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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 10322-CHA STAFF APPRAISAL REPORT Public Disclosure Authorized CHINA SICHUANAGRICULTURAL DEVELOPMENT PROJECT MAY 29, 1992 Public Disclosure Authorized MICROEFICHE COPY Report No. 10322-CHA Type: (SAR) KItM, ff. / X84053 / A7 035/ RA2AG Public Disclosure Authorized AgriculturalOperations Division Country Department II East Asia and Pacific Regional Office IThis documenthas a restlcteddistuibution and may be usedby redpients only in theperfonnance of their officlid duties. Its contentsmay not othenrisebe discosedwthout World Bank authorization. CURRENCYEOUIVALENT (As of February 5, 1992) Currency Unit - Yuan (Y) $1.00 - Y 5.38 Y 1.00 - $0.186 FISCAL YEAR January 1 to December 31 WEIGHTS AND MEASURES 1 meter (m) - 3.28 feet (ft) 1 kilometer (km) - 0.62 miles 1 hectare (ha) - 15 mu 1 ton (t) - 1,000 KG - 2,205 pounds 1 kilogram (kg) - 2.2 pounds PRINCIPALABBREVIATIONS AND ACRONYMS USED ABC - AgriculturalBank of China ACWF - All China Women's Federation BA - Bureau of Agriculture BOF - Bureau of Finance BFO - Bureau of Forestry CAAS - Chinese Academy of AgriculturalSciences CATEC - County AgrotechnicalExtension Center CMIEC - China National Machinery Import & Export Corporation CNSIEC - China National Silk Import and Export Corporation EIA - EnvironmentalImpact Assessment EMP - EnvironmentalManagement Plan GOC - Government of China GVAO - Gross Value of AgriculturalOutput ICB - InternationalCompetitive Bidding ImO - IrrigationManagement Office IPM - Integrated Pest Management LCB - Local CompetitiveBidding LG - Leading Group MOF - Ministry of Finance MWR - Ministry of Water Resources NEPA - National EnvironmentalProtection Agency O&M - Operation and Maintenance PMO - Provincial Project Management Office PO - Project Office at Prefecture/CountyLevel POM - Plan of Operation and Maintenance RCC - Rural Credit Cooperatives SAAS - Sichuan Academy of AgriculturalSciences SOE - Statement of Expenditure SPC - State Planning Commission SPSC - Sichuan Provincial Silk Corporation SRIEP - Sichuan Research Institute of EnvironmentalProtection WCB - Water Conservancy Bureau FOROMCIAL USE ONLY CHINA SICHUANAGRICULTURAL DEVELOPMENT PROJECT Credit and Prolect Summary Borrower: People'sRepublic of China Beneficiarvy SichuanProvince Amount: SDR 107.7million ($147million equivalent) Terms: Standard,with 35 years maturity QnlendingTerms: Onlending ratesto final borrowers(productive entities and individuals)will be no less than the Agricultural Bank of China chargesfor loans for similarpurposes and terms. Obiectivesand Description: The project'smain objectivesare to: (a) increaseand intensifyproductivity of existingcrops by providinga reliable water supply; (b) provide a complementary package of integratedagricultural inputs, support services, adap- tive research,training and technicalassistance; (c) reduce soil and water lossesto preventlong-term siltation prob- lems and maintainsoil fertility;(d) expandagroprocessing activities to utilize locally available raw materials; and (e) increase incomes in poor and remote areas where farmers earn less than 50 percent of the national average, with particularemphasis on helpingpoor women. The project,to be carried out over six years, provides funds for: improve- ment and expansion of irrigation to 135,200 ha; establish- ment of two soil conservation demonstration areas and eco- nomic forestry; expansion of mulberry and cocoon production with expansion of supportingservices; rehabilitation of tea gardens and establishmentof livestockproduction bases combinedwith plantingpastures; and rehabilitationand expansionof two papermills and facilities for rabbit hair spinning,gallnut, goat and geese processing. Benefitsand Risks: At full development, the project is expected to increase annualgrain production by 440,000tons, cash crops by 66,800tons, 2.2 millionm' of timber,455,200 tons of fuel- wood, 205,200tons of mulberryleaves for productionof 1,116tons of cocoons,and 1.9 millionhead of goats,rab- bits and geese. The agroprocessingcomponent would produce 20,400tons of paper,254 tons of angorawool, about 2,800 tons of processedmeat, 40 tons of down, 7,000 piecesof hide and 500 tons of tannicacids. The pr^jectwould bene- fit over 4 millionpeople, and createabout 600,000full- I Thisdocument has a restricteddistribution and may be used by recipientsonly in theperformance | of theirofficial duties. Ius contents may not otherwisebe disclosed without World Bank authorization. - ii - time equivalentjobs with significantcontributions toward. povertyallviation in Sichuan'spoorest counties. rhe economicrate of returnfor the overallproject is estimated to be about 26 percent. No major risks are foreseen. EstimatedCosts Local Foreian Total ----------($ million)---------- Irrigation 119.3 47.2 166.5 Soil Conserv&tion 12.6 2.8 15.4 IncomeGeneration 16.8 5.3 22.1 Agroprocessing 17.6 19.9 37.5 Base Cost 166.3 75.2 241.5 PhysicalContingencies 12.2 6.1 18.3 Price Contingencies 23.7 4.1 27.8 Total ProiectCost 202.1 85.5 287.6 FinancinatPlan: Local Foreian Total ----------($ million)---------- CentralGovernment 17.0 0.0 17.0 Provincial/PrefectureGovts. 