China - Irrigated Agriculture Intensification Project

Document of The World Bank FOR OFFICIAL USE ONLY Z-k IS 3S -S V-7 /Z- Z- Z S( -/. Repon No. 9290-CHA STAFF APPRAISAL REPORT CHINA IRRIGATED AGRICULTURE INTENSIFICATION PROJECT APRIL 25, 1991 China Agriculture Operations Division Country Department III Asia Regional Office This document has a resicted distribution and may be used by reCipients only in the performance of their official duties. Its contents may not otherwise be disclosed witbout World Bank authorization.  CURRENCY EOUIVALENTS (As of January 1, 1991) Currency Unit - Yuan (Y) US$1.00 = Y5.22 Y1.00 = US$0.1916 FISCL YEAR January 1 to December 31 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 cubic meter (cu m) - 35.31 cubic feet 1 kilometer (km) = 0.62 miles 1 hectare (ha) = 2.47 acres 1 mu = 0.067 ha 1 ton (t) = 1,000 kg = 2,205 pounds (lbs) 1 kg = 2.2 pounds (lbs) ABBREVIATIONS AMD ACRONYMS ABC - Agricultural Bank of China CAAS - China Academy of Agr~icultural Sciences CATEC - County Agrotechnical Extension Center CMS - Cubic meters per second cNIEC - China Machinery Import & Export Corporation CMS - Cubic meters per second CPCP - Central Project Coordinating Office CPSG - Central Project Steering Group DAP - Diammonium phosphate GOC - Government of China ICB - International competitive bidding IPM - Integrated pest management ITC - International Tendering Company LCB - Local competitive bidding M&E - Monitoring & Evaluation MOF - Ministry of Finance MWR - Ministry of Water Resources NCS - North China Plain PEPB - Provincial Environmental Protection Bureau PMO - Project Management Office SMC - Supplies and Marketing Cooperatives SNWT - South-North Water Transfer SOE - Statement of Expenditure TATES - Township Agrotechnical Extension Station  ClIMA IRRIGATED AGRICULTURE INTENSIFICATION PROJECT Table of Content. Page No. I. BACKGROUND ................................................ ... 1 Introduction ............................................................. I Irrigated Agriculture in China . ...1.* ................... I Institutional Aspects of Irrigation ..................... 2 Policies and Plans for Grain Production ................. 5 Agriculture in the North China Plain .................... 6 Bank Group Strategy and Role in Irrigated Agriculture ... 6 Rationale for Bank Group Involvment ................... 7 II. THE PROJECT AREAS ............................................ . 8 Location . ... 8 Climate, Topography and Soils .. ...................... 8 Population, Labor, Farm Size and Land Use ........... ... 9 Rural Incomes and Poverty .......... . . . 9 Agricultural Development ............................... . 10 Water Resources and Irrigation ...................... 12 Institutional Support ........ ....................... 15 Infrastructure. . ........... . 19 III. THE PROJECT .. . .......................................... 20 Objectives ............................................. 20 Irrigation and Drainage ................................ 20 Agricultural Intensification . ... ..... .. 26 Trai.ning and Technical Ass ictance .... 29 Water Supply, Demand and Quality ....................... . 30 Design Status and Standards .... 31 Environmental Impact ....... . ........................... 31 Implementation Schedule . ................................ 33 Cost Estimates ...................................... 34 Financing ..... ...... 36 Procurement ..................................... . 36 Disbursements . . *. .o ....... .. ............. 38 Accounts and Audits .................................. . . . 39 This repot is baend on the findingp of a pre-appraisl nission in Nov. 1989 comprising A. Ody (Mision Leader), L. S. Tay, W. P. fl;g (Bank/IDA), R. 1. Sun and S. McGurk (consultants); a technical reWviw mnision in May 1990 eomprising L. S. Tay (Mision Leader), W. P. flag, Usaid El-Hanbali (Bank/IDA) and S. McGurk (consultant) &.nd e- appriul mnision in AuSust 1990 conVrising L. S. Tay (Mission Lader), W. P. rTng, El-Hsnbali, R. Vick (Bank/lDA), Tao Zhan and S. McGurk (consultants). Poer reviewers conrined Mess. A. Ody (AS3CO), H. Plusquellec (AGRPS), J. Berkoff (ASTAO), B. Van de Poll (AS4AG) and R. Derhpande (AS3AO). lbe AS3AG Division Chief is Mr. J. Goldberg and the Depautment m Director is Mr. Shahid J. Burki. Ms. V. Elliott also aeisted in the drafting of the SAR.  