China - Jiangxi Integrated Agricultural Development Project

l~~~~~~~~~~~~~l PID THE WORLD BANK GROUP AWorld Freo ol Poverty 4iwfoshop Ilbr WOWk Iuk. Report No AB67 Updated Project Information Document (PID) Project Name CHINA-Jiangxi Integrated Agricultural Modernization Project Region East Asia and Pacific Region Sector Irrigation and drainage (50%); Agricultural marketing and trade (15%); Agricultural extension and research (15%); Animal production (10%); Crops (1 0%) Project ID P065463 Supplemental Project Borrower(s) PRC Implementing Agency JIANGXI PROVINCIAL PLANNING AND DEVELOPMENT Address COMMISSION Jiangxi Provincial Agriculture Foreign Fund Utilizing Office Address 12 FL. Provincial Planning Commission Building, West 2 Road, Provincial Government Compound, Nanchang 330046, China Contact Person Mr Yuan, Jin Mu Tel +86-791-6211815 Fax +86-791-6212873 Email JAFFO@public nc.jx.cn Environment Category B Date PID Prepared May 2, 2003 Auth Appr/Negs Date October 1, 2002 Bank Approval Date June 19, 2003 1. Country and Sector Background In the last two decades, China has not only ensured food grain security for its large and still growing population, but also achieved impressive growth in agriculture and the rural sector. Many elements regarded as critical for rural development, such as upgrading of marginal lands, investments into the water sector, and agricultural research and technology have contributed to the substantial gains. However, in recent years agricultural growth has slowed and farm income has fallen increasingly behind non-agricultural income. The sector faces considerable challenges, in particular after China's entrance into WTO. In order to maintain the effectiveness of transitional policies and investment gains, new integrated development approaches have to be developed. Stable and sustainable growth in agriculture and ensuring food security is one of five key areas of the Government's strategy as articulated in the Ninth Five-Year Plan and the Fifteen-Year Perspective Plan (national development plans) approved by the National People's Congress. The major challenges defined in these plans are to achieve greater self-sufficiency in grain, to raise farmers' standard of living, to make better use of technology and to speed up the development of nearby industries that use agricultural products and to eliminate poverty. In the current Tenth Five-Year Plan, there has been a shift in focus from quantity of food supply towards cost effectiveness in production and larger diversity and higher  2 PID quality of agricultural products. With growing income in China and the country's upcoming WTO membership, it is acknowledged that any sustainable approach to agricultural and rural development needs to be towards meeting consumers demand. With increasing income levels in the urban areas, consumer demand is becoming increasingly sophisticated requiring a higher variety of products and a distinctively higher quality of products at competitive costs. Responding to the changing needs, the Government's focus is shifting towards its regulatory responsibilities and on removing the remaining policy, administrative and regulatory constraints that are preventing the emergence of full incorporation of socialistic market principles. In addition, to be successful, the public sector has to target investments for creating and/or nurturing the necessary market institutions which enable private entrepreneurs to make their resource allocation and marketing decisions based on undistorted and transparent price signals. 2. Objectives The development objective of the project is to improve the livelihnxfdrural households in Jiangxi Province through establishment of integrated, economically and environmentally sustainable, and market-driven agricultural production systems focusing on productivity and agricultural output of high quality and value. Improved livelihood is defined as increased income; reduced risks; increased employment, in particular of women; and improved access to irrigation and drainage, technologies, information, training, and markets. 3. Rationale for Bank's Involvement The project is designed to be a "second-generation" agricultural development project. It would give China the opportunity to pilot integrated market-oriented support to the agricultural system that is expected to substantially contribute to improve livelihoods of its rural population. In addition, Jiangxi does not have the financial resources of its neighboring coastal provinces, nor does it benefit from China's Western Development Strategy. However, Jiangxi has a strong rural agricultural base with a great potential and comparative advantage in a wide range of agricultural and food products. In addition, it is relatively close to important domestic and international markets. Bank support for the project is justified through its mandate to lend for development-oriented activities with a strong element of public goods, such as basic infrastructure, public information systems, training, extension, and research. Provision of these kinds of basic services in Jiangxi will provide a firm foundation for future agricultural sector investments by the private sector. Furthermore, they will improve the utilization of scarce public resources (financial and technical) and create a basis for increased government revenues for future development. 