China - Second Agricultural Research Project

Docuent of The World Bank FOR OMCAuL USE ONLY Report No. 5039-C-A STAFF APPRAISAL REPORT CHINA SECOND AGRICULTURAL RESEARCH PROJECT July 23, 1984 Projects Department East Asia and Pacific Regional Office This doument bas a restricted disbution ad y be usd by recipients only in the performnce of their offica dues ls contents may not oderwise be diclosed without World Bank authorizton.  CURRENCY EQUIVALENTS Currency Unit - Yuan (Y) US$1.00 = Y1.97 (at time of appraisal) Y 1.00 = US$0.51 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES I meter (m) = 3.28 feet I kilometer (km) = 0.62 miles 1 hectare (ha) = 2.47 acres = l5 mu I kilogram (kg) = 2.2 pounds I ton = 1,000 kg 2,205 pounds ABBREVIATIONS CAS - Chinese Academy of Sciences CAAS - Chinese Academy of Agricultural Sciences CAST - Chinese Association of Science and Technology CMB - Central Meteorological Bureau CNTIC - China National Technical Import Corporation GVAO - Gross value of agricultural output MAAF - Ministry of Agriculture, Animal Husbandry and Fisheries MF - Ministry of Forestry MWREP - Ministry of Water Resources and Electric Power PC - Project Commission PIU - Project Implementation Unit PO - Project Office SSTC - State Science and TechnoLogy Commission  FOR OICIAL USE ONLY CHINA SECOND AGRICULTURAL RESEARCH PROJEC=; STAFF APPRAISAL REPORT Table of Contents Page No. I. BACKGROUND ..................................,..... ... ,,... 1 The Agriculture Sectrr 1 Bark Group Lending for Agriculture......................... 4 II. AGRICULTURAL RESEARCH IN CHINA -Srruter..e ......5....................*........*5 Links Between Research and Higher Education............... 6 Links Between Research and Extens:sono.o.o..... o n.o...e. 7 Research Priorities.o.............. ... ...... o...o......o.. 8 Project Formulation and Rationale.......................o. 9 III. THE PROJECT Project Description ........ .............1 Research Centers................ ... , , , . , 11 Agrotechnical Extension Stations ....e.g...... . .... 14 Status of Project Pre aa r a t i o n 15 Implementation Schedule. ......... s e 15 C,ost Etme s15 Financing.......... _....... . e 17 Procurement ...... ........e.g...... ,e... Ce... ,ee 17 Disbursements. ............. ...... . . , , 18 Accounts and Audits .................. 19 Project Management and Implementation........... 19 Benefits, Justification and Riksks..... 20 IV. AGREEMENTS REACHED AND RECOMMENDATIOSSo.o.o .........o.o...... 21 This report is based on the findings of a preparation mission to China in April/May 1983 and an appraisal mission in October 1983. The preparation mission comprised Messrs. W.P. Ting (IDA), H.H. Cheng, A. Piazza, and W. Tai (Consultants). Appraisal mission members were Messrs. W.P. Ting (IDA), C.L. Chen, R.W. Etheredge, G.W. Liang, and B.S. Luh (Consultants). I Tbis document has a resticted distribution and may be used by recipients only in the performanc aO I their offrci duties Its contents any not otherwise be disclsed without World Bank authorization |  - ii - TABLES IN TEXT 3.1 Cost Summary ............ ........................ 16 3.2 Annual Price Escalation tX)................................... 16 3.3 Financing an.................................... 17 3.4 Procurement Profile ........ 18 ANNEXES 1. Cost Estimates Project Cost Summary Schedule of Expenditures Expected Price Increases Cost Smary by Institutions Estimated Area and Cost of Physical Facilities Training and Technical Assistance 2. Project Institutions by Affiliation/LocationlSpecialty/Staffing 3. Research Center Programs 4. Procedures for CapitaL Construction 5. Selected Documents and Data Available in the Project File LIST OF FIGURES 1. Organizational Structure of the Ninistrv of Agriculture, Animal Husbandry and Fisheries 2. Organization for Project Implementation 3. Project Implementation Schedule MAP IBRD 18272R - Location of Project Institutions  CHINA SECOND AGRICULTURAL RESEARCH PROJECT I . BACIGROUND Introduction 1.01 The Government of China has requested Bank Group assistance in financing the Second Agricultural Research Project. The overalL objective of the project would be to support the Government's plans to upgrade research facilities, to improve the quality and supply of researchers and technicians, and to strengthen research planning, management and program formulation. The project would expand and improve 15 research centers throughout China respon- sible for priority research in food and cash crops, livestock, aquatic products, forestry, hydrology and meteorology. The project would also support a pilot program to strengthen the extension work of ten county-Level agrotech- nical extension stations. Principal features of the project would be project works, including construction and renovation of laboratories, offices, farm buildings and scaff housing; scientific and farm equipment needed for research and experimentation; library equipment, books and materials for modernization of library facilities; local and overseas training in the agricultural sciences and library science; and technical assistance applied to review of center research programs, program formulation for agrotechnical extension stations, and future project