Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16050 IMPLEMENTATION COMPLETION REPORT CHINA JIANGXI AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 2097-CRA) October 2, 1996 Rural and Social Development Operations Division China and Mongolia Department East Asia and Pacific Regional Office 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. CURRENCY EQUIVALENTS Currency Unit: Yuan $1.00 = Y 4.71 (1990) $1.00 =Y 5.37 (1991) $1.00 = Y 5.54 (1992) $ 1.00 = Y 5.75 (1993) $ 1.00 = Y 8.24 (1994) $1.00 = Y 8.42 (1995) ABBREVIATIONS AND ACRONYMS ADP - Agricultural Development Project FAO - Food and Agriculture Organization ICB - International Competitive Bidding IDA - International Development Association PMO - Project Management Office p-mth - Person-month SAR - Staff Appraisal Report SH - Specialized Household TA - Technical Assistance tpa - Tons per annum WEIGHTS AND MEASURES Metric System FISCAL YEAR January I to December 31 FOR OFFICIAL USE ONLY CONTENTS PREFACE ........................................................ iii EVALUATION SUMMARY .........................................................v PART I. IMPLEMENTATION ASSESSMENT .........................................................1 A. Project Objectives ........................................................ 1 B. Implementation Experience and Results .......................................................2 C. Project Impact .........................................................1.1 D. Major Factors Affecting the Project ..1...................................... I E. Project Sustainability ........................................................ 13 F. IDA Performance ........................................................ 14 G. Borrower Performance ........................................................ 15 H. Assessment of Outcome ........................................................ 15 I. Future Operation ........................................................ 16 J. Key Lessons Learned ........................................................ 16 PART II: STATISTICAL ANNEXES ........................................................ 18 Table 1: Summary of Assessments ........................................................ 18 Table 2: Related Bank Loans/Credits ........................................................ 19 Table 3: Project Time Table ........................................................ 19 Table 4: Credit Disbursements: Cumulative Estimated and Actual .................... 20 Table 5: Key Indicators For Project Implementation ............................................ 21 Table 6: Key Indicators for Project Operations .................................................... 25 Table 7: Studies Included in Project ........................................................ 27 Table 8A: Project Costs ........................................................ 28 Table 8B: Project Financing ........................................................ 29 Table 9: Economic Costs and Benefits ........................................................ 29 Table 10: Status of Legal Covenants ........................................................ 30 Table 1 1: Compliance With Operational Manual Statements .............................. 31 Table 12: Bank Resources: Staff Units ........................................................ 31 Table 13: Bank Resources: Missions ........................................................ 32 Table 14: Role of W omen in Project ........................................................ 33 ANNEX A: ICR MISSION AIDE MEMOIRE ........................................................ 34 ANNEX B: BORROWER'S CONTRIBUTION TO THE ICR ................................. 41 Ms document has a restricted distribution and may be used by recipients only in the performance of their | official duties. Its contents may not othensise be disclosed wiLhout World Bank authorization. I - iii - IMPLEMENTATION COMPLETION REPORT CHINA JIANGXI AGRICULTURAL DEVELOPMENT PROJECT (CREDIT NO. 2097-CHA) PREFACE This is the Implementation Completion Report (ICR) for the Jiangxi Agricultural Development Project in China, for which a credit in the amount of SDR 46.2 million ($60 million equivalent) was approved on March 15, 1990. and made effective on April 27, 1990. The credit was closed on December 31, 1995. Final disbursements took place on March 14, 1996, at which time the balance of SDR 0.84 million ($1.2 million) was canceled. Total disbursements amounted to SDR 45.36 million ($63.4 million equivalent). The ICR was prepared by a mission comprising B. Brandenburg (Task Manager), R. Zweig (Aquaculturalist), consultants for the China/Mongolia Rural & Social Development Operations Division of the East Asia and Pacific Region, June Zhong (Economist), Li Qun (Economist), and Robert Hing (Financial Analyst). The Report was reviewed by Messrs. Joseph Goldberg (EA2RS Division Chief) and Zafar Khan (EA2 Acting Project Advisor). The Borrower provided comments which are included as an Annex to the ICR. Preparation of the ICR was completed following the Bank's ICR mission from May 12-24, 1996, and is based on materials and contributions from the Borrower, including views reflected in the Aide Memoire; its own evaluation of project implementation; and financial analyses of the bulk of subprojects. - v - IMPLEMENTATION COMPLETION REPORT CHINA JIANGXI AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 2097-CHA) EVALUATION SUMMARY Project Objectives 1. The main objectives of the project were to assist the Jiangxi Provincial Government in accelerating and diversifying agricultural development and thereby raising rural incomes by improving farm productivity and by strengthening support services at the provincial, prefectural, municipal and county levels. Through the project, the province would take advantage of its relatively low production costs for pigs, waterfowl, and tree crops to compete with other provinces for markets for live pigs. poultry and fish, their by-products, and tea. The main features of the project included: (a) livestock development, featuring pig and poultry production by specialized households, and the establishment of commercial pig and poultry breeding farms to supply these households with improved starter stock; (b) development and intensification of fresh water fish culture, comprising six fish production models undertaken by participating households, including integrated fish-duck and fish-pig production; (c) establishment of slash pine forestry plantations, introducing erosion control on sandy, hilly land while increasing revenues from tree and resin production, (d) rehabilitation of low-yielding tea plantations, through establishment of new or the rehabilitation of existing plantations for the production and export of green tea, and the establishment of tea processing plants, (e) establishment of agroprocessing facilities to increase the value- added of the project's output of pigs and poultry, and to demonstrate the commercial organization, management and financing of such enterprises, and (f) research, training and technical assistance to improve agricultural research programs, train project management staff and participating households. improve extension, and provide technical assistance for enterprise management and marketing. 