China, People's Republic of : Henan Sustainable Livestock Farming and Product Safety Demonstration Project

Project Name

Henan Sustainable Livestock Farming and Product Safety Demonstration Project

Project Number

46081-002

Country / Economy

• China, People's Republic of

Project Status

Closed

Project Type / Modality of Assistance

• Loan

Source of Funding / Amount

Loan 3296-PRC: Henan Sustainable Livestock Farming and Product Safety Demonstration Project

Source	Amount
Ordinary capital resources	US$ 69.00 million

Strategic Agendas

• Environmentally sustainable growth
• Inclusive economic growth

Drivers of Change

• Gender Equity and Mainstreaming
• Governance and capacity development
• Knowledge solutions
• Partnerships
• Private sector development

Sector / Subsector

• Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development - Agro-industry, marketing, and trade - Livestock

Gender

Effective gender mainstreaming

Description

The project aims at demonstrating sustainable livestock value chains that deliver quality food in 11 project counties in Henan Province. The project will help (i) the Henan Provincial Government (HPG) improve livestock product safety monitoring and inspection system; and (ii) 11 medium and large private livestock production and/or processing enterprises, project participating enterprises (PPEs), improve food safety control, and implement environmentally-sustainable livestock production and processing. Henan is the province suitable for the demonstration given its strategic importance in food security and agriculture in the PRC.

Project Rationale and Linkage to Country/Regional Strategy

Henan covers a large part of the fertile North China Plain, with a population of 104.89 million, of which 62.34 million live in the rural area. Poverty rate in the rural area is 13.1%. Agriculture has traditionally been a pillar of Henan's economy. The sector contributed 12.7% of the provincial gross domestic product and provided employment for 41.8% of the total labor force. Henan is also known as the breadbasket of the PRC for its contribution to the PRC's food security with the nation's highest wheat output and second highest corn output. Henan also registered the largest value of livestock production in the PRC in 2010 and 2011. The livestock sector represents 40% of the provincial agricultural sector's output.

The PRC's significant economic growth, fueled by industrialization and urbanization, changed the endowment of resources available for the agriculture sector. Major changes include a long-term loss of arable land, reduction of active rural labor force, and decline of water resources. Given those changes, the PRC government has strived for the agriculture sector modernization, which promotes higher and standardized agriculture production with sustainable resources use. As part of the transformation, the livestock sector has been going through a structural change from the traditional household farming system to industrial farming system characterized by large-holding and integrated supply chains.

The PRC's livestock sector transformation is not only driven by the changes on supply side, but also a change on demand side. As the economy grew and household income increased, Chinese people take significantly larger amounts of animal protein-based products, particularly meat, than three decades ago. From 1978 to 2012, the per capita meat consumption has increased from 18 kg to 36 kg in urban areas and from 6 kg to 21 kg in rural areas. Including consumption outside homes, the average meat consumption of urban residents exceeded 40 kg. Meat consumption is the PRC is expected to grow for coming decades.

The development of the livestock sector is strongly linked to increases in farmers' incomes and rural poverty alleviation. In 2012, the production value of livestock sector accounted for 33.8% of the production value of agricultural sector of Henan. There were 54 counties where the value of livestock production accounted for over 40% of the total value of agricultural production and 15 where it exceeded 50%. In 2013, the total rural population of Henan was 60.7 million and rural labor force was 52.12 million, a substantial part of which were engaged in livestock production. The livestock sector not only provides employment for a large number of households, but also provides links to related activities and has a strong capacity to absorb the rural labor force as livestock production entails a wide scope of supply chain.

The ongoing sector transformation can potentially contribute to two critical issues facing the PRC: food safety and nonpoint source pollution. The vertically integrated livestock farming system allows producers to have better control over product quality and facilitates waste and wastewater collection by producers. Compared to the traditional household farming system, it will also substantially reduce monitoring and inspection cost for food safety and environmental protection regulators.

Food safety incidents in the PRC over the past decade have resulted in widespread national and global attention and have prompted the government to strengthen food safety regulations for local governments and producers. However, despite the positive steps taken by the government, challenges remain to achieving food safety, particularly safety of livestock products, in the PRC. Regulating livestock product safety requires comprehensive information throughout the production chain, which calls for need of traceability. Key issues include limited monitoring and testing capacity and inadequate law enforcement, and inadequate quality control on the producer side. The HPG aims to tackle the livestock product safety by enhancing regulators' capacity to monitor and inspection at the same time promoting producers' quality control by holding them accountable for product quality.

The waste produced by the livestock farms and enterprises contains high concentration of pollutants and is often discharged without proper treatment, which results in serious nonpoint source pollution affecting land and water resources and livelihoods. Livestock waste also results in significant greenhouse gas (GHG) emissions. The government has promoted conversion of livestock waste for renewable energy, particularly for medium- and large-scale livestock farms and enterprises. However, there are still many medium- and large-scale livestock farms and enterprises that do not have proper waste treatment. Livestock enterprises' 'profit before safety attitude and the government's weak environmental law enforcement make it difficult to address this negative environment impact.

The project aims to help HPG and PPEs demonstrate food safety improvement and environmentally sustainable medium- and large-sized livestock production.

The project is consistent with the PRC's Twelfth Five-Year Plan (20112015), which pursues the long-term goal of building a harmonious and moderately prosperous society through livelihood improvement, and regionally balanced and environmentally sustainable growth. It is also consistent with the third plenum of the 18th Communist Party of China Central Committee, which determines the direction of Thirteenth Five-Year Plan, affirmed the government's renewed commitment to food safety system improvement and sustainable environmental and natural resources management. The project is also in line with ADB's country partnership strategy, 20112015 for the PRC in supporting the government's overarching strategic goal by focusing on inclusive and environmentally sustainable growth. Project loan is proposed as financing modality of the project.

