Gansu Internet-Plus Agriculture Development Project (RRP PRC 50393) Project Administration Manual Project Number: 50393-002 Loan Number: LXXXX September 2019 People’s Republic of China: Gansu Internet-Plus Agriculture Development Project ii ABBREVIATIONS ADB – Asian Development Bank COL – collective-owned land CNY – Chinese Yuan EMP – environmental management plan FSR – feasibility study report FY – Fiscal year GAP – gender action plan GPG – Gansu Provincial Government GRM – grievance redress mechanism GSSMCU – Gansu Supply and Marketing Cooperatives Union ICT – information and communication technology IEE – Initial Environmental Examination IOT – internet-of-things LIBOR – London interbank offered rate LURT – land use rights transfer mu – Chinese unit of measurement (1 mu = 666.67 square meters or 0.067 hectares) OCB – open competitive bidding PFD – Provincial Finance Department PIU – project implementation unit PMO – project management office PPE – participating private enterprise PPMS – project performance management system PRC – People’s Republic of China SDAP – social development action plan SOE – state-owned enterprise SOL – state-owned land TA – Technical assistance iii CONTENTS I. PROJECT DESCRIPTION 1 A. Rationale 1 B. Impact and Outcome 3 C. Outputs 3 II. IMPLEMENTATION PLANS 9 A. Project Readiness Activities 9 B. Overall Project Implementation Plan 10 III. PROJECT MANAGEMENT ARRANGEMENTS 12 A. Project Implementation Organizations: Roles and Responsibilities 12 B. Key Persons Involved in Implementation 14 C. Project Organization Structure 16 IV. COSTS AND FINANCING 17 A. Cost Estimates Preparation and Revisions 17 B. Key Assumptions 17 C. Detailed Cost Estimates by Expenditure Category 18 D. Allocation and Withdrawal of Loan Proceeds 20 E. Detailed Cost Estimates by Financier 21 F. Detailed Cost Estimates by Outputs and/or Components 23 G. Detailed Cost Estimates by Year 25 H. Contract and Disbursement S-Curve 26 I. Fund Flow Diagram 27 V. FINANCIAL MANAGEMENT 28 A. Financial Management Assessment 28 B. Disbursement 29 C. Accounting 30 D. Auditing and Public Disclosure 30 VI. PROCUREMENT AND CONSULTING SERVICES 32 A. Advance Contracting and Retroactive Financing 32 B. Procurement of Goods, Works, and Consulting Services 33 C. Procurement Plan 34 D. Consultant’s Terms of Reference 42 VII. SAFEGUARDS 43 A. Environment 43 B. Involuntary Resettlement 44 C. Indigenous Peoples 44 D. Grievance Redress Mechanism 45 E. Capacity for Implementation and Monitoring of Social and Gender Measures 45 VIII. POVERTY, SOCIAL AND GENDER DIMENSIONS 46 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 54 A. Project Design and Monitoring Framework 54 B. Monitoring 56 C. Evaluation 58 iv D. Reporting 58 E. Stakeholder Communication Strategy 59 X. ANTICORRUPTION POLICY 61 XI. ACCOUNTABILITY MECHANISM 61 XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 61 APPENDIX 1: TERMS OF REFERENCES FOR THE LOAN CONSULTING SERVICES 62 APPENDIX 2: SUBPROJECT SELECTION CRITERIA AND GUIDING PRINCIPLES 76 APPENDIX 3: MAJOR ACTIVITIES OF THE PROJECT ENTERPRISES 81 APPENDIX 4: ENVIRONMENTAL MANAGEMENT PLAN 85 APPENDIX 5: DRAFT TERMS OF REFERENCE FOR ENVIRONMENTAL POSITIONS 119 APPENDIX 6: RESTRICTED-USE PESTICIDES IN THE PEOPLE’S REPUBLIC OF CHINA 124 APPENDIX 7: LAND USE RIGHTS TRANSFER FRAMEWORK 125 APPENDIX 8: CONSULTATION AND PARTICIPATION PLAN 144 APPENDIX 9: TEMPLATE FOR PMO PROJECT PROGRESS REPORT 148 v Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and the Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The Gansu Provincial Government, represented by the Gansu Provincial Finance Department, as project executing agency and the Gansu Supply and Marketing Cooperatives Union is the implementing agency who are wholly responsible for the implementation of the ADB-financed projects, as agreed jointly between the borrower and ADB, and in accordance with the policies and procedures of the government and ADB. The ADB staff is responsible for supporting implementation, including compliance by the Gansu Provincial Government and the implementing agency of their obligations and responsibilities for project implementation in accordance with ADB policies and procedures. At loan negotiations, the borrower and ADB shall agree to the PAM; and ensure consistency with the loan and project agreements. Such agreements shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan and project agreements, the provisions of the loan and project agreements shall prevail. After