China - Henan Agricultural Development Project

 ICRR 10498 Report Number : ICRR10498 ICR Review Operations Evaluation Department 1. Project Data : OEDID : OEDID: C2242 Project ID : P003560 Project Name : Henan Agricultural Development Project Country : China Sector : Other Agriculture L/C Number : C2242-CHA Partners involved : Prepared by : Madhur Gautam, OEDST Reviewed by : Helen Abadzi Group Manager : Gregory K. Ingram Date Posted : 08/17/1999 2. Project Objectives, Financing, Costs and Components : Objectives : Overall objective was to assist Henan province in its development plan, which aimed to alleviate poverty and increase farmer incomes by increasing the productivity of agriculture, animal husbandry and fisheries, and by developing agroprocessing and agroindustry . Specifically, the project sought to (i) provide additional irrigation water; alleviate soil salinity and water logging problems through improved drainage and flood protection measures; and improve management of water resources; (ii) increase productivity of low-yield farms through crop intensification and diversification; (iii) expand livestock production; (iv) develop low-lying areas for fish production; (v) support investment in agroprocessing and agroindustry; and (vi) strengthen research, extension and environmental protection programs. Components : To pursue the above objectives, in addition to strengthening overall project management, research, extension, and environmental protection by providing equipment, technical assistance and training, the project had five components corresponding to (i) Irrigation and drainage; (ii) agriculture; (iii) livestock; (iv) aquaculture; and (v) agroprocessing and agroindustry Costs and financing : At appraisal (1991), project costs were anticipated to be US$ 196.03 million, with IDA providing US$110 million (revised to US$ 117.9 million at the time of the mid-term review as a result of the depreciation of the SDR relative to the US dollar). The project closed one year behind schedule on December 31, 1998, with actual costs being US$245.6 million, of which IDA's share was US$116.5 million. 3. Achievement of Relevant Objectives : The project substantially achieved all of its major objectives . The physical production targets were either exceeded or fully achieved. The project has had substantial positive economic, social and environmental impacts : female participation in project production activities and training was over 45%; farm households gained not only through increased incomes but also through assimilation of advanced production techniques; and poverty status of project areas has significantly improved . All components have financial rates of return that are higher than anticipated at appraisal and the overall economic rate of return is estimated to be about 40%, higher than the 36% estimated at appraisal. The project substantially contributed to human resource development, in line with the design intent . Overall, there are few areas where implementation was not fully successful : there were some delays due to lack of timely allocation of counterpart funds and the delayed delivery of equipment for agroprocessing factories; the non-routine heavy maintenance and repair needs of canals is not well attended to, although routine maintenance is satisfactory; and the institutional development objectives of the irrigation and drainage component were only partially achieved. The seed processing component was not well identified and was subsequently reduced in scope . All seed processing plants supported, however, are either in commercial operation or in the process of being commissioned . 4. Significant Achievements : Most project activities were located in poor counties, and have had a significant impact : the annual growth rate of incomes, at 26%, has been above the provincial average of 21.5%. The establishment of an integrated system linking production, processing and marketing is noted by the ICR as the "cornerstone" of the project's success . All agroprocessing plants have been constructed to a high standard and are in profitable commercial operation . The project successfully introduced aquaculture to some areas in the province, and the agriculture component introduced improved technologies in tree crops . Livestock production far exceeded its targets (although alfalfa production was canceled at mid-term review stage following heavy floods in the production areas, low profitability and lack of farmer interest). Research supported under the project produced high quality outputs, many of which have received awards and have been applied in production practice . 5. Significant Shortcomings : The project had few shortcomings as most of the objectives have been met . The shortcomings include: institutional development in the irrigation and drainage component was only partial, resulting in a moderate improvement in water resources management capabilities . The non-routine maintenance of canals is less than satisfactory and tree crop yields are lower than expected . 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory 7. Lessons of Broad Applicability : 1. An integrated approach linking production, processing and marketing can be highly beneficial in agricultural projects. 2. The project demonstrates the benefits of stable project management and good coordination among the project management offices and concerned technical agencies . 3. Development of local management capabilities is critical for a successful decentralization of implementation responsibility and subsequent O&M, requiring substantial support from provincial authorities . 4. Good project design and equipment of a high standard are key factors in attracting private sectors partners in agroprocessing 8. Audit Recommended? Yes No 9. Comments on Quality of ICR : The ICR is well written and provides the relevant information in significant detail . It should, however, have included a discussion of the on-lending terms and issues, including the performance of the portfolio, for the loans financed under the project for the various components .