Ghana - Second Oil Palm Development Project

Document of The World Bank FOR OFFICLAL USE ONLY Repor No. 13818 PROJECT COMPLETION REPORT GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II (CREDIT 1498-GH) DECEMBER 29, 1994 Agriculture Operations Division West Africa Department Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENT Currency Unit = Cedi (0Z) US$1 = 35 Cedis (May 1984) US$1 = 900 Cedis (December 1993) ABBREVIATIONS AND ACRONYMS CIRAD-CP Centre de Cooperation Internationale en Recherche Agronomique pour Developpement - Cooperative Program FAO/WB-CP FAO/World Bank Cooperative Program ffb Fresh fruit bunch GOPDC Ghana Oil Palm Development Corporation ha Hectare IMC Interim Management Committee IRHO Institut de Recherches pour les Huiles et Oleagineux MOFA Ministry of Food and Agriculture mt Metric Ton OP I Oil Palm Development Project Phase I OP 2 Oil Palm Development Project Phase 11 OPRI Oil Palm Research Institute (formerly OPRC)  FOR OFnlCLAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation December 29, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Ghana Oil Palm Development Project - Phase II (Credit 1498-GH) Attached is the Project Completion Report on Ghana-Oil Palm Development Project - Phase II (Credit 1498-GH) prepared by the Africa Regional Office. No comments were received from the Borrower. The project financed the second phase of development of an oil palm nucleus estate. The principal elements of this phase were smallholder outgrower plantings and an expansion of the oil palm mill. Appraisal targets were achieved or exceeded. For example, 5,300 hectares of smallholder managed palms were planted, compared to an initial target of 2,500 hectares. Yields have been above projections and the performance of the mill has been very high. The enterprise was managed from Phase I by an international management agency. Over the life of the project the international staff was progressively replaced by Ghanaians. The enterprise is financially profitable and is currently being privatized. Institutional development is judged to have been substantial and sustainability is likely. The PCR re-estimates the ERR at 21 percent, compared with an appraisal estimate of 12.3 percent. However, given that the real value of palm oil fell by 50 percent over the project period, it is not clear that the high level of physical performance was enough to offset the adverse shift in prices, especially since some aspects of production do not appear to have been fully costed. The project outcome is rated as satisfactory. Apart from the economic analysis, the completion report provides an adequate account of project implementation. No audit is planned. Attachment This document hu a restricted distribution and may be used by recipients only in the performance of their official duties. lt contents may not otherwie be disclosed without World Bank authorization.   FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II (CREDIT 1498-GH) Table of Contents Page No Preface . ................................................... i Evaluation Summary ............................................ iii Part I: PROJECT REVIEW FROM BANK'S PERSPECTIVE ................. 1 Project Identity . .............................................. 1 Background . ................................................ 1 Project Objectives and Description ................................. 2 Project Design and Organization ................................... 2 Project Implementation .......................................... 3 Project Results . .............................................. 9 Project Sustainability .......................................... 11 Bank Performance ........................................... 12 Borrower Performance ........................................ 12 Project Relationship .......................................... 12 Consulting Services .......................................... 13 Project Documentation and Data .................................. 13 Part II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ... ..... 14 PART III: STATISTICAL INFORMATION .......................... 15 Table 1: IDA Credit/Loan Relevant to the Project ....................... 16 Table 2: Planned, Revised and Actual Dates of Project Timetable .............. 17 Table 3: Cumulative and Actual Disbursements ......................... 18 Table 4: Planned and Actual Completion Dates of Components ............... 19 Table 5: Project Cost ......................................... 20 Table 6: Project Financing ...................................... 21 Table 7: Allocation of Credit Proceeds .............................. 22 Table 8: Direct Benefits ....................................... 23 Table 9: Compliance with Credit Covenants ........................... 25 Table 10: Staff Inputs ................... ...................... 27 Table 11: Missions .................... ....................... 28 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.  Contents ANNEXES: Annex 1: GOPDC - Profit and Loss Statement ......................... 29 Annex 2: GOPDC Sources and Application of Funds ..................... 30 Annex 3: GOPDC Balance Sheet ......... ......................... 31 Annex 4A: Economic Rate of Return ......... ....................... 32 Annex 4B: Economic Millgate Price of Palm Oil and Palm Kernels .... ......... 