Ghana - Cocoa Project

1JUL LIllltIIL UI The World Bank FOR OFFICIAL USE ONLY Report No. 3526 THE WORLD BANK PROJECT tFUKRMANUt AUDil KEPORT GHANA: Eastern Region Cocoa Project (Credit 205-GH) June 24, 1981 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of 1s11 UIUIIU UUlt&. In0 "WUan nay 1u3U ULAWI&C u UIaLaUu WAUUu vvURAU IuIR muususgUILsasus. I  FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT GHANA EASTERN REGION COCOA PROJECT (CREDIT 205-GH) TABLE OF CONTENTS Page No. Preface ..........* * * * * **................................................ Basic Data Sheet ......................................................ii Highlights ....................* * **..................................... PROJECT PERFORMANCE AUDIT MEMORANDUM I. PROJECT SUMMARY ..............................................1 II. MAIN ISSUES ................................................... 2 A. Project in Isolation ........................... ... 2 B. Vehicle Spare Parts ...................................... 7 C. Economic Rate of Return .................................. 8 Annex 1: Borrower's Comments .......* * ............................ 9 PROJECT COMPLETION REPORT I. Introduction - ......................... ............ 10 II. Project Identification, Preparation and Appraisal .... 11 III. Implementation .... o ................................ 14 IV. Financial Aspects ................................ 32 V. Agricultural Impact .................... ........34 VI. Economic Re-evaluation ...... . .......... ...... ......37 VII. Institutional Performance and Development ............ 38 VIII. Changes in Repeater Project ........ ............ 41 XI. IDA Performance .................................. 41 X. Conclusions ....... . . ........................... 42 Annexes 1 - 5 ............**............................ **. 44 Attachment * 55 Map Ino UuGunrn nw a oresten as may n o Uws ub u e Y [wdilsepw hu y ul Bank Po in. of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  - 1 - PROJECT PERFORMANCE AUDIT REPORT GHANA EASTERN REGION COCOA PROJECT (CKEDIT 205-GH) PREFACE This is a performance audit of the Ghana Eastern Region Cocoa Project for which Credit 205-GH was approved in June 1970 in the sum of US$8.5 million and fully disbursed on May 7, 1980. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department, and a Project Completion Report (PCR), dated June 4, 1980. The PCR was prepared by the Western Africa Regional Office on the basis of a country visit in November 1979. The audit memorandum is based on a review of the President's Report No. PA 845 dated June 11, 1970, the Appraisal Report No. PA 43a of June 3, 1970, the Credit and Project Agreements dated June 26, 1976 and the PCR. An OED mission visited Ghana in September 1980. The mission held discussions with officials of the provisional Cocoa Council, the Cocoa Project Development Unit, the Agricultural Development Bank (ADB), Barclays Bank, cocoa farmers, the University of Ghana and the Ministry of Finance. The PCR is of good quality. It properly analyses the problem of low producer prices and ties this to Ghana's macro-economic situation. It also discusses the organizational problems satisfactorily. In its conclusions the PCR rightly states the difficulty of using projects to resolve sector issues. The audit memorandum focusses on the issue of implementing the project in isolation. This and the other points raised in the audit have been selected because of their relevance to projects in export-oriented sectors. A copy of the draft report was sent to the Borrower on March 30, 1981. The comments received, from the Cocoa Project Development Unit, have been taken into account in paragraph 22 and have also been reproduced at Annex 1 to the PPAM. The valuable assistance provided by the Government of Ghana, par- ticularly the Project Unit, is gratefully acknowledged.  - ii - PROJECT PERFORMANCE AUDIT REPORT GHANA EASTERN REGION COCOA PROJECT (CREDIT 205-GH) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as % of Estimate Estimated Actual Appraisal Estimate Project Costs (US$ million) 15.6 38.7 248/1 Credit Amount (US$ million) 8.5 8.5 100 Date Board Approval - Uo/2/7 - Date Effectiveness 11/01/70 03/12/71 - Date Physical Component Completed 12/31/75 12/31/79 17/ Rehabilitation 100% - Closing Date 12/31/75 12/31/79 173-/2 Economic Rate of Return (%) 26 12 - Financial Rate of Return - - Institutional Performance Improved Poor Agronomic Performance Improved Poor Number of Direct Beneficiaries 5,000 10,000 200 CUMULATIVE DISBURSEMENTS FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Appraisal estimate (US$ million) -.2 2.6 4.7 a.8 85 - Actual (US$ million) - 0.3 0.5 1.3 2.3 5.4 6.6 7.7 7.9 8.5 Actual as % of estimate (US$ million) - 12 11 19 27 64 78 91 93 100 nato of final dishrsement May 7. 1980 Principal repaid to 01/31/81 (US$ million) 0.04 MISSION DATA Date No. of Manweeks Specializat ons Performnce Types of Mission (Month/Year) Persons in Field Represented' Rajg- Trend-/. Problem Preparation - Pre-appraisal 02/69 5 15 Supervision I 08/70 1 1 a - Supervision II 11/70 1 1 a - Sunervine TTT-- 04/71 1 1 e - Supervision IV 09/71 1 1 e - - - Supervision V 03/72 1 1 a - - Supervision VI 07/72 2 2 a, e - - - Supervision VII 12/72 1 1 e - - - Supervision VIII 08/73 2 4 a, c 3 1 T Review Mission 06/74 1 1 e - - Supervision IX 06/74 1 3 a 3 1 T Revie% Mission 12/74 1 1 e 3 - - Review Mission 03/75 1 1 e 3 1 F Supervision X 17 Supervision XI 08/76 5 5 c, e, d 2 3 M Supervision XII 03/77 2 2 c, a - - - Sunervisin XTTI 09/77 1 1 a 2 3 M Supervision XIV 05/78 2 2 a, e 3 3 M Supervision XV 11/78 2 2 a, a 3 1 M Supervision XVI 11/79 3 3 c, d 3 2 0 Total 62 OTHER PROJECT DATA Borrower Republic of Ghana Fiscal Year Borrower: July 1 - June 30 ADB: January 1 - December 31 Name of Currencv (ahhreviation) Cedi (0) Currency Exchange -Rate Appraisal Year Average US$ 1.00 = 0 1.02 Intervening Years Average US$ 1.00 = 0 1.15 Completion Year Average US$ 1.00 = 0 2.75 Follow-on Project: Name Ashanti Region Cocoa Project Loan Number 1181-GH Amount (US$ million) 14.0 Date Board Approval 12/23/75 /1 Costs escalated particularly for staffing and administration. P77 1so Fr f Rnt -FR d Annroval, /3 a = agriculturist, b = agricultural economist, c = economist, d cocoa specialist, and e - financial analyst 74 1 = problem-free or minor problems, 2 = moderate problems, and 3 major problems 75 1 = improving. 2 = stationary, and 3 = deteriorating /6 F = financial, M = managerial, and T = technical  - iii - PROJECT PERFORMANCE AUDIT REPORT GHANA EASTERN REGION COCOA PROJECT HIGHLIGHTS The project was to help Ghana rehabilitate its cocoa industry which had declined in the late sixties as a result of unsound Government policies concerning cocoa taxation and pricing. The project supported cocoa rehabili- tating and replanting through farm credit, farmer training, cocoa marketing, road construction and project administration. Achievements under the project were disappointing. Most of the area targets were met, but cocoa yields are expected to remain substantially below expectations. Institutional results were also worse than expected. The economic rate of return has been re-estimated at 12%, compared to 26% as estimated at appraisal. Ghana's cocoa production, meanwhile, declined from 416,000 metric tons in 1970 to 249,000 metric tons in 1979. These disappoint- ments reflected primarily deficiencies of macro-economic policy, which the project did not address. The following points may be of special interest: - difficulties in solving sector issues through projects (PCR, para. 10.01; PPAM, paras. 6-17); - low producer prices for cocoa detrimental to project (PCR, paras. 3.44-3.48; PPAM, paras. 12 and 13); - tax reform measures might have been recommended (PPAM, paras. 15 and 16); - farm loan recovery totally unsatisfactory (PCR, paras. 3.29-3.31); and - lack of spare parts detrimental to project (PPAM, paras. 18-21; PCR, para. 4.03).  - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM GHANA EASTERN REGION COCOA PROJECT (CREDIT 205-GH) I. PROJECT SUMMARY 1. The Eastern Region Cocoa Project was to be the first stage of a national program for rehabilitating Ghana's cocoa industry. Unsound Govern- ment policies including heavy cocoa export duties resulting in inadequate producer prices had in the early sixties resulted in declining new cocoa plantings and neglect in farm upkeep; the disbanding of cocoa extension and disease control services had resulted in resurging pests and diseases. An added problem was the migration of young men from farming areas to urban centers. reducing the availability of labor for cocoa farmers. As a con- sequence of these policies and developments, Ghana's annual cocoa production had declined from a record 566.000 metric tons in 1965 to 339,000 metric tons in 1969. 2. The project, starting in 1970, was expected to help Ghana reverse this trend by increasine cocoa production and also to provide rural employment and demonstrate the efficiency of supervised credit. The Bank considered the hiah cocoa export duties Justifiable only (i) because of Ghana-s economic and financial problems, and (ii) if the Government would help farmers achieve nroductivitv levels for profitable cocoa growing. The proiect thus included no provision for higher cocoa producer prices but instead focussed on in- rren.ing nrodinetivitv. Proiect tar2ets were to rehabilitate 51.000 acres and to replant 36,000 acres of cocoa through credit for farm inputs, farmer trainina imnrnvpd onnna marketing- road construction and setting up a proiect administration. A Project Development Unit was to be established because the Croca Pronuctinn niui.ion in tht Ministry of Agriculture was considered unable to absorb additional responsibility. 3. Project effectiveness (March 1971) was delayed by four and one-half M-t- A,,n t-n Dalnu in rPrriit-mPn- of a dpnuv nroiect manager. Advance planting of cocoa shade, consequently, had to be postponed for a year. The Prject nevlonment TTnit and the Prniert Rttprinp Committee were established in October 1970, as planned. The rehabilitation component was set back init4ially, bys t-he Goermnt's natinid froa Tnnea cnrnuina rnmnnicyn- which the Bank first acclaimed but later criticized. The replanting component made availability turned out to be a permanent constraint,.1/ with young people .Leaving for cities and planting of cocoa coinciding with soil- preparation for- food crops. Farm inputs were in short supply too: lower seed supply and 1/.L Ll U ag 5.1 d hmed t r n component, l/ See footnote, page 5. and shortage of insecticides and sprayer spare parts constrained the re- habilitation component. Numerous project vehicles malfunctionea aue to lack of spare parts. Road construction was delayed due to lack of construction materials and subsequent road maintenance was unsatisfactory. 4. Cooperative marketing societies failed, mainly due to lack of financial support from the Ghana Cooperative Marketing Association. Credit arrangements were unsatisfactory because the Agricultural Development Bank seconded too few loan officers to the project and because loans made to farmers were often not properly documented. Differently perceived organiza- tional responsibilities of the Project Unit and the Cocoa Division divided loyalty of seconded staff, and their different work styles and poor perfor- mance were also detrimental to the project. Some weaknesses in project management became apparent in the latter project years although overall performance of project management could be considered reasonable, in the context of the environment in which it operated. The major project problem, however, was the low cocoa producer price, resulting in lack of farmer response. In an effort to reach targets, the Project Unit even went so far as paying farmers for working on their own farms. 5. Achievements under the project were disappointing. Although 100% of the rehabilitation and 90% of the replanting targets were met, this was at an 80% time overrun (nine years instead of the five planned) and a 148% cost overrun (US$38.7 million instead of the US$15.6 million planned). Cocoa yields are expected to remain substantially below expectations. Only half the anticipated distance of roads was constructed. Institutional results were also worse than expected at appraisal and the future status and role of the Project Unit are not yet clear although at present Government appears intent on keeping it. Credit recoveries from cocoa farmers have been particularly disappointing: only 6% of the rehabilitation loans due and 0% of the replant- ing loans due. The economic rate of return has decreased from 26% at apprais- al to 12% at audit. Ghana's cocoa production, meanwhile, declined to 249,000 metric tons in 1979. II. MAIN ISSUES A Project in Tslation PCT C.Nni1cion. The low nroducer price. insufficiently recognized by the Bank in early years, is identified in the PCR as the main reason for low farmer participation and the disannointing project results (paras. 3.43- 3.48). The PCR also considers the different policies of the Cocoa Division andLte Project Unit, bohwrigi h ~P~as a dsign deficiency and detrimental to farmer participation (paras. 3.49 and 7.01-7.02). Further- mr,it shlows that farmer -katicipfat-n estimatess made at prpnaration and appraisal were unrealistically high at the prevailing producer price (para. Government policies, shortage of insecticides and spare parts, drought and other agricultural and managerial problems. The PCR concludes that it is extremely difficult to solve sector issues through projects. The audit concurs with this judgement, but feels that it should have been made earlier. 7. Situation at Appraisal. Encouraged by satisfactory producer prices and effective government policies Ghana-s cocoa production increased from 224,000 metric tons in the mid-fifties to a record 566,000 m tons in the mid-sixties, and its share in world cocoa production rose from 27% to 38%. During that period total world cocoa production also expanded, accompanied by declining world market cocoa prices (in real terms); the real producer price also declined in Ghana. After the 1965 record cocoa crop, worldwide and in Ghana, world cocoa production declined, then stagnated and subsequently increased again, while Ghana's cocoa production declined further and further. The domestic cocoa sector began to feel the effects of unsound Government decisions taken in the early sixties and affecting producer prices, marketing, use of price stabilization funds and cocoa extension services. Ghana's share of world cocoa production in 1969 had fallen to its previous level of 27%. The expansion in world cocoa production before 1965 was accompanied by declin- ing real world market prices while production expansion after 1965 was accom- panied by rising real prices. But in Ghana, cocoa producer prices remained depressed after 1965, and, also due to the poor cocoa sector policies, which further reduced farmers' incentives, the country missed an opportunity for increased export earnings. After the 1966 Government change, steps had been taken to resuscitate the cocoa sector, but progress was slow and the sector was in serious condition in 1969 when the project was appraised. 8. Although the cocoa sector problems were macro-economic, the Bank did, at appraisal, not address them at that level. Instead, it addressed the problems through the project, whose objective was to revitalize the sector by rehabilitating and replanting cocoa fields, farmer training, road construc- tion, improved cocoa marketing and project administration outside the Govern- ment bureaucracy. Ghana's difficult economic and financial position was felt to iustify the high taxes!/ on cocoa exports, if Government was prepared to actively help farmers achieve productivity levels for profitable cocoa growing. No specific conditions were. therefore. imposed to ensure higher cocoa producer prices. 9. The Bank, in the staff appraisal report and at the Board meeting discussing the proiect. attached considerable weight to a one-time increase in producer price for cocoa at that time and a pledge from the Government to maintain it at that level for three years. To the efficient cocoa producer, the new price was thought to be adequately remunerative, if insecticides and spravers continued to be subsidized. It was not sufficiently appreciated, however, that this solution would not provide an adequate price incentive for non-nroiet farmers not henefitting from subsidized insecticides and spravers. 1/ The Bank was also concerned that the Government used too much of the cron salor nrnrpds and dpnrived the cocoa stahiliation fund of its proper function. that it would encourage cocoa smuggling to neighboring countries where cocoa producer prices were much higher, and that it would only apply to those farmers that could be timely supplied with the subsidized inputs. The appraisal design did not, despite Ghana's balance of payments problems, allow for direct imports of insecticides or spare parts under the project. 10. Implementation. The proiect, thus designed, was then implemented to achieve its narrow targets without any indication of how the wider sector problems were to be resolved. Supervision missions mainly focussed on tech- nical, credit, and managerial aspects (see Basic Data Sheet). Staff involved in supervising the project indicated that the Bank was nevertheless constantly aware of the price issue. In the latter part of implementation, when it became clear that the proiect was not proceeding well. low farmer narticinn- tion as a result of low producer prices was identified as the main problem. Stinervising staff did. on a few occasions. mention to Ghanaian aiithoritipR thp possibility of delays in further Bank lending to the cocoa sector because of th untisfqctorv nrocrPq 'hit qninn.qion of divburqsmsnt was not Qeriniicly considered by the Bank. 11. The Bank, during early implementation, decided against support for --rice inancreaes benc ae t feIt theo GZhann Government- couldr no%t- affordl to loe its revenue for cocoa and, therefore, could not afford to pay higher cocoa nroner nrirs. Tn an dpiding the Bank showPd rnnrprn fnr th-i rvnt-rv'z immediate economic problems, but also aided in further eroding the cocoa sectr, nd herby he ovenme-s basi fo t-x rvene. it consequently hampered a long-term solution to Ghana's cocoa sector. 12. The downward trends, creating disincentives for cocoa growing, were not reversed, b-ut instead continued to deteriorate thoghu the project period, as shown in Table 1: TABLE 1: GHANA COCOA PRODUCERS SHARE OF EXPORT PROCEEDS AkTn DD13nnTTUrD DDTrV TATnTPVC Cocoa producer price Producers' Cocoa producer price index relative to share of relative to consumer that in neigh- Year export proceeds price index (base year 1963) boring countries (%) (%) (%) 64/65 67 70 98 69/70 35 71 30 70/71 45 66 24 71/72 42 60 16 72/73 44 66 18 73/74 33 66 16 74/75 32 66 12 75/76 38 47 12 76/77 28 28 13 77/78 33 30 17 78/79 25 35 10 - 5 - 13. Actual project developments during implementation have been sum- marized in paras. 3 and 4 above. Many of those developments are symptoms of sectoral or national policies: setbacks in the rehabilitation and replanting activities reflect the low producer price; shortages of sprayers, road con- struction materials. insecticides, and vehicle and sprayer spare parts illus- trate the shortage of foreign exchange beyond that provided under the project; the organizational problems indicate the lack of a consistent cocoa sector administration; failure of financial and farm credit arrangements results from noor financial sector management and low farmer participation - which in turn is due to the low producer prices; and short labor supply indicates to a large P5tpnt noor macro-economic manaRement causing migration to neighboring coun- tries and a bias of Government development policy against agriculture causing migration to citiesl/_ han'q vnonn nroduction had in 1979 fallen to 249,000 metric tons, with its share in world cocoa production down to 17%. The prnie ctgnerated coon nrodiirion was then estimated at 6.600 metric tons, against about 14,000 metric tons expected for that year at appraisal. 14. Government Commitment. The important political and macro-economic develomentc that determined -h fa- of t-hp nroiprt were. in a nutshell. growing instability and poor economic management. The project had to deal with five different governmnents Hroo of w.hirh milifnrv- Thp mnilifnrv rule (1972-1979) particularly demoralized the Ghanaian public administration: salary levels were depressed and there TWere- p-r%I-il mc of ninlitv nnd motiva- tion at senior staff levels, while at junior levels the public sector was a re 1,1 J ~ h4 crntQ 1,-ft the roniirv or were later removed because of their association with former military regimes. The intailt ai-sopere in the many organiza_nttonal cha-nngeS o-f thie project unit's parent organization. 