2. The project objectives were generally well designed and articulated and well supported by Jiangxi project staff and subloan recipients. Similarly, they reflected the provincial government's good implementation capability and were generally consistent with both the Bank's own development strategy and the Bank's Country Assistance Strategy at the time of implementation. - vi - Implementation Results and Experience 3. The project generally achieved its objectives of accelerating and diversifying Jiangxi's agriculture sector. As a result of the strong performance of most subcomponents, including livestock and afforestation, the overall economic return of the project is reestimated at 32.5 percent, somewhat below the appraised estimate of 39 percent. The lower overall economic return is a result of lower returns on pig production, aquaculture and agroprocessing. Due to a lack of market competitveness, these components were scaled down at mid-term review. Similar methodology was used to calculate appraisal and ICR rates of return. 4. Final total project costs were less than the appraised amounts, though differences exist between appraised and actual costs by component. Generally, final foreign costs exceeded appraisal amounts due to delays and subsequent higher-than-anticipated inflation. For the agroprocessing component, constraints in disbursement of counterpart funds delayed the construction and the establishment of a number of feed mills and slaughter plants. These delays led to significant cost overruns and a one-year delay in project completion and loan closing. 5. FAO/CP's and IDA's performance in the identification, preparation and appraisal of the project was deemed satisfactory. IDA's performance in supervision is also viewed as satisfactory to highly satisfactory, even though the project could have benefited from more procurement supervision visits. The Borrower's performance in project preparation and implementation was generally satisfactory, though some aspects could have been improved upon, such as more frequent visits to project units by the Project Management Office (PMO) and county Project Office (PO) staff. Counterpart funds availability was a serious problem for several large agroprocessing subprojects, causing significant delays in their onset of production. Summary of Findings, Future Operations, and Key Lessons Learned 6. Overall Finding. The project's outcome was satisfactory. The most significant accomplishment was the introduction of new production technologies, particularly for livestock and poultry, in several of the province's low income areas. Over 14,000 households participated in livestock production project training, helping them to shift from subsistence to cash-based commercial agriculture, leading to increased household incomes. Socioeconomic household surveys support this conclusion. The mid-term review provided the opportunity to revise project design based on experience gained. For example, the agroprocessing component, while projected to be viable with an economic return of 32.9 percent, was significantly revised as a result of the mid-term review. The aggregate capacity of appraised feed mills was reduced to reflect changes in the market and the total investment costs were reassessed. The reassessment of investment costs was necessary to account for significant cost overruns and lower than appraised output capacity due to a number of factors including delays in counterpart funding for equipment - vii - procurement. Had there been no delays or changes in market conditions, the project would have been rated highly satisfactory. 7. Project Impact. The project has been very successful in generating employment opportunities and in enhancing income for participating households. It has provided training and employment for over 18,000 women. 49 percent of the total project- generated employment. The introduction of new livestock. poultry and fish production technologies has been widely accepted and replicated by nonproject households and has had a major impact on rural incomes in the province. Agroprocessing facilities, albeit delayed, are impacting favorably by adding value to primary livestock and poultry products generated by the project. Marketing skills for processed products have improved greatly, but could have been institutionalized better, had allocated TA funds been utilized for this purpose. Soil erosion controls in planted tree areas have improved and forest products are being harvested for value-added income. In the provincial context, the project had a significant impact on local government's institutional capabilities. In addition to the introduction of valuable project preparation and management skills to mid- and senior-level government planners, and to project enterprise managers, the project strengthened the Provincial Agriculture Bureau's ability to introduce new production technologies to project and nonproject households. These advances will render a heretofore stagnant agricultural sector more competitive in developing markets outside the province. 8. Sustainability. Strong financial incentives to the project beneficiaries of the livestock and aquaculture components will ensure their sustainability. Continued strong demand for livestock and poultry products, linked to market development efforts, will ensure that expanded production will continue to find markets. Due to the long maturation process of the planted trees, the profitability of the forestry component will not be assured for another three to five years. Tree plantations will continue to require maintenance related to pest control and fertilization. The present status of forest growth and maintenance is good and financial analysis points to future viability. The agroprocessing component, although delayed in implementation and facing significant cost overruns, will be successful provided that market development and efforts continue. The domestic markets for project output of specialty animal feed and tea are both strong and growing. Over 75 percent of the project's frozen and dried duck is targeted at export markets, as is 90 percent of the down garments manufactured under this component. The training provided to project management staff and participating households will be sustainable, as evidenced by household performance. Training will be continued after the project as the result of an upgraded training center and incentive-driven extension staff. 9. Future Operation. The future operation of the project will require some assistance from PMO in the areas of: (a) continued technical supervision of household livestock and fish production, (b) continued maintenance of the training center and extension staff capabilities, (c) facilitating the continuous provision of counterpart funds to complete delayed construction under the agroprocessing component, (d) continued monitoring of the financial profitability of all agroprocessing units, (e) supervision of a - viii - small fertilizer replacement trial under the agroforestry component, and (f) facilitation with the construction and financing of additional tea processing capacity as tea output continues to increase. IDA will continue to monitor progress of the actions to be taken by PMO during the supervision of other projects in the province. 