Ghana - Export Market and Quality Awareness Program - Appraisal ...

GHANA

EXPORT MARKETING AND QUALITY AWARENESS PROJECT

APPRAISAL REPORT

TABLE OF CONTENTS

PROJECT INFORMATION SHEET, CURRENCY AND MEASURES, LIST OF ABBREVIATIONS, SOCIO-ECONOMIC INDICATORS, PROJECT LOGICAL FRAMEWORK, EXECUTIVE SUMMARY. i---xii 1. INTRODUCTION .............................................................................................................................. 1

1.1 Origin and History of the Project.....................................................................................1 2. THE AGRICULTURE SECTOR ..................................................................................................... 2

2.1 Salient features.................................................................................................................2 2.2 Socio-Economic Situation and Production ......................................................................3 2.3 Land Tenure .....................................................................................................................3 2.4 Poverty Status ..................................................................................................................4 2.5 Gender Issues ...................................................................................................................6 2.6 HIV/AIDS and Malaria....................................................................................................6 2.7 Agricultural and Rural Development Policy Framework ................................................7 2.8 Interventions of Major Donors in the Sector ...................................................................7

3. THE EXPORT SUB-SECTOR.......................................................................................................... 8 3.1 Traditional Exports ..........................................................................................................8 3.2 Non-Traditional Exports ..................................................................................................9 3.3 Cassava...........................................................................................................................13 3.4 Institutional Framework.................................................................................................14 3.5 Potentials and Constraints..............................................................................................19

4. THE PROJECT ................................................................................................................................ 20 4.1 Project Concept and Rationale.......................................................................................20 4.2 Project Area and Beneficiaries.......................................................................................22 4.3 Strategic Context............................................................................................................23 4.4 Project Objective............................................................................................................24 4.5 Project Description.........................................................................................................24 4.6 Production, Markets and Prices .....................................................................................31 4.7 Environmental Impact....................................................................................................33 4.8 Project Costs ..................................................................................................................34 4.9 Sources of Financing and Expenditure Schedule...........................................................35

5. PROJECT IMPLEMENTATION .................................................................................................. 36 5.1 Executing Agency ..........................................................................................................36 5.2 Institutional Arrangements.............................................................................................36 5.3 Supervision and Implementation Schedule....................................................................37 5.4 Procurement Arrangements............................................................................................38 5.5 Disbursement Arrangements..........................................................................................40 5.6 Monitoring and Evaluation ............................................................................................40 5.7 Financial Reporting and Auditing..................................................................................41 5.8 Aid Co-ordination ..........................................................................................................42

6. PROJECT SUSTAINABILITY AND RISKS................................................................................ 42 6.1 Recurrent Costs ..............................................................................................................42 6.2 Project Sustainability .....................................................................................................43 6.3 Critical Risks/Assumptions and Mitigation Measures...................................................44

7. PROJECT BENEFITS..................................................................................................................... 46 7.1 Financial Analysis..........................................................................................................46 7.2 Economic Analysis ........................................................................................................47 7.3 Social Impact Analysis...................................................................................................47 7.4 Sensitivity Analysis........................................................................................................48

8. CONCLUSIONS AND RECOMMENDATIONS.......................................................................... 49 8.1 Conclusions....................................................................................................................49 8.2 Recommendations..........................................................................................................49

List of Tables Table 3.1: Volume and Value of Non-Traditional Exports in Year 2000–2003..................................................... 9 Table 3.2: Market Indicators for NTEs Produced by Ghana ................................................................................. 10 Table 4.1: Summary of the Project Cost Estimates by Component....................................................................... 35 Table 4.2: Summary of the Project Cost by Category of Expenditure .................................................................. 36 Table 4.3: Sources of Finance .............................................................................................................................. 36 Table 4.4: Expenditure Schedule by Component (million UA) ............................................................................ 36 Table 4.5: Expenditure by Source of Finance (million UA).................................................................................. 36 Table 4.6: Expenditure Schedule y Source of Finance (million UA) .................................................................... 37 Table 5.1: Key Implementation Target Dates ....................................................................................................... 39 Table 5.2: Procurement Arrangements.................................................................................................................. 41 Table 6.1: Recurrent Expenditure Schedule by Source of Finance. (million UA) ................................................ 44

List of Annexes Number of Pages ANNEX I: Map of the Project Area…………………………………………………… 1 ANNEX II: Project Organization Chart ……………………………………………… 1 ANNEX III: Project Implementation Schedule ………………………………………… 1 ANNEX IV: List of Goods and Services ……………………………………………….. 1 ANNEX V: List of On-going and Completed Projects as at 31 March 2005 ……….… 2 ANNEX VI: Environmental and Social Management Summary ……………………….. 2 ANNEX VII: Summary Financial and Economic Analysis ……………………………. 1 ANNEX VIII: Evolution of Horticultural Products Exports (2000-2004)………………. 1

This report was prepared by Ms. Esther Kasalu-Coffin, Principal Agric. Economist, OCAR.2, Mr. Touba Bedingar, Principal Agricultural Economist, OCAR.1, Mr. Harouna Dosso, Senior Agronomist, OCAR.2, Mr. Diop, Environmental Expert of OCAR.0, and two Consultants in Marketing and Financial Analysis. Contributions were received from Mrs. Rita, Ba, Senior Gender Specialist, OCAR.0 as well as from OPSD. Inquiries should be addressed to them or to Mr. Sami Z. Moussa, Manager, OCAR.2, ext. 2143.

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AFRICAN DEVELOPMENT FUND Angle des Trois Rues, Rue du Ghana, Rue Pierre de Coubertin, Rue Hedi Nouira

B.P. 323, 1002 TUNIS BELVEDERE, TUNISIA TEL: (216) 71 333 511; FAX: (2I6) 71 332 992; E-MAIL: [email protected]

PROJECT INFORMATION SHEET

February 2005

The information given hereunder is intended to provide guidance to prospective suppliers, contractors, consultants and all persons interested in the procurement of goods and services for projects approved by the Boards of Directors of the Bank Group. More detailed information and guidance should be obtained from the Executing Agency of the Government of Ghana. 1. Country : Republic of Ghana 2. Project Title : Export Marketing and Quality Awareness Project 3. Location : In Central, Greater Accra, Eastern and Volta Regions 4. Borrower : Republic of Ghana 5. Executing Agency : Ministry of Food and Agriculture, Agricultural Services Sub-Sector

Investment Programme, P.O. Box M37, Accra, Ghana *Tel: (233) 21 665066 *Fax: (233) 21 780326

6. Project Description :Project components: (i) Production and Productivity Enhancement

(ii) Export Marketing Promotion and Infrastructure Improvement (iii) Capacity Building (iv) Project Coordination and Management

7. Total Cost : UA18.84 million

Foreign exchange : UA 14.03 million Local cost : UA 4.81 million 8. ADF Loan : UA 17.00 million 9. Other Sources of Finance : Government of the Republic of Ghana – UA1.84 million 10. Date of Approval : June 2005 11. Probable Commencement Date and Project Duration

Commencement : January 2006 Duration : 5 Years

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12. Procurement of Goods, Works and Services Procurement of goods, works and consultancy services financed by ADF resources will be carried out in conformity with Bank Group Rules of Procedure. The procurement of civil works (feeder roads, pack houses and farm building) will be by National Competitive Bidding (NCB); Vehicles & equipment by International Competitive Bidding (ICB); and the provision of training, consultancy services through competition on the basis of a short-list. Contribution will be made to the Ministry of Health, the specialised Government body, in support of HIV/AIDS prevention campaigns, and to the malaria prevention activities. 13. Consultancy Services Required Consultancy services will be required for: (i) Technical Assistance services for developing training materials and training in a wide range of areas; (ii) Training for farmers, and Farmers’ Associations, the staff of the project and the line ministries; (iii) Technical Assistance support to conduct baseline surveys, mid-term review, audit, etc.; (iv) Studies including identifying international markets and studying consumer preferences for Ghanaian horticultural produce (v) Business planning, market analysis and strategy for high grade starch. All procurement of goods and services financed by ADF Loan and ADF Grant resources will be in conformity with Bank Group Rules of Procedure.

CURRENCY EQUIVALENTS (February 2005) Currency Unit = Units of Account

UA 1 = USD 1.5205 UA 1 = Cedis 14,061.4

Fiscal Year 1st January – 31st December

Weights and Measures Metric systems

1kg = 2.2 pounds

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ACRONYMS AND ABBREVIATIONS

AAGDS Accelerated Agricultural Growth and Development Strategy ACSo Ayensu Starch Company ADF African Development Fund AESD Agricultural Engineering Services Department AfDB African Development Bank AGOA African Growth and Opportunity Act AgSSIP Agricultural Services Sub-Sector Investment Programme ACFA Ayensu Cassava Farmers Association CBO Community Based Organisation CF Credit Facility CIF Carriage, Insurance and Freight (Incoterms 2000) COLEACP Comite pour Liaison Europe ACP CSIR Council for Scientific and Industrial Research CSP Country Strategy Paper DFI Designated Finance Initiative DFID Department for International Development DGRC General Directorate for Regulation and Control DADU District Agricultural Development Unit EA Executing Agency EC European Commission ECOSOC United Nations Economic and Social Council ECOWAS Economic Community of West African States EDIF Export Development and Investment Fund EDPA Export Development and Promotion Account EIRR Economic Internal Rate of Return ESMP Environmental and Social Management Plan ESSD Environmentally and Socially Sustainable Development Network EU European Union FAGE Federation of Associations of Ghanaian Exporters FAO Food and Agriculture Organisation of the United Nations FASDEP Food and Agricultural Sector Development Policy FOB Free on Board (Incoterms 2000) FDB Food and Drugs Board FIRR Financial Internal Rate of Return GAP Good Agricultural Practices GDP Gross Domestic Product GEPC Ghana Export Promotion Council GoG Government of Ghana GPRS Ghana Poverty Reduction Strategy GPS Global Positioning System GSB Ghana Standards Board GTZ Gesellschaft fur Technische Zusammenarbeit – German Government Agency for

International Co-operation Ha Hectares HAG Horticultural Association of Ghana HEII Horticultural Export Industry Initiative HIPC Heavily Indebted Poor Country ICB International Competitive Bidding JITAP Joint Integrated Technical Assistance Programme to Selected Least Developed and

other African Countries kg kilogramme

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km kilometre MDG Millennium Development Goal MOFA Ministry of Food and Agriculture MOFEP Ministry of Finance and Economic Planning MOTI Ministry of Trade and Industry MOPS-PSI Ministry of Private Sector Development and Presidential Special Initiatives MOH Ministry of Health Mt Metric tonne NAEP National Agricultural Extension Policy NCB National Competitive Bidding NEPAD New Partnership for Africa’s Development NGO Non-Governmental Organization NMTIP National Medium-Term Investment Programme NTAE Non-Traditional Agriculture Exports OCAB Organization Commune Ananas Banane PIP Pesticides Initiative Programme PCMU Project Coordination and Management Unit PPMED Programme Planning Monitoring and Evaluation Directorate (of MOPA) PRSP Poverty Reduction Strategy Paper PSC Project Steering Committee PY Project Year SPEG Sea-Freight Pineapple Exporters of Ghana SSA Sub-Saharan Africa TIPCEE Trade and Investment Program for a Competitive Export Economy TIRP Trade and Investment Reform Programme RADU Regional Agricultural Development Unit RDS Rural Development Strategy RMC Regional Member Country (Member of the Bank Group) SME Small and Medium Enterprises UA Units of Account (for the African Development Bank Group) UBA Union Bananière Africain USD United States Dollar USAID United States Agency for International Development VEPEAG Vegetable Producers and Exporters Association of Ghana WHO World Health Organisation

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Year Ghana AfricaDevelo-

pingCountries

Develo-ped

CountriesBasic Indicators Area ( '000 Km²) 239 30 061 80 976 54 658Total Population (millions) 2003 20.9 849.5 5,024.6 1,200.3Urban Population (% of Total) 2003 42.2 39.2 43.1 78.0Population Density (per Km²) 2003 87.7 28.3 60.6 22.9GNI per Capita (US $) 2003 320 704 1 154 26 214Labor Force Participation - Total (%) 2003 50.1 43.3 45.6 54.6Labor Force Participation - Female (%) 2003 50.2 41.0 39.7 44.9Gender -Related Development Index Value 2002 0.564 0.476 0.655 0.905Human Develop. Index (Rank among 174 countries) 2002 131 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 1995 … 46.7 23.0 20.0

Demographic IndicatorsPopulation Growth Rate - Total (%) 2003 2.2 2.2 1.7 0.6Population Growth Rate - Urban (%) 2003 4.2 3.8 2.9 0.5Population < 15 years (%) 2003 40.6 42.0 32.4 18.0Population >= 65 years (%) 2003 3.5 3.3 5.1 14.3Dependency Ratio (%) 2003 75.8 86.1 61.1 48.3Sex Ratio (per 100 female) 2003 99.0 99.0 103.3 94.7Female Population 15-49 years (% of total population) 2003 25.0 24.0 26.9 25.4Life Expectancy at Birth - Total (years) 2003 58.3 50.7 62.0 78.0Life Expectancy at Birth - Female (years) 2003 59.6 51.7 66.3 79.3Crude Birth Rate (per 1,000) 2003 31.4 37.0 24.0 12.0Crude Death Rate (per 1,000) 2003 9.9 15.2 8.4 10.3Infant Mortality Rate (per 1,000) 2003 56.4 80.6 60.9 7.5Child Mortality Rate (per 1,000) 2003 90.4 133.3 79.8 10.2Maternal Mortality Rate (per 100,000) 2000 540 661 440 13Total Fertility Rate (per woman) 2003 4.0 4.9 2.8 1.7Women Using Contraception (%) 1998-2003 25.0 40.0 59.0 74.0

Health & Nutrition IndicatorsBirths attended by Trained Health Personnel (%) 1998 44.0 44.0 56.0 99.0Access to Safe Water (% of Population) 2002 79.0 64.4 78.0 100.0Access to Health Services (% of Population) 1992-99 25.0 61.7 80.0 100.0Access to Sanitation (% of Population) 2002 58.0 42.6 52.0 100.0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2003 3.4 6.4 1.3 0.3Incidence of Tuberculosis (per 100,000) 2000 56.6 109.7 144.0 11.0Child Immunization Against Tuberculosis (%) 2003 92.0 81.0 82.0 93.0Child Immunization Against Measles (%) 2003 80.0 71.7 73.0 90.0Underweight Children (% of children under 5 years) 1999 24.9 25.9 31.0 …Daily Calorie Supply per Capita 2002 2 667 2 444 2 675 3 285Total expenditure on health as % of GDP 2001 4.7 5.1 … 6.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2001/02 81.0 88.7 91.0 102.3 Primary School - Female 2001/02 78.0 80.3 105.0 102.0 Secondary School - Total 2001/02 38.0 42.9 88.0 99.5 Secondary School - Female 2001/02 34.0 41.3 45.8 100.8Primary School Female Teaching Staff (% of Total) 2001/02 21.0 46.3 51.0 82.0Adult Illiteracy Rate - Total (%) 2003 25.1 36.9 26.6 1.2Adult Illiteracy Rate - Male (%) 2003 18.2 28.4 19.0 0.8Adult Illiteracy Rate - Female (%) 2003 32.7 45.2 34.2 1.6Percentage of GDP Spent on Education 1999/2000 4.1 5.7 3.9 5.9

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2003 15.8 6.2 9.9 11.6Annual Rate of Deforestation (%) 1995 1.3 0.7 0.4 -0.2Per Capita CO2 Emissions (metric tons) 1998 0.2 1.2 1.9 12.3

Source : Compiled by the Statistics Division from ADB databases; UNAIDS; World Bank Live Database and United Nations Population Division.Notes: n.a. Not Applicable ; … Data Not Available.

COMPARATIVE SOCIO-ECONOMIC INDICATORSGhana

Infant Mortality Rate ( Per 1000 )

0

20

40

60

80

100

1995

1996

1997

1998

1999

2000

2001

2002

2003

ghana Africa

GNI per capita US $

0100200300400500600700800

1995

1996

1997

1998

1999

2000

2001

2002

2003

ghana Africa

Population Growth Rate (%)

1.9

2.0

2.1

2.2

2.3

2.4

2.5

2.6

1995

1996

1997

1998

1999

2000

2001

2002

2003

ghana Africa

111213141516171

1995

1996

1997

1998

1999

2000

2001

2002

2003

ghana Africa

Life Expectancy at Birth (Years)

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LOGICAL FRAMEWORK FOR THE PROJECT LOAN Narrative Summary Mid Term

Measurable Indicators End of Project Measurable Indicators

Means of Verification

Key Assumptions/Risks

Sector Goal: Export earnings of non-traditional agricultural products increased

At least 20% increase in export earnings of non-traditional agricultural products by year 2008.

At least 50% increase in export earnings of non-traditional agricultural products by year 2010.

- Agriculture

statistics from Statistics Office.

Project Objectives Incomes for horticultural crop farmers and exporters and of cassava producers increased.

By 2008, average annual household incomes per hectare of farmers in horticulture and cassava production increase:

-Pineapple: from Cedis 11m to 21m -Papaya : from Cedis 43m to 51m -Egg plant : from Cedis 14m to 16m -Chillies : from Cedis 0.5m to 2.5m -Cassava : from Cedis 1.3m to 2.8m

By 2010, average annual household incomes per hectare of farmers in horticulture and cassava production increase:

-Pineapple: from Cedis 21m to 31million -Papaya : from Cedis 51m to 59million -Egg plant : from Cedis 16m to 17million -Chillies : from Cedis 2.5m to 5million -Cassava : from Cedis 2.8m to4.4million

- Agriculture

statistics from Statistics Office.

- Project Progress Reports.

1. Continued conducive agricultural and economic policies support agriculture intensification. The Bank to continue dialogue.

2. Farmers’ will adopt GAP in the production of horticultural export crops and cassava and the use of improved planting materials and seed. Mitigation: Farmer mobilization and training in GAP.

OUTPUTS A. Production and Productivity Enhancement 1. Demonstration farms established in each region for application of Good Agricultural Practices (GAP). 2. Production protocol and manuals of GAP published and market requirements documented by Ghana Export Promotion Council 3. Improved seed and planting materials diffused to farmers for horticultural crops for cassava. 4. Production of horticultural crops and cassava increased

1. Four demonstration farms are established and

functioning by the year 2008. 2. 15,000 production protocols and manuals on

good agriculture practices are distributed to farmers and other stakeholders by year 2008

3. Yield levels in horticultural crops and cassava

increase by 2008: -Pineapple: from 11Mt/ha. to 26Mt/ha.

-Papaya: from 13.5Mt/ha to 25.5Mt/ha -Egg plant: from 6Mt/ha to 12Mt/ha -Chillies: from 4Mt/ha to 8Mt/ha

-Cassava: from 25Mt/ha to 37.5Mt/ha 4. By 2008, total production of horticultural

crops and cassava increase, of which 50% of horticultural crops is exported:

-Pineapple : from 42Mt. to 60Mt. -Papaya : from 13.9Mt to 37Mt -Egg plant : from 2.3Mt to 20.3Mt -Chillies : from 0.6Mt to11Mt -Cassava : from 0.17Mt to 2.17Mt

1. Four demonstration farms continue to

function by the year 2010. 2. 30,000 production protocols and

manuals on good agriculture practices are distributed to farmers and other stakeholders by year 2010

3. Yield levels in horticultural crops and

cassava increase by 2010: -Pineapple: from 26Mt/ha. to 41Mt/ha.

-Papaya: from 25.5Mt/ha to 37Mt/ha -Egg plant: from 12Mt/ha to 18Mt/ha -Chillies: from 8Mt/ha to 12Mt/ha

-Cassava: from 37.5Mt/ha to 50Mt/ha 4. By 2010, total production of

horticultural crops and of cassava increase, of which 80% is horticultural crops is exported:

-Pineapple : from 60Mt. to 78.7Mt. -Papaya : from 37Mt to 60.7Mt -Egg plant : from 20.3Mt to 39Mt -Chillies : from 11Mt to 21Mt

-Cassava : from 2.17Mt to 4.4Mt

- Project Progress

Reports - Monitoring &

Evaluation Reports

- National plans and

budgets.

1. The growth rate in demand for

horticultural crops being promoted remain high. Mitigation: Marketing Strategy

2. The supply of cassava will be continuous

to enable Ayensu Starch Company to consistently operate at full capacity. Mitigation: Farmers are being assisted under the project to enable them produce cassava throughout the year.

3. The MD2 variety from Ghana will meet

the consumer tastes and preferences on the international market. Mitigation: MD2 is already grown and exported by Costa Rica and its demand on the international market is increasing.

4. GAPs are adopted and improved planting

materials and seed are utilized. Mitigation: Continue with Sensitization

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Narrative Summary

Mid Term Measurable Indicators

End of Project Measurable Indicators

Means of Verification

Key Assumptions/Risks

B. Export Marketing Promotion and Infrastructure Improvement

1. Trade Brands for Ghanaian produce

developed and used by exporters 2. Marketing and demonstration farm

facilities constructed and upgraded 3. Feeder Roads Improved 4. Consumers’ needs on international market

for Ghana produce, documented. 5. Major export destinations for Ghana’s

produce in EU aware of produce quality and brands.

C. Capacity Building 1. Smallholder producers and exporters in the horticultural and cassava industry in the project area are mobilized. 2. Smallholder producers and exporters, and related activities are trained. 3. A holistic cold chain, in each of the 4

regions, established & operational. 4. Analysis of residual analysis in crops undertaken. D Coordination and Management - Project activities well managed

1. Four brands for pineapple, papaya, chillies, and egg plant catalogued and documented in a report by year 2007. 2.1 Four pack houses constructed, equipped and functioning by year 2007 2.2 150km of feeder roads upgraded to year-round access by year 2008 3. 150km of feeder roads upgraded to year-round access by year 2008 4. Report on markets for various products available for consultation by 2007. 5. Report on marketing strategy for the four major crops available by 2007. 1. About 50,000 farmers and exporters

mobilized into groups / associations by 2008;

2. farmers, exporters and other related service

officials are trained, of which 2,000 (28%) are women, by 2008: - 300 executive and decision makers - 800 export trade services staff - 800 staff from MOFA - 2,000 graders sorters and parkers - 3,000 farmers

3. Two temperature-controlled trucks are provided & are being run efficiently by 2007.

4. One residual analysis laboratory at GSB is constructed and being used by 2008.

1. HEII PCMU given the responsibility to coordinate and manage the project by 2006; 2. Monitoring indicators selected by 2006.

1. 90% of farmers producing for export under the developed brands for pineapple, papaya, chillies, and egg plant by year 2010. 2.1 90% of farmers using the pack houses by year 2010 2.2 407km of feeder roads upgraded to year-round access by year 2010 3. 407km of feeder roads upgraded to year-round access by year 2010 4. Report on markets for various products available for consultation by 2007. 5. Marketing strategy implemented for the four major crops by 2010. 1. 80,000 farmers and exporters mobilized by 2010;

2. farmers, exporters and other related service officials are trained, of which 4,700 (42%) are women, by 2010: - 600 executive and decision makers - 1,200 export trade services staff - 1,200 staff from MOFA - 3,120 graders sorters and parkers - 5,000 farmers

3. The two temperature-controlled trucks continue to function efficiently by 2010.

4. All horticulture produce for export analyzed for residuals at GSB.

1. PCMU coordinating and managing the project effectively till end of project implementation 2. Indicators monitored & presented in quarterly reports.

- Project Progress

Reports - Monitoring &

Evaluation Reports

- National plans and

budgets.

1. The growth rate in demand for

horticultural crops being promoted remain high. Mitigation: Marketing Strategy

2. The supply of cassava will be

continuous to enable Ayensu Starch Company to consistently operate at full capacity. Mitigation: Farmers are being assisted through the project to enable them produce cassava throughout the year.

3. The MD2 variety from Ghana

will meet the consumer tastes and preferences on the international market. Mitigation: MD2 is already grown and exported by Costa Rica and its demand on the international market is increasing.

4. GAPs are adopted and improved

planting materials and seed are utilized. Mitigation: Continue with Sensitization

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ACTIVITIES A. Production and Productivity Enhancement 1. Executing Agency (EA) assign relevant staff to manage the demonstration farms. Key staff are-

Subject Matter Specialists, Extension Workers and Irrigation Technicians, based in respective districts. 2. EA procure farm and packaging equipment, inputs and supplies for demonstration farms; 3. Demonstration farm team prepares crop-specific plots at the demonstration farms, for training in good

agricultural practices for export market. 4. CSIR multiply MD2 pineapple cultivars for farmers; 5. CIR to Coordinate development, production and distribution of quality seeds for horticultural crops 6. CIR conduct adaptive Research and Development for Potential new crop varieties B. Export Marketing Promotion and Infrastructure Improvement 1. Recruit international TA to undertake brand promotion and to develop marketing strategies for the

selected horticultural crops; 2. Collect market information and consumer preferences; 3. Upgrade feeder roads; 4. Construct farm buildings and lodging and training facilities at the four demonstration farms; 5. Construct Pack Houses; 6. Construct a residual analysis lab C. Capacity Building

1. Sensitization, formation and registration of groups/associations of horticultural small holder producers and exporters

2. Formation and registration of groups/associations of cassava producers 3. Train horticultural producers, exporters, traders, sorting and packing workers, service officials,

decision makers; 4. Train cassava producers, association workers and elected leaders 5. Procure temperature-controlled trucks for horticultural farmers’ and exporters and tractors for the

Cassava Farmers’ Association D. Project Coordination and Management 1. Assign responsibility to existing HEII project team the responsibility to coordinate & manage the

project. 2. Appoint additional members to the existing HEII Steering Committee to meet the requirements of the

project.

