China, People's Republic of: Study on Modern Agriculture Demonstration Area Planning and Financial Support Mobilization

Sovereign Project | 46082-001

Summary

The TA will develop prototypes of MADA strategic development plans and conduct a study on financial support to the construction of MADAs, taking into successful international practices and experiences in agricultural modernization as well as ADB achievements and ongoing interventions in the agricultural sector. The TA will also prepare a policy note to present important policy recommendations on strategic planning and financial support for agricultural modernization through MADA approach. The outcome of the TA will be to facilitate agricultural modernization through adoption of the prototypes of MADA strategic development plans and policy recommendations on mobilizing financial support for MADA construction by MOA. The TA is expected to contribute to the improvement of rural household welfare.

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Project Name Study on Modern Agriculture Demonstration Area Planning and Financial Support Mobilization
Project Number 46082-001
Country China, People's Republic of
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8126-PRC: Study on Modern Agriculture Demonstration Area Planning and Financial Support Mobilization
Technical Assistance Special Fund US$ 450,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Knowledge solutions
Sector / Subsector

Agriculture, natural resources and rural development - Agricultural production

Gender Equity and Mainstreaming
Description The TA will develop prototypes of MADA strategic development plans and conduct a study on financial support to the construction of MADAs, taking into successful international practices and experiences in agricultural modernization as well as ADB achievements and ongoing interventions in the agricultural sector. The TA will also prepare a policy note to present important policy recommendations on strategic planning and financial support for agricultural modernization through MADA approach. The outcome of the TA will be to facilitate agricultural modernization through adoption of the prototypes of MADA strategic development plans and policy recommendations on mobilizing financial support for MADA construction by MOA. The TA is expected to contribute to the improvement of rural household welfare.
Project Rationale and Linkage to Country/Regional Strategy

Although agriculture has been developing fast and making substantial contributions to the overall economic development of the People's Republic of China (PRC) in the past few decades, agricultural production and rural livelihoods have been lagging behind industrial production and urban livelihoods. For instance, the agricultural infrastructure is insufficient and fragile, technological development and adoption levels are low, and increasing challenges arise from natural resource and environmental constraints. There is also urgent demand for the sector to catch up on modern technology and business models to enhance scale economy, develop value chains, and improve product safety. Agricultural modernization is regarded as a fundamental way to ensure food security, develop rural economy, and close the gaps between rural and urban areas. Recognizing the critical period that the sector has been entering, the PRC's 12th Five-Year Plan (2011-2015) sets the core objectives of future agricultural development, which are speeding up the development of modern agriculture and improving the level of agricultural modernization and the farmers' living standards.

Given the significant regional disparities in the existing development levels and natural resources constraints across the country, a one-size-fits-all approach for different regions to achieve agricultural modernization might be unrealistic. A more practical strategy is to encourage and support some regions that have better basis for modernizing their agricultural sector to move forward first, and set up models for the remaining ones to follow. In view of this, the Ministry of Agriculture (MOA) in 2009 proposed to establish modern agriculture demonstration areas (MADAs) to serve as platforms, as well as models, to develop modern agriculture to improve agricultural productivity and rural income. Depending on local specialties and resources, and through concerted efforts and innovative institutions, each MADA may develop new agricultural development concepts and ideas, enhance agricultural infrastructure facilities and equipment, promote technological extensions and agricultural value chains, experiment with new business models and industrial organization, and/or improve farmers' human capital. The MADAs could also lead the neighboring areas to develop modern agriculture through building industrial linkages, spreading technologies and information, and improving human capital based on local needs.

The National Modern Agricultural Development Plan (2011-2015) publicized on 13 January 2012 states that a total of 300 MADAs will be constructed over the period from 2011 to 2015. Since August 2010, 153 counties, cities, and farm districts where the agricultural sector is relatively advanced have been selected to establish MADAs. It is hoped that these MADAs, as well as those to be designated, will lead the transformation toward modern agriculture, generate significant spillover effects to their neighborhood, and promote nationwide agricultural modernization. Local governments are also enthusiastic to host the MADAs in their respective jurisdictions. A number of them have prepared development plans for their respective MADAs and explored innovative ways to support construction.