15. Related to the political instability has been poor economic manage- ment, resulting in distorted cost-price relaionsips low prdcrpie particularly for cocoa, unjustifiable subsidies and a totally unrealistic currency exchange rate. Lhese usoUsun1 reuceU pro ul-on nLcen+v favored import-dependent production over the more necessary export-oriented production. Reaucea revenues inL e. LrueaalumtUer.b.u. U . g v1- apu during part of the 70s and loss of potential revenues throughout the decade, coupled with poor fiscal policies helpedn inucsng the ovr nment's- bdet deficit in the 70s. The deficit was financed by inflationary borrowing, and with no significant increase In productIoLn inLatUn acLeated to over 100 percent per annum, resulting in escalating project cost and rising labor wages. Producer prices were not adjusted, and with official farmgate prices for cocoa remaining low farmers were induced to cultivate crops other, and more profitable, than cocoa or to aadon farming aiLusLu, caalusogeher decrease in cocoa production. The consequent 'decrease in revenues from cocoa 1/ Re2ional staff added that the labor problem primarily resulted from unattractive cocoa producer prices which did not enable farmers to pay attractive labor wages and diverted family labor from cocoa to food crops. The project, through its own labor force, did in fact most of the replanting and maintenance on farmers' behalf. Recruitment of labor by the project was never a significant problem, because it could offer more attractive ages thnn farmprq, -6- further and further below the potential, made the Government even more reluc- tant to grant cocoa farmers a price adjustment: a vicious circle. Because of the high domestic inflation the cedi became increasingly overvalued, providing strong disincentive to export, further encouragement to smuggling and further balance of payments difficulties. Ghana's cocoa export volume thus remained far below its potential and even declined for some time, despite the world market price increase for cocoa. 16. Conclusion. At project completion the cocoa sector faces the same problems that existed at the time of project appraisal: low production, neglected farms and labor movement to cities. The causes for these problems are also still the same: low cocoa producer prices, poor sector administra- tion and, overall, a lack of sector policy. The project addressed the prob- lems but not the causes; it mopped the floor with the tap running. The project was designed to be immune to those causes but it could not be isolated from the rest of the sector. Closer monitoring of those sector developments that were considered so crucial at appraisal and a shift in focus of Bank efforts from the project to the sector would have been warranted. Speci- fically. greater Bank support for cocoa nroducer nrice lnrreases (above thnsq implemented by the Government) from the very early stage in the project would have been beneficial to the .ector and therefore_ to the cointry. Tax reform measures could also have alleviated the revenue shortage, and might, there- fore, have been recommended. 17. The need for a sector stiidv as has now hppn carried outl/ Q_ required under the follow-on project (Ashanti Region Cocoa Project), could have been seen mich earlier. Meanwhile the Achanti nrniot wn anproved and now suffers from the same problems of low cocoa production, neglected farms and lahor movement to the ritio. Howver, with a ponsihle thIrd oena project, which has now been identified and preparation for which is expected to start qnon the Rank intends to mnukse annrqisn1 r-nnritonA non nn MAante cocoa producer price increases and agreement on a mechanism for appropriate nrodiirpr nrirp adiictment- in future Tn hindcaht the audit f4nAO i tnevr- , -- -- I ------------------he--dit find-it-- -e theless difficult to understand why learning the lesson - that sufficient nricp innnVves nre t-riil ton ncrri,lt,,ra1 piroductI4en - should h--~ taken the Bank so long (to 1975), and furthermore, why the Bank should have con- tiniia to suppoinert- the prnoet when it, wasn clear thant the dIalogue with the Government on cocoa producer prices lacked results; the Bank could gainfully hav I% Te Sh14If te d a-t ten 1t1on f r omI th1,e co-0co- a p roJe c ts to t he coco-_a s ec t or . This problem of continued financing of projects under a counter-productive sector policy has also been observedeswhri' 1/ GHANA: Cocoa Sector Study, Report December 19, 1980 (Green Cover). 2/ In the Tanzania tobacco sector, where the Bank continued to finance tobacco projects in the face of stagnating tobacco production due to lack of price incentives. See OED, PPAR, Tanzania - Flue-Cured Tobacco Project (Credit 21-TA), Report No. 2786, December 27, 197/9, Highlights and paras. 10-16. -7- B. Vehicle Spare Parts 18. The general lack of foreign exchange in Ghana caused shortage of spare parts and farm inputs. How serious the situation was for vehicle spares can be seen from Table 2, compiled at the time of audit. TABLE 2: OPERATIONAL STATUS OF PROJECT VEHICLES IN OCTOBER 1980 Operational Year of vehicle purchase Total no. Status 1970 1973 1975 1976 1977 1978 of vehicles Roadworthy 7 0 11 0 1 0 19 Unroadworthy 17 2 16 3 4 2 44 Written Off 29 0 4 0 0 0 33 Total no. of vehicles 53 2 31 3 5 2 96 of the 96 vehicles, purchased by the Project Unit, 33 have been written off. Of the remaining 63 only 19 are roadworthy and 44, or 70 percent of the vehicles not yet written off, are in the workshop mainly because of the spare parts shortage. 19. As early as 1974 project management wrote to the Bank about great difficulties with transportation due to constant breakdowns of project vehi- cles, lack of spare parts and, therefore, ineffective servicing. Again in 1975, it complained that most of the time trucks were off the road and that, for lack of spare parts, it took considerable time to return them to use. Project management requested reallocation of funds for spare parts from the category "Unallocated" to the category "Equipment and Vehicles". Although reallocations were granted by the Bank, spare parts remained excluded from financing out of the Credit proceeds because the Bank considered provision of spare parts recurrent cost which should be borne by the Government. In 1976, when many vehicles and much equipment were still malfunctioning due to lack of spare parts, the Bank asked project management to take the necessary steps to remedy the situation immediately. 20. Project management and the workshop staff could no doubt remedy part of, but not the entire situation. It was basically due to the Government's failure to allocate foreign exchange for direct imports of spare parts for the project. At the same time, the overall shortage of foreign exchange had caused general scarcity of spare parts on the Ghanaian market. It was first of all a macro-economic and political problem outside the sphere of the project. Given the country's economic situation, however, and as the project approached its scheduled completion, the best alternative might have been Bank approval for spare part financing out of Credit proceeds, since not doing so has clearly contributed to the shortfall in achieving the stated project targets. In more general terms, projects in countries where foreign exchange is expected to be in short supply might benefit from large spare parts allocations. - 8- C. Economic Rate of Rpturn 21. Economic anlvsis is as realistic as its under1ving aqnumntions. At appraisal, foreign exchange was not shadow priced for the economic analysis. At comnletion it wan not donp Pithpr hPrniiqP thp PCR authors wanted to maintain comparability with the appraisal analysis!/. The economic rates of return as presented in the PCR ar 97 nf annraian and 197- qt nmpletion These two figures are, however, still not comparable because of different valuationsc of th )i eot- of family7 lbo-r.- The labor shortage in the- cocoa areas was acknowledged at appraisal, but due to the country's overall high unemploy- ment, ~4 , fail lbor cost w.as vraluedA at zero. But since tho projet' sccs was to depend on labor available in the project area, the local labor scarcity shldt. av bee %on reflece in 4- shadow, lab-Or cosct 00bo Zero. in a sensltlv - ity analysis carried out at appraisal, with family labor costed at the minimum wae +-1-0 ra-te of return.- fell from 26% t-o 23.Thisat ,4of 23% was9 clsrt economic reality at the time and should have been presented in the appraisal repoLL. * AfLLeL L1t CUUpiLtiULL WibbUL V.L, L11 LLUjCUL UL.LL UULL.eU VUL Z farm survey which showed that 44% of the cocoa field acreage that had been manUtaineu by Lte Unit, was negIeUteU aLter it was "handed back" to the farmers.2 This state of affairs is not difficult to understand when one Lea.L.Cs LLiat 111UL LmLlLst fa are o.LU LO LU UU oe U age WiLL LheL sos gone and hired labor difficult to obtain, reflecting both scarcity of labor in tne area andU oUU 1uW U-n iucme fro cocoa to pay he hig wages Lequired to attract labor. In this anomalous situation, to save at least part of the cocoa production, project management has suggted tnat the project snould again maintain the farmers' cocoa fields as it had done before. As can be seen in the Borrower s comments (at Annex I to this memorandum), tne Government has now agreed to the project management proposal. A loss of up to 44% of the replanted cocoa area, as expected at the time of the audit mission (and which could have decreased the economic returns to below 10%) is thus no longer expected and the economic rate of return should, therefore, remain at 12% as presented in the completion report. 1/ Shadow pricing of foreign exchange would for this project, with output mostly exported, increase the economic rate of return as re-estimated at completion, to over 20% (up from 12%) because the shadow value of the cedi is a manifold (about four times) of its official value. Shadow pricing at appraisal would not have given a return much different from the one then computed because the shadow value of the cedi was then, on the basis of information available, only about one-third above its official value. 2/ This applies to replanted fields; rehabilitated fields had not been maintained by the project. Annex 1 -9 - NNN N Borrower's Comments RCW18 ZCZC Y1wr274 UWS7445 CAC420 C3496 UPI-IN HL GHAA i14 ACCDIA 1r4/18 11 14r9 LT SHIV S.APUR(TnIRECTOR) OPERATIONS EVALUATION n)EPT INTENAYIONAU DEVELVMFNT ASUSOCIATION 119 H. STREET N. W. WASHINGTON DC.20433 THANK YOU FOR THE DRAFT REPORT ON PROJCFT PCRFORMANCE AUnIT ON GHANA PETWEN REGION COCOA PROJFCT ( CREDIT 205 GH) STOP I HAVE NO COMMENTS EXCEPT THAT THE COCOA COUNCIL PAS AGREED TO OUR C34ri SHIV PArGEP/41 PROPOSALS TO TAKE OVER THE 44=0/0 OF COCOA FIELn ACREAGE IIHANDED DACK'' TO THE FARMERS 91JT WHICH WERE NOT BEING MAINTAINED STOP YOUR PAGE 12 REVEPS STOP THERE WILL AE THE NEED THEREFORE TO C(AIPIIAITC TUC Cf)kM IC DATE OC DCTI10M IM 11lCd AU O nF CflT . 1..V L V 0 . L.I L . . .V IL 1I1 I L V I I1 L.. I1 , Ia I T I;a V I L ." ki1 F F%( L QJ L. 11 1 CIRCUMSTANCE. AG. PROJECT MANAGER COL LT 1B18 20433 205 44=0/0 12 - 10- PROJECT COMPLETION REPORT GHANA: Eastern Region Cocoa Project (Credit 205-GH) 1. INTRODUCTION 1.01 In the late 1960's, when the project under review was formulated, coca acnintpd for about two-thirds of Ghana's total exports. This over- whelming reliance on cocoa has become even greater over the last decade, and at nreent cocoa contributes about 80% of the country's export earnings and around 48% of Government revenues. Further, it employs more than 20% of the 1mbor force and covers about 50% of all cultivated land. 1e02 Des-t its importance. the cocoa sector lost the dynamism it once had. In the early 1960's cocoa production had climbed rapidly, reaching a neie nf 54, nn tmnS in 196i/I5. This growth reflected the substantial expansion of cocoa acreage in the 1950's as a result of sound producer price onlicipq. Thorp were also effective Government measures to control cocoa pests and diseases. However, a sharp decline in cocoa production began after 10A4/A5. Batepan 1965 And 1970. cocoa oroduction averaged only about 400,000 tons annually. Although Ghana remained the world's largest single prnieor nf cocona its share of world cocoa production declined from about 37% in the early 1960's to about 30% in the late 1960's. The declining trend in cocoa nrnduction continued in the 1970's. and in 1978/79 production reached only 265,000 tons, less than half the 1964/65 production. Ghana is ow the wOrld'q third Iargest nroducer of cocoa. having been overtaken by Ivory Coast and Brazil (Annex 1). 1.03 The decline in Ghana's cocoa production in the late 1960's followed decreasing oroducer prices (from US 12 cents/lb. equivalent in 1959 to US 6.7 cents/lb. equivalent in 1965 in nominal terms) in line with falling world prices. There was also an almost complete cessation of cocoa extension and disease control services by the Ministry of Agriculture: consumpton of cocoa pesticides fell from a peak of 312,000 gallons in 1962 to only 27,000 gallons in 1966. As producer prices declined, farmers reduced their new nlantinas and nelected farm maintenance: and as disease control services were curtailed, yields dropped sharply on older farms due to renewec mal--e-l frOm ennQid And Swo11en Shoot Virus Disease (SSVD). By the time the project was formulated, Ghana's cocoa industry was in serious trouble. 1.04 The new Government which came to power in 1966 showed its interest in resuscitatin the indnqrry. Amon other mpaqurps undertaken by the new Government, the cocoa producer price was increased to US 13 cents/lb. equivaln , slight1iv bohve the 1 99 1Pva1 . The nrniet wauq dp.ianed to assist the Government in its efforts to strengthen Ghana's cocoa industry. The rantern Raion Coco Prniet hprAme rho ank (rnn'q first nirPlv Acri cultural lending operation in Ghana. An IDA Credit (No. 205-GH) for US$8.5 million was signed on Tune 7 197n. 1.05 This Project Completion Report (PCR) was prepared from available sources of information: project files, Credit Agreement, Staff Appraisal Report, Staff Appraisal Report on Ashanti Region Cocoa Project (Loan 1181-GE), IDA Supervision Mission Reports, draft PCR prepared by the Project Development Unit (xeroxed copy at Attachment 1), monographs on selected issues produced by the Institute of Statistical, Social and Economic Research (ISSER), University of Ghana, and Report by the Ghana Government/World Bank Cocoa Project Evaluation Committee submitted to the Commissioner of Cocoa Affairs in April 1978. Discussions on selected issues were held with project manage- ment and some Bank Staff members involved with the project. II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL 2.01 A Bank mission to Ghana in 1965 discussed the opportunities for expanding the cocoa industry but made no definite recommendations. A possible rehabilitation project was first discussed in a back-to-office memorandum dated June 29, 1967. Discussing the decline in cocoa production since 1964/65, the mission recommended a comprehensive program in which credit for rehabilitation played a major role. The mission reported that, at a meeting in Kumasi, where representatives of 190 village cooperatives had assembled, farmers themselves had showed considerable enthusiasm for such a scheme. 1/ Farmers interviewed by the mission had stated that, even at the then pre- vailing price level, they would have a higher net income from producing cocoa than from growing food crops. That was because cocoa permitted them to keep a larger area of land under cultivation. The proposed project was visualized as being similar in scope to the one designed for western Nigeria, which had been appraised in 1965. The Nigerian project included credit to the farmers for replanting with high-yielding and disease-resisting clones, and for purchasing equipment, spraying material and fertilizer. For Ghana, a similar scheme would be combined with the construction of better storage facilities and feeder roads which were considered essential for a successful project. A rough estimate of the cot f elanting -was "OSy300-0 er ar and, based on the results of earlier programs, replanting an average of the Government. The Government and the Cocoa Marketing Board (C) reacted favrably.,h and in Jul-n IO967 CY-B sarted prelimina.ryrs data colleo4n& 2o03 In .another letter to the Goenment of Apr41i , iqAA tQR ho Rn proposed the Eastern Region as the project area. This Region had been heanvi1 dasmoad h- ansids and sno l hnnr hse holoot,u -nditIris for cocoa were very favorable, and the area was judged to have the best chances of qineePA for a rehabilitation effort. A nroiaet was nrnnosed havin2 the following three main characteristics: (i) all-out disease control on, and 1/ A farmer arentabilitv survev undertaken by the Government in 1968 showed a 95% favorable response. - 12 - careful maintenance of, existing viable plantations; (ii) replanting of areas where the above action would not be economically justified (trees too old or too infested); and (iii) new planting on suitable soils in forest or other available areas. 2.04 In May 1968, the UNDP was approached by the Government with regard to undertaking a feasibility study. However, in July-August 1968, the Bank felt that a formal UNDP feasibility study, involving broad surveys, and a reorganization of agricultural services then being considered might take too much time. Instead, the Bank favored an initial smaller project along the lines of the Nigerian cocoa project: in this project, to circumvent the generally inefficient extension service, an adequately staffed project authority was established within the Ministry of Agriculture, and applica- tions for replanting and new planting grants and credits were considered on an ad hoc basis. If a small project of this type could be prepared and started within nine to twelve months, one of its components could be the surveys required for a more comprehensive second stage. 2.05 The project was prepared by the Government with assistance from the Bank's Permanent Mission in West Africa (PMWA). A preparation pre-appraisal mission visited Ghana in February 1969. The project was appraised in October- November 1969. An appraisal follow-up mission visited Ghana in February 1970 to clarify some issues, principally relating to onlending to project farmers by the Agricultural Development Bank (ADB) and project organization, including the relationship between the Ministry of Agriculture and the Project Authority. Credit negotiations took place in April 1970. The project was approved by the Board on June 23, 1970, and Credit signing took place on June 26, 1970. Project Objectives 2.06 The project was to be the first stage of a national program to rehabilitate Ghana's cocoa industry and was designed to be implemented over a five-year investment period. The main components of the project were: (a) rehabilitating up to 51,000 acres of existing and low-yielding cocoa by controlling capsids, replanting vacancies and improving farm maintenance, and replanting of 36,000 acres on which cocoa had died out, or where it yielded sub-economic levels, with improved high-yielding cocoa varieties; these programs were to be carried out through the provision of credit to cocoa farmers for the hire of labor and for the purchase of spraying machines, pesticides, fertilizers, and improved planting materials; (b) training farmers in modern cocoa production techniques; (c) improving cocoa marketing cooperatives through the provision of technical assistance, and the establishment of 15 new coop- eratives; - 13 - (d) establishing a project administration within the Ministry of Agriculture to plan and manage the project; and (e) resurfacing some 100 miles of feeder roads in the project area. 2.07 Credit needs of the project were to be channelled through the ADB and the marketing of cocoa was to be handled by the CMB and the Ghana Cooperative Marketing Association (GCMA) acting through primary cocoa mar- keting societies. The Public Works Department (PWD) was to be responsible for the improvement of project area roads. 2.08 The project was to be phased as follows: 1970/71 1971/72 1972/73 1973/74 1974/75 TOTAL Project Year i 2 3 4 5 Rehabilitation (acres) 4,080 20,400 20,400 6,120 - 51,000 Replanting (acres) - a,awu Lu,oVu .,'Jvu O,Quu Jo,wu 2.09 Rehabilitation. Participants in the rehabilitation component, capsid control and fertilizers, and for replanting vacanciesin their farms be provided in the form of a sprayer and insecticides for two years, after which the farmer was expected to be able to finance these- activitie s otof current receipts. A limited volume of cash credit was also to be provided in thoca eva vaarq fmr rhe hire of Iabor where a farmer could show a shorta2e of family labor as a constraint. Capsid control was to involve four sprayings annually with "Gammalin". a benzene hexachloride insecticide, but in areas where resistance to this insecticide had developed, a carbamate insecticide was to be sunlied. 2.10 Revlanting. For replanting, credits were to be provided in the form of cocoa seedlings, plantain suckers and yam tubers, and cash for part of the labor needed for farm development and maintenance until plantings were four years old. For capsid control, credits were to be in the form of sprayers and insecticides. 2.11 The Project Area. The project area comprised the central zone of the Eastern Region, and as envisaged at appraisal, totalled about 146,000 acres of cocoa, food crops and natural bush. Surveys carried out by the Ministry of Agriculture showed the utilization of project area as follows: - 14 - Acres Cocoa Bush Food Farms Townships Total 55,858 71,330 15,500 3,312 146,000 A soil survey of the project area also made by the Ministry showed that or the 71,330 acres of bush about 48,860 acres were on soils suitable for cocoa. 2.12 The main justification for selecting the project area was that, although SSVD was endemic, and in much of the area the original cocoa had died out, soils were still capable of supporting good replantings. It was known from experiments started in the 1940's that, provided the old cocoa trees on a farm were eradicated, as they were usually reservoirs of infection, replantings could be established successfully. 