FINANCIAL RESOURCES

Costs: Component A: UA million Component B: UA million Component C: UA million Component D: UA million Total: UA million Source of financing: ADF Loan: UA million Governments: UA million Total: UA million

3.86 11.44 1.60 1.57 18.84 17.00 1.84 18.84

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EXECUTIVE SUMMARY Project Background 1. Exports of horticultural produce falls into the category of non-traditional exports1, in Ghana. The Government of Ghana (GoG) has identified increase of non-traditional exports as a central element of Ghana’s strategy to become a middle-income country by the year 2020. This will require a doubling of its economic growth rate, sustained over several years. While traditional exports of cocoa and gold remain an important source of economic growth and foreign exchange, export diversification is necessary to accelerate economic growth and poverty reduction and to minimize the country’s vulnerability to external price shocks. Diversification into the horticultural export industry has the potential to provide just the required acceleration in economic growth. 2. During the last ten years, Ghana has experienced significant growth in export of tropical fruits and vegetables. In 1992 the horticultural sub-sector contributed USD6.77 million to the country’s foreign exchange earnings. Within the space of 10 years, to 2001, the contribution of the sub-sector grew nearly four-fold to USD26.85 million, making up 40% of total earnings accruing to non-traditional agricultural exports. 3. Given the important contribution of the sub-sector, the GoG has set a target to increase export earnings from horticultural exports to more than 50% of its non-traditional export earnings, by the year 2010. This will result in an increase of horticultural and processed cassava products’ exports to more than $200 million per year. The total non-traditional export sector in Ghana is currently estimated at $400 million at FOB prices of which $30 million is horticultural produce. However, recent studies demonstrate that this situation is fragile and that the industry faces important challenges to respond to opportunities on the international market that cannot be met by the private sector alone. 4. Ghana’s main horticultural export products are pineapple, cashew, papaya, banana, mango, yam, and vegetables and to a small extent fresh cut flowers. Growth in the horticultural sub-sector is led by pineapples, the exports of which showed remarkable improvement from 9,754 tonnes in 1992 to 35,174 tonnes in 2001, resulting in an increase in foreign exchange earnings from a low of USD4.4 million in 1992 to USD22.1 million in 2004. The growth in pineapple production has been due to favourable growing conditions. The quality of pineapples varies. They are mainly marketed in Europe, where consumers have shifted their preference towards an MD2 variety against the Smooth Cayenne produced in Ghana. The MD2 variety is grown in Costa Rica and other countries such as Honduras and Ecuador. These countries have entered the European Union market in a significant way and are becoming a threat for Ghanaian pineapples to maintain market share. 5. It is therefore important for Ghana to adjust its product to market dictates in as short a period as possible. The ongoing crisis in the pineapple industry underscores the high level of vulnerability of the industry. Papaya is another relatively new crop to Ghana and exports have risen dramatically in the last 5 years. Exports of vegetables are also rapidly expanding with focus on chilli, tinda and aubergine. Ghana also has a lot of potential in developing the processing of cassava into products for exports, which the Government has set itself to realize.

1 The official definition of non-traditional exports in Ghana, adopted in 1995, includes all merchandise exports except for cocoa beans, logs and lumber and mining products. Horticultural crops make up a major part of this classification.

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6. The global market for tropical fruits and vegetables exported from Ghana (Pineapple, Papaya, Mango, Aubergine, Chillies, Other Vegetables) is estimated at $25 billion, and is dominated on the supply side by countries from South and Central America such as Brazil, Mexico, Costa Rica, as well as the Netherlands and Côte d’Ivoire. During the last five years, the industry has witnessed the emergence of new producers such as Malaysia and re-exporters most of which are European countries. Despite its comparative advantage in the production of these horticultural crops, Ghana faces strong competition from the above-mentioned countries and it is urgent that the country improves its performance in order to take advantage of new opportunities and to reinforce its competitiveness in the export markets. 7. The opportunities presented in the horticultural export industry led the GoG to approach the Bank Group to finance a comprehensive study on agro-industries in 2000 through an ADF grant. Several projects were identified under the study, including the Export Marketing and Quality Awareness Project, with the view to improve quality, increase quantity and build confidence in the agriculture export sector in Ghana. At the request of the GoG, in 2003, the Bank recruited a consulting firm to prepare the proposed project. The GoG also requested the Bank to consider financing increased small-scale farming cassava production for processing into higher-grade starch for export. As a result, an identification mission of the Bank visited Ghana in July 2004, to collect information and data on cassava production and processing. In February 2005, the Bank Group fielded a mission to appraise the project. This appraisal report is based on information contained in the project preparation report, the identification report of the cassava initiative, as well as analysis of data collected during the appraisal mission. 8. The Export Marketing and Quality Awareness Project will address specific constraints which currently limit the development of this growth sector, and will increase its potential to achieve higher productivity and added value by improving the performance of its supply chains and its competitiveness on export markets. It is in line with the strategies of the GoG to boost the export sector in order to contribute to poverty reduction and is consistent with the Bank Group’s strategy for Ghana, which focuses on poverty reduction. Purpose of the Loan 9. The ADF loan of UA17.00 million amounting to 90% of the total project cost will be used to finance 100% of the foreign exchange cost of the project (equivalent to UA14.03 million) as well as 61.75% of the local costs (equivalent to UA2.97 million).

Sector Goal and Project Objective 10. The project will contribute towards the goal of increasing export earnings of non-traditional agricultural products. The objective of the project is to increase incomes of horticulture crop farmers and exporters and of cassava producers. Brief Description of the Project’s Outputs 11. The project will be implemented over five years in four regions. It will have four components, namely (i) Production and Productivity Enhancement; (ii) Export Marketing Promotion and Infrastructure Improvement; (iii) Capacity Building; and (iv) Project Coordination and Management. 12. Production and Productivity Enhancement: The envisaged outputs of component are: (i) Four established and equipped demonstration farms; (ii) Increased volume of MD2 pineapple suckers and quality seeds of other horticultural crops available to farmers. (iii) Increased

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availability of improved planting materials for farmers in the Ayensu area. The outcome of this output is increased production of cassava with high starch content to meet the demand at the Ayensu Starch Company, which will in turn lead to increased incomes for cassava small-scale farmers. These outputs will contribute to the improvement of quality and productivity of produce, which will emanate from improved technology of high quality and high yielding planting materials. 13. Export Market Promotion and Infrastructure Development: The main outputs of this component will include (i) established living database on market information and consumer preferences, and documented marketing strategies for the selected horticultural crops; (ii) 407 km of year-round accessible feeder road network; (iii) established cold chain in each of the four regions under the project. All these outputs will contribute to the promotion of export markets of horticultural crops and of cassava starch from the Ayensu Starch Company as well as to increased incomes of producers and associated actors in the industry. All of these activities will complement those of the ongoing Trade and Investment Program for a Competitive Export Economy (TIPCEE), financed by USAID, as well as the World Bank-financed Horticultural Export Industry Initiative (HEII). 14. Capacity Building: The two major outputs expected from this component are (i) trained horticultural producers and exporters, cassava farmers; farm workers, extension personnel, seed inspectors, and other private entrepreneurs; (ii) strengthened horticultural farmers’ and exporters’ associations. From these outputs there will be increased production as more farmers use improved planting materials and reduce post-harvest losses, once they have received the required knowledge using effective method of dissemination of technology at the established demonstration farms, all of which will in turn result in higher levels of quality produce for exports and cassava for the Ayensu processing factory. Activities under this component will include sensitisation of farmers, farm workers, processors, community based organizations (CBOs), out of which 40% will be women 15. Project Coordination and Management: A Project Coordination and Management Unit (PCMU) has been established under the Horticultural Export Industry Initiative (HEII) financed by the World Bank. The team is led by a full-time coordinator, whose only task is to manage the project, and includes three other technical specialists, in the fields of (i) research, innovation, food safety; (ii) infrastructure; (iii) horticultural planting materials and seeds. In addition to this team, the Government will assign to the project a Monitoring and Evaluation officer to work closely with the current HEII technical team, who will remain in the Programme Planning Monitoring and Evaluation Directorate of MOFA (PPMED) to strengthen project management. Support staff will provided by AgSSIP. The PCMU will supervise the selection and screening of individuals who will participate in the various training programs and will also supervise the work of all consultants recruited under the project. Project Cost 16. The total cost of the project is UA18.84 million, including 12% local price escalation and 5.65% foreign price escalation, per annum.

Sources of Finance 17. The project will be financed jointly by the ADF and the GoG. The Fund’s contribution is UA17.0 million, equivalent to 90% of the total project cost, including 100% of the foreign exchange cost, representing UA14.03 million, and 61.75% (amounting to UA2.97 million) of

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local costs associated with operations and maintenance, training and workshops. The GoG contribution is estimated at UA1.84 million, equivalent to 10% of the total project cost. The Government contribution will cover salaries of project staff, office utilities for the project management as well as maintenance of vehicles. Project Implementation 18. The project will be implemented over a period of 5 years. The Executing Agency of the project will be the Ministry of Food and Agriculture, AgSSIP. Conclusions and Recommendations 19. The Export Marketing and Quality Awareness project, designed with the active involvement of stakeholders in the country, will contribute to increasing the production and exports of horticultural products as well as the production of cassava. The project will address specific constraints which currently limit the development of this growth sector and will increase its potential to achieve higher productivity and added value by improving the performance of its supply chains and its competitiveness on export markets. 20. By training extension workers, representatives of CBOs and leaders of associations who, in turn, will train farmers and exporters for increased value addition at the farm level, the project will contribute to one of the fundamental goals of Regional Member Countries of increasingly adding value to agriculture products. This will ensure higher returns to small-scale operators who are usually the poor segments of the population, and comprise mainly women. Support under the Production and Productivity Enhancement Component will contribute towards the export of increased amounts of high quality produce which will generate increased foreign exchange to Ghana. Activities under the Export Marketing Promotion and Infrastructure Improvement component will create awareness among exporters and buyers from importing countries. It will also increase trade with countries in the ECOWAS region. With improved human and institutional capacity, the project will help to mitigate some of the major constraints to the industry. This will strategically position Ghana to effectively find a niche and compete in the global horticultural market.

1. INTRODUCTION 1.1 Origin and History of the Project 1.1.1 The development of non-traditional exports2, under which horticultural exports fall, is a central element of Ghana’s strategy to become a middle-income country by the year 2020. To realize this aspiration, Ghana needs to continue increasing its economic growth rate (real GDP growth of 5.8% in 2004 from 5.2% in 2003), and to sustain the upward trend over several years. A number of studies of the country’s agriculture have suggested the potential for transforming both the sector and the economy with a view to enhancing productivity. These studies have also indicated the need for growth in agriculture as a necessary condition to stimulate growth in other sectors as well. While traditional exports of cocoa and gold remain an important source of this needed economic growth and foreign exchange, export diversification is necessary to accelerate economic growth and poverty reduction and to minimize the country’s vulnerability to external price shocks. The GoG, in line with the Accelerated Agricultural Growth and Development Strategy (AAGDS), has focused on reforming the cocoa industry while promoting selected non-traditional agricultural commodities for which Ghana has or can develop comparative advantage to produce for the domestic market and for export into regional and international markets. Horticultural crops were identified as such non-traditional commodities. 1.1.2 The GoG has set a target to increase export earnings from horticultural exports, to more than 50% of its current total export earnings by the year 2010. This will result in an increase of horticultural and processed cassava products’ exports to more than $200 million per year. The total non-traditional export sector in Ghana is currently estimated at $400 million at FOB prices of which $30 million is horticultural produce. However, recent studies demonstrate that this situation is fragile and that the industry faces serious challenges in responding to opportunities on the international market that cannot be met by the private sector alone. 1.1.3 Given that Ghana is a major producer of cassava, for which it has comparative advantage in production, there is a lot of potential to develop the processing of cassava into higher value products for exports, which the Government has set itself to realize. For these processing facilities to succeed there is need to ensure reliable and sustained availability of cassava. Hence, support to cassava production, mainly by small-scale farmers, is a strategic step for the Government. 1.1.4 The global market for tropical fruits and vegetables exported by Ghana (Pineapple, Papaya, Mango, Aubergine, Chillies, Other Vegetables), estimated at $25 billion, has historically been and remains dominated on the supply side by countries from South and Central America such as Brazil, Mexico, Costa Rica, as well as the Netherlands and Côte d’Ivoire. During the last five years, the industry has witnessed the emergence of new producers, such as Malaysia, and re-exporters, most of which are European countries. Despite the comparative advantage in the production of these horticultural crops, Ghana faces strong competition from the above-mentioned countries and it is urgent that Ghana improves its

2 The official definition of non-traditional exports in Ghana, adopted in 1995, includes all merchandise exports except for cocoa beans, logs and lumber, and mining products. Horticultural crops make up a major part of this classification.

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performance in order to retain the gains, to take advantage of new opportunities, and to reinforce its competitiveness in the export markets. Failure to invest in accessibility of high quality planting materials, key infrastructure, quality awareness and assurance, and marketing will reverse even the gains made to date in the horticultural export industry.

1.1.5 The opportunities presented in the horticultural export industry led the GoG, to approach the Bank Group to finance a comprehensive study on agro-industries in 2000 through an ADF grant. Several projects were identified under the study, including the “Export Marketing and Quality Awareness project” with the view to improve quality, increase quantity and build confidence in the agriculture export sector in Ghana. The results of the study were shared with all the development partners in Ghana. This has generated an overwhelming interest among donors, in particular the World Bank and USAID, which have favourably responded with consistent investment into the sub-sector. As a follow up to the study, the Government of Ghana requested the Bank Group to consider financing the Export Marketing and Quality Awareness project. In 2003, the Bank responded by recruiting a consulting firm to prepare the proposed project. The GoG also requested the Bank to consider financing increased small-scale farming cassava production for processing into higher-grade starch for export. As a result, an identification mission of the Bank visited Ghana in July 2004, to collect information and data on cassava production and processing. In February 2005, the Bank Group fielded a mission to appraise the project. This appraisal report is based on information contained in the project preparation report, the identification report of the cassava initiative, as well as the analysis of data collected during the appraisal mission. 1.1.6 The Export Marketing and Quality Awareness Project will address specific constraints, which currently limit the development of this growth sector and will increase its potential to achieve higher productivity and add value by improving the performance of its supply chains and its competitiveness on export markets. It is in line with the strategies of the GoG to boost the export sector in order to contribute to poverty reduction, and is consistent with the Bank Group’s strategy for Ghana, which focuses on poverty reduction.

2. THE AGRICULTURE SECTOR 2.1 Salient features 2.1.1 Ghana is located in West Africa, on the Gulf of Guinea, bordered by the republics of Côte d’Ivoire, Togo and Burkina Faso. It covers a geographic land area of 238,539 km², and has a population of about 21 million, growing at the rate of about 2.8%. Nearly 60% of the population lives in rural areas. According to the United Nations Development Programme (UNDP) Human Development Index, the country ranks 129 out of the 175 countries and is classified as a Heavily Indebted Poor Country (HIPC). The country is divided into ten administrative regions, which, in turn, are subdivided into 110 administrative districts. 2.1.2 Throughout Ghana, the mean annual temperature never falls below 25 degrees Celsius, a consequence of the low latitude of Ghana and the absence of high altitude areas. The country is divided into four diverse agro-ecological zones, which provide great potential for the development of a wide range of crops, livestock and fisheries activities. (1) The coastal savannah zone covers about 16,000 km² (7% of the total land area), with average rainfall between 600mm and 1,150mm per annum. The vegetation is mainly constituted of grass and scrub, generally a characteristic of poor soils. Maize, cassava, fruits and vegetables are the most widely produced crops. (2) The forest zone covers about 84,000 km² (about

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35% of the land area). The average annual rainfall ranging from 1,150 mm to over 2,000 mm is the highest in the country. The principal crops are cocoa, cassava, plantain and yam. (3) The forest-savannah transitional zone lies north of the forest zone, and covers, on average 1,450 mm of rain annually. The soils are fairly fertile and support a wide variety of crops such as maize, yam, tobacco, and cassava and, to a lesser extent, plantains. (4) The guinea savannah zone covers about 136,000 km² (about 57% of the land area). The zone is characterized by one major rainy season, from May to October and a long, dry season (November-April). The zone is suitable for the largest diversity of crop production activity. Rice is by far the most important cash crop in the zone and is produced in the valley bottoms. Millet, sorghum, yam, maize, groundnuts, vegetables and cotton are also widely produced. Livestock production is also important in this zone, with more than 70% of the country’s cattle, sheep and goats. 2.2 Socio-Economic Situation and Production 2.2.1 Agriculture directly employs 70 percent of the labour force, and accounts for more than 55 percent of foreign exchange earnings. However, the sector performance has fallen short of the targets of 5-6 percent growth per annum set in the Government’s Vision 2020. Instead agriculture output increased by 3.9 percent in 1999, 2.1 percent in 2000, and showed a recovery of 4% in 2001. Cocoa production declined by 1.0 percent during this recovery period, compared with a growth of 6.2 percent in 2000. To a large extent this has been due to the falling international cocoa prices. The major challenge for the Government is to restructure the sector in such a way that there is less reliance on cocoa and to ensure that high growth rates can be achieved and sustained over long periods. To reverse this trend, the GoG, in line with the Accelerated Agricultural Growth and Development Strategy (AAGDS), has focused on reforming the cocoa industry while promoting selected non-traditional agricultural commodities for which Ghana has or can develop comparative advantage to produce for the domestic market and for export into regional and international markets. Horticultural crops were identified as such non-traditional commodities. 2.2.2 The sector (comprising Crops, Livestock, Forestry and Fisheries) contributes about 34% of GDP while Services account for 42% and Industry for 24%. Overall export revenues were USD2,100 million and USD2,300 million in 2002 and 2003 respectively, with cocoa, timber and gold as the major export commodities, together accounting for USD1,300 million (64.7%) and USD 1,800 million (78.8%) for the same period, respectively. Cocoa alone earned over 35% of the export revenues in 2003. Non-traditional exports (horticulture products, processed fish, handicrafts, textiles, etc.) revenues were estimated at USD 490 million in 2003. The annual agriculture GDP growth averaged 3.8% in the period 1992–2002, and rose to 6.1% in 2003 in spite of a 0.5% decline in the cocoa sub-sector. The 2004 cocoa production record stood at 734,699 Mt for a foreign earning of USD 1,200 million. This is the highest production record in the industry since 1965 (580,869 Mt), and also the highest foreign revenue ever achieved by the cocoa sub-sector. 2.3 Land Tenure 2.3.1 Most of the agricultural land in Ghana is under communal ownership. Communal land is controlled by lineage or clan-based land-owning groups and allocated to individuals or households on a usufructuary basis. In most parts of the country, particularly in the northern regions, women generally have difficulties in accessing such land except where there is a male guarantor, or where there is group ownership of land.

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2.3.2 The strong influence that traditional leadership in Ghana exercises over land allocation and use does not always support safeguards for long-term investments, which are frequently required to achieve the objective of modernising agriculture. The comprehensive National Land Policy was introduced in 1999 to serve as a framework for amendments of legislation and formulation of strategies for allocation, utilisation and administration of land. The progress in formalising land ownership through issuing of title deeds has been gradual and most rural land is still under customary law vested in local chiefs. Instead of pressing for transfer of ownership into the hands of the land users under a national land law, new forms of co-operation between the users and the land custodians are being sought, such as is being done under the oil palm expansion project, one of the President’s Special Initiatives. In general terms, women continue to be disproportionally constrained from accessing land, especially for long term use. 2.3.3 In the absence of an agreed national framework for allocation and utilisation of land, the Government has decided to move towards a more transparent system of first addressing the issues of land demarcation and administration. The Land Administration Project, which is financially supported by a number of donors, started in 2003 to reform land laws over a fifteen-year period, and is part of this Government strategy. The first five-year phase will address issues of linkages between land tenure and the rights to trees, wildlife and non-wood forest products as well as the balance of the overall interests of the land users and the custodians of the land. In the meantime, the traditional land tenure still prevails and does not constrain the development of horticultural and cassava growers in coastal areas. 2.4 Poverty Status 2.4.1 About 39% (8 million) of the population in Ghana are classified as living in poverty or extreme poverty. Two million people (10%) classified as living in poverty are unable to meet their food and other needs, while the six million classified as living in extreme poverty are unable to meet even their most basic food needs. Fifty-eight percent (58%) of those identified as poor are in the agriculture sector, most of whom are food producers. The prevalence of extreme poverty varies in different parts of the country, with the Northern and Western regions recording above 70%, while the Accra area has less than 5%. The incidence of poverty is more prevalent among subsistence farmers and female-headed households. Women, especially in rural areas, have less access than men to education, land and credit. Socio-cultural factors continue to play an important role in perpetuating such gender inequities, as evidenced by the statistics in the Socio-economic indicators table on page vii. 2.4.2 Nonetheless, Ghana has experienced continued economic growth since 1992. The incidence of poverty declined from 52% in 1991/92 to 39% in 2004. The proportion of the population living in extreme poverty fell to approximately 25% during the same period. The decline in overall poverty, however, has not been evenly distributed geographically, with poverty reductions being concentrated and skewed in Accra and the rural forest areas. Export farmers and wage employees in private employment enjoyed the greatest gains in their standards of living while food farmers experienced the least gains. In its Poverty Reduction Strategy (GPRS), which was endorsed by the African Development Bank and the Donors community, the GoG aims to reduce the incidence of overall poverty to 32% in 2005 and to reduce poverty among subsistence farmers from 59% in 2000 to 46% in 2005 and extreme poverty from 27% in 2000 to 21% in 2005. These targets will be verified in the next poverty survey.

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2.4.3 The erratic rainfall pattern, coupled with the rudimentary technology used in most production processes lead to fluctuations in food production from year to year, which causes food insecurity. In almost all parts of the country, farming systems are based on mixed cropping, small-scale operations. Ghana’s agricultural production is predominantly rain-fed and is estimated to operate at 20% of its potential; thus it has failed to make a significant impact on poverty reduction and food security. These operations are characterized by small size land holdings of less than 2ha, accounting for 90% of the total cultivated land; holdings above 20ha represent about 10%. Small-scale farming is almost exclusively managed by women, who produce about 80% of the total agricultural production, using mainly labour-intensive technology. They also constitute 59% of the country’s poor. 2.4.4 Despite Ghana’s abundant water resources, with the Volta river system, draining about 70 percent of the total land area, only about 11,000 ha (0.2 percent of cultivated lands in the country) out of a potential 346,000 ha of irrigable land area are irrigated and used mainly to grow rice and vegetables. Efforts to promote irrigation are evidenced by the Government support to development of new agricultural lands and the rehabilitation of existing irrigated schemes. Given the erratic nature of rainfall, contrasting trends are observed in the cultivated land areas, volumes and yields of agricultural production for the principal export and food crops. During the period 1990-2000, Cereals including maize, millet, rice and sorghum were grown over an estimated total land area of 0.9 million ha (1990) rising to 1.31 million ha (2000). The total production for the same period rose from 0.8 million metric tonnes (Mt) to 1.7 million Mt, with average yields also rising from 0.9 Mt/ha to 1.3 Mt/ha. (The trends for the export crops are given in Section 3 on the Export Sub-sector.) Plantain banana and root crops such as yams and cassava are important food and cash crops. In 2002, production of these crops was estimated at 2.3 million Mt, 3.9 million Mt and 9.7 million Mt, respectively. 2.4.5 In 2003 agricultural production statistics were: 1) Cereals: maize (1.3million Mt), sorghum (340,000 Mt), millet (176,000 Mt) and rice (239,000 Mt); 2) Starchy crops: cassava (10million Mt), yam (4million Mt), cocoyam (2million Mt) and plantain (2.4million Mt); and 3) Industrial & tree crops: cocoa (340,000 Mt), tobacco, cotton, oil palm, rubber and shea nuts. Recently, the country has engaged in the development of the non-traditional export crop sector including: fruits (pineapple, papaya and mango), vegetables (chillies, eggplant, okra and Asian vegetables) and root crops (yam and sweet potatoes). 2.4.6 Livestock and fisheries contribute about 7% and 5% respectively, to agricultural GDP. Livestock is mainly concentrated in the Guinea and Sudan Savannah zones. The region accounts for about 75% of the cattle population in Ghana, with the dry coastal savannah in the south accounting for about 15%. The remaining transitional and humid forest zones are sparsely populated with cattle because of the prevalence of tsetse flies, vector of the trypanosomiasis. Small ruminants and poultry are more evenly distributed throughout the country, whereas pigs are concentrated in the forest belt and around urban areas. Livestock and fisheries play an important role in the agricultural sub-sector, providing some 30% and 60%, respectively, of the entire animal protein intake. Livestock is also a major source of draught power for crop production. Women draw income-generated benefit from livestock, since they are able to own pigs and small ruminants. The 2003 Statistics indicate that there are some 26 million poultry, 3.7 million goats, 3 million sheep, 1.36 million cattle and 300,000 pigs. Total fish production has been declining, from: 468,000, 454,000 and 378,000 Mt in 2000, 2001 and 2003, respectively.

