China - Guandong Agricultural Development Project

 ICRR 10451 Report Number : ICRR10451 ICR Review Operations Evaluation Department 1. Project Data : OEDID : OEDID: C2307 Project ID : P003555 Project Name : Guandong Agricultural Development Project Country : China Sector : Fisheries & Aquaculture L/C Number : C2307 Partners involved : Prepared by : Robert C. Varley, OEDST Reviewed by : Anthony J. Blackwood Group Manager : Gregory K. Ingram Date Posted : 08/12/1999 2. Project Objectives, Financing, Costs and Components : Objectives :- Increase fish production; Develop land unsuitable for agriculture, coastal mud flats and shallow water, for aquaculture; Increase fruit production on sloping land; Bring new land into production and improve river flow conditions in the Pearl River delta; Provide modern agroindustrial facilities for handling and processing; Alleviate poverty in limestone mountain areas . Financing ($ million ):- At Appraisal Closing Bank/IDA 162.0 103.5 Provincial, Municipal and County Govs . 12.0 44.2 Self Raised funds 53.0 65.8 Domestic banks 76.6 28.7 Total Project 303.8 242.2 Components :- Total expenditure of $242.2 million - Marine Fisheries (6%); Aquaculture (18%); Land Reclamation (24%); Fruit Development (31%); Agro-industry (11%) and Poverty Alleviation (10%.) These components include an amount of $14.5 million or 6% for local training and overseas study tours . 3. Achievement of Relevant Objectives : The project achieved its planned and revised targets for the marine fishery, land reclamation and fruit development, Qingyuan poverty alleviation and agro -processing components; By completion 28 fishing vessels were in operation and 2,627 ha. of brackish water fish and shrimp ponds, 440 ha. of oyster ponds were developed and 11,000 freshwater and marine net cages constructed; New and improved orchards were established; Production increases exceeded target and were 273,479 tons for sugarcane, 26,325 tons for lotus, 17,951 tons for bananas and 952 tons for fish; The poverty alleviation component exceeded appraisal estimates and 28,000 from 58,000 beneficiaries graduated from the poverty group; 10 agricultural processing plants were completed, 8 commissioned and two are operating well; Although some components were cut back and others suffered from extraneous constraints, the reestimated ERR isf 22% (c.f. 28% at appraisal.) 4. Significant Achievements : Marine capture is now possible in the 100m depth areas; Fisheries resource management has improved; 250,000 project management staff, farmers and fishermen have received technical and managerial training; Fruit and sugarcane development has utilized advanced technology to improve quality and yield significantly; Environmental conditions were improved through reduction of soil and water erosion 5. Significant Shortcomings : Agro-processing plants experienced difficulties with raw material availability, and inadequate financial structures and lack of private sector participation made adaptation to changing market conditions more difficult; Shortages of working capital from the banks could have been anticipated; $10.1 million of funds were misused and had to be refunded to the Bank; Beyond elaborating loan terms and conditions, the project design does not address the issue of intermediation, fiscal decentralization, local revenue base and urban financial management; Adequate provision for efficient O&M of public and private project infrastructure has not yet been achieved; A change in executing agency, delays in supporting funds and complex procurement procedures lengthened construction periods and delayed benefits . 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Partial Substantial Objectives were primarily in terms of skills and application of new technologies, which were largely achieved. Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory 7. Lessons of Broad Applicability : Project designs should be kept simple and flexibility incorporated; Proven technology transfer should be promoted; The private sector needs to be involved in agro -processing activities, and In such criedit operations with public institutions, the Bank should address the long term implications of poor cost recovery for both municipal and provincial credit worthinesss . 8. Audit Recommended? Yes No Why? The Bank has high implicit cost recovery objectives as most of the finance has been provided as loans to provincial governments who onlend to municipalities who onlend to beneficiaries . The long term implications of poor cost-recovery for both municipal and provincial creditworthiness, O&M and sustainability, have not been addressed in the ICR . 9. Comments on Quality of ICR : The major lacunae in the ICR are lack of quantification of the explicit assumptions in the ex -post economic analysis and neglect of the implications for sustainability if poor municipal investment selections have been made and /or inadequate O&M.