1 lirL* I L1. IA 1il I Effectiveness 3.01 The credit was expected to be effective by November 1, 1970, allowIug "Iu days between siguiug aud effect-iveness ul a a n .LLW.L 14 U~\ UL W~ L1U. dU II.LL IL b,' ILI-Lzi Wd.i dL L2e request of the Government which needed parliamentary approval of the namely, signing of an agreement between Government and Ghana Commercial Bank, Barclays Bnk v.C.v., anu Standad onus a1 weeL aJ.L, eBanu'- of umCus A project authority; establishment of a Project Steering Committee; signing of ---------------------------------------- a suUsJidiry agreem C etwL UCvLWCCmn a V2WLLIACUIL dUL 1D 1.LI6 W1. L 41dL WeL between ADB and GCMA; and appointment of the Project Manager, Deputy Manager, postponed to December 1, 1970, on Government request, because appointment o1 Le DepUL . LUCJojcL Ldanage UT)ri, WI-o Was LLitU LU U fei CLL.LLL nationally recruited or be a Ghanaian with managerial experience satisfactory LU DIM, LIL UL UC H .1.Ld LCL U LA...L LC ULLUUCL* 1II CALCUL.VC E 4L C W postponed again to January 4, 1971, March 1, 1971 and April 1, 1971, because appointment of EDUJ Lha not been finalze"' A- - expatriate DPC ... cJi-TT- appUALL WCJ1ULL 01. ULJ 11 LLU L UCCHI L.4II4.1~U * RMU I CA 1.4iLC UKit. W4D 11H. l appointed on March 1, 1971, and the credit became effective on March 12, abo,uuu fouur and a half muntus after tue origiual date. Iu retrospect, 1.7I. 1 IOU 1OL WLU 4 11411 L IILII i l L LLi L ~LU . L . LI .C1ULCL the need for appointment of DPM as a condition of credit effectiveness can be questioned. One consequence of Ce delay in credit effectiveness was that advance planting of cocoa shade was not possible for the 1971/72 planting program. 3.02 Le rUject Development UnIt and lUe rEJ!CL OLeering Committee were established in October 1970, as originally envisaged. - 15 - Implementation of Rehabilitation and Replanting Program 3.03 The original credit closing date was December 31, 1975. However, till that date only about 24% of the appraisal rehabilitation rArapr And about 59% of the replanting target had been achieved. The credit closing date was first extended to December 31, 1977. and finally to December 31, 1979. At the time of credit closing on December 31, 1979, the project had achieved replanting of about 32,400 acres or 90% of the anraisal renlanting target, and rehabilitation of about 51,000 acres or almost 100% of the rehabilitation target. The progress of rehabilitation and reDlanting program of the project is shown on the following page. 3.04 The slow progress of rehabilitation and replanting under the project was due to a variety of reasons discussed in paras 3.42-3.58. A brief review of implementation progress and major issues arising in the process is given below. According to the supervision report of March 1, 1971, the work program prepared by the Project Development Unit for the first year of project operation envisaged rehabilitation of 4,900-5,600 acres, which was 1,000-1,500 acres more than envisaged during appraisal, but it was within the capabilities of the then existing project staff. Spraying against capsids was expected to begin in June or July 1971. During the same period (1971/72) the replanting of 5,000 acres was expected to be achieved. The supervision report of September 27, 1971, reported that the project was developing on schedule. The rehabilitation program started in August 1971. Farmerso response was reported to be good, as a large number of farmers had applied to participate in the project. However, Government made a signifi- cant decision, which later had an important bearing on the progress of the project rehabilitation component, to resume nationwide free mass spraying against capsids throughout the cocoa growing areas. This meant that, since spraying would be free in the rest of the country, it was no longer possible to charge project farmers for this operation. As part of the free mass spraying campaign, the project started gang spraying in the project area with sprayers and insecticides procured trom Cocoa Division and labor paid by the Project Unit. The September 1971 supervision report argued that, for all practical purposes, mass spraying was advantageous. It ensured more efficient capsid control than the pocket spraying envisaged under the project, and it was easier to organze since it did not require either demarcation of farms or loan formalities. Further, mass spraying against capsids was considered one of the best ways to increase cuouo prouuction quickLy. 1he supervision report concluded that the Government decision appeared sound on both technical ment request to reimburse expenditures incurred on the free mass spraying 3.0 Hoever -- aV letro-Arl1, 17, toW the new 'oenmn,IDA argued that free mass spraying was not the most efficient means of capsid control. It wan ar2tipd th at-na. ( pAd the * possible l t task of timely spraying of more than 4 million acres scattered over nearly ona-thfrd of CahAa (JJ) 11- A4A tnny-pp.aJA=r, w ."- farme 4:a-nta±-4ed Playste[ Implementation Iiki 1971/12 1972/73 1973/74 1974/15 1975/76 1976177 1977/7 1978/79 1979/80 j.ppraiIa turt, e:n".,Iat.lve Acru 3,600 14,400 27,9900 36,000 36,000 1/ 36,v00 1 36,000 1/ 36,000 1/ - AC:t.0,4, en. e...ut.LIvA 4.065 9,206 14,215 21,192 25,390 29,347 31,334 32, 3 o A.~., au percentage r rur. I 112.9 63.9 50.9 58.9 70.5 8.5 87.0 89.9 ppe.a:..l ttet,~ .con,..tomlve Ace 4, 011 21.,i.80 44, 1110 si m1 5 (,000 1/ s i ,00 1/ 51, 00J0 fJ 51, 000 1 51.000 1/ Akl .... 1."@ ive ALICU 2/3 2.499 71,615 11,97)4 15, 7-" 27 156 32,831 45.J92 50.871 A a . .I C car,l ge t z 6./ 10.2 I7.1 214.5 110.9 53.6 64.4 . i19.t 99.7 . a.,inee 2 .. ,:co.olar Ive thu.. 176 .62 692 061 5 ,030 1,019 l ,326 1.151 3/ r .l3y : ,cen .,I Ive N4senbyr - - --.539 lit l474 l ,374 1 .490 1.536 3/ b l , . : 11 c e , y 1r* thålm.:r: jat Junl l 19 9 Aja,,,, l.u A,gno 1 3co:,vc ed. <cry 427,5u91 .49 ( 24,672. / .U 2 . .1 N-n1eiie uucvk Ce-,:.c ogn c.e«0u iep n 1. .111 gb 01- at Ll 1e e .. y Couruu al, relljblib tu l 4,t lunt / A. o ud.l-ri.venl.., , 19 PJ. - 17 - his rarm well or inefficiently; and (111) it removen from tne farmer anis participation in, and control of, one of the most important annual mainte- nance operations. 'Le 'eter concuded tna mass SpLaylug Was, L LaU6, a retrograde step. In IDA's opinion, the only satisfactory means of tackling tne cocoa pest pruule was Lu a cll.LLmCL n Pwu 4yaLa, CAU -then to give them advice on pest control and to ensure that supplies of in s e c ti c i Wd e w e re r e au il y a v a il a l . L I A. L - - U m-u-u - AO- A u u-y -n a u -U 4 policy should be followed by Ghana. 3.06 In 1971/72 the project rehabilitation component remained in abe- yance, and rrA considered the de o clln th reaiitto component and using the available funds for additional planting. In this project year, However, as highlighted in the supervision report of August 1972, the problem for the project's slow progress, had surfaced. Contrary to the appraisal assumption hat farm familie wnuld themP1ves nrnvidp more than half of the labor required for replanting, the remainder being hired with the proceeds mf rAqh rrdar nrnvidad by tha ADB_ in nractica nearly all first year labor requirements were met by hired labor and the contribution by farmers and their EamilfAs was minimal. While the reasons for low farmer Darticivation were not analyzed, the supervision report argued that the high use of hired labor in the first year had permitted about 4,000 acres to oe replanted and had acted as a demonstration of what the project offered. Nonetheless, the report su2gested. it was important that in future seasons the farmers should increase their labor contribution. 3.07 With IDA approval, the 1973 planting program was reduced from 10,800 to 8,000 acres, as, based on previous experience, this was considered the maximum manageable by the Project Unit. However, due to the drought in 1973, which had both reduced the availability of planting material and increased the death rate among young plantings, requiring more vacancies in replanted farms to be filled, only 5,141 acres of new plantings were achieved. 3.08 A more permanent constraint, mentioned in the supervision report of October 1973, was the availability of labor during the planting season, which coincided with soil preparation for food crops. The 1973/74 replanting target of 13,500 acres in the appraisal report had been considered unrealistic by the IDA supervision mission of August/September 1973, and this mission had accepted the Project Unit's proposal of a more manageable rate of 8,500 acres per year. 3.09 The Government's free mass spraying program ended in March 1973, and the project rehabilitation program was revived. A total of about 8,000 acres were mass sprayed by the Project Unit under the Government program. 3.10 The actual replanting in 1973/74 was only 5,009 acres, almost 3,300 acres below the revised target. Seed supply was cited as the main constraint. As mentioned earlier, the 1973 drought had created a large demand for replace- ment seed, hampering production of seedlings at the same time. The kWU :S - 18 - stations, at Bunso and Apedwa, were, therefore, not able to meet the project's demand for seed. The Project Unit now estimated that, in view of the perma- nent labor constraint, not more than 7,000 acres could be replanted each year. To meet the appraisal target of 36,000 acres, an extension of the project period by two years to December 31, 1977, was, therefore, necessary. The rehabilitation program was also lagging behind, due to shortage of insecticides. The Project Unit proposed in mid-1974 that, since local research had cast doubt as to the beneficial effect of fertilizers on old cocoa, fertilizers be excluded from the rehabilitation program. The rehabili- tation program was, therefore, to consist of only spraying, the tilling of vacancies, parasitic control and a first underbrus.hing. 3.11 The actual replanting of 6,977 acres in 1974/75 equalled the revised target. However, the rehabilitation program continued to lag behind due to shortage of insecticides and sprayer spares. The supervision report of January 1976 cited the relatively low producer price for cocoa as the factor which had discouraged farmers from participating in the project. 3.12 Physical progress in 1975/76 was disappointing. About 4,198 acres of a target of 7,000 acres (60%) were replanted. The acreage rehabilitated was only 3,760 acres against a target of 16,000 acres (24%). According to project management, the main reasons for the shortfalls were labor constraints, very poor farmer participation (due partly to a large number of absentee landlords in the area), poor weather conditions, inadequate seedlings, and insecticide shortages. The IDA supervision mission of August/September 1976 challenged the poor weather reason, because cumulative rainfall in May and June, which was the major planting season, was higher in 1976 than in 1975; July was drier but by then planting should have ceased. Also, shortage of seedlings should not have posed a problem since the mission estimated that there was a carry-over of 6 million seedlings. However, poor farmer partici- pation was accepted as a reason. Moreover, in the middle of 1976 there was a strike in the project involving laborers and clerical and junior staff. Temporary project laborers wanted higher pay as well as to become permanent project staff with security and pension benefits. 3.13 Another serious problem was noted by the September 1976 mission. It had become evident in 1975 that the Gammalin insecticide being used under the project was inappropriate. Experiments conducted by the Cocoa Research Institute had demonstrated that capsids in the Region were highly resistant to Gammalin treatment. It was decided in 1976 to use Unden 20 (Baygon), to which capsids were not resistant. The IDA supervision mission of August/September 1976 also noted that numerous project vehicles and equipment were malfunctioning due to lack of spare parts, and asked the Government to take necessary remedial steps. For the first time, poor management was explicitly identified as a cause of the project's failure to meet targets, and the mission report recommended that the Government should seriously consider replacing the Project Manager with a more active and capable man. -19 - 3.14 A March 1977 supervision mission reported that little action had been taken to develop farmer interest and participation in the project. The project had no extension equipment or materials. The mission recommended that an intensive extension campaign should be designed to arouse farmer interest, clarify details of assistance and teach project recommended techni- ques. The problem of insecticides supply had been resolved, the supply of spraying and pruning equipment had also been arranged. Results were largely limited to rehabilitation - the project rehabilitated 11,622 acres in 1976/77 which, till then,-was the highest rehabilitation acreage in any year since project inception. 3.15 The replanting component became more and more a centerpiece of project difficulties. The project achieved only 3,957 acres of replanting in 1976/77 as against a target of 8,000 acres. The replanting target for 1977/78 was set at only 3,100 acres, in consideration of the total area for cocoa in the project area, farmer response as reflected by achievemeit till that date in each unit, and the work load of unit staff. The November, 1977 IDA Supervision report mentioned that, on nonproject farms in the project area, the Cocoa Division was replanting and maintaining to maturity farms infected with SSVD, undertaking all operations without charge to the farmers concerned. Because of lack of farmer response, the project had fallen into a similar practice, undertaking all replanting operations on behalf of farmers and handing over the farms at maturity with development costs charged to the farmer loan account. Further, because of farm and casual labor shortages, the project had employed more and more "permanen: laborers" on Government terms. These laborers received the statutory daily wage plus social security, rent and leave allowances, and guaranteed pay for 26 days per month regardless of the number of days worked. Farm costs were thus increased and the project became directly responsible for a very large labor force, which was difficult to supervise on scattered farms. According to the Project Manager's estimate, less than 20% of participating farmers took any part in management or working of their replantings. For rehabilita- tion, the participation was better as farmers tended to undertake underbrush- ing and the first spraying in order to obtain cash credits. 1.10 me Novemoer 1977 supervision report also noted cat ne proportion of absentee farmers was high, estimated at 30% for rehabilitation and 70% for replanting. The mission also emphasized that extension activities remained haphazard and totally inadequate to overcome the inertia of farmers and achieve proUct objectives. The project tooK te easier route or reducing targets, undertaking all operations for farmers and, later, concentrating on of despair", reflected in staff morale and attention to extension effort. 3.17 The actual replantings in 1977/78 were only 1,987 acres compared to target of 4,000 acres. The rehabilitation acreage in 1977/78 was 5,475 as againt-a-agtof1,00are-n i-- -- - -- - 198,, it .. s 12~ ,9.1, b..e higes - 20 - acreage in any year since project inception. The target of 10,000 acres in 1978/79 was thus exceeded. A further 5,079 acres were rehabilitated till mid-November 1979, to make the total rehabilitation acreage by credit closing date 50,871 acres, which was almost equal to the appraisal target of 51,000 acres. The superior performance of rehabilitation compared to replanting in later years was partly due to an IDA recommendation that, in view of rapid increases in production following rehabilitation, efforts should be devoted to rehabilitation rather than to increasing replanting. However, the more important reason for the poor replanting performance in 1977/7 and 19//79 was the severe drought from November 1977 until February 1978 and unusually dry June and July of 1978, which made it necessary for the project to con- centrate on replacing a large number of dead plants. Quoting a survey conducted by the project, the IDA supervision mission of November 1978 refuted the view that absenteeism was the reason for the lack of farmers' respo.nse to the project's program. The survey showed that nearly three- fourths of the farmers lived on the farm or in the nearby village. Training 3.18 Farmers attended either a two-week agronomy course for cocoa replanting or a three-day spraying course for rehabilitation. At appraisal about 6,000 farmers were expected to be trained. However, by mid-November 1979 only 2,887 farmers had been trained (1,351 on replanting and 1,536 on rehabilitation). This mainly reflected farmers' lack of interest in cocoa farming due to inadequate price incentives. As approximately 1U,UUU farmers participated in the project, the proportion trained was less than 30%. In addition, junior staff attended two-month training courses and some senior staff received training abroad. Feeder Roads 3.19 The appraisal estimate called for the resurfacing of about 100 miles of feeder roads in the project area. In 1972, the road program was modified to cover the actual construction and regravelling of about 50 miles of feeder roads and the procurement of road maintenance equipment. Of the 50 miles, construction and regravelling of about 24'miles was to be financed by IDA and construction of 26 miles by the Government as part of its National Feeder Road Construction program. Until the end of 1979, the construction of about 34 miles of feeder roads had been completed and of another 20 miles was nearing completion. Delay in construction of some of the roads was due to non-availability of construction materials. In January 19//, the project handed over its road-making equipment to the Ghana Highways Authority (GHA), with the understanding that the machines would be used exclusively for maintenance of feeder roads in the project area. However, maintenance of feeder roads by GRA continued to be unsatisfactory, despite repeated IDA representations to the Government, either because the maintenance equipment were used for work elsewhere or were inoperative due to spare parts and lubricants shortages. Inadequate maintenance of feeder roads thus consti- tuted non-compliance by the Government of Section 4.12 of the Credit Agreement. - 21 - Cooperatives 3.20 At appraisal, farmers participating in both rehabilitation and replanting schemes were required to be members of a cocoa marketing coopera- tive society and, in doing so, committed-themselves to marketing all their cocoa through the society with credit repayments withheld from the sales proceeds. In addition to the nine societies then existing in the project area, 15 new societies were to be established. In actual practice, by the end of June 1977, 31 cooperative -societies were operating in the project area, most of them receiving support in cash and kind from the project. Lack of adequate funds to purchase cocoa remained a serious problem with the cooperatives in most years of project implementation. This was the result of non-compliance by the Government with Section 4.11 of the Credit Agreement, which stipulated that "the Borrower shall ensure that the Cocoa Marketing Board and Ghana Cooperative Marketing Association make available to coopera- tives in the project area promptly as needed the financing required by such cooperatives to purchase the cocoa produced by the Project'. The GCMA also failed to pay bonuses to farmers from 1971/72 to 1975/76, ostensibly to cover previous debts of societies that had failed. As a result, project participants lost whatever confidence they had in the cooperative movement and in increasing numbers sold their cocoa to private Licensed buying agents and the Produce Buying Agency (PBA) of the Cocoa Marketing Board which were well-funded. The purchases Uy coUperativt! Ue.Lned rUm autu uL =-tL"d u all cocoa purchased in the project area in 1971/72 to about one-fourth by 1976117 This completely upe thecdit reoey systemL proposed at appraisal. In mid-1977 GCMA was absorbed by the CMB and its Produce Buying solved and replaced by "societies", each comprising the group of farmers se1.in toLL oone P1.2.1 buying cener - --- 4--:+ project, despite a promising start, ultimately proved to be a failure, mainly Credit Arrangemen~ts 3.21 As set forth in the Appraisal Report, loans to project farmers were to be made by the ADB. For cocoa rehabilitation, subborrowers were to recaive credit for up to t54/ acre in two annual installments of up to 022 and 032 respectively. These credits were to be repaid at 8% interest over four years after a grace period of one year for both principal and interest. For cocoa replanting, subborrowers were to receive credit for up to 4172/acre in four annual installments of up to 0123, 018, 012 and 019 respectively. The terms of the credit were to be 13 years and repay= ments in the form of annuities at 8% interest would start in the seventh year. Interest was to be waived during the first four years and capitalized during the fifth and sixth years. Since it was considered desirable for participants in the replanting scheme to accept and understand the discipline of credit repayment, progressively increasing token repayments of principal were to be made in the fourth, fifth and sixth year. - 22 - 3.22 ADB was to second four Loan Officers to the project development unit. These were to be directly responsible to the Project Manager until such time as the disbursement of subloans to farmers was complete. Their salaries were to be met under the project and they were to be responsible for appraising the creditworthiness of project participants, and ensuring that participants sign suitable legal loan agreements before credits were dis- bursed by the project authority. In addition. ADB's Board was to approve loans appraised by project loan officers. 3.23 In practice, as project operations progressed, the amounts of individual loans increased greatly. Also, the terms stipulated for loans were not applied, particularly assistance to replanted farms continued beyond the four-year term specified. ADB did not supply the required number of Inan officers until 1978, nor were written agreements completed with all farmers receiving credit. 