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2.4.7 The Forestry sector: The forestry sector contributes 3.6% to the national GDP (2002) and accounts for 11% of national export earnings. Ghana's forest cover has been reduced from 8.2 million hectares to the current 1.7 million hectares, within the last fifteen years. The country has 32,000 km² of forest reserves, of which, 400,000ha are classified as degraded; 350,000 ha comprising primarily hill and swamp sanctuaries and biodiversity reserves require urgent permanent protection. The remaining 900,000 ha are suitable for timber production, which is part of the country’s traditional export commodities. The government’s on-going strategy to address the challenges in natural resource management is largely embodied in conservation and sustainable development of the nation’s forest and wildlife resources for the maintenance of environmental quality and the perpetual flow of optimum benefits to all segments of society. 2.5 Gender Issues 2.5.1 Women represent 50% of the labour force, in Ghana. Increasingly women are involved in commercial farming activities, but the majority are still engaged in producing food crops. Labour is gender disaggregated at the household level. Women and children are the predominant labour force especially in the off-planting season. Almost exclusively, women are responsible for family or home-based economic activities like food production, processing and marketing of agricultural products. 2.5.2 Gender-specific roles exist in farming operations. Men normally carry out land preparation, ridging, re-ridging, and spraying, while the women plant, weed, water, bird-watch, harvest and carry out post-harvest handling and marketing. For horticultural production, women are predominantly engaged in weeding, spraying, picking, sorting, grading and packing. Women disproportionally face difficulties to own land, as well as to access credit since they often lack collateral for security. Trading is a primary occupation for women, and is practised as an off-season activity to supplement farm incomes 2.5.3 To address the gender issue, the government has demonstrated its commitment to improving the situation of women and children, by signing numerous international conventions in this area, among others. A strategy has also been developed to work towards getting 40 percent of decision-makers at all levels to be women. The GoG has also invested in development interventions which are predominantly for women, such as small-scale rural enterprises. 2.6 HIV/AIDS and Malaria HIV/AIDS: The national HIV incidence is around 4%, and varies from region to region. The number of people living with HIV in the country is estimated at 420,000 and about 200 people are infected daily. Women constitute 63 percent of the cases reported. The high migrant population and resistance to the adoption of safe sex measures are a major risk to an increase in the prevalence rate over time. The National AIDS Control Programme has limited capacity to handle the required multi-sectoral approach. Training activities on AIDS are also limited, with most activities restricted to the health services. Community responses to embark on HIV/AIDS prevention activities are insufficient due to limited resources. There is need to co-ordinate community-based activities and ongoing research efforts. To address these constraints, the GoG has adopted a strategy of integrating routine HIV/AIDS activities into regional and district plans and budgets, and building capacity of key institutions in order to further promote AIDS control activities in other sectors. AIDS affects human resource

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productivity and hence it is of direct concern to the agricultural sector and to the success of this project. Nevertheless, the incidence of malaria remains the highest single source of morbidity and mortality in Ghana. The Government is making concerted efforts to spearhead prevention measures such as the use of bed-nets. 2.7 Agricultural and Rural Development Policy Framework

2.7.1 Ghana has demonstrated its commitment to implement significant policy reforms aimed at improving the country’s prospects for sustained economic growth. In 2000, the GoG prepared the Accelerated Agricultural Growth and Development Strategy (AAGDS), with the aim of raising agricultural growth to 6% per annum, by improving: (i) market access for selected commodities, (ii) technology access, (iii) rural finance, (iv) infrastructure, and (v) by building capacity of institutions and human resources. The AAGDS is part of the country’s Poverty Reduction Strategy (GPRS), a comprehensive framework for poverty reduction and creation of wealth through accelerated growth. AAGDS is operationalized through the Agriculture Strategic Plan. This is a three-year rolling plan currently for the period 2004–2006. The current GPRS for the period 2003-2005 has five pillars: (i) agricultural modernisation and rural development to increase production and employment; (ii) infrastructure development; (iii) enhanced social services; (iv) good governance; and (v) private sector development.

2.7.2 The main policy document for the agriculture sector is the Food and Agriculture Sector Development Policy (FASDEP), which was adopted in 2002. In the FASDEP document, the GoG focused on increasing production through commodity-oriented initiatives. The principal goal is to establish a modern, robust and diversified agriculture sector, in line with the first GPRS pillar and the Millennium Development Goals (MDGs). 2.7.3 MOFA, has begun to operationalize the GPRS by prioritizing activities which are: (a) service-oriented: farm technology improvements, including improved planting materials and low-cost pest management; facilitating improved storage and market access; and facilitating increased processing capacity for small-scale farmers; (b) commodity-oriented: support to nucleus–out-grower schemes; and (c) area-based: small irrigation schemes with appropriate technology. In addition, the MOFA extension policy aims to incorporate information on prevention of HIV/AIDS and other social considerations into its advisory messages. MOFA acknowledges that these actions only represent a first step towards an effective pro-poor sub-strategy and need to be followed soon by further measures to have the desired impact.

2.8 Interventions of Major Donors in the Sector 2.8.1 In 2004, the Government of Ghana has established a Donor Coordination Desk in the Ministry of Food and Agriculture, to ensure synergy of efforts among development partners involved in the rural and agriculture sector, and avoid duplication of scarce resources. The GoG has prepared a National-Medium-Term Investment Programme (NMTIP) and a Portfolio of Bankable Investment Project Profiles. The NMTIP has involved the on-going and future programmes of development partners, defined in line with the country’s PRSP. A number of Donors have pledged or provided financial support towards the modernization of agriculture, one of the priorities in the PRSP. The Bank Group, the World Bank, IFAD, CIDA, USAID, DANIDA, European Union, Agence Française de Développement (AFD), JICA, DFID, FAO and GTZ, have provided support towards the many programmes contained in both the AAGDS and the FASDEP. Financial support from the various donors is coordinated under the AgSSIP framework.

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2.8.2 Major projects and programs financed by donor agencies are as follows: The World Bank financed Horticultural Export Industry Initiative (HEII) and the USAID-financed Trade and Investment Program for a Competitive Export Economy (TIPCEE), both of which are ongoing and will complement the activities of this project. The Agricultural Sub-Sector Investment Program (AgSSIP), jointly supported by World Bank, IFAD, EU, JICA, DANIDA and CIDA, with a budget of USD123 million. The African Development Bank Group is particularly active in the sector, with the on-going Livestock Development Project, the Food Crops Development Project, the Cashew Development Project, the Small Scale Irrigation Project and the Community Forestry Development Project, the Special Programme for Food Security (SPFS) and the Inland Valleys Rice Development Project. The Bank is also engaged in co-financing partnership with IFAD for the Rural Enterprise Project. Other donor-funded projects are the Village Infrastructure Programme, jointly financed by IDA, IFAD, KfW; the Root and Tuber Improvement Programme (RTIP), the Land Administration Programme and the Land Conservation and Smallholder Rehabilitation Project, all financed by IFAD. 2.8.3 Lessons learnt: Past agricultural projects depended heavily on public intervention, resulting in limited ownership of the programs by the beneficiaries. Increasingly, projects are being designed so that farmers and communities participate fully in the planning and management process, which has resulted in beneficiary ownership and sustainability. Delays in declaration of project effectiveness, inadequate procurement, slow disbursement and inadequate counterpart funding, have affected the implementation of the some projects. Finally, the design of some of the projects is such that it is difficult to utilize the all the funds allocated on time. As a result, donors’ funds may not be fully utilized by the end of project, hence necessitating requests for extension of project implementation.

3. THE EXPORT SUB-SECTOR 3.1 Traditional Exports 3.1.1 Ghana’s traditional major export commodities are gold, cocoa and timber. Gold and cocoa contribute more than 80% of foreign exchange. Cash crops, comprising primarily cocoa timber and others (coconuts, other palm products, shea-nuts and coffee) provide about two-thirds of export revenues, estimated at USD 3.01 billion in 2004. The major export partners of Ghana are: Netherlands (11%), United Kingdom (10.6%), France (7.6%), Germany (6.2%), Japan (5.2%), Italy (4.6%), Nigeria (4.4%) and the United States of America (4.2%). The combination of unstable cocoa production, due to unfavourable weather conditions and the recent declines in world prices for cocoa and gold has reduced export earnings. Cocoa beans export volumes stood at 280,000Mt in 1999; 360,300Mt in 2000; 335,500Mt in 2001 and 310,700Mt in 2002; 340,000 Mt in 2003; and in 2004, a record of 734,699 Mt for a foreign earning of USD 1.2 billion. Cocoa alone earned over 35% of the export revenues in 2003. Britain continues to be the principal market for Ghanaian cocoa beans, absorbing approximately 50 percent of all cocoa beans exported. 3.1.2 With the decline in cocoa and gold world prices, the Government realized the need for diversifying its sources of foreign earnings into the production and export of horticultural products, which in turn will improve the livelihood of rural populations. By means of incentives, the government has engaged in promoting non-traditional exports (NTE) in the agriculture and fishing sectors since 1983. The project has been very successful in the

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agricultural sector, with the rapid development of export activities for non-traditional agricultural products including fruits such as pineapples, mangoes, papaya, but also cashews and vegetables. 3.2 Non-Traditional Exports 3.2.1 In 1992 the Ghana Export Promotion Council announced a plan to raise Non-traditional Exports (NTE) to USD335 million by 1997 through increased market research, trade missions, trade fairs and exhibitions, and training. The GoG provided a wide range of incentives, which generated considerable response so that by 1998, more than 700 exporters were exporting 123 products. The NTE comprise all merchandise exports except for cocoa beans, logs and lumber and mining products. They are grouped as follows: (i) Agricultural products (horticultural produces, fish and seafood and others); (ii) Processed and semi-processed goods; and (iii) handicrafts. 3.2.2 In 2004, the overall NTE accounted for 8.8% of GDP. As at December 2004, NTE raised more than US$640 million. The European market has been the main market destination of Ghanaian NTEs in 2004, absorbing about 82.6% of the total agricultural exports. In Europe, the United Kingdom is the primary destination, accounting for about 42.1% of total export earnings, followed by Belgium, France, Germany and Italy. Other destinations are ECOWAS countries with about 17%. 3.2.3 Horticultural exports - Agricultural NTEs have the potential for increased foreign earnings, rural employment, incomes and growth, thus reducing poverty. During the period 2000-2004, horticultural products, led by pineapple, have been the biggest contributor to Agricultural NTEs, ranging from 36 to 39%, and accounts for about 36% of the total value of export earnings. The next major contributors are fresh papayas, mangoes and Asian vegetables (tinda, okra, chillies and pepper). Volumes and export earnings have significantly increased in the period of 2000-2003, as indicated in the table below.

Table 3.1: Volume and Value of Non-Traditional Exports (NTEs) (2000–2003)

VOLUME (Mt) VALUES (million USD) NTEs

2000 2001 2002 2003 2000 2001 2002 2003 Pineapple 26,173 19,703 46,391 49,557 11.50 8.00 15.50 60.00Canned Pineapple 1,486 1,416 1,400 na 6.00 5.70 5.50 na Papaya 1,530 na 1,438 1,714 1.20 Na 1.60 2.20Vegetables 2,425 1,894 6,005 7,085 1.20 0.80 7.30 9.50Total 31,614 23,013 55,234 58,356 19.90 14.50 29.90 71.70

3.2.4 The 2004 preliminary statistics indicate an overall volume estimated at 130,000 tonnes valued at USD60.5 million. World Export markets for the principal horticultural crops are indicated below.

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Table 3.2: Market Indicators for NTEs Produced by Ghana

Market Indicators Pineapple Papaya Mangoes Aubergines Chillies and Peppers

World Volume (Mt) 1,765,361 404,338 1,054,668 474,000 4,000,000 Value (USD million) 987.00 163.50 648.90 231.80 2.30 Major Exporters Costa

Rica Mexico Brazil Malaysia

Mexico India Brazil Philippines

Spain Netherlands Mexico

Netherlands Spain Mexico

Ghana’s % market share 7% 2% Negligible Less than 1% Negligible Major. export destinations for Ghana produce

EU ECOWAS

EU ECOWAS

EU ECOWAS

EU ECOWAS EU ECOWAS

3.2.5 Pineapples - The world export market is dominated by Costa Rica (20%) followed by Cote d’Ivoire (17%). Ghana market share is estimated at 7%. Export earning was valued at USD 22 million in 2004, with USD 19 million, from the EU market. World pineapple consumption grows annually by 10% on average and this trend is expected to continue. However, Ghana could lose part of its market share due to the change of consumers’ taste from the traditionally consumed ’Smooth Cayenne’, produced by African countries, to the new MD2 cultivar, from Costa Rica. The difference in taste characteristics is highlighted in the next paragraph. Papayas - The world export market is led by Mexico (29%), followed by Brazil (18%), Malaysia (16%). Ghana is the 9th exporter, with a share of 2%. Mangoes - The market is led by Mexico (20%), followed by India (13%), Brazil (12%), and the Philippines (7%). Ghana occupied the 42nd position with a negligible share. In Ghana, mango will be an important NTE crop in the future, principally for export to EU countries. Vegetables. (1) Aubergines- The world largest supplier is Spain (30%) followed by the Netherlands (26%), Mexico (17%) and Jordan (4%). Ghana is in the 25th position with a share well below 1%. (2) Chillies and peppers- The market is dominated by Netherlands (35%) followed by Spain (25%) and Mexico (17%). Ghana occupies the 40th position with a minimal share of the total market. 3.2.6 MD2 was developed by Del Monte scientists in Costa Rica, for a target market looking for extra sweet fruit, uniform in size and ripeness. In addition to being sweeter than regular pineapples, MD2 has a smooth, distinctive bright yellow exterior, less acidity and a more complex taste, with a distinct coconut flavour. It contains four times the vitamin C of regular varieties. For these characteristics, MD2 is also known as “designer pineapple”. It also offers long shelf-life at room temperature. The agronomic practices of the MD2 pineapple variety are similar to those already in practice in Ghana for the Smooth Cayenne variety. As a tropical crop, it grows in areas of average rainfall between 1,000 - 1,800 mm per annum, as is the case in Central, Eastern and Volta regions in Ghana, where the majority of pineapple plantations are rain-fed. The crop thrives well in a temperature range of 25°C to 32°C and a wide range of soil types, but well drained sandy loam soils with ph of 4.5–6 are preferred. Pineapple plants require about 14 months to mature. The agronomic practices should not be an insurmountable constraint to widespread introduction of MD2, since there will be a strong R&D component to be run by Research Institutions which will address the issue.

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International Trade Constraints for Horticultural Produce 3.2.7 The Cold Chain: Horticultural crops being highly perishable, go through a rapid natural process of degradation immediately after harvesting. With exception of two or three exporting companies, the entire horticultural business in Ghana is being performed without the use of controlled temperature devices during packing, transport and prior to shipment, limiting the shelf life of the product. There is thus need to establish a cold chain. A cold chain implies a continuous control of temperature to which the produce is subjected from the time it is harvested up to the time it is sold to retailers in the importing country. This requires investments in post-harvest infrastructure starting from temperature-controlled vehicles to carry the produce from the fields to temperature-controlled facilities for cleaning, grading and packaging. These are usually referred to as pack-houses. From the pack-houses, the produce should be carried again in temperature-controlled vehicles to temperature-controlled room facilities at the exit ports. Through establishment of a cold chain, product quality is maintained, losses minimized, and shelf-life of the products improved. 3.2.8 Transportation: In Ghana, transportation is performed from packing-sheds to seaport/airport in insulated trucks without temperature-control equipment. On arrival to the loading place, cargo generally remains in the truck until the time of final loading. If major delays are announced, cargo may be offloaded from the truck and stored for waiting in the terminal sheds. At both port and airport facilities, sheds are at ambient temperature and without ventilation. 3.2.9 In the early 1990s, when exports of horticultural products started, air-freight was the only means of transportation into Europe. Air freight is now left to papaya and vegetables which have a much shorter shelf life. Currently, most of the exports are transported by sea. Sea transportation of horticultural products is performed either in refrigerated holds (80%) or reefer containers (20%), the second one being more expensive because they are refrigerated containers. Despite this improvement, sea-freight rates from Ghana are the highest in the West African region. At the present small volume of exports, it is difficult to attract chartered freight services at less than 40% of the Cost and Freight (C&F). To attract shippers at lower rates, Ghana needs a minimum of 4,000 pallets. During transportation in Ghana and by sea or air, goods are not insured because there is no insurance facility. 3.2.10 Port and Freight Charges: The GoG is in the process of liberalization and privatization of port handling and management. This process has yet to be finalized. In the meantime, the Ghana Ports and Harbors Authority (GPHA) has entered into a special agreement with horticultural crops’ exporters, under which they have been availed a 66% rebate in stevedores and shed handling charges. While this will contribute to facilitating the movement of produce, these arrangements are short term and are not enough to meet the standards required for the target market. The HEII project financed by the World Bank will upgrade facilities at the airport and at the Tema port, and is also investing in two pack houses. 3.2.11 Freight costs amount to about 40% of the total C&F value of Ghanaian horticultural products. These charges are high and are due to low shipping volumes as well as to inefficient and expensive port services (pilotage, towage, mooring, port and light dues) charged by GPHA to the shipping companies. Compared to other West African ports, such as Abidjan, show that their average freight rate to European ports range between USD70 to 80 less than the rate from Tema, (USD110 against USD182 per 780 kg pallet). The limited shipping volumes have attracted limited shipping services, especially in the sea transportation sector, which in turn limits diversification of markets for horticultural products.

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3.2.12 At destination: Most exporters retain sales agents at destination markets. Sales agents recall and sell the produce to the supermarkets and wholesalers. After the transaction is completed, the agents prepare a statement with indication of: a) final selling price, b) discounts due to poor quality or commercial problems, c) detailed expenses related to quality inspection, trucking, labeling, storing, and finally, d) the agent’s commission that lies between 5% and 7% of the net selling price. After this, the international freight value is paid by the agent and deducted. The balance is the final income received by the Ghanaian exporter. The absence of exporter representation at destination markets, prevents the possibility of counter-checking discounts claimed because of poor quality. 3.2.13 Export performance and expansion: The long historical presence of Ghanaian products in the international markets is widely known and its quality accepted through its traditional exports of cacao, gold and timber. The strong export growth over 100% of the horticultural sector during the last 5 years has given Ghanaian horticultural products a presence in different consuming markets. Ghana has been able to produce a premium product that has found rapid acceptance in the European market. In addition, these products can be supplied during the European off-season. Despite quality problems pertaining to any incipient industry, the rapid success in capturing an important sector of the market indicates the high potential for market expansion that Ghanaian horticultural products have. 3.2.14 Trade Barriers: Improving the position of Ghanaian horticultural products in the world’s principal markets is a major challenge. There are many barriers to overcome including tariff and non-tariff barriers. Most of these barriers were created at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) which prompted developed countries to adopt new methods for assisting their producers, including refitting subsidy limits and granting access to those markets within the domain of the World Trade Organization (WTO). Horticultural products are the primary target of phyto-sanitary protectionism. Other limitations are: limiting imports during local harvests, imposition of minimum prices for imports, and obligation for pre-licensing of importers. Ghana benefits under the privileged trading arrangements between regions having specific trade preferences such as those granted by the EU for ACP countries under the Lomé Convention, lately through the new Cotonou agreement and the new regime known as “Everything but Arms” that provides zero-duty access for all products except arms from the least-developed countries. Also, the USA African Growth and Opportunity Act offers benefits to Ghana’s exports, through reduced import tariffs. 3.2.15 Brand Development: Brands have proved to be very effective marketing tools for horticultural products. Ghana has yet to develop one. There are plans to sign an agreement between GEPC and the producers/exports associations to establish and promote a Ghanaian Fruit Seal to guarantee standards and the quality of products, and widen the exports of the horticultural sector. The industry has no strategy to organize an international campaign in countries already importing Ghanaian products. The aim should be not only to increase market share, but also to transfer the focus of revenue from international importers and wholesalers to the distribution chains, for wider profit margins. Efforts in this area have been limited to activities such as developing food fairs. 3.2.16 Finance: Access to long-term capital and trade finance services is available at prohibitive interest rates (28%-34%) through regular financial institutions. The Government has channeled funds through the Export Development Investment Fund (EDIF) at more

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affordable rates of interest (15%). These funds are underused. Farmers and exporters argue that procedures are cumbersome and collateral requirements excessive. There is need to review the scheme in order to increase the availability of long-term finance for export development. Finance is one of the key instruments to invigorate exports. Horticultural exporters are paid long after shipment is performed or (better) after consignment has been paid by final buyer without any partial or total advanced payment in cash or through letters of credit that could be used as pre-financing tools. EDIF is addressing this issue, including using re-financing and credit guarantees through designated financial institutions and other institutions involved in the export trade sector. A further problem is that Ghana has no Export Insurance, which has adverse effects on export-related businesses. Effective trade financing requires credit resources for export transactions, as well as insurance to mitigate and minimize the risks that are inherent in the execution of export transactions, especially the risk of non-payments. The Export Guarantee and Insurance Company is addressing this constraint with funding from EDIF. 3.2.17 Out-growers scheme - Horticultural production in Ghana is organized based on the Pineapple production model applied by one of the major exporters. Members of five small-scale pineapple farmers’ cooperatives, together with two former exporters own an export company, which processes and exports their produce. This model uses the ’Cooperative Marketing Strategy and Market Based Development Approach’, which is a cooperative marketing arrangement between exporters and small-scale producers also known as out-growers. Support to growers ranges from finance, technology, entrepreneurial development and marketing. Other out-growers cooperatives in Ghana that are not affiliated could sell their produce, on demand, to Farmapine. 3.2.18 Economically, the model has shown a lot of promise for small-scale pineapple farmers and other producers in Ghana. In this arrangement, risks are considerably lower for small-scale farmers and profits are rather high. On average, out-grower farmers earn about USD 1,000 per acre of pineapple cultivated (about USD 2,000 per hectare). Each farmer cultivates about five acres on average (about 2 hectares) and, thus, can earn in excess of USD 4,000 per growing season. Viewed against the background that per capita Gross National Income in Ghana is USD290, the out-growers can be seen to be doing very well. The out-growers have indicated that they face fewer constraints than non-cooperative members, especially when capital is needed for the farming operations. More and more horticultural exporters in Ghana are organized using this model. The main constraint to successfully implementing the model is the required financing and organization of the cooperatives. In the case of Farmapine, the cooperatives had been working with Technoserve, an NGO, for years and had realized some of the benefits of working together as a cooperative. 3.3 Cassava 3.3.1 Cassava is produced by more than 90% of Ghanaian farmers, either as a main crop or in combination with others. National annual cassava production was estimated at about 10 million metric tonnes in 2002, and Cassava accounts for about 22% of the country’s agricultural GDP. Based on the socio-economic significance of Cassava, the Government launched the "President's Special Initiative (PSI) on Agribusiness", an Integrated Action Program for Cassava Starch Production and Processing for Export in August 2001. Cassava will be used to produce industrial starch, which is used in the paper, textile, food, pharmaceutical, oil drilling and petro-chemical industries. The two key by-products, pulp and juice, are used as cattle fodder and fertiliser respectively. Therefore, there is a great potential

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to transform cassava into a major economic growth pole. Current the US and EU markets for starch are estimated at 24.3 and 7.4 million tonnes, respectively. Market information indicated that other markets have potential demand for cassava starch, including ECOWAS countries, specifically Nigeria, as well as North and Southern African countries. 3.3.2 Ayensu Starch Company (ASCo), is the first of 10 planned starch plants, established at Bawjiase, in Awutu-Effutu-Senya District of Central region. It became operational in June 2003, with a capacity of 3-tonnes per hour modern cassava starch processing. The total investment cost of about USD 7 million was financed through long-term loans from Agricultural Development Bank (AgDB), the National Investment Bank (NIB), Ghana Commercial Bank and OIKO-Credit (a Dutch NGO) and the Export Development and Investment Fund (EDIF). The company was established as a Corporate Village Enterprise (COVE), a farmer-ownership scheme, whereby smallholder out-grower cassava farmers in the five Districts of the project’s operational areas will become shareholders and participate in the enterprise to be managed by professionals. 3.3.3 In 2002, the management of ASCo contracted OIC International, an NGO, to organize the participating farmers into a farmer association, to be out-growers and owners of the company. This was accomplished successfully and the Ayensu Cassava Farmers Association (ACFA) was formed in 2003, with more than 5,000 members. The Association has a three-tier organizational structure, with local branches, zones, and districts. Each tier has a council/management committee in place. A 13-member executive council (including three women) has been formed to be the overall highest decision makers of the association. 3.3.4 ACFA supplied ASCo with raw cassava in 2004 and the company produced its first starch product the same year. Presently the Company is short of cassava and therefore not operational until the next harvest. However, the Association is receiving capacity building support, in terms of improved planting materials, from the Roots and Tubers Improvement Project (IFAD), and an internal extension service provided by the Company. ACFA also provided technical support to its members in terms of mechanized land preparation. Nonetheless, the Association currently lacks the capacity and the necessary resources to serve its members effectively, and to support the Ayensu Starch Company in its business operation. There is now an urgent need for further capacity building of the Association and training of the 13-member executive council, the members of the district and zonal councils, as well as the local branch executive committee and other key members of the Association, to enable them to operate along sound business lines and to create more wealth and benefits for its members. 3.4 Institutional Framework 3.4.1 The Ministry of Food and Agriculture (MOFA): MOFA is charged with the development and growth of agriculture in the country with the exception of the Cocoa-Coffee and Forestry sector. Its primary roles are the formulation of appropriate agricultural policies, planning and co-ordination, monitoring and evaluation within the overall national economic development. MOFA seeks to achieve the following objectives: (i) Improve agriculture productivity, incomes and employment opportunities; (ii) Contribute effectively to balance of payments; (iii) Establish effective agriculture–industry linkages; and (iv) Promote balanced regional development.

