China, People's Republic of: Shanxi Integrated Agricultural Development Project

Sovereign Project | 38662-013 Status: Approved

Summary

ADB is helping the People’s Republic of China provide credit and training to about 66,000 farm households in 26 counties in central and southern Shanxi, including 11 classified as poor. The project will promote high-value, environmentally sustainable agriculture; support on-farm and industrial agro-processing; and provide training to farmers, their associations, and support agencies.

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Project Name Shanxi Integrated Agricultural Development Project
Project Number 38662-013
Country China, People's Republic of
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Grant 0189-PRC: Shanxi Integrated Agricultural Development Project
Gender and Development Cooperation Fund US$ 195,000.00
Loan 2607-PRC: Shanxi Integrated Agricultural Development Project
Ordinary capital resources US$ 100.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Partnerships
Private sector development
Sector / Subsector

Agriculture, natural resources and rural development - Agricultural production - Agro-industry, marketing, and trade - Livestock

Gender Equity and Mainstreaming Gender equity
Description

The Project will provide credit and training to about 66,000 farm households in 26 counties of five municipalities in central and southern Shanxi. Of these, 11 are poverty counties and 12 are on the priority list for treatment of accelerated soil erosion in the PRC. The Project comprises four components (i) transition to high-value farm production by adopting technologies and practices that ensure environmental sustainability and increase farm income; (ii) strengthening of farm-market linkages by supporting on-farm and industrial agroprocessing and marketing of high-value products; (iii) capacity-building and training of farmers, farmer associations, and technical support agencies to support high-value production and processing of farm products; and (iv) project management to support efficient project implementation. To keep project implementation manageable, each participating county will take up two of the three activities in the first component-perennial crops, annual crops, and livestock. Structured criteria were used to select project counties, sites, and activities.

The Project will build the capacity of farmers, their associations, and staff of technical support agencies (TSAs) to adopt high-value and environmentally sustainable production systems that will increase farmer incomes and farm productivity, and improve food safety and quality. ADB's Multi-Donor Trust Fund under the Water Financing Partnership Facility (WFPF) and the Gender and Development Cooperation Fund (GDCF) will provide grants to pilot-test creative interventions. The WFPF-funded activities will demonstrate the viability of more productive and efficient irrigation techniques, and support farmers to adapt to climate change impacts. Poor farmers will be provided with subsidies to adopt water-saving technologies to showcase the efficiency and economic benefits of such interventions. Skills training will help farmers reduce dependence on increasingly scarce water resources. The GDCF grant will facilitate women's economic empowerment by (i) setting up a revolving fund for microfinance; (ii) organizing self-help groups linked to existing farmer associations to access markets; (iii) providing training on technical, marketing, alternative income-generation activities, and leadership; and (iv) building capacity to ensure sustainability of these activities.

Project Rationale and Linkage to Country/Regional Strategy

Shanxi has only about 3.8 million hectares of dependable arable land-of modest quality and productivity-for its 23 million rural population. Low rainfall, high evaporation, frequent natural disasters, and soil erosion lead to instability in agricultural production. After about 30 years of reforms, the agricultural service system, farmers' technical capacity, and women's economic participation have improved. However, the nature of extensive and scattered small-scale agriculture has not changed significantly. Most farmers continue to practice traditional agriculture mainly growing wheat and maize that generate low incomes and require extensive use of water and agrochemicals. Similarly, the patterns of free-range livestock grazing and untreated disposal of animal waste adds to soil and water pollution. This agricultural system is unsustainable and damaging to the environment, and keeps most farmers in poverty. Most farmers also remain largely unorganized and cannot take full advantage of market and rural finance opportunities. In addition, women's participation remains marginal, and their social and economic rights are usually ignored.

One of the main constraints to converting traditional farming to high-value farming is access to formal credit. The agricultural lending institutions have (i) a limited range of products, (ii) inadequate experience with long-term lending, and (iii) weak capacity to assess credit risk. These constraints, coupled with the absence of market-led interest rates, lead to market failure, and the inability of agro-enterprises and farmers to access formal financial services.