preparation. The Agriculture Sector 1.02 Agriculture in China, including crops, livestock, forestry and fisheries, provides sustenance to over one billion people, is the source of income for some 290 million farm families, and accounts for about 35Z of the country's GDP. Only about 100 million ha of China's land area of 960 mil- lion ha are arable. Farming systems are intensive, with large inputs of labor and chemical and organic fertilizers. Nearly half of the arable land is irrigated and more than half of this area grows at least two crops per year. Foodgrains occupy about 80% of the cropland and account for 65% of total agricultural output. This intensive system of production allows China to meet the basic food needs of its population (about 22% of the world's total) from less than 8% of the world's arable land. Grain yields are about 50Z greater than those in other developing countries. Agricultural production is carried out in conmunes, state farms and privately managed plots which account for about 87, 5, and 81, respectively, of the country's arable land and 80, 4, and 16% respectively, of the gross value of agricultural production. 1.03 Agricultural development has been accorded high priority since the .founding of the People's Republic. With investment in agriculture averaging about 101 of total national investment, the sector grew by about 3.21 p.a. from 1955 to 1978. Agricultural productivity per hectare of cultivated land increased considerably. Crain yields nearly doubled between 1952 and 1978; the most rapid increase occurred inr the years 1965-78 when Covernment policy _ _  -2- put special emphasis on achieving self-sufficiency in grain production. These gains, accomplished through combined application of abundant local labor and current and capital inputs such as chemical fertilizers, pumpsets, and mecha- nical threshers, allowed China to feed an additional 300 million people. Remarkable as this achievement was, because of the arable land constraint, total production in fact did litle more than keep pace with population growth during this period. Moreover, the Government's policy of promoting increased local self-sufficiency in grains checked possible gains from crop specia- lization and exchange and, in some extreme cases, led to serious ecological imbalances. By the late 1970s, official assessments began focussing attention on the unsatisfactory state of people's incomes and living standards, particu- larly in certain regions of the country. 1.04 Beginning in 1979, the Government departed from previous policy by setting targets for a relatively high personal growth path and scaling down ,goals for growth in GNP and investment. How to increase the production of food and other agricultural products needed to help meet this commitment to improved nutritional and living standards for China's vast population is the challenge of the next two decades. As an immediate measure, the Government shifted emphasis from grain self-sufficiency to crop diversification based on comparative advantage at the local level so as to tap potential gains from specialization and exchange. Already the effect has been considerable: the total area sown to grain crops between 1979-82 declined by 6%, while the area under cash crops rose by 30%. As a result of increases in per ha grain yields, the total output of both grains and cash crops has increased. 1.05 For the long term, the Government is in the process of refining sub- sector growth targets and activating the means to achieve them. Major targets are as follows: (a) Food Crops. According to current projections, China would continue to be basically self-sufficient in grain. The Government has tar- geted grain production (rice, wheat, maize and other coarse grains) to grow by about 2% annually from the average 1979-81 base to the year 2000, thougl. the area sown to grain would remain substantially unchanged. Increased yields would be the major source of output gains. Plans also call for increasing the productivity of other food crops such as tubers, cassava, and soybeans. (b) Cash Crops. Current Governrent planning stresses the need to improve yields of cash crops, the demand for which is expected to expand rapidly as incomes rise. In the case of cotton, special encouragement given to production by price and procurement reforms and the planting of improved varieties stimulated a 20% expansion of cropped area and a 39% increase in yields during 1978-82. With modern inputs and improved extension, cotton specialists believe that further yield increases of up to 50Z are possible. Per capita production of other cash crops such as fruits, vegetables, and oilseeds is relatively low, the primary constraint being weakness of the processing, transport and marketing systems.  -3- (c) Forestry. Development plans call for increasing' forest coverage from the present 13Z of China's land area to about 20Z by the year 2000 to meet expected rapid growth in demand for forest products. Annual per capita wood consumption is currently about 0.05 cu m compared to 0.08 cu m in India and 1.5 cu m in the US. Reflecting local shortages and increased demand from population and income growth, imports of forestry products rose from US$242 mi