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3.4.2 In accordance with GoG’s policy of decentralization, MOFA's current structure comprises of: (i) A National Secretariat made up of four line directorates (Finance and Administration Policy Planning, Monitoring and Evaluation Directorate (PPMED); Human Resource Development and Management; and Statistics, Research, Information and Public Relations); (ii) Technical Directorates (Crop Services, Agriculture Extension Services, Plant Protection and Regulatory Services, Agricultural Engineering Services, Animal Production, Veterinary Services, Fisheries and Women in Food and Agricultural Development); (iii) Regional and District Directorates (Regional Agricultural Development Units and District Agricultural Development Units); and (iv) Sub-vented Organizations. The Ministry is responsible for four Sub-vented Organizations (Grains and Legumes Development Board, Ghana Irrigation Development Authority, Veterinary Council, and Fisheries Commission). The Policy Planning Monitoring and Evaluation Directorate (PPMED) is charged with co-ordinating MOFA activities and collecting information for policy planning and analysis, as well as collection of data on crop and livestock production, inputs, prices and marketing. 3.4.3 Ghana is divided into 10 Administrative Regions and 110 Districts. MOFA is decentralised at national, regional and district levels. Within this framework, 10 Regional Agricultural Development Units (RADUs) and 110 District Agricultural Development Units (DADUs) have been established. At regional level, the Regional Director is the most senior officer of MOFA, and is assisted by Regional Development Officers, who are technical staff. All the other professional staff are Subject Matter Specialists (SMS) grouped in various SMS centres in the region. Each region has a Training Co-ordinating Unit, which does not maintain a team of trainers but rather co-ordinates services to train Agriculture Extension Agents (AEAs) or farmer groups. At district level, all technical staff has been designated as ’all purpose’ AEAs carrying out field-level missions for the MOFA establishment. The District Director of Agriculture (DDA) heads the MOFA district office. The District Assembly forms committees of which Agriculture is one of the most important. 3.4.4 Crops Research Institute (CRI) - CRI has a broad research mandate covering all food and industrial crops except cocoa, coffee, cola, shea nut, coconut, oil palm, sorghum and millet, which are the mandated crops of other research institutions. CRI is governed by a management board that meets biennially, to discuss the Institute's research and administrative activities, as well as financial transactions. The day-to-day administration of the Institute is headed by a Director, assisted by a Deputy Director and heads of the Institute’s administrative divisions. The administrative and research divisions are: (i) Horticulture - (Vegetables and fruit crops including plantain and bananas), (ii) Roots and Tubers, (iii) Grains, (iv) Crop Protection, (v) Resource and Crop Management, (vi) Post Harvest, (vii) Technical Services, (viii) Administration, (ix) Accounts, and (x) Business Development Unit- responsible for commercial activities. 3.4.5 CRI has a multidisciplinary team of research scientists including: Plant breeders, Agronomists, Horticulturist, Entomologists, Plant pathologists, Virologist, Nematologists, Weed scientists, Agricultural economists and Rural sociologists among others. The staff of the CRI comprised 83 research graduate staff (senior members), 100 technical officers and 40 technical assistants. In addition there are 700 non-research junior staff in various supporting services including unskilled labour. The Institute has adequately equipped offices and laboratories, These include Pathology, Tissue Culture, Biochemistry and Weed Science laboratories. It also has field stations in the various ecological zones of the country where research findings are tested before they are transferred to farmers. These are: Aiyinase (Rain Forest), Akumadan and Assin Foso (Semi-deciduous Forest), Ejura (Forest Savanna Transition), Pokuase and Kpeve (Coastal Savanna).

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3.4.6 With various donor support, CRI has trained about 70 of its staff at post-graduate (MSc/MPhil and PhD) level. Some technical support staff have also been trained. The Institute has expanded its Tissue Culture Laboratory to increase its capacity from 5,500 to 40,000 cultures. A new training centre has been built at the headquarters to facilitate the training programmes offered by the Training and Communication Unit to agricultural workers and farmers. It is equipped with interpretation facilities and other equipment and furniture. The Information system is functional.

3.4.7 The Horticulture Division of the Crops Research Institute (CRI), under the Council for Scientific and Industrial Research (CSIR) is headquartered in the city of Kumasi. The Division is responsible for the development of new varieties and appropriate technologies for farmers to increase vegetable and fruit crop production in Ghana. The major research disciplines are: breeding, genetics, propagation (certified seed, disease-free planting material), culture, physiology, nutrition, crop protection (IPM), post-harvest management. The Horticultural Division has 22 senior staff with MSc and PhD degrees in different fields, and has accumulated significant research results that could be made available to the project beneficiaries.

3.4.8 Food and Drugs Board (FDB) - Established in 1992 under supervision of Ministry of Health, FDB controls the manufacture, importation, exportation, distribution, use and advertisement of food, drugs, cosmetics, chemical substances and medical devices. The institution is self-financed through revenues generated by service fees, in addition to Government subvention and donor grants. The FDB has 118 highly qualified technical personnel capable of performing the assigned tasks but with limited physical space in which to work.

3.4.9 Ghana Standards Board (GSB) – Established in 1965, as the Industrial Standards Institute, and now, as an independent corporate body since 1973, GSB’s mandate is to set standards, and ensure that goods and services conform to the standards and are of acceptable quality both for local consumption and export. GSB issues Export Certificates to assure importers that the Ghanaian products meet the required health, safety and sanitary standards. GSB is today equipped with a pesticide residue detection laboratory. GSB is financed by GoG and by own-generated revenues from service fees. GSB has developed 8 standards for the main horticultural products and is in the process of completing the corresponding 8 inspection manuals for market access that needs to be accelerated. The GSB laboratory is being upgraded to ISO 17025 norms with the support of World Bank financing.

3.4.10 Export Development and Investment Fund (EDIF) – Established in 2001, the mandate is to provide funds on concessionary terms to exporters to finance export-costs. EDIF obtains its resources from various sources: (1) 10% net proceeds realized from divesture of state enterprises; (2) 0.5% of CIF value of commercial imports excluding petroleum products; (3) grants from Government and other sources; (4) recovery of loans and interests payment on loans; and (5) other credit facilities that the Board of Directors can obtain with government guarantees. It operates through two main facilities: a) The Export Development and Promotion Account (EDPA) only providing loans to institutions, organizations and trade associations both in public and private sectors, and b) The Credit Facility (CF) for the provision of loans at 15% interest rate through Designated Finance Institutions (DFI) to producers and exporters. Loan applications are presented through the DFIs and not directly to the CF. DFIs apply stringent conditions and take long to process credit applications. These two factors have led to significantly low utilization of credit resource. The GoG is in the process of reviewing the scheme, for more efficient delivery of credit.

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3.4.11 Ghana Export Promotion Council (GEPC) - Created in 1969, under the Ministry of Trade, GEPC, in collaboration with line ministries, is mandated to assist exporters to identify products, which have potential for export. The institution provides strategic market information, sponsorship, equity participation and sourcing of inputs. The Council also facilitates foreign trade and organizes participation in trade fairs, provides technical assistance, collect statistics and participates in policy formulation. GEPC currently has registered over 3,000 exporters organized into 15 Product Associations. The Council receives 75% of its financing from GoG and the other 25% from donors. GEPC also runs the Ghana Export School from which 2500 students have graduated to date. GEPC has long experience as a facilitator of business but there is need for further coordination of activities with other stakeholders. 3.4.12 Federation of Associations of Ghanaian Exporters (FAGE) -FAGE started operations in 1992, and today has a membership of 16 producers/exporters Associations and more than 30 Companies. FAGE advocates improving and better organizing the export business of NTEs. FAGE also plays advisory role for policy and regulations designed by the Government. At present, FAGE is establishing a market information system with financial support from USAID, and publishes prices on the EU market, on a weekly basis. It has significantly contributed to the success of horticultural industry. The financing mechanism of the Association is through member fees, contribute no more than 10% of the total budget requirement, with the balance covered by donor contributions. 3.4.13 Sea-freight Pineapples Exporters of Ghana (SPEG) - SPEG was established in 1995, by five pineapples exporting companies, which by then were exporting about 2,700Mt by airfreight. SPEG is an umbrella organization grouping all exporters and responsible for over 90% of all pineapple exports. It has 22 active members and claims about 1,000 out-grower members. In 2004, SPEG shipped by sea, about 50,000Mt of pineapples. Other out-growers cooperatives, characterized by individual farm holdings of about 5 to 50 acres (2 to 20 ha), produced about 21,000Mt. SPEG assists its members, producers/exporters of pineapples and other key fruits, by arranging sea-freight space on assigned vessels, consolidates pineapple cargo for vessel operators, coordinates shipping arrangements on behalf of its members, and oversees loading of cargo at the port, and prepares all export documentation. The primary objective of the Association is to ensure that its members satisfy the quality requirement for export. The strategy is to run and maintain a system of on-farm pre-shipment inspection at various locations and to get its members to co-operate in marketing of their produce both locally and overseas. Undoubtedly, SPEG is one of the private sector associations, which has contributed significantly to the success of horticultural export business in Ghana. 3.4.14 Vegetables Producers and Exporters Association of Ghana (VEPEAG) - Created in 1977 by a group of vegetable exporters, VEPEAG is an umbrella association, which promotes vegetables exports by assisting its members to adopt appropriate methods of cultivation, production and marketing. It has become today a national association with over 350 registered members. At present, only 50 members are economically active in the production. Fees collected from members are complemented by GoG and donor contributions. Vegetable crops are: chillies and pepper, aubergines, Asian vegetables (okra, tinda and others). The association is currently running production and export trials on sweet potatoes. The key players in the Asian vegetable sector are mainly Asian entrepreneurs, settled in the country and operating with a number of small out-growers. It is estimated that at

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least 40% of exported vegetables derive from independent low input / low yield smallholder productions. VEPEAG, with support from Care International, struggles to assist its members with extension services. The sub-sector has under-developed infrastructure and logistic to ensure quality and minimize post-harvest losses. 3.4.15 Export Houses - Three of five Export Houses started operations at the end of 2004 under the Ministry of Trade’s New Industrial and Accelerated Growth Program. The objective of the Export Houses is to maximize export earnings from NTE products, by acting as commercial intermediaries between suppliers and buyers located in different countries and with the responsibility for the effective marketing of goods and products from Ghana. Their functions are: a) developing export markets through markets research, b) undertaking product design and development, c) providing competitive finance for export production and marketing, d) providing human resource training services and development to affiliated SMEs, e) ensuring product quality and guaranteeing minimum export prices and f) provision of ware-housing services to SMEs. The three existing export houses are: a) Ghana Trade Centre (GTC) for facilitating trade between Ghana and the Middle East, North Africa and the Mediterranean Region. It is owned by private companies with Ghanaian and Libyan interests, with the GoG acting as facilitator. b) Ghana Export Trade Company (GEXTRACO), that will focus on the ECOWAS sub-region, and c) GNPA Ltd, a limited liability Company, entirely owned by GoG that covers other strategic markets including EU, USA and Asia. 3.4.16 Environmental Protection Agency (EPA) – The EPA formulates the national environmental policy, and co-ordinates and monitors activities that could have an impact on the environment. EPA ensures that development plans and programmes take into account environmental concerns through Environmental Impact Assessments (EIA). EPA also ensures that there is regular monitoring of pre-determined environmental indicators. Where necessary, EPA enforces the environmental law. It disseminates public information on the state of the environment and carries out non-formal education programmes. The agency has the necessary manpower and capacity to undertake the responsibilities entrusted to it. 3.4.17 Feeder Roads Department (FRD) – The FRD is the Government body responsible for development and maintenance of the feeder road network in the country. Currently there are a number of donors providing financial support towards feeder road development, rehabilitation and improvement. The FRD has a highly skilled workforce but carries out a minimal amount of actual civil works. Therefore, the department does not maintain a fleet of requisite machinery. The department contracts out civil works to private contractors. Its major role is to develop technical specifications, design and tender documents, as well as supervise the work of the private contractors. The FRD also receives resources from the Ghana Road Fund, which was established in 1997 for regular maintenance of the country’s roads. 3.4.18 Non-Governmental Organisations and Community Based Organisations – A number of Non-Governmental Organisations (NGOs) are active in the agriculture sector. These organisations provide various services relevant to framing activities, such as extension services, training and limited credit services.

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3.4.19 Other Institutions – Other institutions such as the Agricultural Engineering Services Directorate and the Women in Agriculture Department have the capacity to supervise the implementation of project activities in collaboration with the Project Management Unit. 3.5 Potentials and Constraints: 3.5.1 Potential for Horticultural NTE crops: Ghana possesses tremendous potential for the development of the Horticultural industry. This is characterized by: (i) Under-utilized agricultural land - Presently, the country has used only 28 % of its full agricultural potential; (ii) Favourable agro-climatic conditions for a diversified output of agricultural production, including horticultural products; (iii) Strategic production location -The location of producing areas close to the ports is a major advantage for the success of the perishable products exports business; (iv) Strategic country location - Ghana’s geographical location facilitates access both to large regional markets and Europe, which means an important advantage in respect of freight time as compared with other producing countries; (v) Existing labour market -The country possesses a low-cost labor force for profitable farming and down-stream processing, necessary for the development of a labor-intensive industry for exports; (vi) Export tradition - The long historical presence of Ghanaian products in the international markets is widely known and its quality accepted through its traditional exports of cacao, gold and timber; (vii) Export performance and expansion - Despite persisting quality problems, Ghanaian horticultural export has succeeded, in few years, to capture an important share of the European market. In addition, these products can be supplied during the European off-season; (viii) Dynamic entrepreneurs - The fast growing horticultural sub-sector export trade, indicates the existence of a dynamic group of entrepreneurial horticultural producers and exporters, although the export business is yet far from receiving adequate Government support. 3.5.2 Potential for Cassava Starch Export. Until 2003, Cassava has been a subsistence crop for more than 90 % of all food crops farming households in Ghana, who are classified among the population’s resource-poor communities. In addition to this socio-economic value, the crop can be grown all year round and grows well on poor soils. As a crop grown largely by the poorest segment of the rural population, improvement in crop productivity and the availability of a ready market will positively affect the incomes of those farmers and reduce poverty. Cassava has the potential to provide new opportunities to smallholders to increase incomes, thus favouring more equitable income distribution in the rural economy. Cassava is also important in the further diversification of the agricultural sector, as indicated in the Government’s Vision 2020. Cassava and other roots and tubers contributed 40% to agricultural GDP and have great potential to contribute to increased export earnings. 3.5.3 Constraints for Horticultural NTE crops: In Ghana, there is a limited capacity to comply with more and more stringent quality standards and food safety requirements (such as the EUREPGAP, IPM, HACCP, Good Agricultural Practices), this has led to loss of market shares. The value and volume for Ghanaian Aubergine, chillies and peppers exports decreased by about 7% in 2004, because quality considerations are much below desired standards. As for papaya, Ghana continues to lose market share to Brazil, especially in Europe, the reason being that the variety exported by Ghana is the “Solo” cultivar, ideally suited for air shipment due to its short-shelf life, while Brazil has developed the “Golden” variety, which can be sea-freighted, and is thus able to keep costs low. The major constraint related to pineapple production is the choice of the cultivar to be produced. Recent shift of consumers’ preference in Europe, for the new MD2 variety, against the Smooth Cayenne

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traditionally produced in Ghana, constitutes a threat to the existing market share. This threat to the Ghanaian pineapple industry has put Ghanaian producers and exporters under pressure to improve the quality (varieties and quality standards) of their product, in a period as short as possible. The Government has taken steps to assist producers to acquire suckers of MD2. Private and public adaptive field trials have started in 2004. However, the supply of suckers is still limited and cost-prohibitive, for the large majority of out-growers and other smallholders. 3.5.4 Other constraints relevant to the overall horticultural production activities are: pests and diseases, weeds, soil fertility, harvesting and post-harvest handling methods, including transport. Economic constraints comprise credit and price fluctuations. However, the production zone is confined to areas within a 40-km radius of air and seaports. The major physical constraints are the lack of adequate export infrastructure facilities for perishable products (handling facilities, cold storage rooms, cold chain, export logistics, rural road network). The current status of roads and feeder roads delay transit time from farms and packing houses to place of shipment both for conventional transportation and reefer container movements, therefore unnecessarily increasing costs. With exception of two or three exporting companies, the entire horticultural business in Ghana is being performed without the use of controlled temperature devices at packinghouse. 3.5.5 Institutionally, research and development efforts as well as extension services are not performed in a production-oriented way, targeting particular horticultural crops. Not only is there need to increase yields and adapt to market conditions through new varieties, there is also need for all parties involved in the export sector to understand the reasons for applying Good Agricultural Practices in the production process. Rain-fed agriculture and inadequate irrigation limit the potential yields and quality of the products. The marketing constraints are also important. There is no use of international media and advertising companies to publicize in magazines and newspapers. Few activities with good results have been developed at special events such as food fairs. 3.5.6 Constraints for Cassava Starch Export. Major constraints of the crop have been identified and are now being addressed by the on-going Roots and Tubers Improvement Project (RTIP), and results from the project at mid-term review in 2003 indicate that most of the constraints are relieved. Farmer communities throughout the country are feeling the economic and social impact of these achievements. Achievements include: (i) The development, multiplication and distribution of new disease-tolerant higher yield cassava varieties. (ii) Training in improved farming techniques and planting material multiplication at local levels (for distribution) was successfully undertaken. Ultimately, cassava yields jumped from 8 Mt to 20 Mt/ ha.

4. THE PROJECT 4.1 Project Concept and Rationale 4.1.1 The development of non-traditional exports is a major element of Ghana’s strategy to become a middle-income country by the year 2020. Ghana has a comparative advantage in the production of crops such as pineapple, yam, cassava, papaya, mangoes, and vegetables. However, many constraints hinder the production as well as the export of these crops. These constraints include the lack of best cultural practices, insufficient quantity and quality of

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production-inputs, lack of the handling facilities for export, high costs of transport, high post-harvest losses, and lack of international marketing, quality and management skills in the export markets. If these constraints are properly addressed, Ghana would achieve its export target. 4.1.2 The export marketing and quality awareness project is designed to address the above constraints in order to improve the quality, increase the quantity and build confidence in the agriculture export sector in Ghana and of the cassava output which would feed into the Ayensu processing factory. As a result, the project design process (identification study on agro-industry conducted in 2000 through an ADF grant, the preparation and appraisal missions) involved intensive consultation with the operators in the industry, farm communities and donors financing the sector. The Appraisal Team held extensive meetings with primary beneficiaries (farmers, association representatives, ASCO Management, Ports’ officials) and representatives of the donors (WB, USAID, DFID, CIDA, DANIDA, European Union, Agence Française de Développement (AFD), JICA, KFW, GTZ, and FAO) involved in the sector, to explain the basic strategy underlying the project. It emerged from this exchange of views with all the donors that the project concept and details are appropriate for the sector and the project is complementary with other ongoing and planned interventions. 4.1.3 Further, the project is designed to be carried out through a participatory approach. The full involvement of the beneficiaries in the design of demonstration farms, training (input into skills needs), pack houses, and feeder roads is envisaged, as well as their participation during the project implementation phase, in the selection of sites of the infrastructure and maintenance of such structures. This will increase their sense of ownership and responsibility, leading to more sustainable farming and export activities. Further, all the beneficiaries will be represented in the project co-ordinating committee, which will oversee the implementation of the project and ensure the achievement of the overall objective. In addition, a total of ten consultations workshops (two each year) will be organised during the course of the project implementation. The objective of these workshops is to create a favourable framework for exchanging views and concerns of the project beneficiaries and other stakeholders in order to take appropriate measures as necessary during implementation. The above will increase the stakeholders’ sense of ownership and responsibility, leading to more sustainable horticulture production activities. 4.1.4 In designing the project a number of options were considered in selecting the horticultural crops to support, taking into account the very competitive nature of the industry, involving powerful multinational companies who have resources to easily influence international markets. For horticultural crops, the project has chosen to support a wide range of products instead of one to minimize risk of possible market changes, and in particular has avoided products such as bananas, which are overwhelmingly in the hands of large multinational companies. The support to cassava farmers is a timely undertaking at a time when the Government is making concerted efforts to support agro-industries including cassava starch processing. This provides for a readily available market for the tubers at standard prices. The project has opted to support the farmers in the surrounding area of the Ayensu factory collectively through their already established association. 4.1.5 The design of the project calls for: (i) the effective two-way flow of information between research and farmers/exporters in order to improve researchers’ use of information received from exporters to identify, characterize and prioritize research work, making

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research demand-driven and involving producers as full participants in the development of technologies and to improve the usefulness of research by disseminating and applying the research findings; (ii) the development of an efficient export marketing system and improved infrastructure, for value-addition to agriculture, to reduce post-harvest losses and to stimulate supply responses; (iii) the effective participation of beneficiary groups. 4.1.6 The Bank’s experience in implementing its projects and the experience from other donor-funded projects in Ghana have significantly influenced the design of the present project. The GoG has demonstrated its commitment to this intervention by initiating institutional capacity building, especially in AgSSIP. The Government will assign a Monitoring and Evaluation officer to the current HEII technical team, who will remain in PPMED but work closely with the project team to strengthen project management and monitoring. This will have the advantage of avoiding duplication between the Bank intervention and those of other development partners, namely the World Bank and USAID which are presently involved in the horticultural sub-sector. 4.2 Project Area and Beneficiaries 4.2.1 Project Area: The project will be implemented in the following four Regions of Ghana: Central, Eastern, Greater Accra and the southern-most part of the Volta, due to its proximity to the seaport and airport. Most of the horticultural products for fresh export are produced in these regions. A large part of these regions fall within the Coastal Savannah Agro-ecological Zone with a total mean rainfall averaging 800 mm during two seasons: April-June and September-November. The project area is home to 8.2 million people equivalent to 45% of the country’s total population, of whom 4 million live in rural areas. 4.2.2 The area covers about 53,000 square kilometres, representing 22% of total area in the country. Evacuation of crops from some parts of the project area is difficult due to the poor state of the access roads between farmers’ fields and the trunk roads. It is estimated that 800km of feeder road system needs upgrading. Fifty percent (50%) of these feeder roads are in the areas where there is a concentration of horticulture and Ayensu cassava farmers. Most of the farm holdings are located in rural areas and distanced from structures that could serve for storage. Nevertheless they are close to a number of peri-urban areas where electricity power is available and hence storage facilities can be erected. 4.2.3 Beneficiaries: The farm structure in the project area is typical of those found in most parts of the country. The basic production unit is the nuclear family, with an average household size of about ten, with little or no hired labour. However, this type of farm family-structure has been changing. More and more farmers are now using hired labour. Farming systems for both horticultural export crops as well as for cassava, practise the nucleus out-grower schemes. These are schemes where progressive farmers, usually with larger land parcels, are linked to a number of small-scale producers for technology transfer, input provision, and marketing of the produce. Small-scale farmers obtain their inputs through these nucleus farmers and sell their produce through them. 4.2.4 Gender-specific roles exist in farming operations. Men normally carry out land preparation, ridging, re-ridging, and spraying, while the women plant, weed, water, bird-watch, harvest and carry out post-harvest handling and marketing. For horticultural production, women are predominantly engaged in weeding, spraying, picking, sorting, grading and packing. Their farm incomes range from as little as Cedis 500,000 to as high as

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Cedis 86 million per year per land holding. An estimated 70% of farmers in the target area have land holdings of less than 1.2ha and up to 18% have land holdings ranging from 1.2ha to 2ha. Productivity remains low partly because the level of mechanised farming is limited for a large number of horticultural and cassava farmers. The main tools used are the same as for other crops (hoes and cutlasses). The project area has abundant land for potential expansion of cultivated areas. However, although access to land is not a major constraint, women and settlers still face difficulties in owning land. The major constraints to women operating their own farms are limited access to capital and technology. 4.2.5 Food crop farmers (which includes small-scale horticultural farmers and cassava producers) represent the group with the highest incidence of poverty (59%) in the project area. Poverty is more prevalent among food crop farmers (60%), followed by export farmers (40%) and private informal employees (25%). 4.2.6 About 13,502 rural households or 81,012 people will directly benefit from the project. It is envisaged that a total of 12,000 people employed at various levels of the horticultural export industry will be trained out of which 4,700 will be women. The major beneficiaries of the project are the members of the existing producers/exporters associations for horticultural export crops (SPEG, VEPEAG and FAGE). Members of associations comprise a small number of nucleus farmers and a large number of out-growers linked to the nucleus farmers, whose farm holding varies in size depending on the crop grown. The average farm size of a pineapple out-grower (nucleus farm) is approximately 20ha, compared with 2ha for a nucleus vegetable grower. Farmers in the project area are involved in the production of other food crops in addition to their export crop farming activities. They produce a significant amount of food crops, mainly for household consumption. Nevertheless, some farmers produce other cash crops such as the tree crops of cashew and cocoa. Current annual average income is ranged between Cedis 0.50 million for Chillies growers, and Cedis 43 million for Papaya growers per ha. Almost all farmers practise a mixed farming system. Given that horticultural farms are usually found near water bodies, these farmers are also involved in fishing and even other non-farm activities such as trading, artisan work and small-scale processing. Trading, a primary occupation for women, is practised as an off-season activity to supplement farm incomes. Fishing and fish smoking activities are prevalent along the coast and along the major rivers such as the Volta. Most of the activities are inter-related as income from trading is often used to finance agricultural production. For many farm families, incomes from farming are small, as a multitude of producers compete, with similar surplus supplies. 4.3 Strategic Context 4.3.1 The Bank Group Vision Statement indicates that rural development in general, and agriculture in particular, is its basic strategy for poverty alleviation in its RMCs. Similarly, the Government of Ghana goal for the agriculture sector is to reduce poverty, through improved productivity. In the context of Ghana’s agriculture-dominated economic and employment profile, as indicated in Chapter 3, the Government has recognized that development of the rural economy is the catalyst for the transformation of the national economy, and the drive to economic progress. Rapid growth in the agricultural sector is therefore central to any strategy for reducing poverty and creating employment and growth opportunities. Fostering non-traditional exports, especially in agriculture, where there is growing market demand, will be key to lifting growth rates of the sector as well as the economy.

