promotion of private sector services. Continent-wide, this has resulted in a substantial number of projects which in one way or another promote private animal health care. In the dry areas, the animal health care activities have been supplemented with a focus on animal traction and more recently in an increasing interest in dairy, smallholder steer fattening and small stock production. The strategy of the proposed project follows a similar vein. 1.29 Excellent results have been obtained in smallholder stock fattening, dairy and poultry production and low-cost tsetse control to reduce the incidence of Trypanosomiasis.  - 8 - Bank funded livestock projects in Nigeria, Cameroon and Senegal were successful in stall feeding and fattening of small groups of cattle and small ruminants using agricultural by products. Key parameters in cattle fattening include average weight gains of 0.6-1.0 kg of weight gain per day, high rates of sub-loan repayment up to 95 percent over the project period and ERR of 35 percent (Nigeria) and 21 percent (Cameroon). Smallholder fattening seems to have a wide transferability, as the key inputs (feeder animals and crop by-products) are widely available throughout the region. It is an excellent way to initiate crop farmers into livestock raising, and can very well be combined with animal traction; the key institutional requirements are a functioning credit institution and supply and distribution of feed. Fattening of animals has started in Ghana on a limited scale. The technology will be spread through the National Agricultural Extension Service. Under the proposed project, the pasture and forage development efforts and the production of improved stock that respond well to improved health care and nutrition would facilitate the diffusion of this technology. 1.30 Smallholder dairy development is a well known success in the Kenyan highlands, and this model is, for example, successfully being applied in Bank-funded operations in Rwanda and Uganda. More recently, positive results have been obtained in less favorable environments. A successful Bank-funded small holder dairy development project in Zambia was scaled down to one third of the amount envisaged at appraisal. However, the production targets of the original appraisal were greatly surpassed. There is also promising small holder dairy development around many African towns like Dakar, Bamako, Khartoum, and Addis Ababa. A smallholder dairy component has been added to the Second National Livestock Development Project in Nigeria and farmer response has been very encouraging. A pilot dairy development component is included in the proposed project to stimulate dairy production in the peri-urban area of Accra and Tema. 1.31 Proven technologies exist for the development of semi and industrial poultry production. They were successfully developed, for example, in Cameroon, Nigeria, and Cote d'Ivoire. Key issues concern the availability of local feed grains, and related to that, favorable exchange rates and import policies. Encouraging success has also been obtained at the village level. A simple vaccination scheme, for example, in Burkina Faso and Cameroon, reduced poultry mortality by 60 percent, a small ruminant health and feeding package introduced in Nigeria resulted in an ERR of 20 percent. The proposed project includes vaccination of small ruminants against Peste de Petits Ruminants (PPR) and will introduce a new thermostable vaccine against Newcastle, which is easily administered by mixing it with poultry feed at the farm level, and has been used quite successfully in the Far East. 1.32 Simple screens and traps which attract and kill the tsetse fly, are being tested all over Africa. Technically, these contraptions have been shown to reduce the fly load to 5-10 percent of the initial challenge. Operationally, it seems that this technology can be transferred to the herders, as is shown in the Central African Republic, where the herders maintain the traps well. These technologies, together with the distribution of Trypanotolerant breeds and some of the other fly repellents being tested, could well mean a large part of the solution to tsetse problem. The proposed project includes a pilot program of tsetse control using these new techniques.  -9- II. THE LIVESTOCK SUB-SECTOR A. Livestock in the Economy 2.1 Livestock production is an important feature of the country's agriculture, contributing largely towards meeting food needs, providing draft power and generating cash income. The livestock sub-sector contributes in direct products an estimated 9 percent of agricultural GDP. However, it is a major source of income for farmers in the three northern regions of Ghana and makes an important indirect contribution to overall agricultural development. Cattle production is an integral part of the farming systems in northern Ghana. About half of farmers in the Upper West and Upper East regions use bullocks for plowing. Of these about 40 percent rent the bullocks. Studies show that bullock owning households cultivate 60 percent more land than those who don't. Despite the country's vast resources of forage, its livestock resource base is modest with about 1.2 million cattle, 2.2 million sheep, 2.4 million goats, 8 million poultry, including guinea fowl, and half a million pigs. Livestock production offers rapid growth opportunities, as the necessary internal market exists, the potential for increased production of feed is high and the technology for controlling diseases and improving productivity is available. B. Livestock Production and Constraints Livestock Production 2.2 The cattle population is concentrated in the Guinea and Sudan Savannah vegetation zones of the three regions of Northern, Upper East and Upper West, which combined account for about 77 percent of the cattle population in Ghana. The relatively dry coastal savannah in the south accounts for about 15 per cent. The remaining transitional and humid forest zones are sparsely populated with cattle because of the prevalence of tsetse flies, which transmit trypanosomiasis, a killer disease. Small ruminants and poultry are more evenly distributed throughout the country, whereas pigs are more concentrated in the forest belt and around urban centers. 2.3 Unlike many countries in Sub-Saharan Africa, there is no nomadic population in Ghana, totally dependent on extensive livestock production for its livelihood. An overwhelming majority of the livestock are owned by settled farmers, who rear them to produce food for the family, bullocks for animal traction and surplus animals for sale to meet cash requirements for household needs and for farm inputs. Because the livestock owners are settled, their access to grazing land is limited and their survival is not intricately linked to the number of animals they keep, the size of their herd and flock is small (average of 9 head of cattle, 10 head of sheep and goats). Although livestock still play an important role in the socio-cultural life of farming communities as partial determinants of wealth and offering of bridal dowry, their value as a readily convertible liquid asset is equally important. Bullocks and cows too old to plough and reproduce are readily sold. Sheep, goats, and pigs are the frequent generators of cash required by households. Offtake rate for cattle is about 11 percent while for sheep and goats it is about 30 percent. This compares with 8 percent and 25 percent, respectively for cattle and sheep in purely pastoral systems of livestock production in Sub-Saharan Africa. Ghanaian livestock owners are amenable to increasing the value of  - 10- their livestock asset through improved productivity than through accumulation of numbers. The only exception to this are a small number of herds, mainly in the coastal plains, that belong to absentee owners, who live in urban areas and are engaged in non-farming profession. Such herds are usually entrusted to Fulani herdsmen, who practice a limited degree of transhumance, solely based on extensive grazing. 2.4 Women constitute more than half of Ghanaian farmers and, therefore, play an important part in rearing livestock. Even in farm households headed by men, women are responsible for rearing poultry, pigs, small ruminants and calves. Except for poultry and pigs, there is no large scale commercial production of cattle and small ruminants and there is virtually no marketable milk production. Birds in both the village and commercial sectors are primarily raised for eggs. Poultry meat is a byproduct of egg production. The level of livestock production is low and provides only about 30 percent of the national protein requirement. Fish is the main source of protein, particularly in southern Ghana. Annual fish consumption is estimated at 200,000 tons compared with 54,000 tons of meat. Bush meat, especially that of grasscutter, is very popular and provides a considerable amount of protein, although supply estimates are unavailable. This has led to a significant depletion and in some cases the extinction of several species of wildlife in many parts of Ghana. 2.5 It is difficult to estimate the amount of livestock and meat imported into the country as most of the live animal imports from Burkina Faso are not recorded. Frozen meat imported into the country fluctuates enormously. Imports of recorded frozen meat dropped from a peak of 11,530 tons in 1983 to 1,620 tons in 1987. The trend for 1991 was that about 12,000 - 15,000 tons would be imported. The share of beef imports fell from 73 percent in 1983 to 5 percent in 1988. Most of the current meat import is poultry parts, with a substantial content of turkey tails and chicken wings. Both frozen poultry and beef are imported from EEC countries. Beef export from the EEC is heavily subsidized, depressing domestic prices in importing countries such as Ghana, where the import tariff is not sufficient to countervail the subsidy element. In 1991, retail price of imported frozen beef (bone-in) at Cedis 575 per kg. in Accra was 38 percent cheaper than domestic fresh beef (bone-in) at Cedis 940 per kg. The average cif value of bone-in beef, with 25 percent to 30 percent fat content, would be Cedis 1,345 if the subsidy were removed. 2.6 The milk yield of the predominant West African Shorthorn breed is very low (about 100 kg/lactation). Very little milk is extracted for home consumption. There is hardly any surplus milk produced for the market. Consequently, the dairy product import bill is very high, constituting a significant share of livestock product imports. Annual imports of milk powder and other dairy products are in the order of 3,500 metric tons. The city of Accra with a population of 2 million offers a good market prospect for milk produced in the Accra Plains. Wet season prices for fresh milk can be as low as 75 Cedis per liter and dry season prices 160 Cedis per liter. With concentrate prices estimated in the order of Cedis 50-75 per kg., the milk:concentrate ratio is more than one and is favorable for domestic milk production. Dairy companies are presently using imported powder milk and butter oil. They are interested in using fresh milk for specialty dairy products such as cream, pastry and high quality ice cream if they would obtain a regular supply of about 1,000 liters per day. 2.7 Although the tsetse challenge in the Accra Plains may have discouraged the introduction of high yielding exotic breeds in the past, the challenge is low and could be effectively controlled by chemotherapy. Pure-bred Brown Swiss, Frisian and Zebu cattle are  - I1 - doing fairly well in the Accra Plains. Fl crosses with trypanotolerant breeds have a good possibility of adapting well to the environment. Fl crossbreeds of Ndama x Jersey are giving excellent results in Cote d'Ivoire and seem more resistant to Streptothricosis. Most livestock producers in the Accra Plains are interested in improving milk production, although they are justifiably cautious in introducing cross breeds into their herds. 2.8 There is only one commercial producer of milk in the country keeping a herd of Brown Swiss. The Holstein dairy herd at the government station of Amrahia is not milked for sale. Most of the milk is fed to the calves. The sole commercial milk producer is also collecting milk from traditional herds in the Accra Plains for producing butter, yoghurt and ice cream. However, irregularity of supply from the limited collection route constrains this operation. There are about 70,000 head of cattle, mostly managed by Fulani herdsmen on extensive grazing in the open range in the Accra Plains. Average herds vary between 40 and 100 head. Milk offtake from these herds for human consumption is about one liter per cow per day in the wet season and about 0.75 liters in the dry season or an average of about 125 liter offtake per lactation. This would imply a total production of about 7,500 liters per day, which could be tapped if there were a collection system which offers good incentives to producers. Constraints 2.9 Livestock diseases constitute a major constraint to increased livestock production in Ghana. Several diseases are known to affect livestock and some of them occur in epidemics with devastating effects. In cattle, the main killer diseases are Rinderpest, Contagious Bovine Pleuro-Pneumonia (CBPP), Anthrax and Blackleg. Trypanosomiasis is prevalent in the humid forest belt and sub-humid Guinea savanna areas. The predominant cattle breeds are trypanotolerant. However, farmers are increasingly showing a preference for Zebu cattle, with larger body size, higher milk yield and heavier liveweight. Zebu cattle are, however, susceptible to trypanosomiasis. Streptothricosis, Brucellosis and Foot and Mouth Disease, which are economically important are also found in Ghana. While these have a minor effect in reducing productivity in beef cattle, they would assume increasing importance in the development of more intensive dairy production. 2.10 In small ruminants, Peste de Petits Ruminants (PPR), is a viral disease occurring as an epidemic with usually high morbidity and mortality rates. PPR is estimated to account for up to 50 percent of small ruminant mortalities. Parasitic gastroenteritis and ectoparasitism caused by ticks and mange mites are a major cause of poor productivity in small ruminants. Poor housing contributes to high mortality rates due to pneumonia during the rainy season. 2.11 In poultry, Newcastle Disease and Fowl Pox, are the major diseases, especially in the traditional sector, where producers do not vaccinate their birds and entire flocks are wiped out when outbreaks of these diseases occur. Commercial producers control these diseases by regular vaccination. Gumboro and Marek disease pose a problem for commercial poultry producers, who purchase day old chicks from hatcheries which do not vaccinate the parent stock against Gumboro and day old chicks against Marek disease. 2.12 Poor nutrition is another major constraint to increasing livestock production in Ghana, despite the favorable climatic conditions for forage production. Ruminant production is based primarily on grazing of natural unimproved grasslands and some crop residues. By-product  - 12 - feeding of cattle is very limited. There is a gradually expanding, but still very limited, conservation and use of crop residues and byproducts for fattening sheep and goats. Grazing density is extremely high in some areas in the Upper East, Upper West, and in scattered areas close to settlements. Heavy grazing pressure is typically closely correlated with heavy cropping pressure. Some of these areas, particularly in the Upper East, are facing serious environmental degradation, and soil fertility is declining. 2.13 Most of Ghana's grasslands are greatly underutilized. Such areas are characterized by very rapid growth of tall grasses, with feeding value high only in the early part of the wet season, declining rapidly thereafter, and becoming extremely low in the dry season. Burning usually occurs early in the dry season. Most systems have a relative dearth of useful native legumes, particularly those that can persist under heavy grazing and provide feed into the dry season. Consequently, although the supply of dry matter may be adequate during the dry season, it is seriously deficient in protein and minerals. There have been virtually no deliberate introductions of improved forage/pasture species into rangelands or into farming systems. Few government staff have had exposure to more appropriate development options, but have concentrated development work primarily on government farms and research stations. The prospects are good for introducing hardy legumes into the more heavily grazed rangelands, and for a simplified approach to the introduction of tree legumes into farming systems. There is also good scope for the incorporation of some more intensive on-farm strategies based on forage legumes. A combination of these strategies would facilitate the development of relatively sustainable and productive cropping and livestock systems, and in particular, can lead to a rapid improvement in feeding management and livestock performance and to a more rational approach to herd structure and offtake. 2.14 Ghana had a vibrant commercial poultry production in the late 1960s and early 1970s based on imported yellow maize and fish meal. This industry received a severe economic blow because of shortage of foreign exchange for importation of feed during the late 1970s and early 1980s, when Ghana was facing enormous economic difficulty. It has not yet recovered from that shock although economic conditions have improved and restrictions on imports have been lifted. It is estimated that the industry is now operating at less than half of its capacity, although the supply of feed has improved significantly. 2.15 The supply of feed for commercial production of poultry and pigs fluctuates enormously. In good years, maize, fish and bran are available in adequate quantities, while soy bean meal has to be imported at all times. The main problem of feed ingredients is the sharp inter-month fluctuation of the price of maize, the major ingredient. In 1990-91, maize price was about Cedis 2500-3000 per 50 kg. bag (US$132-158 per ton) immediately after harvest, sharply increasing to Cedis 10,000-12,000 (US$528-632 per ton) in the dry season. A four fold increase in feed price, which is about 70 percent of the total cost in poultry production, is devastating for commercial production. It is important that feed prices are kept low and within a narrow band of price variation, if the poultry industry is to be competitive with imports. Hopefully, this situation would improve as Ghana's efforts in increasing crop production bears fruit and poultry and pig production would become important avenues of marketing surplus crop production. An additional problem is the low quality of commercial poultry feed, which is partially caused by temporary shortages of feed and high prices. A more detailed analysis of the problems of poultry and pig feed is given in Annex 1.  - 13 - 2.16 Provision of water for livestock in northern Ghana does not pose problems in the rainy season. However, considerable difficulties are encountered in the long dry season when streams and ponds dry-up. The shortage of water causes livestock owners to trek cattle over long distances, causing hardships on both herders and livestock. Dams and dugouts which store water from surface runoff provide water for use by humans and livestock. It is estimated that about 450 dams and dugouts of varying capacities ranging from 20,000 to 50, 000 cubic meters exist in the Northern, Upper West, Upper East, Brong-Ahafo, Volta and Greater Accra Regions with the highest concentration in Upper West and Upper East Regions, which have benefitted from a number of development projects. Maintenance of dams and dugouts have been neglected, resulting in many of them silting up gradually while others have developed gullies downstream of the embankments. Spillway channels tend to overgrow with weeds and catchment areas are used for farming in some areas resulting in reduction of installed capacity, largely due to responsibility for these structures being retained with Government agencies. It is estimated about 60 percent of the dams run out before the end of the dry season. Villagers and livestock producers appreciate the benefit of these water supplies and are requesting for development of new structures and rehabilitation of old ones. In some cases they have collected money and have requested the MOA to assist them in arranging for the construction of dugouts. 2.17 Unavailability of improved breeding and growing stock is another major constraint to increasing livestock productivity in Ghana. The dominant livestock breeds are the small sized and trypanotolerant West African Shorthorn cattle, the dwarf forest sheep and goats and the black forest pig. Livestock producers have been expressing strong interest in crossing their stock with larger zebu type cattle, the long legged Sahelian sheep and the European pig breeds of Large White and Landrace. The Animal Health Production Department (AHPD) previously managed 42 livestock breeding farms, designed to respond to this demand and to breed livestock more adaptable to Ghanaian environments. These farms were service oriented and did not recover their full cost from beneficiaries. They heavily relied on public funding and their performance became dismal because of shortage of funds to operate them during the last 15 years, when the country faced severe economic difficulties. In 1987, AHPD closed 17 of these farms. The remaining 28 farms are in various states of disrepair. Although the Ministry of Agriculture has tried to improve the various breeds of livestock, no sustainable improved lines have emerged due to lack of a systematic approach and problems in sustained funding of the breeding programs over the long period of time required to achieve meaningful results. Commercial poultry producers have been and still are importing parent and grand parent day old chicks. However, the quality of day old chicks supplied by the hatcheries is poor. 2.18 Only one hatchery has its own grand parent stock. The rest have to import day old parent stock or commercial hatching eggs. Supply of parent stock should be divested from the control of any hatchery. Even if this were allowed, the company that has a grand parent stock would be unwilling to supply parent stock to its competitors. The supply of day old chicks to a majority of poultry producers is erratic as it is dependent on several factors that affect import arrangements. In addition, there is no method of guaranteeing that day old chicks produced by the hatcheries are vaccinated against Marek disease. Regular inspection of hatcheries would be required to enforce the regulation governing the operation of hatcheries.  - 14 - Livestock and Meat Marketing 2.19 The general flow of cattle, sheep and goats is from the three livestock surplus regions of Upper West, Upper East and Northern to the urban centers in southern Ghana. The Accra- Keita plains also supply livestock to the Accra-Tema markets. Livestock are moved by trucks from the secondary markets of Bawku, Bolga Tanga, Wa, Tamale and Techiman to the terminal markets of Kumasi, Tema, Accra and other towns. Livestock are inspected by AHPD staff at each livestock market and movement permits issued. The system of marketing involves itinerant traders, secondary market traders, middlemen and butchers. The itinerant traders canvass the hinterland purchasing animals from livestock producers. They trek the animals to the secondary markets mentioned above, where they sell them to individual consumers, local butchers and big traders, who bulk their purchases and ship truck loads of livestock to the southern regional and terminal markets. With the exception of Tema, the livestock markets are open areas with no infrastructure for watering, kraaling and loading animals. Nonetheless, the municipal authorities charge fees on each transaction of livestock. 2.20 The livestock marketing system operates fairly well, following well defined marketing rules and practices. The middlemen, known as "market landlords" because they have a long- term claim to market spaces, act as price brokers between traders and butchers. The middlemen perform an important function in livestock transactions. Their intimate knowledge of both the traders and the butchers provides some degree of trust that the prices negotiated are fair, the animals sold are not stolen or sick and when sales are made on credit, the terms are respected. Commission fees are generally paid to the middlemen by purchasers of animals although sellers willingly offer small fees or make price concessions on animals sold to middlemen. Prices are determined by supply and demand conditions. Prices of livestock, especially sheep and poultry increase during festival seasons of Christmas, Easter and Ramadan. Trading margins range between 9 percent to 20 percent. In general, meat and milk prices are high and offer good incentives for improving livestock productivity. Meat prices have shown a persistent up-ward trend in the last decade. Retail price for beef in Accra doubled between 1985 and 1987 and increased by 70 percent between 1988 and 1990. Slaughterhouses 2.21 Most of the slaughterhouses lack facilities for hygienic slaughtering and delivery of meats to the butcheries. Animals are slaughtered and cut up on the floor. Butchers provide their own personnel to slaughter their livestock. The slaughterhouse floors are overcrowded and the meat easily soiled. Provision of adequate water for the slaughterhouses is a major problem in the rural areas. In all towns including Accra and Kumasi, meat is transported to butcheries in unhygienic manner, typically in the trunk of saloon type taxis. The municipalities of Accra and Kumasi are keen to construct new slaughterhouses and are looking for donors to assist them in financing their projects. AHPD has proposed the construction of the construction of 4 slaughterhouses with simple slaughter slabs, water facilities and meat vans at Bwaku, Ho, Tamale and Wa. These would be considered for funding under the proposed Agricultural Sector Investment Project. 2.22 The parastatal, Bolgatanga Meat Products Company was established in Upper East Region to slaughter cattle, sheep, goats and pigs from Upper East, Upper West and Burkina Faso. It has a capacity of slaughtering about 100 head of cattle per day. In addition to  - 15 - sending chilled meat to the urban markets in Southern Ghana, it used to process meat into corn beef and various pork products. When imports from Burkina Fasso were stopped, frozen beef was imported from the EEC and Argentina. It also has a processing plant in Tema, which used to make sausages. Both the Bolgatanga and the Tema plants have stopped production since 1987 due to financial difficulties. These plants are on the Government's list of enterprises to be privatized. The Meat Marketing Board 2.23 The Meat Marketing Board (MMB) of the Ministry of Trade and Tourism was established in 1972 in order to provide services and inputs to promote the development of livestock production and marketing. Its focus shifted to raising livestock at its two ranches, Koluga and Yeji, and distributing domestic and imported meat. Meat imports used to be the monopoly of the Meat Marketing Board prior to the Economic Recovery Program (ERP). In keeping with the new liberal economic policies, meat and livestock imports have been liberalized and are being performed by the private sector, simplifying and facilitating import management. MMB has stopped importing meat and is concentrating on slaughtering cattle purchased from domestic sources and supplying meat to its institutional customers such as hospitals, schools and hotels. It operates 15 retail outlets in Accra, Kumasi, Sekondi, Cape Coast and Koforidua. The MMB employs 184 people and has cold stores and a large warehouse in Accra, which has been converted to a temporary slaughterhouse, while the slaughterhouse operated by the Metropolitan Assembly of Accra is being renovated. 2.24 MMB has been operating at an average loss of Cedis 40 million (US$110,000) per year since 1985. The number of cattle it is slaughtering annually has declined from over 3,000 head in 1987 to 850 head in 1990. This is equivalent to what the private sector is slaughtering in 10 days to supply the Accra beef market. Realizing that the private sector is executing more efficiently the tasks MMB was engaged in and that there is no useful role that it can play in livestock nor meat marketing, Government has closed MMB and is in the process of liquidating it. Institutional Framework 2.25 Public Institutions. Within the Ministry of Agriculture, the Animal Health and Production Department (AHPD) was responsible for the development of the livestock sector. AHPD was created in 1987 as a merger of the Departments of Veterinary Services and Animal Husbandry. AHPD's staffing comprised mainly veterinarians and animal health assistants as a majority of the animal husbandry staff joined the Department of Agricultural Extension Services at the time of the merger. Consequently, AHPD's program was dominated by animal health activities. The animal husbandry program was relegated to operating 28 government farms and had limited involvement with livestock producers. 2.26 AHPD had five divisions headed by five deputy or assistant directors. These were: (a) Field Services, implementing animal disease control programs; (b) Public Health and Zoonoses, inspecting carcass at slaughterhouses and controlling imports of livestock, livestock products and veterinary drugs; (c) Laboratory Services, operating the diagnostic and vaccine production laboratories, with the Central Veterinary Laboratory located at Pong-Tamale; (d) Departmental Farms, operating government breeding farms; and (e) Nutrition and Range Management, responsible for the development of forage, feed and range resources. At the  - 16 - regional level there was a Regional Head of AHPD, who supervised the activities of the District Veterinary Officers, Animal Husbandry and Production Officers, Technical Officers and Assistants and the regional laboratory. The Animal Production Program 2.27 AHPD did not have the organization and expertise to promote and assist the development of the livestock industry other than in matters of animal health. The department did not have specialists in charge of poultry, pig and dairy development. Animal breeders were also in short supply. The Range and Nutrition Division was not staffed with forage and pasture specialists. Policy and program formulation to foster the development of these areas was constrained by the absence of such specialists. 2.28 The animal production program of AHPD was limited to operating 28 government farms scattered in the 10 regions. Most of these farms are at various states of disrepair. All of them are high cost operations producing considerably below their capacity in relation to the human and land resources available. The output of breeding stock sold to farmers is very low, averaging one head of sheep or cattle per farm personnel per year. Sale of the breeding stock produced is priced below market prices, thus encouraging buyers to profit by selling the breeding stock in the slaughter market. Moreover, the breeding farms are locking up highly trained and scarce manpower in the stations, making it unavailable to assist farmers to improve their livestock production. Animal Health Services 2.29 MOA has an extensive network of field staff in all regions implementing its animal health control program. The emphasis is on controlling the major cattle disease, Rinderpest, and the major poultry diseases in commercial flocks. The coverage of vaccination against Rinderpest is variable from region to region. It is 63 percent in the most important cattle producing regions of Upper East, Upper West and Northern, while it is 78 percent and 15 percent, respectively in the Volta and Western regions. According to the results of a recent sero-surveillance, the effectiveness of Rinderpest immunization in Northern Region is around 50 percent, implying that either some of the vaccine used is of poor quality, or was poorly conserved, or it has been wrongly applied. 2.30 CBPP is found in all regions of the country as confirmed by slaughterhouse inspections. However, vaccination against this disease covers only 1.2 percent of the cattle population due to lack of vaccine. This would be catered for by the European Economic Community (EEC) funded Pan African Rinderpest Campaign (PARC) project (para. 2.38), which would use a combined Rinderpest/CBPP vaccine. Anthrax vaccination is adequate as the vaccine is locally produced in sufficient quantity to cover the needs of the country. There is a need to promote vaccination against Blackleg and Hemorrhagic Septicemia. 2.31 MOA intends to launch systematic mass vaccination against Brucellosis, which is not warranted. According to sero-surveillance conducted in Northern Region, only 4.6 percent of cattle tested positive, and even then at a low level, which is insignificant. A rigorous epidemiological investigation needs to be conducted before deciding to vaccinate against  - 17 - Brucellosis. Cattle in MOA's farms have been reported to contain Brucellosis reactors. Those found positive should be sold for slaughter and MOA should ensure that all new entrants into its farms are free of Brucellosis. 2.32 Although vaccination of small ruminants against PPR is known to have a dramatic increase in survival and productivity, the coverage is extremely low, reaching only 13 percent of the total small ruminant population. It is reported that where small ruminants have been vaccinated mortality had decreased by 60 percent. The problem has been lack of vaccine and farmers' lack of information on the benefits of PPR vaccination. An educational campaign would be necessary to convince farmers of the value of PPR vaccination. Vaccination against poultry diseases is adequately covered for the commercial sector. Newcastle disease takes a heavy toll of village poultry, which is not widely vaccinated against this disease. A systematic campaign of immunization needs to be launched including the newly developed thermostable V4 vaccine, which can be administered through feed (para. 3.20). MOA has a tsetse unit which is limited to research on the prevalence of the tsetse fly and the incidence of trypanosomiasis. Production of Vaccines 2.33 MOA's Central Laboratory in Pong-Tamale is currently producing anthrax spore vaccine . It has proposed to produce viral vaccines for poultry, Rinderpest vaccine for cattle and tissue culture vaccine (TCV) for small ruminants. With rehabilitation of its facilities and additional equipment, Pong-Tamale has a capacity to produce viral vaccines, but it would require building a new laboratory, which would be uneconomic given the small quantity required for Ghana (about 3 million doses per year). The prospect for exports is poor as there is already excess capacity in other African laboratories. However, Pong-Tamale can produce the saline solution for dilution of vaccines. In view of the foregoing, the project would not support any expansion in vaccine production. Livestock Research 2.34 While the main responsibility for animal production research is the mandate of the Animal Research Institute (ARI) of the Council for Scientific and Industrial Research (CSIR), the faculties of agriculture in the three universities are also engaged in animal production research. Historically, the staffing and funding of research at the universities has been far superior to that of ARI and the few publications available are results of university research. There seems to be little coordination of research among the university faculties and with the ARI. The erratic nature of funding has tended to focus most of the effort to short term research. Consequently, most of the animal production research has been concentrated on feeding trials. Provision is made in the National Agricultural Research Project to fund livestock research in the ARI and the universities. MOA has the mandate for animal health and veterinary research. Currently, ongoing research is concentrated in three main areas parasitology, Streptothricosis and tsetse control. These are largely funded by MOA. The Streptothricosis research was conducted in collaboration with the University of Edinburgh, with EEC funding which closed in May 1992.  - 18 - Animal Production Extension 2.35 Animal production extension had previously been the responsibility of the Animal Production Department until its merger with the Animal Health Department in 1987 to create the Animal Health and Production Department (AHPD). Animal husbandry extension is now the responsibility of the Department of Agricultural Extension Services (DAES), to which most of the animal production staff have been transferred. So far, the extension activities of DAES has been almost exclusively crop oriented. There is no linkage between the extension service and the little ongoing research in animal production. Arrangements are being made under the IDA financed National Agricultural Extension Project to strengthen animal production extension and the linkage between research and extension. Under the extension project, the Animal Production Department (APD) would provide animal production subject matter specialists to work with DAES in planning the livestock extension program, liaising with livestock researchers, preparing extension agent and farmer training materials, training extension agents, and conducting on-farm trials in collaboration with livestock researchers. It is envisaged that the new technologies produced under the proposed project, i.e. improved breeding stock, leguminous and grass seeds and animal husbandry practices, would be disseminated to farmers through the national agricultural extension system. External Assistance in the Livestock Sub-Sector 2.36 The Ghana - German Veterinary Project. The German government assisted Ghana in strengthening the Vaccine Production Unit and establishing the Tsetse and Trypanosomiasis Control unit in the Central Laboratory in Pong-Tamale in 1979 under this project. The Tsetse Unit surveyed Northern, Upper East and Upper West regions and prepared tsetse fly distribution maps. The German assistance ended in 1983 and the Unit is being supported totally by the Government of Ghana. The project also provided technical assistance for the operations of the laboratory and funds for vaccines and veterinary drugs. 2.37 The Aveyime Cattle Breeding Ranch. The EEC provided funds and technical assistance in 1983 for rehabilitating the Aveyime Cattle Ranch, which was established under Italian aid a decade earlier. The objective of the ranch is to breed improved Zebu stock (75 percent White Fulani breed) for sale to farmers and to promote animal traction in eastern Ghana. Farmers who purchase breeding stock (at about Cedis 600 (US$1.56) per kg) liveweight, are given extension service on health care, breeding, feeding and management of cattle. The ranch has sold 1,842 improved Sanga cattle during 1983-1990, averaging about 370 head per year in the last 4 of these years. It has achieved a remarkably high level of productivity, showing what can be achieved in Ghana through proper animal health care, feeding and management. Calving rate averages 72 percent, calf mortality 6 percent and adult mortality 1.5 percent. Cows have their first parturition at 48 months and mature steers weigh about 300 kg. 2.38 The Pan African Rinderpest Campaign (PARC). The EEC is assisting Ghana to increase the coverage and effectiveness of vaccination against Rinderpest and CBPP during 1991-1993 under the continent-wide PARC project. PARC would provide funds for vaccines, transportation, cold chain, other supplies and technical assistance to implement the project. The PARC project includes a component of privatization of selected veterinary services. A line of credit of ECU 200,000 (US$245,000) is provided for use by veterinarians who want to establish private practice. The credit would finance transport facilities, veterinary  - 19 - equipment, drugs, housing and working capital. Technical assistance would be provided for preparing detailed recommendations and assisting veterinarians to set up private practice. However, the PARC project agreement does not require that all Government services except regulatory services be withdrawn from the areas where private practice would be established. This must be a precondition to the success of private practice. The proposed project, whose implementation would start at the end of the PARC project, would support the maintenance and improvement of immunity levels achieved by PARC for Rinderpest and CBPP by vaccination of young stock. It would also establish policies conducive to the development of private veterinary practice (para. 3.8 - 3.11). 2.39 The Agricultural Services Rehabilitation Project (ASRP), financed by IDA and started in 1987, provided AHPD about US$1.6 million for vehicles, operating costs and storage facilities to enable it make good use of the improved supply of vaccines and drugs provided by parallel funding from the German credit agency, Kredinstalt fur Wiederaufbau (KFW). A national revolving fund was established to recycle the cost recovered by selling drugs and vaccines to farmers. Cost Recovery of Treatments and Drugs 2.40 While mandatory vaccinations against enzootic diseases of ruminants (Rinderpest, CBPP, Anthrax) and dogs (Rabies) are still free, AHPD introduced in 1986 a system of partial recovery of costs by charging livestock producers for farm visits, laboratory investigations, post mortem examinations and for drugs and other vaccines used. It operates a revolving fund of about US$1 million ( Cedis 380 million) for buying and selling drugs, vaccines, feed and day old chicks. These supplies are bought through competitive bidding for which local firms representing overseas manufacturers participate. The private sector imports a wider variety of drugs and vaccines than AHPD stocked for direct sale to commercial poultry producers. AHPD supervised their imports by approving their request for importation. AHPD's selling price of drugs and vaccines was 10-20 percent cheaper than those of the private firms because AHPD did not include staff and domestic transport costs in its price build-up. MOA should charge the full cost of non-mandatory vaccinations, clinical services and drugs including these costs, so that the private sector can compete fairly. The Veterinary Services Department(VSD) should eventually phase out its activities of drug and vaccine distribution. The mid-term review of the ASRP reported that AHPD had difficulty of reconciling the receipts of the fund against stock issued and recommended that a consultant be hired to put the accounts in order and that the revolving fund be audited by independent auditors. Staffing of Animal Health Services 2.41 The number of veterinary officers (VO) joining the service increased rapidly from 65 in 1987 to 108 in 1990, an increase of 66 percent. During the same period, the number of support staff i.e., technical officers (TO) and technical assistants (TA), slightly declined from 957 to 951. The VO:TO + TA ratio dropped from the more desirable level of almost 1:15 in 1987 to almost double of that in 1990. The TO:TA ratio, which should be less than one increased to more than one. 2.42 There is generally a surplus of veterinary officers, in relation to the livestock population and the tasks the veterinary organization normally carries out. It is generally  - 20 - accepted that for the preventive tasks in traditional production systems, one VO per 200,000 Veterinary Livestock Units (VLU) is enough.2/ However, the ratio is as high as 1:7,600 in Ashanti, 1:8,700 in Central, and 1:10,000 in Brong-Ahafo regions and somewhat nearer to the requirements in the Northern Region with 1:53,000. Similarly, there is a surplus of veterinary support staff. The lowest ratio of VLU per support staff found in the Northern Region at 1:5,260 is more than twice of the normal requirement of 1:12,000. The Government has frozen the recruitment of veterinarians into public service and there is a strong pressure on the Ministry of Agriculture to make a significant reduction of its staff. Government is keen to encourage veterinarians in the public sector to establish private practice with financial assistance under the PARC project. The proposed project would support this move by making the policy environment conducive to the development of private veterinary and animal health services practice. (para. 3.8-3.11, 7.1 (a)(i)(ii)). Budyet of Animal Health and Production Services 2.43 The total budget of AHPD was Cedis 1.5 billion (US$4.2 million) in 1991. This is a 15 percent increase over the 1990 budget. Recurrent expenditure constitutes almost three quarters of the total budget. Of the recurrent expenditure, only 39 percent was budgeted for staff emoluments, which is remarkable in comparison with most Sub-Saharan Africa countries, where this expenditure is about 75 percent of the recurrent costs. In addition, AHPD maintained a revolving fund of about US$1 million for the purchase and sales of veterinary drugs and vaccines. III. THE PROJECT A. OWejtives 3.1 The first and immediate objective of the project is to increase meat, egg and milk production, to raise producer income, particularly those of smallholders, to reduce the country's increasing dependence on imports of livestock and livestock products and to reduce the financial burden on the Government of services it provides to the livestock sub-sector. This would be achieved through a combination of institutional reforms and investment that would lead to improved access by producers to livestock health services, improved breeding stock, improved animal production technology and markets. A subsequent objective of the project would be to improve rangeland utilization and resource management. The project would strengthen the public sector by increasing its capacity to render services to the private sector and privatizing activities in which it does not have a comparative advantage. Proect Stratgy 3.2 The institutional and policy reforms are based on Government's declared policy to disengage from direct production and marketing activities and concentrate on providing services in which it has comparative advantage. The proposed reforms aim at making the most efficient use of Government's limited budgetary resources. The Government's drug and v The Veterinuy Livestock Unit (VLU) is an anima unit, introduced to aggreate the work requirements for animal health cea of different livestock species. One VLU cormsponds to I cow or 10 small rumirLnts or 2 pigs or 100 poultry or I cauml or 2 horses or 2 donkeys.  - 21 - vaccine distribution would be based on the principle of full cost recovery so that the private sector would be able to participate and eventually takeover these services. Government services would be withdrawn from those areas where private enterprise is capable of providing these effectively (para. 3.10). The proposed investments are aimed at: (a) institution building to strengthen the capacity of the Government in sub-sector planning, implementation, monitoring and evaluation of development programs; (b) improving the quality and scope of government services to the private sector; (c) organizing traditional livestock producers in associations to increase their capacity to participate in development programs and to benefit more effectively from government disease control and extension services. Summary Description 3.3 The institutional and policy reforms would cover: (a) the out-contracting of vaccination and meat inspection services in areas where veterinarians establish private practice and the withdrawal of government services in these areas (para. 3.10); (b) introducing a phased program of charging full cost recovery prices for all non- mandatory vaccinations, clinical services, drugs, vaccines and breeding stock provided to the private sector and allowing decentralized financial management at the district level (para. 3.11). (c) closing down 18 government livestock farms, which are not required for research or livestock breeding (para. 3.12); (d) establishing quality standards for manufactured feed and monitoring these standards through regular laboratory analysis of samples and publishing the results in the mass media (para. 3.14-3.15); and (e) restructuring animal production and health services to develop its capacity to (i) provide animal production services; (ii) improve the efficiency of rendering animal health control and treatment services; and (iii) contribute more effectively to policy formulation, program planning, implementation, monitoring and evaluation (para. 3.16); 3.4. 3.4 Project investmen would comprise the following components: (a) strengthening the capacity of MOA to improve the control of major animal diseases and to effectively support the national extension program of the MOA by providing and backstopping the animal husbandry subject matter specialists (para. 3.19-3.21). (b) developing livestock water supplies, particularly in the semi-arid north to improve the utilization of rangelands (para. 3.22-3.26); (c) developing forage production on range and farm lands to intensify cattle and small ruminant production (para. 3.27-3.30);  - 22 - (d) improving breeds of livestock (cattle, sheep, goats and pigs) so that livestock would be able to better respond to improvements in disease control and feed and water availability (para. 3.31-3.32); (e) introducing a pilot dairy development scheme in the peri-urban areas of Accra and Tema (para. 3.33-3.34); and (f) institution building through in-service training and technical assistance (para. 3.35-3.36). Project Area 3.5 The project's institutional and policy reforms, the supply of improved breed of livestock, the development of pastures and the expanded coverage of animal health control would be national in scope. However, a major part of the implementation would be carried out in the three regions of Northern, Upper East and Upper West, where most of livestock production takes place. The small ruminant, poultry and pig improvement programs would be attractive to farmers in the south and peri-urban areas. The feed laboratories would serve the commercial producers in the south. The pilot dairy development would serve produces and consumers in the Accra-Tema area. Rationale for Bank Involvement 3.6 The livestock sub-sector has been neglected as no substantial public sector investment has been made so far. The project is a logical follow-up in the implementation of Government's Medium Term Agricultural Development Program prepared with Bank assistance. Financing the proposed project would complement and be in harmony with the National Agricultural Research Development and National Agricultural Extension and Environmental Resources Management projects, all financed by IDA. Financing of the various projects by the same organization would ensure consistency in institutional and policy reforms and enhance institution building and coordination, resulting in greater impact of the total package and assure the implementation of the MTADP. The project emphasizes smallholder production, which is private sector development. The reforms promoted by the project aim at full cost recovery and privatization of animal health services and closing down non-productive government farms and a meat marketing parastatal. The participation of smallholders in the provision of animal health care, the construction and maintenance of stock water facilities and the production of improved forage seeds and breeding animals would further enhance the development of the private sector, which is consistent with the macro- economic policies pursued in Ghana with structural adjustment programs. IDA has financed a number of livestock projects in similar agro-ecological zones in Western and Central Africa, with beneficial impacts, the experience of which it can pass to Ghana. B. Detailed Project Description Institutional and Policy Reform 3.7 In line with stated government policies, a comprehensive set of reforms would be introduced in the livestock sub-sector. Government's resolve to implement these reforms is  - 23 - articulated in its policy statement on livestock development (Annex 2 . Details of these policy reforms are presented in the following paragraphs. 3.8 Privatization of Animal Health Care. Government would adopt a two pronged strategy in promoting the privatization of animal health services. First, groups of livestock producers in the villages would employ a Community Livestock Worker (CLW) to relieve MOA staff from administering simple prophylactics and basic treatment of livestock ailments that could be tackled by farmers given the proper training. Because these treatments are currently given by MOA staff, only a relatively small portion of the nation's livestock receive such attention. MOA would find it increasingly difficult to keep up with the demand for such services as more farmers realize the benefits of these measures and as livestock numbers increase. MOA would, therefore, privatize such simple services by training CLWs, who will be selected by livestock producers in their communities and trained and licensed by VSD to perform simple dispensary duties such as wound dressing, dusting or bathing of animals to control ectoparasites, deworming, relief of bloat, castration and treatment of foot-rot. The CLW would also assist VSD staff in: (a) organizing vaccination and other animal health educational campaigns; (b) carrying out livestock census; (c) isolating animals with contagious diseases; and (d) selling to farmers non-scheduled veterinary drugs and lotions. 3.9 VSD would train about 2000 CLWs during the five-year project period, beginning with 200 during the first year and increasing this number by 100 CLWs each year. The CLWs would initially be trained for 5 weeks with a refresher course of one week every six months for a period of two years. The work of the CLWs would be supervised by VSD staff and their licenses renewed every year. This supervision would ensure that records are kept properly and farmers' views and complaints are addressed to adequately. The CLW would be paid by the farmer groups they service. Sufficient margins would be added to the drugs the CLWs sell and the services they render. APD subject matter specialists, collaborating with the extension service, would ensure that these farmer groups are identical to those formed by extension staff for disseminating agricultural technology. Initially, funds would be made available to VSD for training the CLWs and to stock the CLWs with veterinary drugs and supplies. Private suppliers would eventually take over this supply function when the volume of turnover is sufficient to attract their involvement. The CLWs would keep simple equipments like burdizzo, thermometer, trocar & cannula, drenchers, knapsack sprayers, etc. However, these would be paid for by farmers through the fees CLWs would charge for services they render. 3.10 The second approach to promoting privatization of animal health services is the withdrawal of Government services in areas where veterinarians establish private practice. This is a necessary condition to the success of private practice as private veterinarians cannot compete with subsidized services nor with moonlighting Government veterinarians. Government would, therefore, withdraw all active interventions, except regulatory services in areas where private veterinarians practice. Government vaccination campaigns and meat inspection would be contracted out to private veterinarians and Government would maintain adequate animal health personnel to ensure the quality of service rendered by private veterinarians meets acceptable standards and to conduct epidemiological work. Government would establish, not later than April 1, 1993, a broad-based Committee for the Privatization of Veterinary Services comprising: (i) Director, Veterinary Services Department (DVS); (ii) Deputy Director, DVS (Animal Health Services); (iii) two representatives of the Ghana Veterinary Medical Association; (iv) a representative of the agri-business community; and (v)  - 24 - a representative of farmers' associations. This committee will elaborate the policies for privatization of veterinary services, as broadly indicated above. Assurances to this effect were obtained at project negotiations (para. 7.1 (a)(i)). 3.11 The third approach to promoting privatization of animal health services is related to that of recovering the full cost of distributing drugs and vaccines and services to the private sector. Besides generating more funds for Government services, full cost recovery would create a more favorable environment for private veterinarians and distributors of veterinary drugs and suppliers. The levels of charges for veterinary treatments, non-compulsory vaccinations, veterinary drugs and supplies and breeding stock would be determined on the basis of cost calculations by the Livestock Planning and Information Unit. Raising the charges for veterinary drugs and supplies sold to the public to 75 percent of the cost of the service including cost of drugs, vaccines and supplies used, transport, personnel and financial charges, is a condition of credit effectiveness (para. 7.1 (c)(ii). Furthermore, agreement was reached at project negotiations that these charges would be raised to full-cost recovery levels by January 1, 1994 (para. 7.1 (a) (ii). Revenues so collected would be part of the revolving fund of VSD and would be used for non-salary expenditures. 3.12 Selline or Leasing or Closing Inefficient Government Farms and Marketing QRerations. MOA is operating 28 government farms scattered in the 10 regions. These farms are at various stages of disrepair and are high cost operations, producing substantially below their capacity. They absorb almost all of the manpower and budgetary resources of the animal production program. The quality of breeding animals sold is poor and the number too small to make a significant impact on increasing livestock production. Furthermore, the breeding stock are priced below market prices, thus encouraging buyers to profit by selling the breeding stock in the slaughter market. The project would provide funds for rehabilitating and fully stocking only six breeding farms that would serve as nuclei of networks of breeding programs that would involve farmers in producing improved breeding stock for sale to other farmers (para. 3.31, 3.32). These six farms are located at Amrahia, Babile, Ejura, Kintampo, Nungua and Pong-Tamale. The MOA has requested the Divestiture Implementation Committee of the State Enterprises Commission to dispose of the remaining 18 farms. Assurances were obtained at project negotiations that the Borrower would sell or, lease or close the 18 MOA farms not required for livestock breeding or research by (para. 7.1 (a) (iv)). 3.13 The Meat Marketing Board (MMB) has deviated from its original objectives of rendering input and output marketing services to promote the development of the livestock industry, and has degenerated to being the state butcher, slaughtering cattle purchased from domestic sources and supplying meat to its institutional customers such as hospitals, schools and hotels. MMB has been operating at an average loss of Cedis 40 million (US$110,000) per year since 1985. The number of cattle it is slaughtering annually has declined from over 3,000 head in 1987 to 850 head in 1990. This is equivalent to what the private sector is slaughtering in 10 days to supply the Accra beef market. Realizing that the private sector is executing more efficiently the tasks MMB was engaged in and that it has no useful role to play in livestock nor meat marketing, Government has closed MMB and is in the process of liquidating it. 3.14 Enforcing Ouality Standards for Manufactured Feed. A serious problem that commercial poultry producers face is the poor quality of the feed formulated by some feed  - 25 - mills as there is no quality control by Government. This has in part contributed to the development of a situation in which a great majority of commercial poultry producers are formulating their own feed (Annex I). It is very difficult to formulate good quality feed without the necessary equipment. It is, therefore, essential that producers' confidence in feed mills is restored and feed mills encouraged and regulated to produce reliably good quality feed in accordance with established standards, so that commercial producers would increase their efficiency of production by using more nutritious and balanced feed formulated commercially. If feed mills were supplying more than 50 percent of the feed requirement of the commercial poultry sector, the cost of commercial feed would decrease due to economies of scale and the efficiency of poultry farms would improve as producers would spend less time on chasing feed ingredients and concentrate their energy and capital to specialize in production activities. 3.15 The project provides funds for building a feed analysis laboratory at the Animal Research Institute (ARI) and fully equipping it to test feed samples so that the declared nutrient contents of feed produced and sold by commercial feed mills is monitored closely. Assurances were obtained at project negotiations that Government would, no later than December 31, 1993, set minimum nutrient requirements of the various types of feed and enforce the feed standard regulations by regular testing of feed samples produced by feed mills and publishing the results in the major newspapers to inform poultry producers on the quality of the feeds available in the market (para. 7.1 (a)(iii)). Signing a Memorandum of Understanding between MOA and CSIR, specifying the services ARI would render to MOA, is a condition of disbursement under this component (para. 7.1 (d)(i)). 3.16 Restructuring the Organization of Animal Health and Production Services. The organizational structure of AHPD did not clearly bestow on anyone, except the Director, the responsibility for developing animal production and for responding to the problems the nation faces in this area. There was no unit in AHPD that was responsible for the development of the poultry, pig, small ruminant and dairy industries. Nor did AHPD have specialists in these fields, except in small ruminants and ruminant nutrition, who can competently advise the Director of AHPD on vital policy issues affecting these industries. The same could be said for the development and management of range and pasture resources. The responsibility for animal production was too diffuse and did not augur well for the future development of the livestock industry. The names of the two divisions catering to animal production; i.e. Departmental Farms and Nutrition & Range Management, did not adequately reflect the functions of animal production within a ministry of agriculture. This organization also precluded the recruitment of key personnel and frustrated the development of appropriate animal production programs to solve the problems of the livestock industry. Cognizant of this fundamental problem, MOA restructured the organization and management of AHPD by splitting it into two departments, namely the Animal Production Department (APD) and the Veterinary Services Department (VSD) and by creating the Livestock Planning and Information Unit (LPIU) in the office of the Deputy Secretary, Livestock. While VSD would have, essentially the same structure as that of the current Veterinary Services Division in AHPD, APD would have a totally new structure as that shown in Figure 1 of Annex 2 (see para. 5.4- 5.10 for details). 3.17 The LPIU would be the repository of information on the livestock industry and would operate the data bank to service the policy formulation, programming, monitoring and evaluation needs of APD and VDS. The LPIU would be adequately staffed and equipped to  - 26 - service the needs of MOA for livestock data collection, analysis and dissemination. A management information system (MIS) would be custom designed for LPIU and staff trained to effectively use the system. Disease control programs would be driven by epidemiological information and analysis instead of routine practices. (See para. 5.8 and Annex 13 - Working Paper for details of the MIS). 3.18 Monitoring the Incentive Framework. While poultry exports from the EEC are not subsidized, beef exports are sold in coastal African countries at heavily subsidized prices. While this favors consumers, it could, in the long-run, discourage domestic production of livestock. The Government will carefully monitor the effect of these imports on local production and consumption, and annually discuss with IDA, whether there is a need for specific measures to mitigate the effect of such unfair competition. A further disincentive in the production of poultry and pigs is the problem of erratic supply of maize and lack of credit to finance large quantities of maize when its price is low. The Government would study the impact of subsidized EEC meat imports on domestic production and consumption of meat in Ghana and investigate the impact of maize imports and lack of credit on the supply of feed for the poultry and pig industries and submit a report to IDA, no later than September 30, 1993 (7.2 (b)(ii)). Project Investment 3.19 Animal Health Care. The project would provide funds for the procurement of vaccines, veterinary supplies, equipment, cold chain, transport, expansion and rehabilitation of laboratories, offices and staff housing in remote areas where rental accommodation is scarce. Seven regional laboratories would be rehabilitated and well equipped to provide diagnostic services for clinical services and research and data for the Livestock Planning and Information Unit. These laboratories are those situated at Accra, Pong-Tamale, Kumasi, Bolga, Wa, Ho and Takoradi. MOA plans to phase the establishment of these laboratories by rehabilitating the Accra, Kumasi and Pong-Tamale laboratories first. The establishment of the rest would follow the successful operation of these. The laboratory at Kumasi would specialize in diseases of poultry and pigs. The regional laboratories would provide diagnostic services and provide data to the Livestock Planning and Information Unit (LPIU) for the epidemiological data base and analysis that would guide the planning and execution of animal disease control programs. 3.20 Vaccination campaigns against PPR in small ruminants would be intensified to cover the entire population in 10 years. The new V4 Newcastle vaccine, developed in Australia would be introduced for application in village situations as it has been successfully applied in South-east Asia. The V4 vaccine is convenient, particularly in village situations, because it does not require catching the birds as it is orally administered by mixing it with feed and it is thermostable, requiring no refrigeration. Vaccination against Fowl Pox in village poultry would also be intensified using locally produced vaccine. 3.21 A pilot tsetse control program using new techniques of integrated pest control would be introduced in the Upper west region, covering 2,500 square km of land and in the Coastal Plains by using insecticide and attractant impregnated traps and screens and by release of sterile males. In addition, animals would be treated with pour-on insect repellents. Networking with research being conducted on this approach to controlling trypanosomiasis in different African countries including Cameroon, Central African Republic and Zimbabwe  - 27 - would be promoted. Staff of the tsetse unit would visit these countries to learn from their experiences in using this approach. VSD would liaise with FAO and CIRDES in Bobo- Dioulasso and ensure that the Ghanaian effort fits well into the regional initiative those organizations are attempting to coordinate. A national plan for controlling Trypanosomiasis and tsetse flies will be prepared on the basis of the experience gained (para. 7.1 (b)(vi)). 