10. Lessons Learned. The key lessons learned from the project include the following: (a) lack of counterpart funds should have been spotted earlier in project implementation, so that delays in civil works and Qommissioning could have been avoided, (b) more prompt attention could have been paid to counterpart funds availability if, at appraisal, annual counterpart funds allocations had been documented by amount and source, (c) more effort should have been made to ensure that internationally procured training and technical assistance, especially in marketing and enterprise management, had been completed as scheduled, (d) during the project's onset of implementation, more supervision field time should have been spent on procurement and disbursement issues, so that PMO staff would have been more familiar with these matters at an early stage, and (e) baseline estimate for of key performance indicators for all components should have been established at appraisal. This would have provided a more systematic approach to monitoring during project implementation. IMPLEMENTATION COMPLETION REPORT CHINA JIANGXI AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 2097-CHA) PART I. IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES 1. The main objectives of the project were to assist the Jiangxi Provincial Government to: accelerate and diversify agricultural development and thereby raise rural incomes by improving farm productivity and by strengthening support services at the provincial, prefectural, municipal, and county levels, thereby moving farm operations from a subsistence to a commercial orientation. Part of Jiangxi's marketing strategy as a low-income inland province bordering on the economically advanced seaboard provinces of southern China as well as Hong Kong has been to make optimal use of its relatively low production costs, available rural labor force, and agricultural land to competitively export processed livestock and poultry products. The success of the livestock component has been directly related to this strategy. The project also aimed to increase the use of lands unsuitable for grain and other crop production. 2. The specific objectives of the project were as follows: (a) A livestock development program featuring pig and poultry production on hilly lands unsuitable for grain production, consisting of household production of pigs, ducks and geese; and the establishment of commercial breeding farms for genetically improved pigs and ducks; (b) The development and intensification of freshwater fish culture in low- lying areas and in lakes and ponds, comprising household and farm-scale fish production in a variety of fish pond production models; and integrated duck-fish and pig-fish production; (c) The establishment of new, commercial slash-pine forest plantations on sandy, hilly lands, thereby introducing erosion control of these lands by means of a revenue-yielding tree and resin crop; (d) The rehabilitation of low-yielding tea plantations, comprising the establishment of new or the rehabilitation of existing plantations for the - 2 - production and export of Jiangxi green tea; and the establishment of tea- processing plants; (e) The establishment of agroprocessing facilities to increase the value- added of project output; to provide formulated feed for project livestock; and to demonstrate the commercial organization, management and financing of such facilities; and (f) Training and technical assistance through carrying out programs in staff development and training to upgrade research, extension, and project management; and to introduce advanced animal husbandry and fish cultivation techniques to participating specialized households. 3. The project objectives were generally well designed and articulated in the project documentation and supported by Jiangxi project staff and subloan recipients. Similarly, they reflected the provincial government's implementation capability and were consistent with both the Bank's development strategy and the Bank's Country Assistance Strategy at the time of preparation. B. IMPLEMENTATION EXPERIENCE AND RESULTS Physical Results 4. The project's physical completion output varies considerably by component (see Table 5: Key indicators for Project Implementation). In general, the livestock component exceeded the original targets with the exception of goose raising, which only reached 72 percent of the appraisal target. The number of livestock-raising specialized households (SHs) financed by the project exceeded the appraised target by 12.6 percent, for a total of 14,548 SHs. The production output of pig and black bone chickens exceeded 100 percent of the initial targets, while 21 duck-breeding farms were established as against an appraised target of 23 such farms. Under the aquaculture component, the construction of all but two of the six fish pond models exceeded their original targets. A total of 1,462 ha of new fish ponds was constructed, exceeding the appraised production area by 295 ha. A total of 2,246 ha of improved fish ponds were constructed, exceeding the appraised target of 1,089 ha. The completion of 1,182 ha of fish net barriers exceeded appraised plans for 1,000 ha, while only 22.7 ha and 0.4 ha of fish enclosures and fish cages, respectively, were completed against appraised targets of 276 ha and 3.1 ha, respectively. Pearl cultivation achieved the appraised target of 200 ha. Under the agroforestry component, 8,700 ha of slash pine was planted, exceeding the originally appraised target of 6,705 ha. The tea rehabilitation component reestablished the appraised 4,807 ha of tea plantations. Under agroprocessing, 66 agroprocessing plants were constructed against an initially appraised 118 units. Due to a lack of market competitiveness, 47 medium and small- scale feed mills, I bone meal plant. 3 poultry processing plants and 1 pig abattoir were canceled at mid-term review. Agricultural Benefits 5. Livestock Component. This component has generally met its technical and production targets and provides employment and income generation opportunities to large numbers of livestock and poultry farmers. It was completed on time and its results have been widely replicated by nonproject farmers. It was designed to produce pigs and poultry for processing by the agroprocessing component. The component was appraised to finance 23 improved duck- and 4 improved pig-breeding farms, supplying starter stock to 3,778 pig-raising specialized households (SHs) and to 3.945 layer- and meat duck-raising SHs, and 5,198 goose-raising SHs. One commercial 10,000-head pig farm was also planned. The total investment for this component at appraisal was $15.4 million or 12.7 percent of total project cost. Following the midterm review, the component was revised to support a total of 14,548 SHs, comprising 5,052 pig-raising SHs; 3,763 layer- and meat duck-raising SHs; 3,766 goose-raising SHs; 1,027 duck-fish SHs and 940 pig-fish SHs. The 4 planned pig-breeding farms, I commercial pig farm and I black bone chicken breeding farm were completed, as were 21 of the 23 duck-breeding farms. The component's actual investment cost was $14.7 million. 6. Specialized households have greatly benefited from the project as the result of the introduction of improved breeds and production technologies and from the well- implemented technical training programs. These inputs have shifted participating household production from backyard subsistence to small-scale, commercialized, market- oriented production. In addition, the demonstration effect has been remarkable in a large number of nonproject households-far exceeding the more than 15,000 project-supported households-that have adopted pig- and duck-raising technologies introduced through the project. Comparatively low production costs in Jiangxi have played a significant role in the competitiveness of pig and poultry production vis-a-vis other provinces. While most of the household production models were successful, two models were less than successful: (a) the pig-raising model with 12 breeding sows (Model I) was abandoned in favor of the smaller but very successful Model II, utilizing only 4 sows. The former model turned out to be too labor-intensive and too high in investment cost to be supported by single family units; and (b) the household goose-raising model was reduced in number at midterm review due to the difficulty in procuring adequate numbers of quality starter goslings, the supply of which had not been planned for under the project. Goslings had to be procured and transported at greater cost and risk from outside the province. 