Togo - Cocoa - Coffee Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4552 PROJECT PERFORMANCE AUDIT REPORT TOGO FIRST COCOA-COFFEE DEVELOPMENT PROJECT (CREDIT 503-TO) June 15, 1983 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. TOGO FIRST COCOA-COFFEE DEVELOPMENT PROJECT (Credit No. 503-TO) Currency Equivalents Currency Unit = CFA Francs (CFAF) US$1 = CFAF 250 CFAF1 = US$o.o0 CFAF1,000,000 = uS$4,ooo Weights and Measures (Metric System) 1 ha = 2.47 acres 1 km = 0.624 miles 1 kg = 2.204 pounds 1 metric ton = 2,204 pounds 1 liter = 1.057 US quart Abbreviations SORAD Societe Regionale d'Amgnagement et de Developpement (Regional Development Agency) SRCC Soci6te Nationale pour la R6novation et le D6veloppement de la Cacaoyere et de la Cafeiere Togolaises (National Cocoa and Coffee Development Agency) OPAT Office des Produits Agricoles du Togo (Office of Agricultural Commodities) CNCA Caisse Nationale de Cr6dit Agricole (National Agricultural Credit Agency) BTD Banque Togolaise de Developpement (Togolese Development Bank) IFCC Institut Frangais du Caf6, du Cacao et Autres Plantes (French Institute for Coffee, Cocoa and Other Stimulant Plants) FAC Fonds d'Aide et de Cooperation (France) (French Development Aid Agency) SEDES Soci6te d'Etudes pour le Developpement Economique et Social (France) (Consulting Firm) PCU Project Credit Unit LBA Licensed Buying Agents SSVD Swollen Shoot Virus Disease FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT TOGO FIRST COCOA-COFFEE DEVELOPMENT PROJECT (CREDIT 503-TO) TABLE OF CONTENTS Page No. Preface ................................................................. i Basic Data Sheet ......................................................1..ii Highlights ............................................................. iii PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY ....................................... ..1....... II. MAIN ISSUES .............................................. 4 A. General ................................ ....4...... 4 B. Socio-Economic Aspects of Cocoa Cultivation ......... 5 C. Project Organization ................................ 7 D. The Credit Operations ............................. 8 Annex I - Government Comments ..................................... 11 PROJECT COMPLETION REPORT I. Background .................................................. 21 II. Formulation ................................................. 22 III. Implementation .............................................. 27 IV. Agricultural Impact ......................................... 34 V. Rates of Return ............................................. 36 VI. Institutional Performance and Development ................ 37 VII. Special Issues ....................................... 42 VIII. Changes in Repeater Projects .......................... 44 IX. Bank Performance ........................... ............ 45 X. Conclusions .................................... ....... 48 Annex Tables 1-11 .................................................. 50 Annex I ..................................................... ...... 61 - 16952 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - 1 - PROJECT PERFORMANCE AUDIT REPORT TOGO FIRST COCOA-COFFEE DEVELOPMENT PROJECT (CREDIT 503-TO) PREFACE This is a performance audit of the Cocoa-Coffee Development Project in Togo, for which Credit 503-TO was approved in July 1974 in the sum of US$6.0 million. The credit was closed, fully disbursed on December 31, 1980. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department, and a Project Completion Report (PCR), dated December 11, 1981. The PCR was prepared by the Western Africa Regional Office on the basis of a country visit in October 1981. The audit memo- randum is based on a review of the Appraisal Report (No. 352a-TO) dated June 26, 1974, the President's Report (P-1481-TO) of July 10, 1974 and the Credit Agreement dated August 6, 1974. Correspondence with the Borrower and internal Bank memoranda on project issues contained in Bank files have also been reviewed, and Bank staff associated with the project have been interviewed. An OED mission visited Togo in November 1982. The mission held discussions with officials of the Ministries of Finance and Agriculture, the project implementing agency, Societe Nationale pour la Renovation et le Developpement de la Cacaoyere et de la Cafeiere Togolaises (SRCC), and the agricultural bank, Caisse Nationale de Credit Agricole (CNCA). A field trip was undertaken to meet and discuss the project with some participating farmers which permitted a review of some of the project's socio-economic aspects. A copy of the draft report was sent to Government for comments. Comments received are attached as Annex I. Requested changes have been introduced or properly footnoted. The audit finds that the PCR covers adequately the project's salient features, its accomplishments as well as shortcomings, and the PPAM generally agrees with the conclusions. Subjects discussed have been selected because of their importance to this as well as other Bank-assisted projects. The valuable assistance by the Government and their staff as well as by the farmers met during the preparation of this report is gratefully acknowledged.  PROJECT PERFORMANCE AUDIT REPORT TOGO FIRST COCOA-COFFEE DEVELOPMENT PROJECT (CREDIT 503-TO) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as % of Expectations Current Estimate Appraisal Estimate Project Costs (US$ million) 10.5 11.7 11a Credit Amount (US$ million) 6.0 6.0 100 Date Board Approval - 07/74 - Date Effectiveness 12/74 03/75 3 months delay Date Physical Components Completed 06/80 06/80 - Proportion Completed (%) - coffee planting 100 143 143 - cocoa planting 100 49 49 - Feeder roads 100 122 122 Closing Date 06/80 06/80 Economic Rate of Return (%) 33 20 85 CUMULATIVE DISBURSEMENTS FY74 FY75 FY76 FY77 FY78 FY79 FY80 Appraisal Estimate (US$ million) 0.4 1.2 2.2 3.3 4.4 5.6 6.0 Actual (US$ million) 0.3 0.3 1.7 2.8 4.3 5.5 6.0 Actual as percentage of Estimate 71 28 78 85 98 98 100 Date of Final Disbursement: 10/15/80 MISSION DATA Sent Date No. of Manweeks Specializations Performance Types of Mission by (Month/Year) Persons in Field Representedb Ratin Trend/d Problema-e Appraisal 03-04/73 4 16 ec,fa,ag,ag - - - Supervision I 11/74 2 1.4 ag,ec 1 2 - Supervision II 05/75 2 2.0 ag,ec 2 1 F Supervision III 11/75 1 1.4 fa 1 1 T,P Supervision IV 03/76 1 0.7 ag 1 1 T,P Supervision V 10/76 2 1.7 fa,ag 1 1 T Superyision VI 05/77 1 0.4 ag 1 1 T Supervision VII 10/77 2 1.1 ec,ag 2 2 0,T Supervision VIII 04/78 2 1.1 ec,ag 1 2 0,T Supervision IX 10/78 4 2.QL! ec,fa,ag,ag 1 2 0 Supervision X 04/79 1 1.4 ec 2 1 0,T Supervision XI 12/79 1 1.0 ag 1 2 F Supervision XII 06/80 3 5.0 ag,fa,ec 1 3 M,P PCR 10/81 1 1.0 ag - - - OTHER PROJECT DATA Borrower Government of Republic of Togo Executing Agencies SRCC (National Cocoa and Coffee Development Agency) Fiscal Year January 1 through December 31 Name of Currency (abbreviation) CFA Franc (CFAF) Appraisal Year Average (1973) US$1.00 - CFAF 250 Intervening Years (1974-79) US$1.00 - CFAF 230 Completion Year Average (1980) US$1.00 - CFAF 220 Follow-on Project Name Second Cocoa-Coffee Development Project Credit Number 945-TO Amount (US$ million) 14.0 Date Board Approval 07/23/79 /a Inflation because of depreciation of US$ - in CFAF terms, cost overrun was 4.6%. ag - agriculturalist; ec - economist; fa - financial analyst. Tc 1 problem free or minor problem; 2 - moderate problem; 3 - major problem. d 1 - Improving; 2 - Stationary; 3 - Deteriorating. 7 F Financial; M - Managerial; P - Political; T - Technical; 0 - Other. 7 Combined with appraisal of Second Project.  - iii - PROJECT PERFORMANCE AUDIT REPORT TOGO FIRST COCOA-COFFEE DEVELOPMENT PROJECT (CREDIT 503-TO) HIGHLIGHTS The project was to promote development of modern smallholder cocoa and coffee production through strengthening of project institutions, train- ing of extension agents and agricultural credit personnel, and to expand applied research. About 6,500 smallholders were expected to be provided with technical assistance, credit and grants. Total plantings would amount to 4,400 ha of cocoa and 4,000 ha of coffee, yielding at full production 4,400 t of cocoa and 4,800 t of dry coffee beans. In addition 50 km of feeder roads would be constructed and 110 km roads rehabilitated. Consultants would be employed to recommend improved administrative structures and lending proced- ures as well as evaluate project impact and prepare a follow-on project. Coffee plantings of 5,740 ha exceeded appraisal estimates but cocoa plantings of 2,164 ha fell more than 50% below appraisal targets. About 14,000 smallholders benefitted from the credit program. The road construc- tion/rehabilitation component also exceeded appraisal estimates. Total proj- ect costs were only 4.6% above estimates but annual production reached only 1,200 t cocoa and 3,500 t coffee. The economic rate of return has been recalculated at 20% as compared to the appraisal estimate of 33%. The dis- appointing performance has been mainly due to the unsatisfactory cocoa development. Other points of interest are: - replanting under old cocoa stands proved superior to the recommended clearing prior to planting because of on-farm labor constraints (PPAM paras. 18, 19; PCR para. 3.15); - the insufficient investigation of socio-economic conditions prevail- ing in the project area also contributed to the disappointing results of cocoa replantings (PPAM paras. 13-16; PCR para. 3.14 c); - the implementing agency is one of the best managed units but insuf- ficient Government support has been forthcoming in nominating Togolese staff to take over from expatriate managers (PPAM paras. 21, 22; PCR para. 6.20); - a highly successful simple control system has led to excellent vehicle and equipment maintenance and would be easily replicable in other projects (PPAM paras. 23, 24); - iv - - the poor credit repayment rates and the high cost of credit admini- stration in an environment of heavy produce taxation would favor the introduction of input subsidies (PPAM paras. 25-30; PCR paras. 6.07-6.16). - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM TOGO: FIRST COCOA-COFFEE DEVELOPMENT PROJECT (CREDIT 503-TO) I. SUMMARY.1 1. Togo's cocoa and coffee production is concentrated in the Plateaux region, a mountainous area in the south-west of the country bordering Ghana. Both cocoa and coffee are smallholder crops produced by ageing trees of low-yielding varieties on scattered small plots of 0.5 - 1.0 ha in size. Cocoa and coffee accounted for 50% of total exports during the 1960s but production was stagnating because of the advanced age of the plantations, lack of maintenance and new plantings, low producer prices and the absence of any concerted development effort geared to provide farmers with technical assistance, improved planting material and credit. 2. In line with the Second Five-Year Plan (1971-75) which gave a higher priority to agricultural investment the Government, with financial and technical bilateral assistance, promoted in 1971 the first stage of a cocoa and coffee rehabilitation program involving the establishment, equipping and staffing of SRCC, an autonomous cocoa and coffee development agency (Societe Nationale pour la Renovation et le Developpement de la Cacaoyere et de la Cafeiere Togolaises), the initiation of appropriate research and the multi- plication of planting material. In 1972, the Government requested IDA assis- tance for the carrying out of a second stage of this program based on a study prepared by a consulting firm. The project was appraised by IDA in March/ April 1973. 3. Main issues raised during the formulation period were: (a) the project scope: Government pressing for more ambitious targets than those that the Bank felt were practical and realistic; and (b) agricultural credit: a credit component was included largely because of the Bank's insistence on its educative value with a compromise solution to the institutional problem under which a Project Credit Unit (PCU) would be established as a separate part of CNCA (the National Agricultural Credit Agency) and subject to SRCC operational control. 4. The project's objectives were to implement a program for assisting smallholders to improve and extend their cocoa and coffee plantings over the 1974/75 through 1981/82 period by: 1/ Adapted from the PCR. - 2 - (a) strengthening project institutions, particularly the National Cocoa and Cocoa Development Agency (SRCC) and the National Agricultural Credit Agency (CNCA); (b) training SRCC extension agents and CNCA credit personnql; (c) conducting applied research under SRCC responsibility; (d) providing technical assistance and inputs under credit and grant arrangements to about 6,500 smallholders for the planting and maintaining until entry into production of 4,400 ha of cocoa and 4,000 ha of coffee; (e) constructing 50 km and rehabilitating 110 km of feeder roads and maintaining feeder roads in the project area during the project development period; and (f) hiring consultants to advise CNCA on administrative structures and lending procedures, and to evaluate the project impact and prepare a follow-on project. 5. Total project costs were estimated at US$10 million, with a foreign exchange component of 38%. Financing was to be shared between IDA (US$6 million), FAL/ (US$1.7 million grant) and Government (US$2.3 million), of which: (a) US$7.13 million to be passed on to SRCC as grants to cover the costs of equipment, operating expenses, training, the feeder road program, applied research, insecticide treatment of new cocoa plantings, and the project evaluation study; (b) US$2.91 to be on-lent by Government to CNCA to cover the cost of sub-loans made to farmers by PCU and for equipment and administra- tive expenses. This subsidiary loan would be for a 13-year term bearing interest of 1% and with a grace period of six years for repayment of principal. These terms were calculated to ensure that PCU's cocoa and coffee lending operations were to become financially autonomous; (c) a US$0.06 million grant to CNCA to cover the cost of the organiza- tion study; and (d) US$0.40 million "unallocated" for contingencies. 1/ Fonds d-Aide et Cooperation, the French bilateral aid agency. - 3 - 6. The project's primary benefits were to be derived from increased production and exports of cocoa and coffee and the foreign exchange earnings these would generate, estimated to rise to about US$10 million annually by 1986. Without the project, Togo's cocoa and coffee production was expected at best to stagnate. The project's economic rate of return was estimated at 33%; with output prices and/or yields 40% lower and costs 10% higher, the rate would still be satisfactory at 19%. 7. Implementation started swiftly and, during the project period (1975-80), new coffee plantings on 5,740 ha exceeded the appraisal estimate of 4,000 ha by 43%, but new cocoa plantings on 2,164 ha represented only 49% of the appraisal target due largely to: (a) the effects of drought in 1976 and 1977 on the production of im- proved planting material; (b) low producer prices and compensation for uprooted plantations in the first 3 years; and (c) above all, constraints imposed by the land tenure system existing in the main cocoa producing area (Litime). About 14,000 loans to farmers were approved totalling more than CFAF 608 million (US$2.7 million) of which CFAF 454 million (US$2.0 million) - 72% of appraisal forecast - were disbursed. Feeder road construction of 196 km exceeded appraisal estimates of 160 km by 22% and an average of 74 km were maintained each year. 8. Total project costs were only 4.6% above appraisal estimates, largely because farmer loans disbursed are lower than forecast. Road con- struction and maintenance costs were satisfactory. Credit disbursements were below appraisal projections in the first three years but were completed by June 30, 1980, as projected. 9. All covenants were complied with, except that (a) there were fre- quent delays in the payment of Government's contribution to SRCC and (b) the requirement under Section 4.05 of the Credit Agreement on annual consultations with IDA before Government determined producer prices, was never met. The fact that cocoa and coffee producer prices nearly doubled over the project period (even though at the end they only represented 30% of the FOB values) was the main reason for the Bank not pressing for compliance with a credit condition that impinged on a politically sensitive area. 10. Yields forecast at appraisal have proved too optimistic mainly because of slower farmer response to the new cultural practices..1 As a 1/ The Government in its comments also mentions lower than normal rainfall during implementation and unsuitable clonal material also contributed to slower farmer response. result, annual incremental output at full production is now estimated at 1,200 t cocoa as against the appraisal projection of 4,400 t and at 3,500 t coffee as compared with 4,800 t. Because of higher than projected world market prices, project-induced net foreign exchange earnings should rise to the appraisal forecast of US$10 million from 1986 onwards. The recalculated ERR for the project is 20% as compared to the appraisal estimate of 33%. The coffee component's rate of return despite considerable reductions in projected output is largely due to present world market price projections which for coffee are hi her than those of the appraisal. The ERR of the cocoa component is negative..1 11. The project proved to have closely integrated adaptive research, production and distribution of improved planting material, extension and supervised credit disbursement and, through its feeder road improvement program, has facilitated the spread of these activities in the cocoa and coffee producing area. In the case of the project credit unit, operating costs have been higher than anticipated and this, coupled with lower loan disbursements, has disturbed the financial equilibrium forecast at appraisal. Experience of initial repayments has shown that arrears are of the order of more than 50% and on seasonal loans, arrears were over 20%. Factors ac- counting for this unsatisfactory development include: (a) effects of droughts in 1976 and 1977; (b) abandonment of plantations; (c) lower yields caused by insufficient maintenance and fertilization after the period of supervised credit;2 and (d) tendency on the part of some farmers to treat credit as a gift rather than a loan. The reluctance of the marketing agency (OPAT)I/ to amend its internal mar- keting system to facilitate loan repayments at the time the farmer sells his produce has added to the difficulties of credit recovery. II. MAIN ISSUES A. General 12. The project was successful in rekindling coffee and to a lesser extent cocoa production in Togo which had been stagnant for an extended period 1 The PCR (para. 5.03) shows an ERR for cocoa of 8%. 