China, People's Republic of: Logistics System Development for Agricultural Products

Sovereign Project | 46086-001

Summary

Building on past and ongoing ADB projects, the TA will focus on improving the regulatory and policy framework at the national level, in support of logistics systems for perishable agricultural products in the PRC. At the provincial level, The TA will help Jiangxi province prepare a development plan for improving its agriculture logistics systems and identifying related investment priorities under the guidance of the national framework. Jiangxi province will serve as a case study for low-income agricultural provinces to showcase the benefits of an improved agricultural logistics system. Lessons and knowledge developed from the TA will be applied to improve agricultural logistics systems in other provinces.

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Project Name Logistics System Development for Agricultural Products
Project Number 46086-001
Country China, People's Republic of
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8157-PRC: Logistics System Development for Agricultural Products
Technical Assistance Special Fund US$ 900,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector Agriculture, natural resources and rural development - Agricultural production
Gender Equity and Mainstreaming
Description Building on past and ongoing ADB projects, the TA will focus on improving the regulatory and policy framework at the national level, in support of logistics systems for perishable agricultural products in the PRC. At the provincial level, The TA will help Jiangxi province prepare a development plan for improving its agriculture logistics systems and identifying related investment priorities under the guidance of the national framework. Jiangxi province will serve as a case study for low-income agricultural provinces to showcase the benefits of an improved agricultural logistics system. Lessons and knowledge developed from the TA will be applied to improve agricultural logistics systems in other provinces.
Project Rationale and Linkage to Country/Regional Strategy

Logistics inefficiencies in the agricultural sector are among the main factors causing low returns to farmers, high and volatile food prices, and degraded quality of food supplies in PRC. As reflected in the 12th Five-Year Plan, the government has identified improved agricultural logistics as vital to reducing rural-urban income disparities and improving food security. Improved agricultural logistics are also critical for strengthening the competitiveness of the overall agriculture sector and expanding domestic consumption.

Improved agriculture logistics are particularly important with regard to perishable agricultural products. As much as 30% of fruit and vegetable production is lost due to spoilage during transportation, storage, and wholesale and retail activities. To compensate for spoilage, farmers rely heavily on chemical fertilizers, pesticides, and other inputs to raise crop yields. Furthermore, expansion of the middle-income class and increasing urbanization are resulting in growing demand for perishable agricultural products of high quality and value, placing additional pressure on agricultural logistics. Internationally, the agriculture sector tends to follow the example of manufacturing industries in the formation of tightly aligned value chains. Such value chains help improve efficiency; reduce risks related to quality, quantity and food safety; and are more responsive to consumer demands. Logistics is a vital dimension of the value chain.

Recognizing the need for a modern logistics system for the agricultural sector, the State Council issued a plan to guide development of the logistics industry in 2009. The plan calls for creating a supportive regulatory environment, extensive infrastructure investment, establishing technical standards, promoting integration of logistics processes, reducing barriers to trade and promoting competition. As part of the effort to implement the plan, in June 2010 the National Development and Reform Committee prepared a development plan (for 2010-2015) for cold chain logistics for agricultural products. Given the PRC's size and agricultural needs, the task of achieving greater efficiency in logistics for the agriculture sector is a huge challenge, which will be met largely by the business sector. The government's role is to support business-led initiatives through provision of (i) an enabling policy, regulatory, and institutional environment; and (ii) public infrastructure components of the supply and demand chain.

ADB has provided a range of support to strengthen agriculture value chains, including logistics, in developing member countries. Logistics issues in Xinjiang and Inner Mongolia were evaluated under the Central Asia Regional Economic Cooperation program in 2008; a regional TA approved in 2009 examined obstacles to cross-border trade on the PRC-Mongolia and PRC-Viet Nam borders; several agricultural projects were supported in Gansu, Henan, Shanxi, and Shandong provinces following the value chain approach to enhance synergy and value addition. Lessons from these projects have included the need to greatly improve the efficiency of logistics systems in the country and strengthen related policies and regulations. ADB is preparing a private sector investment project in Tianjin to increase cold chain logistics capacity.