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4.3.2 At operational level, the strategic approach as articulated in the Ghana Poverty Reduction Strategy paper (GPRS), in addition to the above, places particular emphasis on improving skills, promoting the use of improved technology, improving access to capital investment resources for the rural entrepreneurs, and building capacity in the processing of agriculture produce. The strategy envisions increasing rural production and employment. 4.3.3 Government strategy calls for diversifying the agricultural economic base, enhancing the economic base for the rural subsistence farmers, as well as generating employment. Given the potential for generating income from production of high-value crops, and the potential foreign exchange earnings from horticultural exports, the project is in line with the Agricultural Development Strategy for Ghana as it will contribute to the key sector issues of poverty reduction; food security; and generation of employment and support for women. 4.3.4 As designed, the project will contribute to the broad goals of improving living standards of the rural population, particularly the small-holder farmers, and contributing to the diversification of the country’s export base. The project is therefore in line with the Government development strategy expounded in the GPRS in that the intervention directly addresses poverty reduction It is also consistent with the Bank Group strategy for the agriculture and rural sector in Ghana, as stipulated in the Country Strategy Paper (CSP) for Ghana, which is to focus on poverty reduction and food security. Further, it is consistent with the Millennium Development Goal of halving poverty in the year 2015, the goal of NEPAD agriculture sector plan, and the Comprehensive Africa Agriculture Development Plan. 4.4 Project Objective The sector goal is to contribute towards the goal of increasing export earnings of non-traditional agricultural products. The objective of the project is to increase incomes of horticulture crop farmers and exporters and of cassava producers. 4.5 Project Description 4.5.1 The project will be implemented over five years in four regions. The project will have four components, namely (i) Production and Productivity Enhancement; (ii) Export Marketing Promotion and Infrastructure Improvement; (iii) Capacity Building; and (iv) Project Coordination and Management. (A) Production and Productivity Enhancement: Fruits and Vegetables 4.5.2 The envisaged outputs of this sub-component are: (i) Four established and equipped demonstration farms and training in Good Agricultural Practices (GAP); (ii) Production protocol manuals of GAP published and market requirements documented; (iii) Increased volume of MD2 pineapple suckers and quality seeds of other horticultural crops and cassava available to farmers. The introduction of improved technology of high quality and high yielding planting materials will lead to improvement of quality and productivity of produce. 4.5.3 Given the level of sophistication of Good Agricultural Practices (GAP) for export fruits and vegetables, the project will set up four demonstration farms in the project area, of 10 hectares each, to serve as in-field training centres in horticultural crop production. The PCMU, along with the Crops Services Directorate will select the sites for the demonstration

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farms. The sites selected for the demonstration farms will be on existing Government agricultural training centres, which will be expanded to meet the required additional function. The project will then enter into agreement with each of the selected four training centres, one in each region, to establish demonstration farms. With the help of a design engineer, additional infrastructure will be determined and designed for construction. In the meantime, the PCMU will coordinate the clearing of land with close supervision from scientists at CSIR and respective Regional Extension Offices to make ready the plots and the irrigation systems, for planting demonstration horticultural crops. 4.5.4 The management of the demonstration farms has been elaborated under Section 5.2, Institutional Arrangements. Activities at the farms will include demonstration of planting calendars, ideal maturity at harvest, size of fruits, use of irrigation ponds and reservoirs, and on-farm produce handling and packaging practices at various stages, before produce is moved to pack houses which are part of the cold chain facilities. The focus will be on developing quality produce, as this is the main factor in promoting export growth. 4.5.5 In the first year of project implementation, while construction work and land clearing work is going on, the Government will assign two scientist, four subject matter specialists, four extension agents and four irrigation technicians, and will recruit a total of six farm workers and support personnel, from within the Districts in the Region to work on each of the four demonstration farm. This is the team, which will run the farm, and will receive weekly supervision missions from scientists at CSIR. Each demonstration farm will be equipped with office and training equipment and materials; one pick-up truck; one tractor and accompanying accessories; motorcycles for extension staff who will follow up with farmers at their farms; field equipment (including irrigation materials); commerce and packaging materials; and will receive help with farm operating costs. The farm implementing team will be charged with the responsibility of procuring, through the AgSSIP procurement Unit, farm inputs and consumables to operate the farm. 4.5.6 Under this component, the project will also provide funds to support additional activities of the ongoing programme on accelerated multiplication of the high value MD2 pineapple suckers, as well as seeds of improved varieties of other fruits and vegetables. Given that the accelerated multiplication of MD2, is already ongoing, the PCMU will liase closely with the programme implementing team to ensure that the activities supported by the project are clearly identified and monitored accordingly. With the increased amounts of pineapple suckers, farmers will be able to plant and export consumer-preferred produce to enable them reclaim the European market share, which has been lost in the last two years due to change in consumer preference. With regards to crops other than pineapple, additional on-farm and on-station trials will be established, at the existing seed multiplication centers, to grow higher yielding and more market-adapted crops. This programme is being implemented on a cost-sharing arrangement involving growers, exporters, research institutions and seed companies. The cost-sharing arrangement will continue under the project to ensure sustainability of seed multiplication. The PCMU will sign an agreement with the UNU-INRA/Botanic Department and the AESD/Crops Research Institute who will implement the sub-component on development of tissue culture and farm demonstration programmes. 4.5.7 The project will provide to the implementing institutions: Council for Scientific and Industrial Research (CSIR), Crop Research Institute (CRI) and the Agriculture Engineering Services Department (AESD), three vehicles, field and laboratory equipment to be used for training purposes, field allowances, and office support services. With the assistance of an

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international consultant, CSIR will develop production protocol documents and publication materials (fact sheets/folders/ extension guides), and disseminate the technology information to the farmers and other stakeholders, through a variety of publicity media. The consultant will also develop audio-visual material, to be shown at district and regional centres in the project area. Cassava 4.5.8 The expected output of the Production and Productivity sub-component on cassava is increased availability of improved planting materials for farmers in the Ayensu area. The outcome of this output is increased production of cassava with high starch content to meet demand at the Ayensu Starch Company, which will in turn lead to increased incomes for small-scale cassava farmers. 4.5.9 The PCMU will coordinate with the IFAD financed Roots and Tuber project currently involved in the production of high quality cassava planting materials, to make available to the 10,000 farmers in the Ayensu area. For continued supply of these planting materials, the PCMU will identify the appropriate sites for multiplication of planting materials to supply to the farmers in the area. Project activities under this sub-component will focus on assisting the farmers collectively through the existing Ayensu Cassava Farmers’ Association. The project will provide the Association with five farm tractors and accompanying implements, to supplement the existing fleet of four, so that each of the nine districts will have one tractor for land preparation and other activities. The tractors will be hired to farmers at a fee, to assist them with land preparation, as is the practice at present. (B) Export Market Promotion and Infrastructure Development: 4.5.10 The main outputs of this component will include: (i) Trade Brands for Ghanaian produce developed and used by exporters; (ii) 407 km of year-round accessible feeder road network; (iii) Marketing and demonstration farm facilities constructed and upgraded; (iv) Consumers’ needs on international market and marketing strategies for Ghana produce, documented. (v) Major export destinations for Ghana’s produce in EU aware of produce quality and brands. These outputs will contribute to the promotion of export markets of horticultural crops and of cassava starch from the Ayensu Starch Company as well as to increased incomes of producers and associated actors in the industry. 4.5.11 Activities under this component will complement those of the ongoing Trade and Investment Program for a Competitive Export Economy (TIPCEE), financed by USAID, as well as the World Bank-financed Horticultural Export Industry Initiative. 4.5.12 In Project Year 1, technical assistance services in international marketing will be procured to: (i) identify international markets; (ii) study and document consumer preferences for Ghanaian horticultural produce in those markets; and (iii) analyze current and potential markets for various horticultural products so as to prioritize those with higher potential for expansion. Although the focus will be on European Union countries, the analysis will include other potential markets such as in USA, Middle East and ECOWAS Countries. 4.5.13 The study on consumer preferences will provide information on consumer opinions about the different characteristics of Ghanaian versus competitors’ products which are already in the market. The data collected will be entered in a live database by the consultant, and will from then be updated periodically by GEPC (a government department) and FAGE

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(a private exporters’ association). This information will be disseminated to farmers and exporters by GEPC in close collaboration with farmers’ associations, through their member associations. This will be done in the form of seminars and prepared information booklets.. At the start of the project, this activitiy will be done with assistance from the technical assistant. The PCMU will monitor the process. As indicated in section 3.4, GEPC (a GoG department) and FAGE (a private institution) have the capacity to undertake this task. The public-private partnership is expected to even foster effectiveness implementation. They are currently financially viable and they maintain audited accounts. This public-private collaborative effort will ensure efficiency through the direct involvement of beneficiaries. Being well informed, the industry will be better able to respond to the dynamics of consumer preference, with its susceptibility to variations partly due to competitors’ promotion campaigns. 4.5.14 By Project Year 3, as production of horticultural products entering the import markets under the ‘improved quality regime’ increases, GEPC and FAGE will develop a promotional strategy for the ‘New Ghana Produce’. The focus of the strategy will be to create awareness in international markets that the New Ghana Produce adheres to GAP, residual-free and ethical procedures. 4.5.15 Specific promotional activities will involve: organizing consumers’ meetings in selected markets; use of international media and advertising companies to publicize in magazines and newspapers; and participation in special events such as food fairs and culinary shows. An advertising company specialized in this area will be engaged by the project to this effect. The launching of the promotional campaign will include the preparation of relevant promotional material and its dissemination through commercial attaches at Ghanaian Diplomatic representations overseas and through the Ministry of Tourism. The USAID-financed TIPCEE project is also supporting some promotional activities which involve establishing a presence of exporters in the importing countries. The activities under this component will therefore complement efforts under the TIPCEE project. 4.5.16 The executing agency will work closely with the Department of Feeder Roads under the Ministry of Infrastructure, to upgrade about 407 km of feeder roads within the four regions. The PCMU will sign an agreement with the Department of Feeder Roads, who will implement this sub-component. Key elements in the criteria for selecting the location of the 407 kilometers of feeder roads to be upgraded include (i) a high density of farmers, and (ii) ensuring that there is complementarity with other donor interventions, especially that of JICA. 4.5.17 The improved feeder road network will open up fruits and vegetable production centers to pack houses, where this produce is sorted, cleaned and packed; and cassava fields to the Ayensu Starch Company. Improved all-year-round accessibility to processing and market centers is a major contribution to the setting up of a reliable cold chain for horticultural produce. The improved road network is expected to attract more private transporters. This will generate competition in the trucking industry, resulting in reduced hauling costs to farmers. For horticultural produce, the good standard roads will minimize physical damage, a major element in determining the quality of produce. For cassava, the quick delivery of tubers will improve quality as the quantity of starch in the produce is preserved where the lag time between harvesting and processing tubers is minimized.

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4.5.18 Other infrastructure development will include three types of civil works: farm buildings at demonstration farms; pack houses; and a residual analysis laboratory. (a) The project will finance the construction of farm buildings and facilities for trainees at the four demonstration farms which will be established under component A. This work will start in Project Year 1. The project team will procure engineering consulting services to prepare bill of quantities, specifications and bidding documents for contractors. (b) The project will also finance the construction of four pack houses where produce will be hauled after harvest, for sorting, grading, cleaning and packing. The four pack houses will be additional to those being constructed under the World Bank-financed Horticultural Export Industry Initiative, which is financing two other pack houses which will be located in the project area. Given that the Executing Agency and the project implementing team is also implementing the HEII, the location of the pack houses will be planned strategically, with the involvement of key stakeholders like farmers’ representatives, research and extension departments, to ensure efficient cold chains in each region. A study has been commissioned to explore various methods of management for the cold chain facilities. Under Bank Group and World Bank Aid coordination arrangement, both institutions will formulate the Terms of Reference for the consultant, to ensure that the Bank will have input in the nature and concept of the investigation to be undertaken. The management of the pack houses will therefore be based on the recommendations from this investigation. (c) The Ghana Standards Board has the necessary trained personnel and newly procured equipment to effectively carry out testing of agricultural produce for residual elements. However, they have limited laboratory space to house the personnel and equipment, to efficiently undertake residual analysis. The project will therefore construct one residual analysis laboratory at GSB premises, to be used for the analysis of chemical elements in fruits and vegetables destined for the export market. The laboratory will house the equipment which has already been provided to the Board by other donors. The residual laboratory is managed by the Ghana Standards Board and operates on a cost recovery basis. This system will continue, as it has ensured the sustainability of the laboratory facilities over the years. (C) Capacity Building: 4.5.19 There are two major outputs expected from this component: (i) Trained horticultural producers and exporters, cassava farmers, farm workers, extension personnel, seed inspectors, and other private entrepreneurs; (ii) Strengthened horticultural producers’ and exporters’ associations. From these outputs there will be increased production as more farmers use improved planting materials and reduce post-harvest losses. The end result will be higher levels of quality horticultural produce for exports and of cassava for the Ayensu processing factory 4.5.20 Activities under this component will include, for horticultural crops, the following: (i) sensitisation of about 80,000 farmers, farm workers, processors, members of community based organizations (CBOs) involved with horticulture crop production, out of whom 40% will be women. The sensitisation exercise will create awareness in production, handling, storage, processing of crops, quality standards for export market. During this exercise, the target groups will increase their knowledge and understanding of good crop cultivation practices, which will enable them to increase their outputs and hence export earnings; (ii) training of 600 executives and decision makers (government, community, and private sector)

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in export documentation and financing; (iii) training of 1,200 trainers in good agriculture practices (GAP), analysis of residuals in fruits and vegetables and in quality assurance. Most of the trainers will be extension workers, but will also include leaders of CBOs and Associations; (iv) training of 1,200 export/trader service staff, (ports, customs, banks, regulatory institutions), in good service delivery. (v) training of 3,120 workers in processing units (graders, sorters, and packers); (vi) 5,000 farmers will be trained in GAP and basic accounting methods. Farmers’ training will also include audio-visual presentations at village, district and regional levels, on practices adopted in other countries and quality requirements in international markets. Most of the above-itemized training sessions will be carried out at the demonstration farms to be established in the four regions under Component A. 4.5.21 The training in GAP will be offered by hired technical assistants, at a fee to key stakeholders (farmers, harvesters, graders, sorters and packers) involved in the production and export chain of horticultural crops, and will be carried out by extension workers who themselves will receive specialized trainers’ training. The skills acquired at demonstration farm centres will enable farmers and others to better grow and prepare high quality export produce which will meet the requirements under EUREPGAP and other stringent quality level standards. The standards include residues in produce, standard-sized produce, and crops produced under acceptable phyto-sanitary conditions. 4.5.22 As part of the institutional support to the upgrading of the horticultural export industry, the project will provide two 10-tonne temperature-controlled trucks, to SPEG and VEPEAG for moving high perishable produce from farms to pack houses and to export points, pack houses and subsequently airports or seaports. The trucks will be hired by members of the associations, with fee income used to run and maintain the fleet. The amount of the fee will be determined by the association councils taking into consideration market rates as well as the cost of maintenance. Cassava 4.5.23 The expected outputs of this sub-component are: (i) an efficient Farmers’ Association providing improved services to its members; (ii) 10,000 sensitised and trained farmers in Good Agricultural Practices so that they are better able to produce increased amounts of high quality cassava per unit area of land. The outcome of these outputs is improved quality and increased production as more farmers use improved planting materials and reduce post-harvest losses, all of which will in turn result in increased quantity of produce for the Ayensu factory. 4.5.24 For cassava production, the project will support the: (i) mobilization and training of 10,000 farmers and community based organizations involved with cassava production, in good agricultural practices as well as in basic business management; (ii) training of 50 trainers (extension workers, leaders of CBOs) in good agricultural practices and analysis of starch content in the tubers to ensure high quality products for sale to the Ayensu Starch Company; (iii) strengthening of associations, through training of their elected leaders, so that they are better able to deliver services to the members and to maintain their assets especially equipment. The topics for this training will include management of associations, accounting, conflict resolution techniques, negotiation techniques to upgrade their skills in their dealing with the business community; (iv) as production increases, farmers will require additional support for reliable transportation of their produce to the factory. The project will therefore procure in Project Year 4, two 10-tonne trucks to be rented out to farmers for hauling produce.

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4.5.25 To facilitate access to credit for horticultural and cassava growers, as well as exporters, the project will develop awareness of the existence of various credit resources in the country. In particular, project management will establish direct contact with the upcoming Millennium Challenge Assistance Project, which plans to establish a USD50 million special line of credit for: smallholders, out growers, and medium- to large-scale farmers; processing companies, transport, logistics and equipment hire operators. Credit sensitisation seminars will be included during the mobilization exercises. 4.5.26 Other financial training will comprise: (i) Fifteen administrative staff and elected leaders (management committee) of the Ayensu Cassava Farmers’ Association will receive training through project-financed consulting services in organizational skills and governance, to provide business services to its members; (ii) Farmers will be trained in GAP as well as in basic accounting methods to enable them undertake timely production and marketing of high quality tubers. The training methodologies will combine lectures and seminars with workshops, practical exercises and discussions, the provision of simplified written literature (handbooks and manuals), and farmer exchanges. These farmer exchanges between districts will broaden the outlook of the farmers and increase productivity and incomes by sharing lessons learned and best agricultural practices. 4.5.27 Expert advisory services will be recruited to establish a living database of market information on cassava starch market trends and new technologies to be based at the Secretariat of ACFA. The offices of the Secretariat will also be equipped with office equipment (computers, printers, fax, and telephone) and furniture. 4.5.28 The Ayensu Starch Company is the primary target market for the increased cassava produce in the Ayensu area. To support the development of this large and reliable market for cassava farmers, the project has made provision for Technical Assistance to assist the factory management in market analysis and strategic planning as well as in business planning. 4.5.29 HIV/AIDS and Malaria: The project will support community efforts for the prevention of HIV/AIDS and malaria. Farmers, exporters and extension agents targeted under the project will receive HIV/AIDS and malaria awareness and prevention messages. This will be achieved by incorporating training modules on the subject in the courses that will be organised for the various target groups. The process will involve close collaboration with the Ministry of Health officials, at all levels of the administrative structure. (D) Project Coordination and Management Unit: 4.5.30 The Project Coordination and Management Unit (PCMU) has been established under the Horticultural Export Industry Initiative (HEII) financed by the World Bank. The PCMU comprises a coordinator; three technical specialists in the fields of (i) research, innovation, food safety; (ii) infrastructure; (iii) horticultural planting materials and seeds; two procurement specialists; two accountants; a M&E specialist; and support staff. Out of the three technical specialists, one will be a manager of the project. The Government will assign to the project, a Monitoring and Evaluation officer to work closely with the current HEII technical team, who will remain in the Programme Planning Monitoring and Evaluation Directorate of MOFA (PPMED). Support staff will be provided by AgSSIP. The PCMU will supervise the selection and screening of individuals who will participate in the various training programs and will also supervise the work of all consultants recruited under the project.

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4.5.31 Budget provision has been made to audit the project once a year and to undertake a mid-term review in year three of project implementation. Stakeholder planning and review seminars and workshops will be carried out and organized by the PCMU to ensure that key stakeholders participate in the planning and implementation of project activities. 4.5.32 The project will support the project team with operating and maintenance costs for the PCMU, costs associated with travel and field trips, and allowances for the project team members. In order to effectively coordinate the project activities in the project area that encompass the four regions of the country and to implement the activities mentioned above, the project will require mobility. Provision has therefore been made for two vehicles, to replace the current old fleet. 4.6 Production, Markets and Prices Horticultural Produce: 4.6.1 The project will increase the production of pineapples, papayas, mangos and vegetables as a result of improved quality and quantity. The expected increment by 2010 is composed of 30,000Mt of pineapple, 5,000Mt of papaya, 19,000Mt of mango and 3,000Mt each of aubergines, chillies and okra. The World Export markets for 2003 for the principal horticultural crops are indicated in the table below. 4.6.2 The production increase resulting from the project will only represent 13.6% of the expected increase of pineapple imports into the EU, 4.5% for papayas, and less than 2% for the other products. These amounts are small in comparison to the size of the markets, especially in relation to the EU countries which form the primary market for Ghana’s horticultural produce. The incremental volumes would easily be absorbed by the EU market. As a result of these changes, Ghanaian share of the EU import market will grow from 5.7 to 10.1% for pineapples, from 2.6 to 4.7% for papayas, and to a lower extent for other products. The increases in market shares are expected to be achieved by the end of project implementation. Major existing constraints to the export sub-sector will be addressed through project activities; this should lead to an increase in market share where Ghana already has secured market entry. Market indicators for non-traditional agricultural exports are explained in Table 3.2. Marketing and Markets 4.6.3 The process of movement of fruits and vegetables is described below particularly for pineapples. Harvest and packing. Pineapples are harvested the day before shipment or early the same day. The first product selection is done before harvesting, by picking only those fruits of export market standards in size and in shape. On average 60% is harvested, with the balance of 40% left for local market. After harvesting, pineapples are placed in strong resistant plastic cases/baskets. From the farm, fruits are transportation to packing places. At the packing-shed, a second classification is performed while transferring the pineapples from the plastic cases into the export cartons. Rejection does not exceed 1% and are mainly due to cuts to the fruit while harvesting. 4.6.4 Packaging: Cartons used for exports are imported. They are bought from Ghana-based commercial representatives of European manufacturers. Representatives periodically run short of stock, and exporting companies borrow from each other to ship their produce. Each carton carries 12kg net weight of fruit. The cartons are palletized with 65 cartons/pallet.- Each carton is labeled with indication of date, size classification, farmer origin, exporter and receiver.

