China, People's Republic of: Ningxia Irrigated Agriculture and Water Conservation Demonstration Project

Sovereign Project | 44035-014

Summary

The project will improve the value of horticultural outputs by adopting high-value and high-quality varieties, water conservation infrastructures, sustainable farming practices, and institutional capacity development. The project will encompass the Hongsipu District, the Tongxin and Yanchi counties, and six subfarm sites under the Ningxia Agriculture Reclamation Corporation (State Farm Group) in the central Ningxia Hui Autonomous Region (Ningxia).

The impact of the project will be improved sustainability of irrigated agricultural production in Ningxia. The outcome of the project will be increased quality and value of horticulture crops (grapes and Chinese dates). The project will have four outputs and/or components: (i) established vineyards and Chinese date orchards, (ii) increased grape processing capacity, (iii) improved irrigation system, and (iv) strengthened institutional and capacity development.

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Procurement Documents


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Project Name Ningxia Irrigated Agriculture and Water Conservation Demonstration Project
Project Number 44035-014
Country China, People's Republic of
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2973-PRC: Ningxia Irrigated Agriculture and Water Conservation Demonstration Project
Ordinary capital resources US$ 70.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change
Sector / Subsector Agriculture, natural resources and rural development - Agricultural policy, institutional and capacity development - Irrigation - Land-based natural resources management - Water-based natural resources management
Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The project will improve the value of horticultural outputs by adopting high-value and high-quality varieties, water conservation infrastructures, sustainable farming practices, and institutional capacity development. The project will encompass the Hongsipu District, the Tongxin and Yanchi counties, and six subfarm sites under the Ningxia Agriculture Reclamation Corporation (State Farm Group) in the central Ningxia Hui Autonomous Region (Ningxia).

The impact of the project will be improved sustainability of irrigated agricultural production in Ningxia. The outcome of the project will be increased quality and value of horticulture crops (grapes and Chinese dates). The project will have four outputs and/or components: (i) established vineyards and Chinese date orchards, (ii) increased grape processing capacity, (iii) improved irrigation system, and (iv) strengthened institutional and capacity development.

Project Rationale and Linkage to Country/Regional Strategy

During the Country Programming Mission held in Manila in December 2009, the government of the People's Republic of China (PRC) requested the Asian Development Bank (ADB) to assist the Ningxia Hui autonomous region government (NHARG) to prepare the Ningxia Irrigated Agriculture and Water Conservation Demonstration Project (formerly the Ningxia Dryland Farming and Water Conservation Demonstration Project) which is included in ADB's lending program for 2012.

Ningxia, located in the northwest region, is one of the PRC's ethnic minority regions, with a total area of 66,400 square kilometers and a population of about 6.2 million, of which about 2.2 million or 36% are Hui minority. Ningxia is largely arid and semiarid, with dry and harsh winters and hot summers. Ningxia and its people lag behind the rest of the PRC in terms of income and well-being. Ningxia's per capita gross domestic product was CNY26,860 in 2010, below the national average gross domestic product of CNY29,762. A large income disparity exists between urban and rural residents, with the average urban income (CNY15,334) more than 3 times that of rural income (CNY4,675) in 2010. In Ningxia, over 1 million people or 25.6% of the total rural population are living below the national poverty line. One key to reducing poverty and the gap between rural and urban income is to provide increased income to crop growers and households in the agriculture sector. The project includes design elements which improve the employment situation and increase the incomes of women as well as empower them to participate in decision making.

Agriculture remains an important sector in Ningxia. Ningxia's agriculture has a long history. The vast plain of the Yellow River in the north has been irrigated for centuries; and over the years, an extensive system of canals has been built to pump water from the Yellow River. The total agricultural land in Ningxia is about 4.1 million hectares (ha). Ningxia has three traditional agricultural areas: (i) northern plains, with primarily irrigated agriculture; (ii) central arid and semiarid area, with a mix of irrigated and rainfed agriculture; and (iii) southern hilly and mountainous area, with rainfed agriculture. The central arid and semiarid area covers about 45% of Ningxia. Most of the land in the area is relatively flat and close to the Yellow River. Extensive irrigation infrastructures have been built in the area since the 1960s. Particularly in the 1980s, several large lift irrigation schemes were built to divert water from the Yellow River transforming central Ningxia's dryland farming into an irrigated agriculture area.