2/ The Government finds that this was more the consequence of delayed maintenance works, inadequate fertilizer application and failure to follow the manuring schedule. 3/ Office des Produits Agricoles du Togo. -5- of time. It also contributed to strengthening a young organization, the SRCC, although little could be done to prepare for a reduction in the expatriate management structure. Socio-economic problems caused by complex land tenure/ share cropping arrangements were identified belatedly and, in the audit's view, this has contributed to the relatively poor performance of the cocoa subcomponent. Cocoa development was further hampered by an unsuitable tech- nical package. The project's credit scheme which is now plagued by high arrears, was unable to safeguard credit morale and this will have reper- cussions on the farmers' attitude vis a vis repayment obligations for years to come. These points are further discussed below. B. Socio-economic Aspects of Cocoa Cultivation 13. Planting of cocoa fell far below appraisal estimates. According to the PCR (para. 3.14), only 2,164 ha were planted or 49% of the 4,400 ha estimated at appraisal. Since project completion most of the planted acreage has been abandoned, a fact also reflected by the low recovery rate (10%) of cocoa loans. The mission found that major socio-economic conditions were not adequately analyzed during project preparation/appraisal and the recommended technical package was inappropriate not only on technical but also on socio- economic grounds. 14. The Litime where most of Togo's cocoa is grown is characterized by a fairly complicated land tenure system. Absentee land ownership is quite frequent. In some cases landlords who own plantations of several hundred hectares,1/ live in'Ghana, since the Litime was under British colonial administration before it became part of Togo in the twenties. Other landlords reside in Lome, or other urban centers; some are also coffee farmers on the plateau some 20 to 30 km away from the cocoa plantations.2/ Work on the plan- tations is usually carried out by share croppers, most of them from other regions of Togo; only a few from the Litime itself. There is a contractual agreement between the landowners and share croppers under which the major share of cocoa harvested is sold for the owners' account and a relatively minor part, about 13%, is the cropper's share. He is, however, compensated by using some of the land for staple food production, of which he sells considerable quantities. Since the agreement between the two parties is only valid as long as there is cocoa on the land contracted, both show little interest in uprooting and replanting cocoa: the share cropper because he is in danger of losing his livelihood and the land owner because a continuous source of income from investments undertaken by his forefathers may be in jeopardy. 15. This reluctance to participate in the project is further accen- tuated by the relatively high age of most share croppers and land owners. The mission interviewed a number of farmers, all of whom had children in the urban centers and/or neighboring countries. All expressed inquietude about the fate of their holdings since their offspring showed little interest in returning to the land. 1/ Information - A. Schwarz, ORSTOM, Lome. 2/ Government, however, asserts that the number involved is negligible (See Annex I). - 6 - 16. This rather precarious social system was expected by the project to clear existing old cocoa, live without any income from cocoa for 4 to 5 years and adopt a technical package which farmers knew.Y in advance would fail. l7. The appraisal had not made any provision to compensate farmers for the years between uprooting the old cocoa and the first harvests from new plantings. In its efforts to reach appraisal targets SRCC even went so far as to get'Government approval on forcing farmers to uproot old cocoa plantations. However, it was at this stage that an uprooting premium - not foreseen at appraisal - was introduced, i.e. CFAF 60,000/ha spread over 5 years. It should be noted that this premium corresponds to a yield of only about 50 kg/ha. It should therefore come as no surprise that only limited interest was taken in the scheme. 18. Simultaneously, farmers were not convinced that SRCC recommendations about replanting were workable. The Litime is an area of marginal potential from the point of cocoa cultivation, since rainfall hovers around 1400 mm, the minimum required.11 As a matter of fact, during the past years rainfall was consistently below 1400 mm, in 1980/81 only slightly above 1100 mm. In the face of this precarious rainfall situation, SRCC recommended clearfelling the old cocoa stands and planting cocoa under the shade of plantains and cocoa yams. 19. Farmers following this recommendation found that the clearfelling led to excessive exposure of the soils, resulting in destruction of the little organic matter available; leaching of basic nutrients during heavy rainstorms also leading to soil erosion of slopes; and finally an almost unmanageable weed problem which did not only suffocate the young cocoa plants, but in many instances also stunted the growth of the plantains planted for shade..! From the interviews with planters and from some existing demonstration plots, it becomes apparent that under prevailing conditions cocoa establishment under existing cocoa trees is much more successful. The research conclusions that planting under old cocoa is inferior to the clearfelling method is apparently based on experience under a relatively dense tree population with a perfect canopy. But no farmer would be prepared to uproot such a high yielding plan- tation and there is no need to do so. 20. What was not done and what, in the audit's view, is needed for any further cocoa plantings is a survey leading to the preparation of a proper 1/ Neither Operations Policy Staff nor the Region accept this assertion. 2/ Operations Policy Staff point out that the soils of the area have a high water retention potential thereby partly offsetting lower rainfall. 3/ The Government in its comments considers the Bank to be too pessimistic in its view on clearfelling. But, from all plantations seen by the mission the ones established under existing cocoa were superior to those established after clearfelling. However, there is no doubt that under research/experimental conditions, the clearfelling method is superior. - 7 - land use plan. The survey should indicate the various land-ownership/share cropping arrangements prevailing in the prospective project areas. The survey should also identify cocoa plantations which are in an "in between stage", i.e. exclude those which do not require replanting because of relatively good stands and dense canopy, and also those which have only a few defoliated trees left, since replanting under sporadic trees with inadequate shade will lead to the same problems as encountered under clearfelling conditions. C. Project Organization 21. The project relied on SRCC for management and implementation. SRCC had been established a few years earlier under the FAC-assisted pilot project. The key positions, at present four posts, have been filled with expatriates and the director general of SRCC, on secondment from the French coffee/cocoa research organization 1/ (IRCC), has been in this position from the onset. He has shown excellent management capabilities as well as drive and SRCC definitely belongs to the best managed project units found in Africa. The disappointing performance of the cocoa subcomponent (see para. 13 above) cannot be blamed on SRCC since it strictly followed IRCC and appraisal reconm- mendations. On the contrary, it needs to be mentioned that SRCC tried with all means available, like land clearing by decree, introduction of compensa- tion for uprooted cocoa trees, etc., to fulfill the cocoa planting targets, as it had met or exceeded the coffee planting and construction targets. 22. On the negative side, it has to be stated that even after all these years SRCC has still to rely on expatriates to run its affairs. The Government never appointed qualified counterparts, who, with extended training by expe- rienced expatriates, could have taken over management responsibilities. As frequently found in other projects, Government opted for quick results by appointing expatriates, leaving, however, institutional development in abey- ance.2/ This project also proves that one cannot expect bu y managers to train also local counterparts, even if they are available.31 The mission found that the Region is aware of this problem and that this issue is under discussion with the ministry concerned. 23. One aspect underlining the above comments on excellent project management needs to be specially highlighted. The expatriate workshop manager introduced, upon his arrival in 1974, a strict scheme for vehicle and equip- ment maintenance. For this purpose he developed a form of visual "critical path" by using pegboards. On first sight everybody concerned can check when the next oil change or major overhaul is due. There is also a 6 months- warning indicator prior to major overhauls, permitting the timely ordering 1/ Institut de Recherches pour le Cacao, Cafe et autres Plantes Stimulantes. 2/ See Sierra Leone Integrated Agricultural Development, OED Report No. 2066 of May 22, 1978. 3/ See Cameroon Semry Rice, OED Report No. 2054 of May 15, 1978. - 8 - of spare parts, thus avoiding last minute decisions requiring costly air- freighting of these parts. The system is, of course, supported by log books, records of gas and oil requirements, workshop machinery inputs, personnel costs, etc. In the end, the project is always in a position to show the exact mileage/hour costs of each vehicle and/or major construction equipment. 24. The results of this strict control are most beneficial. Vehicles used for some 6 years by extension staff under the rough conditions of the African bush, and having logged more than 200,000 km are still in excellent working order, a feat unparalleled in any other project audited so far. The shop manager is at present preparing a manual to guide other projects in implementing his system. He is also convinced that he could introduce the system and train project workshop managers within a 6-month period. The Bank would be well advised to study this system in depth and if it becomes avail- able, make use of the manual. D. The Credit Operations 25. The project provided for loans to participating farmers to pay for the required inputs such as seedlings, fertilizer, as well as for labor costs arising from felling of old trees, land clearing, planting and weeding. During project implementation SRCC also extended short-term loans for plantain suckers.l/ At appraisal coffee farmers were expected to obtain up to CFAF 73,000 (US$292 equivalent) per ha coffee and CFAF 40,000 (US$160 equivalent) for each hectare of cocoa to be established. Repayment terms included a grace period of 4 years for coffee and 5 years for cocoa, repayment of the loans over 9 years and interest at 6.5-8%. Loan administration would be under a specialized credit unit under SRCC which would obtain funds from CNCA. 26. Repayments over the past years have been disappointing. So far only 45% of the coffee loan repayments due and 10% of the cocoa installments have been received.2/ Due to the disappointing performance of the cocoa subcom- ponent there is little hope to recover the outstanding cocoa loans. The Bank is paying special attention to these unfavorable developments during its supervision of the follow-on second coffee/cocoa project (Cr. 945-TO). At present efforts are being made to recover outstanding payments through coop- eration with authorized buying agents. It is thought that each planters acreage would be determined, irrespective of his having participated in the project or not, so that debtors could not sell their crop under an assumed name. Whenever they would market their crop under their rightful names, the authorized dealer would be obliged by law, to deduct whatever is due to PCU/CNCA. 1/ Plantains are planted to provide shade for the young cocoa plants. 2/ The repayment percentage is actually lower. Farmers who are entitled to an annual compensation for uprooted trees have their repayments auto- matically deducted from this grant if they are in arrears with their obligations. - 9 - 27. In the audit's view, this approach is flawed in several aspects. First, the cost of a land-use survey in an area of complex land ownership (see para. 14) will be time consuming and above all very costly. Second, the cooperation of the agents is in no way assured and if they were to be interested, a compensation for their efforts has to be considered. Third, the production areas are too close to the border and illegal exports could become a problem; at the same time, it would make it impossible for coffee/cocoa coming across the border to be sold in Togo. 28. These unfavorable developments of the credit component have been further exacerbated by the high cost of administering the credit. According to the 1980/81 PCU balance sheet, total administrative cost amounted to CFAF 58.2 million, with a net loss of CFAF 11.8 million. Cumulative losses since the start of the project now amount to CFAF 81.3 million, excluding bad debts. Bearing in mind the high administration cost, together with the high incidence of bad debts, the question should be asked if credit is the acceptable solu- tion in comparison to direct subsidies. Subsidies appear justified in the case of this as well as the follow-on project in light of the high taxation of coffee/cocoa. In the form of export taxes, the Government takes about 65% of the f.o.b. price. As a consequence Togolese farmgate prices for cocoa are about 30% below those received in the Ivory Coast and Cameroon to name only a few examples. 29. The Bank has been aware of the disincentives generated by this taxation policy and over the past years has repeatedly tried to persuade Government to change its policy without any apparent results as mentioned in the PCR (para. 3.30). 30. Government never adhered to Section 4.05 of the Credit Agreement which provided for annual consultations between the Bank and Government prior to the setting of farmgate prices for coffee/cocoa. In the audit-s view, changing from costly credit operations to subsidies would have had merits in the light of (a) providing badly needed incentives; (b) preventing the now prevailing low credit morale, which is likely to spread to other non-coffee/ cocoa related lending activities; and (c) saving costs. A similar approach substituting subsidies for credit at high cost to numerous smallholders had been introduced by the Bank in other projects.l/ 1/ See Burundi Coffee, OED Report No. 1531 of March 21, 1977.  - 11- Annex I Page 1 E-1028/83 May 17, 1983 French (Togo) OED DBB:law Rev.:ENMcM Ministry of Rural Development Societe Nationale pour la Renovation et le D6veloppement de la Cacaoyere et la Cafeiere Togolaise (SRCC) Ref.: 281 D/SRCC Lom6, April 28, 1983 The Director Operations Evaluation Department The World Bank Washington, D.C. Dear Sir: Thank you for your letter of March 9, 1983, enclosing the first draft of the project performance audit report for the first cocoa-coffee development project (Credit 503-TO). I have forwarded this report to all my staff, both Togolese and technical assistance staff, which explains the delay in my reply. I am returning this report to enable you to correct translation and other errors which we picked up. I am also attaching for information the comments of the head of the extension service (Mr. Viroux) and of his Togolese deputy (Mr. Tsogbe). Both feel that the analysis contained in the report regarding the method of cocoa planting after the uprooting of the old trees and the planting of plantains for shade was not objective. -12 - Annex I Page 2 To clarify this point, I am forwarding to you a memorandum by Mr. Belin written after his mission to Togo from February 4 to 12 this year. The project completion report refers frequently to the foreign technical assistance provided under this project, referring to us as "foreign technicians." To the Togolese, a "foreigner" is someone who is in the country temporarily. The words "technical assistance" seem preferable to me within the context of this report. In view of the comments made by Messrs. Viroux and Tsogbe, I have limited my comments to the following problems: climate, the problem of food crops and prices, credit repayments by the planters, and cocoa planting in the Litime. Yours sincerely, /s/ J. Deuss - 13 - Annex I Page 3 Ministry of Rural Development Soci6te Nationale pour la Renovation et le Developpement de la Cacaoyere et la Cafeiere Togolaise (SRCC) Lome, April 28, 1983 Memorandum on the Project Performance Audit Report for the First Cocoa-Coffee Project The purpose of a PPAR is to establish to what extent the objectives of a project have been attained, to determine the reasons for any failures and to pinpoint the most noteworthy achievements. This type of audit should enable those managing agricultural development in the country as well as the agencies that contributed to financing the project to draw conclusions and derive useful information. For the 1974-80 coffee and cocoa development project, the Togolese Government obtained: (a) a loan of US$6 million from IDA; (b) FAC support amounting to CFAF 428.9 million, and a contribution of CFAF 750 million from the Government's investment budget. In addition, OPAT (Office of Agricultural Products of Togo) financed a cocoa capsid insecticide treatment project at a cost of CFAF 658,511,000 during the period 1974 to 1980. Now that the project is completed, and after a lapse of two years, it would seem that some factors were underestimated or neglected during the 1973/74 appraisal. The repercussions of this are becoming evident over time and have become major problems facing the second project. We might mention here: - 14 - Annex I Page 4 1. Climatology: For perennial crops such as coffee, cocoa, oil palm and rubber, climatology, and rainfall in particular, have a major impact on yields. The ecological requirements of these crops are well known: cocoa requires a rainfall of least 1,500 to 1,650 mm, distributed throughout the year, co,abined with high moisture levels; oil palm requires at least 600 mm of rainfall over the six driest months of the year; rubber can only achieve good latex yields with abundant rainfall, in excess of 1,800 mm per annum, etc. Study of the climatology of the coffee and cocoa area in Togo was virtually ignored in the project appraisal, and the completion report contains the statement that this area is covered by a humid forest, which is incorrect and shows that the authors of the report were unaware of this problem. During the first project the plateau region suffered reduced rainfall from 1974 to 1977 -- as low as 1,100 mm in some areas. Furthermore, this reduced rainfall was combined with dry seasons lasting three or four months, and with some periods of harmattan of varying durations. Dry periods resulting in losses of 50% of coffee production occur three out of every five years, possibly even two out of every three. In the event of exceptional drought, the impact on production can last fully two years and there is thus only one year of normal production out of five. Average yields projected for the plantations under the second project in 1978 were reduced to 700 kg/ha for coffee and 800 kg/ha for cocoa. In 1982, these figures were once again revised by the interim appraisal mission for the second project, which put the blame on the inadequacy of the extension work done. - 15 - Annex I Page 5 The climatology of the plateau region seems no more than marginal for coffee and cocoa, and under these conditions it would have been better, in view of the inherently risky nature of production, not to base the project on a seasonal credit system. Due to the climatic risks involved, there is every reason to expect that farmers would abandon coffee and cocoa and it would therefore seem very important that those in charge of economic development in Togo pay more for these products so that the price paid to the producer reaches 45% of the CIF price. The farmers are fully aware that it is easier and more profitable to grow food crops. The acceptance or rejection of the coffee and cocoa programs, regardless of heavy supervision by SRCC, is still a function of their economic profitability to the producer. 2. Farmers' loans and loan repayments The problems with loan repayments by the planters were clearly foreseeable and -- as the project completion report noted -- FAC had therefore refused to become involved in financing this part of the project. A subsidy system would have been as effective as a loan system, and far less burdensome in the final analysis. Since the loan system was still in effect in 1979/80 at the time of the appraisal of the second project, it was planned to pay the farmers an advance on the price of coffee and cocoa, and withhold part of the official price in order to pay off loans as they fell due. This assumes a revision of the marketing system and the schedule of prices, for which a study is to be prepared in the near future. - 16 - Annex I Page 6 3. Sociological and land tenure problems in the Litime are the main stumbling blocks in the way of the cocoa program. These are complex problems and it was not possible, we feel, for the appraisal mission in 1973 to find a solution which in 1983 is still in doubt. If nothing is done, the cocoa trees in the Litime will finally disappear and be replaced by food crops due to demographic pressures. The landowners assumed that the State would make itself responsible for the planting of cocoa, as in the case of village oil palm plantations. This misunderstanding still persists today with the result that no one feels the urge to plant. In addition, the traditional sharecropping system has created a barrier and the sharecroppers who are supposed to work on the plantations are actually growing food crops in the plateau area, which is very much more profitable than earning an annual wage of CFAF 1,000 per 32 kg cocoa load. Conclusion By the end of the first project, SRCC had obtained tangible results in various fields of activity, in particular as regards the effectiveness of its structures, the construction and maintenance of feeder roads and the replanting of coffee trees. The problems mentioned above may well slow down the coffee and cocoa development program. The importance of these two products to the Togolese economy is sufficient justification for a continued major effort on the part of the Government, and assistance provided by financing agencies is still needed in order to be able to reach the proauction cbiect:ves established under the economic and social development plan. /s Z. Deuss Director of SRCC - 17 - Annex I Page 7 SRCC Extension Department TSOGBE Comments on World Bank PPAR Page 1, Paragraph 1. It should have been said that: Production was stagnating in part because of the advanced age of the plantations, the lack of maintenance and the creation of new plots, and also in part because of low producer prices and the absence of any concerted development effort geared to providing farmers with technical assistance, improved planting material and credit. Page 5 (page 4 of English text), item c It was not only the land tenure system. One should also add: - the absenteeism of plantation owners who were from Ghana; - the age of the owners and life expectancy problems; - the resistance of many farmers who are perfectly satisifed with the yields obtained from old cocoa trees. Page 6 (page 5 of English text), paragraph 10 The reduction in yields forecast was not so much a function of slower farmer response to new cultural practices but reflected in particular: (1) The excessive degradation of ecological factors from year to year (chronic rainfall deficit and poor distribution); (2) The use of certain clones and clonal mixtures that were poorly adapted to some of the regions of the project (years 1975 to 1977, inclusive). Page 7 (page 5 of English text), item b It was mainly the use of poorly adapted clones and clonal mixtures, together with poor selection of some of the plantation sites, that led farmers to abandon some of the plots. - 18 - Annex I Page 8 Item c (page 6 of English text) It was not so much a matter of insufficient maintenance and fertilization but of delays in the resumption of maintenance work after each pass, the use of inadequate amounts of fertilizer, and failure to stick carefully to the manuring schedule. Page 8 (page 7 of English text), paragraph 12 Rather than "credit management principles that were rigid enough,"* it would have been better to say "principles that were sound enough" since the rigidity sought by the Bank is not a sound educational tool and is therefore contrary to the farmer training objective which is established for the credit component under the SRCC project. Page 9 (page 8 of English text) The proportion of cocoa farmers who also grow coffee in the plateau area is too small to be worth taking into account. They are mostly absentee landlords from Ghana (absenteeism generally found in the villages bordering on Ghana). Page 11 (pages 9/10 of English text), paragraph 19 This paragraph is typical of the excessive pessimism shown by the Bank in relation to the clearfelling system of planting. This suggests that all the planting done by this method would unquestionably fail. This is not the case. *T.N.: This was the French translation of the English ntne Project's credit scheme .... was unable to safeguard credit morale," an originally German expression, the meaning of which, one has to admit, was unclear and therefore hard to translate into any language. -19 - Annex I Page 9 In practice, the clearfelling planting system requires more work, greater effort and longer time spent on the site by the planter than he is accustomed to. It is suited more particularly to young villagers who are full of energy, enthusiasm, perseverance and the will to succeed. Page 12 (page 10 of English text), paragraph 20 Planting after clearfelling is still possible, provided attention is paid to: - The natural plant cover and the location of plantations; - The success level achieved in plots that have been prepared prior to planting; - The amount of land to be clearfelled individually, and on a voluntary basis, as a function of the planter's work capacity and availability. This system would make it possible to develop food crop intercropping in the Litime region. Page 18 (page 16 of English version of the PCR), paragraph 4.08 An unnecessary and incorrect comment. It is in no way difficult for the Extension Service to determine the number of farmers participating in the project. Page 22 (page 20 of English PCR), paragraph 6.13 The following point should be added: (e) poorly understood marketing system. Page 23 (page 21 of English PCR), paragraph 6.19, line 7 It was due to the performance of the extension workers rather than that of the farmers. - 20 - Annex I Page 10 Page 26 (page 23 of English PCR), lines 18-20 Incorrect statement: It was more a failure to adhere to the cropping timetable as regards plantation maintenance. In the opinion of the Bank, what proportion of planters fails to maintain their plantations? Annex Table 4 .1. The Amlame sector is missing. - 21 - TOGO FIRST COCOA-COFFEE DEVELOPMENT PROJECT (Credit No. 503-TO) PROJECT COMPLETION REPORT I. BACKGROUND 1.01 At the time of appraisal (1973), agriculture accounted for about 40% of Togo's GDP, for more than 60% of export earnings and provided employment for some 75% of the population. Food crops accounted for 80% of agricultural production and industrial crops--principally cocoa, coffee, cotton and palm oil--for the remainder. In the previous decade, cocoa and coffee had made up 50% of the value of exports; the next most important being phosphates with 35% of the total. 1.02 Togo's Second Five-Year Plan (1971-75) aimed at a growth in GDP of 7.7% p.a. (compared with about 7% p.a. achieved during the 1960s), allocated 15% of public expenditure to agriculture and fixed ambitious targets for increased production of cocoa and coffee. These crops dominate the farm systems of the south-western Plateaux region where the project is located. This region is a mountainous quartzite elevation shared by Ghana and Togo covered by humid montane forest with a single rainy season (average annual rainfall 1,500 mm).11 1.03 Project areas in the Plateaux region covered in all about 90,000 ha supporting some 75,000 people. Project cocoa development activities were concentrated in the Litime region in the North (30,500 ha and 32,000 inhabi- tants) and Klouto in the southwest with about 21,000 ha and 10,000 inhabi- tants). Project coffee operations were carried out in the Akposso area, east of the Litime, (with a population of about 16,000 in an area of about 19,600 ha) and on the Dayes plateau in the centre of the area where some 16,000 people live on about 19,000 ha. 1.04 Average farm size ranges from 2 ha in Klouto, to 3-5 ha in Akposso and 4-5 ha in Dayes and Litime. Cocoa or coffee is grown on separate plots of varying sizes (0.5 to 1.0 ha) and one farmer may have two or three such widely separated plots in addition to the areas devoted to food crop production. Cocoa is of the Amelonado type and about 50% of cocoa trees in Litime are over 30 years old, although still producing yields of about 150 kg/ha. Coffee plantings are mostly around 20 years old and of the low-yielding Niaouli variety of the Robusta family producing less than 100 kg/ha. The bulk of existing cocoa and coffee plantations suffered from lack of maintenance, with the farmers operations limited mainly to the gathering of such fruit as appeared. 1.05 Land tenure arrangements are more complex than is usual in West Africa. Land rights are vested in the traditional village authority under tribal law but individual village members acquire quasi-permanent land use rights which may be transferred to others under rental or share-cropping arrangements. This applies particularly to cocoa plantations in the Litime where the rights of such tenants can be ill-defined and conflicts between tenants and absentee landlords arise. 1/ In the southern zone 1300 mm and 1450 mm on the Litime plateau. - 22 - 1.06 Although it was the third Bank Group operation in Togo, the project was the first in the agricultural sector; the others being an IDA Credit (131-TO) of US$3.7 million in 1968 for a Road Maintenance Project and IDA Credit (450-TO) of US$8.7 million in 1973 for a second Highway Project. Following a mid-term evaluation in 1978 of the progress of the cocoa-coffee development project, a follow up project was approved with IDA financing of US$14.0 under Credit (945-TO) signed Jul- 23, 1979. II. FORMULATION Origin 2.01 In 1967, the Togolese Government entrusted to the Institute for Coffee, Cocoa and other Stimulant Plants (IFCC), responsibility for applied research for cocoa and coffee. A main research station for this purpose was established at Tove near Kpalime, and trials and multiplication of improved planting material derived from basic material from the Ivory Coast, Ghana, Nigeria and Uganda were commenced. 2.02 A project identification study for cocoa and coffee development and rehabilitation was financed by bilateral assistance in 1968, but the Government did not accept its recommendations on the grounds that the project proposed was too limited in scope. Subsequently, FAC agreed to finance two-thirds of the total cost (US$2.45 million) of an interim program for 1971-75 based on the establishment of a new commodity- oriented development agency (Societe' Nationale pour la Re'novation et le Developpement de la Cacaoyere et de la Cafeiere Togolaise - SRCC) in place of the regional development organisation (Socie/te Re/gionale d'Amenagement et de Developpement - SORAD des Plateaux) whose performance had been unsatisfactory. SRCC was created by Decree No. 71/165 of November 29, 1971, and entrusted with (i) the establishment of an extension service; (ii) applied research on cocoa and coffee; (iii) rehabilitation of cocoa and coffee plantations, in particular, the anticapsid treatment of cocoa plantations; (iv) establishment of nurseries for new cocoa and coffee development; and (v) improvement of feeder roads. 2.03 The interim program also provided for the mounting of a feasibility study for a medium-term program of new planting and re- planting with cocoa and coffee, which was entrusted to a consulting firm. Undertaken in 1972/73 and involving four man-months of field work, this study was in general satisfactory, but, in the absence of other sources, data for farm models had to be obtained by sample field enquiries and some of the areas proposed in the report (such as Agou and Kpalime) were subsequently found unsuitable from the point of view of soils and farmer response. 2.04 The consultant study recommended that two independent six-year planting programs for cocoa and coffee should start in 1976. However, the Government later agreed to a Bank proposal. for a cocoa planting project to start in early 1974, with Bank appraisal in March/April 1973. Govern- ment requested that, under the same project, the Bank Group should finance coffee development during 1974 and 1975, on the assumption that the Government would seek FAC financing for the separate six-year coffee development project proposed under the consultants' study to start in 1976. - 23 - 2.05 Following the Bank's appraisal mission visit to Togo in March/April 1973 and the decision meeting of May 1973, further discussions led to Government agreement to (a) one single project with co-financing by the Bank and FAC, and (b) despite Government preference for a more ambitious program, limitation of the project's scope to the planting of 4,400 ha of cocoa and 4,000 ha of coffee, because of: (i) limited availability through 1977 of planting material; (ii) the uncertain response of farmers; and (iii) the need for gradual build up of the capabilities of the executing agency (SRCC). 