Document of The World Bank FOR OFFI NAL USE ONLY Public Disclosure Authorized epoit No. 8495-CiA STAFFAPPRAISAL REPORT Public Disclosure Authorized CHINA HEBRI AGRICULTURALDEVELOPMENT PROJECT MAY14, 1990 Public Disclosure Authorized Public Disclosure Authorized Agriculture Operations Division Country Department III Asia Regional Office This doessamauhas a I dtsctod a a%d mOYbe used bY only in the puteuummuc.. th aefir&a dudies. lbs couuteul my mat odEhewl be discosed i Weld DWuk CURRENCY EQUIVALENTS CurrencyUnit - Yuan (Y) US$1.00 - Y 4.72 Y 1.00 - US$0.21 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 - 2,209 pounds 1 kilogram (kg) - 2.2 pounds - 2.0 Jin PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ABC - Agricultural Bank of China APC - Acquatic Products Company APF - Acquatic Products Bureau BAG - Bureau of Agriculture BAH - Bureau of Animal Husbandry BOF - Bureau of Finance CAAS - Chinese Academy of Agricultural Sciences CATEC - Country Agrotechnical Extension Centers DAP - Diammonium Phosphate FAO/CP - Food and Agriculture Organization - Cooperative Program GOH - Government of Hebei GVAO - Gross Value of Agriculture Output HAAS - Hebei Academy of Agricultural Sciences HAC - Hebei Acquaculture Corporation ICB - International Competitive Bidding IFAD - International Fund for Agricultural Development IPM - Integrated Pest Management ITC - International Tendering Company, China LCB - Local Competitive Bidding MAP - Monoammonium Phosphate MOF - Ministry of Finance MOFERT - Ministry of Foreign Economic Relations and Trade PLG - Project Leading Group PMO - Project Management Office SO - Statement of Expenditures SMC - Supply and Marketing Corporation WCB - Water Conservancy Bureau CHINA IFOROMCIAL USEOnLY HEBEI AGARICULTURALDEVELOPMENT PROJECT Credit and Project Summary Borrowers People'sRepublic of China Beneficiary: Hebei ProvincialGovernment Amounts SDR 116.1 million (US$150million equivalent) Terms: Standard,with 35 years maturity OnlendingTerms: From Governmentto Hebei Provinces 15 years, includingfive years of grace, with interestat 5.5 percent per annum. Onlending rates to final beneficiarieswould be no less than AgriculturalBank of China charges on subloans for similar purposeswith similarmaturities. Ob3ectivesand The projectwould'alleviate poverty and increase farmer Descriptionst incomesby increasingagricultural productivity and marketa- bility in the NortheastCoastal area and the inland Heilonggangarea. The projectwould (i) optimize conjunc- tive use of surfaceand well water by rehabilitatingirriga- tion structures,sinking of about 9,950 new shallowwells; (ii) set up a water monitoringand evaluationsystem and develop a water resourcesplan for the province; (iii) pro- vide needed inputs, improve seed productionfacilities, strengthenagricultural research and extension; (iv) increaseefficiency in sheep and cattle production through ammonificationof wheat and corn straws, and plant- ing alfalfa; (v) produce fertilizers(urea and monoammonium phosphate)and promoteuse of cotton stalk in particleboard and flutingpaper manufacturing;(vi) strengthenagromachin- ery service stations;(vii) improve efficiencyof aquacul- ture investmentsby rehabilitating3,467 ha of shrimp ponds, constructing533 ha of new ponds, modernizationof proces- sing facilitiesand constructionof fishpondsand scallops chains; and (viii)provide equipmentand technicalassis- tance, particularlyin agroindustriesand overseastraining programs. Benefitsand At full development,the project would produce 793,000tons Risks: of crops valued at US$175 million, 114,000 tons of fruits valued at US$35 million annually. Incrementalproduction of aquacultureand livestockwould be US$12 million. Agro- industries'value added would be US$8 million annually. Per capita incomewould increaseby an average of 125 percent for the 540,000 poor farm families. Significantemployment would be created in all components. Employmentfor women would be notable in the Heilonggangarea. No major risks are anticipated. This document has a restricted distribution and may be used by recipients onlyin the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - Estimated Costs Local ForeiAg Total --…------- (US$ million) ---------- Water Ctonbervancy 57.0 27.2 84.2 Agricultural Development 18.5 44.4 62.9 Livestock Development 18.3 8.7 27.0 Aquaculture 18.0 11.8 29.8 Agroindustries 19.6 35.7 55.3 Institutional Development 2.5 0.9 3.4 Base Cost /a 133.9 128.7 262.6 Physical Contingencies 6.9 7.7 14.6 Price Contingencies 19.6 12.8 32.4 Total Proiect Cost 160.4 149.2 309.6 L Project is exempt from taxes and duties. Financing Plant Local Foreign Total ---------- (Us$ million) ---------- IDA 0.8 149.2 150.0 Provincial Government 32.0 - 32.0 Prefecture/County Governments 71.6 - 71.6 Agricultural Bank of China 13.0 - 13.0 Beneficiaries 43.0 - 43.0 Total 160.4 149.2 309.6 Estimated Disbursements Bank/IDA FY 1991 1992 1993 1994 1995 1996 Annual 19 37 45 31 13 5 Cumulative 19 56 101 132 145 150 Economic Rate of Returns Crops: 342, aquaculturet 302, livestock 332 Overall Projects 322 -Liii CHI" EBB13AGRICULTURAL DEVELOPMENT PROJECT Table of Contents Paze No. I *ACKGROUD . 