Impact

Agricultural industrialization and large-scale operation upgraded,

Capacity in ensuring agro-product quality and safety enhanced,

Conservation of agricultural resources and ecosystems strengthened

Project Outcome

Description of Outcome

Model livestock production and processing with improved environmental sustainability and product safety demonstrated

Progress Toward Outcome

The loan became effective on 7 July 2016. Loan inception mission was fielded on 10-14 October 2016. Handover mission took place in Feb 2017 and was delegated to PRCM in March 2017. ADB approved minor change in project scope of adding three new subprojects (15 contracts) for utilization of $26 million loan savings on 23 April 2021. Due to the heavy rainstorm flood disaster happened in Henan province from 20 to 29 July 2021 and the outbreak of coronavirus disease delta variant, 11 months of extension of the loan closing date from 30 September 2021 to 31 August 2022 was approved.

Implementation Progress

Description of Project Outputs

1. Livestock product safety monitoring and inspection facilities upgraded

2. Environmentally sustainable livestock production facilities established

3. Capacity and project management strengthened

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

The project was closed on 31 August 2022 and the final liquidation was completed. The loan account is expected to be financially closed by October 2023.

By 25 September 2023, total contract awards reaches $55 million and accumulative disbursement reaches $48.9 million. All procurement and construction activities have been completed. Capacity building have been conducted as planned and ADB has approved two overseas study and four domestic training seminar. Monitoring on social safeguards and environment have been conducted regularly.

The overall outputs and impacts of the project will be evaluated during the project completion review.

Geographical Location

Nation-wide, Henan Sheng

Safeguard Categories

Environment

B

Involuntary Resettlement

B

Indigenous Peoples

C

Summary of Environmental and Social Aspects

Environmental Aspects

The project is classified as category B for environment. Safeguard documents, including initial environmental examination, has been prepared following ADB's Safeguard Policy Statement (2009).

Involuntary Resettlement

The project is classified as category B for involuntary resettlement. Safeguard documents, including resettlement plan, has been prepared following ADB's Safeguard Policy Statement (2009).

Indigenous Peoples

The project is classified as category c for indigenous peoples. Safeguard documents has been prepared following ADB's Safeguard Policy Statement (2009).

Stakeholder Communication, Participation, and Consultation

During Project Design

During Project Implementation

Business Opportunities

Consulting Services

For implementation of ADB-financed Henan Value Chain Products and Safety Demonstration Project, the project management office (PMO) will be assisted by the commissioning of a project implementation consultant (PIC) team, which comprises nine national consultants for 56 person-months (pm), during the project implementation period.

Procurement

All procurement of goods and works will be undertaken in accordance with ADB's Procurement Guidelines (2013, as amended from time to time). Contracts for goods estimated to cost $3.0 million and above and contracts for works estimated to cost $40.0 million and above shall be procured using international competitive bidding (ICB) procedures. Contracts for works and goods estimated to cost less than the above ICB value but equal to $100,000 and above will be procured through national competitive bidding (NCB) procedures. NCB will be conducted in accordance with the PRC Tendering and Bidding Law (1999), subject to modifications agreed with ADB. Contracts for goods and works estimated to cost less than the above NCB values will be procured using shopping procedures. The relevant sections of ADB's Anticorruption Policy (1998, as amended from time to time) will be included in all procurement documents and contracts.

Procurement under international competitive bidding (ICB) procedures shall use the latest ADB standard bidding documents which can be downloaded from ADB's website. Documents for all procurement under ICB will be subject to the prior review of ADB.

For procurement under National Competitive Bidding (NCB) the following provisions will apply i) the advertisement may be limited to the national press, an official gazette or an open access website; ii) bidding shall follows the standard bidding documents issued by Ministry of Finance (MOF) and approved by ADB; ii) bidding documents may be only in the Chinese language, and CNY may be used for the purpose of bidding and payment. Procurement under NCB will be subject to the provisions of the NCB annex of the procurement plan. Additionally, before the start of any procurement ADB and the Government will review the public procurement laws of the central and provincial governments to ensure consistency with ADB's Procurement Guidelines.

For ICB, all invitations for bids, bidding documents, bid evaluation reports, and draft negotiated contracts need ADB's prior review and approval. For NCB, invitations for bids, bidding documents, bid evaluation reports, and draft negotiated contracts for the first NCB for civil works and the first NCB for goods need ADB's prior review and approval. For subsequent NCB packages, invitations for bids, bidding documents, bid evaluation reports, and signed contracts provided they are consistent with previously approved documents will not require ADB's prior review. However, such documents will be subject to post-review and must be submitted to ADB's as soon as they are completed and issued, but no later than one month after their issuance

Project implementation consultants (PIC), which will be financed by the HPG, will be recruited to assist the PMO in managing the project implementation.

Contact

Responsible ADB Officer

Xia, Heng

Responsible ADB Department

East Asia Department

Responsible ADB Division

PRC Resident Mission (PRCM)

Executing Agencies

Henan Provincial Government (HPG)

Timetable

Concept Clearance

08 Apr 2013

Fact Finding

07 Jul 2014 to 18 Jul 2014

MRM

22 Aug 2014

Approval

29 Sep 2015

Last Review Mission

-

Last PDS Update

26 Sep 2023

Funding

Loan 3296-PRC