China - Smallholder Cattle Development Project

 ICRR 12464 Report Number : ICRR12464 IEG ICR Review Independent Evaluation Group 1. Project Data: Date Posted : 09/18/2006 PROJ ID :P045264 Appraisal Actual Project Name :Smallholder Cattle Project Costs 180.80 211.93 Development Project US$M ) (US$M) Country :China Loan/ US$M ) Loan /Credit (US$M) 93.50 93.45 Sector (s):Board: ): RDV - Animal US$M ) Cofinancing (US$M) production (74%), Agricultural marketing and trade (15%), Sub-national government administration (6%), Agricultural extension and research (5%) L/C Number :L4530 FY ) Board Approval (FY) 00 Partners involved : Closing Date 12/31/2005 12/31/2005 Evaluator : Panel Reviewer : Division Manager : Division : Ridley Nelson Christopher D. Gerrard Alain A. Barbu IEGSG 2. Project Objectives and Components a. Objectives The objectives of the project, as stated in the PAD, were (1) to improve smallholder cattle production within existing crop farming areas with large crop by -product surpluses, (2) to improve the quality and marketability of cattle in order to (3) enhance farmer incomes and reduce poverty . b. Components (or Key Conditions in the case of Adjustment Loans ): There were four components: 1. Cattle Breed and Feed Improvement (planned US$2.00 million, actual US$2.39 million) to improve breeds for production under local conditions while also preserving local genetic material . 2. Cattle Production (planned US$132.53 million, actual US$167.63 million) to increase cattle productivity through linking the improved breeds with better feeding, management and veterinary services . Dairy production was added as a new component in 2001. 3. Market Development (planned US$25.45 million, actual US$22.83 million) to support cattle and beef markets, including a pilot program for 16 cattle markets and also to improve linkages between production and markets and to upgrade slaughterhouses . 4. Institutional Strengthening (planned US$19.88 million, actual US$18.14 million) to develop a reliable grading system compatible with international practice and enhance animal husbandry services to farmers and provide training and research and project management . Four provinces participated : Anhui, Henan, Hebei, and Shanxi. c. Comments on Project Cost, Financing, Borrower Contribution, and Dates The project was closed on schedule fully disbursed after five and a half years . 3. Relevance of Objectives & Design : The objectives were relevant to the borrower's strategy at the time and also to the Bank's . The design was suited to achieve the objectives, although, given the income and poverty objective, the dairy component should probably have been included at the outset since often this enterprise is highly relevant to the poorer households with limited land . 4. Achievement of Objectives (Efficacy) : The objectives were almost entirely achieved or exceeded with very few apparent weaknesses . With respect to improving smallholder cattle production , the monitored indicators show that the application of new feeding-related technologies increased from a baseline of 40% to 95%, the feedlot cattle daily weight gain increased from 0.93 kg to 1.22 kg, the cow conception rate using AI increased from 62% to 81%, calf weaning weights went up by about 20%, annual production of fattened cattle by households increased from about 76,000 head to about 162,000. A recording system for dairy cows was introduced to inform owners of individual cow performance, an important contribution to efficiency, and annual milk production averaged 4.91 tons per cow. However, with respect to increasing the efficiency of converting low -value crop residues into marketable beef, the ICR does not report on three key indicators listed in the PAD including number of producers using crop residue feeding, number using crop residue feeding technologies, and cattle performance records associated with such feeding . Therefore achievement in this area is difficult to evaluate . With respect to improving the quality and marketability of cattle , the outcome indicator data is less specific and interpretation of data is more difficult due to parallel national programs . However, the project established 10 pilot demonstration cattle marketing centers, the proportion of farmers aware of market information increased from 39% to 84%, and the channels of sale for households diversified substantially . However, since the sub-component was reduced in size due to various parallel programs there must be questions on those data about attribution . With respect to enhancing incomes and reducing poverty , while beneficiary data by poverty quintile is not given, surveys quoted in the ICR show incomes increased by 164% which is assumed to be a nominal increase . (This would still represent a significant real increase since only in 2004/2005 did inflation start to become of some significance, indeed, earlier there was some deflation .) Income from cattle raising went from Y1,512 to Y4,000, and, probably less directly attributable to the project, wages for labor went up by about 30%. The project made a major contribution to the employment of surplus labor . About 54% of project trainees were women and 1,000 women were employed in project-supported processing plants . It is claimed in the ministry report that 83,800 households were lifted out of poverty and that "poverty-stricken households and absolutely poor households have been basically eliminated" from the project areas. In addition to the above, there was a strong training program including training in genetics, animal feeding, feed processing, silage making, feedlot and dairy management, and disease control . 