45.5 0.0 45.5 CouwtyGovernment 19.0 0.0 19.0 Local Banks 9.0 0.0 9.0 SpecialPoverty Alleviation Funds 10.0 0.0 10.0 Enterprisesand Farmers 40.1 0.0 40.1 IDA 61.5 85.5 147.0 Total 202.1 85.5 287.6 EstimatedIDA Disbursements IDA FiscalYear 1993 1994 1995 1996 1997 1998 1999 Annual 20 32 36 26 18 12 3 Cumulative 20 52 88 114 132 144 147 EconomicRate of Return: 26 percent - lli - ci SICHUANAGRICULTURAL DEVELOPMENT PROJECT Table of Contents PstesNg. I. BACKGROUND. 1 A. Introduction ....................................a........... 1 B. The Agriculture Sector ... .a . .a . 1 C. Irrigation Subsector ................................... 2 D. Soil Cor.iorvationEfforts in China . 4 E. Sectoral Objectives and Bank Lending . 4 P. Agriculture in Sichuan 5 G. Rural Poverty in Sick &a . 7 H. Rationale for IDA Involvement . ....... ... 8 II. THEPROJECT AREAS . 9 As*Location . a . a . 9 S. Climate, Topography and Soils . 9 C. Water Resources and Irrigation . 10 D. Population, Farm Size and Land Use . ... 11 S. Rural Incomes and Poverty. .......... .. 11 F. Present AgriculturalDevelopment . 12 G. Support Services 13 H* Infrastructure 14 III. THE PROJECT # . o. 16 A. ProjectObjectives . 16 B. Project Description . 17 C. Detaled Features . .r. ... 17 D. Status of Preparation ........ o ...... .. 28 S. ImplementationSchedule .. .. .............. 28 Fe Cost Estimates .... 29 G. Financing .. ......... 30 HN Procurement ............ .. ..... 31 I* Disbursements . 33 J. Accounts and Audts ................... ..................34 K. EnvironmentalImpact . ................ 34 This report is based on the findings of an appraisal mission In November/ December 1991. Members of the appraisal team iziluded H. Kim (mission leader), J. Stemp, and W. Price (IDA), J. Smyle. C. Cronberg, 0. Hong (consul- tants). Others involved in the preparation and preappralsalwere B. Albinson, J. Post, R. Dayal %IDA), P. Gilchrist, H. Lea, 0. Knowless M. Bi (consultants) and A. Nameed (FAO/CP). Peer reviewers comprised H. Froderikeen, E. Chobanian, K. Yeow, N. Jones (ASTAG), H. Plusquellec,J. Srivastava and H. lisa (AGRPS). The division chief is J. Goldberg and the department direc- tor is Shahid Javed Burki. - iv - a6seN. IV. ORGAI O ANDMt ENT . 36 A. Project Coordinationand Management. 36 B. Execution of Project Works .. .. .. .. .. a 37 C. Mnagement of Production Activities . 37 D. Vinancial Neagoement . .. 38 R. Irrigation System Operation and Maintenance . 39 F. Project Launch Workshop .... *..*.*..... 40 G. Monitoring, Evaluation and Reporting . 41 V. PRDoUCTNtonMA T8 . PRICES . 42 A* Production * o 9 oe 99 oo o9 9o* 9o 42 B. Markets and Marketing Channels . 43 C* Prices . ... .*..* . .*.. 45 VI. BENEFITS.JUSTIFICATION AND RISKS . 47 A* Benefits *........*.......* .. 47 B. Employmentand Incomes . 47 C. Women in Development ................ 47 D. Rent nd Cost Recovery .......... ....... 48 e. Financialand Economic Analysis 48 F* Risks o oo 9* oooov * o** *v * * 49 VII. AGREEMENTSREACHED AND RECOMMENDATION. 50 TABLESIN TEXT 3.1 Irrigation Component: Summary of Works . 19 3.2 SoilConservation: Summary of Works . 21 3.3 Sericulture: Summary of Works . 22 3.4 Livestock: Summary of Works . 24 3.5 Project Cost Summary . 30 3.6 Project FinancingPlan 30 3.7 ProcurementProfile . 31 5.1 Irrigation Component: Summary of Output . 42 5.2 Other Components: Summary of Outputs . 44 - v - 1. Basi4 Data 1. Provincial and Project Area Statistics 2. Climate 3. Project Locations 4. Responsibilityfor Project Design and Implementation S. Counterpart Funding: Amount and Sources 6. Research and Training Program 7. Summary of Agroprocessing 2. Pro1ect Cost Summary 1. Project Cost Summary by Component 2. Project Cost Summary by Category 3. Procurement 1. Procurement of Machinery, Equipment, Materials and Vehicles 2. Procurement Schedules 4. Estimated DisbursementSchedule 5. Farm Models and Croi Budgets 1. Cropped Area, Yield, and Production 2. Crop Budgets 3. Cropping Calendar of Main Annual Crops 4. Farm Models 5. Rent and Cost Recovery 6. Econwomicand Financial Analysis 1. Summary of Economic anu FinancialAnalysis 2. Main Conversion Factors 3. Border Prices for Principal Products and Prices 4. Historical Financial Prices of Main Products 7. Monitorint and Sunervision 1. Key Monitoring Indicators 2. Supervision Plans 8. Summary of Dam Safety Review 9. Summary of EnvironmentalAssessment