2.06 Other main issues raised during the formulation period were: (a) the relationship of project production targets with international agreements. This was considered to be satisfactory as even with the forecast project incremental production, Togo would be well within existing export quotas; (b) Government's view that the only means to achieve substantial and satisfactory planting or re-planting was to have it done by SRCC on force account. This the Bank could not accept because it would not give the farmers a stake in the project and would be twice as costly; and (c) the question of agricultural credit. In view of previous experience in West Africa generally and Togo in particular, the wisdom of including an agricultural credit component in the project was queried, inter alia by FAC, by the Bank's Agricultural Credit Adviser, and by the General Manager of SRCC. However, it was decided to include such a component, mainly on Bank insistence on its educational value. On the institutional side, the appraisal mission proposed that credit operations should be. the direct responsibility of a special department within SRCC, because of the weakness of the national agricultural credit agency (CNCA). A compromise solution was eventually adopted under which a new and separate CNCA project credit unit (PCU) was to be established, administered by CNCA but operationally responsible to SRCC. 2.07 In view of the number and nature of the issues involved and the fact that this was the Bank's first operation in Togo's agricultural sector, the project formulation period does not appear to have been over- long. Project description 2.08 The project represented a continuation of Togo's ongoing cocoa and coffee development program, initiated in 1971 with bilateral technical and financial assistance, which had established SRCC, started up appropriate research and the multiplication of planting material. Its objectives were to implement a program for assisting smallholders to improve and extend their cocoa and coffee plantings over the eight years 1974/75 through 1981/82 by: - 24 - (a) strengthening project institutions, particularly the National Cocoa and Coffee Development Agency (SRCC) and the National Agricultural Credit Agency (CNCA); (b) training SRCC extension agents and CNCA credit personnel; (c) conducting applied research under SRCC responsibility; (d) providing technical assistance and inputs under credit and grant arrangements to about 6,500 smallholders for the planting and maintaining until entry into production of 4,400 ha of cocoa and 4,000 ha of coffee; (e) constructing 50 km and rehabilitating 110 km of feeder roads and maintaining feeder roads in the project area during the project period; and (f) hiring consultants to: (i) advise CNCA on administrative structures and lending procedures for the project credit unit; and (ii) evaluate the impact of the project and prepare a possible follow-up project. 2.09 Project cost estimates were based on current experience and included: (a) a 10% physical contingency on investment and operating costs, other than staff salaries; and (b) price contingencies compounded annually by: 18% in PY1, 15% in PY2 and subsequently 12% per year on costs of civil works and buildings; of 14% in PY1, 11% in PY2 and subsequently 7.5% on equipment costs; of 10% in PY1, 9% in PY2 and subsequently 6% on operating expenses of SRCC and CNCA; and of 9% in PYI, 7% in PY2 and subsequently 5% per year on credit made to farmers. Total costs net of import duties and taxes during the six-year development period, 1974/75 to 1979/80 were estimated at US$10 million with a foreign exchange component of 38% or US$3.8 million equivalent, as summarised in the Annexed Appraisal Report table 1. 2.10 The proposed financing of the project was as indicated in the Annexed Appraisal Report table 2. The IDA credit (US$6 million), the FAC grant (US$1.7 million) and the Government contribution, (US$2.8 million including import duties and taxes of US$0.5 million) were to be deployed as follows: (a) US$7.13 million to be passed on to SRCC as grants to cover the costs of equipment, operating expenses, training, the feeder road program, applied research, insecticide treatment of new cocoa plantings, and the project evaluation study; (b) US$2.91 to be on-lent by Government to CNCA to cover the cost of sub-loans made to farmers by CNCA and equipment and administrative expenses. This subsidiary loan would be for a 13 year term bearing interest of 1% and with a grace period of six years for repayment of principal. Then terms were calculated on a basis that was intended to ensure that the PCU's cocoa and coffee lending operations under the project were financially autonomous; - 25 - (c) US$0.06 million to be passed to CNCA as grants to cover the cost of the organisational study; and (d) US$0.40 million to be retained unallocated as a contingency reserve. 2.11 The IDA credit of US$6 million was granted on standard terms, with a closing date of December 31, 1980 and with principal repayments to commence on December 1, 1984 and to end on June 1, 2024. 2.12 The project's primary benefits were to be the increases in production and exports of cocoa and coffee and the foreign exchange earnings these would generate, estimated to rise to about US$10 million annually by 1986. Without the project, Togo's cocoa and coffee production was expected at best to stagnate. While Togo was already largely dependent on these two cash crops, environment and current levels of technology precluded diversification into economically more rewarding alternatives in agriculture. 2.13 This contention was supported by the appraisal mission calculation of the projct's economic rate of return. Costing family labor (re- presenting 70% of total labor requirements) at the then current agricultural wage rate of CFAF 150/manday, and taking a conservative estimate of a project life of 28 years, the economic rate of return was estimated at 33%. With output prices and/or yields about 40% below appraisal estimates and costs 10% higher than basic assumptions, the return was calculated to be about 19%. Targets and goals 2.14 Planting schedules and yield estimates were as follows: Planting schedules and yield forecasts A. Planting Schedules 1975/76 1976/77 1977/78 1978/79 1979/80 Total ha Cocoa 200 700 1,500 2,000 - 4,400 Coffee 300 700 900 1,000 1,000 4,000 B. Yield Forecasts 1/ 2/ Year Nl- N2 N3 N4 N5 N6 N7 N8 N9- N10 N11 Yields in kg/ha Cocoa - - - - 200 400 600 800 1,000 1,000 1,000 Coffee - - - 300 900 1,400 1,500 1,500 650 900 1,200 1/ Nh = Year of Planting 2/ N9 = Year of Major Prunning. - 26 - 2.15 These yields were based on (a) best estimates of the potential of improved planting material to be used, (b) improved maintenance due to close extension supervision and (c) in the case of cocoa, use of 200 kg rock phosphate in year of planting only. In the absence of experience under Togolese conditions, the yields forecast were based on Ivory Coast field results reduced by 30%. 2.16 The main incentive to the adoption of the improved methods was the provision of credit by the PCU of CNCA to those farmers selected and approved by the SRCC extension service. Based on farm model calculations, credit terms were fixed as follows: (a) nine year loans at 8% per annum; (b) grace periods, during which interest would be capitalized of: (i) five years for cocoa; (ii) four years for coffee; and (c) Credits totalling: (i) for cocoa CFAF 40,000/ha (US$160) of which CFAF 16,250 would be in kind; and (ii) for coffee, CFAF 73,000/ha (US$292) of which CFAF 22,000 would be in kind. Provision was made for these amounts to be adjusted periodically in line with actual costs and experience. It was estimated that during the project period, some 6,500 farmers would take up such loans and credit disburse- ments by CNCA/PCU were projected to total FCFA 587 million (US$2.3 million) during the project period. 2.17 To achieve the expected (90%) rate of credit recovery it was proposed that the Agricultural Commodities Marketing Agency (OPAT) would make appropriate arrangements with its licensed buyers to collect credit repayments on behalf of CNCA at point of sale, or if this failed CNCA/PCU would be licensed by OPAT to buy cocoa and coffee from participating farmers. Sector Significance 2.18 During the project period (1975-80), estimated project induced cocoa replantings (4,400 ha) would have represented 8.5% of the total area under cocoa (51,500 ha). For coffee, replantings of 4,000 ha would have covered some 10% of existing coffee areas (35,600 ha). At full development by 1982, project induced cocoa plantings would produce about 4,400 t of cocoa annually, equivalent to 30% of estimated 1973 production. In the case of coffee, total production generated by the project would stabilize by 1988/89 at about 4,800 t equivalent to some 70% of estimated total production in 1972-1974. - 27 - Other Donor Agency Roles 2.19 In view of the part it had played in the preliminary phase (paras 2.0 and 2.02) and the limitations on Government contributions to project financing, the Bank pressed for co-financing by FAC. This took the form of a grant of FF 8.5 million (US$1.7 million) which as indicated in Annex table 2 was deployed as follows: Deployment of FAC grant US$ % of '000 Cost Finances SRCC Expatriate Staff 720 100% Road Construction and Maintenance 380 25% Project Evaluation Study 85 40% Applied Research 515 40% 1,700 The FAC grant made no contribution to the costs of the PCU because of doubts as to the project's credit component (para 2.06(c)). III. IMPLEMENTATION Effectiveness and Start Up 3.01 Conditions of effectiveness were that: (a) a consultant had been hired to carry out a study on the organisation and methods of CNCA (and the PCU in particular) under terms of reference acceptable to IDA; (b) the Government of Togo had contracted from FAC a grant of French FF 8.5 million to assist in financing part of the project; (c) a satisfactory grant agreement and a subsidiary loan agreement had been concluded between Government and SRCC and CNCA respectively; and (d) the initial deposits of CFAF 50 million and CFAF 25 million had been paid into the two special accounts from which SRCC and CNCA/PCU would be budget funded. 3.02 Progress in meeting these conditions was relatively slow due to unfamiliarity with Bank procedures. Although hastened during the first supervision mission (November 1974), it was necessary to defer the effecti- veness deadline from December 6, 1974 to April 4, 1975 and the credit became - 28 - effective on March 12, 1975. This three-month delay had little or no adverse effect on the project mainly because the executing agency (SRCC) was already established and in operation and so able to plan its operations for PY1 (1975/76). There was, however, a one-year delay in the start-up of credit operations. Since these involved the setting up of a new unit (the PCU) which had to await the findings of the consultant's study (para 2.08(f) (i)), it seems that the appraisal report was optimistic in thinking that this could be accomplished in time for loans to be made in 1974/75. Revision 3.03 Following a comprehensive review of progress at the time of the appraisal of the repeated project (Sept/October 1978), a reallocation of disbursements by category was agreed between IDA and the Government on February 5, 1979, as set out in Annex table 3. 3.04 Project areas based on proposals in the preparation report had to be modified as more experience was gained both as to soil suitability and farmer response. The utilisation of compound fertilizer (20-10-10) on coffee-plantations at a rate of 400 kg per ha and the production of more coffee plants at central nurseries than at village centres were the main technical variations to appraisal report proposals. Physical Progress General Infrastructure 3.05 Against appraisal estimates of the construction of 50 km of new feeder roads and the rehabilitation of 110 km of existing feeder roads, the project succeeded in building and repairing mostly by force account 196 km exceeding targets by 22%. In fact, this is an understatement, since in order to avoid erosion and degradation, many existing roads had to be re- traced to limit slopes to 4-5%, so that of the total of 221 km more than 80% represented new construction. In addition, an average of 74 km of feeder roads were maintained each year. 3.06 The cost of road construction per kilometer, including deprecia- tion of equipment, rose from CFAF 1,385,000 (US$5,500) in 1975 to CFAF 1,990,000 (US$9,000) in 1980; an average increase of 9% per annum. The cost of road maintenance in 1980 was CFAF 48,540 (US$220) per kilometer. These low costs which appear to have been less than 40% of comparable contract prices, reflect the efficiency of SRCC's road service and vehicle maintenance operations; its roads section is headed by a competent Togolese engineer. 3.07 The project's road development has been essential adjunct to SRCC's main planting operations through the opening up of previously inaccessible areas and has additional social benefits that are difficult to qualify. The success of the road program received tangible recognition through a grant by OPAT of CFAF 53 million (US$240,000) in December 1978 for the purchase of a Caterpillar D7 and a grant of US$25,000 from bilateral aid for the Bena-Gabe-Benali road in the Akposso region. Farm Investments (a) Method of operation 3.08 To participate in programs, farmers selected from candidates - 29 - requesting assistance from SRCC extension agent have first to form a group of at least five members and pay a contribution of CFAF 500 (US$2) to show their willingness to follow the program laid down by the extension agent including, where appropriate, the construction of village nurseries. A satisfactory survey by SRCC's extension service as to the suitability of the plot offered for cocoa or coffee planting, together with a satisfactory report on the farmer's credit worthiness by PCU credit agents are necessary before a loan is granted by CNCA. These loans pass via the group but are always to individual farmers and for specific "plantations" averaging bet- ween 0.5 and 1.0 ha in size. A farmer may and many do receive more than one loan. Loans are given according to a standard scale per ha (para 6.08) partly in kind (planting material and fertilizer) and partly in cash, released over three years but only after confirmation of satisfactory performance by SRCC extension agent. In the case of cocoa, the farmer also received a cutting out compensation grant, paid for by OPAT. (b) Coffee 3.09 The areas planted under SRCC project programs are given in Annex table 4: 3.10 The plantings achieved (5,740 ha) thus exceeded the appraisal estimate of 4,000 ha by 43%. The number of planters indicated in Annex table 4 refer to the number receiving loans and as indicated in para 3.08, a certain number have received more than one loan over the project period. 3.11 Problems encountered included: (a) difficulties in getting farmers to follow correctly planting procedures and timing; (b) poor selection of soils in early years, which together with droughts experienced in 1976 and 1977 led to a high proportion of these areas being abandoned; (c) difficulties in assuring timely preparation and availability of planting material; and (d) lack of maintenance and use of fertilizer at the end of the credit period i.e, from the fourth year onward. (c) Cocoa 3.12 This programis based onreplantingold cocoaplantationswithhybrid Amelonado/Upper Amazon varieties. Seed supplies come from 16 ha planted between 1971 and 1974 at IFCC nurseries at Zozokondji. 3.13 The areas replanted under the project are given in Annex table 5. 3.14 Compared with appraisal forecasts of 4,400 ha the project achieved only 49% due principally to the following factors: (a) low cocoa prices (CFAF 150/kg) and low cutting out grant (CFAF 10,000/ha) during the first three years lessened incentives to - 30 - replant. The raising of the cocoa price to CFAF 220/kg for the 1978/79 season and the increase of the cutting out grant to CFAF 60,000 in 1979 led to somewhat higher planting rates in 1979 and 1980; (b) reduction in improved seed supplies from the IFCC nursery at Zozokondji due to the droughts of 1976 and 1977. This has been countered by the installation of drip irrigation over 9 ha since 1977/78; and (c) above all, by the constraints imposed by the land-tenure systems operating in the main cocoa-growing area, the Litime, in the north of the project area on the border with Ghana. Here a com- plicated tenant/sharecropping system prevails, with absentee landlords living on the plateau of Akposso (and sometimes in Ghana) being content to claim as high a proportion of the crop as possible, while tenant/sharecropper rights are ill-defined. As proposed at appraisal, attempts have been made to study the problem further leading to the introduction of a standard tenancy contract to facilitate grant and loan procedures for replanting but progress in its acceptance and use is slow. 3.15 As an alternative approach to the problem in the Litime, Govern- ment authorised SRCC to take compulsory measures to cut down old plantations after notification of a replanting program. Because of the local opposition it engendered, this program had to be suspended in March 1980. (d) Processing and marketing 3.16 As part of the mid-term evaluation of the project prior to appraisal of the follow-up project, a study was carried out in 1978 by IFCC into possible methods of improving coffee decortication. It recommended the installation of large scale automated plants or alternatively some 75 Brazilian-type hullers, and three of these are being installed on a trial basis; one to be operated by a cooperative and the other two by private entrepreneurs. Their performance is undoubtedly superior to that of the small and often worn-out village decorticators presently in use but their requirements of a minimum throughout of 100 t of green coffee per year inevitably means that farmers will have to transport their coffee over longer distances than at present to get it decorticated. It is as yet too early to judge the results of these trials. 