7. Significant shifts in input and output prices occurred during the life of the project. Most compound feed prices peaked at four times the 1989 appraisal prices, from Y 450/ton in 1989 to Y 2,200/ton in 1995. whereas farm gate prices for pigs and poultry tended to rise only two-fold. This trend resulted in periodical reduction in profit margins or losses although, over the life of the project. the household models have remained quite profitable. This scenario largely reflected the generally beneficial increased commercialization and competitiveness of China's rural economy over the life of the project, the extent of which could hardly have been anticipated during the preparation period. Success has largely been due to the greatly improved production efficiency practiced by participating households, - 4 - enhanced by persistently strong markets for ducks and pigs, of which an estimated 40 percent were marketed outside the province. 8. Specialized Household Survey. Household income rose dramatically in the project area. At the time of project appraisal, provincial rural income levels were below the national average, and incomes in the project area were even lower than the provincial average In a survey of 250 project SHs completed in 1995 as part of project implementation compliance, a number of socioeconomic parameters were measured and documented. IDA credits issued to SHs ranged from Y 5,000 to Y 15,000 per family and were expended on pig pen or poultry house construction and working capital for the purchase of piglets, breeding sows, goslings, ducklings or fingerlings. The project provided on average two training sessions per SH, delivered by participating veterinary and extension units which had also received upgrading under the project. The transfer of animal husbandry technologies such as artificial insemination, disease prevention and treatment, animal nutrition, and vaccination has been quite successful, as evidenced by SH performance. The size of the average production unit for all types of SHs increased 20 percent over appraisal estimates, mostly the result of the rapid reinvestment of profits following the completion of credit repayments after two to three years. Increases in production scale varied greatly, ranging from 10 to 100 percent over nonproject households, for pig-raising SHs; from 2 to 8 times for layer ducks; from 50 to 200 percent for SHs raising meat ducks; and from 10 to 50 percent for goose-raising SHs. For SHs engaged in aquaculture, pig and duck raising are complementary activities for the specific purpose of providing manure for fish pond fertilization. Fish production per ha of pond increased by more than 20 percent due to this technology. 9. Increases in project household benefits are significant. Households raising layer ducks increased their per capita income from an average of Y 680 to Y 4,777 (a seven-fold increase); fish-pig raising households from Y 845 to Y 4,545 (a five-fold increase); duck- pig raising households from Y 569 to Y 3,282 (an almost six-fold increase); pig-raising households from Y 663 to Y 2,486 per year (an almost four-fold increase); meat duck- raising households from Y 660 to Y 1,372 (a two-fold increase); and goose-raising households from Y 729 to Y 1,061 (a 1.5-fold increase). Net income per labor day increased from 12 percent for goose-raising households to 500 percent for layer duck- raising households. The most compelling evidence of SH success was the wide replication of all production models by nonproject households. 10. Pig- and poultry-breeding farms. The number of originally appraised farms was, with the exception of two poultry-breeding farms, achieved. These farms introduced improved local or exotic pig and duck breeds that were disseminated systematically throughout the project area. The productivity of the pig-breeding farms' selection programs was sufficiently vigorous to reduce the needed number of breeder pigs offered for sale by 20 percent below estimated appraisal rates. Future culling rates are projected to decrease, however, as the genetic quality in the breeding herds stabilizes over time. An important omission in project design was the failure to establish a three-stage pig multiplier system under the project, instead of the prevailing two-stage system. This additional step would - 5 - have allowed for the multiplication (rather than sale to farmers) of primary and expensively raised parent breeding stock. This has been raised with breeding farm management and is now being implemented on several breeding farms. 11. The duckling output of the duck-breeding farms, totaling 8 million per year at project completion versus 9 million as appraised, was sufficient to supply 71 percent of the 11.2 million ducklings annually raised by participating households. The balance was procured from nonproject hatcheries. With numerous ponds and waterways located in the duck-raising project areas in northern Jiangxi, commercial duck raising has become an important mainstay of SH production. 12. Aquaculture Component. The overall development objectives of this component were generally met and production targets were exceeded. The component was appraised to finance five different fish production models, comprising 1,167 ha and 1,069 ha of new and improved fish ponds, respectively; 1,000 ha of net barrier ponds; 276 ha of net enclosures; and 3.1 ha of cage enclosures. In addition, financing would include 200 ha of pearl farms, 920 SHs engaged in integrated fish-pig raising, and 534 SHs engaged in integrated fish- duck raising. The total appraised investment cost was estimated at $14.4 million or 11.8 percent of total project cost. Following the midterm review, actual financing included 1,462 ha of newly constructed fish ponds, 2,246 ha of improved fish ponds, 1,182 ha of net barriers, 22 ha of net enclosures, and 0.4 ha of net cages, 4 pearl farms covering a total area of 200 ha, 940 SHs engaged in integrated pig-fish farming, and 1,027 SHs engaged in integrated duck-fish farming. The total actual investment cost was $15.1 1 million. These investments were established in 18 project counties across Jiangxi province. 