5. Efficiency : Efficiency was fully satisfactory . The overall project ERR was estimated at a high 25 percent compared to 30 percent estimated at appraisal. The analysis was done for each participating province and for the project as a whole . The methodology appears sound . The reduction in ERR from appraisal was due mainly to increases in labor cost . (This may have been a beneficial shift for the poor who were employed and who would have been earning more although the net effect on producers and consumers, or on those who are both, and on the partially employed, would call for sophisticated analysis to fully understand .) Fee-based systems were introduced by government for AI and veterinary services -- suggesting that efficiency is likely to have improved in these support service areas . 6. M&E Design, Implementation, & Utilization: The ICR reports effective M&E for the project . There was a computer based planning and recording system developed by the Central Project Management Office, drawing on its experience in managing other rural projects in China. There was attention to the development of the M&E system at a range of levels from central to local . Unlike many projects reviewed by IEG, the M&E in this case was in place from the start due partly to the existence of this Management Office. 7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative): The ICR does not directly discuss Bank Safeguards, however the project was an environment category B project . Environmental reports were required for the establishment of feedlots, cattle markets and veterinary facilities . The project promoted the utilization of about 1.3 million tons of surplus crop residues, reducing the pollution caused by burning this material. Food safety rules were tightened by governments and provinces during the project period . 8. Ratings : ICR ICR Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Substantial Substantial Although government reported some weaknesses in interagency cooperation . Sustainability : Highly Likely Highly Likely The arguments in the ICR for this rating are convincing Bank Performance : Satisfactory Satisfactory As noted in the ICR, the time taken to prepare and appraise the project was excessive, particularly for such a fast developing economy and sector . But quality of design and supervision were strong.  Borrower Perf .: Highly Satisfactory Highly Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006. - ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness . 9. Lessons: The ICR offers three useful lessons, which are presented here with some modification : 1. To be competitive with the increasing range of loan alternatives and in rapidly changing economies, IBRD lending procedures need to function faster . This can enhance operational efficiency and avoid projects being overtaken by rapidly changing country developments . 2. Flexibility of both lending procurement procedures and investment production models is particularly important in a rapidly developing rural economy where expanding commercial operations demand nimble adaptation to shifting market conditions and where there is a need to respond quickly to any revealed weaknesses or gaps in project design and to respond to shifts in commodity demand . 3. Rural projects calling for integration of production and marketing benefit from strong coordination between public and private sector agencies and farmer associations . In this case Project Management Offices at local level played a key coordinating role. 10. Assessment Recommended? Yes No Why? This appears to be an impressive project with a number of potential lessons for the Bank and the sector more widely, including lessons on M&E design, public /private partnerships, and smallholder market linkages . Moreover, this is a commodity-based project, a focus that the Bank has drifted away from in recent years towards multi-component, community-based, projects. The comparison and issues of scaling up would be informative . 11. Comments on Quality of ICR: Overall, the ICR is satisfactory. It very nicely outlines the achievements,although arguably formulating them too much towards the components as opposed to the stated objectives . It provides good indicator data and draws sound conclusions and lessons . It has a useful and important economic analysis, often a weakness now in Bank ICRs . As noted above, it has limited evidence on the central issue of the extent and efficiency of use of low -value crop residues. (The region have since provided additional evidence about silage making and crop ammonization .) More evidence on environmental performance and safeguards would have been desirable . It should have presented more evidence on household loan performance, both from Bank source funds and other sources, since this would support and triangulate other output and outcome evidence . (The region has since indicated that only a few loans had matured by the time of the ICR.) The difference between nominal and real income gains should have been more clear since inflation was not insignificant in the final years . Overall, given other programs, with the information provided in the ICR it is difficult to disentagle the impacts of the project itself from the impacts of other interventions .