3.17 A marketing study, carried out in 1977 by consultants as part of the preparation for the second project, recommended the establishment of village group centres, fixed dates for cocoa and coffee markets and for only one licensed buyer to operate in each zone. Arrangements on these lines would, it was hoped, facilitate recovery by PCU of loan repayments at the time the farmer sold his produces. In addition, such village group centres could serve as a focal point for extension work, its store could be used for fertilizer distribution and the system might lead to the eventual growth of village cooperative units. It now appears that such growth might well be enhanced, if, as an alternative to the Brazilian-type decorti- cators described in the preceding paragraph, village centres were helped to purchase and operate smaller-scale decorticators, although these machines are admittedly less efficient. Twenty-two centres were established - 31 - on a trial basis in 1978/79 but their operations were suspended in 1980 because of opposition by OPAT which suggested as an alternative the creation of an organization of licensed buyer who would assist with credit recoveries. This arrangement was included in and made a condition of the second credit agreement (Credit 945-TO) but was not implemented until 1980. As indicated in Annex 1, it has not succeeded as yet in contributing to any major improvement in the rate of credit recoveries. (e) Special Studies 3.18 Special studies financed under the project covered: (a) the organisation and procedures of the CNCA/PCU: this was carried out by a consulting firm and its recommendations were adopted. The credit recording system, which has proved to be unduly sophisticated and involves much duplication, is currently under review for simplification together with possible use of computer processing. (b) marketing and coffee decorticating as part of the preparation of the second project. These studies were carried out by a local consulting firm and the technical services of IFCC respectively and their results are analysed in paras 3.16 and 3.17 above. Procurement and Construction 3.19 The procurement procedures set out in para 2.12 were adhered to but the Bank agreed to minor modificaions were justified in view of limited representation of suppliers in Togo and the need for standardization of equipment and vehicles. Major sources of material supplies were: Vehicles France Irrigation Equipment Germany Roadwork Equipment USA Tractors UK 3.20 As regards road standard specifications, CCCE suggested in June 1980 that the technical specifications of the feeder roads Constructed by SRCC's road department probably exceeded the levels justified in the context of the expected future traffic. Appropriate re-designing would therefore allow some economies to be made in future, but the poor quality of the laterite which has had to be used as topping could adversely affect the durability of the roads and thus lead to high maintenance costs. Costs and Disbursements (a) Total and Unit Costs 3.21 Total project costs are summarised below: Summary of Total Project Costs Appraisal Difference Estimate Actual Amount % All in CFAF Million SRCC 1,782.5 2,116.4 +333.9 +18.7% CNCA/PCU 742.5 628.2 -113.8 -15.4% Unallocated 100.0 2,625.0 2,744.6 +119.6 + 4.6% - 32 - The savings shown for CNCA/PCU mask the fact that its operating costs increased for a lower than estimated level of lending and the effects of this are detailed in para 6.05. As regards SRCC, its costs, excluding road construction and maintenance, can be taken as representative of planting assistance costs. On the basis of the appraisal forecasts, these were expected to amount to about CFAF 167,000 (US$750) per hectare; calculated on actual expenditures the cost per hectare totals CFAF 212,000 (US$940) -- an escalation of 25%. Road unit costs have been very satisfactory (para 3.06). 3.22 The overall increase of 4.6% was relatively small and was covered by provision in the follow-up project (Cr. 954-TO) for CFAF 201 million (US$0.9 million) for credit on plantations already started and for US$0.5 to complete plantations during the first half of 1980 with planting material produced in nurseries established at the end of 1979. Actual disbursements for these purposes under Special Action Credit No. 24-TO amounted to CFAF 157 million (US$715,000). Expenditure Categories and Financial Sources 3.23 A comparison of appraisal estimates of costs and actual expenditures by category and source of finance is given in Annex Table 6. This shows that with SRCC there was an overall increase of 19% largely due to higher than estimated expenditure on administrative costs (31%) and buildings (36%); road construction and maintenance costs were 30% higher, due largely to the extended work program, CNCA/PCU costs were less than estimated at appraisal but caused largely by a reduction in credits extended to farmers (para 3.21). 3.24 These results show that the contingency allowances were in general adequate. Schedules and Delays 3.25 The phasing of project disbursements is indicated in the following Table: Total Cumulative Project Disbursements Appraisal 1/ Actual as Year Estimates Actual - % of Estimates CFAF Million 1974/75 300 298 100% 1975/76 771 722 94% 1976/77 1,234 1,145 93% 1977/78 1,787 1,626 91% 1978/79 2,265 2,210 98% 1979/80 2,625 2,744 105% 1/ Extrapolated from differing financial years. 3.26 IDA disbursements are shown in Annex Table 7. - 33 - The disbursement delays in the first two years of the project were due largely to inevitable time-lags execution of programs for construction and to initial setbacks in the planting and credit programs. Exchange Rate Adjustments 3.27 Variations in the US$/CFAF exchange rate from CFAF 250 = US$1 in 1975 to CFAF 220 US$1 in 1980 largely accounts for the IDA credit covering ony 52% of total project costs as against an estimated 57% at appraisal. The short-fall was covered under the repeater project (para 3.22 above). Covenants 3.28 Credit conditions met were: Section of Credit Agreement Subject 2.03 Procurement 3.01 Implementation 3.02 (i) Accounts 3.03 Management 3.04 Insurance and proper use of proceeds 3.05 Reports and records 3.06 Land and rights in respect of land 3.07 CNCA to create PCU and to enter into agreement with SRCC to coordinate activities of PCU and SRCC. 3.08 Institution of land tenure survey in Litime area. 3.09 Training program 3.10 Organisation of farmers' groups 4.01 Accounts and audit. 3.29 Governments Quarterly Advances to SRCC under Section 3.02(ii) were frequently in arrears but this condition was eventually complied with before project completion. 3.30 The requirement under Section 4.05 that there should be annual consultation between Government and IDA before producer prices for cocoa and coffee were fixed was never met despite repeated reminders by supervision missions. During the project period, producer prices were fixed by Government as follows: Season Coffee Cocoa (CFAF/Kg) (CFAF/kg) 1974/75 105 115 1975/76 115 120 1976/77 125 130 1977/78 145 150 1978/79 180 200 1979/80 200 220 1980/81 200 220 - 34 - The fact that producer prices nearly doubled over the project period even though at the end they were only about one third of the FOB values was the main reason for the Bank not pressing for compliance of a credit condition that impinged on a politically sensitive area. In real terms, producer prices rose by an estimated 27% for cocoa and 21% for coffee. IV Agricultural Impact Incremental Output 4.01 Given the time lag before the trees come into bearing (three years in the case of coffee and four years for cocoa), it is only possible at this stage to give preliminary estimates of aggregate increases. The yields from new plantings projected at appraisal as detailed in para 2.15 have already been shown to be over-optimistic and were scaled down in the follow-up project as indicated below: First and Second Project Average Yield Estimates 1/ Year Ni - N2 N3 N4 N5 N6 N7 N8 N9 N10 Mil Yields in Kg/ha 1ocoa First Project - - - - 200 400 600 800 1,000 1,000 1,000 Second Project - - - 30 100 300 500 600 750 750 750 Coffee First 2 Project - - - 300 900 1,000 1,500 1,500 650- 900 1,200 Second Project - - 60 350 600 8O 850 30&- 500 800 750 1/ Ni = Year of Planting. 2/ Year of major pruning. These revised yields were based on SRCC experience which showed that for coffee 25% of farmers would have an above average performance, 50% would be average and 25% below average; whereas in the case of cocoa, only 7% had above average performance, 57% were average and 36% below average. 4.02 Calculated on the basis of these revised yields, incremental production from project plantings is likely to be as shown in Annex table 8. 4.03 Exports by OPAT over the project period have been as follows: - 35 - Production Marketed by OPAT 1974-1980 in Tonnes Cocoa Coffee Season Main Interm. Total Graded Non-Graded Total (October- Crop Crop (September) 1974/75 11,736 2,847 14,583 6,406 1,288 7,694 1975/76 14,545 3,240 17,785 6,218 2,294 8,512 1976/77 11,334 2,645 13,979 9,366 1,019 10,365 1977/78 14,622 2,047 16,669 4,138 561 4,699 1978/79 10,244 2,358 12,602 4,368 1,775 6,143 1979/80 11,661 4,469 15,554 9,916 2,035 10,383 1/ 1/ 1980/81 14,075 7,843 - 279 - 1/ Totals to June 30, 1981. As indicated, any contribution by project-induced production would have been minimal and limited to the 1979/80 and 1980/81 coffee marketings. Allowance has also to be made for the effects of unrecorded imports from Ghana in any interpretation of the above figures. 4.05 The net incremental production is due to replanting by higher yielding varieties and improved cultural practices, rather than extension of area since land suitable for cocoa and coffee production is strictly limited. Past experience suggests that little or no replanting and improve- ment would have taken place without the project. 4.06 At appraisal, it was estimated that project-induced net foreign exchange earnings would rise to about US$10 million annually by 1986 and thereafter remain at about this level. This objective is still likely to be achieved despite the reduced estimates of net incremental output at para 4.02 because current world market price projections are above the levels forecast at appraisal. Technological Change 4.07 The project's technical targets proved to be feasible but there was a varied response by farmers. This is not surprising since what was demanded of the farmer was a complete change of attitutde and practice. Instead of only visiting his cocoa and coffee trees in order to harvest what fruit they bore, he was required to plant carefully the new trees and care for them systematically (weeding and utilisation of fertilizer) particularly during the establishment period before the trees reached full production. The average appraisal yield targets have been shown to be much too ambitious (para 4.01) mainly because the degree of adoption of the new methods was over-estimated. - 36 - 4.08 At appraisal, it was estimated that some 6,500 farmers would participate in the project. The total number of farm plots covered was nearly 11,000 for coffee and over 3,300 for cocoa (with an average size of about 0.5 ha) but a large number of farmers have participated more than once in respect of different parts of their holding. 4.09 The farmer selection procedure has been described in para 3.08. The progressive reduction in the proportion of new plantings that were subsequently abandoned (Annex tables 4 and 5) reflects improvement in the selection process as the extension service gained in experience. There was a high degree of uniformity in project participants for coffee planting but land tenure problems in the Litime region were a major cause of the cocoa replanting program's failure to achieve its targets (para 3.14). Overall Assessment 4.10 The project is beginning to have a significant physical and social impact, particularly in the coffee growing areas as evidenced by the numbers of new applications to participate in the repeater project. The appraisal report envisaged a larger area being replanted in cocoa than planted in coffee, but in view of the constraints encountered in the cocoa regions there has been a shift in emphasis to coffee. This shift can be justified by the fact that, taking into account the existing areas and the economic life of 20 years for a coffee tree and 35 years for cocoa, the annual rates of replanting required to maintain production potential are 5% or 2,500 ha for coffee and 2.8% or 1,140 ha for replanting cocoa. Coffee planting under the project reached 1,455 ha in the last year and is approaching 2,000 ha under the follow-up project. V. RATES OF RETURN 5.01 Using its forecasts for yields, prices and costs, costing family labor at the then current agricultural wage rate of CFAF 150/man-day and assuminga project life of 28 years, the appraisal report estimated that the economic rates of return would be: (a) for the cocoa component 27% (b) for the coffee component 40% (c) for the project as a whole 33% If prices and/or yields were 40% below appraisal estimates and costs were 10% higher than basic assumption, the return for the project as a whole would remain satisfactory at about 19%. 5.02 However, in these calculations no allowance was made for production foregone from trees cut out on areas replanted. When this omission is rectified, the appraisal report economic rates of return become: (a) for the cocoa component 23% (b) for the coffee component 38% (c) for the project as a whole 30% and - 37 - (d) for the project as a whole with yields and/or prices reduced by 40% and a 10% increase in costs the rate becomes 19%. 5.03 The economic rates of return have been recalculated in constant 1980 terms using actuals for the project period (i.e. to 1980/81) and EPDCE commodity price forecasts set out in memo dated June 22, 1981 for subsequent years, costing family labor at 1980 current level of CFAF 450/man-day and using net conversion factors employed in Second Project appraisal. The resulting rates of return are: (a) for cocoa component 8% (b) for coffee component 36% (c) for project as a whole 22% and (d) for project as a whole with for post 1980/81 projections a 10% increase in costs and a 40% reduction in yields and/or prices 19%. VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT Institutional Design and Growth 6.01 The project aimed at strengthening the SRCC - the main executing agency - and establishing a special unit of CNCA - the project credit unit (PCU) to handle lending to farmers approved and supervised by SRCC's extension service. SRCC, established by Decree No. 71/165 of November 1971, is responsible to the Minister of Rural Development, who is the chairman of its governing board. As a state organisation it had administrative and financial autonomy subject to general guidelines laid down by the Ministry of Industry and State Enterprises. 6.02 Adequate project funds were provided for the operating costs of SRCC for extension of office buildings and staff quarters, for vehicles and equipment for applied research, for the production and distribution of improved planting material and for the feeder road program. In addition, SRCC was responsible for the execution of the anti-capsid spraying campaign throughout the cocoa areas for which OPAT provided CFAF 524 million (US$2.3 million) during the project period. OPAT also financed the cocoa cutting out compensation grants to farmers at a total cost of CFAF 37 million (US$160,000). 6.03 At appraisal, under its General Manager, who was directly responsible for administration and accounting, SCC had three departments: (a) Field Operations Department which through seven sector offices was responsible for both production and distribution of planting and the extension service, (b) the Road Department, and (c) the General Services Department. Under the project, five additional sectors were created, four for coffee and one in the cocoa growing area. The increase in SRCC staff - 38 - from about 200 to 400 during the project was more than projected at appraisal largely because more SRCC operated cantonal nurseries were established instead of farmer operated village nurseries; the extra cost being largely recovered in the price charged to the farmer. 6.04 SRCC contracted with IFCC for the execution of the necessary applied research, particularly as to the relative suitability for different areas of the various newly introduced planting material and into the best accompanying cultural practices. This arrangement worked reasonably well but to ensure that IFCC's research programs did not stray from adaptive to "pure" research, it was decided to establish in 1980 a technical committee to review the research programs of both IFCC and IRAT (for food crops under the follow-up project). 