ADB Board approval of the project’s report and recommendations of the President, changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the project administration instructions) and upon such approval, they will be subsequently incorporated in the PAM. I. PROJECT DESCRIPTION A. Rationale 1. Agricultural production and rural livelihoods have lagged behind industrial production and urban livelihoods in the People’s Republic of China (PRC). As a result, income inequality and poverty persist in rural areas of lesser-developed regions of the PRC. Increasing productivity and value addition through modernization and enhanced market linkages has considerable poverty reduction potential in the PRC, where agriculture labor still accounts for more than 25% of total employment. Against this backdrop, the Government of the PRC formulated the rural vitalization strategy for 2018–2022 to promote poverty reduction, rural development, and green and inclusive growth.1 The rural vitalization strategy focuses on modernizing agriculture with the application of information and communication technology (ICT), which is intended to increase agricultural productivity, reduce food safety risks, and cut pollution from fertilizers and pesticides. The Asian Development Bank (ADB) and the government have agreed to adopt a framework approach to strategically program ADB’s lending support for rural vitalization development initiatives. 2. Internet-plus agriculture refers to the application of network-connected information technology along the entire value chain from production to marketing. This enhances market access through a two-way automated information exchange system between producers and consumers. It provides consumers with product information while producers get access to market information and production support services. Internet-plus has shown great potential to increase income in rural areas through (i) stabilized demand via access to e-commerce, and (ii) reduced production costs from avoided food losses along the value chain as a result of expanded smart storage and processing capacity. This project will demonstrate the application of network- connected sensors and tracing technologies to provide product quality and safety information to consumers and to enhance market access and technical support for farmers. 3. Gansu province, in the northwest of the PRC, is the seventh-largest province in the PRC with a population of 26.20 million, of which 14.44 million (55.1%) live in rural areas.2 In 2016, Gansu’s total gross domestic product was CNY720 billion, of which agriculture accounted for 13.7%. In 2017, Gansu’s gross domestic product per capita of CNY29,326 (equivalent to about $4,417)3 was the lowest of all provinces in the PRC, and 50% of the province’s 87 counties are designated as national poverty counties. In the proposed project prefectures, 6.5%–10.5% of the rural population live below the national annual income poverty line of CNY2,300 per capita.4 4. Information asymmetry about product quality and safety characteristics (e.g., origin of inputs, farming system, food safety, nutrition values) has led to selection of low-value products, which compromises traceability, food safety, and competitiveness in developing high-value online and offline markets in Gansu and other provinces. The project design contains innovative agriculture internet-plus features, which aims to achieve global public goods, such as enhanced food safety and reduced environmental pollution. ICT-supported value chain services for traceability and food safety will provide an opportunity for farmers to access high-value e- 1 Government of the People’s Republic of China, Central Committee of the Communist Party of China and the State Council. 2018. Five-Year Plan on Rural Vitalization Strategy. Beijing. 2 Government of the People’s Republic of China, National Statistics Bureau. 2017. China Statistical Yearbook 2017. Beijing. 3 Based on an average 2016 exchange rate of $1.00 = CNY6.64. 4 Project interventions are planned in Baiyin, Lanzhou, Tianshui, Wuwei, and Zhangye prefectures with some project activities also in Dingxi and Jiuquan prefectures. 2 commerce markets through the network of relevant business entities (e.g., traders, logistics services, wholesalers, and retailers). 5. Uncoordinated business relationships between the primary and processing segments dominate the agriculture sector. Farmers’ decisions on the quality and quantity of applied water, fertilizers, and pesticides for