35 Annex 4C: Production of ffb, Palm Oil and Palm Kernels ................... 38  PROJECT COMPLETION REPORT GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II (CREDIT 1498-GH) PREFACE This is the Project Completion Report (PCR) for the Oil Palm Phase II Project in Ghana, for which a Credit (Cr. 1498-GH) in the amount of SDR 23.5 million (US $25 million at the time of appraisal) was approved on June 12, 1984, and signed on June 22, 1984. The Credit closed on December 31, 1993, after two extensions totalling three years from the original closing date. It was almost fully disbursed on May 10, 1994, the date of the last disbursement, and SDR 1.48 million was canceled. This PCR was prepared by the Agricultural Operations Division of the Western Africa Department (Preface, Evaluation Summary, Parts I and III). T he PCR was prepared by Ms. Patience Mensah and is based, inte "i, on the Report and Recommendation of the President; the Staff Appraisal Report; the Development Credit and Project Agreements; supervision reports; correspondence between the Bank and Borrower; internal Bank memoranda; and interviews with Bank staff involved with the project. A copy of the draft PCR was sent to the Government of Ghana on May 13, 1994 and no comments were received.   iii PROJECT COMPLETION REPORT GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II (CREDIT 1498-GH) PROJECT EVALUATION SUMMARY A. Obiectives 1. The objectives of the project (para. 6 main report) were to continue the Bank's involvement in the agricultural sector including policy areas, strategy for development, production of improved planting material and improved cultivation technology; diversification away from cocoa, import substitution; and continued development of investments made in the Oil Palm Development Project Phase 1 (Cr. 531-GH). More specifically the project would assist in the development of new outgrower plantings of oil palm and the expansion of oil palm milling capacity. B. Implementation Experience 1. Overall project implementation was satisfactory. The project period was extended twice, once for one year, then for two years, to complete project activities (para. 12). GOPDC, a wholly-owned government liability company, was responsible for implementation. The project established new outgrower plantings under a loan scheme where repayments are recovered from crop sale revenues payable by GOPDC to outgrowers. It also consolidated developments made in the Phase I project consisting of a nucleus plantation and smallholder/outgrower plantings. Civil works included construction of buildings (workers' houses, offices, workshop); construction and maintenance of feeder roads; and extension of the central mill's capacity from 15 ton ffb/hr to 30 ton ffb/hr. The mill processed fruits from the nucleus estate, smallholder/outgrower holdings and private/state farms. 2. The main financial constraint encountered was a two-year delay in the government providing US$1.3 million equivalent of its equity contribution to GOPDC. However, GOPDC has operated at a profit during project implementation. Over-dependence on a single buyer at the initial stage caused problems of cash flow and poor product off-take especially during peak supply periods. This was overcome through diversification of sales channels and some expansion of storage facilities. 3. Management was on the whole satisfactory and was provided under a management contract with an internationally experienced firm whose staff worked with local counterparts, who took over full management responsibility in the last year of the project (para. 20). There was over-recruitment of workers at the beginning and productivity was low, but excess labor was successfully reduced in size and productivity increased. Harmony in labor-management was not always attained and the high degree of politicization of the labor movement in  iv Ghana encouraged a confrontational attitude. There were two serious cases of industrial action which led to disruption of project activities for several weeks. 4. The project provided support for research in breeding and production of improved seedlings of oil palm, and for investigation into Cape St. Paul's Wilt disease of coconut. Both senior and middle level staff benefitted from on-the-job as well as formal training. Management of the Oil Palm Research Institute (OPRI; formerly Oil Palm Research Center) was unsatisfactory. C. Results 5. The project was successful in completing the establishment of a nucleus plantation, and extending (doubling) the capacity of a central oil mill linked to smallholder/outgrower holdings. New plantings by outgrowers were 5,283 ha, involving 2,673 smallholder farm families. At the time of PCR preparation, annual production was 16,700 tons palm oil and 3,040 tons kernel (para. 38). The PCR estimates oil palm fruit production at full development of Phase I and II at 91,000 tons, or about 129 percent of the SAR estimate (Table 8). A portion of the outgrower program is receiving follow-on financing under the Agricultural Diversification Project (Cr. 2180-GH, FY91). 