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4.6.5 Marketing Channels: The movement of horticultural produce within the country and before export is as elaborated in paragraphs 3.2.8, 3.2.9, and 3.2.12 above. Phyto-sanitary and Customs inspection: With the exception of Companies acting within declared free zones, both inspections are performed at port/airport prior to loading. 4.6.6 Prices: Annex 8 shows the trend of prices of horticultural products during the last 5 years. Generally the data show a declining trend over time, exhibiting a decreasing market value of Ghana’s produce, which underscores the need to improve the quality of the produce so that the produce can attract high premium prices of the high end product in terms of quality. Cassava 4.6.7 Production: With 9.8 million tonnes produced in 2004, Ghana is the 6th main cassava producer in the world with 5% of the world production. It is the third largest producer in Africa after Nigeria and D. R. Congo, and had a significant production increase of 21.2% for the period 2000-2004. The 48.7% increase in cassava production in Ghana during the last 10 years is as result as of a similar increase in the area under cassava cultivation (48.6%), and not as result of higher yields. According to FAO data, yield is back to levels similar to the 12 tonne/ha level of 1995. The project area comprises 46.9% of the total area cultivated with cassava in the country, representing 52.4 % share of total national production. With exception of Greater Accra where cultivated area is very small, and Eastern Region, the area has yields well over the country’s average. 4.6.8 The annual average consumption of cassava food has dropped by 6% for the period 1998-2002 from 226.6 Kg/capita to 212.9 Kg/capita respectively, due to other substitute starch foods. Cassava consumption as animal feed has increased from 0.619 million tonnes in 1998 to 2.057 million tonnes in 2002. This increase by 232% is reflected in the share of animal feed use of cassava that changed from 8.7% in 1998 to 21.2% in 2002. The use of cassava as food, despite its growth in volume, has lost share from 59.4% to 44.8 % for the same period. “Other uses” of cassava, although from a low base, have trebled. 4.6.9 Marketing: Losses of cassava are estimated in about 30% of the total domestic supply, mainly due to the low quality of the road-network transport that prevents marketing of produce away from local areas. The bulky nature of the produce also restricts movements to distant urban markets, where the road network is poor. 4.6.10 Ayensu Starch Company (ASCo), is the first of 10 planned starch plants, established at Bawjiase, in Awutu-Effutu-Senya district of Central region. Presently ASCo is short of cassava and it is not operating until the next harvest. The Ayensu Cassava Farmers Association, on the other hand, has received capacity building support, in terms of improved planting materials, from the Roots and Tubers Improvement Project, and an internal extension service, provided by the Company. 4.6.11 Prices: Prices of cassava fluctuate significantly during the year having a low price line during harvest season. At present, average market prices are around 400,000 to 450,000 cedis per tonne. Fluctuation can range from a minimum of 300,000 cedis/tonnes to a maximum of 650,000 cedis/tonne. However, in supplying to the Ayensu Starch Company, farmers are assured of the price of their produce throughout the year.

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4.7 Environmental Impact 4.7.1 The project has been classified under Environmental Category II, therefore having limited environmental impacts that can be easily mitigated by applying specific measures or changes in the project design. It is not located in or close to environmentally sensitive areas such as ecosystems with high species diversity, or which harbour endangered species or unique landscape features, which should be preserved.

4.7.2 Positive impact: The overall environmental impact of the project is expected to be positive. Increases in production will result from the use of higher quality seeds, and application of Good Agricultural Practices (GAP) on existing farmland. Most project activities concern the rehabilitation of farmland through water and soil conservation operations at a small-scale level. The average size of cultivated horticultural smallholdings is less than 2ha and these are concentrated in the existing irrigation schemes or on land that is less vulnerable to soil erosion. Activities under the Capacity Building component will encourage rational utilization of the natural resources (land), as most of the production will derive from increased crop productivity. Given the stringent market requirements for quality, farmers and exporters will be compelled to apply environment friendly production methods in order to effectively penetrate the target markets. For example, detection of harmful chemical residues in the produce will render the entire consignment unfit for the market or at best reduced in value. Such strict Good Agricultural Practices will force producers to use reasonable amounts of agro-chemicals which will in turn be favourable for the environment. The rehabilitation of the feeder road network will be mainly spot improvement, consisting of filling potholes, and providing drains and culverts on specific portions of the roads. 4.7.3 Negative impact: The likely negative impacts are surface and ground water pollution where farmers fail to comply with recommended levels of agro-chemicals. The frequent use of tractors for land preparation may exert considerable force on the soil, resulting in degradation on the soil structure and leading to soil compaction. Other possible environmental impacts arise from feeder roads improvement and include disruption of local hydrology and drainage patterns, destruction of natural habitat following construction of camps, roadside drains and borrow pits, silting in rivers from road wash-off, accident, dust and noise. Surfaces of most rural roads are not sealed and are therefore prone to erosion, particularly in areas of heavy rainfall and poor drainage. Erosion affects the main carriageway and the drains especially at steep sections where it creates deep gullies. The combined effects of gully erosion and localized ponding render most feeder roads un-motorable during rainy seasons. 4.7.4 The various stages of rehabilitation works and vehicular traffic on the roads generate dust. This has effects on the labour force and adversely impacts the photosynthetic function of vegetation. The multiplication of borrow pits, sometimes found littered all over the rural areas can contribute to land degradation, trap water and create health problems associated with stagnant water bodies. Issues may also arise from the use of diesel-operated power generators to run the various agro-processing and storage facilities ranging from fuel storage and handling to smoke emission and noise generation. 4.7.5 Mitigating measures. Appropriate mitigation measures to address the above-cited potential impacts will include clearing only required areas, compensatory tree planting, avoiding steep gradients, providing drainage, providing interception gutters and infiltration pits to capture silt and pollutants, training work force in safety measures, watering of road

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surface and no operations at night, advance warning for all the affected, re-instatement after use by landscaping, enforcing speed limits. Proper planning and the provision of appropriate drainage structures at regular intervals and raising the carriageway slightly above the existing ground level will mitigate most of the adverse effects. Mitigating measures will also include the controlled use of chemicals in storage facilities, limiting site preparation to dry season, with no clearing of highly erosive areas. As the project will lay emphasis on sensitization and training on quality requirements for the export market, it is envisaged that most farmers will comply with the recommendations, which will help prevent chemicals from polluting water bodies and soil, and limit the occurrence of health problems. 4.7.6 Environmental Monitoring. The Ghana Environment Protection Agency (EPA) will be responsible for supervising the ESMP implementation. EPA will assist with evaluating and monitoring of the residual impacts throughout project implementation. The Executing Agency of the project will ensure that all identified problems are addressed and mitigating measures included in the implementation schedule. International and national safety standards will be applied to the agrochemical procurement process. Through compliance monitoring, EPA shall ensure that the environmental mitigation measures are implemented, and mechanisms put in place in order to monitor the long-term ecological effects of the project. A budgetary allocation has been made for that purpose. 4.8 Project Costs 4.8.1. The total cost of the project, excluding taxes and duties, including physical and price contingencies, is estimated at UA18.84 million (equivalent to Cedis 264,942 million as at the February 2005 exchange rate). The foreign exchange portion is estimated at UA14.03 million representing 74% of the total project cost. The local costs of the project are estimated at UA4.81 million, which is equivalent to 26% of the total cost. A local inflation rate of 12% has been considered. A summary of costs by component and by category of expenditure is provided in tables 4.1 and 4.2 below. 4.8.2 Project cost estimates are based on the prevailing prices in Ghana in February 2005. Unit rates for locally procured goods, services, and for civil works are also based on prevailing rates in February 2005. Similarly, unit rates for civil works are based on ongoing similar works in the country in February 2005. The exchange rates used on imported goods and services were those of February 2005.

Table 4.1: Summary of Project Cost Estimates by Component Million Cedis Million UA % Components

LC F.E. Total L.C F.E. Total F.E. (A) Production & Productivity Enhancement 9,985 30,581 40,566 0.71 2.17 2.88

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(B) Export Marketing Promotion & Infrastructure Improvement 21,712 111,610 133,322 1.54 7.94 9.48

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(C) Capacity Building 3,634 18,298 21,932 0.26 1.30 1.56 83 (D) Project Coordination & Management 16,685 3,952 20,637 1.19 0.28 1.47 19 Base cost 52,016 164,441 216,457 3.70 11.69 15.39 76 Physical contingency 6,233 13,160 19,393 0.44 0.94 1.38 68 Price contingency 9,351 19,741 29,092 0.67 1.40 2.07 68 Total project cost 67,600 197,342 264,942 4.81 14.03 18.84 74

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Table 4.2: Summary of the Project Cost by Category of Expenditure

Categories Million Cedis Million UA % L.C. F.E. Total L.C. F.E. Total F.E.

1. Works 20,415 93,359 113,774 1.45 6.64 8.09 82 2. Goods 2.1 Equipment 495 8,554 9,049 0.04 0.61 0.65 94 2.2 Vehicles 995 8,963 9,958 0.07 0.64 0.71 90 3. Services 3,139 13,666 16,805 0.22 0.97 1.19 82 3.1 Training and sensitization 222 18,613 18,835 0.02 1.32 1.34 99 3.2 Technical assistance 1,770 12,389 14,159 0.13 0.88 1.01 87 3.3 Studies/Audit/Research 20,415 93,359 113,774 1.45 6.64 8.09 82 4. Personnel 22,934 0 22,934 1.63 0.00 1.63 0 5. Operating expenses 2,046 8,897 10,943 0.14 0.63 0.77 82 Base cost of the project 52,016 164,441 216,457 3.70 11.69 15.39 76 Physical contingency 6,233 13,160 19,393 0.44 0.94 1.38 68 Price contingency 9,351 19,741 29,092 0.67 1.40 2.07 68 Total project cost 67,600 197,342 264,942 4.81 14.03 18.84 74 4.9 Sources of Financing and Expenditure Schedule The project will be financed by the African Development Fund (ADF) and the Government of Ghana (GoG). The total ADF financing will be UA17.00 million, representing 90% of the total project costs. The ADF resources will finance UA13.89million (99% of the foreign exchange costs) and local costs amounting to UA3.11 million (65% of total local costs) associated with operations and maintenance, and local costs of training and workshops. The Government contribution will cover salaries of staff in the implementation unit, vehicles for the project management, as well as operating and maintenance of office equipment. The financing plan of the project is shown in Table 4.3 and 4.4 below.

Table 4.3: Sources of Finance

Sources Million Cedis Million UA L.C. F.E. Total L.C. F.E. Total %ADF loan 43,695 195,349 239,044 3.11 13.89 17.00 90Governments 23,905 1,993 25,898 1.70 0.14 1.84 10Total project cost 67,600 197,342 264,942 4.81 14.03 18.84 100

Table 4.4: Expenditure by Category and by Source of Finance (million UA) Categories ADF GoG TOTAL L.C. F.E. Total L.C. F.E. Total L.C. F.E. Total 1. Works 1.45 6.64 8.09 0.00 0.00 0.00 1.45 6.64 8.092. Goods 2.1 Equipment 0.04 0.61 0.65 0.00 0.00 0.00 0.04 0.61 0.65 2.2 Vehicles 0.07 0.53 0.60 0.00 0.11 0.11 0.07 0.64 0.713. Services 3.1Training / Sensitization 0.22 0.97 1.19 0.00 0.00 0.00 0.22 0.97 1.19 3.2 Technical assistance 0.02 1.32 1.34 0.00 0.00 0.00 0.02 1.32 1.34 3.3 Studies/Audit/Research 0.13 0.88 1.01 0.00 0.00 0.00 0.13 0.88 1.014. Personnel 0.00 0.00 0.00 1.63 0.00 1.63 1.63 0.00 1.635. Operating expenses 0.07 0.63 0.70 0.07 0.00 0.07 0.14 0.63 0.77 Base cost of the project 2.00 11.58 13.58 1.70 0.11 1.81 3.70 11.69 15.39Physical contingency 0.44 0.93 1.37 0.00 0.01 0.01 0.44 0.94 1.38Price contingency 0.67 1.38 2.05 0.00 0.02 0.02 0.67 1.40 2.07 Total project cost 3.11 13.89 17.00 1.70 0.14 1.84 4.81 14.03 18.84

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Table 4.5: Expenditure Schedule by Component (in million UA)

Components 2006 2007 2008 2009 2010 Total(A) Production & Productivity Enhancement 0.19 1.56 0.75 0.70 0.66 3.86(B) Export Marketing Promotion & Infrastructure Improvement 1.18 3.19 2.42 2.35 2.30 11.44(C) Capacity Building 0.08 0.78 0.37 0.37 0.37 1.60(D) Project Coordination & Management 0.23 0.35 0.37 0.31 0.31 1.57 Total 1.68 5.88 3.91 3.73 3.64 18.84

Table 4.6: Expenditure Schedule by Source of Finance (in million UA)

Sources of finance 2006 2007 2008 2009 2010 TotalADF Loan 1.48 5.60 3.47 3.28 3.17 17.00Government 0.20 0.28 0.44 0.45 0.47 1.84Total 1.68 5.88 3.91 3.73 3.64 18.84

5. PROJECT IMPLEMENTATION 5.1 Executing Agency The Ministry of Food and Agriculture, which is mandated to provide agriculture services will be the Executing Agency. The Coordinator for AgSSIP (a programme under MOFA) will be responsible for the day-to-day overall management, and co-ordination of project activities, including accounting, procurement and monitoring of progress and achievements of set targets. The Coordinator will work with the existing team of three technical specialists, an M&E specialist, two existing AgSSIP procurement specialists and two existing AgSSIP accountants, making up the Project Coordination and Management Unit (PCMU). The technical specialists are currently implementing the World Bank-financed HEII project, which is scheduled to be completed in September 2006. The specialists were seconded to the HEII project by the Government. When implementation of the Export Marketing and Quality Awareness project commences, the GoG will officially assign the staff to the PCMU; this will be a condition of the loan. The GoG will assign a Monitoring and Evaluation officer to the current HEII technical team, for efficient coordination with the Monitoring and Evaluation Unit of the Programme Planning, Monitoring and Evaluation Directorate (PPMED). 5.2 Institutional Arrangements 5.2.1 Project Steering Committee: A Steering Committee with 13 members has been established to oversee and guide the implementation of the HEII project and comprises one each from: (1) Ministry of Food and Agriculture (MOFA), Chief Directorate; (2) Federation of Associations of Ghanaian Exporters (FAGE); (3) Directorate of Crop Services, MOFA; (4) Agricultural Services Sub- Sector Investment Program, MOFA; (5) GABRHO Farms Limited; (6) Sea freight and Pineapple Exporters of Ghana (SPEG); (7) VEAPEG; (8) Ghana Exports Promotion Council (GEPC); (9) Phoenix Tropical Exports Limited; (10) Athena Foods Limited; (11) Ghana Ports and Harbours Authority (GPHA); (12) Private Food Safety Practitioner; and (13) Ghana Civil Aviation Authority (GCAA). The project will utilize the services of this committee, chaired by the Minister of Food and Agriculture or his representative. The AgSSIP Coordinator will provide secretariat services to the committee for the Export Marketing and Quality Awareness project.

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5.2.2 Additional members representing stakeholders in the horticulture export and cassava industries will be appointed, so that the following members will be represented: The first 8 members on the list above plus one each from MOFA (research, extension), MOTI, GSB, MOFEP, MOPS–PSI, Ministry of Roads and Transport, the private sector (ACFA), a representative of NGOs. The Fund will require evidence from the Government of Ghana that these representatives are currently members or have been appointed to the Steering Committee. The Government will also provide evidence that the Steering Committee has been given official responsibility to oversee project activities of the current project. The Steering Committee will approve the Annual Work Programs and Budgets which will be consolidated by AgSSIP based on inputs from implementing units. 5.2.3 The Steering Committee will meet quarterly, and will be responsible for the overall direction of the project implementation. The Committee will a) review and approve the annual work programme submitted by the PCMU; b) discuss and resolve any regional issues related to the horticultural export and cassava industries in general; c) address any inter-agency constraints and facilitate project implementation; d) review the regular project progress reports, including monitoring and evaluation reports, from the PCMU. 5.2.4 Decentralised implementation structure: At the field level, the project implementing team will work very closely with the RADUs and the DADUs in each of the districts in the project area. A Senior Monitoring and Evaluation Officer from PPMED will be responsible for the direct monitoring of project activities within the regions. The management of the demonstration farms will be by the Ministry of Food and Agriculture (MOFA), under the Crops Directorate and through their existing decentralized Regional Offices (RADUs). Given that the farms will be located at existing Government facilities, MOFA will collaborate with those established management units of the existing facilities. MOFA’s extensive experience in managing similar facilities will be instrumental in ensuring that they are sustainable. The Ministry of Health will implement Malaria prevention campaigns, while the HIV/AIDS Commission will implement the campaign on HIV/AIDS prevention. 5.2.5 The GoG is currently undertaking efforts to strengthen AgSSIP management. Recognizing that these efforts could take time to finalize under the current project, the GoG will at least have assigned two additional qualified accountants and two additional procurement officers, to adequately meet the additional work generated by the Export Market and Quality Awareness Project and other projects. The additional personnel will be assigned before implementation of the project starts, and no later than the first quarter of 2006. 5.3 Supervision and Implementation Schedule The Fund will field supervise the project twice a year, and undertake continuous desk supervision, review requests for proposals, bidding documents, reports and disbursement. In addition, the country office which will have been established at the time project implementation starts, will carry out periodic supervision and will be available to assist the PCMU staff with procurement and disbursement issues. The presence of Bank staff in the country will also provide effective coordination with other donors supporting activities in the horticulture and cassava industries. The PCMU will oversee the implementation of all project activities including those to be undertaken by consultants and participating institutions. At the start of the project, an annual work programme and budget shall be submitted to ADF. Project activities are expected to start in January 2006. During the first year, emphasis will be on preparing bidding documents for procurement of civil works and goods, as well as making

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the necessary preparations for sensitisation and training. Details of the implementation schedule are given in Annex III, while key implementation target dates are set out in Table 5.1 below.

Table 5.1: Key Implementation Target Dates

ITEM No.

ACTIVITY ACTION BY START DATE

END DATE

1 Approval Board of Directors ADF 06/2005 06/20052 Signature of loan agreement GoG/ADF 07/2005 09/20053 General procurement Notice ADF 08/2005 10/20054 Effectiveness and first disbursement GoG/ADF 09/2005 01/20065 Launching ADF/GoG/PCMU 02/2006 03/20066 Recruitment of TA ADF/ PCMU 01/2006 09/20067 Bidding doc. & signing of contracts PCMU/ADF 01/2006 12/20108 Implementation of Project activities PCMU/ADF 01/2006 12/20109 Mid-term review ADF/PCMU/Consultant 06/2008 12/200810 Audit of project Accounts PCMU/Consultant 12/2006 12/201011 Project Completion Report ADF/GoG/PCMU 06/2010 12/2010

5.4 Procurement Arrangements 5.4.1 All procurement of goods, works and acquisiti.on of consulting services financed by the ADF under the project will be in accordance with the Bank’s Rules of Procedure for Procurement of Goods and Works or, as appropriate, Rules of Procedure for the Use of Consultants, using the relevant Bank Standard Bidding Documents. 5.4.2 Civil Works: Procurement of civil works comprising of rehabilitation of 407 km of feeder roads, (estimated at UA8.17 million), construction of farm buildings and lodging facilities for trainees, and plastic houses at the demonstration farms (UA0.91 million) and construction of Residual Analysis laboratory, 4 pack houses for preservation and storage of fruits and vegetables (UA1.01million) will be procured through several small contracts under National Competitive Bidding procedures. The location and size of the construction works to be undertaken are such that they are unlikely to attract bids from outside Ghana. 5.4.3 Goods: Procurement of drip irrigation equipment and accessories, farm and training equipment (seed extractor, fridge, computers and accessories) valued at UA0.73 million, insulated vehicles, double cabin vans, motorcycles, tractors (UA0.65 million) will be procured through International Competitive Bidding procedures. The procurement of various types of equipment for office, valued at UA0.06 million, will be through National Shopping since the goods to be procured are so diversified that it would be of no commercial interest for a single supplier to bid for them. 5.4.4 Consultancy Services and Training: Consulting services shall be procured on the basis of shortlists in accordance with the Bank's "Rules of Procedure for the Use of Consultants". These will include market studies on cassava starch, fruits/vegetables, preparation of audio visual programmes, environmental monitoring, socio-economic monitoring, all estimated at UA0.89 million. Training and workshops would include pre-production practices for farmers/farm workers, extension officers, production practices for

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farmers/ farm workers, production practices for extension officers, post production practices for harvesters/graders/sorters/packers, post production practices for traders/exporters/ transporters, training in tissue culture techniques (estimated at UA2.26million). Design and supervision of civil works valued at UA1.09 million. The selection procedure will be based on technical quality with price consideration. The activities under HIV/AIDS and malaria initiative (valued at UA0.20 million) will be carried out directly by MOFA (Gender Unit, Youth and Health in the Directorate of Agriculture Extension Services) and the Ministry of Health on the basis of two protocol agreements to be signed with the project. The two organs are the specialised GOG institutions.

Table 5.2: Procurement Arrangements (Million UA) Category ICB NCB Other * SL NBF Total 1.Civil Works 1.1 Infrastructure (roads) 8.17 [8.17] 8.17 [8.17]

1.2 Construction of farm buildings and lodging facilities for trainees, and plastic houses

0.91 [0.91] 0.91 [0.91]

1.3 construction of Residual Analysis laboratory and pack houses

1.01 [1.01] 1.01 [1.01]

2. Goods 2.1 drip irrigation equipment and

accessories, farm and training equipment

0.73 [0.73] 0.73 [0.73]

2.2 Vehicles 0.65 [0.65] 0.14 0.79 [0.65] 2.3 Office equipment 0.06 [0.06] 0.06 [0.06] 3. Consulting Services

3.1 market studies, audio visual programmes, environmental monitoring, socio-economic monitoring

0.89 [0.89] 0.89 [0.89]

3.2 Training 2.26 [2.26] 2.26 [2.26] 3.3 Design and supervision of

civil work 1.09 [1.09] 1.09 [1.09]

3.4 HIV and Malaria initiative 0.20 [0.20] 0.20 [0.20] 3.5 Annual audit 0.09 [0.09] 0.09 [0.09] 3.6 Mid term review 0.03 [0.03] 0.03 [0.03] 5. Miscellaneous 5.1 Personnel 1.63 1.63 [0] 5.2 Operating expenses 0.91 [0.91] 0.07 0.98 [0.91] TOTAL 1.38 [1.38] 10.88[10.88] 0.91[0.91] 4.17[4.17] 1.84 18.84 [17.00]Notes: - The short list applies to the use of consultants only. -*"Other" refers to LIC, international or local shopping, Direct Purchase or Force account; - The figures in brackets are amounts financed by ADF. 5.4.5 Annual auditing (UA0.09 million), mid-term review (UA0.03 million) will also be procured based on shortlists, using the selection procedure of technical quality with price consideration. 5.4.6 National Procedures and Regulation: Ghana’s national procurement laws and regulations have been reviewed and determined to be acceptable.

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5.4.7 The Executing Agency: MOFA will be responsible for the procurement of goods, works, consulting, and training services. MOFA has extensive experience implementing donor-financed projects included those financed by the Bank Group. The Implementing Agency is therefore familiar with ADF Rules of Procedure for the Procurement of Goods, Works and Services. The resources, capacity, expenses and experience of MOFA are adequate to carry out the procurements. Table 5.2 above gives a summary of the procurement arrangements under the proposed project. 5.4.8 General Procurement Notice: The text of a General Procurement Notice (GPN) will be issued for publication in United Nations Development Business, after approval of the project loan proposal by the ADF Board of Directors. 5.4.9 Review Procedures: The following documents are subject to review and approval by ADF before promulgation: (a) Specific Procurement Notices; (b) Tender Documents and Requests for proposal for Consultants; (c) Tender Evaluation Reports or Reports on Evaluation of Consultants’ Proposals, including recommendations for contract award; (d) Draft contracts, if these have been amended from the drafts included in the tender documents. 5.5 Disbursement Arrangements Project funds will be disbursed according to the expenditure schedule by component and source of finance and by category shown in Tables 4.5 and 4.6. The Government will open an account in the name of the project for the funds provided by ADF. The contribution of the Government to the project will also be deposited in a separate account. The opening of the account will be a loan condition. The ADF funds will be disbursed according to annual work plans and Budget, which will be approved by the Government and the Fund. Initial request for disbursement of the special account will be submitted to the Bank for approval and the amount shall be in accordance with relevant Bank Group Rules of Procedure. The first disbursement from the ADF account will be made after entry into force of the loan and fulfilment of conditions precedent to first disbursement on the loan. The disbursement of subsequent funds will be subject to justification of the utilization of the preceding funds. Other disbursements under the project will be made in accordance with the procedures in force. The contribution of the Government to the project costs will be deposited in a special account on a quarterly basis according to the schedule shown in Table 4.6. The settlement of expenses relating to services of consultants, contractors and suppliers will be effected by direct payment in accordance with rules of the Bank. 5.6 Monitoring and Evaluation 5.6.1 Monitoring and Evaluation (M&E) will be an important management tool to effectively assess progress of project activities, identify critical problems and constraints, and evaluate new opportunities. Monitoring and Evaluation activities will include a) a baseline survey; b) on-going monitoring; c) a mid-term evaluation; and d) a project completion report. A start-up workshop will be organised in order to provide a forum for the beneficiaries to participate in the project before the start of implementation. The workshop will also contribute to raising awareness about the project, and provide an opportunity for close collaboration with the beneficiaries and other stakeholders on project objectives and modalities of implementation.