3.24 Loans made to farmers were previously guaranteed by the GCMA the parent body of the produce marketing cooperatives to which farmers receiving credit were required to belong. The role of GCMA was set out in the GCMA Guarantee Agreement made between ADB and GCMA which, although not always enforced, was specified and the cooperatives deducted loan repayments as project farmers sold their cocoa. In mid-1977, however, PBD became the sole buyer of cocoa. No instructions were given by CMB to PBD regarding recovery of farmer loans until January 1978, when authority was given for PBD purchasing clerks to made deductions from payments for cocoa, upon directives from the project or ADB, and the procedure for remitting collections to ADB was described. Thus, no loan repayments were received by ADB in the 1977 cocoa buying season. 3.25 Farmers' loan agreements with ADB specified loans in monetary terms, with the result that, as labor costs and input orices increased over the loan disbursement period, and the project continued to supply the quanti- ties of labor and materials necessary for each farm, supplementary agreements became necessary. In view of the difficulties experienced in completing farmers' original and supplementary loan agreements, IDA emphasized the need to revise the original agreements so that supplementaries would be un- necessary. One means suggested to achieve this was to express loans in physical terms, assigning only an estimated monetary value subject to change as input costs changed. While this suggestion was accepted and implemented by the Ashanti Cocoa Project, it was not implemented by the Eastern Cocoa Project. 3.26 The failure of ADB to second four loan officers to the aroict until 1978 and to complete farmer loan agreements with all farmers receiving credit, and also the failure to recover rehabilitation credits cnaranted by GCMA, constituted defaults under the Credit Agreement, Section 5.02. 3.27 Farmer Loan Documentation. Even though loan documentation improved in the last two years after the number of seconded loan offinerR frn AnR rose to four, in addition to one finance officer, it continued to be unsatis- factory till the project completion. Rerords comniled hv the AnR rem - 23 - showed that, of 11,468 loans for replanting and rehabilitation made until June 1978, legal documents for 2,416 loans or about 21% of total were not avail- able. About 8% of farmers required to sign supplementary loan agreement had not signed the agreement. Figures for 1978/79 had not been reconciled by the ADB team with the Records Department at the time of the November 1979 super- vision missions visit. 3.28 The problem in loan documentation was to locate farmers, many of whom were absentees, and then to-persuade them to sign in situations where credit issues had already been made and continued without formal commitment. Attempts were made to bring documentation up to date. During the univer- sIty's lOng vacation Jn 1977, a team of st-uents was employed to assist and, in January 1978, four junior staff were appointed for this work. Although responilA".ty Lay winth a, the isue o credits prior to completion of farmer loan agreements could be regarded as a serious deficiency in project management* unsatisfactory. Till November 1979, only 5.8% of the rehabilitation loans du er ecvre.Te low recove rate . J. 14 ~ " A. that cooperatives, which were supposed to deduct loan repayments, did not have sufficent t 0n 10n u -, cn,a c _.-n,as a r,_A t. , aea sol thi coco,.--a to other licensed buying agents (LBAs). Later, lack of coordination between A.DB and the PBD was the reano A OM ciwrlar f Ta.-, A 1070 called all PBD depots in the project area to deduct repayments, but it was not Fnolnlie hMV All riannPe participants should have commenced token repayments in 1974/75 and full payments from 1977/78. Even aenludfina the ver of dishnyvomane from the three-year grace period, 1978/79 should have been the year for commencement of full rate repayments from the first year narticInant And rekan nmants from 1972/73, 1973/74 and 1974/75 participants. 3.31 The credit position has been complicated because the project, instead of ceasing credit assistance for individual replantinas at the end of four years as intended, has continued to maintain all participating farms, undertaking brushing and spraying, although the farmer harvests and sells the crop. Such continuation of credit assistance is claimed necessary because of the poor condition of farms at the end of the four-year replanting period, due partly to inclement weather during the project period. No amendments to farmer loan agreements were made, nor was the effect of con- tinued credit on farm budgets considered. 3.32 Amount of Credit and Credit Terms. Due to greatly increased labor and input costs, reflecting massive internal inflation, the amount of credit granted to each farmer increased enormously over the life of the project. Recent project estimates of replanting credit costs per acre, compared with the appraisal estimate made in 1970, are: - 24 - 7AAr 1 Ypar 2 Ypar I Ypar & Tnral ---- ---- ---- ---4 per ac e - - - - -- - Appraisal 123.00 18.00 12.00 19.00 172.00 Revisions 1975/7A 19.7 87.60 6q.60 60.30 406.72 1976/77 217.22 105.20 85.50 74.70 482.62 1977/78 3QA.0 - 171.97 157.70 156.03 879.10 1978/79 398.40 211.97 182.70 162.70 955.77 Current and appraisal costs are not strictly comparable due to reduced planting density, reater nrovisin for renlacement -ant, no use of ferti- lizer and a major change in labor cost. 3.33 Rehabilitation credits per acre (097) were also above appraisal estimates (dBA) but to a ler deoreas lar input is much loa and material inputs are heavily subsidized. 3.34 Outstanding Issues in Credit Documentation and Recovery. The Guarantee Agreement her-teen GCMA and ADB- whereby rCMA cnaranteed nr. tn farmers, has still not been amended to reflect the absorption of GCMA by CMB. Tho CMR it-qlf wA. dii_nIvPd in lAtp 1q7Q: hnowver- thp PRT)_ which w a division of CMB, is still responsible for the purchase of cocoa from farmers. Althnah ADR'. lnn irPPmnt fnrm qt1ll mpntions GCMA- its nn _nnnn-n tion form and promissory note have been amended to include PBD instead of GCMA. Thp nrnmisArv note includes witnessinq by PRD hut in thp ah.aPncp nf A guarantee agreement between ADB and PBD, ADB cannot have PBD countersign nromissory notet. Thiq i_q.qP has hzpn rqi-pd hv TDA with thp (ovPrnment ane ADB without any result as of this date. 3.35 The period of credit extension is also an outstanding issue. IDA, in lar dAtpd Alaqt - 1978, to th Prniprt Maner- r its unwillingness to disburse funds on replanting loans beyond the fourth year; however, t had nn nh4atinn 1 H r.he Govrnent dnin Qn. Th rur-nmani- hma not taken any decisions so far on the credit extension period and the Credit Aev ame t arv an RA and _ ev r-ment and the suhsid-ar.7 aoreemertha.- Government and ADB still carry a four-year credit extension period even thgnh farmers have ean ran raiit in crtPQ qF ffn vars. - -1 -- - - - - - - - ~~~- -- -- - -- ------ --- _-- - ---I--- - Project management believes that the repayment period should be a function of tho quality oF nitn s4:n* hotter qnmlity n1antings chould hal r cl-rter repayment period. To arrive at a sliding scale for the repayment period, the good, fair, poor and abandoned. IDA, in a letter to the Government on Tjanuar 9 1070 agueA * oT4A4n- aslt sldj 7n tjhe r--A the-- 4- discriminates against the "good" farmer. No decision has yet been taken by the 1G'ver-nment on th±4S issue. - 25 - Technical Aspects 3.37 Site Selection. The standards of site selection in the project area have been variable. Under pressure to reach annual project targets, many unsuitable farms were included, particularly those which had been heavily food farmed, and most of these failed either partially or completely. 3.38 Site Preparation. The initial cover on farms accepted for project participation varied from -high secondary forest to recent regeneration after food farming. Costs of site preparation have, therefore, varied widely. Plantains have been established on most farms to provide temporary shade. Where the plantains established well, satisfactory growth of the young cocoa seedlings usually followed. 3.39 Planting and Farm Maintenance. Planting standards appear to have been inconsistent. In general, the more distant farms were less well planted than those nearer to the roads, probably because supervision was more difficult. Seedling losses on project farms have been consistently high. These have been due to acceptance of unsuitable sites for reaching planting targets, extension of the planting season too late in the year, use of overgrown nursery seedlings, and the adverse effects of two very dry years. The spacing for cocoa- in project farms is 8 ft4. For the higher rainfall sectors in the north and west of the project area, a spacing of 9-10 ft2 would have been preferable. The removal of surplus chupons has received little attention on many project farms. Capsid damage was found to be high on many farms. Too little attention has been given to the adjustment of shade within project rehabilitation farms. 3.40 Nurseries. Seedling beds five plants wide are used in all nur- series. Since most seedlings have to be retained for more than four months, narrower beds three plants wide would have been preferable. Polythene sleeving is used to produce 9" x 6 layflat bottomless containers. with these open-ended containers, soil loss and damage to the root system during transportatlo to the planting site aed"fcl oaod 3.41.11 " C in- proec de-g maedu implementation were as follows: ProJect Area: The Project Area was extended from 146,000 acres as envi±saged at appraisal to 23,0 ace n 95 The extension became necessary as farmer response was much below appraisal exhecabiins and the achevement po wppraithl teoriing and rehabilitation targets was not possible within the original project - 26 - Farm Size: At appraisal, it was considered desirable to restrict replanting to 2 acres per farmer in the tirst year and stop turther replantings until the farmer's performance with the first 2 acres had been evaluated. However, the average size of replanting in 1972 was found to be about 5 acres per owner by an IDA supervision mission. There were two reasons for raising the initial 2 acre limit: first, cocoa farms in the project area were found to be larger than indicated in the preparation report and 2 acres of replanting held little attraction to many farmers; and second, contiguous block replanting had advantages in organization and supervision of replanting and subsequent pest and disease control. Arguments against larger farms were that their owners' ability to maintain such farms was yet to be proven and that the project credit terms were designed more for small farmers than large commercial operations. The Project Steering Committee established 30 acres as the maximum that a farmer could replant under the project and removed any requirement of phased replanting. This constituted a substantial change in project design and concept. In a letter of August 10, 1972, IDA recommended to the Government that farmers who had received replanting credit in 19/Z should not be eligible for additional replanting credits in 1973 so that their ability to maintain the replanted acreage could be proved by the time of the 1974 credit allocations; and further, that replanting in 1973 would be limited to 5 acres per farmer unless the Project Manager proposed alternative justifiable rules. This recommendation was not implemented by the Project. However, in practice, very few farms of 5 to 30 acres were planted; the average size of replanted farms remained around 5 acres. Paying Wages to Participating Farmers: During project implemen- tation it was found that some project participants were working as laborers on farms other than their own for wages. Some farmers also asked to be paid for working on their farms to supplement their income. The Project accepted this. IDA disagreed with this practice as it ran counter to the idea of "own contribu- tion" usually required of beneficiaries of IDA projects. However, the Project continued this practice arguing that this increased farmer participation. Mistletoe Removal: During project implementation it was found that mistletoe parasites constituted a serious threat to cocoa. Control of mistletoe through provision of pruners was, therefore, included in the rehabilitation program even though it was not envisaged at appraisal. Feeder Roads: The program of construction and regravelling of feeder roads was modified in 1972 (para 3.19). I3-421 The nrmprl wasq impnemnterd at a time (1970-1q7g') whan Ghana was going through one of the most difficult periods in its history. The nalifii-c statrion was marked by arowina instabilitv with Government changing three times over a short span of ni.e years. This resulted in inatitutional problems for the cocoa sector, amoni other sectors in the economy. The economy was in doldrums with an unsatisfactory balance of payment situation, a declining GNP and inflation running at an average 35 percent per annum. These macro-economic factors adversely affected the imnlementation of the Droiect. The increasing scarcity of foreign exchange, resulting in shortages of imported inputs, including insecticides, and spare parts for vehicles, remained a problem practically over the entire project implementation period. The high inflation rate, particularly after 1977, accompanied by rising labor costs, led to escalation in project costs. In particular, the cocoa sector was adversely affected by the Government's failure to raise cocoa producer prices in line with those of the competing crops and the general inflation rate. The factors affecting project imple- mentation are discussed in greater detail in the following paragraphs. Analysis of Implementation Problems 3.43 In retrospect, the principal factor responsible for slow physical implementation of the project was low farmer participation. Accurate figures for farmer participation are not available. However, during January 1977, the project surveyed farmers participating in the replanting and rehabilita- tion programs. For replanting, 24% of these farmers were working on their land. Farmers and farmer-employed caretakers provided 39% of total labor used, the remaining 61% being laborers employed and supervised by the project on behalf of farmers. Overall, the project was maintaining 69% of the area replanted. In contrast, 65% of farmers undertaking rehabilitation worked on their farms, while farmers and caretakers provided 80% of total labor. The project was maintaining only 19% of the total area rehabilitated. Survey figures confirm that farmers showed more interest in rehabilitation, which provided immediate gains, than in replanting. 3.44 Several explanations were offered for the low farmer participation during project implementation. However, the principal reason seems to be the low producer price of cocoa compared to prices of food crops. Both the Government and IDA seem to have insufficiently appreciated this problem in the earlier stages of the project. The Appraisal Report (1970) stated that "...The producer price of 18 per 60 lb. headload, which is the current producer price, is probably an adequate incentive to the efficient cocoa farmer" (SAR, page 5). This price was only slightly above the 1959 level which meant that, in real terms, it was much lower than the 1959 price. However, the implication of this was not analyzed i1 the Apprasal Report nor was there any analysis of returns from competing food crops. The memorandum to the Loan Committee (April 8, 1970) clearly stated. We du uu recommend any further action for the Government to take at this stage on producer prices inCe we have no firm_U basis for asesing their L-UpOrtanCe LAUong theC VAriet6y - 28 - or elements tnat afrect cocoa pructinuu. tivaJEL U . the short run production response to price changes. On the other hand, as the focus of the project suggests, it is clear that significant produC on benefits can flow from expanded rehabilitation and replantings...". 3.45 A much deeper analysis of the producer price issue was made in the Appraisal Report of the Ashanti Region Cocoa ProJect (November 18, 1975) The SAR stated that, due to the high level of internal inflation in Ghana, the real incomes of Ghana s cocoa farmers in the Istl of ru0 were estLmatU f to be on average only three-quarters of the '60s level and only one-third of the '50s level. The SAR argued that because of the drop in real incumes and the substantial rise in the cost of labor (from 00.70/manday in 1970 to 02.0/manday in 1975) - which accounted for about 90% of the vUos u pruduc- tion at maturity - farmers were unwilling to maintain and, at times, harvest their farms and had done little replanting. The then prevailing producer price of 016/60 lb. was considered clearly inadequate, even under the most favorable conditions, to provide a satisfactory return to labor employed In cocoa cultivation and to induce farmers to replant and maintain their cocoa farms satisfactorily. The Ghanaian producer price at that time was estimated to be less than half the price paid in Nigeria and two-thirds of that paid in ivory Coast, tne two otner principal cOcud pLudugln.1 cuuntrice in West Africa, and was less than 30% of the expected world market price for 1976. When labor costs, the major item in cocoa production costs, were compared (daily wage rate of US$1.73 equivalent in Ghana, US$1.33 in Ivory Coast and US$1.44 in Nigeria), it was evident that the Ghanaian farmer was at even mue of a relative disadvantage than producer prices indicated, particularly when there was no evidence that labor productivity was higher in Ghana than in either Ivory Coast or Nigeria. Even the benefit of input subsidies to Ghanaian farmers was more apparent than real since inputs, particularly insecticides, were not readily available. The Ashanti project SAR concluded that producer price must be increased substantially over the then existing level. However, due to lack of up-to-date data on supply response to price increase, the optimum producer price for Government and farmers alike could not be accurately determined at that time. Consequently, an understanding was reached at negotiations for the Ashanti project that Government would formulate for discussion with IBRD a producer price policy that took account of the country's needs and the findings of relevant studies. 3.46 Cocoa producer prices were increased several times since the inception of the Eastern Project: from 08 per 60 lb. headload in 1971 to 010 in 1972, 012 in 1973, 015 in 1974, 16 in 1975, u20 in 1976, 030 in 1977 (per 30 kg headload), 040 in 1978, 080 and 4120 in 1979. However, these increases were never adequate to offset the effects of infla- tion, particularly the massive inflation rates of 116% in 1977, 73% in 1978 and 54% in 1979, and to keep pace with prices of competitive food crops. In real terms, the cocoa producer price in 1979 was only about 53% of that in 1971. - 29 - 3.47 The earliest IDA supervision report, which mentions low cocoa producer price as the factor which had not encouraged farmers to participate in the project was that of January 29, 1976. The July 1978 supervision report reaffirmed that the low level of farmer interest, as measured by their participation in replanting work, was believed primarily due to the low price for cocoa in relation to food crops. Since the early 1960's an increase in demand for and shortages in the supplies of food and raw materials had caused prices of these commodities to increase at a faster rate than that of cocoa. An evaluation report on the project, submitted by the Ghana Government/World Bank Cocoa Project Evaluation Committee 1/ in April 1978, stated that between 1963 and 1977, prices of maize, cocoyam and plantain increased 28, 35 and 28 times compared to 5 times for cocoa. PRICES OF SOME AGRICULTURAL COMMODITIES (0) Maize Cocoyam Cassava Plantain Cocoa Year (200 lb.) (200 lb.) (200 lb.) (20-25 lb.) (60 lb.) 1963 6.60 3.10 2.50 0.39 5.40 1973 18.43 12.26 6.09 1.13 10.00 - 12.00 a/ June 1977 184.00 108.00 8.00 11.00 27.27 b/ 1973 price: 1963 price 2.8 4.0 2.4 2.9 2.0 1977 price: 1963 price 28.0 35.0 3.2 28.0 5.0 a/ Price raised to 412.00 in October 1973. b/ A load of cocoa was increased from 60 lbs. to 30 kg.; price for 30 kg. was 030.00. Source: Ministry of Agriculture. The same report estimated the 1977 return from maize at 01,000 per acre, from cassava ,0-3,uu per acre, aud from coo ounly '150 per acre with an assumed yield of 150 kg/acre; even with a 300 kg yield, the return Lrom cocoa would nave been un.y vu. 00 u-u tI 1-uu 7 uy Is iAtute of Statistical, Social and Economic Research (ISSER), relating to the role of that, to evoke farmer interest and for cocoa production to have stayed in c - p ti- t3lo ...th food #n.A-rps t-he produce.r pric fo a rn coco shlds, haveo been 092/30 kg. headload in the 1976/77 season compared to the then existing I..J%j. U*I L Uf v r,~* manday from yams at 0109, from maize at 03, and from cocoa at full devlopen lessfh t 00han 0-I. 1/ The nine-member Committee was constituted by the Ministry of Cocoa AfF4f a onacember 20, 107A to eannaes the Eatarn and A_hant Cocoa Projects and make recommendation for future rehabilitation and ,rpl-lnti-n.g e-f-rt-A - 30 - 'I 48 /.Q Q-t aadrt fromn the c ash revnueso fromn the food crps the a -h----- of the Ghanaian farmer to meet his food needs first in the face of high price levels a .nd u.ncertain av,a4labsili4*t- of commodi.nAltieStaaa '----+nrt reon for diversion of family labor from cocoa farms to food farms. 