6. The economic rate of return is 21 percent (Annex 4A). Debt recovery from outgrowers and smallholders has been behind schedule, with year-to-year recovery of annuities fluctuating from 48 percent to 98 percent. D. Sustainability 7. The project is financially, institutionally and technically sustainable. It has been able to successfully integrate improved technology practices into local farmers' oil palm cultivation. GOPDC is capable of prudential management of its finances and continuing profitable operation. Local managerial and technical capacity has been built to efficiently utilize the land, capital and human resources available for a viable commercial operation. In fact, the government has put GOPDC up for sale to the private sector, and three international firms have submitted proposals to buy it. The private business interest is indicative that the company will continue to be operated efficiently in the future should the divestiture succeed. It is not certain how the smallholder/outgrower component would be treated in the event of divestiture, but it is clear that the nucleus plantation and mill would depend on smallholder/outgrower production to maintain profitability. E. Lessons Learnt 8. The project has shown that establishing a nucleus plantation linked to outgrower holdings is viable under the conditions of: (i) a simple project design; (ii) autonomy to operate as a business entity; (iii) efficient and competent management; and (iv) provision of adequate amounts of local counterpart funds. Technical assistance can be used for the successful training of local counterpart staff with the cooperation of the TA provider and close monitoring by the recipient.  PROJECT COMPLETION REPORT GHANA OIL PALM DEVELOPMENT PROJECT - PHASE II (CREDIT 1498-GH) PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE A. Project Identity Project Name: Oil Palm Development Project - Phase II Credit Number: 1498-GH Credit Amount: SDR 23.5 million (US$25 million) RVP Unit: Western Africa Department (AF4) Country: Ghana Sector: Agriculture B. Back_round 1. Ghana experienced negative growth in the 1970s for reasons including inappropriate macro-economic policies, poor management and adverse external factors. The agricultural sector which was contributing about 50 percent of GDP and employed 51 percent of the labor force was neglected, resulting in a downturn in production of food and export crops. Cocoa, the leading export crop, experienced a progressive decline due to high net taxation and poor producer price incentives. 2. The Bank's earlier involvement in the agricultural sector was to reverse the decline of the cocoa and timber subsectors and assist the country in efforts to increase the production of food and raw materials for agro-industries. Total lending from 1969 to 1983 amounted to US$105.5 million, comprising eight projects, amongst which was the Oil Palm Development Project Phase 1 (Credit 531-GH) for US$13.6 million for developing 4,000 ha of nucleus plantation and 1,200 ha outgrower plantings and constructing a 10 ton/hr palm oil mill and associated infrastructure. Most of these projects were largely unsuccessful due to shortages of both foreign exchange and local funds, poor management and slow bureaucratic processes. However, the Phase I Oil Palm Development Project (OPI) achieved its planting targets, institutional, financial and economic objectives. 3. OPI was appropriate considering long-term projections of excess demand for palm oil over Ghana's domestic production. This was not only a hedge against future shortages of palm oil but also offered an opportunity for import substitution in view of the serious shortage of foreign exchange at that time. 4. Preparatory work on a second phase project (OP2) was initiated in anticipation of the end of OPI, which was due to close on June 30, 1984. Preparation was carried out by FAO/CP staff together with an IDA mission in October 1980. The project was appraised in April 1981 and the draft Staff Appraisal Report (Green Cover) was completed in January  2 1982. Further processing of the financing proposal was suspended temporarily. The submission of the loan package to the Loan Committee was deferred pending the new government, which came into power in December 1981, reaching agreement with the IMF and the Bank on macro-economic policy reforms. 5. The project was re-appraised in October 1983 after the government reached agreement with IMF and the Bank and announced the reforms. C. Project Objectives and Description 6. The objectives of the project were to continue the Bank's involvement in the agricultural sector, including policy areas, strategy for development, production of improved planting material and improved cultivation technology. Continuation of improvement in the developments started in OPI would provide a diversified production base that had been dominated by cocoa, save foreign exchange through import substitution of edible oil, and increase foreign exchange earnings from exports of palm kernel. 