Li Page No. IV. ORGANIZATION AND MANAGEMENT .............................................. . 40 Project Organization . ... ................................ 40 Financial Management .................................... 41 Execution and Supervision of Project Works .............. 42 Operation and Maintenance ... . .......... 43 Project Launch Workshop .. .. 44 Monitoring, Evaluation and Reporting ............ ....... o 45 V. PRODUCTION, MARKETS AND PRICES .............. ................. 45 Production .............................................. 45 Markets ........................... 0............ 0.......... 46 Marketing Channels . ...................... .......... 48 Prices . ....................... ....................... . 49 VI. ECONOMIC AND FINANCIAL ANALYSIS ..... 51 Benefits .............. .. . . . 51 Employment and Incomes ..... 52 Cost Recovery ......................................... .. 52 Economic Analysis . .... 53 Risks .... .54 VI. AGREEMENTS REACHED AND RECOMMENDATIONS ........................ 55 TABLES IN THE TEXT Table 2.1 - Area and Yield of Major Crops Table 2.2 - South-North Water Transfer - Eastem Alignment Table 3.1 - Improvement and Expansion of Irrig. Areas Table 3.2 - Improvement and Expansion of Iig. Areas in Jiangsu Table 3.3 - Improvernent and Expansion of Irrig. Areas in Anhui Table 3.4 - Improvement and Expansion of Irrig. Ars in Shandong Table 3.5 - Project Cost Summnary Table 3.6 - Project Financing Table 3.7 - Procurement Profile Table 5.1 - Cropping Pattem, Yields and Production Table 6.1 - Annual Increnental Staple Crop Production and Value Added ANNEXES 1. Basic Provincial and Project Area Statistics Project Prefectures, Municipalities and Counties Climatic Data - Anhui, Jiangsu and Shandong Annual Hectarage Damaged by Drought and Waterlogging, 1970-89 Design Standards for Flood Control, Drainage and Irrigation List of Existing Dams/Reservoirs in Jinagau requiring Periodic Safety Inspections  FOR OFFICIAL USE ONLY CH{INA IRRIGATED AGRICULTURE INTENSIFICATION PROJECT Loan/Credit and Proiect Summary Borrower: People's Republic of China Beneficiaries: Provinces of Anhui, Jiangsu and Shandong Amount: Loan US$147.1 million Credit SDR 139 million (US$187.9 million equivalent) Terms: Loan: 20 years maturity including 5-year grace period at variable interest rates. Credit: IDA standard terms with 35 years raaturity. Onlendino Terms: From Ministry of Finance to Provinces of Anhui, Jiangsu and Shandong on terms and conditions satisfactory to the BankjiDA. It is expected that the Ministry of Finance will onlend to the Provinces for 15 years including 5 years of grace with interest at 5 percent per annum, and from the provincial governments to prefecture and county governments at the same terms. Objectives and Description: The principal objective is to assist the Government in increasing production of staple food and thereby increasing farm incomes for some 2.8 million rural families in the North China Plain. The project would: (a) improve and expand irrigation and drainage facilities to some 1.14 million ha of lowi and medium yielding land covering sections of 73 counties in the provinces of Anhui, Jiangsu and Shandong; (b) provide a complementary package of integrated agricultural inputs and support services to increase production; (c) provide institutional development in technical skills, project implementation and management through technical assistance, operational research and training programs; and (d) implement an environmental monitoring management program to sustain the projected agricultural productivity. Benefits and Risks: About 1.14 million ha of low and medium yield land would have higher productivity. At full development, the project would produce about 2.5 million tons of grain, 56,300 tons ginned cotton, 82,600 tons oilcrops and 65,100 tons other crops with a total value of about US$528 million. Per capita income would increase by about 40% for 2.8 million farm families. About 450,000 per-_.,-year employment opportunities would be generated during the construction period. No major risks are foreseen. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: Local Foreign Total