3.49 Another significant reason why the cocoa farmer was not prepared to Ao On f thl wrk 'Lmself eAmma from the d4ffercs 4i who n .J4.4.. "F the two institutions, the Cocoa Production Division (CPD) and the Eastern 'Reg i CocoLa Pro ec (4 EU U,.tJ F ) , 4- 4._ -L. -.1 T.i -L4 -0W -4 1, .li .4 L .L U - 1 4. 4;- of the project, CPD continued its policy of "cutting and replanting" on IDLhaltg -4: C4.--n s an w ud n 4- .-- QC01M -a e a -e n A-- - --1 pr g a . n t e-t e UCLtALC UVAlCW UJ L.AJE L4AC i.UULa * O L A.LC ULL6L .. hand, ERCP was asking farmers to participate in their program and do the work themselves* It seems farmers were acting peeiclyA 4a-ua .H u1-4 LC LLWC VC4.. CUO LiiA. C. A.L4U L=.C L )f.. I.a%..LLL.J. LIZ PU.UL_."A?S LIL.L. labor into other crops knowing full well that CPD and ERCP would provide LiL. U LI J.L IO...) sta es A.V LLAU staff, which came mainly from CPD, did not make it quite clear to prospective project farmers Luat CrD 's puiy U fuug everyting Louthnem woulu not ue continued by ERCP. 3.50 There appeared also to have been a miscalculation of farmers' response during both pro^ec - - . ---4 _ -A - - - - ;- 'r- --1 _- _-- FU J JJ J- LI CLI"U CL LO L - A.Li OV W..V J LLI=U acreage of new plantings, an assumption was made that farmer response would I-e u_1 g u II n te origiual prugoj etaeca uf 1 6, 000 acres , surveys 1-au au -2 UC L1J.IL Li .i k ..1. JUJCL UO L L'1 00 d L O u.t U .Lni.- cated :hat some 56,000 acres were under cocoa and some 71,000 acres under IJ LJaUy vLL. LU ILCuVC FLUJCLL LdcLs, iu/ LtCJULIMC wuuLu nLev Uee necessary. But previous experience should have indicated that a response of LiHl.3 ULU.tCL. WGO HiJ. f .A 4 LnVC yCL. BCLWCC 1748and 17a, a time when returns from cocoa were higher than during the project period, tnee won unI-y lu- --ou 'over-ment scnemes 'ur controlling SOwI in IILCLC WaQ UL"JY CL JU/* LCMPULIOC LU kUJILIC1 ~L11CC 1. .iL.llfgS~uj the area. Quite apart from the optimistic assumption about the level of respuse, tne ac tual number of frmers adU ava" atbu.J""ity uL 'Ldar turneu out to be less than assumed, although by how much is difficult to determine since vter activites must have uscu a LU u Lu he lavor ta was thought to oe available for cocoa. 3.51 Inconsistent Government policies also affected the implementation JuAn UJ CI. badei UuveUmenUL odly run tree mass spraying program adversely affected the rehabilitation component of the project. Although the 4 -- 2 - .41 --- J - -- -- -1 -1 - program euncui 1973, t causeu an itLial L-y-d4 UL-Ldy LI LUe 3Lar oL LUe project's rehabilitation activities, since farmers were not prepared to unUertake iuuividual sprayinu ou creut. Mureuver, tne effect of tne renablili- tation component of the project in the early stages was dubious, since the insecticide used until 1976 was dLamaUin, ar capsids causing damage to the trees had built up an increasing immunity to this insecticide; since 1977 the project has used other more effective insecticides, uuen 4U and Elocron 4U. weatner countrait, aucn as one Long arougus o 1i9/i4 ana 1977/78, and irregular rain distribution in several years, caused large seedling losses in the nurseries and in the newly planted fields. This required higher than normal vacancy filling at the expense of new plantings. -31 - Exact figures for additional vacancy filling caused by drought conditions were not available; however, it is estimated that, if these had not been required, the project would have realized the appraisal replanting target by 1978. However, a large proportion of vacancy filling undertaken was on farms which should not have been accepted after initial inspection and which were subsequently abandoned. 3.53 Shortage of insecticides greatly retarded the progress of the rehabilitation component in the earlier years. However, figures quoted by the May 1978 supervision mission show that project operations after 1974/75 were not limited by insecticide supply. 3.54 Organizational problems also affected project progress. Te SSVi control which was supposed to be done by the Cocoa Division remained mostly unsatisfactory. it would have been preferable to make the roject Unit responsible for SSVD eradication in the project area. Moreover, the problemn seconded from CPD and ADB persisted over the project implementation period. 3.55 The project design itself was deficient in the sense that the -rjctaeAtre ou. *to bea much~l to Pan -,~ 4,f Mt, "^n F4Anno interested farmers to achieve replanting and rehabilitation targets. Moreover, two' se:tr of th rjc r-sSOl not have b-Or inruriae Within Lt. Yuch of the southern part of the project had light, drought-prone S04_an"vo = -:nMOr 4tila eon had bepn grown nrPviqn1iV. In the eastern part, decades of intensive food farming had lowered soil fertility. Project repriant-ings in t-1aaa nnnrpr qaOtnrq were discontinued after many farms had failed. 3.56 It has been argued that, for a smallholder project of this nature, the replanting and rehabilitation targets to be achieved over five years as envisaged at appraisal were probably too optimistic. This is a controversial issue. If the farmer response had been better, and this was conceivable with proper pricing policies, and the project had not suffered from inconsistent Government policies, shortage of insecticides and adverse weather conditions, the project might have been close to achieving the appraisal targets in five years. However, the extent of farmer response itself assumed at appraisal could be criticized as optimistic. 3.57 It is probable that under pressure to meet planting targets and with poor farmer response, the project management, instead of redoubling efforts to interest farmers through extension, chose the easier alternative of taking over farms, preparing and planting the land and maintaining it subsequently. An increasing maintenance commitment accumulated, leaving the project staff less time and attention for extension and new plantings. 3.58 Finally, shortage of spare parts for vehicles also affected project operations as transportation of labor and materials and effective supervision became difficult. - 32 - IV. FINANCIAL ASPECTS Costs 4.01 A summary of actual project coss and appraisal estimates iS shown below and detailed in Annex 2. Actual project costs amounted to 052.8 million (US$38.7 million) compared to appraisal estimates of uPi. million (US$15.6 million). This represents a 232% increase in terms of cedis and a 148% increase in dollar terms. This inuease was due to the substantial time over-run (4 years) in project completion accompanied by massive internal inflation in Ghana, particularly since 1977. The largest increase was in staff costs which accounted for 63% of the increase in total costs. Increase in on-farm costs accounted for only about 20% of the increaae in total costs. Much of the increase in on-farm costs was accounted for by the steadily rising labor costs. SUMMARY OF PROJECT COSTS Appraisal Actual % Increase - Actual Estimates Costs Costs over Z%uid .zC On-Farm Costs New Planting 5. Rehabilitation 2.5 1/ Sub-Total 7.9 15.2 92% Buildings, vehicles & equipment 1.u .; au,. Administration, Operation & maintenance costs 0.6 6.7 1,017% Staff Cost 4.8 27.9 481% Feeder Road Improvement 0.4 0.3 -25% Contingencies 1.2 - - TOTAL: 15.9 52.8 232% US$ (million) 15.6 38.7 148% 1/ Cost figures provided by the Project Development Unit do not appear to have been appropriately allocated between replanting and rehabilitation. - 33 - Financing 4.02 A comparison of appraisal and actual project financing is shown below. The actual percentage of IDA financing was reduced to 22% from the appraisal estimate of 54.5% while the Government share increased to 69% compared to the appraisal estimate of 17.2%. 0(m) US$(m) % 0(m) US$(m) % Government of Ghana 2.7 2.7 17 3 7.1 2 67 a Tnal Commer4al Banks 4.5 4.4 28.3 4.5 3.5 9.0 IDA Credit 8.7 8.5 54.5 11.2 8.5 22.0 TOTAL: 15.9 15.6 100.0 52.8 38.7 100.0 Procurement 4.03 No maior orocurement oroblems arose under the IDA Credit during project implementation. However, procurement of spare parts for vehicles and of insecticides, which could not be imported under the rDA Credit, remained a significant problem affecting project implementation, though availability of insecticides improved after 1975. Disbursement 4.04 Disbursements remained much behind appraisal estimates due to the slow physical progress of the project. By end March 1980, the IDA Credit for the project had been fully disbursed. I/ A comparison of actual dis- bursements and appraisal estimates is shown below. 1/ Excluding exchange adjustment. - 34 - APPKAIAL VS ACTUAL ULDURSEMENT (US$ million) CUMULATIVE Actual Disbursements Appraisal Actual as a % of Appraisal IDA Fiscal Year Estimates Disbursements Estimates 1970-71 1.2 - - 1971-72 2.6 0.3 11.5% 1972-73 4.7 0.5 10.6% 1973-74 6.8 1.3 19.1% 1974-75 8.5 2.3 27.1% 1975-76 -5.4 63.5% 1976-77 - 6.6 77.6% 1977-78 - 7.7 90.6% 1978-79 - 7.9 92.9% 1979-80 (as of end March 1980) - 8.5 100% 4.05 The allocation of Credit proceeds as laid down in the Credit Agreement were revised first in late 1973 to reflect changes in the feeder road program and new proposals for staff housing and training. The Credit proceeds were reallocated again in mid-1978; Category II for fertilizers was deleted as no disbursements had been made under char category till then and future requirements were not considered likely and the disbursement percentage of subloans to farmers (Category V) was reduced from 82% to 10% in order that disbursements could be continued until the credit closing date. V. AGRICuULURAL !HUACT Yields and Output 5.01 The Appraisal Report assumed a base line yield of 150 lbs./acre for cocoa needing rehabilitation and envisaged average yield increasing to 500 lbs./acre after rehabilitation. With treatment of 51,000 acres under the project, incremental cocoa production would have amounted to about 8,000 tons annually from 1977 onwards. On the basis of the Bank's price forecasts, this was valued at US$4.6 million in foreign exchange. 5.02 A replanted farm was assumed to begin yielding in its fourth year and its production was assumed to increase progressively up to its seventh year reaching a yield of 700 lbs./acre and thereafter remain stable until it reached 25 years of age. From 1982 onwards, project replantings were projected to have an annual output of about 11,000 tons valued at US$6.2 million in foreign exchange. Thus the total annual incremental output from rehabilita- tion and replanting program under the project was projected at 19,000 tons valued at US$10.8 million. - 35 - 5.03 It is clear that the rehabilitation component of the project has been more successful than the replanting component. Present indications are that a fair proportion of all those farmers who have had their farms rehabili- tated are prepared to continue maintaining their cocoa properly. To ensure that the benefits of the rehabilitation program are not lost, the supply of necessary inputs will have to be assured and extension services must be stepped up. 5.04 An assessment made by the project on all farms planted during the period 1971/72 to 1975// showed the following results: Good Condition - 21i Fair Condition - 42% Poor Condition - 26% Abandoned - 11% It is possible that many of the farms classified as poor will never come into production and will be abandoned. The majority or rehablitated farms are in fair condition. Many of the farms planted during the first two years of the project nave "radUy been haued over Lo their owners. It is reported that about 25% of these farmers have been reluctant to take over responsibility for their farms and have shown 1.ttla e suequenu interest in them even though the trees were well into bearing. 5.05 In the project area, many of the replantings established represented the third or flourth cy'cles of cocoa since the original plantings of the early 1900s. Soil fertility has decreased as compared with its condition when the fors wa frt l a r ed 1 n. An. . atmptn 1, 1. ben n ma 1y. proec staff-to collect data from replanted farms which have already come into bearing by are not reliable. Because not all harvests were recorded, the calculated yieldsar ver low O the assumption that the- --4-4--l 4 ..-~ - wa satisfactory and that farmers' maintenance standards including effective cansid control arp not rRducAd- a vield build-un on nrniprr ran1mrit-Ear FmTwM was estimated by IDA supervision/completion mission of November 1979, as shown below: Yr.1 Yr.2 Yr.1 Yr.A Yr.5 Yr.1 Yr.7 Yr.A Yr,) lin-rec Appraisal Estimates lbs./acre 0 0 0 100 300 400 700 700 700 Revised Estimates negli- lbs./acre 0 0 gible 100 300 450 450 500 450 5.06 Peak net yields with the hybrids planted tend to occur cuite early in the life of the planting. In later years, although total pod production may increase, actual yields may remain static or decrease as losses from pod disease rise after the cocoa canopy forms. - 36 - 5.U7 if tne replante' 'arms clasJie' as pour are abanaonea or produce little, an average mature yield of 300-350 lbs. cocoa per acre would result for the project. An economic Life of 30-40 years for replanting on the better sites in the project area appears to be a reasonable assumption. SSVD is endemic within the project area and will remain so. However, provided existing diseased cocoa trees are removed from farms replanted and, sub- sequently, efficient inspection and prompt treatment of any new outbreaks within the replantings are ensured, losses of trees from infection can be kept low. 5.08 The project has also attempted to estimate the average yields from farms after rehabilitation by obtaining information on the quantity of cocoa sold by the farmers concerned and relating this to acreage rehabii1tated. For a sample of farms in two of the units in the more favorable areas (Units 4 and 7) the calculated average yields for farms rehabilitated during the 1972 to 1978 period were 825 lbs./acre for the 1976/77 season and 755 lbs./acre for the 1977/78 season. Similar calculations for two other units where conditions for cocoa are generally less favorable (Unit 1 North and Unit 2) gave yields of 500 and 521 lbs./acre for the same two seasons. The calculated yields from some farms within these samples are as high as 1,50C lbs./acre or more and it is probable that the quantities of cocoa sold included produce from other farms owned by project farmers. 5.09 However, it is clear from field examination that the response to the rehabilitation measures has been encouraging. Most of the farms offered and accepted for rehabilitation appear to have been better than average and base line yields are estimated to be nearer to 300 lbs./acre than the 150 lbs./acre used in the appraisal report. 5.10 As a result of the rehabilitation measures, yield increases of about 20% should occur during the first year, provided that all four sprayings against capsids are applied that year, and a 40% increase in the second year. Thereafter, if good standards of farm upkeep were maintained, yields would be expected to increase slightly in the third and fourth years. The revised rehabilitation yields estimated by the IDA supervision/completion mission or November, 1979 are shown below: Base Line Yr. 1 Yr. 2 Yr. 3 Yr. 4 onwards Appraisal Estimates lbs./acre 150 150 250 450 500 Revised Estimates lbs./acre 300 360 420 450 450 - 37 - 5.11 Within the project area the acreage of "D" class cocoa, that is, more than 30 years old, is low as much of the older cocoa has been destroyed by SSVD. Most of the rehabilitated farms seem to be "B" and "C" class cocoa that is, 8 to 30 years old. Provided that good standards of farm maintenance are continued, and SSVD is controlled, an average additional economic life of 20 years could be expected. 5.12 The Project Unit estimated that, between 1970/71 and 1977/78, production from the project area accounted for about 16% of the total produc- tion of about 524,000 tons of dried beans coming from the Eastern Region, increasing from about 10%.of the total in 1970/71 to about 23% in 1977/78 (Annex 3). While the production of all other districts in the Eastern Region declined by 30% or more over the 8-year period (as production of all other regions in the country declined), that of the project area increased from about 7,600 tons in 1970/71 to about 13,000 tons in 1974/75; it dropped to about 10,000 tons in 1977/78 because of drought. These figures should be considered indicative only since some project participants are likely to have sold their cocoa outside the project area and some non-project farmers sold their cocoa to project area cooperatives. The increase in cocoa production in the project area can be related principally to the impact of the reha- bilitation program. The replantings have as yet had only marginal impact. 5.13 Assuming that the replantings made in 1978/79, the last project year, will come into full bearing by 1985, the total annual output from project replantings is projected to be about 6,600 tons (yield of about 450 lbs./acre from project replantings of 32,400 acres). Annual incremental production from rehabilitated farms is projected at about 3,400 tons (incre- mental yield of 150 lbs./acre from about 51,000 acres or project rehabili- tated farms). Thus the annual incremental project production from replanting and rehabilitation is projected to be about 10,000 tons, which is substan- tially less than the appraisal estimate of 19,000 tons. However, at the projected world price (current) of cocoa in 1985 of $3.84 per kg (estimated $3.71 per kg F.0.B. Accra), this annual production is valued at about $37 million, which is substantially higher than che appraisal estimate or USS10.o million, based on a price of 27 cents per lb. C.I.F. New York (25 cents per lb. F.O.B. Accra). 14 The revised cot and---------from relntn and rehabilitation are shown at Annex 4. The manday requirements differ considerably from appraisal estimates (r""nex 4, Tabl U ) I At ful income from replantings (excluding long-term loans and debt servicing) are projected to average about 0.3,800 per acre in, 197 prce .Ane. 4,Tal 4) and the incremental annual income from rehabilitation about 01300 per acre (AnneX 4, Table 5)o VI. ECONOMIC RE-EVALUATION 6.01 The ecnonmic rate of return for the project has been computed in 1979 constant terms (Annex 5, Table 2) using the revised yield estimates shown 4n pW2a. and 5.10 and economic producer prices shown in Annex 5, Table 1. The cost and benefit assumptions used in the economic analysis - 38 - (i) The life of the replanting component is assumed to be 25 years beginning from Project Year 1, as at appraisal. (ii) The life of the rehabilitation component is assumed to be 20 years, instead of 15 years as at appraisal. This was consi- dered appropriate since benefits from farms treated in the last year of rehabilitation (Project Year 9) would have accrued for only 6 years if project life was taken to be 15 years, resulting in significant underestimate of benefits. (iii) Full on-farm costs of replanting and rehabilitation (incre- mental costs only) have been included, although participating farmers obtain insecticides and sprayers at subsidized prices. All labor costs have been included, in constrast to the appraisal report which included only hired labor cost. Labor has been costed at the estimated shadow wage rate of 04.00 per man day. (iv) As in the appraisal report, the cost of feeder road improve- ment and subsequent maintenance is not taken into account as road user savings are assumed to offset these expenditures. (v) All project administration costs have been included until 1978/79. Thereafter, a declining proportion of costs has been included to reflect the decrease in maintenance requirements of project farms. (vi) In the calculation of economic producer prices, costs of marketing and CMB operation costs have been taken into account. (vii) As in the appraisal report, no benefits from food crop produc- tion have been included in the calculation.. (viii) As at appraisal, the foreign exchange rate is not shadow priced. 6.02 Based on these assumptions, the economic rate of return is 12.2% compared to 26% at appraisal. The principal reasons for this lower rate are the substantially lower projected yields from replanting compared to appraisal estimates and the enormous escalation in costs resulting from the extended implementation period of 9 years compared to 5 years estimated at appraisal. These adverse factors were partially offset by greatly increased cocoa prices compared to appraisal assumptions. VII. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT 7.01 The Project Development Unit was established within the Ministry of Agriculture with a large measure of autonomy. The Project Manager was responsible to the Minister of Agriculture, through the Principal Secretary. At Annraisal this arrangement was regarded as essential because the Cocoa Division was considered to have neither the experience nor the capacity to carry out an oneration as comnlex and large as the oronosed project. In addition, it was thought that the Cocoa Division, after fulfilling commit- ments to the project authority. would be fully utilized in SSVD control and could not absorb additional responsibility. This view was disputed by an IDA consultant who. in his comments on the draft anraisal renort. ar2ued that the proposed arrangement might have been the best solution at the time the project was initiated, given the weak administration in the Cocoa Division. By mid-1970, however, the new Chief Cocoa Officer was in the process of rebuildina the Cocoa Division. In the consultant's opinion, the uroject would be more beneficial to the country if it were placed under the Cocoa Division and the new Chief Cocoa Officer was given some responsibility with regards to the rehabilitation and replanting program under the project. He argued that this would help the new Chief Cocoa Officer in his program to develop a competent extension service for the cocoa sector and it would also be a way of elevating the Cocoa Division out of the organizational morass of the Ministry of Agriculture. Whatever the merits of this argu-ment at that time, the existence of the Cocoa Division in the project area as a separate entity with its own policies did create problems for the project in later years. 