7. Project components as described in the Staff Appraisal Report (SAR) No. 3724-GH comprised: (a) the development of 2,500 ha of new outgrower plantings; (b) the expansion of the oil mill capacity from 15 ton ffb/hr to 25 ton ffb/hr; (c) continuation of international management expertise; (d) consolidation of Phase I development of nucleus estate and smallholders/outgrowers by providing vehicles, equipment, housing, and inputs for plantings not yet in bearing; (e) practical training of Ghanaians in technical and management aspects of the project, and provision of consultants' services for special and general studies and training; and (f) support for OPRI's research program through provision of vehicles, equipment, materials, overseas training and consultant's assistance for OPRI. D. Project Design and Organization 8. The OP2, which was to be implemented over a six-year period, was designed on the model of a government-owned nucleus plantation with a central crop processing facility linked to smallholder/outgrowers through credit and crop purchase arrangements. Nucleus plantation and smallholder/outgrower plantings established earlier under OPI would be brought to maturity and the area under outgrowers would be expanded with new plantings. A smallholder/outgrower oil palm fruit collection system for centralized milling would be set up, and loan repayments would be deducted from proceeds payable to the smallholders/outgrowers. Increased production from earlier plantings together with harvests  3 from the additional outgrower plantings in this phase would allow expansion of existing oil mill capacity from 15 ton ffb/hr to 25 ton ffb/hr. 9. Project concept and design were appropriately timed to consolidate developments made in OPI where 5,145 ha of oil palms were planted and a 15 ton/hour palm oil mill was constructed; together with a planned development of additional 2,500 ha and expansion of the mill to 25 tons/hour. Consequently, the project financing included resources to finance inputs, operate and replace plant and equipment inherited from the earlier project until such a time that the project would generate positive cash flow from its operations. The project also provided for on-plantation housing of its workers as a solution to the high level of absenteeism encountered during the first phase. To provide for the required management and technical expertise, the implementing agency would enter into a management contract with an internationally recognized firm experienced in oil palm management. The staff of the managing firm would work with Ghanaian counterparts, who would have to be trained to take over the management by the end of the contract. The investments made in OPI warranted follow-up IDA assistance to support pre-maturity crop maintenance and to expand production to a financially-viable scale. 10. Except for two relatively small components, project implementation was assigned to the Ghana Oil Palm Development Corporation (GOPDC), which had implemented OPI. OPRI and the Ministry of Agriculture were to be responsible for research and for feasibility studies for future agricultural projects, respectively. Although wholly government-owned, GOPDC was to be given autonomy to operate as a business entity. It was intended that, in the course of time, the prospects for privatization of GOPDC would be discussed, including the possibility of smallholders/outgrowers and employees acquiring shares in the privatized structure. The Interim Management Committee (IMC) which had replaced the Board of Directors in 1992 would provide policy direction only. IDA sought assurances from the government to co-opt a representative each from the Ministries of Finance and Agriculture on the IMC as the IMC was an internal committee composed entirely of staff of GOPDC, without any representations from the two key policy organs at the national level. This was complied with and the IMC was subsequently replaced by the Board which was reconstituted in June 1991 to replace the IMC. E. Project Implementation 11. Credit Effectiveness and Project Start-up: The Credit became effective on November 14, 1984, three weeks after the scheduled date of October 23, 1984, with the Borrower meeting the remaining condition of signing an agreement with management consultants. 12. Implementation Schedule: The Credit was to close on December 31, 1990, but was extended twice, first for one year to December 31, 1991, and then for two more years to December 31, 1993. The main objective of the extensions was to extend the outgrower program to more participants than originally planned and also to allow for the completion of the resurfacing of a road providing access to the project area. 13. Outgrower Scheme: Outgrower plantings started a year later (1986) than the SAR estimate (1985). As the Credit became effective only at the end of 1984, the oil palm seedling nursery was established in 1985 for field planting in the following year. A revised  4 planting program was agreed to and maintained, and by the time of the original closing date 3,750 ha had been planted. A further 1,533 ha were planted during the three-year extension period. GOPDC provided the outgrowers with technical advice and long-term credit. Credit in kind was provided for oil palm seedlings, leguminous cover-crop seed, fertilizers and farm tools. Participating farmers were also advanced credit in cash for 80 percent of labor costs for up to four years from planting. Altogether 2,673 farmers joined the outgrower scheme with an average of 1.98 ha per farmer. A majority of the outgrowers adopted most of the practices recommended by the staff of the GOPDC outgrower unit, but it was apparent that quite often the fertilizer provided by GOPDC was not being applied to the palms once these appeared to have been well-established. Consequently, after 1990, GOPDC decided not to supply fertilizers after the first year of planting except on demand. One issue that seems to have been discussed several