13. New fish ponds. Construction generally followed SAR specifications, with minor variations due to topography. Sufficient interest in developing new ponds existed to increase their area by 295 ha (25 percent over the SAR Target), for a total of 100 project sites with an average pond area of 15 ha per site, ranging from 3 to 70 ha. Most often, a single adjacent nursery (0.2 ha) and a single grow-out pond (I ha) areas were leased to individual households. Occasional departures from the appraised models included a three-pond model (two nursery and one production pond); changes in the appraised 1-to-5 area ratio for nursery to production ponds; and much larger pond areas leased to households due to little interest among a few households in the vicinity. Water exchange control structures for the ponds varied in design and effectiveness from high quality, well-engineered structures to none at all. The latter was due to uniforn preset, per unit area investment limits for all ponds which were not always adequate to accommodate site specific topography and water management needs. Moreover, independent water supply and drainage canals served projects sites on the whole, but not always individual ponds within the site which resulted in water pumped between ponds, making water management less than optimal. Despite the above-noted design variations, fish farmers were generally able to achieve the appraised production targets and anticipated profitability. - 6 - 14. Improved ponds. The same engineering specifications used for new ponds were used in the construction of improved ponds and involved mostly deepening, reshaping, and the installation of independent water supply and drainage channels. The effectiveness and demand for this subcomponent led to its expansion at mid term review by 1,355 ha, a 152- percent increase over SAR targets. A total of 105 sites were developed with a pond surface area averaging 21 ha, ranging from 2 to 105 ha each. 15. Net barriers. The development of net barriers, set out to confine fish in water catchments or lakes, essentially met appraised targets, with an area increase of 182 ha, 18 percent over SAR target. Eleven sites were developed averaging 107 ha and ranging in size from 20 to 280 ha each. On one site, freshwater crabs were included to the fin fish polyculture due to their higher market price and production profitability with care taken to have the crabs available for marketing during the annual Spring Festival. This production model was analyzed to be economically successful and sustainable. However, demand for this advanced type of aquaculture technology proved not to be as widespread as that for pond culture. in part due to higher risks from flooding, the limited number of suitable sites and little knowledge of the methods. 16. Net enclosure and cage culture. These two models have been judged as failures due to technical development problems and unfamiliarity by farmers and PMO aquaculture staff with their operation. Moreover, the Project Construction Unit was reluctant to expend funds for consultants and research. Their further development was therefore stopped at midterm review. Of the two models, cage culture would appear to hold the most potential for success, based on its performance in other parts of China. The total development of sites for these two models was reduced from 3.03 ha to 0.4 ha for cage culture, and from 276 ha to 22.7 ha for net enclosure. The balance of allocated funds was transferred to other aquaculture subcomponents. 17. Pearl cultivation. This subcomponent was appraised at 200 ha comprising four sites. During the midterm review a request for expansion to 400 ha was turned down on the grounds that market saturation of freshwater pearls from the project and from other production sites in China would depress market prices. This concern was borne out as the average pearl prices for all grades of pearls fell by about 33 percent from Y 1,800/kg to Y 1.200/kg between 1993 and 1995. 18. Integrated pig-fish and duck-fish ponds. These pond models were sufficiently popular to warrant their increase at midterm review by 20 SHs and 493 SHs, respectively. The animal husbandry production generated sufficient return on investment to carry its own costs while contributing to fish yield increases from the fertilizing effects of manure and reducing input costs. 19. Tea Rehabilitation Component. This subcomponent's processing capacity has kept balance with incremental tea production output under the separate tea rehabilitation component. The combined FRR for the processing and production parts is 24.1 percent. At project completion, the fresh-leaf tea yield at present, taking into account staggered planting - 7 - and differing planting sites and times, was reported to average 3 t/ha, for a total yield of 14,421 t of fresh-leaf tea, or production of 3,600 t of processed tea (at a ratio of 4:1 for fresh:processed tea). This yield is projected to reach 5.6 t/ha at full production. and additional processing capacity will be built from nonproject funds to keep up with increasing output. At appraisal, the construction of 47 primary-processing facilities of 120 tpa each was planned with an aggregate capacity of 5,640 tpa of processed tea. In order to maintain fresh leaf quality and to purchase and process more easily, the construction of primary processing plants was increased to 80 plants at mid-term review. At completion. however, only the original 47 plants had been completed. at 60 tpa capacity, for an aggregate capacity of 2,820 tpa. Existing (i.e.. preproject) capacity of 2,500 tpa, as well as further planned expansion of primary processing will close the gap. The large number of these plants is due to their need to be situated adjacent to each of the numerous tea harvesting areas in order to maximize the freshness of the harvested tea during processing, thereby ensuring expected product quality. In addition, seven existing refined-processing factories were expanded from 400 to 800 tpa. for an incremental aggregate capacity of 2,800 tpa. Total tea-processing capacity stood at 5.640 tpa at completion. The component is financially viable based on existing assumptions. Whether the planned yield of 5.6 t/ha will be reached is uncertain, given other production profiles in the area and the rather northern latitude at which the tea plantations are located. 20. Agroforestry Component. This component serves two purposes: erosion control of hilly terrain through tree planting, and resin and log harvesting and processing. The component was increased at midterm review from an appraisal estimate of 3,966 to 8,700 ha of newly planted slash pine, a species with a 30 percent greater resin yield than the native masson pine. The pine stands are dispersed over four separate project areas. While it is too early in the 20-year maturation cycle to confirm final target resin or log yields, the plantings were observed to have reached their expected height of 5.4 m at five years of age. The resin processing plant procured and processed 2.245 t in 1995. By 2006-09. it will reach full production, which is estimated to be 32,000 t annually. In order to save operating costs during the long nonproductive maturation period, urea fertilizer, to be applied at 1.1 tlha, has been replaced with organic compost, applied at 0.65 t/ha. This substitution resulted in a cost saving of Y 900/ha. PMO has been requested to review this substitution in view of potential losses of growth and production. One-ha trial plots will be designated for continuous urea application to establish comparative baseline growth rate curves for organic and nonorganic fertilizer application programs. Logging will not begin until the year 2000. Based on data available to the mission. this component was analyzed to be profitable. 