7.02 During appraisal, it was agreed that SSVD control in the project area should be the responsibility of-the Cocoa Division. The Government subsequently requested that the Project Dev-l -Unit :arry out this work; chis was agreeab'le to IDA. During negotiatio:s, '.;ever, the Gove:rnment indicated that they had changed their minds again and wished the Cocoa Division to carry out SSVD control in the project area as well as in the rest of the country. This was eventually agreed between Government and IDA. SSVD control by the Cocoa Division remained mostly ineffective. More signifi- cantly, two different schemes of assistance to cocoa farmers remained in operation within the project area. Under the one conducted by the Cocoa Division, farms treated for SSVD were replanted and maintained at no cost to the farmers. Under the project, credit was made available to enable farmers to replant their own farms. The operation of these two schemes by different Government agencies in the same area led to confusion, duplication and wasteful competition. it would have been preferable to assign to the project responsibility for all extension work, direct services and disease control within the project area. Apart from considerations of efficiency, the building program would not have been necessary as the project area was replete with offices and houses which were constructed when disease control work was initiated. 7.03 The arrangement to second technical and field staff from other divided loyalty, low quality of work, and lack of identification with project obecivs -17-aay -ecnJ__1 -31 a.-s--ant 1-- to.e.--- ac by the project to the Cocoa Division because of below-average work output. Th.s ree sfte in a Dvigh i sonere sedhto and feld staff. T hhe staff seconded from the Cocoa Division were used to working directly for the farmer and. had, difcut understanding~ tht as. exenio agnt un er ths pr 04eCt - 40 - they were to encourage and assist the farmer in undertaking all work on his own farm. In fact, as reported by the Project Manager, many farmers com- plained that the field assistants did not even allow them to supervise work on their own farms. 7.04 The cooperation and coordination between the project field and accounting staff and ADB staff seconded to the proiect remained unsatis- factory. There were huge backlogs of unapproved applications for credit from farmers in the be2inning.- Later. reconciliation of field and loan records remained a problem. The problems of coordination with ADB were duly taken into account in the design of the Ashanti Project. where the project itself was given the responsibility of appraising the credit-worthiness of farmers, processing and approval of loan applications, and documentation and record- keeping. 7.05 All the IDA supervision missions in earlier years expressed satis- faction with the nerformance of the proiact management. The first AHverqp comment on performance of project management was recorded in the IDA super- vision report of October 1976, which reported unsatisfactory planning and execution of the work program, organization of supplies and supervision of Junior staff and laborers. This assessment was repeated in the supervision report of November 1977, which, in addition, stressed lack of a vigorous extension effort from mana2ement to enroll less resoonsive farmers and existence of low staff morale in the project due to lack of discipline and specific work plan. However, overall, the performance of project management could be considered reasonable, in view of the major sectoral problems which affected the oroiect and which evidently could not be controlled by project management. Reporting 7.06 In the initial years of the project, progress reports were late and audited financial accounts were considerably behind schedule. However, timeliness of reporting improved in later years even though audit reports in most years were submitted later than stipulated in the Credit Agreement. Financial records (with the exception of farmer loan records: para 3.27) were un-to-date in most years and quarterly reports and accounts were being prepared on a regular basis. Future of the Project Develovment Unit 7.07 The project has always suffered because of the weakness of institu- tHone ndminiqterina the secor. Tt never got the kind of sunnort rpn;ired from a strong central headquarter in dealing with other Government agencies. T'hia linri Qprimiq~n i' 1n'e n twon virAl ArpaA- diqh11rqinq flintiq frr insecticides and spare parts. At present the future of the Project Develop- marnt- Tniit- ic incprm-nin. There hApve hen mPvern1 imnorrAnt And qignifi- cant institutional changes since the new Government came to power in late 1070 The Mnn4sr of ronn Affnirq alon with the (-R And the CPT) have hen abolished. The cocoa industry is now administered by an interim Cocoa - 41 - Council reporting directly to the President. The ERCP is now under the '- "- - , I- -- 1 6t i* fS1l46 6h4, .4. permanent Cocoa Council. The ERCP and Ashanti Cocoa Project would probably under the Cocoa Council. A proposal has been made by project management for for the entire cocoa industry in the Eastern Region. Given the state of flux sector, it is difficult to say whether the future role of ERCP would be smilar to that nronosAd by thp manaaement. T- is eynerred that- with the establishment of a permanent Cocoa Council, the future organization of the industry includin2 the ERCP would become clparpr. VIII. CHANGES I RE?EATER PROJECT 8.01 The experience gained under the ERCP was taken into account in the design of the Ashanti Cocoa Project, which was the second cocoa project in Ghana financed by the Bank. Some of the important desi2n changes were the following: (i) To alleviate the problem of low farmer response experienced under the ERCP, the project area in Ashanti Project was ten times that of ERCP. (ii) ADB was not involved in the Ashanti Project and credit under the project was to be disbursed by the project management unit and repayments collected through the cooperatives or the Produce Buying Agency (PBA). (iii) The ERCP did no: have a project evaluation unit, which could provide management with a detailed analysis of farmer response. This could have allowed project management, Government and IDA the opportunity to correct deficiencies in project design early in its implementation. Evaluation of the Ashanti Project was expected to be carried out by ISSER. (iv) The Ashanti Project was formulated with a much deeper aware- ness of the cocoa producer price issue. However, the project introduced no mechanism to ensure that appropriate producer prices will be paid by the Government. As a result, the Ashanti Project also faced the same problem of low farmer participation during project implementation as the ERCP had faced. I. IDA PERFORMANCE 9.01 aume questions can e raisea about IDA perfurmance at appraial anu during supervision. The major deficiency of project design was the assump- tiou or a 'u' farmer respounse on an acreage bas. It UPPU4L that prev_us - 42 - experience (farmer response of about 30% to replanting after SSVD treatment in the period 1948 to 1962) was not carefully researched and analyzed. Had the farmer response been assumed to be lower at appraisal, either the re- planting targets would have been lower and, therefore, more realistic, or the project area much larger than originally envisaged, or the project implementa- tion period somewhat longer, or a combination of these alternatives. As mentioned in earlier sections, project area had to be enlarged during implemen- tation and replanting targets fell short of appraisal expectations even after the extended implementation period of nine years. Considering that it was the Bank Group's first purely agricultural operation in Ghana and in a sector which was afflicted with multiple problems, lower replanting targets in the same project area envisaged at appraisal would have been a desirable alterna- tive. This would have facilitated efficient and effective supervision of replanting and rehabilitation operations and better maintenance. 9.02 Another deficiency of project design was the existence of two institutions (Cocoa Division and the Project Development Unit) in the project area, both doing replanting but, as it turned out later, on different terms. This created duplication, confusion and wasteful competition apart from ineffective SSVD control by the Cocoa Division. 9.03 During supervision, IDA seemed to have had an insufficient apprecia- tion of the cocoa producer price issue in the earlier years of the project. Given the non-resolution of this major sector issue, the decision to implement the Ashanti Region Cocoa Project (Loan 1181-GH), even though sufficient awareness of the problem is evident in the Staff Appraisal Report, could be criticized. 9.04 At appraisal, direct imports of spare parts for vehicles and insecticides had not been included for financing under the Credit. During implementation, oroiect management requested IDA to finance these items as these were increasingly difficult to procure in view of the scarcity of foreign exchange in Ghana over most of the implementation period. However, IDA did not accede to this request. It can be argued that IDA could have shown greater flexibility during project implementation in agreeing to finance these two items. IDA did show flexibility in agreeing to finance the procurement of oruners which were not envisaged at aoraisal. 9.05 Apart from the issues outlined above, IDA supervision of the Project appeared adequate and the working relationship between IDA on the one hand and the Government and the Prolect Development Unit on the other con- tinued to be good throughout project implementation. X. CONCLUSTONS 10.01 The experience with the Eastern Region Cocoa Project illustrates mj nPr-imnnAAhil sctv tn PnsArin _ codj ropict Imi ennin when major sector issues (in this case, cz:ccaprzducer cres, inconsistent - 43 - Government policies and inefficieut 2.nstiut ions') remain UnreavZes.-u sector problems were compounded by the general country economic problems (in this case, shortage of foreign exchange leading t s age of inse i and spare parts for vehicles and equipment). The experience with the ERCP and Ashanti project also illustrates the extreme d121ff± 4cut16y i n ut.lizing projects as vehicles for addressing and resolving sector issues. 10.02 An overall assessment of the project is somewhat difficult to make. rehabilitation and replanting, as is the general objective of IDA projects based on farmers own cotiuin th pr ect wa a "--0--~ physical and financial terms, the project did make a positive impact as expected to be positive. 10.03 There are several important lessons to be learnt from the experience ,n, thi proj ect, o viinAl nr Ining that Any future Rank Group lending in the cocoa sector in Ghana must be based on a full comprehension of t. fnemo? narrq-inArinn nroblem. includin2 relative nroducer orices of cocoa and food crops and the interrelationships between food crop farming and cocoa farming. Then onidaerations have been kept in view while designing the Cocoa Sector Study which is currently underway. This Study is being carried nt inintlv by the Bank staff and the Government with the assistance of Consultants (Peat, Marwick and Mitchell). The Study includes an analysis of the oricing. inputs. institution and marketing aspects in an integrated framework and will consider the possibilities of a simultaneous development of all these elements for a rapid and sustained recovery of the cocoa industry. A first draft dealing with input and pricing aspects has already been completed *by the Bank staff. The part dealing with institutions and marketing is being carried on by PMM in Ghana. Work on an action plan has also begun and is expected to be completed after incorporating the findings of the P"M Study in July/August, 1980. Any further involvement by the Bank in Ghana's Cocoa sector would depend on the Government taking a series of measures to alleviate the problems facing the cocoa industry. These measures will be based on the action plan, foremost among them being raising of producer prices, removal of subsidies and provision of foreign exchange for purchasing insecticides and spraying equipment. IANA EAS'TERN EGICON CUCOA PROJECT - PROJECT COMPLETI101 REPORT Production of COCOA BEANS in the R1011D1) zi.d Selected Leadling Ccoa ProducnCountries: (000 m.t. JP AR lORLD CIANA f s.CNAST NICVRiA CAME1I00N AFRICA IRAZI1. FIRST SECOii Tii1RD _% of ti % of 1950/51 81.1 266 32.7 57 112 4t 516 63.4 155 CRANA BPAZIL NICERLA 1951/52 651 214 32.9 45 110 5S 459 70.5 56 " NIcERIA ERAZIL 1952/53 811 251 30.9 61 111 54 513 63.3 142 " BRAZIL 1IGERIA 1953/54 788 214 27.2 57 99 54 471. 59.8 166 " 19514/55 815 224 27.5 79 91 -56 505 61.9 142 "" 1955/56 855 241 28.2 71 116 54 525 61.4 171 " " 1956/57 911 268 29.4 72 137 60 584 64.1 163 " 1957/58 786 210 26.7 46 82 65 450 57.3 164 "" 1958/59 923 259 2d.1 56 142 60 5(9 61.6 175 " 1959/60 1,053 322 30.6 62 157 64 660 62.7 201 " " 1960/61 1,189 440 37.0 94 198 74 ß69 73.1 124 " NIGERIA U1RAZIL 1961/62 1,140 417 36.6 82 194 75 829 72.7 118 "Ø 1962/63 1.176 429 36.5 103 179 76 854 72.6 113 "t 1963/64 1,234 443 35.9 99 219 85 915 74.1 125 "l 1964/65 1,506 566 37.6 148 298 91 1,182 78.5 119 " " 1.CO.ST 1965/66 1.,226 417 34.0 i t3 185 79 866 70.6 1.73 ~ " [RAZIL 1966/67 1,351 382 28. 1 150 267 86 969 71.7 175 " 19671/68 . ,354 422 31.2 147 239 92 91L 72.4 144 " ".co.,sT 196t,/69 l . 236 339 2). 4 145 192 104 1164 69.9 165 " 11JZUiL 1969/170 '435 416 29.0 11 223 108 1,03 70.6 20L " 19)0/71 1,416 392 26.2 180 308 1.12 1,098 74.7 1112 1971/72 1,S'0 464 29.4 226 2S5 123 ., 1602 71.5 167 " .COAST 19/2/73 1,3911 411 29.9 1t1 241 107 1,029 73.6 162 " 193/74 1.,447 350 24.2 209 215 110 953 65.9 246 " RRAZIL IGt1A 1974/75 1,5119 37) 24.3 242 214 118 1,009 65.1 273 " .cO1.sT 19s/76 1,511 397 26.3 231 216 96 1,00L 66.2 258 1976/77 1,339k 319 23.9 229 165 82 849 63.4 234 1977/78 21,6.6 263 18.0 3o4 205 108 918 64.1 283 1 .COAST 11,I bLA1 197879 1,441: 249 17.3 312 138 107 8720 60.4 314 1k-.ZIL 1.COAST Sourc4. CIl 6 Duffu, Cocoa Statistica, Different ,;IJUL 2/. estimate RASE EO Il::A lE,LT I 0<5 SECT CN'ISIl*I.t 10N kEI'(II<T tillff2 19/2ff) <19[3/{4tu.I <<INfs llfl s [tf' li'f( if9 Tr nei-Ipana C>at 32'j !45 416 , b 2,21 4 ,if1 i,94 4.26i 1S, lbú{ Bulldinge, Vurnliture and EqluusiIpat gtw Af l4il ,!Y., 422 144 105 '12 1,W/T vehkilcles 2%4 4 64 :4f / il 911 1,9 <109) 6!i Fecder kumaIa - - 9 - Sul (1110) 330 $taff:t GSL 940 I WnO 2,44 2,ti.5 4,039 7457 8,744 gI, 91,4 Haintnianalce and Operating Coat 48 tlU. J6. 2l1(5 !.99 '<¼ 62' UJI> 3,bt9 Ul Administrative Coat U(L______42 { 591 910 . lQg TOTAIL I ,ilKb 2,20, 211, ..* 01ti b,tIft '{,8.2 12,'lt 14,6911 S2,tl3t Appiraaal £i matua9( 39'L2 - ?J 11&chtot&n omenduittsre len l'WjØffj. - 46 - Annex 3 GHANA Eastern Region Cocoa Project Proiect Com=letion Report Comnarative Purchases of Cocoa in the Proiect Area and the Eastern Region Year Proiect Area Eastern Region % of Proiect Area Purchases Purchases Purchases to East- ern Reeion Purchases 1970/71 7,569 75,303 10.1% 1971/72 9,851 78,452 12.6% 1972/73 10,908 72,947 15.0% 1973/74 10,405 63,350 16.4% 1974/75 12,985 72,105 18.0% 1975/76 12,014 67,273 17.9% 1976/77 8,530 51,101 16.7% 1977/78 9,970 43,595 22.9% Total: 82,232 524,126 15.7% Source: Project Development Unit based on data from Cocoa Marketing Board. - 47 - ANNEX 4 Table 1 GEANA WAROTEW! SRM COCCA ?OOTTPT PROJECT COIPLETION REPORT Mandays Reguired for Realanting and Rehabilitation (Aporaisal and Revised EstiMaes) .1i to 3 YY oavards Land Clearing 12 - - - - Peg Cucting. Lining Soling for Cocoa and Shade 4 - - - Carrying Cocoa Seedlings 3 1 * * * Carrying Mlantain Suckers 2 - - ?lancing Plancain 3 - - 91sr4n. Cca and Fill ine Vacancies 6 3 1 Weeding (Brushing) 3 14 14 14 10 S 6 6 Capsid Cantral (Spraying) T 2 2 Pruning 0 0 0 1 1 1 1 1 Uarvesting, Processing and Markacing 0 0 0 4 1 16 Toral andav ?3auirament 39 20 17 20 i3_ aO __22 26 Aoaraisal zstizate 96.5 Pro-Project Y1 V2 Y3 Y4 ! owards Rehabilitation Spraying - 3 3 3 3 3 **'ding (Bxushing) 12 12 10 8 xfisclatce Remvall - io 4 2 2 2 Usrvescing.Processing and xarkacing 1/ 9 11 13 14 14 14 :ncremencal Yandav lecuirement 15 9 6 6 6 Acoraisal Estimate 0 0 2 0 2A.0 Assuming 3 mandays per 100 lbs of cocoa, as at appraisal. The revised estimaced vields are: pre-projec: 300 lbs; first year 360 lba; second year 420.12s; and =hird year nwaz.ds L50 I3s. o8888888888 8888 tii i I ~222~i222iBm:g iisÉÉiisiiiÉ .sg ..i . I j I e L~p 1i 8 8I 8 8 8 8 8 -: I i i' i' 'i --' 88888888888888 I8 I I - i 3 - 8 8 8 8 8 8 8 8 8 - I. sucae eaeaå : #EEEs#E&urdardst P EEEEEgesttä.I t eter - 69 2 CHANA EASTERN REGION COCOA PROJECT Proaject Compet1 n Report Replant_i_, lCostu and Returnus et cre ( YRI YR2 YR3 YR4 YRS YR6 YR7 YR8 YR9 YTIO Producl: in coua (lb/ac) - - 100.00 300.00 450.00 450.00 .500,00 450.00 450.o plantain (buncbes) - 200.00 250.0a 100.00 - - - - Caååyåm lb/a) - 450.00 500,00 - - - - coeno (120/30 kg) - - - 880.00 2,640.00 3,960.00 3,960.00 4,400.00 3,960.00 3.960.00 Plantaln (9/buneh) 2/ - 1,800.00 2,250.00 900,0> - -- - - - Ccoyam (t0.80/1b) 2/ - 360.00 400.00 - - - Total Tncome - 2,160.00 2,650.00 1,780.00 2,640.00 3,960.00 3,960.00 430.00 3,6.C" 3,960.00 On-Fari Expenditurea Labor 3/ 189.54 9.7.20 82.62 97.20 87.48 97.20 106.92 126.36 126.36 126.36 Materiala 4/ 312.60 49.70 24.70 9.50 9.30 2.70 10.30 2.70 9.30 2.70 Total On-Farm Expenditures 502.14 146.90 107.32 106.70 96.78 99.90 117.22 129.06 135.66 129.06 Net Incoe 1/ (502.14) 2,013.10 2,542.68 1,673.30 2,543.22 3.860.10 3,842.78 4,270.94 3,824.34 3,830.94 T~EKeluding long-term Ioans from ADB and debL tervicing. Tiee have been excluded becaue estimatea at manday requiregaents and coats of materiale provided by ADBi are not consistent witih IDA project campletion miuaion eutImates. Loans fram ADB total ¢955.77 per acre spread aver tour yeari witth 398.40 for year 1. <211,97 for year 2, j(182.70 for year 3 and <162.70 far year 4. In practice, however, aome farmert have recatved laane beyond thme fou--year period. 2/ Only part of food crop incoame will be in calk; however, full vailue is hown hIkere, as at appraisal. u/ Asauitnlg 90% lired labør (Ilcluding project labor) at <5.40 per iaLiday; hased on Anne 4 Table 2. Viu14m Anniiex 4 Tab3ke 2; akt Pkub,31dzed priýcus. GIANA Eastern Region Cocoa Project Project Completion Report 1/ Rehabilitation, Incremental Costs and Returns per Acre () Year 1 Year 2 Year 3 Year 4 _a5 Yr6ar _(e L - _8 sO rIft Incremental Production of Cocoa (lbs.) 60 120 150 150 150 150 150 150 150 150 Incremental Income 12030kg) 528.00 1056.00 1320.01) 1320.00 1320.00 1320.00 1320.00 1320.00 13:20.00 1320.00 On-farm Incremental Expenditure 2/ Incremental Labor 72.90 43.74 29.16 29.16 29.16 29.16 29.16 29.16 29.16 29.16 3/ Incremental Materials 15.30 2.70 4.30 2.70 9.30 8.70 4.30 2.70 9.30 2.70 Total Incremental On-farm Expenditures 88.20 46.44 33.46 31.86 38.46 37.86 33.46 31.86 38.46 31.86 1/ Net Income 439.80 1009.56 1286.54 1288.14 1281.54 1282.14 1286.54 1288.14 1281.54 1288.14 I/ Excluding loans from ADBI and debt servicing (see footnote I of Annex 4 Table 4 for explanation). Loans from ADB total 097 per acre spread over two years. 2/ Assuming 90% hired labor (including project labor) at 5.40 per man-day; based on Annex 4 Table 3. 3/ From Annex 4 Table 3; at subsidized prices. Ln0 4. GIL EASTERN REGION COCOA PROJECT PROJKCT COMPLETION REPORT ESTIMATED ECONOMIC PRODUCEK PRICE OF COCOA (g per metric ton) 1/ F.0.B. Price In 1979 Constant Leam CHB Costs Economic (current) terms and LBA Producer Allowance in Price 1979 terms 1970/71 645.7 1,778.8 809.4 969.4 1971/72 691.9 1,721.1 700.0 1,021.1 1972/73 827.7 1,713.7 919.5 794.2 L973/74 1,311.1 2,177.9 818.2 1,359.7 1974/75 1,673.5 2,411.4 731.9 1,679.5 1975/76 1,598.8 2,261.4 877.7 1,383.7 1976/77 2,575.0 3,379.3 738.6 2,640.7 1977/78 .3,553.0 4,023.,B 1,404.0 2,619.8 1978/79 9,740.6 2/ 9,740.6 1,864.8 7,875.8 1979/80 9,175.6 - 8,311.2 1,864.8 6,446.4 1980/81 9,636.0 8,003.3 1,864.8 6,138.5 Ur 1981/82 10,100.8 7,769.8 1,864.18 5,905.0 1982/83 10,125.0 7,273.7 1,,864.8 5,408.9 1983/84 10,175.0 6,847.2 1,864.8 4,982.4 1984/85 10,219.0 6,459.5 1,864.8 4,594.7 1985/86 10,000.0 5,948.8 1,864.8 4,084.0 1986/87 9,800.0 5,490.2 1,864.13 3,625.4 1987/88 9,600.0 5,071.3 1,,864.8 3,206.5 1988/89 9,400.0 4,693.0 1,,864.8 2,828.2 1989/90 9,280.0 4,383.6 1,864.13 2,518.8 1/ Index of International Inflation used. 2/ CHU projection,. 3/ Based on Bank projections up to 1990; F.O.B., Accra price .1mouimed to be about: $125 less than CIF, New York. 4/ Using inplicit GDP deflator as follows: 1970/71 197L2 1972/3 1973/7.4 194/5 1975/76 19715/17 1977/8 197879 6.4 7.4 8.7 11.0 13.8 17.5 38.9 64.9 100.0 Eatern RKeILn CcCD piPect (Renefits and cQuts in 0 M1l11l1in1 1979 cona*kant terma) Project CoRpletion meport Economic Rute of Return Year Total Inciremental ProductIon Producer Total Total- On-Varm On-Fra Staftf Operation and (metrctons) Price lenefitt Caoitu Reluabilitation Replanting Admtnitcrative Coats (Ecconkoml c) Coutu Costa ( per m. 197/172 7 11021 0.01 4 .12 1972/173 75 794 0.06 25.40 1973/174 280 11360 0.38 20.73 1974/175 753 1680 1.27 36.81 1975/176 1644 1384 2.28 39.31 1976/177 3094 2641 8.14 A 1977/178 4729 2620 12.39 19.63 1978/179 6641 7876 52.30 14.70 1979180 8:271 6446 53.31 11.20 3.71 4.87 2.62 3/ 1980/81 9319 6139 57.21 9.63 3.50 5.09 1.04 41 1981/82 9926 5905 58.61 9.94 4.61 4.81 0.52 5/ 1982/83 10093 5409 54.59 10.13 4.13 5.48 0.52 1983/84 10161 4982 50.62 12.18 6.21 5.45 0.52 1984/85 10117 4595 46.49 9.41 3.57 5.32 0.52 1985/86 10095 4084 41.23 9.43 3.45 5.46 0,52 1986/817 100170 3625 36.50 10.29 4.71 5.06 0.52 1987/88 100170 3207 32.29 10.12 3.98 5.62 0.52 1988189 100170 2828 28.48 12.32 6.31 5.49 0.52 1989/90 101370 2519 25.37 9.38 3.53 5.33 0.52 1990/91 10070 2519 25.37 9.54 3.55 5.47 0.52 1991/92 6609 2/ 2519 16.65 5.59 - 5.07 0.52 1992/93 6609 2519 16.65 6.14 - 5.62 0.52 1993/94 6609 2519 16.65 6.01 - 5.49 0.52 1994/95 6609 2519 16.65 5.85 - 5.33 0.52 1995/96 6609 2519 16.65 5.99 - 5.41 0.52 Interutal Rate of Return: 12.2% 1/ Actual project COCa from 1971/172 to 1978/179 expreued In 1979 constant terma using tihe Implicit CDP oleflator (see tootnote 4 of Annlex 5 Tuble 1 ). Thkee costa include expeniditure on buildInga , vehLicIes, equlpmenbt and furaiture whicIh are auamted not to be replaced after 1971/179. 