MOA has identified two core issues to be addressed at the early stage of the MADA campaign. First, there is a need to develop prototypes of MADA strategic development plans to reflect stakeholders' consensus of modern agriculture and to identify major elements of MADAs for different regions. The MADA development plans prepared by the local governments can be substantially improved based on MOA's assessment. To be consistent with national policies and take into account local characteristics, the development plans should address the major aspects of constructing a MADA, e.g. access to resources, institutional innovations, performance monitoring and evaluation, and spillover effects on non-MADA regions.

Second, since more investments are required to develop the MADAs, it is necessary to identify strategies and assess options to mobilize financial resources and improve financial services for the MADA construction. While fiscal investment continues to play a key role in financing the agricultural sector, the government's fiscal budget for the development of MADAs is limited. Therefore, it is important to improve the efficiency of public investment on the MADAs. Furthermore, there are great potentials to mobilize non-fiscal financial resources including private capital, national policy lending, as well as funds from international financial institutions to support MADA construction. Associated with the lack of financial resources is poor financial services for the agricultural sector. There is thus a need to look into the gaps between demand for credit and insurance and the constrained supply of financial services in the MADAs, as well as to examine successful international experiences in financial support to agricultural modernization that may be applicable to the PRC.

The proposed TA will help MOA identify solutions to these two issues through preparing prototypes of MADA strategic development plans and conducting a study on financial support to the construction of MADAs. A policy note will also be prepared on strategic planning and financial support for agricultural modernization through MADA approach. An international conference on modern agricultural development and MADA construction will be held to share knowledge and improve the TA outputs.

In the PRC's 12th Five-Year Plan (2011-2015), the core objectives of agricultural development are speeding up the development of modern agriculture and improving the agricultural modernization level and the farmers' living standards. Accordingly, the plan makes a clear statement that construction of MADAs will be promoted. The proposed TA is in line with ADB's sector priorities as identified in the Country Partnership Strategy: People's Republic of China, 2012-2015, which supports interventions contributing to sound management of land, water, and forest, food security, and rural livelihood improvement.

Impact Improved rural livelihoods
Project Outcome
Description of Outcome Modernization of the agriculture sector
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Prototypes of MADA strategic development plans prepared and adopted

A study report on financial support to the construction of MADAs completed

A policy note on strategic planning and financial support for agricultural modernization through MADA approach prepared

Status of Implementation Progress (Outputs, Activities, and Issues) The draft final report of the TA was submitted in 25 February 2015 and the final review workshop is scheduled on 31 March to 1 April 2015. The international conference on agriculture modernization and MADA development, one major TA activity, is tentatively scheduled toward the end of April 2015.
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation Officials from the Ministry of Agriculture, the executing agency of the project, participated in the inception workshop and provided guidance and requests. External experts from university and research institute reviewed the inception report and participated in the workshop as well.
Business Opportunities
Consulting Services The TA will be implemented over 18 months, tentatively from 1 October 2012 to 31 March 2014. The TA requires an estimated 24 person-months of consulting services, comprising 4 person-months of international and 20 person-months of national consultants. The consultants will be a national agricultural planning specialist and team leader, a national agricultural finance specialist, a national agricultural and rural development specialist, a national agricultural policy specialist, and an international agricultural economist.
Responsible ADB Officer Jan Hinrichs
Responsible ADB Department East Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, EARD
Executing Agencies
Ministry of Agriculture11 Nong Zhan Guan
Nan Li, Beijing
People's Republic of China
Timetable
Concept Clearance 31 May 2012
Fact Finding -
MRM -
Approval 02 Aug 2012
Last Review Mission -
Last PDS Update 20 Mar 2015

TA 8126-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
02 Aug 2012 31 Aug 2012 31 Aug 2012 31 Mar 2014 30 Sep 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
450,000.00 0.00 0.00 0.00 0.00 0.00 450,000.00 02 Aug 2012 189,001.69

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