China - Mid-Yangtze Agricultural Development Project

V -- ; Document of, '-The World'Bank=-, FOR OFFICIAL USE ONLY Repors No. 7990-CHA STAFF APPRAISAL REPORT / ~~CHINA MID-IYANGTZE AGRICULTURAL DEVELOPMENT PROJECT JULY 17, 1990 Country Department III Asia Regiotal Office Agtic@ttural Operations Division Thi document h a residted distibl and may be used by redpienb ondy in the peioranae of thei offical duties Us conteuts may no ohwise be diosed witout Wodd Eank authmorton.  CURRENCY EQUIVALENTS Currency Unit - Yuan (Y) US$1.00 Y4.72 Yl.00 - US$0.21 FISCAL YEAR January l to December 31 'WEIGHTS AND MEASURES 1 meter (fi) - 3.28 feet (ft) lkilometer (km) - 0.62 miles 1 hectare (ha) - 2.47 acres 1 mu - 0.067 ha 1 to (t) - 1,000 kg - 2,205 pounds (lbs) 1 kg - 2.2 pounds (lbs) PRINCIPAL ABBREVI4TIONS AND ACMONY1S USED ABC - Agricultural Bank oE'China ATEC - Agriculture technical Exteonssion---Center BOF - .Bureau of Finance CAAS - Chinese Academy of Agricultural Sciences CEROILS - China National Cereals, Oils and Foodstuffs Import and Export Corporatioxi CRI - Citrus Research Institute CFDC - County Fruit Development Corporation DAP Diammonium Phosphate FAC/CP - FAO/Vorld'Bank Cooperative Programme FAO/ISP - FAO/Tnvestment Support Programme FTB - Foreign' Trade Bureau GOC - Government of China GVAO - Gross Value,of Agricultural Output JPMO - Joint Project Management Office 1GB. - International Competitive Bidding MACHIMPEX - Chin,a National Machinery Import Export Corporation MOA - Ministry of Agriculture MOF - Ministry of Finance MOFERT - Ministry of Foreign Economic Relations and Trade PFDC - Provincial Fruit Development Corporation PLG - Project Leading Group PMO - Project Management Office SPC - State Planning Commission STC - Scientific and Tecmnical Committee WCD - Water Conservancy'Department \~~~  CHINAw FOR OMCIAL USE ONLY MID-XANZE AGRICULTURAL DEVELOPMENT PROBJECT Credit aPInd rj ec t Summar borrower: People's Republic of China Benefiglaries: Sichuan and Hubei Provincial Governments and Chongqing Municipality Mgjant: SDR 48.6 million (US$64 million equivalent) Terms: Standard, with 35 years maturity Onlending Tm: From Government to the Provinces/Municipality: 17 years, including seven years of grace, with interest at 5.51 p.a. Onlending rates to final beneficiaries would be no less than Agricultural Bank of China charges on subloans for similar purposes with similar maturities. Objectives and The project objectives would be to increase production, Descrigtion: productivity and marketability of fruit in low income areas and thus increasi .acome and alleviate poverty. It would do this by structuring production so as to satisfy domestic and export demand for quality, variety and seasonality and by stimulating the development of effective marketing institutions. The project would: (a) develop 11,986 ha of new orchards on presently uncultivated hilly slopes and rehabilitate 2,473 ha of existing ones (about 801 of the planted area would be citrus and 201 lychees, longans, pears, loquats, plums, yellow peaches and kiwi); (b) increase the provincial Agriculture Bureaus' abilities to identify, propagate and distribute healthy, disease-free planting material, to institutionalize virus indexing and budwood registration programs, and to provide technical assistance for rcsearch and extension and training for managerial and technical staff in all aspects of fruit development and marketing; and (c) establish new and strengthen existing commercially independent Fruit Development Corporations including three new joint stock companies to market quality fruit in local, distant and export markets by introducing modern post-harvest techniques, packing and storage facilities. X B-ane-fits At full development, new orchards developed under the project and-Risks: would produce annually 260,000 tons of citrus valued at US$61.5 million and 48,000 tons of other fruits valued at US$15.3 million. Incremental production from rehabilitated orchards would be 42,000 tons valued at US$10.8 million. Per capita incomes would increase by an average of 180X for 130,000 poor families. Beyond this, significant employment would be created in all three project areas. The development of hilly areas with contouring and terracing would improve environmental con- ditions. The project would also provide a replicable model for other fruit production areas. No major risks are anticipated. This document has a restrict6d distribution and may be used by recipients only in the performance of *, I Its ci ts r not otherwise be disclosed without World Bank authorization.  - ii - Estimated Cost Local Forein otal ------------ (US$ million)- Nurseries and Mother Tree Gardens 1.1 0.9 2.0 Orchard Establishment 50.8 39.3 90.1 Orchard Rehabilitation 5.3 6.8 12.1 Marketing Facilities 5.3 6.2 11.5 Institutional Support 2.1 3.0 5.1 Base Cost a/ 64.6 56.2 120.8 Physical Contingencies 1.4 1.6 3.0 Price Contingencies 7.1 6.0 13.1 Total Project Costs 73.1 63.8 136.9 gxJaning Pl Loal Forei: T 1ota ------------ (US$ million)------ IDA 0.2 63.8 64.0 Provincial/Municipal Governments 7.5 - 7.5 Prefecture Governments (Sichuan) 2.5 - 2.5 County Governments 25.9 - 25.9 Agricultural Bank of China 13.0 - 13.0 Beneficiaries 24.0 - 24.0 Total 73.1 63.8 136.9 Estimated Disbursements: Baa.kIDA FY I991 192. 1993 1994 12995 Annual 13.0 19.0 21.0 8.0 3.0 Cumulative 13.0 32.0 53.0 61.0 64.0 Economic Rate of Return: Citrus: 32%, Other Fruits: 34%, Rehab Orchards: 49% Overall Project 34% a/ Project is exempt from taxes and duties.  CHIN KID-YANGTZE AGRICULT DEVELOPM ROJICT Table of Contents Page No. I. BACKGROUND .............................. 1 A. Introduction ................................. 1 B. The Agricultural Sector .......................... 1 C. The Fruit Sector ................................. 2 D. Sectoral Objectives and Bank Lending .... ......... 4 E. Agriculture in Sichuan, Chongqing and Hubei 5...... F. Project Rationale ................................ 7 II. THE PROJECT AREAS .................................... 7 A. Location of Project Areas ........................ 7 B. Climate, Topography, Soils and Water Resources ... 7 C. Land Use, Farm Size and Population .... ........... 9 D. Present Development .............................. 10 E. Infrastructure ................................... 13 F. Marketing ......... ............................... 13 G. Horticultural Support Services ..... .............. 14 III. THE PROJECT .......... ................................ 16 A. Project Objectives and Relation to the Sector .... 16 B. Project Description .............................. 16 C. Detailed Features ................................ 17 D. Cost Estimates ................................... 22 E. Financing ......... ............................... 23 F. Procurement ...................................... 23 G. Disbursements .................................... 26 H. Implementation Schedule .......................... 27 I. Accounts and Audits .............................. 27 J. Environmental Impacts ............................ 27 IV. PROJECT ORGANIZATION AND MANAGEMENT ......... ......... 28 A. Project Organization ............................. 28 B. Financial Management .31 C. Execution of Project Works.32 D. Monitoring, Evaluation and Reporting ............. 32 V. PRODUCTION, MARKETS AND PRICES ......... .. ............ 33 A. Production ......... .............................. 33 B. Markets .......... ................................ 35 C. Marketing for Exports ............................ 37 D. Prices . ........................................... 39