6.05 The Project Credit Unit was established in 1975 and operates under an agreement between CNCA and SRCC under which it is administratively responsible to CNCA but operationally responsible to the General Manager of SRCC. Its administrative staff are located in SRCC administrative headquarters at Tove near Kpalime with one or two credit agents located in each of SRCC's extension service sector offices. This had achieved the very close coordination of operations envisaged at appraisal. PCU's total staff has increased from 17 in 1975 to 21 in 1980. The unit is well- managed and accounts are punctitiously maintained. Measures are in hand, including possible use of a computer, to give field staff more time to maintain contact with borrowers. As CNCA staff they do not enjoy the same benefits (notably, bonuses based on good performance) as SRCC personnel but attempts are being made to rectify this. PCU's investment and ope- rating costs, taken together, have exceeded appraisal estimates by 22% partly because of the inevitable complexity of dealing with separate loans for each small plot replanted and partly because the recording system adopted on the recommendations of the consultants' study of 1975 is unduly cumbersome. Disbursements against approved farm loans have been 23% lower than expected and as a result the ratio of operating cost to loans disbursed stands at the high level of 30% and PCU can no longer be regarded as financially self-sufficient as envisaged at appraisal. Supporting Services 6.06 By the end of the project period SRCC had some 120 extension agents, usually 10-15 per sector, which meant that each agent had an average 120 individual loans to appraise and supervise which was generally in line with appraisal forecasts. Farm Credit 6.07 Those portions of project funds covering PCU's investment and operating costs and loans to farmers totalling an estimated CFAF 727 million (US$2.9 million) were on-lent by Government to CNCA for a period of thirteen years including a six-year grace period at 1% per annum on the out- standing amount. Loans to farmers were for nine years carrying interest at 8% per annum and with grace periods of five years for cocoa and four years for coffee, during which interest would be capitalized. With the advent of the follow-up project, these terms were varied: the rate of interest was increased to 8.5% and a once and for all commission of 2% levied for CNCA's guarantee fund and the terms extended to 9 years (with 4 years of grace) for coffee and 10 years with 6 years of grace for cocoa. - 39 - 6.08 The initial loan rates per hectare were CFAF 73,000 (US$292) for coffee and CFAF 40,000 (US$160) for cocoa were justified in the light of the farm models established at appraisal. Subsequently, to take into account the increased costs of inputs and labor, these levels were raised as follow: Loan Rates in CFAF per Hectare Coffee Cocoa 1977 90,000 50,000 1979 90,000 66,000 1980 100,000 80,000 6.09 Farm loan disbursements were made partly in kind (fertilizer and planting material) and partly in cash over a three-year period and subject to confirmation by the SRCC extension service that proper planting procedures were being followed. SRCC was responsible for producing and distributing improved planting material and the price changed to the farmer in the loan involved a subsidy of the order of 50% borne by Government. SRCC also bought fertilizer from the National Fertilizer Procurement Agency and distributed it to participating farmers at the Government subsidised price of FCFA 15,000 (US$60) per ton. As loans were disbursed CNCA/PCU reimbursed SRCC for the inputs supplied but delays inherent in this procedure are beginning to cause cash-flow problems for SRCC. 6.10 Loans approved during the period 1975-1980 totalled over CFAF 608 million (US$2.7 million) are detailed in Annex table 9. Of this total, CFAF 454 (US$2.0 million) had been disbursed by end 1980. The average size of loan approved was CFAF 44,000 (US$200). 6.11 Given the traditional land tenure system, land could not be taken as colateral and the loans had to be evaluated by PCU staff on an assessment of the applicant's credit-worthiness. Because of poor past experience with cooperative enterprises, it was not possible to insist on mutual responsibility by group members and all loans were granted on an individual basis. The method of credit recording by plantation plot rather than by planter did not facilitate assessment of past performance when a farmer applied for a second loan. 6.12 In an attempt to foster improved care of coffee plantations after the end of the medium-term credit period, CNCA/PCU provided seasonal credit out of its own resources to finance the purchase of fertilizers. A total of CFAF 2.6 million (US$11,200) was disbursed for such seasonal loans of which CFAF 2.0 million (US$9,000) or 79% had been repaid by March 31, 1981. 6.13 Of the medium-term loans disbursed under the project, because of the periods of grace, only the first two instalments of coffee loans granted in 1975/76 and the first instalment of coffee loans approved in 1977 have so far become due for repayment. For some 4,500 such instalments totalling CFAF 58.9 million (US$260,000), repayments totalled CFAF 26.7 million (US$120,000) or just over 45%. (Annex table 10). Factors accounting for this high rate of delinquency include: - 40 - (a) effects of the droughts of 1976 and 1977; (b) abandonment of some early coffee plantations which, through lack of experience, had been started with unsuitable clonal varieties and/or on marginal soils; (c) lower yields caused by insufficient maintenance and use of ferti- lizer after the period of supervised credit; (d) tendency on the part of some farmers to treat the credit as a gift rather than a loan; and (e) poorly understood marketing system. 6.14 Insufficient data exists to quantify accurately the relative import- ance of these factors. It is suggested that on account of (a) and (b) above, the level of instalments should be reduced by CFAF 11 million (US$50,000) which would bring the rate of recovery ip to 50%. Equally, this implies that CNCA/PCU should write-off some CFAF 55 million (US$250,000) from its portfolio. 6.15 It is however clear that the present uncontrolled marketing system which permits the farmer to sell his cocoa and coffee to any licensed buyer at any time and at any place fails to provide PCU with any support in its recovery efforts particularly with those who come under category (e) above. Attempts have been made to improve the situation through the establishment of village group centres and more recently through the amalgamation of the expatriate buying firms into one organization (STCP) in which OPAT has a share; but so far their results have been small because of reluctance of Government authorities, particularly OPAT, to make any radical change in a system that, from the strictly marketing point of view, works satisfactorily. 6.16 The only sanction available to PCU would be to refuse to extend any further credit to areas with a poor repayment record, but this could have an adverse effect on SRCC's future replanting programs under the follow-up project. As indicated by the detailed repayment figures in Annex table 10, there is considerable variation in loan repayments both within and between sectors. Financial Performance and Returns 6.17 At appraisal, it was calculated that the margin available to PCU would enable it to be financially self-supporting provided the rate of loan repayment arrears was kept to 10%. At the time of appraisal of the repeater project, it was recognized in the light of higher operating costs and repay- ment delinquency, this was no longer feasible and so under Credit 945-TO, Government agreed to make available through OPAT the equivalent of an extra 2-1/2% on loan interest or all loans to farmers payable to enable PCU to be self-supporting. Government Income and Deficits 6.18 Government cash flow projections have been recalculated to take into account not only actual cost figures and revised output forecasts but also the cost of compensation grants for cocoa cut out and the effects of credit repayment arrears continuing at 50%. These revised projections are compared with those forecast at appraisal in Annex table 11. - 41 - In both cases, the annual cash flow is forecast to have become positive in 1979/80 but the revised cumulative cash flow by 1989/90 is only 65% of that forecast at appraisal mainly because of (a) higher levels of revenues lost in early years due to unexpectedly high world market prices, (b) lower incremental production in later years, and (c) lower assumptions as to level of future OPAT surpluses as a result of lower world market price pro- jections. Staff and Training Issues 6.19 Only a very small provision CFAF 24 million (US$95,000) (represent- ing less than 1% of total cost) was made for training. Actual expenditure on training at CFAF 12 million (US$48,000) was even less. The bulk of the field staff had to be recruited and trained on the job. The fact that SRCC was able to pay bonuses based on performance was a valuable incentive and it was unfortunate that PCU field staff could not, because of CNCA's status, enjoy the same opportunity. Foreign Technicians 6.20 In SRCC the posts of General Manager, of Head of Field Operations and Extension Services and of Chief Mechanic were already filled at the commencement of the project by expatriates seconded by IFCC. Under the project, they continued in these posts and were paid for out of the FAC contribution. It was envisaged that Chief Mechanic's post would be filled by a Togolese at the end of PY5 but the expatriate has continued in the post as part of the follow-up project. Similarly, the post Head of Field Operations and Extension Services was to have passed to a Togolese at the end of PY4; in fact, the expatriate remained as Head until end 1980, when the Department was divided into two under the follow-up project and expatriates were appointed to head both the new Extension Service and Training Department and the Planting Material Production Department. 6.21 To the technical competence and continuity of service of this expatriate staff the project owes much of its success. In particular, the General Manager, as project director, has maintained a high standard of management and the degree to which cost estimates have been adhered to is largely due to the personal control he had exercised over financial matters. In this process it is perhaps not surprising that he has on occasion been criticised for inflexibility. The General Manager is assisted by a Togolese deputy and has as special adviser, a former Minister of Rural Development. 6.22 An expatriate credit specialist gave technical assistance to CNCA and served as Head of the PCU for the first three years when he handed over responsibility to his Togolese deputy. For the next two years, he remained as advisor, financed 50% under the project and 50% under the Togo Maritime Region Rural Development Project. Accounting and Reporting 6.23 Accounting and progress reporting procedures have been satisfactory and have complied with credit conditions. The fact that the project year ran from July 1 to June 30, while for Government, SRCC had to prepare accounts and reports for the calendar year was a complication that has been rectified in the follow-up project. - 42 - 6.24 Some preliminary monitoring and evaluation studies were carried out under the direction of the special adviser to the General Manager. Under the follow-up project, this work is to be strengthened after consultant's studies have led to the adoption of key indicators to monitor project progress and in particular to gain more information as to farmers' response to technical recommendations and financial incentive- as well as acceptance of the new landlord-tenant contract for cocoa replanting in the Litime area. Institution Building 6.25 In SRCC a very well-organized structure has been built up which successfully links research, improved planting material production, extension and research for a limited purpose - cocoa and coffee replanting in a specific region. Its public image is good and its standing in Government circles and with provincial administrations is high. But the project's only linkages with OPAT were for that organization to continue to finance the cost of the anti-capsid campaign and the cutting out compensation paid to cocoa farmers. Failure to provide more specific linkages in respect of price policy and marketing arrangements have weakened credit recovery by PCU and represents a problem still to be satisfactorily resolved under the follow-up project. This is discussed more fully in Section IX. VII. SPECIAL ISSUES Substitution and Diversion 7.01 The evident lack of replanting by cocoa and coffee farmers in the previous decade suggests that without the project's credit element little or no replanting investment would have taken place particularly in view of the Government policy of fixing producer prices at low levels. The high degree of supervision of the use of each tranche of farmer's credits has minimised the risk of diversion. 7.02 The PCU is practically an autonomous financial unit of CNCA, and there is no evidence to suggest that project funds have been diverted to other unplanned purposes. Weather and Other Risks 7.03 Severe droughts in 1976 and 1977 badly affected the first years coffee plantings and has to be taken into account in assessing the low initial rate of loan repayments (para 6.13). The strong demand for participation in this and the follow-up project suggest that, in areas of proven potential, farmers are willing to accept the risk of drought recurrence in the future. 7.04 These droughts also virtually eliminated the supply of cocoa seedlings from the IFCC cocoa nursery at Zozokondji. As a safeguard against any recurrence, a drip-irrigation system financed under the project has now been installed there. - 43 - Research and Technical Availabilities 7.05 The technical possibilities for change through the use of improved planting material and cultural techniques were correctly identified at appraisal, but: (a) the time necessary to select coffee planting material appropriate to differing soil and micro-climates within the project area was under-estimated; (b) the use of rock phosphate in cocoa was discontinued but the need to use fertilizer on the new coffee plantations was only subsequently confirmed; (c) the use of plantain as a temporary shade for new cocoa showed that the planting of gliricidia hedges was unnecessary and was discontinued; and (d) inadequate allowance was made for the time lag involved in changing participants from mere fruit gatherers to planters in the true sense of the term. Under the project, SRCC was responsible for the adaptive research carried out by IFCC and the resultant close liaison between research and extension facilitated the adaption of the project program to meet () (b) and (c) above. More time is still needed for the change at (d), as evidenced by the failure of many farmers to continue proper maintenance and fertilizer usage on new coffee plantings after the supervised credit period is ended. Sector Influences 7.06 In an attempt to ensure a proper phasing of Government policy on prices and subsidies, project management relied on assurances that IDA would be consulted before producer prices were fixed. Project management had little or no leverage in this matter and the Bank failed to secure compliance with the relative covenant (para 3.30). As a result, lending terms and conditions to farmers had to be varied to ensure that they reflected true repayment possibilities (para 6.08). Replication 7.08 The initial success fo the project was judged after careful appraisal in 1978 to justify the mounting of a larger repeater project, partly financed by IDA Credit 945-TO. Provided the problem of securing adequate credit recoveries can be solved, there is likely to be a need for the project to be continued until the greater part of the cocoa and coffee areas are replanted with higher-yielding stock. As the executing agencies gain experience, sufficient Togolese technicians should be available to take over progressively management responsibilities from foreign technicians. Settlement and Other Issues 7.09 No settlement issues were involved, but the land tenure problem in the Litime area (para 3.14) proved to be much more difficult to solve than was envisaged at appraisal and this has been a serious constraint to the cocoa replanting program. - 44 - VIII. CHANGES IN REPEATER PROJECTS 8.01 The project agreement provided that as soon as 1,000 ha of cocoa and 1,000 ha of coffee had been planted a study would be initiated to make recommendations, on which a joint Government/IDA/FAC decision should be taken as to whether a second phase project should be prepared. This evaluation was carried out by the Bank in 1977 when, although cocoa plantings were behind appraisal estimates, overall plantings were 98% of forecasts. This led to the preparation by SRCC, with assistance from RMWA and consultants' studies on marketing and coffee processing, of a repeater project, which was appraised in October 1978 giving rise to Credit 945-TO of US$14 million signed July 23, 1979 and effective June 11, 1980 with co- financing by FAC (US$3.5 million) CCCE (US$7.7 million in two tranches) EEC Special Action Fund (US$4.6 million) and Government (US$1.6 million) to cover a total estimated cost of US$31.4 million. 8.02 This Second Cocoa Coffee Development Project is a continuation of the first and over a five and a half year period aims at: (a) planting about 7,500 ha of coffee and 4,000 ha of cocoa by some 17,000 smallholders; (b) providing marketing facilities for plantains to be grown as temporary shade for young cocoa trees; (c) introducing improved food crops to be interplanted in cocoa and coffee and also grown outside plantations; (d) constructing low-cost storage space and providing post-harvest technical advice for cocoa and coffee in up to 80 villages; and (e) constructing and rehabilitating about 300 km of feeder roads and providing maintenance for roads built under both the first and second projects. 8.03 Basically the same organisation and management applies as developed in the first project with the addition of a contract between SRCC and the Research Institute for Tropical Agronomy and Food Crops (IRAT) covering applied research and the production of improved food crop seed. But shortcomings noted in the first project are addressed, notably: For SRCC (a) separation of plant material production and extension into two separate departments; (b) provision of more key personnel especially for the extension service; (c) increased provision for staff training; (d) creating a new post of Finance Director, to ease the burden on the General Manager and to facilitate his eventual handing over of responsibility to a Togolese; and (e) improved monitoring and evaluation. - 45 - For CNCA/PCU (a) measures to simplify administrative procedures and reduce operating costs; (b) increasing interest rates and payment to CNCA by OPAT of complementary interest at 2.5% p.a. on all loans to 8.5% p.a. to farmers to enable PCU to achieve cumulative financial equilibrium; and (c) establishment of an organization of licensed buyers to assist in credit recovery. As already indicated these measures have so far proved largely ineffective and the problem of reducing the present high delinquency rate overshadows the second project. It must, however, be remembered that at the time of appraisal of the second project (october 1978), few loan repayments had yet become due and the magnitude of the problem was not yet apparent. 