4. Description General. The project main components are: (i) Irrigation and Drainage; (ii) Farn Production Improvement; (iii) Market Systems Development; and (iv) Project Management, Monitoring and Evaluation. Applied research, training and extension activities are included in each component. Irrigation and Drainage ComponentThe component would include; (i) physical construction: '(ii) rehabilitation and extension of existing irrigation works, including main and secondary canals, drainage structures, and pumping stations (works and goods); (iii) construction of on-farm irrigation and drainage systems (works and goods); and (iv) construction of access and farm roads (works). In addition, the component would include: (v) support to the establishment of Self-Managed Irrigation and Drainage Districts (SIDD) for all irrigation command areas under the project. This would ensure more efficient and sustainable use of land and water resources for irrigated agriculture (technical assistance). About 70,000 ha of land would be covered by the investment, benefiting about 230,000 farm households.  3 PID Farm Production Improvement Component. The Component would specifically target those farmers who benefit from the Irrigation and Drainage Component. It includes the following sub-components (i) soil fertility improvement; (ii) applied research, training, and extension; (iii) farm production support, and (iv) support to women and ethnic minority farmers. To facilitate the shift towards higher value production systems and to improve farmers access to markets, the project would, in addition to funding infrastructure investments, provide loan funds to farm households or farmer groups for the improvement of soil fertility or farm production activities such as: (a) irrigated field crops; (b) livestock (mainly pigs and poultry); (c) small-scale on-farm fish production; and (d) upland crops. Criteria for selecting the households would be based on their willingness (as determined by their application), their needs (as determined by the community) and their loan repayment ability (as determined by the Project Management Offices, PMOs and Rural Credit Cooperatives, RCC) The farmers would be able to choose their investments into improved agricultural production. The menu of investment options would be designed in a participatory manner, in the farmers groups, through Participatory Rural Appraisal (PRA) methods, to ensure that the farmers demands across different farm production systems are met in a flexible manner throughout the project implementation period. This Component would be implemented in a community-driven manner, including community procurement. The Women and Ethnic Minority Farmers Sub-component would ensure that women, and ethnic Yao from Yaoshan village participate actively and benefit from the project. The Applied Research, Training and Extension Sub-component will finance applied research at universities and research institutes, technical assistance (TA), training of trainers (in line bureaus and extension stations), and training of households and participating enterprises. Activities to be financed include: (1) funding for applied research (identifying, developing and adapting relevant low-cost technologies to solve specific problems to facilitate implementation and enhance benefits from the project activities; (2) training (training of trainers, training of farmers, training of provincial, county and township project staff to ensure smooth project implementation and sustainability). This training would be delivered through TA, individual training, workshops, and study tours; and (3) public extension services (participatory demonstrations, household visits, group discussions, technical training, company led training and extension). Market Systems Development Component The component would focus on activities that add value to the investments in irrigation and drainage and in improved agricultural production, consisting of: (i) support to agro-enterprises and leading households; (ii) construction, rehabilitation or up-grading of agricultural product markets; (iii) grants for promotion of quality standards and improvements of market information systems; and (iv) promotion of farmers' marketing groups (farmers' associations). Project Management, Monitoring and Evaluation.The component includes: (i) project management; (ii) institutional strengthening of PMOs at provincial, prefecture/city, county and township levels (goods and training); (iii) establishment of a monitoring and evaluation system that includes environmental and social indicators (technical assistance and training); and (iv) development of community advisory/participation groups (technical assistance and training). 5. Financing Total (US$m) BORROWER $31.27 IBRD $100.00 IDA LOCAL COMMUNITIES $20.06 Total Project Cost $151 33  4 PID 6. Implementation Institutional Arrangements. The project would be executed by the Provincial Planning and Development Commission (under the State Planning and Development Commission) under which the PPMO is located. The integrated approach of the project is reflected in the project management structure, in which the various stakeholders, including the beneficiaries, various government line agencies, private sector and civil society, participate. Project Leading Groups (PLGs), Project Management Offices, and Technical Advisory Groups (TAGs) at provincial, county and townships levels have been established. An Investment Lending Committee has been established at the provincial level with the purpose of evaluating and appraising the agro-enterprise loans. 