2/ Production from replantinga only. 3/ 25% of 1978/179 cout to take care of maiantenancice of replaunted farma mInce 1976/77. / 10% of 1978/179 coat to take cure of matitenance of repklanted farms since 19771/7. 5/ 5% of 1978/79 coat aaaumed till Year 25. 5u u. - 54 - Attachment 1 P. 0. Box 97, SUHUM, GHANA - rojq--...u,. W_ F K Chrian. M.Sc. Cable Ad,r&* "COPRUN" Dam /FTelephone: Suhum 55-56-57 D Acka'd --- -- 1_5th Decber 19 Duted PREPARAT lL, NEGOTIATION AND APPROVAL: . L. FiLP-9 -_ DJS changesJ.J made - J S.,t 4.4S : (i) extending the Project area from 146,000 acres to 240,000 acres, (ii) extending the closing time of the Project from 31st December, 1975 to 31st December, 1979. --------------------- .--.~- %.LL.J1 pCyV.LtS 6t: wbi XvI WVI.u6 Wu LlLt.LL UWWn farms. In the Project farmers were originally to contribute 20% of the total on faarm costae (iv) increasing maximum acreage for replanting to 30 acres instead of 5 acres. Extension of Project Area: The Project areas was extended to bring in more suitable land for growing cocoa and more mature cocoa for rehabilitation. In effect making J. I.posu -~U LO I ~ Ui I I- 11 L . V 6A L L.U4 ~ .J j~. .A. V ~ L". the Project. The field programme of the Project had originally been based on the assum-tion tviaf abnt QqO_ of the farmers in f*hp Prnipnt Ar- participate in the Project. Early in the Project this assumption was found incorrect and it became necessary, if the Project targets were to be achieved in reasonable time, to extend the area to cover many more farms and farmers. The extension of the Project area was justified as many new plantings .qnd rehabilitsted fprmx were 1neAtPd in the Pytendd arpa and rpplantfin had virtually ceased by the end of 1976 in many of the Units. South of Suhum where soil conditions were not very favourable for growing cocoa. The extension of the Project area at first rejected by the Project was made in 1974/75. The Bank without expressing very strong opinion on the extension came eventually to accent it. Extension of Closing date of Project: The closing date of the Project was extended to enable targets set in the appraisal report achieved. Low farmer participation, absenteeism among farmers, lack of labour and of certain imputs, notably pesiticides, made it difficult to achieve targets on schedule. The extension of the time enabled a high percentage of the replanting target (90.0%) and the whole rehabili- tation target to be achieved. The extension of the closing date was agreed to by the Government and the Bank. - 55 - Paying Farmers for working on their oxn farms: part of the credit to them had the effect of increasing farmer part- lcl+ ti^n 4nnahe" P rc e Apeci %ryin I-h-'iI i n whwr-, nnir-h of farm brushing was done by farmers. This practice was resorted to when it was found that some Project particiDants were working as labourers on farms other than their own for wages and also as a result of appeals. from farmers to be paid for working on their farms to supplement thein income. T),a PI--ia4=e ni-pel -Hi nn-r rin i+ nwn The nl ni originally not in agreement with the practice but eventually came to accent it. The maximum acreage for replanting was increased to 3O acres to give assstance t wanle~ A~~ fliaJ --1, . '-- . 114-- -U-11- S X Cocoa to plant a sizeable acreage which will give them adequate income. VPrV fPW fA?rMA nf thiR Ri7. were in fact nlAntPAt the avernA s4.0 of a replanted farm still remained around 5.00 acres. The changes were by and large beneficial. They enabled the Project to cast its net wider to cover many more would-be project participants %. ~ ~ ~ ~ L L,1. .&iA=L U JV 1 m I ULW= %.v Lam JLU-euWa The constraint of Project area limited in size and the difficulty of very zamitiom nria+ine and ,ehb +nfinn +nnela n ha arli.WaI 4, n whan+ period were somewhat eased. (b) A number of agencies in Ghana including the Ministry of Agriculture, Soil Research Institute of CSIR, the Institute of Statistics, Social and Economic Research of the University of Ghana, the Cocoa Marketing Board, the Department of Co-operatives and the Public Works Department participated in the preparation of the Project. All these agencies had competent technical and managerial staff to undertake the work required for the preparation of the Project. The Government was fully appraised of World Bank loan conditions relating to civil works, procurement, reimbursement and appointment of consultants. (c) No key issues raised by the Bank through loan approval. (d) The Project was intended to provide opportunity to Ghanaians to develon skills in the management nf Rnrvised redit neman mm a mnA of promoting agricultural development. No special programmes and actions were envisaged at appraisal to achieve this aim. The training was to be more on the job for field staff and seconded staff from the Agricultural Development Bank and the Department of Co-operatives. In particular seconded Agricultural Development Bank staff were expected to gain consider- able practical experience in the technical appraisal of farmer's applications, disbursement of loans and collaboration with field extension officers. During implementation period, the allocation of vroceeds of credit was amended to include a category for training and provision made under this was used to train, in short duration courses, a number of staff members in agricultural management in Mananga Agricultural Management Centre in Swaziland and in the University of Bradford, United Kingdom. (e) Adequate provision was made and agreed with the borrower on Project tefaoll reingoenitio When the fe eness ha effeme b M t ah ov r 071 the following conditions of effectiveness had been met by the Government. - 56 - been made for financing the pQrtion of the credit not financed by the credit: These included loan agreements siwned between the Government and Ghana Comercial Bank, Barclays, Bank of Ghana and Standard Bank Ghana Limited to provide a total sum of 04.5 million additional to the Government's budgetery allocation to finance the Project, (ii) a Proiect Authority to carry out the Proiect on behalf of the Government had been established, (iii) a Project Steering Committee with membership and terms of reference satisfactory to International Development Association had been established, a<i Suhsidiary Loan LArmane~nt. 1-orntryf Tnfor. national Development Association, had been signed between the Government and Agricaltural Development Bank, kV an agreement satisfactory to InternationF. Develop- ment Association had been signed between the Agricur-i Association. (iv) The Project Manager, Deputy Project Managcr, Financial Controller and Co-operative Officer had (f') Thp mnost imnnrf--nt i ssiie t1hat ca me up duri ng i mp or n tNio '-' was the lack of participation of project participants in farm work and the tardiness of farmers to get involved in the Project at all. The success of the Project especially realization of targets depended to a very large extent on this single factor of effective farmer participation in the Project. Old age of and absenteeism among farmers, low producer prices and inadequate labcur sulply all basically affected farmer participation ana 'nese unould have been more closely examined during the identification, preparation and appraisal processes to determine their tr-ue ultimate effects and the most effective methods to adopt in I -.11-4--tt. Asi were the impression was rather created in the apprai3al report that rear - full DarticiDation of farmers was to b exrpnctd and thatbsh m inm and labour supplies would present no problems. -A Th Prjctiselfl was well ident-ified. kihana.1had a problem with its cocoa industry of falling production and a definite effort was required tnberiap nAfm h A----linpnn inf----r--r--Fi,-----0;et a sited in a Region which although full of Swollen Shoot diseases has some of the best cocoa growing conditions and was once the nremier cocoa growing area in the country. That it had a high incidence of swollen shoot disease should not prevent a project of replanting and rehabilitation from being sited there. For the success of such a project it was only necessary to ensure that the presence of'disease would not mar the Project. The control of the disease in the Project area should therefore be made the responsi- bility of the Project Authority thus making it easy to co-ordinate disease control operation and planting of new farms and renabIlitation or existing cocoa. In the final appraisal report of the Project control of Swollen Shoot virus disease in the Project area was made the responsibility of v ravuuI,.L.ou J.Mv LXul VI tue r1nitbry of CUua %Lirs. Tn5 arrangemen failed to rid the Project area of swollen shoot disease and many new plant- in.r,an ro-qhli n pr f-,rnz p - . . . . . ..A)I -- a - -, - 57 - The -antual lotion of the Prnipr-t area around Suhum could have been more satisfactory if it had extended further west towards Asamankese and north towards Osino and Bunso. The part of the Project area south of Suhum fell on light soils and could have been eliminated from the area. PROJECT DESCRIPTION: (a) General: The Eastern Region Cocoa Project ls tne firS 8A-ML.Lcan6 WoWw Scheme introduced by the Ghana Government with the assistance of the World BanII- io rehab" itlL Gunt Coo inn-AU--tr an inraeoo production in the country. The Project area is centered around Suhum in the Eastern Region and covers an area which was extended from an orizinal 146,000 acres (58,400 hectares) to 245,000 acres (98,000 hectares). The Project is covered by Credit Agreement No. GH C5 between the Government of the Republic of Ghana and the International Development Assocatio L .j ~.JJZ'J -.h. 6'L Worl _--- k Th Agemn was 1970 and became effective on March 12th, 1971. .The original closing date of replanting and rehabilitation targets set at appraisal, the closing date of the Prnint was Pytended twice. the first time to December 31st. 1977 and finally to December 31st, 1979. (b) Project Objectives: Objectives of the Project were to:- Li) provide farmers with credit to rehabilitat&e or r the condition of a total of 51,000 acres of existing low (ii) train farmers in improved techinques of cocoa farming, (iii) construct or upgrade 50 miles of feeder roads in the Project area, and in the Project area by providing effective technical (i) Reilantina and Rehabilitation of Cocoa: The Project had two farm improvement programmes: replanting of old or planting of new farms and rehabilitation of existing bearing cocoa in poor condition to increase yields. Replanted farms were more than an acre in size but did not exceed 30 acres (formerly 5 acres). A farm to be rehabilitated could however be of any size. Both programmes were credit assisted. The first replanted farms were established in 1972. The last plantings were made in 1979. Credit assisted rehabilitation which was started in 1971 was curtailed in 1972 when the Govern- ment introduced a free mass spraying scheme for all cocoa growing areas in the country. During this period, the project undertook free mass spraying for farmers in the Froject area. The scheme was stopped in March, 1973 and the Project resumed its original rehbbegltationg prrgoemM. ct rird tmer was from the beginning of the Project required to be a member of a - 58 - From September, 1977 when the co-operative societies became part of the Produce Buying Division (PBD) of the Cocoa Marke.ting Board, project participants were required to be members of the societies of Produce Buying Division (PBD). In addition the farmer should be more than 21 years old, credit worthy and the land or farm he owned should not be mortgaged. Up to the end of June, 1979, 32,405.0 acres of farms had been replanted, 52,329.0 acres had been rehabilitated by the end of September, 1979. The total acreage rehabilitated excludes,119 acres _of cocoa sprayed by the Project in the fre-e7Ass spraying scheme introduced by the Government in 1972/73. Credit to Farmers kArrangements and Terms. Agricultural Development Bank separately for rehabilitation and replanting. The loans were disbursed by the Proiect Development Unit. Borrowers for cocoa farm rehabilitation received credits which increased from %54.00 in 1971 to 084.00 in 1979 per acre for a period of two years for pest, shade and mistletoe control and brushing of farms. These credits are repayable at 8% interest over four years after a grace period of one year for both principal and interest. Fa-riown whn horrnwed monev fn renlant farmA rpnivod crpAit of C1?2.-OY in 1971 increasing to 0956.00 in 1979 per acre in four annual inatailments for crop establishment and subsequent farm maintenance including brushing, capsid control and filling of vacancies. The period for repaying the loan is 13 years, repayments starting in the seventh year at 8% interest. No interest is paid during the first four years. Interest for the fifth and sixth year is capitalized. Farmers' Training: Project participants attended residential courses at the Apedma Cpo Station Fr ro'= Sr-T)nn1, T hpv-P wpi-p +win t-anin pogramrmes -F the farmers namely: (a) an agronomy course lasting two weeks aimed at improving the skills of the farmer in the establishment and maintenanbe of cocoa farms, and (b) a capsid control and care of spraying machines course lasting three days designed to teach the faraer to spray effectively against capsids and look after his spraying machine well. Total number of farmers attending the 2-week and 3-day courses as at the end of June 1Q7Q were reApntively 1-A2 and 1-4Qn. There were also courses on co-operative principles and the role of the co-operatives in the Project for members and secretaries of the executive committees of co-operative societies. A total of 889 members and secretaries of co-operative societies attended such courses. Co opera-soeis werefl40 tn-- -Ve 4=, +'- Projectr M4-1- 4...S as channels through which credit repayments were to be made by the farmers. ife bea a z-ev- a cco-perative society to which he agreed to sell hi- nnna and which he also authorised to withhold credit ranerentm from the sale proceeds of his crop. - 59 - Th:re were 9 co-operative societies in the Project area when the Project started. By the end of June, 1977 a total of 31 co-operative societies were operating in the Project areas. Most of these societies because they could not stand on their own received support from tne Project both financially and in kind. Their secretary receivers and Iabourers workin in the cocoa sheds were Daid by the Project. Stationery. gratings and other equipment were also supplied free by the Project to the societies. In order to facilitate supervision of the co-operative societies in the Project area, all societies except two Kukua and Kraboa Coaltar were in 1971 formed into one Co-operative Union, the Cocoa Rehabilitation Co-operative Union (CRCU), instead of the two Nsawam/Kibi and New Juaben Co-operatives Unios eistngnpreviusl in t-he areaa The Co-operative societies in the Project area had always had problems with regard to being supplied with adequate sums of money to purchase cocoa. This situation it was considered would change when the co-operatives became DLLVJA VC&. __± -.h - - -V1 - --- -.---4 1 Board and the Ghana Cc-operative Marketing Association (GCMA) to "make avail- - able to co-operatives in the Project area promptly and as needed the financing- required by such co-operatives to purchase the cocoa produced by the Project". Throuahout the imnlementation neriod of the Proiect. with the exception of the 1974/5 crop season, funds to purchase cocoa by the co-operatives remained inadequate and irregular in supply leading to cocoa being bought by the chit system. To offset this, attempts were made by the Project to have the Cocoa Rehabilitation Co-operative Union licenced as a cocoa buying agent 1-, 4Ahe Cocoan Mrketi4ng BoarA This warculd hnavrs ennabled the rc-na Rehqhil4tnatin Co-operative Union to receive adequate funds promptly and direct from the Cocoa Marketing Board to purchase cocoa. The attempt however proved a failure. Table Funds received by CRCU to purchase cocoa and cocoa purchased by CRCU and all societies 1971/72 to 1976/77 I.f '--"/ Y 1+'4/ w -+/ I-) to lyfo/ff No. of -RCU 11 I 17 19 21 23 29 Societies Total Amount Received I52,208.34 828,703.00 1,000,000.00 1,795,000.oo 1,186,000.0o 1,301,520.0c by CRCU (in Cedia) Average Anount Received 32,018.94 48,747.24 52,631.58 I 85,476.191 51,565.22 1 44,880.0 oy a tnu Society 1196 2720 2642 3132 2645169 Cocoa 1 1196 2720) 2642 313226519 Purchased ' by CpgC Tonnage of C o c o a p u r c -? f x ' 2 0 4 71 1 5 Z ties L Proje Area. j Cocoa Purchasea pi,.u .c .j 3u.u 0.0 6. bya - 60 - Cocoa purchased by the co-operatives increased from 800 tons in 1970/71 to 1,196 tons, in 1971/72. The tonnage purchased in the following year (1972/73) nearly doubled, stayed at about this level in 1973/74 and increased to 3,132 tons in 1974/75. The increases in tonnage from 1970/71 to 1q74/75 were partly due to increasing 3u1ber of societies established from year to year and the enthusiasm of co-operative members in selling cocoa to their societies in the early years of Project implementation. However after the initial rise in total tonnage purchased by the co-operatives which represented 33.2% of all purchases made in the Project area. in 1971/72, the percentage of cocoa purchased by the Co-operatives decline# and was 25.6% in 1975/76 and 26,3% in 1976/77. Farmers interest in the societies began to wave especially after 1974/75 when it became very difficult for societies to receive enough funds to buy cocoa from farmers. The Ghana Cocoa Marketing Association had. also failed to pay bonuses to the farmers and renumeration to the societies from 1971/72 to 1975/76. Many did not have scales and enough gratings, and tarpaulins. Sheds had inadequate storage space and cocoa was often stored outside the sheds with little protection from bad weather, peat infestation and stealing. Appeals to the Ghana Co-operative Marketing Association and Agricultural Development Bank by the Steering Committee to provide funds on credit to enable the societies acquire the necessary facilities and equipment were unsuccessful. The Cocoa Marketing Board in 19-75/76 however constructed three new 500 tons storage sheds for Nankese, Densuso and Suhum societies. Feeder Roads Improvement: Owing to the poor condition of the road net work in the Project area the Project provided for the regravelling and maintenance of i00 miles of feeder roads and tracks in the area. On re-examining the Project area when the Project started, the road programme was modified to cover the actual construction of 54 miles of feeder roads and the procurement of earth moving equipment to maintain them. The road construction programme was completely taken up in the National Feeder Roads programme in 1976/77 owing to escalating costa. To date the construction of 33.8 miles of feeder roads has been co.pleted and 20.0 miles are near completion. Feeder Roads Construction II Feeder Road n Mileage Percent Constructed I e by 1. Asuboi-Mangoase 8-6 i00 Project 2. Suhum-Ntunkum .5.5 100 Project 3. Aranae-Akorabo 6.0 100 Project 4. Kukun-Dedewa . 3.7 100 Project 5. Suhum-Atiebu 5.0 100 Project/National Feeder Roads i IProgramme. 