3.22 Stock Water Development. The project would provide funds for the development of 62 stock water supply points in five regions, distributed approximately as follows: 25 in Northern, 18 in Upper West, 9 in Upper East and 5 each in Greater Accra and Volta regions. These water supply points would include dams or dug-outs, dug or drilled wells and springs. Where more than one choice exists, the decision will be based on the least-cost sustainable option after consultation with water users' associations. The economic justification for the individual investments would be based on their contribution to weight gains or savings from weight loss by the animals using the water. The daily water requirement of an adult livestock unit is about 30 litres per day. The annual weight gain or savings from loss which can be ascribed to the new water source is about 52 kilos liveweight per Tropical Livestock Unit with a commercial value of Cedis 18,200 in 1992 prices. 3.23 The maximum economically profitable capital expenditure, with adequate provision for proper operation and maintenance of the facility (estimated at about 10 percent of the capital cost) would be about Cedis 502 per cubic meter of storage capacity with a 50 percent of storage efficiency in cases of small reservoirs, ponds or dug-outs. This implies a maximum expenditure of Cedis 25 million (US$63,000) for a 50,000 m3 storage capacity earthen dam and (b) Cedis 38 million (US$96,000) for a borehole with capacity of 3,000 litres per hour (Annex 3!. 3.24 The Ghana Irrigation Development Authority (GIDA), in consultation with APD, would work out for each proposed facility the estimated capital costs, the operating and maintenance costs and finalize the decision to implement only where the cost per unit of storage or yield per hour capacity is below the estimated economic threshold. The cost implication to the beneficiaries would be worked out and clearly explained to them for their commitments to the investment capital as well as the operation and maintenance costs. The implementation methods or procedures would also be worked out to the satisfaction of the beneficiaries, and including their fullest possible participation, having regard to maximum efficiency in use of all available resources. 3.25 The development of these water points would be based on community initiatives and with their full participation. Communities seeking assistance would participate in the decisions and made responsible for controlling water use and protecting the environment around the water sources and catchment areas. They would agree to protect the wells, pumps and drinking troughs, dams, embankments, reservoirs, dugouts etc. and their immediate catchment areas by planting trees and vetiver grass and other effective vegetation and by instituting control of grazing around the structures as appropriate. They would also be made responsible for the maintenance of the water supplies with technical assistance from the MOA through . Where they do not yet exist, communities would be required to form water users' associations, which would be charged with these responsibilities designed to enhance sustainability of the investment. The range management improvements proposed under the project could be implemented more successfully with the active involvement of these associations, which would find it in their own interest to regulate water use and, by extension,  - 28 - the grazing area commanded by the water sources developed. Communities would contribute a minimum of 25 percent of the total cost of developing the water sources in kind and/or in cash and take full responsibility for the proper operation and maintenance of the facility. This will be done through water users' associations. A scheme would be designed whereby the limited funds available would be applied to economically viable stock water development facilities in communities with greatest need and commitment to sustaining the investment. GIDA would be charged with the responsibility for implementing this component, including identifying stock water needs, designing supply schemes, obtaining user commitments to the development and maintenance, organizing the implementation with water users associations and providing training and technical guidance to users in operating and maintaining the facilities. APD would be responsible for organizing water users' associations and providing technical assistance to them in controlling water use and protecting the environment around the water supplies and their catchment areas. Submitting to IDA a draft model contract between MOA and water users' associations is a condition of credit effectiveness (para. 7.1 (c) (iv)). 3.26 GIDA has the requisite manpower and expertise to undertake this responsibility. The project would provide GIDA with funds for vehicles, motorcycles and incremental recurrent costs. In undertaking these responsibilities, GIDA would ensure appropriate priority allocation of available water resources for human and livestock consumption and irrigation. The development of the water supplies would be undertaken by contractors using,as far as possible, labor from the communities. Where boreholes are the only solution to the problem of water supply, they would be established under local competitive bidding or shopping, depending on the cost and the packaging arrangements for maximum cost effectiveness. In many instances, hand dug wells and boreholes, would be possible, and they should be given preference because of cost effectiveness and the opportunity for employment generation in the dry season when agricultural operations are at a low point. Signing a Memorandum of Argeement between GIDA and MOA specifying these arrangements would be a condition of disbursemn under the water development component (Para. 7.1 (d)(ii)). 3.27 Feed Resources Development. The project would provide funds for seeds, equipment, farm machinery, and transport to implement the following forage and pasture development program: (a) Oversowing of about 40,000 ha of heavily grazed rangeland, primarily in the Upper East, Upper West, and parts of the Northern Region, with pasture legumes, the stylos in particular. The sown legumes would have the ability to persist, to provide higher quality grazing in the dry season, and to spread widely; (b) Oversowing of about 5,000 ha of leniently grazed grasslands, primarily in the savannahs of the northern areas and of the Accra and Ho-Keita Plains, with a mixture of herbaceous and tree legumes; (c) Development of about 5,000 ha of "sustainable swiddening' through the introduction of Leucaena into fallow areas, primarily in the forest and transition zones and with particular emphasis on steep hillsides in the Volta Region, to provide a reliable forage and fuelwood base and to establish a more sustainable and less exploitative approach to crop production in those areas; and  - 29 - (d) Establishment of about 6,000 intensive plots of tree legumes adjacent to dwellings and kraals, scattered throughout all regions, for cut and carry utilization. 3.28 These interventions would lead to rapid spontaneous expansion into adjacent areas because of the readily available seed supply and natural seeding via wind, surface water and the defecation of animals. Other strategies which would be introduced or supported on a smaller pilot scale are: (a) Establishment of about 1,000 ha of fodder banks through the introduction of herbaceous legumes into fallow areas, preferably with control of livestock access; target areas would be scattered through most regions, but there would be very little activity in the highest intensity cropping areas. Promotion of appropriate utilization of forage from tree legume strips in alley farming systems established under initiatives of the Crop Services Department; (b) Undersowing of about 600 ha of annual crops with a range of forage and dual purpose legumes, particularly in higher rainfall areas; (c) Establishment of forage legumes under perennial tree crops, on about 1,000 ha; (d) Urea treatment of rice straw, on a small pilot scale, in conjunction with research groups and development of 700 ha of improved pastures and 400 ha of tree legume stands on MOA farms. 3.29 Seed Production. Range and forage development on this scale demands large quantities of seeds, which would be prohibitively expensive to import. The project would establish a capacity for the local production of seed. This program would be based on a contract scheme with smallholder farmers. Seed of leguminous species would be produced by some 300 smallholder on plots averaging 0.2 ha. 3.30 The seed production program would be undertaken by the Crop Services Department (CSD) of MOA and based in Tamale, with most outgrowers in adjacent areas, but with limited quantities of seed being collected from other areas. Storage and handling facilities would be established in Tamale. It is anticipated that the program would produce about 150 tons of seed over the 5 years of the Project. Prices for the herbaceous legumes are anticipated to be at least less than 20 percent of the cost of imported seed. 3.31 Breed Improvement. Funds would be provided under the project for the acquisition of superior breeding stock from Ghana and abroad, the rehabilitation of the six breeding farms, transport, developing pastures, purchase of feedstuff and other incremental operating costs. Professional breeders from APD, the Animal Research Institute (ARI) and the universities would have a professional input in the design and monitoring the execution of the breeding and testing programs. Each breeding center would have a steering committee that would oversee the execution of the breeding program and the distribution of animals to ensure its accountability and transparency. ARI and university researchers would be given access to these farms for conducting animal production trials that do not adversely affect or interfere with the breeding objectives of these farms.  - 30 - 3.32 The method of breeding operations on the six farms to be retained and developed for the breed improvement program under the project is described in Annex 13 - Working Paper 2. The specialization of these farms would be: Amrahia for dairy cattle; Babile for pigs; Ejura and Kintampo for small ruminants; and Pong-Tamale for mainly beef cattle. These farms would serve as nuclei breeding and performance testing centers for the different species of livestock. Private farmers would be involved in multiplication of breeding stock from parent stock provided from the nuclei breeding centers under an animal exchange program. These farmers would be closely supervised in multiplying improved breeding stock and given extension advice and animal health care assistance. The stock multiplied by these farmers would supply the needs of other farmers for improved breeding stock. This would have a multiplier effect and would make a significant impact in a shorter period than relying on government breeding farms. A similar program for sheep has been quite successful in neighboring Cote D'Ivoire, which Ghanaian breeders would visit in order to learn useful lessons from that experience. 3.33 Pilot Dairy Development Scheme. The project would support the establishment of a pilot milk collection scheme around which activities aimed at increasing the supply of milk would be organized. The Amrahia farm would be rehabilitated to serve as the nucleus for the pilot dairy development scheme. Fifty high yielding Frisian cows would be imported to start a cross breeding program. The farm infrastructure would be improved by adding a new water supply system, repairing the perimeter fence and paddocks, installing a new milking machine, rehabilitating a bulk milk cooling tank and renovating existing buildings. Farm machinery, transport including a one ton truck for milk collection and delivery, would be provided. Participating farmers would be encouraged and supported to organize themselves into a milk marketing association, which would eventually take over the milk procurement and marketing function. Assurances were obtained at negotiations that APD would (a) maintain separate accounts for the pilot dairy scheme; (b) progressively implement full cost recovery for the collection and sale of milk; (c) promote the establishment of a milk producers association to operate the scheme; and (d) either transfer operation of the scheme to such association or other private parties or terminate the scheme not later than January 1, 1997 (para. 7.1 (a) (v)). 3.34 Funds would also be made available for forage development and extension program for rendering technical assistance and organizing farmers into milk producers associations in order to link them with the proposed milk collection and marketing scheme. Interested farmers would be identified and given technical assistance and extension advice in improving their milk production by using crossbred bulls, supplementing their feed with high quality forage, agro-industrial by-products and concentrates, and providing good animal health care. The goal in the initial years would be modest as getting such a development scheme, involving cross breeding and organizing smallholders, off the ground is difficult and takes a long time. Details on the pilot dairy development scheme is given in Annex 13 - Working Paper 3. 3.35 Institution Building. The project would provide funds for staff training and technical assistance. In-service training would be provided for all categories of staff, while training outside Ghana would be provided for key staff, who need to sharpen their skill and deepen their knowledge to deliver efficient service in the veterinary laboratories, the Livestock Planning and Information Unit and the new sections in the Animal Production Divisions to be established under the project, i.e., Range Development and Monitoring, Forage and Pasture  - 31 - Development, Poultry and Pig, Small Ruminant Development and Dairy Development sections. Study tours to observe successful implementation of tsetse control, animal breeding, milk collection and marketing schemes. Technical assistance would be provided in the key areas of livestock information management, tse-tse control, the introduction of the V4 vaccine, animal breeding and range ecology, and financial and administrative management, where expertise is lacking in Ghana (Annex 4!. 3.36 The training and technical assistance outlined above would strengthen the capacity of the MOA to: (a) contribute effectively to the formulation of livestock sub-sector policies and development programs and to support private sector investment in the industry; (b) improve the control of major animal diseases; (c) effectively support the national extension program of the Ministry of Agriculture (MOA) by providing animal husbandry subject matter specialists and backstopping their activities; and (d) monitoring and regulating the livestock industry. IV. PROJECT COSTS A. Cost Estimates 4.1 Total project costs are estimated at US$29.06 million ((Z 11.87 billion) inclusive of duties and taxes in the amount of US$2.24 million ((7910 million). About 67 percent of total costs, excluding duties and taxes, or US$17.99 million is foreign exchange cost. As a proportion of base costs, investment costs amount to 73 percent and incremental recurrent costs 27 percent. Total contingencies are 18 percent of base costs, using 1992 prices, with physical and price contingencies accounting for 9.8 and 8.0 percent, respectively. Price contingencies are estimated on the basis of the implementation schedule and expected annual price increases as follows: Local 8% p.a. for 1992 and 5% p.a. during 1993-97; and foreign 2.8% p.a. for 1992; 3.9% p.a. for 1993-94, and 3.8% p.a. for 1995-97 4.2 Table 4.1 presents a summary of project costs by component. Additional summary tables on project costs by year, by component, and by summary accounts are presented in Annex 5. B. Proposed Financine Plan 4.3 Of the total project cost of US$29.06 million, the proposed IDA Credit would finance US$22.45 million, the Government of Ghana (GOG) US$5.35 million and beneficiaries US$1.27 million. The IDA credit would finance 100 percent of foreign exchange costs and 51 percent of local costs, excluding duties and taxes. Of the total IDA contribution, US$4.34 million is to finance incremental recurrent costs on a declining basis, as shown in Table 4.6.  - 32 - Tabk 4.1 PROJECT COST SUMMIARY % Foreign %Total Proiect Component Local Foreien Total Exchanee Base Costs -(US$ Million) Animal Health Control 2.46 5.60 8.06 69 33 Feed Resource development 0.89 0.89 1.78 50 7 Livestock Water Supply 2.04 1.50 3.54 42 14 Breed Improvement 1.42 2.71 4.13 66 17 Pilot Dairy Development Scheme 0.29 0.65 0.94 69 4 Institution Building Animal Production Services 0.90 1.47 2.37 61 10 Livestock Plan & Information 0.22 0.25 0.47 53 2 Training 0.87 1.35 2.22 61 9 Technical Assistance - 1.14 1.14 100 4 TOTAL BASELINE COSTS 9.09 15.56 24.65 63 100 Physical Contingencies 1.01 1.43 2.44 59 10 Price Contingencies 0.97 1.00 1.97 51 8 TOTAL PROJECT COSTS 11.07 17.99 29.06 62 118 of which: Incremental Operating Costs (4.30) (3.51) (7.81) (45) (27) Duties and Taxes (2.24) (2.24) (8) Table 4.2 PROPOSED FINANCING PLAN BY PROJECT COMPONENT Benefi- Proiect Component IDA GO ciaries Total Percent (USS Milion o Animal Health Control 7.90 1.67 - 9.57 33 Feed Resource development 1.26 0.84 - 2.10 7 Livestock Water Supply 2.58 0.60 1.26 4.44 1S Breed Improvement 3.68 1.16 - 4.84 17 Pilot Dairy Development Scheme 0.85 0.25 - 1.10 4 Institution Building Animal Production Services 2.36 0.44 - 2.80 10 Livestock Plan & Information 0.40 0.15 - 0.55 2 Training 2.21 0.24 - 2.45 8 Technical Assistance 1 2 _ __ 21 4 Total 22.45 5.35 1.26 29.06 100 Table 4.3 PROPOSED FINANCING PLAN BY FOREIGN EXCHANGE AND LOCAL COSMS orecizn Local Total (USS Million) IDA 17.99 4.46 22.45 Government of Ghana - 5.35 5.35 Beneficiaries - 1.26 1.26 TOTAL 17.99 11.07 29.06  - 33 - C. Procurement Table 4.4 SUMMARY OF PROPOSED PROCUREMENT ARRANGEMENTS (USS million equivalent) * Project Element ICB LICB LCB Other Total 1. Works 1.1 Building, Fences 3.65 0.42 4.07 (3.29) (0.36) (3.65) 1.2 Water Supplies 3.52W/ 3.52 (1.77) (1.77) 2. Goods 2.1 Vehicles and Farm Machinery 4.19 0.08 4.27 (3.77) (0.07) (3.84) 2.2 Equipment and Furniture 3.59 0.50 0.20 4.29 (3.59) (0.45) (4.04) 2.3 Livestock 0.46 0.40 0.86 (0.46) (0.10) (0.56) 2.4 Veterinary Drugs and Supplies 0.78 0.12 0.90 (0.78) (0.78) 2.5 Seeds 0.38 0.38 (0.22) (0.22) 2.6 Office & Miscellaneous Supplies 0.44 0.44 (0.24) (0.24) 3. Training and Technical Assistance 3.1 Training 2.46 2.46 (2.25) (2.25) 3.2 Technical Auistance 1.21 1.21 (1.21) (1.21) 4. Miscellaneous 4.1 Incremental 0 & M Cost I/ 2.29 4.37 6.66 (1.25) (2.64) (3.89) Subtotal 8.56 0.46 10.52 9.52 29.06 (8.14) (0.46) (7.00) (6.85) (22.45) * Figures in parenthesis show share of IDA funncing 1I of which 11 % or USS0.73 million is for incremental salaries and allowances. a/ of which US$1.26 million is funnced by beneficiaries. 4.4 All goods, civil works and services financed under the IDA credit would be procured in accordance with the Guidelines for Procurement under IBRD Loans and IDA Credits. Technical assistance will be procured in accordance with Bank Guidelines for the Use of Consultants and training and study tours will be arranged in consultation with IDA and in accordance with the training program agreed in the annual work program and budget of the project.  - 34 - 4.5 The Bank's Sample Bidding and Contract Documents would be used to develop standard bidding documents for goods, works and consulting services. In carrying out LCB procurement, adequate bidding time (not less than 60 days) would be allowed. The bidding document would provide explicit bid evaluation and award criteria, and foreign firms would be allowed to participate if they so desire; contracts for goods and works would be awarded under LCB to the lowest evaluated responsive bidders. 4.6 To encourage prompt action by of the project, the completion of bidding documents satisfactory to IDA for the procurement of goods and civil works have been prepared for the first two years of operation and are included in the Project Implementation Schedule (Annex 6). A summary of the proposed procurement arrangements is given in Table 4.4. 4.7 Civil Works. The individual civil works proposed in the project are not suitable for ICB as they are small and scattered throughout the 110 districts of Ghana. Civil works amounting US$7.59 million would be procured under LCB. Small and scattered civil works, costing less than US$20,000 per contract up to an aggregate of US$0.42 million would be procured under local shopping. Major works would be grouped in convenient packages based on their location and nature of works and would be procured by LCB in which foreign firms would be permitted to participate. A procurement schedule for works is given in Annex 6. All engineering, design and construction supervision of these works would be entrusted to consulting firms to be appointed by the project according to IBRD/IDA's procurement guidelines. 4.8 Goods. Vehicles and farm machinery (US$4.19 million) would be procured under ICB. However, some of the vehicles and farm machinery required urgently (e.g. for start up activities or replacement for those that may be totally lost through accidents) would be procured in small quantities by local shopping procedures through local dealers, but not exceeding an aggregate amount of US$0.08 million. As a substitute for local shopping, the project may procure these through the Inter-Agency Procurement Services Office (IAPSO)/UNDP). Other goods estimated to cost US$100,000 or less up to an aggregate of US$1.95 million would be procured under LCB. Seeds estimated to cost up to an aggregate amount of US$0.22 million; office supplies, and vehicles and machinery operation and maintenance estimated to cost up to an aggregate amount of US$1.91 million (excluding incremental salaries and allowances), may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines and in accordance with procedures acceptable to IDA. Breeding livestock not to exceed US$0.46 million will be procured through limited international competitive bidding (LICB). Breeding livestock not to exceed US$0.10 million would be procured through international shopping. 4.9 The Borrower has agreed that IDA financed procurement under ICB would exclude any price verification by any surveillance firm although inspection of goods for quality and quantity could be carried out by such a firm. LCB procedures will include local advertising, public bid opening, clarity and disclosure of evaluation criteria, transparency in the evaluation process, award to the lowest evaluated bidder and non-exclusion of foreign bidders that may wish to participate. 4.10 Consultancies and Training. A list of major contracts for consultants is shown in Annex 4. These contracts would be awarded following IDA's procurement guidelines.  - 35 - Training requirements have been identified as presented in Annex 4. The project will submit for IDA's review annual training and study tour programs. These would identify trainees for each course, period and place of training and estimated costs. 4.11 Procurement Review by IDA. All contracts for works estimated at US$200,000 or more and contracts for goods estimated at US$150,000 or more, would be subject to IDA's prior review procedures. This would cover about 76 percent of the total value procured. Selected post review of contracts below the above threshold will take place during project supervision missions (one in five). All contracts for consultants, would be subject to IDA's prior review at each stage of implementation. 4.12 Contract Reporting. Procurement information would be reported to IDA by the project via comprehensive quarterly reports to IDA indicating (a) revised cost estimates for individual contracts and the total project, including best estimates of allowances for physical and price contingency; (b) revised procurement schedules; and (c) compliance with aggregate limits on specified methods of procurement. 4.13 Implementation Capacity. It is Government policy that the procurement of goods should be undertaken by the Ghana Supply Commission (GSC). However, Government has agreed that IDA financed projects could apply for exemption from this requirement as GSC does not have sufficient manpower to process procurement for all IDA financed projects. The project would apply for such exemption. The Project Coordination Unit of MOA, which was established for implementing the Agricultural Sector Rehabilitation Project (ASRP) is given the responsibility for preparing procurement and disbursement documents for all MOA projects. This unit would be responsible for preparing procurement and disbursement documents under the project. The unit has a well qualified financial controller and a Bank trained procurement officer, who are familiar with the Bank's guidelines and procedures for procurement of goods and services. In addition, VSD's Deputy Director and one of the accountants have been trained by Bank staff. Project staff would be given additional training as part of the continuing program of the Western Africa Department to train the Borrower's officers in the Bank's procurement procedures for goods and services. D. Disbursement 4.14 The IDA Credit of US$22.45 million is expected to be effective on April 1, 1993. The project is expected to be completed by June 30, 1998. The credit would be disbursed over a period of five and a half years, up to the closing date of December 31, 1998. The disbursement schedule is provided in Annex 5. It is shorter than the historical disbursement profile of eight years for agriculture and rural development projects in Africa. The five and half year disbursement period is considered realistic since the departments responsible for implementing the project are firmly in place, and most of the vehicles, equipment and furniture would be procured in the first two years of the project. The civil works for office, staff accommodation and farm rehabilitation would also be completed in the first two years of the project. The construction of dams and boreholes for stock water development may be  - 36 - delayed as its implementation would heavily depend on the initiative and participation of beneficiaries and GIDA to mobilize support and supervise implementation. The disbursement schedule is summarized in Table 4.5. Table 4 SUMMARY DISBURSEMENT SCHEDULE (USS Million) Caftory Amount of Crcdit % of Exwenditum to be Financed Civil Works 3.74 100% of foreign and 90% of local Water Development 1.61 100% of foreign and 90% of local Vehicles & Farm Machinery 3.51 100% of foreign and 90% local Livestock 0.51 100% of foreign and 90% local Equipment and Furniture 3.68 100% of foreign and 90% of local Veterinary drugs & Supplies & Seeds 0.68 100% of foreign and 90% of local Training 2.06 100% of foreign and 80% of local Technical Assistance 1.10 100% Incremental Recurrent Cods 3.56 70% up to June 30, 1996 and 50% thereafter Sub-total 20.45 Unallocated 2.00 TOTrAL 22.45 4.15 In order to facilitate project implementation and to reduce the volume of withdrawal applications, a Special Account will be opened at a commercial bank on terms and conditions acceptable to IDA. This account will be operated by MOA. An initial advance of US$ 1.0 million, covering four months of eligible expenditure financed by IDA, will be authorized and can be withdrawn upon credit effectiveness. Replenishment requests will be submitted monthly. Each request will be fully documented except for incremental recurrent expenditures and for contracts of less than US$20,000 equivalent which will be made on the basis of statements of expenditure (SOE). All supporting documents will be retained by MOA and made readily available for review by periodic Bank supervision missions and external auditors. Whenever possible, withdrawal application should be aggregated in amounts of not less than US$50,000. The same limit applies to direct payments. The Project Coordinating Unit of MOA will have responsibility for the preparation and submission of withdrawal applications. 4.16 Government will establish a project account with a local commercial bank, which will receive the Government funding contribution and would be used to make payments for the implementation of the project. Government will pay its contribution, monthly and in advance to this account. The first Government deposit in this account, US$70,000 equivalent in Cedis, is a condition of credit effectiveness (para. 7.1 (c)(v)). This would be sufficient to cover Government's contribution to finance the local incremental recurrent and capital costs for the first three months of the project's operations. An annual work program and budget would be prepared and submitted to IDA not later than September 30, of each year by APD, VSD and all other departments and agencies participating in the project (para. 7.1 (b) (v)).  - 37 - E. Auditing and Reporting 4.17 All accounts related to the project, including drug revolving funds and the accounts of livestock breeding farms, would be audited annually by independent auditors acceptable to IDA. In addition to the auditors' reports and statements of accounts, a long form audit report, that is, financial statements of project accounts, the special account and SOE's and a management letter, will be prepared. This auditors' report would be submitted to IDA within six months of the end of the fiscal year of the Government. Quarterly financial progress reports and semi-annual progress reports would be submitted to IDA within 45 days of the end of each reporting period (para. 7.1 (b)(iv)). Financial Implications 4.18 The project would require Government to make a US$5.35 million contribution over a period of five and a half years. About US$2.24 million of this is recovered through taxes and duties on goods and services used by the project. The net budgetary contribution of the Government would, therefore, be US$3.11 million. The annual Government contribution would be US$0.46 million in the first year increasing to a high of US$1.2 million in the second year of the project and declining to US$1.01 million in the fifth year. In 1991, the expenditure allocation of MOA was about US$50 million, out of which US$19.6 million was under the recurrent budget. The recurrent budget of the Animal Health and Production Department was US$4.2 million. Incremental recurrent expenditure resulting from the project is shown in Table 4.6. Government's contribution to this incremental recurrent expenditure during the first year of the project would be US$0.2 million and gradually increasing to US$1.01 million in the final year. However, an average of US$17 million per year is for operating expense of the 6 breeding and testing stations, which APD would recover through the sales of improved livestock. There would also be savings realized from selling or closing down some 18 livestock farms MOA is currently operating. The average incremental recurrent cost of US$1.56 million represents an increase of less than 8 percent p.a. of MOA's current allocation for recurrent expenditure on animal health and production services. The additional burden on the Government's budget should not be onerous, particularly if APD and VSD are vigilant in recovering the cost of services rendered to farmers, disposes of its unproductive farms and encourages privatization of animal health services. Table 4.6 PHASING OF INCREMENTAL RECURRENT EXPENDITURES Project Year if PY2 X PY4 a Calendar Year 1993 19 i 199 1997 TOAL -----------------------------(US$ Million)-----_---- IDA 0.46 1.01 1.07 0.96 0.84 4.34 GOG 0.20 0.37 0.61 0.80 1.01 2.99 Beneficiaries - 0.06 0.10 1 1 0.48 TOTAL 0.66 1.44 1.78 192 2.01 78  - 38 - V. PROJECT IMPLEMENTATION A. Organization and Management 5.1 The project would be mainly managed by MOA and implemented by the Animal Production Department and the Veterinary Services Department in collaboration with: (a) GIDA, which will implement the stock water development component; (b) the Crop Services Department, which will implement the pasture and forage seed multiplication component; and (c) ARI, which will conduct the feed analysis for MOA. In addition: (a) The Policy, Planning, Monitoring and Evaluation Department (PPMED) would oversee that the project has a satisfactory management and information system (MIS) and that project activities are adequately monitored and evaluated; (b) DAES would extend improved livestock technologies, backed-up with animal production SMS, and assist in contacting, selecting and organizing farmers who would participate in animal breeding, seed production and community livestock worker programs; (d) the MOA Project Coordinating Unit would arrange procurement and disbursement under the project; and (e) the MOA Manpower and MOA Training Department would make arrangements for staff training. A matrix of these project implementation arrangements is given in Annex 6. 5.2 Project implementation would be decentralized with the Chief Regional Veterinary and Animal Husbandry officers and managers of the 5 breeding and testing stations and the manager of the Dairy Development Center at Amrahia, playing a major role in the annual planning, implementation and monitoring of their respective project components. The role envisaged for the directorates of APD and VSD is that of coordinating this planning, facilitating and supervising its implementation. 5.3 Under the guidance and coordination of the Deputy Secretary for Agriculture (Livestock) the directors of APD and VSD and the heads of the different divisions, sections and units of APD and VSD would be responsible for implementing the various components of the project and to administer the approved budgets. They would, in collaboration with the Livestock Planning and Information Unit (LPIU), be responsible for monitoring the progress and effectiveness of the components they implement. The Deputy Secretary for Agriculture (Livestock) would be the de f= coordinator of the project. A project Steering Committee would be established that would meet regularly to review the progress of the project and advise on policy matters and coordination with other departments of MOA, the Council for Scientific and Industrial Research (CSIR), other government agencies, and the academic, farming and business communities active in the livestock industry. This committee will meet once a month during the first year of the project when teething problems abound. It may meet once every quarter in subsequent years. Establishing the Steering Committee is a condition for credit effectiveness (para. 7.1 (c)(i)). The proposed composition of the Steering Committee would be as follows: PNDC Deputy Secretary for Agriculture (Livestock), Chairman Director, Animal Production Department; Director, Veterinary Services Department; Director, Department of Extension Services; Director, Crop Services Department; Director, Policy Planning, Monitoring and Evaluation Department;  - 39 - Director, Animal Research Institute, CSIR; A representative of Environmental Protection Council; A representative of Ghana Irrigation Development Authority; A representative of professional associations in the livestock industry, co-opted by MOA; and Head of LPIU, Secretary. Animal Production Department (APD) 5.4 The APD has three divisions, namely, Ruminant Production, Non-Ruminant Production and Range and Forage Production. The rationale for setting-up the three divisions is recognition of the major thrusts that are required to get animal production in Ghana moving forward and to underscore the differences in the problems these sub-sectors face. It is easier to commercialize non-ruminant production as is seen in poultry production in southern Ghana. The major problems in the non-ruminant industry relate less to technology and more to availability and quality of inputs (e.g., breeding stock and feed) and processing and marketing of products. Grappling with these issues requires specialized personnel with the requisite training and the necessary authority and responsibility. The previous structure of AHPD did not confer this specialization and responsibility to any identifiable unit or person. The creation of the three divisions mentioned above addresses this fundamental problem that existed in AHPD's organization. 5.5 Production of ruminants is constrained by inadequate supply of improved animals and shortage of feed and water, particularly during the dry season. The problem is more production and technology oriented than marketing and processing. Although the organization of AHPD allowed focussing on these problems, the dichotomy of breeding and nutrition and the merging of range management with nutrition did not facilitate the development of ruminant production. Furthermore, range monitoring and range improvement are specialized functions dealing with ecology and environmental protection, thus requiring particular attention and responsibility for their development. This responsibility cannot be efficiently discharged if lumped with non ruminant and ruminant nutrition. APD includes a Range Monitoring and Improvement Unit which will be stationed at Tamale near where the field work would be undertaken. This unit would have a range ecologist, and a sociologist to cater for those aspects dealing with beneficiary participation in managing range and water resources. Veterinary Services Department (VSDI 5.6 The proposed organization of the Divisions VSD are along existing lines except for the Epidemiology Unit. VSD would have three divisions, namely Animal Health Services, Laboratory Services and Regulatory Services. The Animal Health Services Division would be responsible for the major part of the work of VSD in the control and treatment of animal diseases. The Laboratory Services Division would support the field work in disease control and treatment by rendering diagnostic, vaccine production and research services. The Regulatory Services Division would be responsible for formulating and enforcing policies that regulate the movement of livestock, and livestock products and the quality of veterinary drugs and vaccines used in Ghana.  - 40 - The Livestock Planning and Information Unit (LPIU). 5.7 It is proposed to enhance, reorient and expand the scope of the Epidemiology Unit's activities to adequately and effectively cater to the needs of MOA for information on the livestock sub-sector for policy making, development planning and monitoring and evaluating the impact of development programs under implementation. MOA needs reliable information on livestock production and productivity and on the constraints to productivity such as health, nutrition and genetic potential. For management purposes, APD and VSD require information on the activities of personnel and on expenditures and revenues generated. The current activities of the Epidemiology Unit would not enable it fulfil these functions. It would be renamed the Livestock Planning and Information Unit (LPIU) and strengthened and expanded to enable it design and implement a management information system (MIS) that is capable of compiling and analyzing such data and publishing the information in usable formats for decision makers, development program implementers and the livestock industry at large. 5.8 The unit's work program, staffing and other resource requirements are given in Working Paper 4. In summary, the unit would assist MOA in policy formulation and program planning and the various divisions, sections and units of APD and VSD in developing their programs, preparing their budgets and monitoring the progress and effectiveness of their implementation. This unit would develop a MIS that would enable all staff of APD and VSD involved in directly implementing development programs to monitor the progress and effectiveness of their work. Thus, LPIU is responsible for the monitoring and evaluation of the project (para. 5.7-5.10). In addition, it would be the repository of all statistics on the livestock industry, including animal health, production, and marketing, and would publish on a regular basis the analysis on trends and their implications for the development policies of the industry. Data on livestock census, animal productivity, epidemiology, movement of animals, price and volume of livestock traded in major markets, licenses, volumes and values of livestock and veterinary products imported, which are currently lying uncompiled and unanalyzed in MOA's archives would be processed and published regularly by this unit. A major part of the data would be collected by field staff in the normal course of their work. Regional veterinary officers and diagnostic laboratories would submit their reports to the unit on a regular basis in an agreed format as shown in Annex 13 - Working Paper 4. Animal health control programs would be designed on the basis of epidemiological information rather than on routine practice. 5.9 The main office of the LPIU would be situated in Accra with a branch at Pong-Tamale. The latter would cover the northern half of the country. The main office would cover the southern half, in addition to being responsible for the compilation and analysis of the national data base and synthesis of the national picture. The unit would be staffed with four epidemiologist, two animal production specialists and one agricultural economist. Technical assistance would be required to set-up the MIS system and to train staff. Provisions are made for training staff abroad. The unit would work closely with PPMED, which has already seconded the required agricultural economist. 5.10 MOA has agreed to set-up APD, VSD and LPIU along these lines and to appoint the directors and heads of the divisions and units with qualifications and experience acceptable to IDA. The restructuring of animal health and production services under the project would facilitate its operations and the implementation of the project. However, the directorates of APD and VSD would need to institute an improved management system that would be  - 41 - effective and responsive to changing situations in the industry. Full authority needs to be delegated to division and section heads to implement the budgets of their approved programs and their activities. The accounting system needs to be improved in view of AHPD's inability to account fully for the revolving fund established under the Agricultural Services Rehabilitation Project. Recruiting an expert in financial and administrative management is a condition of credit effectiveness (para. 7.1 (c) (ii), Annex 4). B. Monitoring and Evaluation (M&E) 5.11 Two types of monitoring and evaluation (M&E) are distinguished, i.e., M&E of project implementation and M&E of the project's impact on total livestock production and on the welfare of the target beneficiaries. Implementation Monitoring 5.12 Monitoring and evaluation of project implementation is an integral part of project management as it provides feed back on whether the physical and financial targets are being achieved as planned. The head of the Livestock Planning and Information Unit (LPIU) is responsible for overseeing the operation of the management information system (MIS) that would provide such information. 5.13 An MIS that would transmit data monthly from the field to district and regional offices would be set up. Field staff and officers of the APD and VSD would be required to fill monitoring forms as part of their normal duties. Supervisors in the regional offices would analyze the data so supplied and send the results to the districts and headquarters. The LPIU would aggregate and synthesize the information for the whole project and prepare a management report that would be transmitted back to the regions. Semi-annual physical and quarterly financial progress reports would be prepared and submitted to IDA (para. 7.1 (b)(iv)). These progress reports would facilitate the production of the annual reports of APD and VSD. The LPIU, would from time to time, undertake simple field assessments in order to explain variations between planned targets and results achieved or to assess the effectiveness of certain facets of the animal health and production program by interviewing selected farmers and field staff. Government would design an MIS satisfactory to IDA and implement it no later than December 31, 1993 (para. 7.1 (b)(i)). Impact Evaluation 5.14 Monitoring and evaluation of project impact provides information to national planners and policy makers as well as IDA concerning the effectiveness of the project in achieving the desired objectives as set out in the project plans. This would require: (a) the establishment of bench mark data against which the project's impact would be gauged, and (b) periodic measurements of the key impact parameters. While some of the baseline data and periodic measurements, such as number and characteristics of farmers adopting innovations, can be collected through the MIS, socio-economic evaluations and livestock productivity surveys to determine impact on beneficiaries and national livestock output have to be conducted by PPMED. Most of this data would be obtained from the normal operations of the LPIU described in para. 5.8 and Annex 13 - Working Paper 4.  - 42 - C. Technical Assistance 5.15 APD and VSD would need experienced professional technical assistance for capacity building and implementation of the project. Funds are provided under the project for commissioning a total of 115 man months of consultants to start implementation of the various programs initiated under the project, to train staff and to provide advice on the execution of these. About 70 man months of technical assistance would be devoted to capacity building activities and 45 man months to short-term substitution (project implementation) activities. APD and VSD would provide qualified Ghanaians as counterparts. Annex 4 shows the phasing for the various expertise required and their terms of reference, including their qualification, duration of consultancy, reporting requirement and support to be provided by the MOA . It is highly unlikely that experienced experts in these fields would be found in Ghana. International recruitment is assumed in estimating the cost of the technical assistance component. D. Mid-Term and Completion Reviews 5.16 The progress and impact of the project would be jointly reviewed by MOA and IDA, not later than December 31, 1995. Not later than September 30, 1995, MOA would prepare a mid-term report on the project to facilitate this review (para. 7.1 (b)(iii). The review would inter l evaluate: (a) the effectiveness of the Livestock Planning and Information Unit's reports for planning and implementing animal disease control services; (b) the depth and coverage of the vaccination program and the level of immunity reached against the major diseases; (c) its impact on livestock production and target beneficiaries; (d) the effectiveness of MOA's animal health and production services; (e) development and maintenance of water points; (f) participation of farmers in the delivery of animal health services and the management of rangelands and water points; (g) the training program of the Community Livestock Workers and their effectiveness; (h) progress in privatization of veterinary services; and (i) progress in closing MOA farms not required for livestock breeding or research; 0) progress in carrying out the pilot dairy development scheme; and (k) the adequacy of the Borrower's counterpart funding. This report would provide the basis for a joint Government/IDA review to be conducted no later than December 31, 1995. 5.17 The key indicators in assessing impact for the mid-term review would be: (a) the number of animals vaccinated; (b) the number of breeding animals produced by the breeding centers and participating farmers; (c) the improvements made in productivity parameters as compared to those given in Annex 1; (d) the adequacy of Government support in counterpart funding, particularly incremental recurrent costs; and (e) implementation of policies with respect to the provision of credit, availability of inputs, accessibility of markets and incentives that would enhance the widespread adoption of improved livestock technologies by Ghanaian farmers. The Borrower and IDA would consider changes in the project as a result of the mid- term review. Assurance was obtained at project negotiations that this review would be implemented before December 31, 1995 (para. 7.1 (b)(iii)). E. Implementation Schedule and Supervision 5.18 A detailed implementation schedule and a project supervision plan are given in AnnR 7 and 8, respectively. Project supervision would be closely linked to the implementation  - 43 - schedule. There would be three supervision missions during the first year of the project, when the project may be faced with start-up problems. Subsequent supervision missions would take place semiannually. The first supervision mission would launch the project by assisting APD and VSD in meeting with conditions of credit effectiveness, initiating actions to implement the project covenants and troubleshooting arrangements for procurement of goods and services. One of the semiannual supervision missions would be timed during the last quarter of the year to review the annual work program and budget. Key indicators of the project shown in Annex 9 would be incorporated into the semi-annual progress reports. These would include targets for adoption rates by type of technology. In addition to these indicators of financial and physical progress, which are related to the implementation and disbursement schedules and to the detailed cost tables, supervision would assess progress on the quality of the animal health control and animal production services and the in-service staff training programs. The LPIU and PPMED would play a key role in these supervision activities. VI. BENEFITS, JUSTIFICATION AND RISKS A. Benefits and Justification 6.1 The project would help generate substantial increase in livestock production and would improve the nutrition, income and standard of living of a large number of rural families through improved animal disease control services and the diffusion of improved technologies in livestock and forage and pasture production and facilitating access to off-farm inputs, credit and markets. Specifically, project benefits should manifest themselves in three main areas of increased livestock production, development of human resource and increasing institutional capacity to cater to the development needs of the livestock industry. 6.2 The economic benefits resulting from the project would be strongly affected by the rate at which the veterinary, breed, forage and water improvements are adopted by livestock producers. An internal rate of return on investment in animal health control, forage and water development, excluding the investment in manpower development and technical assistance was calculated on the basis of the most probable rate of growth of services made available by the project, modified by a factor of adoption. Within the range defined by these assumptions the ERR of this investment would be about 52 percent (Annex 11). The ERR is robust. A sensitivity analysis was carried out by decreasing prices of meat and milk and increasing costs by a combination of 10 and 20 percent. Varying both by 10% reduced the ERR to 39 percent. Decreasing prices by 10 percent and increasing costs by 20 percent reduced the ERR to 35 percent. A combination of 20% reduction in prices and 20% increase in costs depressed the ERR to 30 percent. 6.3 Incremental livestock production was estimated for only the veterinary, forage and water improvements on cattle and small ruminants. Lack of reliable data and adoption rates on village poultry and the breeding program precluded estimates of realistic incremental production on these interventions. The estimates of incremental production are thus very conservative. The project would result in the incremental production of 8370 metric tons of meat and 8,770 metric tons of liquid milk in a period of five years valued at about US$12.65 million in constant 1992 prices. The average annual incremental production is estimated at  - 44 - 1,755 metric tons of meat and 1,750 metric tons of liquid milk during the first 5 years. This would increase to 3,210 metric tons of meat and 7,100 metric tons of liquid milk in the next 5 years (Annex 1I). B. Sustainability 6.4 The sustainability of the project is assured by the strong human resource development component that would strengthen the capacity of the MOA to provide effective disease control and animal production services and to monitor and evaluate their impact. Beneficiary participation in maintaining water facilities provided under the project and taking up the distribution of veterinary drugs and supplies and basic treatments by employing Community Livestock Workers would, in the long-run, reduce their dependence on VSD and extension staff for providing these services. MOA's ability to plan and coordinate animal disease control and animal production services at the national level would be greatly enhanced by the establishment of the Livestock Planning and Information Unit under the project. This would allow for a more effective system of technology diffusion and adoption and would permit improved capacity and leadership in the livestock sub-sector, thereby creating a better opportunity for obtaining and streamlining both internal and external financing. The infrastructural requirements of the animal health and production services and trained staff would be in place to continue the national program. The recurrent costs would be well within the means of Government financing, particularly if MOA is vigilant in fully recovering the cost of its services from beneficiaries, closes the 18 non-productive farms it operates and refrains from recruiting additional veterinarians into the service and promotes vigorously privatization of animal health services and the distribution of veterinary drugs and supplies. C . P>rsiect Riusk 6.5 The foreseen project risks, which are common to similar IDA supported projects, include: (a) ineffective management and training of personnel; (b) low adoption rates of technical recommendations by farmers; (c) the possible inability of Government and/or donors to sustain the long-term commitment required to achieve durable improvements in the effectiveness of livestock support services; and (d) unfavorable output:input price ratios. 6.6 The structure of the Animal Health and Production Department was not conducive and its management needs improvement for the effective implementation of the project. Improved management of livestock services is expected as a result of the improved organization, training, monitoring and evaluation, and technical assistance to be provided under the project. Decentralizing decision making by conferring more authority and responsibility at the regional level would improve management. The station and on-farm research support provided by the National Agricultural Research Project and the strong research/extension linkage in planning the research and extension program built into the National Agricultural Extension Project should reduce the risk of low adoption rates. The annual review of work plans and budgets, as well as the mid-term implementation review, will provide good opportunities for program review and enhancing long-term Government and donor commitment. Use of improved technology and increased access to inputs and produce markets would help in reducing the cost of production as well as the spread between wholesale and farm gate prices.  - 45 - D. Environmental Impact 6.7 A limited environmental impact assessment of the project was made by the Environmental Protection Council with the assistance of IDA (Annex 13 . The Council has also prepared an environmental action plan, which would be implemented through a series of projects including the proposed project. The limited environmental impact assessment of the project indicates that the most likely negative environmental impacts from the project are related to the potential overgrazing as a result of higher livestock numbers raised as a result of project interventions and the tsetse fly control involving an area of 2,500 sq km. The project seeks to mitigate this potential negative impact through introducing a number of interventions to improve the productivity of rangelands and their management. Livestock producers would be organized into associations around water supplies, i.e. dams, dugouts or boreholes. Water supplies would be developed or rehabilitated and maintained through these associations. Both pasture and tree legumes would be introduced into rangelands and burning of the range controlled in collaboration with the associations. A system of closing and opening water sources would be used to control grazing of the range. This is expected to substantially increase the carrying capacity of the natural pastures to enable them sustain production at a higher level. 6.8 APD includes a Range Monitoring Unit which would conduct environmental awareness campaigns and give technical assistance to the livestock producers' associations in: (a) organizing and managing their business affairs; (b) improving the range resources; (c) managing the range resources by controlling access to water resources and burning. RIMU would have experts in range ecology, range management, and socio-economics. A systematic range monitoring to assess the impact of grazing on the environment would be one of the major functions of the Unit. The results of the range monitoring exercise would be used to demonstrate the impact of good and poor management on the environment. 6.9 The project would introduce growing leguminous fodder (e.g., Stylosanthes m and Leucaena e) into the farming systems, where most of the cattle and small ruminants are raised. Farmers would be taught on the cultural practices and management of these legumes as well as the conservation of crop residues and by-products of the village processing industry (e.g., cassava, yam, cocoyam and plantain peelings, palm kernel meal, etc.) for feeding livestock during the dry season. This would significantly increase the availability of feedstuffs to sustain more intensified production of livestock, and improve soil fertility. 6.10 Adverse effects of insecticide use in the tsetse control program is expected to be limited as no blanket spraying of insecticide is envisaged, and the odor baited screens and traps that will be used are non-polluting.  - 46 - VII. AGREEMENTS REACHED AND RECOMMENDATION 7.1 During project negotiations with Government the following assurances and agreements were obtained: (a) Proiect Implementation (i) VSD would contract out vaccination and meat inspection services in areas where veterinarians establish private practice and would withdraw government services in these areas. This would be guided by a broad-based committee overseeing the privatization of veterinary services, comprising: (1) Director, VSD; (2) Deputy Director, VSD (Animal Health Services); (3) two representatives of the Ghana Veterinary Medical Association; (4) a representative of the agri-business community; and (5) a representative of farmers' associations. This committee would be established by the Borrower not later than April 1, 1993 (para. 3.10); (ii) VSD would progressively increase its charges for non-mandatory vaccinations, clinical services and drugs and vaccines provided to the private sector to full cost-recovery prices by January 1, 1994. The LPIU would calculate the cost of providing inputs and services including domestic transport and personnel costs and finance charges. The schedule of fees VSD would charge would be submitted to IDA for prior approval, together with the cost build-up calculation, semi-annually, and published not later than March and September of each year (para. 3.11); (iii) APD would, not later than December 31, 1993, establish quality standards for manufactured feed and subsequently enforce these standards through quarterly laboratory analysis of samples and publish the results in the media (3.15); and (iv) The Borrower would, by December 31, 1993, end all budgetary support for the 18 MOA farms which are not required for livestock breeding and research. (v) APD would operate the pilot milk collection scheme under terms of reference satisfactory to IDA, which shall require, inter alia, that APD (a) maintains separate accounts maintained for the scheme; (b) implement progressive full-cost recovery in the collection and sale of milk; (c) promote the establishment of a private milk producers association to operate the scheme; and (d) either transfer operations of the scheme to the association or other private parties or terminate such scheme not later than January 1, 1997. (b) Assurances for Reporting. Project Monitoring and Evaluation and Implementation Review: (i) A management information system (MIS) would be designed for APD and VSD, satisfactory to IDA, and implemented no later than December 31, 1993 (para. 5.7-5.8);  - 47 - (ii) The Borrower would, not later than September 30, 1993, prepare studies on the impact of imports of subsidized meat from the EEC on domestic production and consumption of meat and lack of credit on the supply of feed for the poultry and pig industries (para. 3.18); (iii) Not later than September 30, 1995, MOA would prepare a mid-term report on the project, evaluating inter alia: (1) the effectiveness of the Livestock Planning and Information Unit's reports for planning and implementing animal disease control services; (2) the depth and coverage of the vaccination program and the level of immunity reached against the major diseases; (3) its impact on livestock production and target beneficiaries; (4) the effectiveness of MOA's animal health and production services; (5) development and maintenance of water points; (6) participation of farmers in the delivery of animal health services and the management of rangelands and water points; (7) the training program of the Community Livestock Workers and their effectiveness; (8) progress in privatization of veterinary services; and (9) progress in closing MOA farms not required for livestock breeding or research; (10) progress in carrying out the pilot dairy development scheme; and (11) the adequacy of the Borrower's counterpart funding. This report would provide the basis for a joint Government/IDA review to be conducted no later than December 31, 1995 (para. 5.16-5.17); (iv) Semi-annual progress reports and quarterly financial reports would be prepared within 45 days of the end of each reporting period and submitted to IDA (para. 4.17); (v) An annual work program and budget would be prepared and submitted to IDA not later than September 30 of each year by the Borrower and GIDA (para. 4.17); and (vi) Not later than December 31, 1996, the Borrower would submit to IDA a national plan for the control of trypanosomiasis and tsetse (para. 3.21). (c) Conditions of Credit Effectiveness (i) The Project Steering Committee would be established (para. 5.3); (ii) An administrative and financial management expert would be recruited (para. 5.13); (iii) Cost recovery of veterinary drugs and supplies sold to the public would be raised to 75 percent of the cost of the service, including cost of drugs, vaccines and supplies used, and charges for transport, finance and personnel (para. 3.11); (iv) A draft model contract between MOA and Stock Water User's associations, specifying their contributions, functions and responsibilities in the development and management of the water supplies and the range resources commanded by them (para. 3.25) would be submitted to IDA; and  - 48 - (v) A Livestock Services Project Account would be established and the Borrower would pay into this account its first contribution of the equivalent of US$70,000 in Cedis (para. 4.16). (d) Conditions of Disbursement For Feed Laboratory Component (i) A memorandum of understanding would be signed between CSIR and MOA on the supply of feed analysis equipment to ARI and the services ARI would render in analyzing samples of commercial feed for regulatory purposes and in support of APD's feed resource development and breeding programs (para. 3.15); and For Stock Water Develogpment Component (ii) A memorandum of understanding would be signed between MOA and GIDA on designing, contracting and supervising the construction of stock water supplies and the training of water users' associations in their proper use and maintenance; and (para. 3.26) Recommendation 7.2 Based on the above agreements and conditions, the project is suitable for a credit to the Republic of Ghana of SDR 15.3 million (US$22.45 million equivalent) on standard IDA terms with 40 years maturity.  - 49 - ANNEX I Page 1 of 8 GHANA NATIONAL LIVESTOCK SERVICES PROJ1ECT LIVESTOCK PRODUCTION A. Livestock in the Economy 1. Livestock production is an important feature of the country's agriculture, contributing largely towards meeting food needs, providing draft power and generating income. Cattle production is an integral part of the farming systems in the northern part of Ghana. About half of farmers in the Upper West and Upper East use bullocks for plowing. Of these about 40 percent rent the bullocks. Studies show that bullock owning households cultivate 60 percent more land than those who don't. The livestock sub-sector accounts for an estimated 9 percent of agricultural GDP. However, it is a major source of income for farmers in the three northern regions of Ghana. Despite its vast resources of forage, the livestock resource base is modest with about 1.2 million cattle, 2.2 million sheep, 2.4 million goats, 8 million poultry, including guinea fowl, and half a million pigs. Livestock production offers rapid growth opportunities, as the necessary internal market exists, the potential for increased production of feed is high and the technology for controlling diseases and improving productivity is available. B. Livestock Production and Constraints Livestock Production 2. The cattle population is concentrated in the Guinea and Sudan Savannah vegetation zones in the three regions of Northern, Upper East and Upper West, which combined account for about 77% of the cattle population in Ghana. The relatively dry coastal savannah in the south accounts for about 15 per cent. The remaining transitional and humid forest zones are sparsely populated with cattle because of the prevalence of tse tse flies, which transmit trypanosomiasis, a killer disease. Small ruminants and poultry are more evenly distributed throughout the country, whereas pigs are more concentrated in the forest belt and around urban centers. 3. Except for poultry and pigs, there is no large scale commercial production of cattle and small ruminants and there is virtually no marketable milk production. Birds in both the village and commercial sectors are primarily raised for eggs. The level of livestock production is low and provides only about 30% of the national protein requirement. Fish is the main source of protein, particularly in southern Ghana. Annual consumption is estimated at 200,000 tons compared with 54,000 tons of meat. Bush meat, especially that of grasscutter, is very popular and provides a considerable amount of protein, although supply estimates are unavailable. This has led to a significant depletion and in some case the extinction of several species of wildlife in many parts of Ghana. 4. It is difficult to estimate the amount of livestock and meat imported into the country as most of the live animal imports from Burkina Faso are not recorded. Frozen meat  - 50 - ANNEX 1 Page 2 of 8 imported into the country fluctuates enormously. Imports of recorded frozen meat dropped from a peak of 11,530 tons in 1983 to 1,620 tons in 1987. The trend for 1991 was that about 12,000 - 15,000 tons would be imported. The share of beef imports fell from 73% in 1983 to 5% in 1988. Most of the current meat import is poultry parts, with a substantial content of turkey tails and chicken wings. 