INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT STAFF APPRAISAL REPORT Public Disclosure Authorized China: Songliao Plain Agricultural Development Project June 16, 1994 The above-captioned Public Disclosure Authorized Staff Appraisal Report for China: Songliao Plain Agricultural Development Project is a revised version of the report prepared following the approval of the Project by the Executive Directors of the Bank and does not include information deemed confidential by the Public Disclosure Authorized Government of the People's Republic of China. Public Disclosure Authorized I Documentof The World Bank FOR OFFICIAL USE ONLY /3 77P-CAII- F, ~~~11`7?5=CHA STAFIFAPPRAISAL REPORT CHINA SONGLIAO PLAIN AGRICULTURAL DEVELOPMENT PROJECT February 1, 1994 INACCORDANCE WTH THE WORLD BAK'S POUCY D.OISCLOSURE OFINFORMATION TH16DOIC_WEHT ISAVAILABLE TO THE PUBL. Agriculture OperationsDivision / 7 China and Mongolia Department East Aia and Pacific Regional Office eY CURRENCY EQUIVALENTSI/ (January 1, 1994) Currency Unit - Yuan (Y) $1.00 = Y 8.7 Y 1.00 - $0.115 FISCAL YEAR January 1 - December 31 WIGHTS AND MEASURE I meter (m) 3.28 feet (ft) 1 cubic meter (m3) = 35.31 cubic feet I millimeter(mm) = 0.04 inch 1 kilometer (kIn) = 0.62 miles 1 square kdlometer(kmi 2) = 100 hectares 1 hectare (ha) 15 mu I ton (t) 1,000 kg = 2,205 pounds 1 kilogram (kg) = 2.2 pounds 1 kilovolt OMV) = 1,000 volts I ldlowatt (W) = 1,000 watts 1/ Thisproect W appraisdm lune/uly 1993whm the excane atewas $1 - Y 5.7. AUlcosts and finncinghve bee raculaed gtthe ateof $1 - Y 8.7,effective Januay 1, 1994.Economic and A finncial lysis baed onorigal pprisalparmiete. hedevaluaton would imrove economic ad finaal ruts to someextnL, FOR OFFICLAL USE ONLY ABBREVIATIONSAND ACRONYMS ABC - Agricultural Bank of China AI - Ardficial Insemination BOD - Biochemical Oxygen Demand BOF - Bureau of Finance CATEC - County AgrotechnicalExtension Center CIS - Commonwealth of Independent States DCA - Development Credit Agreement ERR - Economic Rate of Return FAO/CP - Food and Agriculturl Organization/CooperativeProgram FRR - Financial Rate of Return GDP - Gross Domestic Product GOC - Government of China GVAO - Gross Value of Agricultural Output ICB - Internaitonal Competitive Bidding DA - International Development Association IPM - Integrated Pest Management ITC - International Tendering Company LCB - Local Competitive Bidding LN - Liquid Nitrogen MOF - Ministry of Finance NCPG - North China Power Grid NECN - Northeast China Network O&M - Operationand Maintenance PCBC - People's Construction Bank of China PEPB - Provincial EnvironmentalProtection Bureau PLG - Project Leading Group PMO - Project Management Office PO - Project Office PPMO - Provincial Project Management Office ppm - Parts per Million SMC - Supply and Marketing Cooperatives SOE - Statement of Expenditure TATES - Township AgrotechnicalExtension Station WCB - Water Consevancy Bureau This document has a restricted distributionand may be used by recipients only in the performance or their officialduties. Its contents may not otherwise be disclosedwithout WorldBank authorization. CBINA SONGLIAOPLAIN AGRICULTURAL DEVELOPMENT PROJECT Credit and Project Summary Borrower: People's Republicof China Beneficiaries: Liaoning and Jilin Provinces Amount: SDR 148.5 million ($205 million equivalent) Terms: Standard, with 35 years' maturity Objectives and Description: The major objective of the project is to increase agricultural production, farm-familyincomes, rural employmentand women's participation by increasing the productivity and marketability of crop, fruit, livestock and aquatic products. The project would increase hectaae of productivelands by (a) expandingirrigation and drainage ficilities; (b) developing unutilized wastelands, including introduction of soil and water conservation; and (c) developingintertidal areas for aquacultureproduction. It would also diversifycrop productionfrom com to rice and wheat, and invest in livestock production and agroprocessig activities to make use of surplus corn and other by-products. Benefits and Risks: The project would directly increase incomes, employment and living standards of some 518,000 farm families. At full development, the project would generate incremental annual production of 177,000tons of grains (paddy, wheat and soyabeans) valued at $30.5 million (after adjusting for associated reduction in corn); 187,600 tons of fruits valued at $56.1 million; beef, mutton, rabbit and goose meat, and deer antlers together, includingthe value of processing, valued at $37.5 million; shrimp, shellfish and crabs products valued at $24 million;and the value added of $40.2 million per year from agroprocessing plants. The project's incremental annual value of production would be $188.3 million. The average farm income would be tripled or quadrupled. The economicrate of return for the total project is estimated at 32 percent. Significant employment, including for women, would be created by all components. There are few risks, which have been satisfactorily minimized. EstimatedCost: Loa Eoreign IQ1I (S million) Irfigationand drainage 16.9 12.5 29.4 Field crop development 4.7 16.8 21.5 Orchard development 17.9 12.4 30.3 Soil and water conservation 2.7 1.3 4.0 Livestock development 39.3 19.9 59.2 Livestock processing 15.9 16.2 32.1 Agroprocessing 37.0 69.5 106.5 Aquaculturedevelopment 11.5 8.9 20.4 Project management 1.7 3.6 5.3 BaseCosts La 1476 IAL 308 7 Physical contingencies 7.3 14.2 21.5 Price contingencies 40.6 11.5 52.1 Total Proect Costs l9 S 18 81, Pbm: MA 18.2 186.8 205.0 Provincial, prefecture, municipal and county governments 62.6 0.0 62.6 Commercialbanks 57.8 0.0 57.8 Enterpriss and farmers 56.9 0.0 56.9 Toul 1295 16 382. EstimatedDisbusements: BRD/IDA FY 1995 1996 19972k 29 2Q1 ($million) Annual 30 42 41 41 24 19 8 Cumulative 30 72 113 154 178 197 205 Poverty Category: Not applicable Economic Rate of Return: Crops 42 percent, Orchards 47 percnt, Livestock 27 percent, Aquaculture 26 percent, Agroindustry 23 percent, Livestock procsing 27 percent, Overall Weighted Project 32 percent. La Project is exempt from taxes and duties. CONTENTS 1 Badckound .................................... 1 A. Introduction ................................... 1 B. Agricultural Seo ............................... 1 C. Livestock Subsector .............................. 2 D. Fisheries Subsector .. 3 E. Sectoml Objectivesand BaI Lending. 4 F. Agriculture in Liaoning and Jilin Provinces ................ 5 G. Rural Incomes and Poverty ........................ 7 H. Project Formulationand Rationale ..................... 8 2 The Project Areas .. 9 A. Loction ........................... 9 B. Climate, Topographyand Soils ....................... 9 C. Water Resources ................................ 10 D. Water Avaiability and Water Balance ................... 11 E. Population, Farm Size and Land Use ................... 12 F. Preset Development ............................. 12 G. Infrastucture .. 15 H. Design Considerations ............ .. .............. 16 I. Women in Agriculturl Development .................... 16 3 TheProject ..................................... 17 A. Project Objectives .............. .. ............... 17 B. Project Description .............................. 17 C. Detailed Features ............................... 18 D. Status of Preparation ....... ........ .............. 36 E. ImplementationSchedule ........................... 36 F. Cost Estimates ................................. 37 This report is based on the findings of an appraisal mission in June/July 1993. Members of the mission team included R. Jaisaard (Mission Leader), W. P. Ting, U. El-Hanbali, C. De Haan, M. Sharma (IDA), D. Gue, A. Kaelin and G. Franzen (Consultants). Another involved in the preappraisal was Mr. A. Nell. Peer reviewers comprised Messrs. De Haan (AGRTN), Pritchard (SA2AG), Ochs (AGRNR), Chobanian, Zweig (ASTEN). The Division Chief is Joseph Goldbergand the acting DepartmentDirector is Zafer Ecevit. - iv - G. Financing .................................... 37 H. Procurement .................................. 38 I. Disbursement ................. ................. 40 J. Accountsand Audits ...... ......... .............. 41 K. EnvironmentalImpacts ............ .. .............. 42 4 Organizationand Management ........................ 44 A. Project Organization .............................. 44 B. management .................................. 45 C. EnvironmentalMonitoring and Management ............... 45 D. Financial Management ............................ 46 E. Managementof ProductionActivities ................... 47 F. Operation and Maintenance ......................... 48 G. Project Launch Workshop .. 48 H. Monitoring,Evaluation and R.or.ing...........48 5 Production, Markets and Prices ........................ 50 A. Production ................... ................. 50 B. Markets ..................................... 52 C. Prices ...................................... 54 6 Benefits, Justification and Risks ....................... 55 A. Benefits ..................................... 55 B. Employmentand Incomes ................ 55 C. EmploymentOpportunities for Women ....... .. ......... 56 D. Cost Recovery ................................. 56 E. Financia and Economic Analyses ..................... 57 F. Risks ....................................... 58 7 Agreements and Recommendations. 59 TAmLS IN TE:x 3.1 Project Cost Summary .37 3.2 Procurement Profile .39 Asm 1. Basic Provincialand Project Area Statistics ...............