21. Agroprocessing Component. General. This component was designed to process feed for livestock and the output from the livestock, forestry and tea rehabilitation components. It was appraised to finance 52 feed mills; 7 duck- and pig-processing plants: 47 tea-processing plants; 7 refined tea processing plants; and 5 enterprises producing down for garment insulation. soil conditioner from poultry waste, bone meal. resin byproducts. and food packaging, for an estimated total investment cost for 118 enterprises of $30.15 million. These investments were reduced to 66 enterprises at the mid-term review - 8 - by eliminating 47 small feed mills, 4 livestock- and poultry-processing plants, and the bone meal plant. The revised component established 5 feed mills. I poultry waste conversion plant, 2 poultry slaughter plants. I pressed salted duck processing plant, I eider down- processing plant, 47 primary tea and 7 refined tea-processing plants, I food product package printing plant, and I resin-processing plant, at an actual investment cost of $27.97 million or 24.5 percent of actual total project cost. 22. Despite this scaling down, the principal objectives of the agroprocessing component have been largely attained. The main types of agroprocessing activities foreseen at appraisal have been constructed and are expected to operate profitably. In response to prevailing market conditions, several changes in processing capacity were approved by the Bank at midterm review. These included the elimination of 42 small-scale [500 tons per annum (tpa)] compound feed mills, 5 medium-scale (10,000-15,000 tpa) compound feed mills, and 2 medium-sized (3.3 million birds p.a.) poultry slaughter plants. An increase in processing capacity from 47 to 80 primary tea-processing plants was also approved, although no more than the original 47 plants had been constructed at project completion. A significant investment increase in production technology for the food product packaging printing plant was also approved, allowing this plant's output to compete in upscale, more profitable food packaging markets. 23. The establishment and commissioning of the feed mills and poultry slaughter plants were delayed due to three factors: (a) construction delays due to counterpart funds constraints; (b) cost overruns resulting from the delays and consequent higher-than- estimated inflationary trends as well as deteriorating exchange rates, and (c) miscellaneous factors including lack of clients familiar with ICB procurement and severe flooding of poultry-processing plant sites. As a result, the component has a lower-than-appraised total processing capacity, at nearly twice the appraised investment cost. Furthermore, local banks were often unable to disburse originally committed loans due to severe credit shortages, further delaying plant construction. These extra costs have been absorbed by larger-than-planned allocations of counterpart funds. 24. Feed Mill Operations. The two 20,000 tpa and three 5,000 tpa feed mills constructed under the project will be able to respond positively to current market trends, as they will possess the necessary advanced processing technology, quality assurance skills, and marketing strategies. The two larger mills began trial operations in October 1995 and began commercial operation in March 1996. In spite of delayed commissioning, the projected rates of return of these mills remain satisfactory. The three smaller feed mills are presently operating at a break-even production rate on one shift until their planned increase to two shifts per day scheduled for 1997. 25. This subcomponent, even though considerably reduced in investment scope due to market changes toward larger mills and specialty feeds and away from smaller compound feeds, will respond well to these changes and become quite successful. The midterm revision eliminated 47 appraised feed mills for a combined design output of 156,000 tpa of compound feed, leaving an annual feed output under the project of 114,000 tons. This 58 - 9 - percent reduction in planned output (although severe in dimension) was directly in line with prevailing feed-processing trends in the province in which, during the early stages of feed industry development, large numbers of small- to medium-sized mills were established to service the rapidly commercializing pig and poultry subsectors, with little regard for product lines or competitiveness. The past several years has seen the replacement of many small mills by larger, more technologically advanced mills producing specialty feeds of higher quality. It is worth noting that the trend-as experienced in Jiangxi-of shifting to larger, more technologically advanced feed mills, at the expense of smaller mills operating at lower technology levels, quite accurately reflects the findings reported in the Bank- executed 1993 China Animal Feed Sector Study, which recommended significant shifts in this same direction. 26. Duck-processing Plants. This subcomponent was also reduced in investment scope due to lower-than-appraised processing capacity need. The capacity built under the project is, although delayed, technologically advanced and projected to be profitable. Five processing plants were envisaged at appraisal, with a combined output of 10.55 million frozen or preserved ducks and quantities of eggs and down, for an investment of Y 31 million. Actual implementation included two processing plants with an aggregate capacity of 3.1 million frozen birds, and the expansion of an existing dehydrated duck plant. The two new plants will commence trial operations in September 1996, with regular operations scheduled for 1997 and full production for 1998. Unusual flood conditions in 1995 further contributed to the construction delays referred to above. All plants are, however, projected to be profitable. They were built to process the ducks raised by participating project households that, due to the commissioning delay of these plants, had, in the interim, developed their own marketing channels through middlemen and wholesale free markets. Assurances have been made by PMO that project households will continue to make marketing choices on the basis of fair, free-market prices when deciding on whether to shift from their private sales channels to selling to the new processing plants. The two new plants, in their turn, are projecting buying costs adequate to ensure them a sufficient supply of poultry. The expansion of the dehydrated duck plant was completed on time and its target output, of which 90 percent is exported, has been achieved. Income statements provided by the company indicate that this plant is operating profitably. 27. Other Processing Operations. Several other processing plants for resin, down, poultry waste, and tea have been completed and, based on factory data, are operating profitably. The resin-processing plant, built for a capacity of 3,000 tpa of refined resin products, produced 1,620 tpa (or 54 percent of full production) of processed rosin and turpentine in 1995, exceeding break-even profitability (1,400 tpa). Crude resin is procured from tapping slash pine stands established under the agroforestry component. The project also financed the expansion of a down-processing factory that supplies a nonproject insulated-garment factory. The company purchases and processes 148 tpa of eider down (equivalent to the output of 1.6 million ducks raised by project-sponsored SHs) and manufactures 300,000 coats and jackets per year. Its financial rate of return (FRR) has been calculated to be 12.2 percent. The guano-processing plant converts poultry waste into fertilizer; it was constructed on time and is operating at full capacity. This plant provides a - 10- good example of financing the conversion of potential environmentally-toxic wastes into value-added soil conditioner. The planned tea packaging printing plant, originally estimated to cost Y 6.6 million, was redesigned at midterm review into a much larger multiple-offset color printing plant using state-of-the-art. ICB-imported printing equipment, at an increased investment cost of Y 29.54 million. The plant was commissioned in 1995 and is producing a great variety of high quality printed packaging materials for tea and food products. The plant's revised financial analysis, taking into account its greatly increased investment cost offset by a larger market for top-of-the-line packaging products, is calculated to be 14.8 percent. This has been largely due to the efforts of plant management which, in consultation with the Bank. has embarked on an aggressive and successful marketing program to increase markets and sales. 