The Project will address these constraints and provide financing for high-value farming, agroprocessing, product quality and safety, environmentally sustainable farm practices by adopting water-saving irrigation techniques, microfinance to poor women, and improved capacity of farmers and TSAs. These initiatives are consistent with the Government's 11th Five-Year Plan (2006-2010) and ADB's PRC country partnership strategy, 2008-2010.

Impact Rural poverty reduced and a sustainable agriculture sector developed in 26 counties of Shanxi.
Project Outcome
Description of Outcome Sustainable and higher farm productivity and increased income in the project counties.
Progress Toward Outcome

The project has promoted rapid development of animal and agriculture farming with modern facilities which significantly increased the farmers' income.

In the second quarter of 2015, a total of 13.4254 million RMB was invested to the project, covering 309 farmer households in 15 counties. The components includes: 3D civil work for 60 animal farms in amount of 6.2299 million RMB (0.2592 million RMB for swine, 2.9859 million RMB for cattle, 2.9848 million RMB for chicken); crop and tree plantation of asparagus, nut and fruit trees, and fast-growing poplars in 19.66 hectares on investment of 0.8645 million RMB (including 0.754 million RMB for walnut, 0.1105 million RMB for dates); 3G, 153 arched sheds in amount of 2.4319 million RMB; 3H, 37 green houses,,prickly ash seedlings and dryland farm on investment of 1.3322 million RMB. Other expenditures included 50 thousand RMB for capacity building and training, 1.6865 million RMB for project management, and 0.8304 million RMB for demonstration area infrastructure and others.

Implementation Progress
Description of Project Outputs

Increased productivity and production of perennial crops

Increased productivity and production of annual crops

Increased livestock productivity and production by adopting appropriate rearing and waste management measures and technologies

Expanded on-farm processing capacity

Training and equipment provided to demonstrate water-saving techniques

Project Management for effective project management capacity established and strengthened

Status of Implementation Progress (Outputs, Activities, and Issues)

As of end of Q2 Annual crops: A total of 3.7641 million RMB was invested on 190 farmer households. Cumulatively, a total of 248.181 million RMB was invested on 9,144 farmer households, in two categories of arched sheds and sunlight greenhouses. The quality all fit the criteria defined in the feasibility report, readily usable for growing vegetables in accordance with the managerial techniques and the agricultural standards for each subproject. The implementation satisfies the technical criteria for crop plantation, good breeds and appropriate management under the project. The civil work is in good quality with proper environmental controls. The farmers saw significant increase in income and women's participation was over 65%. Achievement in civil work are sufficient.The project management and monitoring are all satisfactory.

Perennial crops: A total of 0.8645 million RMB was invested on 19.66 hectares of land for 59 farmer households. Cumulatively, a total of 327.1053 million RMB was invested on 6971.55 hectares of land for 20,942 farmer households, covering walnut, jujube, crispy pear, apple, prickly ash seedlings, Chinese herbal plants, asparagus and fast-growing poplars. The output amounts to 187.42 million RMB. The civil work satisfies the quality criteria defined in the feasibility report and fits the good practice in the industrial sector. The facilities are readily usable for growing fruit trees in accordance with the managerial techniques and the agricultural standards for each subproject. The implementation satisfies the technical criteria for fruit tree plantation and the appropriate management under the project. The civil work is in good quality with proper environmental controls. The farmers saw significant increase in income and women's participation was over 45%.

Animal Farming: A total of 6.2299 million RMB was invested on 60 farmer households . Cumulatively, a total of 584.1313 million RMB was invested for 8,812 households. The yields amounted to 12.55 million animals with the output value of 1280.35 million RMB. The civil work satisfies the quality criteria defined in the feasibility report, fits the good practice in the industrial sector, and meets the technical standards for animal farming. The activity disseminated the concentrated animal farming technologies, featured by high technical contents, proper management practices and good breeds in accordance with the requirements under the project. The civil work is in good quality with proper controls for animal wastes in accordance with environmental protection standards. The farmers saw significant increase in income and women's participation was over 65%.