At the provincial level, Jiangxi province has been selected as a pilot for two primary reasons. First, agriculture is an important sector in the province and the government is committed to improving agricultural logistics systems. About 38% of the labor force depends on agriculture and the province accounts for a substantial share of the PRC's production of grain, pork, edible oil, vegetable, and hydroponic products. In its 12th Five-Year Plan, Jiangxi provincial government identified modernization of agriculture as a development priority; an improved agricultural logistics system is one of the key factors for modernizing the sector. Under an earlier TA, key agricultural logistics problems were identified and measures to develop an effective agricultural logistics system were recommended as part of the rural development strategy for Jiangxi province. The province is now formulating plans to invest in logistics infrastructure as part of the effort to achieve the goals included in its 12th Five-Year Plan. Second, Jiangxi is a low income province in which poor rural households will benefit from a well established logistics system. More than 8% of the rural population lives under the national poverty line and 21 counties are designated for national poverty alleviation assistance.

Impact Improved agricultural logistics systems in the PRC and Jiangxi province
Project Outcome
Description of Outcome An improved policy and regulatory framework in support of cold chain logistics systems for perishable agricultural products developed in the PRC and improved agricultural logistics planning for Jiangxi province
Progress Toward Outcome Current schedule: submission of final report is expected by March 2015 and knowledge product is expected by June 2015.
Implementation Progress
Description of Project Outputs

Policy and regulatory recommendations to improve PRC's cold chain logistic systems for perishable agricultural products

A development plan for an effective agricultural logistics system in Jiangxi province

A knowledge product for improving cold chain logistics systems for perishable agricultural products in the PRC

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

(a) Will be submitted by March 2015

(b) To be completed by June 2015.

(c). A thematic paper will be produced, summarizing the key findings and policy recommendations. One shorter knowledge product will also be prepared to complement the thematic paper in the format of a knowledge brief.

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
Business Opportunities
Consulting Services The TA is tentatively scheduled to be implemented from 1 October 2012 to 30 September 2013. The TA activities will be undertaken by two consulting firms. The consulting firm for the national component is required to provide a total of 35 person-months of consulting services, with two international consultants (8 person-months) and three national consultants (27 person-months). The consulting firm will be engaged by ADB. The consulting firm for the provincial component is required to provide a total of 43 person-months of consulting services, with one international consultant (5 person-months) and four national consultants (38 person-months). The consulting firm will be engaged by JPAD. The consulting firms will be engaged following ADB's Guidelines on the Use of Consultants (2010, as amended from time to time) using the quality- and cost-based selection criteria, with a quality-cost ratio of 80:20.
Procurement For the Jiangxi province component, equipment will be procured by the TMO following ADB's Procurement Guidelines (2010, as amended from time to time).
Responsible ADB Officer Fei Yu
Responsible ADB Department East Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, EARD
Executing Agencies
Jiangxi Provincial Rural Social Development BureauNo.2,2nd East Road,Provincial Government
Compound,Nanchang City,Jiangxi Province
People's Republic of China
Development Research Center of the State Council225 Chaoyangmen Nei Dajie
Beijing 100010
People's Republic of China
Timetable
Concept Clearance 15 Jun 2012
Fact Finding -
MRM -
Approval 10 Sep 2012
Last Review Mission -
Last PDS Update 27 Mar 2015

TA 8157-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Sep 2012 05 Oct 2012 05 Oct 2012 30 Sep 2013 30 Jun 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
900,000.00 0.00 0.00 0.00 0.00 0.00 900,000.00 10 Sep 2012 844,197.05
Title Document Type Document Date
Logistics System Development for Agricultural Products Technical Assistance Reports Sep 2012

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