6. Ntunkum-Nankese n 5.0 100 - do - 7. Suhum-Dokrochiwa O 8.5 95 - do - $. Budu- Kokooso f 7.4 95 - do - 9. Asuboi-Anum 4.1 95 - do - Total: 53s8 ILLe~ ue.Lay in1 completing the the ro-=dS Jas beenU %Ld-L Voibt,=bu.L, UJ lack of materials such as cement and iron rods to construct bridges and Earth-moving equipment purchased for the maintenance of the roads is as follows: 1 Pay-Loader 1 Water Tanker (2,000 gallons) 2 Tinmer Trucks i Tractor 1 Tipping Trailer (37 tons) The machines were handed over in January, 1977 to the Ghana Highway Authority (Eastern Region) who are responsible for the maintenance of the roads in the Project Area. In their maintenance programme, the Ghana Highway Authority undertook to reshape completed roads every three months and regravel them every two years. The maintenance programme sufferred many set back and could not be carried out satisfactorily. Road surfaces remained imperfect for many months of the year because maintenance equipment had either broken down or had been diverted for work elsewhere. Organisation: A Project Development Unit, established within the Ministry of Cocoa Affairs, was respon.4hle fnr th^ ^w^nution nf the Proiect. The Unit was' directed by a Project Manager assisted by a Deputy Project Manager, a Financial Controller. Administrative Officer. Co-operative Officer and Loans Officers. The ^o-operative Officer and his assistants and the Loans Officers were seconded from the Co-operative Department and the Agricultural Development Bank respectively. seconded from the Cocoa Production Division of the Ministry of Cocoa Affairs. A Steering Committee, consisting of representatives of a number of agencies involved in the production and marketing of cocoa in Ghana, co-ordinated the activities of these agencies with respect to the Project and over saw the progress of the Project. The Project area which originally measured 146,000 acres was divided ino f+e Units (l+.r 17 Units) ach maAmIing aAnt In 0 Are. & Ar+ Unit had its headquarters where the Senior Technical Officer in charge of the Unit wAn Atationed. The Units were grouped into 3 Zones of about 30,000 acres each. The three Zones were named SAuhum, INow and MaUgoas ter the tCownz whore the headquarters were located. A Principal Technical Officer was in charge Working under a Senior Technical Officer in charge of a Unit were technical officers and field assistants. A total of 600 field assistants (F.A.) and 150 Technical Officers (T.0.) were envisaged for the Project. During the implementation period of the Project, the total number of technical officers was never more than 43 (1973/74). The number dropped to 7 in 1977/78 and nil in 1978/79. Many of them had been promoted to the grade of Senior Technical Officer to take charge of Units. - 62 - Field assistants Grade I took over the supervisory duties of technical officers. The number of field assistants reached the peak number of 617 in 1976/77 Project Year, dropping to 441 in 197/79. A number of field assistants-were sent back to the Cocoa Production Division for inefficient The arrangement whereby technical and field staff were seconded to the Project from other organizatIons did not work out satisfactorily. The seconded staff in most cases showed divided loyalty and their attitude to work was highly influennd hv thmir nrk rmern,a and m^An nf nrn incr in their parent organizations. Thus the technical officers and field assis- tants seconded from the Cocoa Production Division who were used to working directly for the farmer, could never bring themselves to accepting the fact that, as extension officers, they were to encourage and assist the farmer to undertake and supervise all work on his own farm. Many farmers in fact complained that the field assistants did not even allow them to supervise Seconded staff have also not always been of the best type and the Project has had to send back to the Cocoa Production Division many technical officers and field assistants for replacements or for good because their work Technical Officers and Field Assistants. In the appraisal of the credit worthiness of a project participant, the loans officers seconded from the Agricultural Development Bank adopted procedures which appeared cumbersome and irrelevant to the Project. Project participants were to be fully appraised by the loans officers, loan applications approved by the Agricultural Development Bank and agreements executed before the credit was disbursed to the participants. The procedure was very slow and resulted in a huge back-log of unapproved applications and delays in starting work on farms. Modifications which enabled the technical in processing loan applications by contacting farmers, inspecting their farms and assisting them to complete their apDlication forms were introduced to shorten the process and allow work to start on farms as soon as possible. The-situation did not very much improve by adopting this procedure nor by a later modification which required the application forms and legal documents to be ccmpleted at the same time by project participants. At the end of September *1<7 ""'ee were 2,4V appication forms out o 11x,500 not fully processed. Divided lovalty was most stronrlV pyhibitpd r the n,^A.A Saf onf Agricultural Development Bank who always looked upon themselves as not really belonging to the Project Management. Co-operation between them and the field and accounting staff of the Project was not very satisfactory. Attempts made to reconcile field and loan records were not very successful because the loans section would not fully co-operate with the records section. After the Projects Records office had submitted to the Loans Section lists of Project paican frum 171/ 72 to 1974r.7 to be used in reconcling their records,, it was found, many months later, that this had not been done. The Agricultural Development Bank never maintained its full complement of staff with the Project as stipulated in the Subsidiary Loan Agreement or in the Appraisal Report. Staff seconded from the Agricultural Development Bank were frequently transferred from the Project. Some also left for courses overseas. This resulted in a high turn over of staff. Eleven Agricultural Development Bank Loan Officers was seconded to the Project at one time or the to the 4 required for the Project). This has deprived the Project of staff with the necessary exierience to cope with the Deculiar nroblems of the Proijnt. The practice of seconding staff from other organizations to Projects to is a practice which needs to be closely looked at by the World Bank and either completely discarded or used minimally. - 63 - identify completely with the aims and objectives of projects and to operate in an alnnf mnerP anid, thea f4t-+ +V,,+ mtr%nel q+Aaff ArA nfal n+ mf the best calibri have marred many Projects. In a discussion among a number of Project Managers including the writer from many countries attending an agricultural management course at Mananga in Swaziland in August, 1978, it became quite clear that the problems generated by seconding staff to Projects are common to many projects which adopt the practice and create difficulties which tend to impede progress. Since 1974 when the Deputy Project Manager left the Project the Project Manager had not had a deputy which made effective co-ordination of field programmes difficult. To improve supervision of field work a number of' agriculs-was officers were appointed from 1975 to coorudinat rwplantizng and rehabilitation, and supervise farm inspection and records. In 1975 when the Project area was extended, Unit One became too large to be handled by one Senior Technical Officer. The Unit was therefore divided into three sub Units: Unit One East, West, North each with a Senior Technical Officer in charge. At the same time owing to decreased work in the Units. Unit 5 was merged with Unit 14 and Unit 6 with Unit 13 each merger being put under a Senior Technical Officer. Implementation: The Project became effective on March 12th, 1971 when all conditions of effctiAveness had beeL mt. Ae las% Condition beiag the appointmeat 9f the Deputy Project Manager. The time of effectiveness delayed by four months 4.a. from l=f Nvur 1770 did nt+ make it poss4ble to une.t.ke.. .414 tation in 1970/71 as scheduled in the Appraisal Report. The delay however did not affect the replantina proaramme which was scheduled to start in 1W71/72- The rehabilitation programme was duly started in 1971/72. During 1970/71 all key personnel including the Project Manager his deputy, Financial Controller, Co-operative Officer, Loans Officer and Administrative Officer were appointed. About 8O% of all senior technical officers and field assistants required for this period of the Project were recruited. Project Uf4cers were &ccomoudated either in Cocoa Division uffiqes or.rented premises. On the whole the late start up resulted in pushing forward for at least one ypar- the in-n1aA++n A-uj g1~,I --- - - n u- -- -A.-A -- z, not have any important impact on project performance. Revisions: Important changes made in project design were as follows: (a) Distribution of Zones: Tne distribution of Zones and Units envisaged at the time of appraisal was amended to allocate more evenly the proportions f r ia ntgb famiAag in caun une ana zac3i.Lv.aTe mobility of staff. The revised Zones were as follows: Zones Units 1. Suhum (Western) 1, 2, 3, 4s9 15 2. Nankese (Central) 5, 6, 7, 13, 14 3. Mangoase (Eastern) 8, 9, 10, 11, 12 - 64 - Feeder Roads: At the time of appraisal it was estimated that resurf&cing of about 100 miles of feeder roads would be required in the Project area. Project costs therefore included a total sum of 9448,ooo to be used by the Public Works ear+men ocary ou+ +his wrk The ontal snm included d.1>An_rM for earth-moving equipment and 169,000 for road resurfacing. Following an inspection of the Project area by the Project Manager and the Regional Engineer of the Public Works Department in Koforidua and a survey rfie oUL Uy Lhe Duiluig adJ Roau Research Yns-Abubs 01 baw Uvas AAv Scientific and Industrial Research which revealed that most of the teeder roads in the Project area were in fact tracks, the Project Manager proposed that 50 miles of feeder roads should be constructed in the Project area including about 12 miles of existing roads to be resurfaced. The Project Manager also recomm- ended that the Project should purchase fewer pieces of equipment for road maintenance. Of the 50 miles of roads, the cost of constructing 28 miles was to be borne by the Proiect and the rest by the Government as nart of its National Feeder Road construction programme. To effec+ the chan-en in the rand mnrno-mma nsts were ranllnated as follows to be financed from project budget: i. Construction of 16.5 miles of feeder roads - %229,950.00 ii. Regravelling of 11.5 miles of feeder roads - 63.750.00 iii. Purchase of earth moving equipment - 129,200.00 J422,900.00 10% Contigency ..... 42,290.00 0465,190.0o The changes were suggested to bring a lesser mileage of roads to a higher (Tuality rather than merely resurface alogml e~ge and al-- estLazl C a more effective net work of feeder roads in the Project area. Most of the existing roads in the Project area were aligned north-south. Many of the roads proposed for construction especially those to be constructed by the Government run east-west to connect the roads running north-south. The original objectives of the road programme which were to carry out the Project and facilitate evacuation of cocoa in the area were well served by the changes in the programme. Implementation schedules were pushed forward because tenders had to be invited from road construction contractorsand suppliers of eauipment who found it difficult to comnlete nraiects and doliver zpnAn nn tM. Feeder Roads: SConstruction Roan ileage Appraisal ConstructS Actual Constructed % Target ional Target Completion t7 Comp- Date 1s+4.n 1. Asuboi-Mangoase 8.6 1972/73 1971/72 1972/73 Project 100 2. Subum-Ntunkum ,I 5.5 1972/73 1971/72 1972/13 I 100 3* Kukua-Dedewa 3.7 17/3 11/2 1975/76*To 4. Amanase-Akorabo 6.0 1972/73 1971/72 1975/76 _ 100 A- - I I I 5 uu- e 1 5ff) 11/Wfl) 1//fff PojecIv 100 National UII U Feeder Rd- 6. Suhum-Atiebu 5.0 1972/73 1975/76 - m 95 8. Budn-Kokooso a7.4 172/7 191'75/9 - -do - 95 9. Asuboi-Obargo a4.0 197/73 1972/73 National 95 Feeder Rd. Programme. Total:- 53.-7 - 65 - Rehabilitation: Towards the end of 1971 the Government decided to resume in 1972 a nationwide free mass spraying scheme against capsids throughout the cocoa growing areas. As spraying was the most attractive part of the rehabilitation pro6ra=me to the L-rmers and it was no longer possible to charge project farmers for spraying while the same operation was was suspended during 1972. The Project, with insecticides and spraying machines supplied by Cocoa Production Division, undertook gang spraying in the Project area. 8,119 acres of Cocoa were sprayed during the period of the scheme. In March, 1973 the free mass spraying scheme was stopped by the Government and the Project resumed its rehabilitation programme during the 1973/74 Project Year. Extension of Project Area: The Project area was extended in 1975 after a first request in 1974 LO Wne OL-eriu Committee nad uen turneU down. Ine extensaon oecame necessary in order to have many more farmers on which the Project could t- -11 - * - *J -A -C C - V . uIA ±&4 0 IC -U to participate in the Project had partly been blamed on the restricted troiect area and the fact that the Proiect reanuired the nartiecimatin nf nearly all farmers in the Project area to meet the original annual targets of replanting and rehabilitation. It was considered the extension would minimise the problem of farmer participation. The extenouU -zu"-C-e the ProjeJC area from 1W6,00 to 245,000 acres and was made to Unit 1,3,4,15,12,9 and 10. It made it possible for the Project tnorch its tArL-^+ ocn ially fr -ehamM14+-+4- Rehbilitation4- in Units 5,6,13 and 14 had been low because of sparse cocoa and in Units 7 and 8 because of farmer resistance. Extension of the prolect aran primcipally in Units 1,3 and 4 brought a lot more cocoa into the project area to be rehabilitated. Extension of Project Period: The implementation period of the Project was extended twice from Deemuer 1st, 15 to December sst., 15W in- The first instance and finally .to December 31sti 1979. The extension of time became necessary when it beceme clea-r early in the P-'4-tba the. 4-n-1 targets -f ---at~ and. -- rehabilitation were too high and could not be met for the Project to complete its programme by the closing date of December 31st. 1975. The extension of time increased costs of implementation nearly four fold. Inflation which was running at very high rates (about 100% during the last two years of the implementation period) increased project costs to very high levels and placed a burden on the Government to prov4de additional funds to run the Project. Extension of time also had the effect of keeping worn-out vehicles longer in use and depriving the Project of efficient transDortation service especially towards the end of the Project implementation period. Tiroughout, most of the project period spare parts were difficult to come * and many project vehicles as a result of frequent breakdowns went off the road for long periods. In 1974 the Project Unit reported considerable transportation difficulties. In 1/b seven new trucks were purchased to improve the situation but the general lack of spare parts prevented this from having a moderating ""luence on the inefficient performance of a fleet which consisted of 80 vehicles. During the last two years of the project period most of the project a serious set back. - 66 - Re-Allocation of Credit Funds: i. Allocation of credit funds to purchase vehicles.spare parts: Lack of vehicle spare parts became a problem as early as 1972. Owino to the difficulty of obtaininz imort licence. reauest was made to the World Bank to provide funds to purchase spare parts but this was refused because the Bank considered provision of spare parts recurrent cost which should be borne by the Government. Some spare parts were obtained later on import licence but the need was great and the transport service showed no marked improvement. ii. Allocation of credit funds to purchase insecticides: made available from the credit to purchase insecticides to control capsid pests on cocoa. During appraisal, it was agreed that the Project should receive its supply of insecticides from the Cocoa Production Division which was responsible for ordering the national requirements of insecticides. The Project Unit, however, in the early years of the Profect never received enough pesticides to spray replanted and rehabilitated farms. Insufficient supply of insecticides meant a Lower total acreage of farms rehabilitated. Table. 197/721 172/73 1973/74 1974/75 1 1975/761 1976/771 1977/78 Insecticide suppie * S I CPD/CMB 1,810 88,93I 11,694 1 4,444 (in gallons) !! Equivelant n Mass 11 ~ ~ ~ ~ ~ ~ ~ ~ 0 a S a 69. mOno o 000 Acreage vro S=raying --'v II vC.u 'I',UVV C212zo oQooo (4 Sprays) n Actual Acre- age Replantedi 4,065 5,141 5,0o9 6,9781 4,1971 1.988 by Project Actual Acre- age Rehabili- 273 2,225 5,186 4,288 3,760 11,622 5,475 tated by Project Total Acre- a age to be I Sprayed 273 6,563 16,617 23,689 29,241 40,772 46,446 & Rehabilita-11 tion) n6 and replanted farms receiving less than the optimum frequency and therefore ticide available for pest control during the ineffective against resistant capsids. Many farms spraved with this insecticide therefore continued to show capsid damage and looked unthrifty. The problem of insufficient supply of insecticide arose as a result of the government lack of foreign exchange to order insecticides in adequate quanti- ties. The World Bank in 1975 was therefore asked by the Project Unit to.make available under the credit the necerary funds to purchame in adequate amounts the insecticides Unden '20" which had been proved effective against resistant - "5h"R,y1 ,, tho vemio-nt - 67 - From 1977 however, the Cocoa &-trketing Board, which in the meantime had become responsible for ordering insecticides, supplied the Project with resistant cazsids. There was marked improvement in the condition of farms when these insecticides were sprayed on cocoa. It is to be regretted that the Bank was unable to accede to the requests of the Proiect Unit and make available under the Credit funds to procure spare parts to service vehicles and the right type of insecticides to rehabilitate farms and protech new plantings against capsid damage. The two constrants of lack of vehicle spare parts and inadequate supplies of effective pesticides did much to impede the progress of the Project when drought hit the Project area the comnb;----tion.s of capsid damage and droughty condition deStroyedA M-nY replante- farms and grossly retarded growth on others.. The main benefit to be derived from the Project for the participation of the World Bank was the provision through the World Bank of the scarce resource of foreign exchange. Constraints which arose as a result of scarcity of foreign exchange should therefore not nve ueen eiu io mAr aled tproeo uJ -nUU.u _yw anw w havebeen m-a-w- -n-u to by making the necessary adjustments in the Credit. Allocation for the purchase of Pruners: Mistletoe parasites growing on cocoa constitute.a serious form or cocoa disease which was not given enough prominence at appraisal. During implementation it hPrnami e-I-ar that the Pro-et wnud have to innndo rnntrni lat mintltnon in the rehabilitation programme. Many farms carried large number of mistl:etoes and farmers were asking for pruners to remove them. A proposal made by the Project Unit to the Bank to make available under -. the credit funds to purchase 8,000 pruners to distribute to farmers were accepted by the Bank. 4,470 pruners have to date been delivered to the Project for dis- tribution to farmers. Offices and,Bungalows (Headquarters and Zones Showing Appraisal and Contractual Targets and Actual Completion Dates: Contracts Award on Tender + No. Appraisal Constractual Actual Target Target Completion Date Beadquarters, Suhum: 1. Combined Project Headquarters and Zonal i Office. ) 1 1970/71. 1971/72 1973/74 2. Bungalows: n (a) I-erom 2 I ff '" . (b) 3-bedrooms 1970/71 971/2 1976/77 (Project Manager's Bungalow) H %c) 2- bedrooms lfuy1 1y/1/2 1274.73 . A Zones: U 3. Zonal Offices: 1 (a 1agos 1 1970171 1971172 1974/75 (b) Nankese 1 1 1970/71 1971/72 1972/V3 4. Zonal Bungalows: a (a) 2-bedrooms at Nankese 1 1 u1970/71 1971/72 1973/74 (b) 2-bedrooms at Nangose g 1 1970/71 1971/72 1976/77 (b)-- 2-ero- at--angoase--1-1-70/-1-1971/72-1976/ - 68 - Junior Staff Quarters Dates. Constructed using direct labour Typi/Site No. A-nraisall Contractual Actual Target --Target Completion i aDate A. 2-bedroom and sittingl r o o m w i th 3 , -0 0 ga l n 4 water tank.1 1 - 1 1 Nankese 4 - 1974/75 1976/77 Asuboi 1 - 1974/75 1975/76 Akorabo 2 - y1974/75 1976/77 Tinkong 2 - 1974/75 1976/77 AnkLfwajJ~ ni(Mngose) 2 - 1974t/75~ 1976 /77 Dokrochiwa 2 - 1974/75 1976/77 Mangoase 2 - 174/7% 1978/79 B. One-bedroom and 62itting room wi 3,000 galls. water tank. Suhum 6 - 1974/75 1975/76 Nankese 4 - 1974/75 1q76/77 Asuboi 4 - 1974/75 1975/76 Akorabo 6 - 1974/75 1976/77 Sowatey 2 1974/75 ' .976/77 Tinkong 2 - 1974/75 1976/77 Ardwan(Mngose 2 - 1974j'/75 1976'O/77 Dokrochiwa 2 - 1974/75 1976/77 Mangoase 2 - 197 /75 1976/77 Unit Offices and Stores Showing Appraisal and Contractual Targets and Actual Completion Dates. (Contracts Awarded on Tender) Unit Location No. Appraisal Contractual Actual T .rget Tarñetb om ltin a te, 1 Kabu-Hill 1 . 1970/71 1971/72 1972/73 2 Aahia 1 1 19707 . 1971/72 -1972/73 3 1 Aponoaponoj 1 1970/71 1 1971/72 1972/7} 4 Sowatey 1 1970/71 1971/72 1972/93 5 Amnade 1 1970/71 1971/72 17/ /3 6 Okorase 1 1970/71 1974/75 1974//5 7 Adidiso 1. -1970/71 1971/72 1972/73 8 Supreso 1 1970/71 1971/72 1972/73 9~ 1",1-- 1ý ~2irf/e 9 T i 1 1 7 - 1 7/ 4 10 Iangoase 1 1970/71 1971/72 1973/74 11 t orabo 1 i 1970/71 1971/72 1972/73 12 Kukua 1 1-970/71 1971/72 1k/b3 13 Chichiwere 1 1970/71 1971/72 1972/73 14 Asuboiw 1 1 1970/71 1971/72 1972/73 15 LDo'-chiwa 1 1970/71 1971/72 1973/74 Unit Bungalows Showing Appraisal and Contractual Targets and Actua]l Completion Dates. (Constructed bv dirpet Iabour) Unit Location No. Appraisal Contractual Actual Target Target Completion Date 1 Kabu-Hill 1 1970/71 1971/72 1972/73 3 Aponoapono 1 1970/71 1971/72 1972/73 4 Sowatey 1 -197/74 197/7 1972/73 5 Amanase 1 119 1 171/72 1972/73 1 Oknrag& i 1970/71 11971/72 197 7 Adidiso 1 1970/71 1971/72 1971/72 8 Supreso s~ 1 1970/7 1 1971/72 1 9 71/72 9 Tinkong 1 1970/71 1971/72 1971/72 10 Mangoase 1 1970/71 1975/76 1977/78 (Ankwani) 11 Akorabo 1 1970/71 1971/72 1971/72 12 Aukua 1 1970/71 1971/72 1971/72 13 Chichiwere 1 1970/71 1971/72 1971/72 14 Asuboij 1970/71l1971/72 1971/72 15 Dokrochiwa I 1 1970/71 19?1/72 1971/72 (W.F-K. C=TRS'PTTN) PROJECT MANAGER SYED Z. HUSAIN, (ECONOMIST) AGRICUJLTURE IV, WEST AFRICA PROJECT DEPARTMENT, IUNATIONAL D17VEIIM;DNT ASSOCIATION, 1818 H STREET, N.W., ~A-IN'I D . 2v-433 u.s.A.  BRD 15107 (PCR) o03' 02r aI wUNE 1980 F GHANA EXTENSION AREA 61. COCOA PROJECT DEVELOPMENT UNIT FA-STFRN RFGC(~N - Project constructod feeder roads \Exislng roads -R.ilway River I U nrrr bo U ndar e s 1 North 1 5 Un -.nrrnbers do kw o nto ; / 6Akoko Nrronso 4 .-----Apedw o - juncton ~ N unkum rowKroose W e re obt Hd eWbu Aponoopon " k S upeoekrs Kroe bo osoy 'o Anum-PP C Apop..jamno. Ku W ouskDdeo - O10 - . okociw \0 noo~ outu AlikrO -... (A.- MAt UPPER VoLT VRYCOAST OGO GHANA M |LESDd T27-