Agro-processing: The Qinzhou Yellow Milliet Company has completed its project component with the cumulative investment of 7.611 million RMB.

On-farm processing: So far, 222 jujube drying rooms have been constructed with the cumulative investment of 12.3545 million RMB.

Improvement of agro-products quality: Cumulatively the investment amounted to 10.1039 million RMB on the following activities: 19 production bases with quality certifications (7 for organic vegetables, 1 for prickly ash seedlings, 1 for swine farming, 1 for meat sheep, 1 for meat chicken, 4 for organic walnuts, 1 for millet crop, 2 for crispy pear, and 1 for jujube plantation), which cover the agrarian field in 196,400 mu. At present, a total 60 kinds of agricultural products were issued with quality certifications. Meanwhile the training programs and surveys with 2,600 persons/times on GAP production technology, product quality monitoring, product certification, GAP criteria, proper use of pesticides and fertilizers, water-conserving irrigation, associations of crop production and animal farming, and the farmer households linkages, etc.

Capacity building and training

In this quarter a total of 50 thousand RMB was invested to the capacity building and training ,The cumulative investment amounts to 19.4158million RMB.

In this quarter, a total of RMB 0.8304 million was invested for project management,The cumulative investment of 37.8475 million RMB was used in this category.

In this quarter, a total of RMB 0.8304 million was invested for project management,The cumulative investment of 37.8475 million RMB was used in this category.; The enterprises or farmers cooperation organizations take the lead and provide the required services before, during and after the production and managed by farmers in the demonstration area.

Geographical Location Changzhi, Jinzhong, Linfen, Luliang, and Yuncheng Municipalities in Central and Southern Shanxi Province
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

The Project will generate significant environmental benefits by helping farmers to adopt modern technologies and practices. The expansion of high-value perennial and annual crops will reduce soil erosion in sloped areas, improve water-use efficiency, reduce use of agrochemicals, and produce high-quality and safer products. The estimated annual water savings will be approximately 3.8 million m3. Fertilizer use is expected to be reduced by about 2,300 tons/per annum. Environmental benefits will not be even across all project counties.

Depending on the nature and/or number of activities, a net increase may result in the use of water and agrochemicals in certain counties. Net annual savings from reduced use of water and agrochemicals is expected to be around CNY15 million. Livestock activities will provide health benefits by encouraging farmers to collectively manage their herds in larger facilities, improving

hygienic conditions in living areas, and reducing soil degradation by limiting free-range grazing. Livestock waste, a major source of nonpoint source pollution in soil and water, will be disposed off safely either by composting and/or through biogas digesters to produce clean energy for domestic use.

Due to increased fruit-tree production, net annual pesticide use will increase by about 5.4 tons. Other potential adverse environmental impacts may stem from increased generation of agricultural waste and construction of cold storage and processing capacity for five groenterprises. The increase in waste production will be mitigated by adopting adequate treatment and disposal procedures. Construction impacts will be mitigated by applying a code of practice for all construction works, as outlined in the environmental management plan.

During project preparation, initial environmental examination and summary initial environmental examination reports were prepared in accordance with the PRC regulations and ADB guidelines. A summary of findings and recommendations of expected benefits and impacts are presented in Appendix 15. The summary initial environmental examination is in Supplementary Appendix K. Due diligence review of environmental management practices by the participating 24 agro-enterprises was also undertaken (Supplementary Appendix L). The review shows that the agro-enterprises comply with all national regulations and apply adequate environmental management procedures acceptable to ADB.