1 A. IntiLoductLon. I a. The Agrlculture Sector . 1 C. The Livestock Subtector or.......... 2 D. The Flsherles Subsector.t........ .. 2 E. SectoralObjectives and Bank Lending . 3 F. Agrlculture in Hebei ....... ......... 4 G. ProJect Formulationand Rationale. 7 II. THEPROJECT AREAS . 7 A. Location .... .. .7 B. Climate, Topographyand Soils . .7 C. Water Resources and Irrigation . 8 D. Land Use, Farm SLse and Population 8 E. Present Develoomentp..t....... 9 F. Support Services ..... ............ 11 0. Infrastructure . 13i1 III. THE PROJECT. 13 A. Project Descriptlon............... 14 B. Statusof Preparatlon. ....... *. .... .. 24 C. ImplementationScheduled.. ........... 24 D. Cost Estimates . 24 B. Financing . 25 F. Procurement. 25 0. Dlsbursements. - . ........ 27 B. Accounts and Audl ts..... ...... .... 28 I. EnvironmentalImpact . 28 IV. ORGANIZATIONAND ANAGEMENT ....... 29 A. Project Organization . ... 29 B. Managementof ProductionActlvities . 30 C. FinancialManagement... 31 D. 8xecutlon of Project Works ............. 32 E. Operation and Maintenance. .... ........ 32 P. Project Launch Workshopr ............ 33 G. Monitoring,Evaluation and Reporting . 33 This report is based on an FAOICP preparationreport (Aprll 1989) and the findings of an appraisalmission comprlsingt H. Eisa, R. Jalsaard, W. Prlce (IDA) and V. Ashworth, D. Gue, A. Xaelin and R. Smith (Consultants)in Noven- ber/Decdmber 1989. K. Constant (IDA) appraised the fertlI zer plants compo- nent in February 1990. POLe No. V. PRODUCTAON, MRK TSANn PRICE . 34 A. Production . 34 B. Marketing Channels . ....... .. ...... 37 C. Markets . 36 D. Prices ............ .... 41 VI. BEPFITS, JUSTIFICATIONAND RISKS . .. 43 A. Benefits . .43 B. Employment and Incomes . 43 C. Employment Opportunitiesfor Women .44 D. Cost Recovery . .. 45 S. Financial and Economic Analyses . .... ... 45 P. Risks .48 VII. AGREEMENTS AND RECOMMDATIONS . .. 49 TEXT TABLES 3.1 Project Land Area Summary . 16 3.2 Project Costs Summary. ..... 25 3.3 Procurement Profile .... ...... ... 26 ANNEXES 1. Basic Provincial and Project Area Statistics Climate Water Supply and Demand Distributionof Water Conservancy Components and Distribution Within Prefectures (Appendix 1) 2. Project Cost Summary Summary Accounts Cost Summary Summary Account by Project Component Project Component by Year Procurement of Machinery Equipment and Material Estimated Disbursement Schedule 3. Cropped Areas, Yields and Production Crop Budgets Farm Models Rent and Cost Recovery Financial Analysis Main Conversion Factor Used Border Prices for Principal Products and Inputs Economic Analysis Key Monitoring Indicators 4. Shrimp; A Summary of World Market Situation 5. Selected Documents and Data Available in the Project File - v - CHARTS Project Organization Implementation Schedule Procurement Schedule Crop Calendar MAP IBRD No. 22306 - Project Locations - 1 - CHINA HEBEI AGRICULTURALDEVELOPMNT PROJECT I. BACKGROUND A. Introduction 1.1 The Governmentof China has requestedIDA assistancein financingan integratedagricultural development project in the Province of Hebei. The projectwould cover 46 counties and cities in the Heilong,jangarea and 7 coun- ties in the northeast coastalarea. The main objectivesof the project are to assist the governmentin acceleratingand diversifyingagricuiltural develop- ment in order to alleviatepoverty, raise farmer incomesand increase rural employment. The proposed projectwould emphasizethe effectiveuse of water and other inputs in low-yieldingareas to increaseagricultural productivity, integratethe use of crop by-productsin livestockproduction and agro- industries,and developmarginal land for crop and aquacultureproduction. The project was identified in September 1988 and prepared in JanuarylFebruary 1989 by FAO/CP missions with participationof Bank staff. A preappraisal mis- sion visited the project area in August/September1989 and appraisaltook place in November/December 1989. B. The Agricultural Sector 1.2 Agriculture In China, including crops, livestock, forestry and fish- eries, provides sustenance for over one billion people; it iv an important source of income for some lO million farm families and accounts for about 30 percent of the country'sGDP. Only