5. The milk yield of the predominant West African Shorthorn breed is very low. Very little milk is extracted for home consumption. There is hardly any surplus milk produced for the market. Consequently, the dairy product import bill is very high, constituting a significant share of livestock product imports. Import of dairy products in 1988 was 4,100 tons valued at US$6.7 million. Cattle Production 6. The West African Shorthorn (WAS) is the predominant cattle breed, accounting for over 80% of the cattle population. Most of the remaining cattle are mixtures of WAS, Ndama and the Zebu. Most cattle are owned by smallholders who are predominantly settled farmers. Herds are generally small, average holding being 9 head, and production primarily geared towards provision of drought power and beef. There are a few large herds of absentee owners and which are managed by Fulani pastoralists. There is virtually no large commercial production of cattle. Although there are 29 government farms in which cattle are reared, the only one that can be regarded as a commercial ranch is the Aviyeme Government ranch in Greater Accra region, where about 2,200 head of cattle are reared. Almost all cattle production is a based on a low-cost -low -output traditional extensive system using natural pastures in the open range and crop residues. Except on Government farms there are no planted pastures. Besides the value of the animals, the only other investment is limited to the provision of kraals, night enclosures. Disease control is largely limited to free Government vaccinations. 7. This low level of input results in low levels of productivity. Calving rates are below 55% and calf mortality is high (25-30%) and only about 55% of the calves born reach maturity. Calving intervals are long(19.5 months). Age at first calving is 4-5 years and animals take a long time (5-6 years) to attain maturity at a weight of about 220 kg. liveweight. Offtake rate is estimated at 9% p.a. and the cattle herd is growing at an average rate of 3.8%. It is estimated that cattle provide about 30 percent of the domestic meat supply. 8. Milk extraction, limited to the wet season, is estimated at about 100 liters per lactation of about 205 days. Very few farmers sell milk on a regular basis. Only one Govermnent farm and one private farm keep a small number of cows for milk production. The proportion of cows within herds managed by Fulanis in the coastal plains is 54% in contrast to 36% in the Upper East region where draft power is important. The national average of cows in herds is 40%.  ANNEX I Page 3 of 8 9. Although WASH can be efficient relative to their small body size, there is a growing interest among farmers in introducing Zebu blood, particularly in Upper West and Upper East and the Accra Plains, where the Zebu are mostly found. The Aviyime government ranch has successfully bred Sanga type cattle, which are 25% WASH and 75% Zebu of mainly White Fulani breed. The ranch sold 1,842 improved Sanga cattle during 1983-1990, averaging about 370 head per year in the last 4 of these years. The ranch has achieved a remarkably high level of productivity, showing what can be achieve in Ghana through proper animal health care, feeding and management. Calving irate averages 72%, calf mortality 6% and adult mortality 1.5% p.a. Cows have their first parturition at 48 months and mature males weigh about 300 kg. 10. The Amrahia government farm and the University of Ghana, Legon have maintained Friesian dairy cattle, although Amrahia is struggling with keeping them alive due to shortage of funds to operate the farm efficiently. A private farmer has introduced brown Swiss cattle near Accra and producing milk for sale. However, disease have to be adequately controlled, feeding resources properly developed and conserved, and improved techniques of animal husbandry in livestock feeding, breeding,young stock rearing and sheltering taught to farmers if larger and exotic breeds of cattle are to be productively used in Ghana. 11. Cattle Diseases constitute the most important constraint on cattle production and development in Ghana. Several diseases are known to affect cattle and some of them occur in epidemics with devastating effects. The main killer diseases are Rinderpest, Contagious Bovine Pleuro-Pneumonia (CBPP), Anthrax and Blackleg. Trypanosomiasis is prevalent in the humid forest belt and sub-humid Guinea savanna areas. The predominant cattle breeds are rypanotolerant. However, farmers are increasingly showing a preference for Zebu cattle, which are susceptible to trypanosomiasis. Streptothricosis, Brucellosis and Foot and Mouth diseases are economically important cattle diseases also found in Ghana. While these have a minor effect in reducing productivity in beef cattle, they would assume more importance in the development of a dairy cattle breed. 12. Grazin2 Resources. Cattle production in Ghana is based primarily on grazing of natural unimproved grasslands and some crop residues. By-products feeding of cattle is very limited. There is a gradually expanding but still very limited conservation and use of crop residue. Most of the crop residue is burnt. 13. About two thirds of Gnana's land area is grassland. This comprises the Guinea and Sudan Savanna in the north, the transitional areas of the Lower Volta Plains and Afram plains and the coastal savanna of the Accra-Keita Plains. The naturally occuring grasses in north Ghana are Andogon gayanus, Hyparrhema na, Cenchrus ., Hetropogo M In the humid region, the common grasses are giant star (Cynodon plectostachyszs), elephant grass and guinea grass (Panicum maxim. Although much higher yields have been reported under experimental conditiions, a yield of 2 ton DM per ha can easily be expected under nattural range condition, producing about 6.8 million DM ton p.a. Most of Ghana's grasslands are greatly underutilized. Such areas are characterized by very rapid growth of tall grasses, with feeding value high only in the early part of the wet season, declining rapidly  - 52 - ANNEX I Page 4 of 8 thereafter, and becoming extremely low in the dry season. Burning usually occurs early in the dry season. The natural pasture could support the national herd of cattle sheep and goat all year round if properly managed and conserved. 14. Grazing pressure is extremely high in some areas in the Upper East, Upper West, and in scattered areas close to settlements. Heavy grazing pressure is typically closely correlated with heavy cropping pressure. Some of these areas, particularly in the Upper East, are facing serious environmental degradation, and soil fertility is declining. Most of the rangelan has a dearth of useful native legumes, particularly those that can persist under heavy grazing and provide feed into the dry season. There have been virtually no deliberate introductions of improved forage/pasture species into rangelands or into farming systems. Few government staff have had exposure to more appropriate development options, but have concentrated development work primarily on government farms and research stations. 15. Provision of water for livestock in northern Ghana does not pose problems in the rainy season. However, considerable difficulties are encountered in the long dry season when streams are dry. The shortage of water causes livestock owners to trek cattle over long distances, causing hardships on both herders and livestock. Dams and dugouts which store water from surface runoff provide water for use by humans and livestock. It is estimated that about 450 dams and dugouts of varying capacities ranging from 20,000 to 500, 000 cubic meters exist in the Northern, upper West and Upper East Bronhg Ahafo, Volta and Greater Accra Regions. with the highest concentration in Upper West an Upper East Regions, which have benefitted from a number of development projects. Maintenance of dams and dugouts have been neglected, resulting in many of them siliting up gradually while others have developed gullies downstream of the embankments. Spoillway channels tent to overgrow with weeds and catchmnebnt areas are used for farming in some areas resulting in reduction of installed capacity, largely due to responsibility for these structures being retained with Government agencies. It is estimated about 60% of the dams run out before the end of the dry season. Villagers and livestock producers appreciate the benefit of these water supplies and are requesting for development of new structures and rehabilitation of old ones. In some cases they have collected money and have requested the MOA to assist them in arranging for the construction of dugouts. Small Ruminant Production 16. Most of the sheep and goats are of the West African Dwarf Forest type known as the Djallonke. Crossbreeding with the larger Sahellian breeds is occurring in the northern part of the country and is increasing the size of the crossbred population currently estimated at 15%. Small ruminants are kept by almost all farmers throughout Ghana. Flock sizes are small averaging 10 head. In addition to providing meat and generating cash as required, they are used in the performance of customary rights, celebrations of religious and other social activities. The traditional system of small ruminant production consists of animals roaming freely in village compounds, road sides and uncultivated areas to graze an browse. In the rainy season the animals are tethered along farm boundaries to avoid crop damage. Apart from household crap they generally receive little attention. Inbreeding is rampant and young  - 53 - ANNEX 1 Page 5 of 8 females are mated before they reach mature size. Shelter provisions are generally poor and overcrowded. Animals are exposed to the elements with a consequential rise in the levels of respiratory related diseases, particularly pneumonia during the rainy season. 17. Although the breeds of small ruminants are highly prolific (annual reproductive rates of 1.7 and 2.1 per ewe and doe, respectively), productivity remains low due to high lamb/kid mortality and poor nutrition and management. Mortality of young stock among village flocks of sheep under traditional village management is about 38%. Mortality of adult sheep and goats is estimated to be 15% and 20%, respectively. Adult body weights of marure animals are small, averaging about 19 kg. for sheep and 16 kg for goats. Offtake rates of small ruminants is estimated at about 30% and the growth of the national flock is estimated about 7% p.a. Small ruminants provide about 35% of domestic meat production estimated at 18,000 tons in 1989. 18. Diseases are the most important constraint to small ruminant production. PPR is a more viral disease affecting sheep and goats, occurring as an epidemic with usually high morbidity and mortality rates. PPR is estimated to account for up to 50 percent of small ruminant mortalities. Parasitic gastroenterids and ectoparatism caused by tdcks and mange mites are a more cause of poor productivity in small ruminants. Poor housing contributes to high mortality rates due to pneumonia during the rainy season. No large scale vaccination campaign is carried out against PPR. 19. Problems of provision of feed and water to small ruminants is similar to that of cattle described in para 15 above as the production of sheep and goats heavily relies on the extensive use of natural pasture. However, small backyard rearing of small ruminants based on cut and carry, the use of crop residues and crop byproducts is increasing supplying fattened rams and bucks for the expanding urban market, particularly during religious festivities of the Sallah, Christmas and Easter. Pouly Production 20. about 80% of the poultry are unimproved native breeds reared by smallholders as a backyard operation. The remaining 20% are imported exotic breed reared in commercial poultry farms located around more urban centers in the South. There is a dual system of poultry production in Ghana; a traditional village system with 80% of the total bird population and a modern commercial system. Birds in the traditional system are mostly scavenging and supplemented with left over household food and white ants. Productivity of birds is very low due to poor nutrition and health care. Laying starts at about 6 months with an annual production of 40-50 eggs per hen. The eggs are small, weighing about 20-25 grams, which is half of the weight of eggs produced by the commercial sector. Hatching rate is about 60%. Both mature males weigh 0.9-1.2 kg. Mortality rate of village poultry is a high 55% as birds are not vaccinated against epidemic diseases such as Newcastle and Fowl Pox. Despite the large bird population, the traditional free ranging system accounts for less than half of total production of poultry meat, estimated at 3,500 metric tons p.a.  - 54 - ANNEX 1 Page 6 of 8 21. Commercial poultry production is dominated by small-scale operators with holding capacities ranging from 100 to 1000 birds. However, there are a few firms with more than 20,000 thousand birds, including the parastatal Pomadse Poultry Enterprise. Birds reared under the modern intensive commercial production system are sheltered properly, vaccinated regularly and fed with commercial or home made balanced rations containing maize, fish meal, oil cakes and vitamins. The commercial poultry sector has achieved a high degree of modernization and stratification. Hatcheries provide day old chicks and fed mills balanced feed to poultry farms. Productivity of the commercial poultry sector is high. Average egg production is about 180 eggs per hen p.a. Eggs weigh 40-45 grams. Broilers take 9-10 weeks to mature and are sold at a live weight of about 2 kg. However, there is little broiler production in the commercial sector. As birds are primarily reared for egg production with spent birds supplying poultry meat. The predominant commercial poultry breeds are Leghorn and Rhode Island Red. Constraint.s 22. The prevalence of diseases, especially Newcastle and Fowl Pox, is the major constraint to increasing production in the traditional poultry sector, where producers do not vaccinate their birds. Whose flocks are wiped out when outbreaks of these diseases occur. Commercial producers control these diseases by regular vaccination. Gumboro and Marek disease pose a problem for commercial poultry producers, who purchase day old chicks from hatcheries which do not vaccinate the parent stock against Gumboro and day old chicks against Marek disease. 23. The major problems of commercial poultry production revolve around the supply of feed and day old chicks. Progress in the growth of the commercial poultry sector has been chequered reflecting partly the economic misfortunes of the country. Producers heavily invested in expanding production capacity in the late 1960s and early 1970s. The unavailability of yellow maize and fish meal, which used to be imported, dealt a severe blow to the industry in the 1980's and many producers closed their operations. Although economic conditions have improved since 1987 as a result of the Economic Recovery Program and domestic production of white maize has increased substantially, many poultry farms remain closed. The prevailing high rates of interest (more than 30% p.a.) and the credit crunch are discouraging many farmers to reinvest in their poultry farms. The 12 hatcheries with a total throughput of 30 million day old chicks p.a. and the 25 registered feed mills with a total rated capacity of about 270,000 tons p.a. are utilizing less than 25% of their installed capacity. 24. In good years, maize, fish and bran are available in adequate quantities, while soya bean meal has to be imported at all times. The main problem of feed ingredients is the sharp inter-month fluctuation of the price of maize, the major ingredient. In 1990-91, maize price was about Cedis 2500 - 3000 per 50 kg. bag immediately after harvest, sharply increasing to Cedis 10,000-12,000 in the dry season. A cost of production analysis shows that if poultry production is to favorably compete with imported poultry meat at a wholesale price of Cedis 700 per kg, Cedis 5,000 per bag of maize would be a break even cost price. The certainty of maize prices to shoot above this price is compelling poultry producers to stock up a  - 55 - ANNEX 1 Page 7 of 8 sizeable quantity of maize and fish meal. This results in many poultry farms operating below capacity as their working capital is tied up in feed storage. Moreover, it encourages them to mix their own feed, which in most cases is done inefficiently. This reduces the demand for commercially formulated balanced feed from the feed mills, resulting in underutilization of production capacity throughout the poultry industry i.e. poultry farms, hatcheries and feed mills. of both the farms and the feed mills. 25. A healthy and thriving commercial poultry industry would require that maize prices are stabilized at a reasonable level. This could be achieved in the long-term by increasing the domestic production of maize and soybean and improving the infrastructure for grain storage and marketing. In the short-term, a stock of imported yellow maize would be necessary. This could be stocked by feed mills. 26. Another problem commercial poultry production is the poor quality of the feed formulated by poultry producers and in some cases commercial feed mills. In spite of a large installed capacity, commercial feed mills are producing only 10% of the total poultry feed requirements of commercial producers, a great majority of which are formulating their own feed. It is very difficult to formulate good quality feed without the necessary equipment. It is, therefore, essential that producers' confidence in feed mills is restored and feed mills encouraged and regulated to produce reliably good quality feed in accordance with established standards, so that commercial producers would increase their efficiency of production by using more nutritious and balanced feed formulated commercially. If feed mills were supplying more than 50% of the feed requirement of the commercial poultry sector, the cost of commercial feed would decrease due to economies of scale and the efficiency of poultry farms would improve as producers would spend less time on chasing feed ingredients and concentrate their energy and capital to specialize in production activities. 27. Supply of Parent Poultry Stock. Another constraint of the poultry industry in Ghana is the unreliable quantity and poor quality of day old chicks supplied by the hatcheries. Only one hatchery has its own grand parent stock. The rest have to import day old parent stock or commercial hatching eggs. Supply of parent stock should be divested from the control of any hatchery. Even if this were allowed, the company that has a grand parent stock would be unwilling to supply parent stock to its competitors. The supply of day old chicks to a majority of poultry producers is erratic as it is dependent on several factors that affect import arrangements. In addition, there is no method of guaranteeing that day old chicks produced by the hatcheries are vaccinated against Marek disease. Regular inspection of hatcheries would be required to enforce the regulation governing the operation of hatcheries. Pig Production 28. As in poultry production, there is a dual system of pig production; i.e. a village based traditional system and a commercially oriented production system. The breed used in the traditional system is the indigenous Ashanti Black Forest pig, which accounts for 70% of the  - 56 - ANNEX I Page 8 of 8 pig population in Ghana. These pigs roam around in the villages scavenging. They are given supplemental feed is given in the form of household refuse, cassava, yam and plantain peelings, pito mash, maize bran and copra and palm kernel cake. The Ashanti pig is a small hardy animal with good disease resistance. The average litter size is six and the average weight at slaughter is 40-50 kg. It becomes excessively fatty at higher weights. 29. Commercial pig production is cetered around principal towns and cities. Production based largely on imported exotic breeds of Large White, Landrace, Middle White and their crosses, is intensive and relies on purchased feed materials. By-products such as distillers and brewers grains and limited amounts of grain and oil cakes are fed, Productivity remains low due to poor nutrition and health care. Only 5-6 piglets are weaned per litter, reaching porker weight at about 7-8 months of age. Commercial pig production grew rapidly during in the 1980s parallel with the decline of commercial poultry production as poultry farmers switch to pig production. 30. It is estimated that pig production provides about 8,000 tons p.a. or 17 percent of the domestic meat supply. There is an export of pigs to Togo, where there is a pork processing plant in Lome. Although official stadstics show the export to be about 500 animals p.a., the actual export is much more as most of the export passes through unofficial channels via both land and sea. 31. The main problems of commercial production of pigs in Ghana are supply of good breeding stock, the erratic supply and high price of feed and the low price of pork due to lack of demand for unprocessed fresh pork. Commercial production of pigs is not attractive at the prevailing high feed costs and low pork prices of Cedis 600 per kg. compared with Cedis 650 for poultry and Cedis 900 for beef.  - 57 - ANNEX2 Page 1 of 7 GHANA NATIONAL LIVESIOCK SERVICES PROJECT Livestock Development Policy Statement Introduction 1. Livestock production is an important feature of Ghana's agriculture, contributing largely towards meeting food needs, providing draft power and generating income. Despite Ghana's vast forage resources, its livestock resource base is modest with about 1.2 million cattle, 2.2 million sheep, 2.4 million goats, 8 million poultry and half a million pigs. 2. Virtually all ruminant livestock production is based on a low-cost - low-output traditional extensive system using natural pastures in the open range and crop residues on the farm. Disease control is largely limited to free Government vaccinations. This low level of input results in low levels of productivity. Domestic production of meat supplies only about 30% of the national protein requirement. Fish is the main source of protein, particularly in southern Ghana. The milk yield of the predominant West African Shorthorn breed is very low, and little milk is extracted for the market. Consequently, the dairy product import bill is high, constituting a significant share of livestock product imports. 3. Apart from nutrition and inadequate supply of water, livestock diseases constitute the most important constraint in livestock production and development. Almost all of the known livestock diseases in West Africa occur in Ghana. The control of diseases and improvement of animal health services is, therefore, a prerequisite to sustained development of the livestock industry and the reduction of the gap between demand and supply of animal protein. 