times was the type of planting material that should be provided to the outgrowers. The choice was between that produced by OPRI and that obtained from Cote d'Ivoire, the latter having higher yield potential but also being much more expensive. The inability of OPRI to supply the required quantities on a timely basis created a fait accompli of a sort. Also the unusually high oil extraction rates obtained from the imported material seem to justify the higher cost. 14. Farmer debt carried an annual compound interest rate of 12.5 percent capitalized over the first six years. Interest was paid in the seventh and eighth years; then interest and capital were to be paid in five equal installments. Under DCA section 3.01, outgrower loan funds were to be from a loan from the government to GOPDC also at 12.5 percent interest rate. There was therefore no margin allowed for GOPDC for the full credit risk it was to take. IDA supervision missions in 1990 asked the government to review the interest rate charged to farmers to be consistent with rates charged by other Bank-assisted projects such as the Rural Finance (Cr. 2040-GH) and SME/Finance (Cr. 1996-GH) projects, starting from 1991 plantings. At that time, the Rural Finance Project was charging the participating financial institutions a reference interest rate (RIR) of 18.95 percent, and they on-lent to farmers at rates between 19.5 percent and 35 percent. The objective was to avoid discriminating against other crops with preferential rates for oil palm which might lead to inflated demand for outgrower planting. On request from the government, IDA agreed to suspend application of a new interest rate for new plantings in view of the fact that farmers who had already been selected had agreed to participate on basis of the existing arrangement. The old rate was maintained until the end of the project. 15. GOPDC collected fruits from farmers at points close to their farms for processing at the central mill. It kept smallholder/outgrower accounts and deducted from fruit sales against loan repayment. Annual loan repayments tended to be higher for smallholders whose farms were happened to be located within the nucleus estate boundaries and were developed almost as its integral part. Outgrowers, whose farms are generally some distance away from the nucleus estate and have been less intensively supervised than the smallholders, have been less responsible in repayments (see below). YEAR 1990 1991 1992 1993 Smallholder Repayment % 70 81 69 98 Outgrower Repayment % 54 58 48 76 Total Repayment % 65 76 64 85  5 16. Nucleus Es: Oil palm plantings completed in OPI for the nucleus estate owned and operated by GOPDC as a corporate entity continued to be maintained and harvested. Maintenance consisted of weeding, fertilizer application and replacement of palms and was satisfactorily carried out. The plantation suffered from drought in late 1986 and early 1987 and a serious attack of leaf miner disease during November 1986 to April 1987. The palms recovered with the return of good rains whilst the leaf miner was controlled by aerial spraying. Subsequently, a program was established for routine monitoring of leaf miner population and this was successful in keeping it under control. As the plantation had been developed as one contiguous block, there was considerable variation in soil characteristics leading to differing impact on oil palm growth and productivity. 1981 plantings were largely over an area where soils were shallow and a hard-pan prevented proper root development. As a result there was high incidence of wind damage over an area of about 285 ha. It may be necessary to exclude some of these areas from normal maintenance because of low palm density and resulting uneconomic production. 17. As the plantation matured there was less requirement for labor for field maintenance which was partly offset by the need for harvesting workers. Also there was seasonality in the demand for labor with more harvesters and maintenance workers required during the period of high oil palm fruit production and higher rainfall which occurred at about the same time. It would appear that in attempting to balance seasonal demands with an assured supply of labor, GOPDC ended up with a larger permanent labor force than its productivity could justify. In addition, the wage structure was not related to output. This was particularly true for harvesting where labor requirements in the low production period can be one quarter of that for months of high production. The politicization of the relationship between workers and management also made it difficult for GOPDC to demand greater productivity from its workers. Nevertheless, after pressure from the Bank and increasing competition from imports, GOPDC introduced an incentive scheme to improve the productivity of fruit harvesters whereby a harvester received a bonus for higher output on a weight basis. The aim was to start with a minimum of 0.5 ton ffb per harvester per day and push it up to 1 ton ffb per harvester. This was quite successful and the average output per worker increased from 0.5 ton in 1990 to I ton in 1993. A drawback of the scheme was that it encouraged enterprising workers to over-harvest (that is, cut underripe fruits), which meant a loss for the plantation in terms of lower oil extraction. This necessitated closer worker supervision and imposition of penalties for underripe fruit harvested. 