28. Training and Technical Assistance (TA). Based on the above-noted results, the component was implemented with varying degrees of success. It was appraised to deliver 89 person-months (p-mths) of international study tours (57 months of short courses for technical staff and 32 months of study tours focused on production, processing and distribution); 15 p-mths of international TA for local workshops in new technologies and management; 12,400 p-mths of technical training for SHs; 7,621 p-mths of training for technicians; the establishment of a training center; and an agricultural research program with a budget of Y 3.95 million, at an appraised investment cost of $5.04 million (4 percent of total investment cost). At project completion, 8 and I p-mths of study tours and TA had been implemented, respectively; as had 12.400 p-mths of SH training (100 percent implementation); 5,426 p-mths of technician training (71 percent); a training center 79 percent of its appraised size; and a research program that utilized 16 percent of its appraised budget, for an actual investment cost of $2.54 million. 29. Project management training, including international study tours and TA, was not completed, despite repeated reference to this omission by supervision missions. The reasons given by PMO indicated a reluctance to spend allocated foreign exchange funds for project activities that would not result in tangible financial returns, from which the IDA credit could be repaid. In contrast, training programs for SHs were completely implemented and very well organized, and have been instrumental in ensuring the ability of recipient households to absorb the new production technologies introduced under the project. Similarly, technician training was well implemented, and evidence of its efficacy is the acceptance of the new technologies by project and nonproject households as transferred by these technicians. The research budget was poorly utilized due to the institutional constraints on recipient institutes to develop and implement significant research and development programs directly linked to stated project objectives. Failure to use project support for research had a minor impact on the project, since it was not focused on livestock/poultry production. The long-term effect of lack of project and enterprise training in marketing and management would be mostly evident in the agroprocessing component, where enterprise managers could have benefited from exposure to commercial management and marketing practices. - 11 - C. PROJECT IMPACT 30. The project has been very successful in generating employment opportunities and in enhancing income for participating households. The introduction of new livestock, poultry and fish production technologies has been widely accepted by project and nonproject households alike. Breeding farmns are functioning as designed, as the suppliers of improved genetic stock to households. Agroprocessing activities, albeit later in implementation than planned, are impacting favorably by adding value to livestock and poultry products generated by the project. Marketing skills for processed products have improved greatly, and could have become institutionalized much sooner if more training funds allocated for this purpose had been spent. PMO and plant managers have, however, become very much aware of the need for innovative marketing as a tool for profitability. A significant project input is the increased integration of farm and processing units into the market economy. Tea rehabilitation has resulted in the development of new local and export markets, through the marketing of top-of-the-line tea products and export packaging, and the revitalization of an important tea producing area. Tree planting has converted deteriorating, nonarable hilly land into productive and environmentally sound production areas, creating additional employment. The project has provided employment and training to over 18,000 women, 49 percent of the total project-generated employment. In the provincial context, the project had a significant impact on local governnent's institutional capabilities, particularly the Provincial Agriculture Bureau. The project enhanced the ability of the Agriculture Bureau to introduce advanced animal production technologies to rural households, both in and out of the project area. In addition, the project introduced modem processing, marketing and management techniques to a previously stagnant agricultural sector. The project also introduced project preparation and management skills to mid- and senior-level government planners that will be certainly utilized in future project development. The project also highlighted to senior planners the need for an improved agricultural sector development strategy, particularly for agroprocessing, in order to take advantage of relatively low production costs in comparison with neighboring provinces. D. MAJOR FACTORS AFFECTING THE PROJECT 31. Implementation Schedule. The project was initially scheduled for completion on December 31, 1994, four and one-half years after signing but was granted a one-year extension to December 31, 1995, except for the agroprocessing component. Civil works, comprising 26 percent of total investment, were largely completed on schedule. Counterpart funds shortages during 1993 and 1994 slowed civil works completion for several of the larger agroprocessing plants, which in turn delayed the international procurement of equipment. As a result, these plants were commissioned up to four years behind schedule. International procurement underwent some delays, due to differing equipment specifications as the result of subproject revisions, and to unfamiliarity by PMO with ICB procedures. Most equipment procured by competitive international bidding was delivered between 1993 and 1995. Once civil works were completed, equipment installation and commissioning followed rapidly. - 12 - 32. Training and Technical Assistance. Training and TA was divided into international and local training and tours, of which the international component was largely uncompleted. As previously noted, only 8 p-mths out of an appraised 104 p-mths of international study tours and TA were completed. PMO has quoted its inability to repay the foreign exchange allocated due to the nonrevenue earning capacity of this subcomponent. This matter should have been resolved much earlier in implementation and should have been attached to a conditionality. Local training of participating technicians and households was very well implemented. Technology transfer related to animal husbandry and fish production has been very efficacious, as evidenced by the level of production expertise practiced by most households. 33. Procurement. In spite of procurement delays due to delayed completion of civil works as the result of counterpart funds shortages, procurement proceeded as planned and the delivery of contracts was satisfactory. The preparation of bid documents, bid invitations, evaluation and contract awarding were carried out by the China National Machinery Import and Export Corporation in cooperation with the PMO procurement unit and county PMOs. The bulk of equipment purchased overseas was procured by ICB procedures, which presented occasional technical and procedural problems. By end 1995, the total procurement value was $45.82 million. Twenty-seven contracts valued at $40.86 million were procured under ICB and LIB. The balance of equipment purchased was procured under national competitive bidding (NCB) and shopping, where contract values were too small to justify ICB. Procurement processing improved greatly from 1994 on, following the introduction of standard Bank bid documents. All of the equipment procured was delivered in timely fashion and met technical specifications. 