8.04 The results achieved by the first project fully justified a follow-on project although the Bank and its co-financers had to again resist Government demands for more ambitious targets. IX. BANK PERFORMANCE 9.01 The Bank's performance has materially contributed to the successes the project has achieved. The project design that emerged from appraisal has proved to be one that closely integrated adaptive research, production and distribution of improved planting material, extension and supervised credit disbursement, and through its feeder road improvement program, has facilitated the spread of these activities in the cocoa and coffee producing areas. Apart from matters relating to price policy and credit recovery (discussed below), covenants and conditions were enforced and productive. 9.02 Eleven supervision missions were mounted during the project period; roughly one every six months involving a total of some 19 man-weeks in the field and an average of 1.7 man-weeks per mission, with spells of continuity of personnel. These missions contributed materially to the solution of problems of implementation, supported project management where necessary in its approaches to Government, and paid particular attention to institution building, organisation and management and phase out aspects. Good working relationships were built up not only with project staff but also with Government authorities concerned with the project. 9.03 The project design proved to be generally efficient. A simple and sustained increase in producer prices would not alone have been sufficient to achieve the necessary replanting and investment it entails, because supplementary support, guidance and training are needed to change the farmer from a simple fruit collector into a cocoa or coffee planter in the proper sense of the term. This backing the project was designed to provide. Farm models were reasonably representative but the project was too optimistic in its forecasts of the rate and degree of acceptance by farmers of the technological changes they were required to adopt. Similarly the time needed to find and implement a satisfactory solution of the land tenure problem in the Litime was under estimated. As a result, - 46 - projected induced incremental production of cocoa at full production is likely to reach only 30% of the appraisal forecast. The corresponding figure for coffee is 63%. 9.04 Failure to allow for production foregone from trees cut out in areas replanted meant that the economic rates of return presented in the appraisal were over-stated to the extent of 3 to 4 percentage points. This probably did not effect judgment passed on the project proposals since the corrected rates are at satisfactory levels -- best estimate for the project as a whole being 30%; and when prices and/or yields were reduced 40% and costs increased by 10% the revised rate only fell to 19% (paras 5.01 - 5.03). 9.05 The fact that the project design did not provide for direct involvement of the Agricultural Commodities Marketing Agency (OPAT) has proved to be a major weakness particularly for credit cooperatives and recovery. OPAT, which has been in coperation since 1964 and which comes under the Ministry of Commerce, has three main function, viz.: (a) to advise on the fixing each season of producer prices for scheduled agricultural commodities to be purchsed for export, of which cocoa and coffee represent about 85% of the value of its turnover; (b) to organize and control the internal marketing of such commodities through the licensing of buyers, who are required to deliver their purchases to its port stores from which OPAT subsequently arranges for overseas shipment and sale; and (c) out of surpluses arising from its operations to stabilise producer prices and to finance research and development schemes. A detailed description of OPAT's operations and performance is set out in Annex I. From the summary given above, it is clear that OPAT's role has four major implications for the project, viz.: (i) on the level at which producer prices are fixed depends the degree of incentive given to the planters; (ii) the producer price level also materially affects the terms and conditions on which viable credit terms for replanting loans can be made; (iii) on the structure of OPAT's internal marketing system depends the possibility of linking credit repayments with produce sales; and (iv) OPAT is a legitimate source of project funding. 9.06 These implications were recognized at appraisal. On producer prices, a safeguard was thought to be provided by the covenant (Section 4.05 of the Development Credit Agreement No. 503-TO) under which Government undertook to consult with the Bank before such prices were fixed. But the covenant has not been complied with; nor, as yet, has the revised covenant in Section 4.05 of Development Credit Agreement No. 945- TO under which a cash crop pricing analysis unit was to be established in - 47 - OPAT, suggesting that this general approach to what is obviously a politically sensitive question has been unproductive. As regards linking credit repayments with produce sales, Credit 503-TO only required farmers to undertake to service their loans out of sales proceeds to an OPAT licensed buyer selected by the farmer and approved by PCU. Since this has been "more honoured in the breach than the observance" an additional covenant (4.12) of Credit No. 945-TO called for the creation before November 30, 1979, of an organisation of licensed buyers that would assure both good marketing and satisfactory credit recovery. Established only in August, 1980, this organisation (Societe Togolaise de Commercialisation des Produits Agricoles - STCP), has as yet made little impact on the problem, mainly because as long as the farmer can sell his cocoa or coffee when and where he likes to a wide choice of licensed buyer, it will be easy to evade attempts to ensure credit repayment at time of sale. OPAT is lukewarm in changing its present system which, from the purely marketing point of view, functions satisfactorily (Annex I). The attempt to create village group centers under the project had also to be suspended because of opposition by OPAT. 9.07 OPAT does assume responsibility for the funding of peripheral activities to the project, notably, the anticapsid campaign carried out by SRCC over most existing (and new) cocoa plantations. During the project period, for this purpose OPAT provided FCFA 658 million or nearly US$3 million. OPAT also bears the cost of the cutting out compensation grant to cocoa farmers totalling CFAF 30 million (US$130,000) during the project period and under the provisions of the second project pays an additional 2 % p.a. on outstanding loans to farmers to give PCU a sufficient margin to break even (para 8.03). 9.08 In essence under the existing project design, project management and particularly the PCU have little or no direct leverage to ensure wholehearted cooperation by OPAT and OPAT itself has similarly little or no direct interest in assisting in improving credit recoveries for another institution belonging to another Ministry. 9.09 This situation would have been improved if, for example, the project design had incorporated a provision that OPAT should guarantee farm credit repayments and reimburse PCU at the end of each year for all or part of arrears according to a mutually agreed formula. Under such a scheme, OPAT would have inducement to (a) endeavour to ensure that producer prices were fixed at incentive levels, and (b) the internal marketing system was modified in ways most likey to aid credit recoveries. 9.10 Unless there is an improvement in the rate of credit recoveries, the future of the PCU in particular could be in jeopardy. Bad habits spread fast and once some planters have "got away with it" more will be quick to follow. CNCA is already in deep financing trouble and cannot face a further drain on its resources, and the educative purpose that was the justification for the credit element is in danger of becoming nullified. At the same time, some financial inducement is needed to pursuade farmers to replant and to adopt the new techniques under SRCC guidance. Without substantial reduction in arrears, grants as alternative to credit would have to be reconsidered and it would be logical for OPAT to be called on to finance them. - 48 - 9.11 The proposed credit guarantee by OPAT would have cost that institution less than any outright grant system. Nor would OPAT be without representation in the credit recovery process. On the one hand, OPAT is represented on the Board of Management of SRCC where performance is reviewed and policy matters are decided. On the other, the bulk of credit recoveries could be expected to be made through the STCP in which OPAT is a shareholder; where other licensed buyers would be concerned, OPAT has the powers to revoke their licence in cases of malfeasance. At the present time (November 1981), any solution of PCU's credit recovery problems will have to be considered in the context of the emergency measures being taken to remedy the financial crisis facing CNCA as a whole (Annex 1). X. CONCLUSIONS 10.1 Although it is too early to predict the final outcome, it is reasonably clear that the project has made an encouraging start towards meeting its primary objective, the rehabilitation of Togo's cocoa and coffee areas. In physical terms, while coffee planting area targets were exceeded by 43%, cocoa plantings reached only 49% of targets, mainly because the appraisal projection under-estimated the time needed to find and implement a solution to the land tenure problem in the Litime. The road program also exceeded its targets by 80%. These indictors not only show that the physical targets set at appraisal were realistic but are also a tribute to the efficient management and organisation of the project. For coffee alone, the program in 1980 called for the production and timely distribution of over 2 million cuttings or seedlings, to some 5,000 farmers whose plots are scattered over a mountainous region while the PCU made nearly 14,000 individual loans to participating farmers during the project period. 10.02 The appraisal targets in fields where human and social factors were paramount were much less realistic. In addition to the Litime land tenure problem, the extent of the adoption of the new cultural technologies by farmers who were basically fruit collectors was greatly overestimated so that actual yields are much lower than forecast. Similarly, the assumed rate of 10% arrears has proved to be far too optimistic, particulaly in the absence of methods of credit recovery at time of produce sale. 10.03 While the project has built up an efficient system to help farmers replant their cocoa and coffee, the concentration of effort has been more on the areas planted and less on the planter. This is being corrected under the second project and in particular the establishment of a monitoring and evaluation unit should help to provide more information as to farmers' attitudes and responses. Together with the inclusion of a food crop component should widen the role of SRCC field staff so that, instead of being mainly if not entirely "replanting agents", they became extension agents in the wider sense of the term. 10.04 The appraisal report expressed the hope that, as a consequence of the project, "an effective mode of agricultural development would be demonstrated that should be applicable to a wide range of situations in Togo". This hope has ony been fulfilled in respect of SRCC's activities in adaptive research production and distribution of improved planting material, and extension. Credit was an essential ingredient to secure farmer participation and the joint supervision of credit use by PCU and SRCC worked well; but until surer means of credit recovery are adopted, high rates of delinquency are likely to continue. - 49 - 10.05 Given not only the inherent risks of operating any credit scheme in Togo, as exemplified by previous failures, but also the underpayment of producers with considerable "forced savings" accruing to Government and OPAT, supervised grants rather than supervised credit might well have been the better way of providing the financial inducements for replanting. But any supervised grant scheme would have involved OPAT in the establishment and operation of a General Replanting Fund to ensure that, in the interests of equity, such grants would eventually be available to all farmers since all would have contributed by way of "forced saving". -50- Table 1 Annex Table 1: Summary of Project Cost Estimates Summary of Project Cont Estimates CFA? million US$1000 Foreign 8e1 Foreign Total Local Foreizn Total Exchanzt A. Costs Including Import Duties and Taxes 1. SRCC Ta Cocoa-Coffoe Development Program - blildings 27 26 53 108 104 212 50 - Equipment & Vehicles 20 30 50 80 120 200 60 - Administration - Staff Kanagement 25 60 85 100 2h0 340 70 Extension Sorvices 200 35 235 800 140 940 15 General Services 60 40 100 210 160 400 40 - Operating expenses 65 45 110 260 180 440 40 - Planting material propagation 30 6 36 120 24 1" 15 (b) Road Departnent - Equipment & vehicles -12 28 40 48 112 160 70 - Road works 127 128 255 508 512 1,020 50 - Administration - Staff 16 - 56 - 56 - - Operating expenses 4 & 9 20 16 36 4O (e) Training 16 4 18 56 16 72 20 (d) Project evaluation study 3 42 42 - 168 168 100 (e) Applied research 120 120 240 480 48o 960 50 (f) Cocoa Capsid Control for new plantings 14 21 35 56 84 140 60 II. CIICA/PCu T Equip.ent & vehicles 6 8 14 24 32 56 60 (b) Administration - Staff h9 26 75 196 10 300 35 - Operating expenses 12 8 20 48 32 80 L0 (c) Credit to farmers h33 22 .455 1,732 88 1,820 5 (d) Credit organization study - 14 14 - 56 56 100 Subtotal 1 233 667 1,900 h,932 2.668 7,600 35 Physical contingencies 50 50 100 200 200 400 50 Price contingencies 402 223 625 1,608 892 2,500 36 Total 1,685 9h0 2,625 L2!LO 2,Z60 10, 5CX) 36 8. Import Duties & Taxes * 125 - 125 500 - 500 - C. Totkl Net of Import Dutins and Taxes 1,560 9h0 2,500 6,240 3,760 10.000 38 - 51 - Table 2 Annex Table 2: Proposed Financing IDA FAC GOVERNMENT TOTAL US$ US$ US$ US$ '000 % '000 % '000 % '000 Project Costs Including Import Duties and Taxes and Price Contingencies SRCC Buildings 190 70 - - 80 30 270 Equipment & Vehicles 335 70 - - 140 30 475 Administration & Planting aterial Propagation (a) expatriates - - 720 100 - - 720 (b) other costs 1,970 85 - - 370 15 2,340 Road Construction & Maintenance - - 380 25 1,140 75 1,520 Training 75 80 - - 20 20 95 Project Evaluation Study 135 60 85 40 - - 220 Applied Research 515 40 515 40 260 20 1,290 Cocoa Capsid Control for New Plantings - - - - 200 100 200 Subtotal 3 32 CNCA/PCU Equipment & Vehicles 50 70 - - 22 30 72 Administration 388 80 - - 98 20 486 Credit to Farmers 1,880 80 - - 470 20 2,350 Credit Organization Study 62 100 - - - - 62 Subtotal 2,380 590 2,970 Unallocated 400 100 - - - - 400 TOTAL 6,000 57 1,700 16 2,800 27 10)500 - 52 - Table 3 Annex Table 3: Revised Disbursement by Category % of - Expenditures Brief Original Revised to be financed Category description allocation allocation SRCC: construction of 70% I Buildings 190,000 284,000 II Acquisition of vehicles and road construction, office and house equipment 100% of (a) SRCC 195,000 172,000 foreign (b) PCU 50,000 187,000 expenditure or 70% of local expenditure<c) SRCC: road program 140,000 178,000 85% III SRCC: operating costs 1,970,000 2,857,000 80% IV Training: SRCC and PCU 75,000 75,000 80% V PCU : operating costs 388,000 590,000 80%Z VI Loans to farmer 1,880,000 1,078,000 VII Consultants services: 100% (a) credit study 62,000 62,000 60% (b) project evaluation 135,000 17,000 40% VIII SRCC: applied research 515,000 500,000 - IX Unallocated 400,000 - 6,000,000 6,000,000 Annex Table 4: SRCC: Coffee Plantings 1975-1980 Sector 1975 1976 1977 1978 1979 1980 Totals ha. Kpalime - North 112.3 66.1 65.6 132.1 149.1 206.6 731.8 Kpalime - South 73.3 71.8 53.1 125.4 96.3 95.3 515.2 Agau - South 14.0 2/.5 31.6 24.3 54.2 20.1 l11.7 Kpele 84.1 60.0 107.8 70.8 118.1, 154.1 594.9 Dayes 95.1 102.9 135.7 172.9 182.2 181.7 870.5 Kougnohou 61.1 112.1 148.0 137.4 133.6 176.5 768.7 Agou - North. 53.7 124.6 210.4 147.5 205.5 284.5 1,026.2 Akposso 63.9 61.6 101.0 245.2 253.0 335.9 1,060.6 1 557.5 626.6 853.2 1,055.6 1,192.0 1,454.7 5,739.6 Areas abondoned or destroyed 71.0 (13%)110.0(.17%)61.0(7%)40.(4%) 21. (2%) nil 303(5%) Balance 486.5 516.6 792.2 1,015.6 1,171.0 1,454.7 5,436.6 Appraisal targets - 300 700 900 1,000 1,100 4,000 Groups (No.) NA 185 187 209 230 260 1,071 Participants (No.) 1,876 1,129 1,504 1,846 2,137 2,741 10,933 Average plot size per participant (ha) 0.35 0.55 0.56 0.57 0.55 0.53 0.52 Annex Table 5: SRCC: Cocoa Plantings 1975-1980 Sector 1975 1976 197/ 19/i 1979 1960 Totals ha Kpalime - North 6.0 17.6 - - 1.6 23.6 48.8 Kpalime - South 23.1 60.0 - 26.6 26.9 l.4 154.6 Agou - South 36.3 32.1 105.6 3.9 15.7 34.4 228.0 Kpele 14.6 27.8 - - - 5.3 47.7 Tomegbe 6.4 30.9 13.5 24.8 117.0 133.7 326.3 Badou 37.6 66.1 50.9 73.7 115.5 194.0 537.8 Kpete-Bena 43.1 36.4 34.3 28.1 64.8 101.5 * 308 2 Agou - North 29.3 67.2 120.7 113.5 94.6 87.2 512.5 197.0 338.1 325.0 270.8 436.1 597.1 2,164.1 Area abandoned 3 or destroyed 70.8(36%) 1l0.0(33%)61.0(19%)39.8(15%) 20.8(57.) - () 302.4 (14%) Balance 126.2 228.1 264.0 231.0 415.3 597.1 1,861.7 Appraisal targets - 200 700 1,500 2,000 - 4,400 Groups (No.) NA 113 70 66 98 125 472 Average plot size per participant (ha) NA 0.51 0.62 0.60 0.66 0.56 0.58 Annex Table 6: Comparison of Appraisal Estimates of Costs and Actual Expenditures Appraisal Estimates Actual Total3as proportion Actual Total IDA FAC Govern- Totals IDA FAC Govt Amount ota mponent compared to ment appraisal fo* cast totals FCFA SRCC all in FCFA million % million % Suildings 47.5 - 20.0 67.5 64.1 - 27.5 91.6 4% t 24.1 .36 Equipment & vehicles 83.75 - 35.0 118.75 70.9 - 30.4 101.3 5% - 17.45 - 15 Administration (a) expatriates - 180.0 - 180.0 - 204.1 - 204.1 10% iP 24.1 +. 