Shanxi Inclusive Agricultural Value Chain Development Project (RRP PRC 48358) Due Diligence Report on Land Use Rights Transfer and Land Acquisition and Resettlement Project number: 48358-001 August 2017 People’s Republic of China: Shanxi Inclusive Agricultural Value Chain Development Project Prepared by Zhiyang He for the Asian Development Bank PRC: Shanxi Inclusive Agriculture Value Chain Development Project Due Diligence Report on Land Use Rights Transfer and Land Acquisition and Resettlement (Revised on 25 June 2017) August 2017 Zhiyang He, Land and Resettlement Specialist TABLE OF CONTENTS 1. Introduction .............................................................................................................................. 1 1.1 Project Background ....................................................................................................... 1 1.2 Tasks Assigned and Progress ......................................................................................... 1 1.3 Methodology and approaches ...................................................................................... 1 2. Land Acquisition and Resettlement Impacts Screening ............................................................ 4 2.1 Screening of LAR Impacts .............................................................................................. 4 2.2 Documentation Preparation on LAR ............................................................................. 4 3. Type and Scope of Voluntary Land Use of PACs ........................................................................ 6 3.1 State-Owned Land Occupation ..................................................................................... 6 3.2 Leasing of Collective-Owned Land ................................................................................ 7 4. Review on LURT Contracts ........................................................................................................ 9 4.1 Profile of LURT Contracts .............................................................................................. 9 4.2 Contract Counterpart, Voluntary Negotiation and Signature Status............................. 9 4.3 Contract duration of LURT Contracts ............................................................................ 9 4.4 LURT rental rates and Adjustment mechanism ........................................................... 10 4.5 Approval status of land use of facility agriculture ....................................................... 10 5. Compliance of Land Contracts with the PRC and ADB Requirements..................................... 17 5.1 Compliance review of Land Contracts based on documents review and KIIs with ....... PACs ............................................................................................................................. 17 5.2 Compliance review of Land Contracts based on HHs surveys and KIIs with villagers . 17 6. Capacity of the EA/IA and PACs ............................................................................................... 18 6.1 Overall Project Implementation Organizations and Structure .......................................... 18 6.2 Capacity of Management of LURT and Land Cooperation ................................................ 21 7. GRM and Monitoring Arrangements ....................................................................................... 22 7.1 Responsibilities of Agencies/staff for the Proposed GRM ................................................. 22 7.2 GRM for Land Use Transfer and Land Cooperation Complaints ........................................ 22 7.3 Complaint and Grievance Redress Records ....................................................................... 23 7.4 Internal and External Monitoring Arrangement ............................................................... 23 8. Conclusions and Recommendations ....................................................................................... 24 8.1 Main Conclusions of DDR ....................................................................................... 24 8.2 Follow-up Action Plan .............................................................................................. 25 Appendices: ..................................................................................................................................... 26 Appendix I: Collective land leased by PACs ..................................................................................... 26 Appendix II: Detailed TERMS OF REFERENCE for EXTERNAL SOCIAL SPECIALIST ............................ 27 Appendix III: Scanned Sample Copies of the LURT agreements and/or Land Certificates .............. 32 1. Introduction 1.1 Project Background The Shanxi Provincial Government (SPG) requested the Asian Development Bank (ADB) to help eradicate extreme poverty and improve livelihood in the poverty-stricken areas of the province by capitalizing on the potential of agriculture sector in developing rural income- generating opportunities. The SPG particularly requested help on the implementation of the new rural development policy of the People's Republic of China (PRC) to promote agriculture- based industry for local specialty agricultural products as part of its poverty alleviation and rural development program. The Shanxi Inclusive Agricultural Value Chain Development Project (the project) impacts will be (i) inclusive economic opportunities in the rural areas of Shanxi Province increased, and (ii) poverty in the rural areas of Shanxi Province reduced. The project outcome will be increased income-generating opportunities from selected local specialty agricultural products. The project particularly aims at strengthening the value chains of local specialty agricultural products with untapped market potential in 17 counties in 6 municipalities.1 The Project will be implemented by 19 Project Agriculture companies (PACs) specializing in livestock and agricultural production and/or processing. Project implementation will be overseen and coordinated by the provincial Project Management Office (PMO) and county level PMOs (CPMOs). The project outputs will be (i) agricultural value chain strengthened and (ii) Inclusive Business (IB) mechanism piloted. 1. Output 1: Agricultural value chain strengthened. ADB introduced the value chain (VC) approach to Shanxi for subprojects selection and project design, and the project will demonstrate effective ways to advance the agriculture sector in Shanxi. Main activities will include: (i) capacity building for PMOs and project agribusiness companies and cooperatives (PACs) on value chain concept and approach for business plan development, subproject selections, VC action plan formulation, and project design; (ii) financing for 10 PACs’ investment in value chain strengthening; 2 (iii) advisory services for those PACs to improve their business model and management, and their cooperation with upstream or downstream partners especially farmers; (iv) implementation of AVC action plans to demonstrate model AVCs by at least eight PACs; and (iv) dialog with services providers, such as financial institutions, and local government to catalyze solutions to the common needs of players along model value chains. 2. Output 2: Inclusive Business (IB) mechanism piloted. To ensure farmers especially the low income and poor groups adequately benefit from the agriculture sector development, the IB concept and approach were introduced to Shanxi. The project will aim at piloting a localized IB mechanism to promote private sector solutions to poverty reduction and sustainable development. Key activities will include: (i) appraisal of companies and their proposals using a tailor made four- 1 Those local specialty products include primary and processed products of livestock and meat, coarse grains, vegetables, fruits, mushrooms, flowers, and Chinese herbs. 2 The financing will be used to strengthen the model value chains for (i) better product quality, (ii) higher production efficiency, (iii) greater value added through deep processing, (iv) richer diversity of final products to meet different consumers’ needs, (iv) cold chain development and wider market coverage, and (v) greener production. 1 dimensional scoring tool for subproject selection and identification of potential IB companies; 3 (ii) incubation of IB models, formulation of IB action plans, and ex-ante social impact assessment of selected IB companies; (iii) implementation of IB action plans by IB companies and monitoring of the action plan implementation by the provincial project management office (PMO); (iv) creation of incentive program to promote IB practices such as interest rebates and IB awards; (v) advisory services and training for IB model development and IB mechanism establishment; and (vi) mainstreaming of IB mechanism into the government poverty alleviation and rural development program. 3 Four dimensions comprise (i) market and value chain, (ii) financial performance, (iii) social impact of investment, and (iv)innovation. 2 Figure 1: Shanxi Project Counties/districts. Red circles denote project counties A list of all the sub-projects as of June 22th 2017 is provided in table 2 below. In order to avoid and/or minimize the involuntary resettlement impacts and develop necessary mitigation measures if needed, the resettlement specialist conducted field survey and documents review on various issues relating to Land Use Right Transfer (LURT) and/or Land Acquisition and Resettlement (LAR) during