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5.6.2 Project monitoring and evaluation will be the responsibility of the PPMED in MOFA. This is the Directorate tasked to monitor development interventions in the rural and agriculture sector and to evaluate their impacts. Monitoring and evaluation will be carried out in a participatory and gender-sensitive manner. At the start of project implementation, and building on the indicators presented in the matrix of this document, PPMED will set up verifiable gender-disaggregated indicators for monitoring project impact on male and female beneficiaries, and recommend necessary modifications where required to ensure that the benefits reach the target group, and that the project attains the indicators set out in this appraisal report. PPMED will be required to provide quarterly reports prior to each of the Project Steering Committee meetings. The Ministry of Finance will periodically monitor the overall implementation of the project. A mid-term review of the project’s performance will be undertaken in the third year, which will form the basis for modifying the project’s approach, if found necessary. 5.6.3 At the beginning of project implementation and with the use of short-term local consulting services, a baseline survey will be carried out to verify in detail the situation analysis in the participating four regions, using best practice participatory methods approach. The survey will, inter alia, identify key indicators under which the project impact will be determined and provide data against which specific project activities will be assessed vis-à-vis project objectives. Key indicators will include rate of women’s participation in horticultural crop production and in cassava production. 5.6.4 Project management will prepare quarterly progress reports (according to the Bank Group format) and annual progress reports indicating physical progress, procurement activities, expenditures, and evaluating the representation of men and women as beneficiaries according to the requirements of ADF. Quarterly reports should reach ADF within two months of the end of the reporting period, while the annual report should be submitted before the end of March of the following year. A project completion report will be submitted by MOFA within six months of the end of project implementation. 5.7 Financial Reporting and Auditing 5.7.1 The GoG has passed a new law on procurement which aims to build capacity in procurement skills from central government to the devolved institutions. The purpose of the new law is to enhance transparency, cost effectiveness and efficiency. In this regard, Government is addressing the issue of institutional strengthening, in AgSSIP. An Assistant to the AgSSIP Coordinator has been appointed and has already commenced work. When these efforts are completed, AgSSIP will have a Financial Controller and three qualified accountants. For procurement, professional staff with the necessary academic background will be trained at Regional and District levels, which will avail AgSSIP projects with qualified procurement specialists at the headquarters as well as at the devolved institutions, in line with the decentralized structure of MOFA. Given that these efforts being undertaken by the GoG, could take time to finalize, under the current project, the GoG will at least have assigned two additional qualified accountants and two additional procurement officers to AgSSIP, to meet the additional work, which will be generated by the Export Marketing and Quality Awareness Project. 5.7.2 Internal Control Mechanism: The PCMU will utilize the established internal control mechanism at AgSSIP to record, verify and report all transactions to present a true and fair view of financial records maintained for ADF and Government funds disbursed to the project,

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which will be submitted to the Fund for review. The PCMU will also prepare and submit quarterly project financial monitoring reports and annual project financial statements and arrange for their auditing by a qualified auditor acceptable to the Bank. 5.7.3 Accounting System: The PCMU-AgSSIP Accounting Unit will keep financial and accounting records in accordance with sound international accounting practices and in line with internal control mechanism and audit formalities required by the Fund. Quarterly progress reports will be prepared and sent to the Bank on a quarterly basis, and will include progress on project implementation, and a financial report. 5.7.4 Flow of Funds: A Special Account in US Dollars will be established and managed by the PCMU. Replenishment of resources will be made using Bank Rules of Procedure for Disbursement including direct payment, replenishment to the Special Account on the basis of Statement of Expenditures and full documentation as required. Government contribution to the project will be deposited in a separate account in local currency. 5.7.5 Auditing: The project financial statements will be audited once a year under International Standards by an independent auditor acceptable to the Bank, and under terms of reference acceptable to the Bank. The audit will cover all sources of funds and expenditures related to the project. The audit report will be sent to the Bank no later than six months after year-end. 5.8 Aid Co-ordination 5.8.1 As indicated under institutional arrangements (Section 5.2), the project will be implemented by the Agriculture Services Sector Investment Programme (AgSSIP). Within AgSSIP there is an established mechanism for donor co-ordination for all bilateral and multilateral donor organizations providing support to the agricultural sector. The donor consultative meetings are held under the auspices of FAO. Joint donors’ co-ordination committee meetings are held on a quarterly basis, or as and when deemed necessary. The agencies represented include the AfDB, World Bank, EU, IFAD, USAID, CIDA, DFID, GTZ, AFD, FAO, and JICA. 5.8.2 During project preparation, the project was discussed in detail with donors, first in meetings arranged separately with representatives of those donor agencies directly involved in the horticultural and cassava sub-sector and in the four regions under the project (World Bank, USAID, JICA), and then at a joint donors’ meeting, and was attended by World Bank, USAID, DFID, EU, KFW, GTZ, FAO, CIDA, WFP, IFPRI. Consultations with bilateral and multilateral donors will continue during the implementation of the project, through these donor consultation meetings. The implementation of project activities will be carried out in close collaboration with USAID, the World Bank and JICA who are also financing activities which are complementary with the proposed project. 6. PROJECT SUSTAINABILITY AND RISKS 6.1 Recurrent Costs Total recurrent costs under the project are UA2.81 million. The year–by-year expenditure of ADF and GoG on operating costs is shown in Table 6.1 below. After project implementation, the government agencies connected with implementing project activities

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would continue to pursue the same under their existing recurrent expenditures. These agencies would fund their respective roles in training, feeder road maintenance, research and extension services to farmers and exporters. Recurrent costs incurred for production, processing, trial farms, cold chain, transportation and all other expenses pertaining to exports shall be the responsibility of the private sector beneficiaries.

Table 6.1: Financing of Recurrent Expenses by Source of Finance (million UA)

Sources of finance 2006 2007 2008 2009 2010 TotalADF 0.16 0.32 0.26 0.20 0.17 1.11Government 0.20 0.28 0.30 0.45 0.47 1.70Total recurrent costs 0.36 0.60 0.56 0.65 0.64 2.81

6.2 Project Sustainability 6.2.1 The project has been prepared and designed in a participatory manner. Through the training programmes under the project, farmers, exporters and community based organisations will build upon their experience and strengthen their capacity to undertake their own business activities and decisions. The horticultural crops to be promoted under the project have been selected on the basis of their adaptability to the agro-climatic zones and consumer preferences in the domestic and export markets. Cassava is highly adaptable to the Ayensu area (selected project area) where it has been grown for many decades. The use of higher quality inputs, better cultural practices, and appropriate technology, will improve soil fertility and structure, leading to sustained production and productivity in an environmentally friendly manner. 6.2.2 The crop budgets indicate that income gains from growing the crops with improved management are substantially higher than traditional practices, which provides adequate incentives for farmers to adopt the improved varieties. The comparatively favourable farm-gate and export prices of horticultural crops and cassava will generate higher marginal returns. As a result, the high additional incomes, which producers will realise through increases in the area cropped and productivity per unit area, will provide the necessary incentive and motivation for the farmers to continue production. The training in basic business accounting through various project delivered courses will enable them to run financially viable operations even after the end of project implementation, a further incentive to the farmers and exporters. For cassava farmers, the ability to sell their high quality produce at stable prices to a reliable market will ensure continued production, an assertion farmers themselves indicated during preparation of the project. 6.2.3 Through sensitisation, stakeholders will participate actively in project activities during which implementation processes and constraints will be discussed and solutions proffered as an integral part of the problem solving process. This will contribute to fostering the achievements of the project, thereby engendering a sense of ownership which will enhance sustainability. 6.2.4 The MD2 multiplication program is based on the request of the Ghanaian pineapple farmers and exporters, in response to market demands. The producers/exporters see the switch to MD2 production as the way to maintain their existing market shares and profit margins, and a way to increase export volumes, which, in turn, should generate enough revenues to finance their recurrent costs. Also, pineapple being a crop that multiplies

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vegetatively (through suckers from harvested roots stocks), the investment costs will be limited to the first acquisition of the mother suckers from the appropriate tissue culture laboratories. Thereafter, each producer would be able to produce its own supplies of planting materials, as is the current situation, and even sell the surplus. 6.2.5 The establishment of demonstration farms will provide the industry with an effective manner of disseminating innovative technology to the farmers and to undertake adaptive research for the scientist, such as generating a horticulture database, which will provide growers with crop profiles (type, planting calendars, productivity, yields, pests and diseases control actions). This process of innovative R&D will develop strong collaboration between the public and private sectors, which will contribute to the sustainability of the farms. The demonstration farms will also serve as a focus for awareness campaigns and sensitisation to new products for diversification and new technological packages, which will enable the industry to improve its productivity and open new markets. The farms will also establish sustainable sourcing and development of high quality seeds and planting materials to adapt to changing market needs. In the process of training, the demonstration farms will produce high quality fruits and vegetables, which will be exported or sold on the local market. The revenue from the sale of this produce will generate income for the ongoing operations of the farm. 6.2.6 The Associations (Vegetables Producers and Exporters Association of Ghana (VEPEAG), the Sea-Freight Pineapple Exporters of Ghana (SPEG), the Association of Cassava producers in the Ayensu area, and the Federation of Associations of Ghanaian Exporters (FAGE)) established by producers and exporters of horticultural products and of cassava have exhibited well managed structures headed by elected leaders. The accounts of all these associations are audited. They also receive resources directly from external financiers, in kind or as budgetary support. Capacity building of these institutions will further lay the foundation for their success and accountability. Their success will also continue to induce further private investments. 6.2.7 The tractors and temperature-controlled trucks provided to the associations of the cassava producers, SPEG and VEPEAG, will be used by their members at a fee, which will be used to run and maintain the fleet. In addition, the associations will be strengthened through training so that they will be able to manage and maintain their assets, especially equipment. Based on the experience and the incomes to be generated under the project, the recurrent operating and maintenance charges will not create an additional burden and hence the management of these tractors and trucks will be sustained. 6.2.8 The improved feeder road network in the project area will be regularly maintained through GoG’s established Road Fund, which is financed through fuel levies and donor contributions. Therefore there will be no additional cost due to the project. 6.3 Critical Risks/Assumptions and Mitigation Measures 6.3.1 It is assumed that the Government of Ghana will continue to promote a conducive agricultural and economic policies in support of agriculture intensification. To encourage this, the Bank and other donors will continue to dialogue with the Government. 6.3.2 The primary risk for the project is farmers’ adoption of Good Agricultural Practices (GAP) in the production of horticultural export crops and cassava and the use of improved planting materials and seed. This risk will be minimized through mobilization and training of

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farmers in GAP. Farmer groups and associations will be formed and registered which will enable the project to effectively follow up their utilisation of the improved planting materials and seeds. 6.3.3 It is assumed that the growth rate in demand for horticultural crops being promoted will remain high. As a mitigation measure, the project will actively implement a marketing strategy, to retain or expand the country’s market share. The strategy will focus on creation of awareness in international markets that the New Ghana Produce adheres to GAP, residual-free and ethical procedures. The project has provided for funds to recruit an advertising firm specialized in this area to use international media to advertising and publicize the products. 6.3.4 It is assumed that supply of cassava will be continuous to enable Ayensu Starch Company to consistently operate at full capacity. As a mitigation measure farmers are being assisted by the project through their association with high quality, disease-tolerant and high yielding cassava varieties which will enable them to produce increased amounts of cassava throughout the year. In addition, the project will finance the development, multiplication and distribution of new disease-tolerant higher yield cassava varieties to increase the availability on a continuous basis of improved planting materials for farmers. This will lead to increased production of cassava with high starch content to meet the demands of the starch company. 6.3.5 The MD2 variety from Ghana will meet the consumer tastes and preferences on the international market. This variety of pineapples is already grown and exported by Costa Rica and its demand on the international market is increasing. Since the agronomic practices of this variety are similar to those already in practice in Ghana for the Smooth Cayenne variety, it is expected that farmers will not find any difficulty in producing MD2 to meet the appropriate international quality requirements. 6.3.6 It is assumed that the cost of production for Ghanaian products will remain favourable and internationally competitive. As a mitigation measure, the project has made provision for the improvement of feeder roads to reduce transport costs. The project will also provide to the associations temperature controlled trucks to reduce post harvest handling losses. This will reduce the average unit cost of production and ensure competitive market prices. 6.3.7 The quality of handling and management services at both the airport and sea ports is not appropriate to meet requirement in the international market. As a mitigation measure, government is in the process of liberalization and privatization of these. It is expected that private sector involvement in the provision of these services will enhance quality. In addition, the HEII project financed by the World Bank to upgrade the facilities at the airport and Tema port is already under implementation. 6.3.8 Government road fund will be sufficient to maintain the additional 400km of feeder roads. The mitigation measure: The selection of the feeder roads to be upgraded were chosen by the Ministry of Transport and Roads in collaboration with the Crops Services Directorate and the roads are part of the overall programme for road construction and upgrading, and eventual maintenance using resources from the road fund. The project continue this collaborative efforts between the concerned Ministries, to ensure adherence to the planned programme.

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7. PROJECT BENEFITS 7.1 Financial Analysis 7.1.1. Based on the rapid growth in pineapple and papaya exports in the fruits segment and promising growth opportunities in vegetables segments, increased areas under cultivation are shown to be used for pineapple, papaya, green chillies, okra and eggplants over a period of 20 years from the date of the start of the project. The project's overall benefits would accrue from quality improvement in both horticultural crops and cassava, improvements in quality control, timely issuance of export certificates for horticultural crop exports, and savings in terms of transportation costs. For quantification purposes, it has been conservatively assumed that the project benefits would accrue from shifts in produce market destination, i.e. from shifting more produce from domestic to export markets for horticultural crops and to the Ayensu factory for cassava. It has further been assumed that the small and medium participating farmers would have an opportunity to make the market shift as they improve the quality of their produce.

7.1.2 Although the project's main focus group is the participating farmers and exporters, the project would benefit all horticultural growers and exporters through the upgrading of market information and intelligence capacity, improvement in infrastructure facilities like feeder roads, pack houses, refrigerated vehicles, opening windows for marketing in regional and European markets, strengthening of quality control and certification facilities and services. It would also provide the environment where private investors would be encouraged to undertake further investments. For the cassava industry, the project would raise the quantity and quality of the produce even for that which is sold on the local market, thereby encouraging other farmers to invest in similar possessing facilities and hence creating a market for the small-scale growers. For the farmers, this would expand the reliable market for their produce. 7.1.3 Farmgate Price: The difference between the CIF and FOB prices is approximately 70-75% which is due to the loading of freight charges (either sea or airfreight). Between the FOB and farm-gate price the difference is 50% covering margin or commission to traders/ exporters, transportation charges, packing material cost, port handling charges. A major portion (around 41%) of this 50% is the margin or commission to traders/exporters. These elements have a direct impact on the pricing of the products and on the outcome of general trade or business practices prevalent in the export sector. To reduce the incidence of freight costs in determining cost-competitiveness, the project will increase value, mainly through high-value processing operations, seedlings and adopting good agricultural practices.

7.1.4 Crop budgets without and with the project were prepared for five selected crops: pineapple, papaya, okra, eggplants, green chillies. The costs and revenues were estimated per hectare. Farm-gate prices per kilogram of output have been considered as revenue and all variable costs, including seed, chemical fertilizers, mulch, irrigation water, and labour were deducted from the total revenue in the Net Farm Income. Fixed costs were assumed to be: the depreciation cost of plastic houses, irrigation system, and working capital interest charges. Incremental value obtained per hectare has been considered for project inflows in the computation of FIRR and EIRR in financial and economic analysis. Although the significant potential benefits that farmers could obtain from export of horticultural products compared to their sale in the local markets is not in doubt, nevertheless the magnitude of these benefits need to be monitored further during project implementation.

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7.1.5 Net financial benefits, obtained after deducting investment cost and recurrent costs from net incremental value obtained from cultivation of selected crops would generate an FIRR of 25% (see Annex 7).. 7.2 Economic Analysis 7.2.1 The economic benefits of the project will be derived from an increase in exported volumes, through increased production and reduced number of rejected consignments, as well as through increase in value per unit volume due to improvement in product quality. 7.2.2 The project is expected to create a conducive environment for small and medium scale farmers to channel their produce toward more profitable exports in the Regional and European markets. It would also help large farmers/exporters to consolidate their market positions by raising sufficient volume from the small farmers and out growers in order to meet demand requirements, reduce their marketing costs and establish strong client relationships with buyers in importing countries.

7.2.3 The Economic Internal Rate of Return computation is based on the following assumptions: (a) The net benefits accrue to the project over a period of 25 years from the date of the start

of the project. (b) A conversion factor of 0.88 was used to derive the economic prices from market prices, (c) Investment costs of the project have been adjusted to economic costs by excluding taxes,

duties and price contingencies. (d) The investment costs have been computed by considering opportunity costs at 12%. The EIRR of the project was found to be 24% (see Annex 7). 7.3 Social Impact Analysis 7.3.1 The project will have positive social impact on men, women and youths in the project area through: i) increased crop production; ii) increased productivity enhancement; iii) improved export marketing and infrastructure; and iv) capacity building. The sensitisation and training activities under the Capacity Building component will enhance the awareness and capability of the project beneficiaries to make better business decisions. In addition, the HIV/AIDS awareness campaigns and malaria prevention activities are expected to contribute to improved health of the population. Increased production will create more employment in the rural and urban areas and lead to increased incomes for smallholder men and women producers and exporters. All of these improvements will contribute to improved welfare and reduced poverty. 7.3.2 About 13,502 rural households or 81,012 people living in these households will directly benefit from the project. An estimated 12,000 people employed at all levels of the horticultural export industry will be trained over the project life, of whom 4,680 (39%) will be women, who are predominantly engaged in weeding, spraying, picking, sorting, grading and packing. Training of women farmers in good agricultural practices will enable them to increase crop production which will lead to increased incomes of the women farmers in the project area. The increase in incomes for women will contribute to improved standard of living for entire households and thereby contributing to poverty reduction.

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7.3.3 The project will have a significant impact on the collective voice of the community, as the capacity building of existing groups will contribute to empowering members to take charge of their development needs. Under the project, men and women will be mobilised and trained in horticultural and cassava good agricultural practices, as well as in basic accounting methods. Ghana has long-term experience in group formation for both men and women. Women groups have been comparatively more successful, and membership does not require a male guarantor. 7.3.4 In Ghana, women account for 52% of the agricultural labour force and 70% of agriculture work. They play the leading role in post-harvest activities such as storage, processing, marketing of horticultural crops. In spite of their importance in the agricultural labour force, they have limited access to basic resources, especially land. Increased incomes for women will improve household food security and well-being, as women spend most of their earnings on their families, especially on their children. 7.3.5 Training of Association elected leaders and administrative staff will avail the communities with leadership skills which would further foster cooperation around economic and social activities. This would also contribute to minimising conflict in this area. The project will, therefore create the capacity for the communities to self-promote rural development operations. The structures, training and procedures that the project will put in place should enable the beneficiaries to pursue and develop the activities initiated, as well as to maintain the infrastructure set up. Therefore, the project will have a positive impact on rural organization by making farmers more accountable and by developing human resources in general. 7.3.6 Improved feeder road network in the project area will attract more transporters, which should result in reduced cost of transportation in these area and will facilitate inter-community travel and social activities. This will ensure year-round passage in the districts, and increase trade in various goods and services, among others. 7.4 Sensitivity Analysis 7.4.1 The sensitivity analysis was based on a number of assumptions: (i) increase in the project cost owing to increase in the costs of infrastructure, equipment and project activities; (ii) reduction of additional project benefits because of the fall in returns or in product prices; (iii) occurrence of both of the two assumptions mentioned above, namely reduction of benefits and increase in costs; and (iv) increase in the maintenance/operating expenses of the structure and additional expenses of the important speculations used. The results of the sensitivity analysis are:

• 10 % increase in expenses, EIRR=21.8%; • Fall in return leading to a 10% reduction of the benefits, EIRR=21%; • 10 % increase in expenses and 10% fall in earnings, EIRR=20.3%; • Two years slippage on project implementation, EIRR=18.4%.

7.4.2 These sensitivity tests allow concluding that the project remains viable in spite of increase in expenses. The sensitivity of the EIRR will be reduced by the constant monitoring of the implementation of all the project activities in order to maintain their expected level of full production.

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8. CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The project will address the constraints and challenges facing the horticulture export sub-sector and cassava production in Ayensu. (i) Horticultural crops are high value crops and the export market exists and continues to grow. As well, international market prices for these products provide a comfortable profit margin for the producers. During the past ten years Ghana has demonstrated that it can compete on this very challenging global market. Thus the technical feasibility of the proposed project activities is already verified. The need therefore is to invest in infrastructure development, and in human and institutional capacity building to create a conducive climate for further development of this sub-sector. (ii) Cassava farmers in the Central Region have been given an opportunity for a ready market for their produce, at the Ayensu Starch Company. To effectively exploit this opportunity the project will support farmers in the production of quality high-starch content cassava crop to sell to the Ayensu factory. 8.1.2 Project activities are expected to contribute to increased incomes of the targeted growers and exporters. In average income per hectare will increase from Cedis 0.50 to 5.00 million for Chillies growers, and from Cedis 1.3 to 4.40 million for Cassave growers, from Cedis 11.0 to 31.00 million for Pineapple growers, from Cedis 14.00 to 17.00 million for Egg plant growers and from Cedis 43 to 59 million for Papaya growers. The increase in incomes among horticultural producers and exporters, and the consequent improvement in rural living conditions, will significantly contribute to the reduction of rural poverty among small-scale producers as well as other operators in the two industries. 8.1.3 Capacity building is mainly focused on human recourse training to ensure sustainability. In this regard, 80,000 farmers and exporters will be mobilized into groups and/or associations. By project completion, about 11,120 farmers, exporters, and other related service officials will be trained out of which 4,700 i.e. 42 percent will be women. 8.1.4 The project is socially desirable, technically feasible, financially viable and environmentally friendly. Furthermore, it is accorded high priority in the agriculture development strategy adopted by the Government of Ghana and is consistent with the Bank Group Vision statement as well as the Bank strategy for Ghana. At the national level, the project is expected to contribute to the diversification of the country's export base, generate rural employment and enhance rural incomes. 8.2 Recommendations It is recommended that a loan not exceeding UA17.0 million, should be granted to the Government of Ghana for the purpose of implementing the proposed Export Marketing and Quality Awareness project subject to the following conditions: (a) Conditions Precedent to Entry into Force The entry into force of the Loan Agreement shall be subject to the fulfillment by the Government of Ghana of the provisions of Section 5.01 of the General Conditions of the ADF.

50

(b) Conditions Precedent to First Disbursement The obligations of the Fund to make the first disbursement of the loan shall be conditional upon the entry into force of the Loan Agreement and the fulfillment of the Government of Ghana of the following conditions: The Borrower shall have provided to the Fund evidence: i) of opening two special accounts in a commercial bank acceptable to the Fund, one to

receive the proceeds of the loan and the other to receive counterpart funds for the project (Para. 5.5)

ii) of having assigned the existing HEII PCMU to coordinate and manage the project; and of

having assigned the staff working on the HEII PCMU to work on the Bank project (Para. 5.1).

iii) of having assigned a Monitoring and Evaluation officer, to work closely with the HEII

technical team, who will remain in the Monitoring and Evaluation Unit of PPMED, two qualified accountants and two procurement officers to AgSSIP (Para. 5.1 and 5.7.1)

iv) of the appointment of an ADF-approved list of additional members to serve on the

existing HEII Project Steering Committee, that will comprise but not be limited to: representatives of MOFA (research, extension), MOTI, GSB, MOFEP, PSI, Ministry of Roads and Transport, VEPEAG, ACFA, and GEPC. (Para. 5.2.2).

(c) Other Conditions The Borrower shall provide to the Fund: i) six months after loan effectiveness, the agreements signed with the Department of Feeder

Roads, UNU-INRA/Botanic Department and AESD/Crops Research Institute, following the Bank’s approval of the draft agreements, respectively, for the implementation of the feeder roads, Tissue Culture, and farm demonstrations (Para. 4.5.16 and 4.5.6)

ii) evidence of including the maintenance cost of the feeder roads to be rehabilitated by the

project in the Road Fund Budget on the annual basis (Para 6.2.8)

ANNEX 1 Ghana: Export Marketing and Quality Awareness Project Location

##

#

#

#

#

BURK INA FASO

COTE D'IVOIRE

TOGO

UPPER WEST

NORTHERN

UPPER EAST

BRONG AHAFO

ASHANTI

WEST ERN CENTRAL

EASTERN

VOLTA

GREAT ER ACCRA

Wa

Accra

Te male

Seko nd iCap e C oas t

0 100 200 300 Kilometers

Project Area

#

#

#

##

##

#

#

#

AccraTema

Nsawan

Koforidua

Ola Tafo

Oda

SwedruWinneba

Cape Coast

VOLTA

EASTERN

CENTRAL

GREATER ACCRA

0 50 100 150 Kilometers

This map was provided by the African Development Bank exclusively for use of readers of the report to which it is attached. The names used and borders shown do not imply on the Bank and its members any judgement concerning the legal status of territory nor any or acceptance of these borders.