7. Sustainability The overall success of the project depends upon a continuing stable macro-economic environment and the Government's political commitment to private sector development. Whereas continuing liberalization of markets and international trade are critical in terms of China's WTO membership, possible devaluation of local currency may hinder the borrower's ability serve its loan obligations. On the other hand, future liberalization of financial markets (e.g. commercial interest rates) may improve farmers' and agricultural producers' access to credit resources. Three main factors are critical to project sustainability. First, institutional sustainability is important, and is being pursued by building consensus on the project design among a wide range of stakeholders and adopting a participatory process. Most of the implementing institutions are at the local level and only strong participation of all stakeholders during planning and implementation can bring long-term sustainability to project investments. Second, selection of irrigation areas would be based on economic incentives for farmers to participate. The selection of irrigation sites would be based on the potential for increased crop yield and potential of production of higher-value products arising from reliable water supply and better maintenance. Only those areas would be selected where the incremental value of farm output are greater than the costs for farmers to participate in WUAs, based on existing farm production systems. Third, a high level of ownership of the planning and implementation process by project beneficiaries is critical for the project success. For example, the sustainability of the investments into productive infrastructure (e.g. irrigation, drainage, etc.) depend upon the functioning of the relevant resource users' associations, being able to generate revenues for operation and maintenance and organize members to contribute labor. Implementation of project investments and activities will thus go in parallel with capacity building at the local level through a participatory approach. Particular attention would be paid to putting in place practical arrangements for operation and maintenance (O&M), and in this context, supporting the beneficiaries in building capacity to take on this responsibility.  5 PID 8. Lessons learned from past operations in the country/sector The project design has benefitted from the Bank's extensive experience in agriculture and rural development in China and other countries around the world. More specifically, the project has built on lessons learned from, among others, the Jiangxi Agricultural Development Project, the Second Red Soils Area Development Project, the Irrigated Agriculture Intensification Projects, the Yangtze Basin Water Resources Project, and the Sichuan , Henan, and Songliao Plain Agricultural Development Projects (ADPs). A number of key lessons include: (i) the importance of government and beneficiary commitment; (ii) benefits of small scale investments; (iii) the importance of beneficiary ownership of project; (iv) the importance of integration of infrastructure activities with income generation activities; and (v) the importance of flow of funds monitoring. 9. Environment Aspects (including any public consultation) Issues : Environmental Impact Assessment. An environmental impact assessment (EIA) of the project has been carried out in parallel with project preparation. The EIA has: (a) screened the project to the most appropriate review and approval option; (b) established a reliable environmental baseline against which to measure future change; (c) established environmental objectives, standards and performance indicators; (d) identified additional environmental project design features; (e) identified benefits and residual impacts or risks (i.e. those that cannot be avoided or mitigated); (f) developed an environmental monitoring and mitigation plan with a schedule and triggers for action; and (g) provided guidance to more detailed planning and implementation. Participation/Consultation. In order to seek local support, to increase transparency and accountability to the public, to reach consensus with various stakeholders, and to enhance ownership of the environmental management and the proposed project, participation of beneficiaries and other stakeholders was of crucial importance in the environmental assessment process. In order to keep all beneficiaries informed, the EIA Terms of Reference (TOR) were sent to the libraries within the affected communities for review and comment by the interested parties. Notices were issued and were put up on notice boards. News media including local newspapers, television and radio were also used extensively to inform all beneficiaries and potentially affected people within the areas of project impact about the planned environmental study, and their input was sought actively. A separate Beneficiary Participation Manual (BPM) has been prepared in close cooperation with the EIA and established the means and mechanisms by which project beneficiaries would participate in a meaningful way in project implementation. All consultations were appropriately recorded. Training and capacity building are proposed as part of the project to enhance the Borrower's ability to implement the project in a participatory manner. The purpose of the BPM is to describe in detail and formalize the consultation and participation process with affected groups. As such, it is a strategy for allowing stakeholders to influence and share control over the decisions and resources that affect them. The BPM should be viewed as a working document that is modified to reflect any changes in the project and/or in the economic, political, and social conditions. Anticipated Environmental Impacts. The environmental analysis of the project indicates that it would have no major direct negative impact on the natural environment. The overall objective and design of the project suggest that the net environmental impact of the project, if successfully implemented, will be positive and that any negative environmental effects will not be- irreversible or long-term. The project would bring environmental benefits, through a more efficient use of natural resources. The rehabilitation and institutional reform of existing irrigation and drainage schemes would lead to more efficient use of water, which would reduce incidents of water logging and salinity threat. Other positive impacts are expected through the farm production improvement and marketing components, which