The rationale for the project arises from the identification of two key opportunities: increasing the production of high-quality and high-value crops, and improving agricultural productivity by particularly improving water productivity. There is a clear economic driver for pursuing these opportunities increased competitiveness of farm households and wine enterprises, thus improving the financial and economic viability of these entities. The project will demonstrate water conservation measures that are (i) useful in central Ningxia and elsewhere in irrigated dryland areas, and (ii) resilient to climate change. The project will also help farmers to use more sustainable farm practices.

The project is consistent with the government's 12th Five-Year Plan (2011 2015), which aims to promote equitable and balanced regional growth, sustainable natural resources management, and conservation agriculture and crop diversification. The project particularly follows the State Council's decree on further promoting economic and social development of Ningxia (issued in 2008). The project supports the 12th Five-Year Plan of the Ningxia government's goal to accelerate agricultural development by increasing agricultural production capacity, reducing risk, and improving market competitiveness. The plan specifically targets improving the production capacity of low-yielding agricultural land. Both grapes and Chinese dates are mentioned as crops that can be transformed into high-value crops along with further development of competitive processing. For grapes, the 10-year development plan for Ningxia viticulture sector proposes an expansion with one million mu (650,000 ha). The plan also promotes innovation in irrigation technology and advocates increasing the use of water-saving irrigation technologies such as drip and sprinkler irrigation systems. The State Farm Group will be the key player in achieving this target. The project is in line with the Asian Development Bank's (ADB) country partnership strategy, 2011 2015 for the PRC which supports the government's goal of building a harmonious society by (i) addressing the rising income inequality and widening regional disparities, and (ii) promoting environmentally sustainable development. It also supports ADB's Water Operational Plan, 2011 2020 for promoting integrated water resources management and irrigation efficiency.

Impact Improved sustainability of agricultural production in Ningxia
Project Outcome
Description of Outcome Increased quality and value of horticultural crops in Ningxia
Progress Toward Outcome --
Implementation Progress
Description of Project Outputs

1. Improved irrigation systems

2. Improved vineyards and Chinese date orchards

3. Increased grape processing capacity

4. Strengthened institutional and farmer capacity

Status of Implementation Progress (Outputs, Activities, and Issues) The implementation progress has been remarkable. As of 15 March 2015, disbursement reached $6.035 million. 29 contracts approved with amount of $6.69 million.
Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The project preparation technical assistance team conducted interviews with rural household as the primary beneficiaries, including key informant interviews and female focus group discussions; and interviews with other primary stakeholders, such as the project management office (PMO) and local governments. The project will support capacity development for public consultation and participatory planning targeting the PMO and local communities in the project area.
During Project Implementation Consultation and particiapation are integral features of the project through the formation and/or strengthening of farmer professional associations (FPAs), village committees, and local women federation (LWF). They are included in the project design to make project implementation more efficient through the involvement of the primary beneficiaries, who are also key providers of input to the project. They also form part of the social action plan. To facilitate interaction among stakeholder groups and improve project planning and implementation, the design of the participation strategy stresses gender equality; and includes three elements: (i) Information sharing stakeholders will not be able to provide meaningful participation if they are not fully informed about the objectives and intended outcomes of the project; (ii) consultation will be held with primary stakeholders to let them participate in the design, formation, and/or strengthening of the FPAs; and (iii) public meetings and stakeholder panels will provide forums for collaboration in decision making.
Business Opportunities
Consulting Services Consulting services to be financed under the ADB loan will be selected in accordance with ADB's Guidelines on the Use of Consultants by the Asian Development Bank and its Borrowers (2010, as amended from time to time). Four international consultants will be engaged for a total of 18.25 person-months in the fields of viticulture, winemaking and winery management, quality management, and wine marketing. Eight national consultants will also be engaged for a total of 54.25 person-months to provide consultancy services in the fields of project management, wine marketing, wine making, drip irrigation, viticulture, Chinese dates growing, and institutional and quality management. The implementing agencies will be responsible for the selection of the consultants, with concurrence of NHARG and the PMO for contract negotiations and contract administration. The consultants will be engaged using the individual selection method. The consulting packages are included in the procurement plan in section C below, while the list of expertise to be engaged is provided in table below. The consultants' detailed terms of reference are under preparation, in consultation with the executing and implementing agencies, while the summary of the tasks to be performed by each expert is presented in section C below. The relevant sections of ADB's Anticorruption Policy (1998, as amended to date) will be included in all documents and contracts relating to the engagement of consultants.
Procurement