13 (b) other costs 492.5 - 92.5 585.0 677.9 - 119.6 797.5 38% y 212.5 + 36 Ioad construction L maintenance - 95.0 285.0 380.0 - 111.0 382.5 493.5 237. + 113.5 t, 30 fraining 18.75 - 5.0 23.75 8.5 - 2.1 10.6 0.5% - 13.15 - 55 Project evaluation study 33.t5 21.25 - 55.0 6.9 4.6 - 11.5 0.57. 43.5 79 Applied research 128.75 128.75 . 65.0 322.5 109.2 109.2 131.6 350.0 16% f- 27.5 1 9 Cocoa capsid Ln control : new plantings - - 50.0 50.0 - - 56.3 56.3 3% * 6.3 V 13 1 805.0 425.0 552.5 1,782.5 937.5 428.9 750.0 2,116.4 100 - 333.9 + 187 CNCA/PCU Equipment & vehicles 12.5 - 5.5 18.0 22.3 - 9.5 31.8 5% + 13.8 + 77 Administration 97.0 - 24.5 121.5 11.0 - 1./ 126.i 21% + 7.2 + 6 Credit to farmers 470.0 - 117.5 587.5 .363.0 - 90.7 453.7 72% -133.3 23 Credit organisztion study 15.5 - - 15.5 - - 14.0 14.0 27 - 1.5 - to 595.0 - 14/.5 742.5 496i.3 - 131.9 628.2 100% 133.8 -15.4 Unallocated 100.0 - - 100.0 1,500 425.0 700.0 2,625.0 1,433.8 428.9 881.9 2,744.6 + 119.6 * 4.6 US $ million 6.0 1.7 2.8 10.5 - - - - Proportion 5/% 167. 27% 100% 52% 16% 327 1007, 01 C.V -56 - TableT Annex Table 7: TOGO Cocoa-Coffee Development Project (Credit 503-TO) Schedule of IDA Disbursements (in $'000) IDA Fiscal Year Appraisal Actual Actual as and Quarter Estimate Disbursement % of Appraisal 74/75 1 50 2 125 - - 3 250 285 114 14 oo 285 71 75/76 1 600 340 57 2 800 340 43 3 1,000 340 34 4 1,200 340 28 76/77 1 1,450 1,144 79 2 1,700 1,144 67 3 1,950 1,4114 73 4 2,200 1,726 78 77/78 1 2,475 1,920 78 2 2,750 2,200 80 3 3,025 2,631 87 4 3,300 2,804 85 78/79 1 3,575 3,053 85 2 3,850 3,433 89 3 4,125 3,821 93 4 4,oo 4,296 98 79/80 1 4,700 4,46o 95 2 5,000 4,927 99 3 5,300 5,205 98 4 5,600 5,462 98 80/81 1 5,800 5,800 100 2 6,000 6,000 100 Annex Table 8: Incremental Production - Appraisal Estimates and Revised Forecast all tons_ full product- Year 1 2 3 4 5 6 7 8 9 10 11 12 ion Cocoa Appraisal estimate (22) (101) (270) (455) (100) 370 1,2500-2,1301 2,970 4,0.00 4,400 4,400 4,400 Revised forecast (19) (53) (93) (124) (171) (211) (115) 25 513 473 758 974 1,300 Coffee Appraisal estimate - (11) (38) (19) 371 1,170 2',390 3,840 4,835 4,965 4,725 3,895 4,800 Revised forecast (49) (100) (151) (80) 123 193 1,184 1,782 2,552 3,015 2,991 2,939 3,000 Note: Figures in brackets reflect loss of production from old trees in replanted areas. ID Annex Table 9: PCU: CREDIT OPEMATI(qS SUMMARY: 1975-1980 C 0 F F E E 1975 1976 1977 1978 1979 1980 TOTALS Area (ha) 291 608 848 1 043 1 450 1 486 5 465 Number of Groups 161 178 187 206 238 288 1 258 Number of Loans 751 1 076 1 510 2 811 2 265 2 710 11 123 Total Loans Approved(CFAF)21 852 982 44 881 630 78 316 510 94 458 525 110 586 450 140 946 985 491 043 082 C 0 C 0 A Area (ha) - 257 335 280 407 510 1 789 Number of Groups - 61 77 78 99 111 426 Number of Loans - 409 602 491 655 899 3 056 Rotal Loans Approved(CFAF) - 10 227 952 20 612 000 14 298 600 27 824 310 44 233 000 117 195 862 COFFEE AND COCOA COMBINED Erea (ha) 291 865 1 183 1 323 1 596 1 996 7 254 Number of Groups 161 239 264 284 337 399 1 684 Number of Loans 751 1 485 2 112 3 302 2 920 3 609 14 179 Total Loans Approved(CFAF)21 852 982 55 109 582 98 928 510 108 757 125 138 410 760 185 179 985 608 238 944 - 59 - Table 10 Annex TaLe 10: Situation of Credit Recovery by Sector for the Season 1980-81 Ngrch 31. 1981 (tp CTAF '000) Anticipated Effective 2 of Sector 14g DeM Recovery Recovery Recovery Recovery North Kpaliml 75 Coffee 713 593 84 509 71 76 Coffee 1,833 1,248 41 1,208 66 77 Coffee 1,830 1,502 51 1,451 79 Fertilizer 1/ 296 273 - 274 92 Total 4,672 3,616 176 3,442 74 South Kpalimi 75 Coffee 1,658 918 22 896 54 76 Coffee 1,930 1,286 3 1,283 66 77 Coffee 1,667 888 - 888 53 Fertilizerl/ 119 116 - 116 97 Total 5,374 3,208 25 3,183 59 South Agou 75 Coffee 406 170 22 149 37 76 Coffee 2,241 426 13 413 18 77 Coffee 1,193 180 12 167 14 Fertilizer - Total. 3,840 776 46 729 19 Kpal 75 Coffee 1,403 460 1 459 33 76 Coffee 2,503 639 - 639 26 77 Coffee 1! 3,367 1,254 20 1,234 37 Fertilizer - 79 40 - _.0 50 Total 7,352 2,393 21 2,372 32 Dayes 75 Coffee 2,139 1,421 33 1,387 65 76 Coffee 2,928 1,981 11 1,970 67 77 Coffee 4.027 ,164 113 3,051 76 Fertilizer 962 833 - 833 86 Total 10,056 7,399 137 7,241 72 Aalack 75 Coffee 1,716 444 47 397 23 76 Coffee 4,817 1,067 208 859 18 77 Coffee 4,868 2,333 181 2,153 44 Fertilizer 365 223 - 223 61 Total 11,766 4,067 436 3,632 31 Akebou 75 Coffee 211 185 22 163 77 76 Coffee 1,471 845 44 800 54 77 Coffee 3,827 2,237 29 2,208 58 Fertilizerl- 134 77 - 77 58 Total 5,643 3,344 95 3,248 58 North Asou 75 Coffee 2,070 510 83 426 21 76 Coffee 2,099 783 127 656 31 77 Coffee 3,514 633 2 632 18 Fertilizer 165 136 - 136 82 Total 7,848 2,072 212 1,850 24 Akposso 75 Coffee 536 292 30 262 49 76 Coffee 2,043 1,203 78 1,125 55 77 Coffee 2,251 1,364 - 1,366 61 Fertilizer 448 336 - 335 73 Total 5,278 3,195 108 3,088 59 TOTAL 75 Coffee 10,826 4,993 344 4,649 42 76 Coffee 21,591 9,475 524 8,951 41 77 Coffee 26,524 13,558 408 13,159 50 Fertilizer 2,568 2,034 - 2,034 79 Total 61,509 30,060 1,276 28,793 47 1/ Seasonal Loan for Fertilizer. Annex Table 11: COMARATIVE GOVEMigMT CASH FLOW (In Million CFAF) 1974/7S 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/64 1984/85 1985/86 1986/87 1987/88 198/89 199/ CASH FLOWS AFTER IDA DEBT SERVICE T. Appraistl Report Projec(tons Net Ann,tal Caesh Flow (101) (160 (138) (238) (128) 207 568 965 1,394 1,560 1,654 1,538 1,466 1,528 1,590 1,569 Curmilative Cash Flow 1 (101) (261) (4001 (638) (766) (559) 9 974 2,369 3,929 5,583. 7.121 8,587 10,115 11,705 13,274 It. Completion Report Projections Net Annual Cash Flow (139) (160) (259) (230) (132) 13 234 450 796 999 1,077 1,123 1.172 1,224 1,278 1,290 CniultLve Cash Flow 1/ (139) (299) (558) (788) (920) (907) (673) (223) 573 *1,572 2,649 3,772 4,944 6,168 7,446 8,736 1/ Some dirferences due to rounding. a I- - 61 - ANNEX I TOGO FIRST COCOA-COFFEE DEVELOPMENT PROJECT (Credit No. 503-TO) PROJECT COMPLETION REPORT OUTLINE OF PRODUCE MARKETING SYSTEM Introduction 1. The Office des Produits Agricoles du Togo (Agricultural Commodities Marketing Agency) - OPAT - was established in 1964 by conversion of the then existing Caisses de Stabilisation into a type of marketing board structure. First under the Ministry of Foreign Trade and subsequently the Ministry of Commerce, OPAT was a para-statal organization which until recently enjoyed great administrative and financial autonomy. However, since 1980, all of OPAT's financial surpluses are budgetised thus reducing its financial autonomy. 2. Opat's principal functions are: (a) to advise on the fixing each season of producer prices for scheduled agricultural commodities to be purchased for export, of which cocoa and coffee represent about 85% of the value of its turnover; (b) to organise and control the internal marketing of such commodities through the licensing of buyers, who are required to deliver their purchases to its port stores from which OPAT subsequently arranges for overseas shipment and sales; and (c) out of surpluses arising from its operations to stabilise producer prices and to finance research and development schemes. These are examined in detail below. Price Stabilisation 3. OPAT, following an analysis of market prospects, is responsible for proposing each season a producer price for export crops on which Government fixes the price; OPAT is then responsible for ensuring that farmers receive this fixed price. 4. During the 1960's and early 1970's producer prices for cocoa and coffee were raised only infrequently and did not keep pace with world prices or with inflation in Togo. Declining trends in production of both - 62 - commodities are partly attributable to this fall in real prices paid to growers. Thus the Government was in effect following a policy of maximising its short-term revenues on cocoa/coffee exports through OPAT surpluses without sufficient regard to long-term effects on production. Producer prices were however nearly doubled over the project period i.e. from 1974/75 to 1979/80, even though at the end they represented only about one third of FOB values. 5. Non-economic factors entering into Government price fixing decisions include: (a) the use of surpluses generated by cocoa and coffee exports to finance deficits arising on other products produced in other less favored regions; (b) the attraction of increased imports particularly cocoa from Ghana. Marketing Arrangements 6. OPAT has continued to rely on the private sector for internal marketing through its appointment of licensed buyers who are required to purchase from producers at not less than the fixed price (which is uniform throughout the cocoa and coffee areas) and sell to OPAT before export at a price which includes an allowance ("bareme") calculated to cover normal buying costs. From its inception (1964) to the opening of the new port at Lome in 1968, licensed buyers were paid on delivery to FOB point, effectively limiting their numbers to those (mostly foreign-owned) firms capable not only of up-country purchase but: also of providing port storage and shipment facilities. 7. In the port complex, OPAT has built and operates large modern storage facilties, so that it can take over produce from licensed buyers on delivery to its port stores. This has enabled many more Togolese orgnisations and individuals to be appointed as licensed buyers as indicated by the following approximate statistics: Season 1963/64 1979/80 Purchases (in '000 tons) Cocoa 18.5 15.5 Coffee 15.1 10.4 Licensed Buyers (Numbers and Shares) Foreign-owned Companies 8 (95%) 1 1/ (60%) Togolese 5 ( 5%) 40 (30%) Cooperatives 2 (10%) 1/ STCP - See Below. - 63 - Thus the numbers of buyers has more than tripled even though the total volume marketed has declined by 25% largely through the appointment by OPAT to licensed buyer status of a number of persons who previously acted as buyers and sub-buyers for expatriate firms. 8. The demand for appointment as a licensed buyer stems more from the access to credit it confers than from profit possibilities in an ever- increasing competitive market. While expatriate firms have obtained the working capital they need to finance their seasonal purchases from commercial banks, Togolese licensed buyers have been able to obtain credit for this purpose from the Caisse Nationale de Credit Agricole (National Agricultural Credit Agency) - CNCA. Inadequate supervision of these credits has permitted a substantial portion to be diverted to other uses and converted (by the borrowers) into longer-term loans. This accounts for the fact that repayment arrears at CNCA as of mid-September 1981 amounted to CFAF 2,700 million (US$12 million) and were threatening the liquidity of that organisation and Government in September 1981 had to call in an expatriate credit specialist to assume the management of CNCA. Some Togolese licensed buyers also managed to obtain financial assistance from OPAT. 9. The effects of these marketing developments include: (a) the payment of bonuses of up to CFAF 8/kg to farmers in addition to the official producer price; (b) assumption by buyers of produce preparation measures that ought to be carried out by farmers themselves; (c) withdrawal of several expatriate firms from produce buying and grouping of the remaining four into one single organisation, Societe Togolaise de Commercialisation des Produits Agricoles (STCP) with a capital of CFAF 254 million (US$1.1 million). This regrouping was encouraged by OPAT and it has subscribed 10% of STCP's capital because it was anxious to preserve a sound basis for its internal marketing system. 10. For cocoa and coffee, there are no scheduled markets and quality inspection by Government's Produce Inspection Service (SCCPT) takes place at buyers' stores up-country, on delivery to OPAT port stores and immediately prior to shipment. 11. The consultants study made in 1977 as part of the preparation for the second project confirmed that, despite the anarchic nature of the internal marketing arrangements, the system is in general efficient. Producers often receive more than the official price, a flexible net is provided to attract non-recorded imports, OPAT' s buying allowances to licensed buyers are reasonable although its own overheads are probably inflated. The quality reputation of Togolese exports remains high. 12. Overseas sales which at first were made through an OPAT subsidiary selling organization in Paris are now conducted direct, mostly by telex, from OPAT's headquarters in Lome. - 64 - Development Activities 13. Prior to the establishment of SRCC, OPAT had financed road improvement schemes in the cocoa and coffee areas. It also finances the anti-capsid spraying program and compensation payments for the uprooting of trees to combat swollen shoot virus disease (SSVD) both of which are now the responsibility of SRCC in the cocoa areas. 14. Other agricultural development expenditures by OPAT include: (a) financing the construction and rehabilitation of a number of roads in other regions; (b) introducing or developing the cultivation of such crops as citrus and avocado; and (c) taking equity participation in or lending to agro-industries and other agencies, including CNCA and STCP. 15. Because of the price policy adopted by Government, OPAT had accumulated considerable reserves and a high proportion of these were lent on a long-term basis to Government; in fact Treasury Deposits totalling CFAF 12 billion (US$48 million) were written off when the new system of budgetisation of OPAT surpluses was introduced in 1980. In addition, OPAT had capital participation in numerous unprofitable state enterprises. Possible Internal Marketing changes to Facilitate Project Credit Recoveries 16. In addition to their function in the existing marketing chain, sub-buyers and agents of licensed buyers are a principal source of non- institutional credit. Such loans are used by buyers to bind producers to sell to them, often at terms advantageous to the buyer. In any event, buyers' primary concern is for the recovery of their own advances before assisting in repayments of some other organisation's loans. 17. Under the first Cocoa Coffee Development Project (Credit 503- TO), participating planters were to undertake to repay loans by deduction from sales to a nominated buyer approved by PCU. Under the second Project (Credit 945-TO), Village Group Centers (VGCs) were to be established where sales were to be made on fixed days, controlled by an agent of SCCPT, to a main agent of an appointed licensed buyer who would assist the PCU agent in obtaining loan repayment at the time of produce sale. Neither scheme has worked, mainly because the farmer, able to sell his produce anytime, anywhere to any licensed buyer, was easily able to evade any imposed channel. 18. The counter-proposition by OPAT that an organisation of licensed buyers should be set up that would assist with PCU credit recoveries has resulted in the establishment of STCP. In 1980/81, STCP accounted for 54% of cocoa purchases and 63% of coffee purchases. Forms and a credit recovery procedure were agreed with PCU and STCP assisted in loan repayments totalling CFAF 3 million (US$13,000 million) which represented only 9% of total PCU recoveries. - 65 - 19. STCP's proposal that they should be given the monopoly of produce buying does not appear to be practical because it would: (a) be resented by farmers who undoubtedly benefit from the existing competition; (b) provide a less flexible network for the collection of unrecorded imports; (c) bring with it all the possible disadvantages of any monopoly; and (d) be fiercely resisted by existing small licensed buyers many of whom possess considerable political influence. 20. Alternative solutions that merit exploration include: (a) zoning the activities of licensed buyers. This could be controlled in the coffee region at least in part by the existing inspection system of SCCPT. It would then be easier to establish VGCs with a known and limited number of buyers in each zone. But particular difficulties would be encountered in the Litime and other border areas; and (b) payment by PCU of a commission to buyers on repayments actually made through them. This would add to PCU's costs but would be off set by a reduction in unpaids. Conclusion 21. The problem is a complex one with social and political overtones. Any solution that is not supported by OPAT stands little chance of success. Therefore the first step is to secure the active involvement of OPAT in the process. In the main report, it is suggested that one way of achieving this might have been to require OPAT to guarantee the repayment of credits advanced by PCU, which would have given OPAT an interest in measures to reduce arrears to a minimum.  IBRD 16952CPPA) JANUARY 1983 UPPER VOLTA DAPANGO TOGO WFIRST COCOA - COFFEE I DEVELOPMENT PROJECT MANGO KANDE NIAMTOGOL Kom 1 PAGOUDA LAMA KARA• Natä chab - Kabou K.k.Äd GHANA .SASSAR SOKODE* COCOA \ COFFEE Sotoboua PAVED ROADS - MAIN GRAVEL AND EARTH ROADS RAILWAYS RIVERS y6gog -- -- INTERNATIONAL BOUNDARIES Langon K..n-hou do16, ATAKPAM E 0 20 40 60 E dvoon KILOMETERS TeNrdB k strxcuve readrs ad r excs-er fo meNOT SE Coprao The denomonarronsoo .E and M b nr sownA .. c econdnesTabl,gb ýMUITANI Asshoun Afa nò an NEG •9 - KCévé ~~PE TSEVIE BSSAU GL ENINVga LIBERIA OGA CAMEROON AEGAN! OCE E EA LOME Gir CF ~GA BON0