ANNEX II Implementation Organization Structure

- –

Project Steering Committee: MOFEP, MOFA, MOTI, Ministry

Roads and Transport, GSB, EDIF PSI, FAGE, SPEG,

VEPEAG, Cassava Growers Association, Representative of

NGOs) Ministry of Food and

Agriculture

AgSSIP Coordination Unit

Field level implementation

AYENSU CASSAVA FARMERS

ASSOCIATION

SPEG - PINEAPPLE PRODUCERS/ EXPORTERS

VEPEAG -VEGETABLES PRODUCERS/ EXPORTERS

Institutions Partners

CSRI

Ghana Standards Board

PPMED

0

Quarters 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1PROJECT MAJOR ACTIVITIES

Preparatory Phase for Start-up

0.1 ADF Appraisal Report

0.2 Project Approval by ADF

0.3 General Procurement Notice

0.4 Signature of Protocol of Grant Agreement

0.5 Appointment of PCMU

0.6 Project Effectiveness

0.7 Launching of project activities

Implementation of Project Activities

1.1 Elaboration of draft bidding documents/Shortlist of consultants.

1.2 Procurement of contracts for Civil Works and Goods

1.3 Proc. of Civil Works -Access Roads/Laboratory Building

1.4 Procurement of Civil Works – Model Farms

1.5 Proc. of Goods -Tractors/Trucks/Other equipment

1.6 Civil Works supervision

1.7 Implementation Agreement with Research Instructions

1.8 Recruitment of Consultants by short list

1.9 Training of Extension Workers, Exporters and Farmers

1.10 Adaptive Research Activities on new NTE crops

1.11 Marketing and Markets Development activities

1.12 Multiplication of MD2 pineapple suckers

1.13 HIV/AIDS and Malaria Campaigns

1.14 Supervision missions

1.15 Audit

1.16 Mid-term Review1.17 Project Completion Report

2009

ANNEX III: Project Implementation Schedule

2005 2006 2007 2008

ANNEX IV PROVISIONAL LIST OF GOODS AND SERVICES (UA million)

Local Cost Foreign

ExchangeTotal

1. Works 1.45 6.64 8.09 2. Goods 2.1 Equipment 0.04 0.61 0.65 2.2 Vehicles 0.07 0.53 0.60 3. Services 3.1Training and sensitization 0.22 0.97 1.19 3.2 Technical assistance 0.02 1.32 1.34 3.3 Studies/Audit/Research Programs 0.13 0.88 1.01 4. Personnel 0.00 0.00 0.00 5. Operating expenses 0.07 0.63 0.70 Base cost of the project 2.00 11.58 13.58 Physical contingency 0.44 0.93 1.37 Price contingency 0.67 1.38 2.05 Total project cost 3.11 13.89 17.00

ANNEX V Page 1 of 2

GHANA: LIST OF ONGOING PROJECTS AS AT 31 MARCH 2005

Project Date

Approved%

Disbursed Loan Amount1 RURAL ENTERPRISES PROJECT 12/12/2002 1.2 7,500,000

2 FOURTH LINE OF CREDIT TO AGRICULTURAL DEV. BANK 07/14/1999 99.9 15,000,000

3 AFRAM PLAINS DEVELOPMENT STUDY 05/03/2000 46.8 619,395 4 LIVESTOCK DEVELOPMENT PROJECT 10/10/2001 5.4 19,580,000 5 FOOD CROPS DEVELOPMENT PROJECT 12/10/1997 45.8 10,000,000 6 CASHEW DEVELOPMENT PROJECT 10/31/2000 16.3 9,890,000 7 INLAND VALLEY RICE DEVELOPMENT PROJECT 05/18/2001 1.3 15,000,000 8 KPONG IRRIGATION PROJECT 09/17/1990 83.1 23,238,142 9 KPONG IRRIGATION PROJECT (GRANT) 09/17/1990 78.2 2,081,578

10 SMALL-SCALE IRRIGATION DEVELOPMENT PROJECT 12/04/1997 34.0 15,000,000

11 COMMUNITY FORESTRY MANAGEMENT PROJECT 07/03/2002 10.5 7,000,000 12 RURAL FINANCIAL SERVICES PROGRAMME 10/11/2000 56.0 3,580,000 13 NERICA DISSEMINATION PROJECT - GHANA 09/26/2003 0.0 2,650,000 Agriculture 39.4 131,139,115 1

ACHIMOTA-ANYINAM ROAD REHABILITATION PROJECT 12/15/1997 69.0 10,000,000

2 REHABILITATION OF ACHIMOTA-ANYINAM ROAD 12/15/1997 0.0 7,000,000 3 REHABILITATION OF ACHIMOTA-ANYINAM ROAD 12/15/1997 0.0 0 4 ROAD INFRASTRUCTURE PROJECT 2003 09/17/2003 0.0 18,000,000 5 ROAD INFRASTRUCTURE PROJECT 2003 09/17/2003 0.0 800,000 6 ROAD INFRASTRUCTURE PROJECT 2003 09/17/2003 0.0 3,000,000 7 AKATSI-DZODZE-NOEPE ROAD(AKATSI-AKANU) 12/20/2002 0.0 12,720,000 8 THREE ROADS STUDY 10/20/1999 36.9 1,160,000 9 TEMA-AFLAO ROAD REHABILITATION PROJECT 04/17/2002 0.0 14,700,000 10 ANYINAM-KUMASSI ROAD CONSTRUCTION 11/22/1985 85.8 23,671,036 11 ANYIANAM-KUMASI ROAD REHABILITATION 09/27/1985 0.0 6,670,000

12 TETTEH QUARSHIE CIRCLE MAMFE ROAD REHABILITATION 12/11/2000 28.4 25,000,000

Transport 28.3 122,721,036 1 ACCRA SEWERAGE IMPROVEMENT STUDY 05/03/2000 62.8 950,000 2 RURAL WATER AND SANITATION PROGRAMME 09/08/2004 0.0 12,800,000 Public Utilies 4.3 13,750,000 1 SENIOR SEC. SCHOOL SUPPORT PROJECT - III 09/24/2003 0.3 20,000,000 2 SENIOR SEC. SCHOOL SUPPORT PROJECT - III 09/24/2003 0.0 5,000,000 3 HEALTH SERVICES REHABILITATION III 10/30/2002 0.0 17,640,000 4 HEALTH SERVICES REHABILITATION III 10/30/2002 0.0 1,000,000 5 POVERTY REDUCTION PROJECT 98.3 11,000,000 Social Sector 10/28/1998 19.9 54,640,000

1 INSTITUTIONAL SUPPORT TO THE MINISTRY OF FINANCE 11/14/2001 67.0 2,000,000

2 CAP.BUILDING, GOVERNANCE & POVERTY RED. 25.9 3,000,000 Multisector 42.3 5,000,000 Grand Total 30.5 327,250,151

GHANA: LIST OF COMPLETED PROJECTS AS AT 31 MARCH 2005

No. Project Title Date Approved Source Loan Amount

1 Cocoa processing factories 12/18/1979 ADB 8 2 Gold Mining Rehabilitation 4/17/1990 ADB 26.74 3 El-Din Salt Mill LTD 4/17/1990 ADB 0.66 4 Particle Board Manufacturing 4/17/1990 ADB 1.08 5 Sheratom Ambassador Rehabilitation 4/17/1990 ADB 7.96 6 Pulp and Paper Mills 8/28/1985 ADF 1.07

ANNEX V Page 2 of 2

GHANA: LIST OF COMPLETED PROJECTS AS AT 31 MARCH 2005 Project Date Approved Loan Amount 1 LINE OF CREDIT TO CAL MERCHANT BANK 07/10/2002 5,000,000.00 2 ECONOMIC REFORM SUPPORT LOAN II (ERSO II) 03/29/2001 38,584,142.82 3 TERTIARY EDUCATION REHABILITATION 06/18/1991 12,776,664.78 4 WOMEN'S COMMUNITY DEVELOPMENT 06/18/1991 1,388,150.99 5 WOMEN'S COMMUNITY DEVELOPMENT 06/18/1991 446,628.53 6 PRIMARY EDUCATION REHABILITATION PROJECT 01/09/1997 12,000,000.00 7 GOPDC Oil Palm Expansion Project 12/12/2002 7,140,000.00 8 SPECIAL PROGRAMME FOR FOOD SECURITY PILOT PROJECT 05/17/2000 709,902.79 9 AGRO-INDUSTRIAL STUDY 09/09/1998 701,977.93 10 POVERTY REDUCTION SUPPORT LOAN 10/22/2003 34,580,000.00 11 ECONOMIC REFORM SUPPORT LOAN 11/12/1998 13,180,075.67 12 LINE OF CREDIT (II) 12/13/1984 13,791,520.09 13 AGRICULTURAL SECTOR REHABILITATION 06/26/1987 18,605,250.40 14 REHAB.OF AGRICULTURE - TRANSPORT SECTION 12/16/1983 28,092,085.97 15 SUBRI INDUSTRIAL PLANTATIONS 11/15/1984 14,112,792.52 16 STUDY OF SMALL-SCALE IRRIGATION PROJECT 05/25/1992 1,778,584.83 17 COCOA REHABILITATION 04/25/1988 17,599,560.82 18 COCOA REHABILITATION 04/25/1988 6,620,510.78 19 STRUCTURAL ADJUST.LOAN FOR PRIVATE SECT. 11/25/1991 18,421,040.00 20 ROADS STUDY 08/31/1993 427,143.98 21 RAILWAYS PROJECT 04/28/1981 10,000,000.00 22 MECHANISED RAINFED COTTON PRODUCTION 08/20/1975 1,830,101.11 23 PALM OIL MILLING FACTORIES 03/31/1976 1,827,911.00 24 LINE OF CREDIT (I) 05/21/1980 7,364,842.81 25 KPONG IRRIGATION STUDY 12/16/1983 1,470,180.60 26 THIRD LINE OF CREDIT TO THE AGRICULT.DEVEL.BANK 11/24/1993 22,994,736.69 27 LINE OF CREDIT 11/13/1984 17,815,406.66 28 EXPANSION OF GLASS MANUFACTURING UNIT 01/17/1975 4,989,707.63 29 INDUSTRIAL SECTOR ADJUSTMENT 05/27/1988 49,999,999.99 31 MPATABA-ELUBO ROAD CONSTRUCTION 01/25/1978 3,524,098.40 32 MPATABA-ELUBO ROAD CONSTRUCTION 01/25/1978 2,269,559.07 33 ACHIMOTA-ANYIMAN ROAD STUDY 08/24/1992 564,120.70 34 ACCRA-TEMA WATER SUPPLY REHABILITATION 10/18/1988 16,450,000.00 35 ACCRA-TEMA WATER SUPPLY REHABILITATION 10/18/1988 6,343,886.87 36 ACCRA-TEMA WATER - SEWERAGE FACILITIES 05/08/1974 4,000,000.00 37 ACCRA-TEMA WATER - SEWERAGE FACILITIES 04/06/1977 2,266,550.98 38 ACCRA SEWERAGE STUDY (GRANT) 10/29/1990 690,211.88 39 BRONG AHAFO ELECTRICITY NETWORK 06/17/1986 24,344,460.80 40 INTERCONNEXION PROJECT 08/22/1978 6,239,999.27 41 TELECOMMUNICATIONS NETWORK 10/21/1977 4,909,447.41 42 HOSPITAL REHABILITATION STUDIES 09/27/1985 1,723,323.37 43 HEALTH SERVICES REHABILITATION I 01/16/1990 12,527,817.77 44 HEALTH SERVICE REHABILITATION (GRANT) 01/16/1990 300,590.03 45 HEALTH SERVICES REHABILITATION II 12/16/1991 12,146,927.34 46 NASIA RICE DEVELOPMENT 09/17/1973 2,300,000.00 47 NASIA RICE DEVELOPMENT 12/21/1976 878,446.18 50 BONSA TYRE REHABILITATION 12/14/1988 20,299,328.78 51 PARTICLE BOARD MANUFACTURING 07/15/1993 1,516,875.18 487,544,563.42

ANNEX VI Page 1 of 2

ENVIRONMENTAL AND SOCIAL MANAGEMENT SUMMARY

Brief Description of the Project The project will be implemented over five years in four regions and has four components, (i) Production and Productivity Enhancement which envisages establishing demonstration farms and increasing volume of MD2 pineapple suckers and quality seeds of other horticultural crops available to farmers; (ii) Export Marketing Promotion and Infrastructure Improvement which establishes a living database on market information and consumer preferences, a cold chain in each of the four regions under the project and a 407km of year-round accessible feeder road network; (iii) Capacity Building; and (iv) Project Coordination and Management. Major environmental and social impacts Possible environmental impacts that may result from implementation of project activities are in the agricultural domain when farmers do not comply with recommended levels of agro-chemicals, which could lead to water pollution. Soil compaction that reduces rainfall infiltration and increases run-off can be triggered by frequent use of tractors in the land preparation. Impacts from the rehabilitation of feeder roads can also be noticeable with the potentiality of prompting disturbances in local hydrology and drainage patterns, and natural habitats. Other environmental impacts arising from the feeder roads rehabilitation are road side drains and borrow pits, silting in rivers from road wash-off. When the roads are rehabilitated, vehicular traffic and speed will increase, generating more accidents, dust and noise that will adversely affect humans, animals and vegetation. It has been noticed that most rural roads are not sealed and are therefore exposed to the elements making them prone to erosion particularly in areas of heavy rainfall and poor drainage. Erosion affects the main carriageway and the drains especially at steep sections where it creates deep gullies. The combined effects of gully erosion and localized ponding render most feeder roads unmotorable during rainy seasons The rehabilitation works involving excavation will create borrow pits that can be found littered all over the rural areas and contribute to land degradation. Borrow pits can trap water and create health problems associated with stagnant water bodies. They also have the potential of disrupting natural drainage patterns. Road alignment which interferes with flow paths can cause flooding of adjacent areas by blocking the flow and by increasing run-off. Issues may also arise from the use of diesel operated power generators to run the various agro-processing and storage facilities ranging from fuel storage and handling, smoke emission and noise generation. Improving existing rural roads in the rural communities encourage over-speeding, abuse by trucks with excessive axle load. Public health and safety are worsened through accidents and dust generation. Opening up rural areas could be both beneficial (retaining the youth, access to vital social amenities) and detrimental (influx of people and pressure on limited resources). Mitigation and Enhancement program To address the impacts mentioned, the ESMP has laid out several measures of mitigation. Within the capacity building component, it is recommended that farmers be trained in proper irrigation scheduling and operation planning to ensure a more efficient use of water. With the risk of water pollution resulting from possible misuse of agro-chemicals, the ESMP recommends that safe drinking water facilities be provided to farmers. A need assessment has been conducted during the ESMP, and has helped to determine the adequacy of water supply facilities, specific prevention, prophylactic and treatment measures. Proper canal maintenance through weeding and lining should help avoid vector breeding and conveyance to plots. Other mitigating measures include: reinforcement of health centers; latrines; advocacy and awareness campaigns, etc.

ANNEX VI Page 2 of 2

For the feeder roads rehabilitation, appropriate mitigation measures envisaged to address the potential impacts include clearing only required area, compensatory tree planting, avoiding steep gradients and banks, providing drainage, providing interception gutters and infiltration pits to capture silt and pollutants, training work force in safety measures, watering of road surface and no operations at night, advance warning for all the affected, re-instatement after use by landscaping, enforcing speed limits. Proper planning and the provision of appropriate drainage structures at regular intervals and raising the carriageway slightly above the existing ground level will mitigate any adverse effects. For other project activities, mitigating measures include the controlled use of chemicals in storage facilities, the limitation of site preparation to dry season, with no clearing of highly erosive areas. Monitoring program and complementary initiatives A site-specific survey will be conducted before the commencement of project activities in order to determine environmental mitigation / enhancement measures which should be integrated with project design and implemented under the ESMP. Among other outputs, the survey will prepare a matrix of the potential environmental and social impacts of the project with their corresponding mitigation measures, the associated costs and time frame for effectively carrying out the mitigating measures. Special attention must be given to those beneficial impacts that can be enhanced to improve the project’s environmental and social performance. To ensure compliance with national environmental and social policies and standards as well as with the Bank’s policies and guidelines, the Monitoring Program of the ESMP includes both surveillance and monitoring activities, as well as indicators to be used to assess efficiency of the mitigation and enhancement measures during project implementation. Moreover, the implementation schedule shall be developed in co-ordination with the overall project implementation plan. Institutional arrangements and capacity building requirements The Ghana Environment Protection Agency (EPA) will be responsible for supervising the ESMP implementation. They will facilitate a consultative workshop that will serve as a forum for consensus on the objectives and institutional arrangements for implementing the ESMP. Before the commencement of project activities, an agreement will be signed between PCMU and EPA to carry out the supervision of the site-specific survey aimed at facilitating the ESMP implementation. Public consultations and disclosure requirements The project is designed to operate in a participatory approach where all activities will be implemented in close collaboration with local communities to increase their sense of ownership of the new techniques to be introduced under the project. Estimated costs Environmental Monitoring and Supervision by EPA - UA 30,000 Implementation of mitigation measures - UA 45,000

Total: - UA 75,000 Implementation schedule and reporting Reports on monitoring activities done by the EPA will be provided to the Project Steering Committee (PSC), the Bank, and will also be available to the public. Moreover, copies will be presented to NGOs and other interested groups.

ANNEX VII

ECONOMIC INTERNAL RATE OF RETURN (figures in UA) Year COSTS BENEFITS

Investment

Cost Operating

Cost Total Costs

Incremental Income

Net Incremental Income

1 2,884,000 2,884,000 0 -2,884,000 2 9,481,000 9,481,000 1,848,057 -7,632,943 3 1,559,000 1,559,000 2,477,913 918,913 4 1,467,000 1,467,000 3,146,991 1,679,991 5 760,100 760,100 4,296,878 3,536,778 6 760,100 760,100 4,296,878 3,536,778 7 760,100 760,100 4,296,878 3,536,778 8 760,100 760,100 4,296,878 3,536,778 9 760,100 760,100 4,296,878 3,536,778 10 760,100 760,100 4,296,878 3,536,778 11 760,100 760,100 4,296,878 3,536,778 12 760,100 760,100 4,296,878 3,536,778 13 760,100 760,100 4,296,878 3,536,778 14 760,100 760,100 4,296,878 3,536,778 15 760,100 760,100 4,296,878 3,536,778 16 760,100 760,100 4,296,878 3,536,778 17 760,100 760,100 4,296,878 3,536,778 18 760,100 760,100 4,296,878 3,536,778 19 760,100 760,100 4,296,878 3,536,778 20 760,100 760,100 4,296,878 3,536,778 21 760,100 760,100 4,296,878 3,536,778 22 760,100 760,100 4,296,878 3,536,778 23 760,100 760,100 4,296,878 3,536,778 24 760,100 760,100 4,296,878 3,536,778 25 760,100 760,100 4,296,878 3,536,778

EIRR 23.8225

ANNEX VIII

EVOLUTION OF HORTICULTURAL PRODUCTS EXPORTS (Period 2000-2004)

2000 2001 2002 2003 2004 (*) %Change %Share Volume Value Price Volume Value Price Volume Value Price Volume Value Price Volume Value Price 2004/2000 2004 (Mt) (000USD) (USD/Mt) (Mt) (000USD) (USD/Mt) (Mt) (000USD) (USD/Mt) (Mt) (000USD) (USD/Mt) (Mt) (000USD) (USD/Mt) Volume Value Value Pineapples 28,512 11,853 416 35,174 13,316 379 46,391 15,520 335 45,145 14,378 318 71,858 22,090 307 152 86 36 Fresh Fruit cuts n/d n/d n/d n/d n/d n/d n/d n/d n/d n/d n/d n/d 3,582 20,539 5,734 n/d n/d 34 Yams 12,463 7,172 575 14,410 7,786 540 13,025 8,248 633 7,974 4,442 557 16,169 8,400 520 30 17 14 Onions/Shallots 58 15 259 46 12 261 362 58 160 17,884 3,365 188 16,868 3,438 204 28983 22820 6 Other vegetables n/d n/d n/d n/d n/d n/d n/d n/d n/d n/d n/d n/d 3,933 1,998 508 n/d n/d 3 Papaya 1,747 1,361 779 1,792 993 554 1,474 864 586 1,916 737 385 3,752 1,267 338 115 -7 2 Tinda 1,126 474 421 1,256 532 424 1,137 587 516 1,135 636 560 n/d n/d 560 1(**) 34(**) n/d Marrow 326 130 399 248 92 371 328 154 470 795 514 647 n/d n/d 647 144(**) 295(**) n/d Aubergines 1,080 434 402 1,295 519 401 1,512 455 301 1,867 522 280 698 260 372 -35 -40 0 Banana 3,882 3,695 952 3,251 3,189 981 3,233 3,250 1,005 364 227 624 725 209 288 -81 -94 0 Mangoes 268 118 440 232 78 336 126 70 556 234 108 462 376 164 436 40 39 0 Pepper/Chillies 2,819 1,255 445 5,281 1,938 367 4,688 1,782 380 4,674 1,822 390 282 107 379 -90 -91 0 Oranges(fresh) 1,242 249 200 1,336 126 94 15,213 672 44 4,307 329 76 742 94 127 -40 -62 0 Fresh Okra 64 45 703 67 22 328 65 21 323 136 62 456 n/d n/d 456 113(**) 38(**) n/d Tomatoes 2,033 446 219 4,539 757 167 4,961 1,096 221 4,369 427 98 607 56 92 -70 -87 0 Berries 267 59 221 353 44 125 445 58 130 1,141 159 139 644 54 84 141 -8 0 Flowers 55 114 2,073 53 53 1,000 13 15 1,154 78 68 872 8 10 1,250 -85 -91 0 Other 132 47 356 119 35 294 323 59 183 1,014 192 189 9,267 1,586 171 6920 3274 3 TOTAL 58,013 28,082 484 71,565 29,989 419 96,320 33,614 349 98,452 29,219 297 130,310 60,543 465 125 116 100 (*)Provisional data (**)%Change 2003/2000 (***)%Share 2003 (n/d) No data available Source: GEPC

Annex

GHANA EXPORT MARKETING AND QUALITY AWARENESS PROJECT

CORRIGENDUM

Appraisal Report (1) Para. 4.5.6, Page 25: The last three lines have been amended to read as follows: “The

PCMU will sign an agreement with the Botany Department of The University of Ghana and the Crops Research Institute (CRI), to implement the sub-component on development of tissue culture. CRI will participate in farm demonstration programmes. ”

(2) Section 5.1, Page 36: Executing Agency has been amended to read as follows: “ The

Ministry of Food and Agriculture, which is mandated to provide agriculture services will be the Executing Agency. This project will be under the umbrella of AGSSIP, Government programme for growth and development strategy, with the Directorate of Crop Services having the technical oversight of the project. The day-to-day implementation of project activities will be carried out by the existing HEII management team. The technical specialists, as described in 4.5.30, currently implementing the World Bank-financed HEII project, scheduled to be completed in September 2006, will be reassigned to manage the Export Marketing and Quality Awareness project. ”

(3) Para 5.4.2, Page 38: Civil Works: line number 6 has been amended to read as follows:

“…National Competitive Bidding procedures, subject to post review for an amount up to UA 50,000.00…”

(4) Para 5.4.3, Page 38: Goods: line number 5 has been amended to read as follows:

“…through National Shopping, subject to post review for an amount up to UA 50,000.00…”

(5) Para 5.4.4, Page 39: has been amended to read as follows: “…..Training and workshops

shall be procured on the basis of short list, which includes …..(Estimated at UA2.26million). Government procurement procedure will be used for training logistics…The selection procedure for consulting firms will be based on technical quality with price consideration….”

(6) Para.5.4.9, Page 40: Review procedures: The following sentence is added to the end of

the paragraph: “post review process can be used for NCB and NS up to UA 50,000.00.” (7) Conditions Precedent to First Disbursement

Condition (b) (iii), Page 50 has been amended to read as follows: “ …….two qualified accountants and two procurement officers from Agricultural Services Sub-sector Investment Programme (AgSSIP) to the Project (Para. 5.1 and 5.7.1). ”

Condition (b) (iv), Page 50 has been amended to read as follows: “…..but not be limited

to: representatives of Ministry of Food and Agriculture (Directorate of Extension

2

Services), Crop Research Institute of Counsil for Scientific and Industrial Research, Ministry of Trade and Industry, Ghana Standard Board, Ministry of Finance and Economic Planning, Ministry of Private Sector Development and President’s Special Initiatives, Ministry of Road Transport (Department of Feeder Roads) and Ayensu Cassava Farmers Association. (Para. 5.2.2)”.

(8) Other Conditions

Condition (c) (i), Page 50 has been amended to read as follows: “Within six (6) months of loan effectiveness, two Fund-approved agreements signed with (a) the Department of Feeder Roads, for the implementation of the feeder roads sub-component, and (b) the Botany Department of the University of Ghana and Crops Research Institute (a joint-agreement), for the implementation of tissue Culture sub-component (Para. 4.5.16 and 4.5.6).”

Condition (c) (ii), Page 50 has been amended to read as follows: “Evidence of inclusion of the maintenance cost of the feeder roads to be improved by the project in the Annual Road Fund Budget of the relevant year (Para 6.2.8). ”