Involuntary Resettlement The Project will not require land acquisition or involuntary resettlement. The expansion of production systems and agroprocessing will be on existing land.
Indigenous Peoples The Project will not affect minorities.
Stakeholder Communication, Participation, and Consultation
During Project Design The Project will ensure stakeholder C&P (consultation and participation) in its activities through a series of workshops and meetings throughout its implementation. Farmers and farmer associations will receive training on group mobilization, organization, management, and marketing skills to enhance their capacity to participate in project implementation.
During Project Implementation
Business Opportunities
Consulting Services The Project will provide 120 person-months of national consulting services for project management and training. SPG will finance and engage five individual consultants to (i) introduce ChinaGAP to promote best practices in product quality and safety; (ii) build capacity of farmers and their associations to adopt improved production and marketing practices; (iii) train TSAs in gender development, monitoring of soil and water quality, safe disposal of animal waste, and environmental impact assessment; and (iv) support the PMO and PIUs to undertake and prepare project monitoring and supervision, bidding and procurement documents, midterm review, and a project completion report. Specific consulting inputs are outlined in Appendix 13. To implement WFPF activities, three individual consultants will be engaged for 25 person-months [one international (water resources specialist, 5 person-months) and two national (irrigation specialist 12 person-months and hydrogeologist 8 person-months)]. To implement GDCF activities, a local nongovernment organization will be engaged following the single-source selection procedure (Appendix 8). A national individual consultant will be engaged for 2.5 person-months to monitor and evaluate GDCF activities. All recruitment financed under the WFPF and GDCF grants will be carried out in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time).
Procurement Of the $100.0 million loan, about $98.7 million will be disbursed in cash as farm credit to farmers and agro-enterprises. The remaining $1.3 million will be used to procure office and farm equipment, vehicles, and to conduct workshops and training by the PMO and PIUs. The detailed procurement plan is in Appendix 12. All procurement of goods and works will be carried out in accordance with ADB's Procurement Guidelines (2007, as amended from time to time). Contracts for works estimated to exceed or equal $10.0 million and those for goods estimated to exceed or equal $1.0 million will be procured using international competitive bidding procedures. Contracts for works estimated to cost less than $10.0 million but more than or equal to $200,000, and contracts for goods estimated to cost less than $1.0 million but more than or equal to $100,000 will be procured through national competitive bidding procedures in accordance with the PRC Tendering and Bidding Law (1999), subject to modifications agreed with ADB. Contracts for works estimated to cost less than $200,000 and for goods estimated to cost less than $100,000 will be procured using shopping procedures. All procurements and expenditures by farmers and agro-enterprises undertaken or incurred using the subloans will be supported with receipts provided to the PIUs and kept on the PIU and/or PMO record for audit. The relevant sections of ADB's Anticorruption Policy (1998, as amended to date) will be included in all procurement documents and contracts.
Responsible ADB Officer Maria Pia Ancora
Responsible ADB Department East Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, EARD
Executing Agencies
Shanxi Provincial Government
Mr. Liu Guicuan
No. 345 Yingze Street, Taiyuan, Shanxi Province, 030001
Timetable
Concept Clearance 16 Apr 2008
Fact Finding 18 Apr 2008 to 25 Apr 2008
MRM 08 Jun 2009
Approval 16 Dec 2009
Last Review Mission -
PDS Creation Date 19 Oct 2006
Last PDS Update 22 Sep 2015

Grant 0188-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Dec 2009 30 Jun 2010 25 Oct 2010 30 Jun 2012 31 Aug 2013 10 Mar 2014
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 0.00 Cumulative Contract Awards
ADB 0.00 16 Dec 2009 0.00 0.50 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 16 Dec 2009 0.00 0.50 100%

Grant 0189-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Dec 2009 30 Jun 2010 25 Oct 2010 30 Jun 2012 30 Nov 2013 17 Jun 2014
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 0.20 Cumulative Contract Awards
ADB 0.00 16 Dec 2009 0.00 0.19 99%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.20 16 Dec 2009 0.00 0.19 99%

Loan 2607-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Dec 2009 17 Jun 2010 09 Sep 2010 30 Jun 2016 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 188.61 Cumulative Contract Awards
ADB 100.00 16 Dec 2009 97.23 0.00 97%
Counterpart 88.61 Cumulative Disbursements
Cofinancing 0.00 16 Dec 2009 100.00 0.00 100%

Safeguard Documents

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Evaluation Documents

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Related Publications

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