would address issues like soil erosion, soil fertility, nutrient leaching, and promote environmentally sustainable agricultural production (including Integrated Pest Management) and marketing practices. The project, in  6 PID general, will have a positive impact on the socio-economic conditions of the farming communities by improving their livelihood through increased purchasing power. The most substantial negative environmental effects of the project can be expected from a more intensive agricultural production, which might involve higher use of fertilizer and pesticides. The project in its design will put strong emphasis on mitigating these effects by introducing more efficient application techniques to farmers. Most importantly, the project would support integrated pest management (IPM), including: (a) managing pests (keeping them below economically damaging levels) rather than seeking to eradicate them; (b) relying, to the extent possible, on non-chemical measures to keep pest populations low; and (c) selecting and applying pesticides, when they have to be used, in a way that minimizes adverse effects on beneficial organisms, humans, and the environment. Other potential negative impacts include a possible increase in the incidents of schistosomiasis within the project counties in the perimeter of the Poyang Lake and Yangtze River, and to a much smaller scale, noise or pollution of construction sites, increased transportation under the project, and increased waste disposal on agricultural product markets. An Environmental Management Plan (EMP) has been developed to prevent or reduce the adverse direct and indirect environmental impact of the project. Social Aspects. The design of the project requires that it is community driven in design, preparation and implementation. This is reflected in the Social Assessment (SA) of the proposed project, which is a continuing process focusing on issues that directly and indirectly impact the key stakeholders in the project. The range of issues that are addressed by the SA include, but are not limited to: (a) affordability concerns; (b) land security; (c) inclusion; (d) access to employment, credit, irrigated water, and land; and (e) social cohesion and community decision-making. The following summarizes the key social issues relevant to the objectives of the project, which were identified by the SA, and specifies the project's social development outcomes. Socio-Economic Situation of Project Beneficiaries.The majority of the directly targeted beneficiaries of the project are farm households which farm in poorly irrigated and drained areas and are primarily from the poorer strata of rural society. Their subsistence depends to a high degree on rice and other food produced on the approximately onenu of land they have per household member. Crop production is frequently complemented by animal husbandry activities such as raising pigs or chickens, and off-farm employment adds significantly to household income. The availability of effective drainage and irrigation is of crucial importance for the livelihood of these families, since it enables them to grow a second or even third crop, to reach higher yields, and to become engaged in the production of higher-value (cash) crops. Other beneficiaries and stakeholders include: (i) farm households in other areas of the project counties who could benefit from the market system development, training, extension, and other project activities; (ii) employees, managers and owners of agro-enterprises; (iii) other parts of the population (consumers of food products); and (iv) government officials and employees in the project counties. Ethnic Composition. Over 99% of all residents in the directly affected project areas are Han nationality, only small numbers of the She, Yao, Li, and Hui minorities are resident there. The She, mostly recent migrants from Zhejiang Province to the east, live fairly dispersed throughout the project areas, and are basically acculturated to Han patterns. The Yao are mostly concentrated in the southeast of the province, in the counties abutting Guangdong, and have maintained both their residential segregation and their Yao cultural distinctiveness. There is one significant Yao village in the project area, Yaoshan, the local Yao are mainly engaged in hunting, timber felling, corn, potato and taro planting and the collection of mountain forest products. The proposed project is paying particular attention to this village by allocating funds for infrastructure and small-scale loans and by providing additional support with the help of the  7 PID Provincial Women's Federation. Status of Women The status of women in Jiangxi has improved considerably over the last decades. Today, most women actively participate in decision-making on major family matters. However, inequalities still exist. Women are generally less well educated than men and work in relatively low-paid positions. Due to seasonal out-migration of middle-aged men and younger (both male and female) workers, many farm households are headed by women and a large share of the farm work is carried out by women. This feminization of agriculture in Jiangxi means that women make up a very large part of the targeted beneficiaries of the project. 10. List of factual technical documents: 1. 11. Contact Point: Task Manager Sari K. Soderstrom The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone 202 473 1000 Fax: 202 477 2733 12 For information on other project related documents contact. The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax (202) 522-1500 Web http 11 www worldbank org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. Tables, Charts, Graphs: Processed by the InfoShop week ending: 05/02/2003 For a list of World Bank news releases on projects and reports, click here I SEARCH L .F5FDACK_ IE MAP L OWCAS E ZZ]