4. Realizing that livestock production offers rapid growth opportunities, as the necessary internal market exists, the potential for increased production of feed and provision of water is high and the technology for controlling diseases and improving productivity is available, the Government has accorded the development of the livestock sub-sector high priority under the Medium-Term Agricultural Development Plan (MTADP). Livestock Development Strategy 5. The Government seeks to increase livestock production and improve farm income and nutrition, reducing at the same time the burden of the public sector in the development of the sector. It plans to achieve these objectives through implementing development programs that alleviate the most important constraints to livestock production, namely: disease control, development of feed resources and stock water supply and improvement of the genetic potential of livestock breeds. It would support these actions with the introduction of more appropriate policies.  - 58 - ANNEX 2 Page 2 of 7 6. Roles of the Public and Private Sectors. The role of the public sector in livestock development would be to perform only those activities which are essentially of a public nature. These would be formulation of livestock policies and programs, enforcement of regulations, epidemiological and statistical services, detection and control of major epizootic diseases, and livestock research and extension. 7. To this end, Government would, to the extent possible, transfer animal health services which primarily benefit the individual livestock producer to private practice. These services would include curative treatments, routine treatment against intestinal and external parasites, non-compulsory vaccinations, castration, and other clinical treatments. Private practitioners would be authorized to sell drugs, chemicals and medicaments. Government would also entrust private veterinarians with performing some of the public functions, such as compulsory vaccination of notifiable diseases and inspection of animals for movement and slaughter, under specific contracts. However, there would be areas of the country, where due to remoteness or low density of livestock or lack of demand, private practitioners would be unable to render animal health services. Government would have to continue providing these services in such areas. 8. In the domain of livestock production, the private sector would be totally responsible for production, processing and marketing of livestock and livestock products. Government would not operate livestock farms nor marketing and processing facilities for commercial purposes. Government would retain only a limited number of livestock farms, where breeding, testing and research would be conducted. Livestock extension would focus on encouraging farmers to improve their breeding, feeding and management aspects of livestock production. The National Livestock Services Project 9. As part of the MTADP, the Government of Ghana is seeking financial support from IDA to implement the National Livestock Services Project, which would (i) restructure the organization for delivering animal production and disease control services; (ii) rationalize and improve the efficiency of livestock breed improvement programs, involving to a much greater extent private farmers in the selection and improvement of livestock breeds; (iii) rationalize and improve the animal health delivery systems, by providing the appropriate regulatory and incentive framework for private practice and strengthening its public sector functions; (iv) improve the efficiency of the delivery of the animal production services; and (v) monitor input and output incentives. These components are elaborated below. Restructurine of the Animal Health and Production Department (AHPD) 10. The current program of AHPD is heavily biased towards animal health services in program content, personnel deployment and allocation of other resources. There is virtually no animal production program that would make a significant impact on increasing animal productivity in Ghana. While the control of animal diseases is of prime importance, it would not yield large dividends if efforts are not intensified to increase the productivity of livestock through improved  - 59 - ANNEX 2 Page 3 of 7 breeding, nutrition, housing, processing and marketing. The challenge of the Ministry of Agriculture (MOA) in the 1990s and beyond would be to develop the leadership of the livestock industry by tackling the animal production problems the industry faces while at the same time improving its efficiency in delivering animal health and disease control services. Cognizant that the current organizational structure of AHPD would not allow it to develop this leadership, MOA has decided to split AHPD into two departments, namely the Animal Production Department (APD) and the Veterinary Services Department (VSD) and to create the Livestock Planning and Information Unit (LPIU) in the office of the Deputy Secretary (Livestock). 11. The APD would have three divisions, namely, Ruminant Production, Non-Ruminant Production and Range and Forage Production and would be responsible for the development of livestock breeds, nutrition and processing and marketing. The rationale for setting-up the three divisions is in recognition of the major thrusts that are required to get animal production in Ghana moving forward and to underscore the differences in the problems these sub-sectors face. 12. The proposed organization of the Divisions VSD are along existing lines except for the Epidemiology Unit. VSD would have three divisions, namely Animal Health Services, Laboratory Services and Regulatory Services. The Animal Health Services Division would be responsible for the major part of the work of VSD in the control and treatment of animal diseases. The Laboratory Services Division would support the field work in disease control and treatment by rendering diagnostic, vaccine production and research services. The Regulatory Services Division would be responsible for formulating and enforcing policies that regulate the movement of livestock, and livestock products and the quality of veterinary drugs and vaccines used in Ghana. 13. The LPIU would be the repository of information on the livestock industry and would operate a data bank to service the policy formulation, programming, monitoring and evaluation needs of APD and VDS. It would be responsible for the collection, analysis and dissemination of livestock information. A management information system (MIS) would be custom designed for LPIU and staff trained to effectively use the system. Disease control programs would be driven by epidemiological information and analysis instead of routine practices. 14. Furthermore, in order to improve the efficiency of field operations, MOA will decentralize the financial management of the public animal health services, depositing the revenues it generates from these services in the two departments' existing revolving fund for veterinary drugs, vaccines and other livestock inputs. The revolving fund would be audited annually. Breed Improvement Programs 15. To improve the efficiency of its breeding program, Government intends to: (a) prepare a national livestock breeding policy in consultation with progressive farmers, breeders in AHPD, the Animal Research Institute, the Faculties of Agriculture and the United Nations Food and Agricultural Organization. This policy would provide appropriate guidelines for breeding programs and the breeds of livestock that can be imported into the country;  - 60 - ANNEX 2 Page 4 of 7 (b) retain only the following seven farms for a broad-based selection program for indigenous sheep, goat, cattle and pig populations, using farmers and village herds and flocks as the main selection base, and maintaining on the remaining stations only small elite breeding populations. These farms are: (i) Amrahia for selection and breeding of cross bred dairy cattle; (ii) Babile for pigs (iii) Ejura and Kintampo for small ruminants; (iv) Nungua for pigs, rabbits and grass-cutters; and (v) Pong-Tamale for West African Shorthorn cattle, and (vi) Aveyime for White Fulani crosses. Since Pong-Tamale is the center for training medium level animal health and production staff, it would raise other species of livestock for instructional purposes. Animal Health Improvement 16. To improve the animal health situation in the country, Government intends to: (a) establish a broad-based Committee for the Privatization of Veterinary Services (Committee) comprising: (i) Director, VSD (ii) Deputy Director, VSD (Field Services); (iii) two representatives of the Ghana Veterinary Medical Association; (iv) a representative of the agri-business community; (v) a representative of farmers' associations. The committee will elaborate the policies for privatization of veterinary services, as broadly indicated below and oversee their implementation. (b) cease carrying out all curative treatments and other clinical interventions, sale of veterinary pharmaceutical and other livestock inputs and non-scheduled vaccinations, the moment a private veterinarian is established in a certain area. The Committee will elaborate specific criteria regarding the size of the area and the numbers of animals to be covered by a private practice, taking into account the experience and manpower the prospective candidate proposes to deploy, the character of the clientele (urban or rural) and the scope for subcontracting as specified in para (d) below; (c) introduce a progressive increase of the full cost recovery of all vaccinations against non-scheduled diseases, curative treatments and veterinary drugs such that full cost recovery is achieved not later than January 1, 1994 in order to eliminate unfair competition to private practice; (d) sub-contract to private veterinarians vaccinations against scheduled diseases, where feasible and meat inspection and the issue of livestock movement certificates. The fees would be determined by the Committee with the help of the LPIU. The VSD would have the right to suspend any subcontract upon review with the Committee; and  - 61 - ANNEX2 Page 5 of 7 (e) establish a list of scheduled drugs, which can be sold only to accredited veterinarians and another list of drugs that can be sold on the open market, to veterinary auxiliaries and farmers. These lists would be updated regularly. Auxiliary staff would be authorized to handle non-toxic pharmaceutical and inputs. 17. Furthermore, the Government intends to progressively improve the efficiency of its disease control campaigns, by concentrating on those diseases which cause major economic losses, and whose control provide the highest returns. Because of the incomplete data on disease prevalence in the country, the Government will strengthen its diagnostic and epidemiological program capacities, and use the information forthcoming from these services, as major inputs into the definition of the future control strategies and extension packages. The LPIU would be strengthened to achieve these objectives. 18. Realizing the severe constraint the prevalence of trypanosomiasis places on cattle production over a vast area of the country, the Government would launch a pilot tse tse control program around Wa and in the Accra Plains in collaboration with the regional tse tse control program of the regional livestock research center, CIRDES, in Bobo-Dioulasso. New non-polluting techniques of integrated pest control using insecticide and attractant impregnated traps and screens, and newly developed long-duration livestock insect repellents would be used. If the pilot program proves successful and cost effective, efforts would be made to expand the tse tse control nationwide. Improvement of Animal Production Services 19. The Government recognizes the key role that efficient extension services will play in increasing the productivity of the livestock sector. APD will therefore redirect a major part of its resources to strengthen the transfer of technology to the small holder and commercial farmer. As livestock is an integral part of most Ghanian farming systems, improved livestock technology can best be disseminated through the unified extension service with the extension agent extending both crop and livestock production and health messages. APD will actively support this extension effort, through the provision of subject matter specialists. However, tsetse control and pasture and dairy development, which are seriously lagging behind in technology transfer, require additional inputs, and the Government, therefore, foresees to maintain the tsetse unit and establish specialized units for supporting extension services in pasture and dairy development. 20. APD would in association with the Council for Scientific and Industrial Research (CSIR) and the Crop Services Department (CSD), introduce, test and promote the development of forage legumes and grasses in range and farmlands. In the short and medium-term, Government would assist stock owners in the development of stock water supply. However, stock owners would, before being eligible for Government assistance, have to organize themselves into water users' or herders' associations to (a) contribute to the development of the water resources in kind and cash; (b) take complete responsibility for the judicious use and maintenance of the water supply; and (c) to participate in the development and sustainable use of the rangeland served by the water supplies. Priority of development would be given to those associations that contribute the most resources. APD and the Ghana Irrigation Authority (GIDA) would aid these associations in fulfilling these tasks by rendering technical assistance and training of their membership, leadership, and staff.  - 62 - ANNX 2 Page 6 of 7 21. The availability of feed of reliable quality is also a key requirement, especially in the development of the commercial poultry and pig industries, and major improvements are required in this area in the near future. The Government will therefore, not later than December 31, 1993, establish quality standards for manufactured feed and enforce thereafter these standards through regular quality control and publication of the results. Monitoring the Incentive framework 22. The dumping of subsidized beef from the EEC on the Ghanian markets constitutes a major threat to the sustained development of the sector. The government will carefully monitor the effect of these imports on local production and consumption every year and determine whether there is a need for specific measures to mitigate the effect of such unfair competition.  GHANA NATIONAL LIVESTOCK SERVICES PRoJECT Figure 1: PropoeOgm nization Chart of Ani _t Prodution wnd Anit _ NlHeeth Dep, rten Ninistry of Agricutture |DEPUTY SECRETARY | (LIVESTOCK) LIETC PANN |AND INFOR14ATION UNIT| |ANIMAL HEALTH DEPARTMENT] |ANMIPAL PRODUCTION DEPARTMENT| r 'I I -7 1 ANIMAL | LBRTRIIEUAOY UIAT||O U ATI |RANGE AND FORAGIE| |HEALTH SERV.| P PRVOD||SEVCS|t'RDCIN IUTO UCTION |c N DIAGNOSTIC| q NUTRITION | H NUTRIT~~ION| AG IfPROV.] tRVICES| | SERVICES | |& ON~~~~~~~~~WITORING| VACCINE S NRVNN|1 BED |1 DVLPET |t Owl~~ ~~~~~~ KARKETING & _ ARKETI~NG & PROCESSING PROCESSING t ~~~~~~~~~~~~~~~~~m~~t F-h  - 64 - ANNEXI3 Page 1 of 2 GHANA NATIONIAL LIVESTOCK SERVICES PROJIECT Estimation of Costs and Benefits of Water Development 1. The purpose of this Annex is to derive the maximum expenditure that can be justified in developing water supply points for livestock. The benefit derived from water used by livestock is assumed to be the value of the weight gain attributable to water. In semi-arid areas with annual rainfall of less than 800 mm, young cattle grow at a rate of about 250 gm per day without feed supplementation. In similar environments, small ruminants grow at a rate of about 35 gm per day or 350 gm per day per Tropical Livestock Unit (ILU). The weighted average weight gain is 277 gm per day. It was assumed that the weight gain (or avoided weight loss) attributable to water in a free range livestock production system in Ghana would be about a quarter of the total 277 gm per day or 69 gm per day per TLU. The dry season in northern Ghana, where most of the water points would be developed lasts for about 210 days. The benefit attributable to water in a free range situation for the dry period would, therefore, be about 14.5 kg per TLU p.a., with a value of about Cedis 2,719. 2. The water requirements of one TLU is about 40 liters per day. An earthen dam with a storage capacity of 100,000 cubic meters would be able to support about 5,950 TLU for a period of a dry season of 210 days, at a storage efficiency of 50 percent. The benefit stream such a dam would generate is Cedis 16.2 million p.a. Assuming that 10% of this value would be spent on maintenance, the net revenue of the dam would be Cedis 14.6 million. If the dam has a life of 20 years, the maximum expenditure on developing it would be the net present value (NPV) of the annual net revenue generated for the 20 year period. Discounted at an interest rate of 22%, the NPV of a 100,000 cubic meter dam would be Cedis 65.07 million. A smaller dam of 50,000 cubic meters would warrant a maximum expenditure of Cedis 32.5 million (US$162,686) or Cedis 650 ($1.63) per cubic meter of storage capacity. Similarly, a maximum expenditure for investment in a borehole, with a capacity of 3,000 liters per hour, efficiency of 8 hours per day and a life of 10 years, was calculated to be Cedis 5.8 million (US$14,224). These calculations are shown in Table 1.  - 65 - ANNEX 3 GHANA Page 2 of 2 NATIONAL LIVESTOC SERVICESR Table 1. Estinu of Costs ad Bmefits of Stock Water D ovit Weight gain of cattle/TLU/day = 250 grams Weight gain of small runinants per TLU/day = 350 grams Weighted average weight gain/TLU/day = 277 grams Weight gain attributable to water = 69 Water requirements of 1 TLU = 40 liters/day Water available in a 100,000 cu m earthendamat50% efficiency = 50000 cum Duration of dry season = 210 days DAM No of TLU a 100,000 cu m dam supports in a year 5952 Annual weight gain due to water in dam = 86458 kg liveweight Gross value of annual weight gain = 16210938 cedis Net value after allowing 10 % for maintenance cost of dam - 14589844 cedis Assumed life of dam = 20 years Interest rate 22 percent Net present value of benefit stream attributable to the dam = 65074585 cedis 162686 US$ BOREHOLE Capacity = 3000 liters/hour Efficiency 8 hours/day No. of TLU the borehole will support 600 per day Annual weight gain due to borehole water 8715 kg Gross value of annual weight gain = 1634063 Cedis Net value after allowing 10% for maintenance cost of borehole 1470656 Cedis Assumed life of borehole 10 years Interest rate 22 percent Net present value of benefit stream attributable to the borehole 5769656 cedis 14424 USS  - 66 - ANNEX4 Page 1 of 18 GHANA NATIONAL LIVESTOCK SERVICES PROTECT Training and Technical Assistance Requirements 1. This annex provides a list of the training and technical assistant requirements and provides detailed terms of references for consultant services under the technical assistance component of the project, summarized in Section III (para 3.34) and Section V (para 5.19) of the Staff Appraisal Report. 2. Training. The main objective of the training program is to enhance the capacity of staff by sharpening and deepening their skills and broaden their views so that they would effectively contribute towards the formulation of appropriate policies, planning, implementing and evaluating programs for developing the livestock industry. A major part of the training program would be in-country in-service training. About 620 staff would be given an average of 14 days of training in year one of the project, amounting a total of 7,650 mandays of training. This would increase to 1,044 staff with an average training period of 25 days each in the fifth year of the project. Over half of this staff (600) would be community livestock workers. 3. APD and VSD staff would also participate in overseas short courses and study tours that would keep them abreast of new technologies and techniques in their fields. The study tours would afford staff to learn from the experience of livestock development programs in other African and Asian countries. Very few post graduate training of one year are provided to develop skills that are necessary for the project and have not been acquired by staff hitherto. Table 1 summarizes the types of training planned under the project. Staff attending courses of over 6 months would be bonded to serve MOA as per Government regulations. 4. Technical Assistance. It is envisaged that internationally recruited consultants would be engaged to assist MOA for project implementation support (Substitution TA) and for Institutional Development (Capacity Building TA). Specifically, the assistance would be in improving financial management, setting-up and operating its livestock information system, conducting its tsetse eradication, V4 poultry vaccination, breeding, forage development, range monitoring, dairy development and in-service staff training programs. The internationally recruited consultants would provide expertise and experience that is not available in Ghana. Although the terms of references below have been drawn for internationally recruited consultants, local consultants could be substituted provided they meet the qualifications specified in consultation with IDA. Table 2 summarizes the specialties of the consultants and the duration of the consultancies required under the project. The terms of reference for each consultant are outlined below.  - 67 - ANNEX4 Page 2 of 18 Table 1A. In-Country. In-Service Training I- Tw cf Im.w.im T uUm !g I I I 1. Fm.Mainpmd No. 20 2D 2D 20 20 hjsFw Mooemd Koa i P, deb4 200 200 200 230 200 2.3. Pr,:cs NoM 33 40 40 40 40 2 ..da- N R_ Pt_ 462 MO 560 560 5t0 1.p Rma PtO&KaM 3. Nom-Redm_ f.o~.dios No. 23 30 30 s0 30 9htsa: bu.d.u4. NsdzN o. Pkg PM Si P-try h.di.m. 322 420 420 420 420 uDSO& PMKt 4. P.im,&Rage 3.o&.~~~~~~~~~~oU ~No 22 29 20 20 29 4. jsd U PmA y R u h3 406 406 406 40 S. T _ C ed A m W No. lDO 3 400 50 4 N- 4200 51 7 00 S0oo 4 & f _d. Cu fw FildT.O. N. OD sO OD so s0 &6jsa Ouam to Pqo. D_ Cd_d bomt WuN MUn&" 1220 1120 1120 1120 1120 UF"" 7. b6.tor CAm fm L1moay T.WO No2 2 20 20 20 a&io- OuaS go pktad D* C_R and hWdq Mm 200 230 200 30 200 L; ad _ iDim_ bwSM- No. 20 20 20 20 2C fn.a f P. e Y_. And-iuo _ AM ma.yn l10 100 1oo [O0 l0 Pd. Uphh.. Yu P..- D -de, 9.Rm oIb*_l U_fe D OitM i No. 120 120 120 120 120 &hj..e 0O.u.M tO PV*d R d.w o Pmgo. Ya Wwnk M.yb 1200 1200 1200 1200 1204 P-op f. de Ym 2oS DyM-bi. Mid- mawy and Mid-3idy aC. Km&mmk.r Cw,. fix Amos and SM" f .m No 10 10 s0 10 10 8:. P.np A.4.5 .o. By-MO, PAmom Fu, P am. 0 20 0 30 30 230 a~marmio. So 11. AUmml Ao. Umpml (OAPA) NS 5 S 5 5 &j.a UIanl ad DwmdiO CO.i.s MN4 y 70 70 70 70 70 12. M m pI M.b (03MPA) No. 5 S S 5 5 M d: Rm** l D- d im bmw cMm. Mn. lli 70 70 70 70 70 1I. aUmimo Phkmm (0D4PA) No. S 5 S 5