18. GOPDC had begun with a large labor force, but retrenchment was successful in reducing it by 30 percent to 1,460 in 1988. This has been gradually scaled down further, and total staff strength at the time of the PCR stood at 805. 19. Project Costs and Financing: The government delayed in providing US$1.3 million equivalent as its equity contribution to GOPDC required in section 3.01(c) of the DCA. IDA missions suggested to the government to issue GOPDC shares to financial institutions, workers and farmers in view of the difficulty in raising its equity. The government offered 50 percent of equity shares to financial institutions with the intention of retaining 30 percent and giving 20 percent to farmers, but the financial institutions did not accept the offer on the premise that their liquidity position was weak. Consequently, the government did not implement the plan to sell part of its shares to institutions and farmers and continued to fully own GOPDC. Generally, GOPDC met its working capital and counterpart funds  6 requirements from internally generated revenues. However, there were some years when cash earnings dropped below budget estimates due to drought-induced lower production. At another time, GOPDC had to pay for unplanned increases in salaries arising from new wage agreements, fuel costs and locally procured spare parts; it was able to use local commercial bank overdraft facilities to finance the extra expenditures. Only about midway through the project period did management begin to make good use of the budget as a management tool and fully involve the senior staff in its formulation and monitoring. This resulted in better financial planning and a senior management more responsive to profitability objectives. IRHO staff had tended to be more oriented to maximizing technical input and proficiency and this was at the expense of cost management. 20. Management: Project management was provided by IRHO which stayed on from OPI under renegotiated terms. At the start there were problems related to management maintaining good relations with labor and government authorities. The situation erupted into a demonstration by workers against management during which four senior local staff sustained serious injuries. In the first few years there were three changes in the Chief Executive provided by IRHO and this created some instability which the local political organization exploited to create a confrontational relationship with management. Nonetheless, the overall management performance was good despite these initial difficulties. An interesting feature of the IRHO management arrangements was that several Ghanaians were engaged by IRHO as their own staff seconded to GOPDC and this permitted these staff to be paid salaries substantially higher than those prevailing in Ghana. The performance of these contract employees was quite satisfactory. On expiration of the contract on December 31, 1992, the expatriate Managing Director was retained as a Technical Adviser. A Ghanaian Deputy Managing Director was appointed and the contract terms for the Ghanaians on the IRHO team were changed to that of direct employees of GOPDC. The Ghanaian Deputy Managing Director became the Acting Managing Director after the departure of the expatriate Technical Adviser in June 1993. The GOPDC Board of Directors agreed with an IDA supervision mission in March 1992 to submit a long-term management proposal to IDA. In 1993, the GOPDC Board submitted to government and received approval to maintain the present establishment of an all-Ghanaian management team as the long-term plan. The transition from IRHO management to a management team consisting entirely of Board employees appears to have been successfully achieved with good continuity of management being provided by staff previously employed under the IRHO contract. 21. Civil Works: Mill extension work was commissioned five months behind schedule due to a delay in the signing of the contract and disagreement over the rectification of construction defects. The additional equipment and facilities that were installed were for upgrading the rated capacity from 15 to 30 tons of ffb/hr. Although it was possible to operate the mill at the rated capacity at the required efficiency level, continuous operation was limited at the beginning by inadequate palm oil storage facilities, as at that time a near monopolistic buyer was lifting produce very slowly. This bottleneck has since been removed through the expansion of storage capacity from 1,000 tons to 5,000 tons capable of storing 30 percent of the annual output. 22. GOPDC hired a local firm of consulting architects to prepare the designs for the buildings for workers' housing, offices, stores, workshops and a health clinic. The firm's contract included preparation and calling for bids, bid evaluation and supervision of the  7 construction work. The SAR mentioned that earlier designs were too elaborate and should be simplified to suit users. This was generally complied with, except that the government disagreed with the proposal to use wood instead of concrete. 23. Delays in obtaining bids put the construction program behind schedule by one year at a time when the value of the cedi was depreciating, resulting in near doubling of local currency costs from estimated