All procurement to be financed under the ADB loan will be carried out following ADB's Procurement Guidelines (2010, as amended from time to time). Contracts for civil works valued at over $10 million and contracts for goods and related services valued at over $1 million will be procured through international competitive bidding (ICB) procedures. Contracts for civil works valued at $10 million or less but over $200,000, and contracts for goods and related services valued $1 million or less but over $100,000 will be procured through national competitive bidding (NCB) procedures. NCB will be undertaken following the PRC Tendering and Bidding Law (1999), subject to modifications agreed with ADB. Contract packages for civil works valued at $200,000 or less and contract packages for goods valued at $100,000 or less will be awarded through shopping procedure. Most work on the development of the vineyards and orchards involves the hiring of labor through community participation procedures. ADB's guideline for community participation in procurement that have been approved for the Ningxia Integrated Ecosystem and Agricultural Development Project will be adopted for the project. Procurement will be centralized; and a procurement agency that is familiar with ADB's procurement procedures will be engaged by NHARG to undertake procurement of works, goods, and services under the project on behalf of the implementing agencies.

A procurement capacity assessment of the executing and implementing agencies has been undertaken. Based on the assessment, the mission recommends that prior ADB review be applied for all ICB contracts, consulting services, the first NCB contract for works, and the first NCB contract for goods; and post review for all other contracts. The training of project staff on procurement, as well as in all other aspects of implementation needs to be pursued to enable them to gain better understanding of the contract packaging under the project, the method of procurement to be used for each package, and the requirements to be met and procedures to be followed for the different types of procurement methods.

Before the start of any procurement, ADB and the government will review the public procurement laws of the central and state governments to ensure consistency with ADB's Procurement Guidelines (2010, as amended from time to time).

A procurement plan indicating the thresholds and review procedures; contract packages for goods, works, and consulting services; and NCB procedures are provided in section B below. The relevant sections of ADB's Anticorruption Policy (1998, as amended to date) will be included in all documents and contracts relating to procurement.

Responsible ADB Officer Zhiming Niu
Responsible ADB Department East Asia Department
Responsible ADB Division PRC Resident Mission
Executing Agencies
Ningxia Hui Autonomous Region Government (NHARG)No. 416 Jiefang Xijie
Yichuan, Ningxia, PRC
Timetable
Concept Clearance 22 Oct 2010
Fact Finding 15 May 2012 to 24 May 2012
MRM 17 Sep 2012
Approval 14 Dec 2012
Last Review Mission -
Last PDS Update 16 Mar 2015

Loan 2973-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Dec 2012 07 May 2013 27 Jun 2013 31 Dec 2018 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 106.40 Cumulative Contract Awards
ADB 70.00 14 Dec 2012 7.61 0.00 11%
Counterpart 36.40 Cumulative Disbursements
Cofinancing 0.00 14 Dec 2012 9.66 0.00 14%

Evaluation Documents

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