34. Disbursement. The disbursement profile was lower than estimated. Disbursement at the end of the second year of implementation was only 34 percent of estimated targets. This gap narrowed to 78 percent of estimates by end- 1993, after which disbursement closely followed estimates for the final two years of implementation. Considerable time was spent by supervision missions and PMO procurement staff to improve contract specifications, initiated by project beneficiaries, and to prepare contract revisions. Changes in construction specifications often caused delays in contract preparation. The last IDA Credit disbursement was on March 14, 1996, following loan closing on December 31, 1995. Project expenditures were estimated to be $121.74 million. The total amount disbursed was $63.4 million; higher than the original credit amount of $60 million equivalent. due to the depreciation of the US dollar against the SDR. SDR 0.84 million ($1.2 million) was canceled at loan closing. 35. Credit Allocation. The actual allocation of funds by category proceeded largely as anticipated, with a minor adjustment to include disbursement for civil works for the agroprocessing component under Category I (civil works) of the Credit Agreement, and to transfer $1.6 million of surplus Category I funds to Category II (equipment, vehicles and materials). An increase was also granted in the percentage of expenditures to be financed for civil works under Category I from 32 percent to 54 percent. - 13 - 36. Costs. Total project costs were lower than appraisal estimates, though individual components and the relationship between local and foreign costs differ. Actual costs for research, training and technical assistance are significantly lower since this component was not fully implemented. In addition, lower-than-appraisal costs are the result of revisions in project design after the mid-term review. E. PROJECT SUSTAINABILITY 37. Livestock component. The strong financial incentives to the project beneficiaries will ensure the sustainability of this component. Continued strong provincial and interprovincial demand for livestock and poultry products, linked to market development efforts, will ensure that expanded production will continue to find markets. Since livestock producers are already expanding their operations outside the project and have found and adjusted to prevailing markets, little additional technical assistance will be required, except for routine supervision of project activities. Due to the long maturation process of the planted trees, the profitability of the forestry component will not be assured for another three to five years and will require continuous maintenance related to fertilization and pest control. The present status of forest growth and maintenance is good and financial analysis points to future viability. 38. The aquaculture component, which has been very successful in terms of the adaptation of new technologies and level of operation, stands every chance of sustainable profitability and will not require significant future supervision inputs. As an inland province, Jiangxi will benefit from producing freshwater fish. Markets and fish prices are strong enough to ensure profitability even though fish feed prices have risen sharply. Supervision by PMO should focus on maximizing production efficiency and avoiding over-production. The final ERR supports this conclusion. 39. The agroprocessing component, although delayed in implementation and facing significant cost overruns, will be successful. Continuous market development and enterprise commercialization will be needed. Commercialization includes the successful attraction of joint venture partners to achieve recapitalization and improved management; improving the stability of production supplies; and expanding markets. The domestic markets for both animal feed and tea are both strong and growing. Over 75 percent of frozen and dried duck meat is targeted at export markets, as is 90 percent of the down garment output. As China has a comparative advantage in aquatic poultry, frozen and dried duck meat should be competitive in international markets. Current export duck meat price quotes, FOB factory, exceed the sales prices used in the project financial projections. Only small amounts of forest products will be produced under the project, and marketing that output should pose no problem. Marketing arrangements for the various agroindustries under the project are mostly through state-owned trading companies. The down garment factory and the dried duck factory sell their output through Hong Kong agents. While no price or supply problems were reported to the mission with respect to raw materials, the two largest feed mills financed under the project are still running acceptance trials, and are one to two years from full capacity - 14 - operation. The animal feed industry in central China relies heavily on northeast China for its supplies of corn and soybean, and that region's ability to supply adequate tonnage to the growing feed industry does not seem to have been questioned by project management. It is evidently assumed that price increases can be passed on to the livestock farmers and, ultimately, to the consumer. Supplies of poultry are procured under contract from associated production units. PMO needs to continue to supervise enterprise transition toward more commercialized business operations and promote joint ventures and recapitalization. PMO has been assuming these functions during the final project year, with the successful attraction of joint venture partners for the package printing plant and one pig-breeding farm. Additional promotional support such as this will ensure viability. F. IDA PERFORMANCE 40. IDA's performance in the identification, preparation and appraisal of the project, assisted by the FAO Cooperative Program during the early stages of preparation, has been viewed as satisfactory, though it entailed the resolution of initial conceptual differences of opinion with the central government regarding project scope and design. The preparation work was directly based on the provincial government's development strategy, as set out by the Jiangxi Planning Commission, the Bank's Country Assistance Program, and the implementation of earlier provincial agricultural development projects (ADPs), particularly Shandong ADP and Coastal Lands Development I. The central government initially wanted an irrigation-based agricultural development project linked to a crop production component. These components were analyzed to be economically nonviable and would have suffered from a lack of collaboration between the province's Agriculture Department and the Bureau of Water Conservancy and were eliminated at preappraisal. The aquaculture component did not benefit much from Nanchang municipality's prior experience with the Bank's Fresh Water Fisheries Development Project due to a lack of technical contact between these two agencies. 41. IDA's supervision performance is considered satisfactory. The eight supervision missions, which took place on a regular basis, on average once a year over the period 1989-95, were adequate to the circumstances and considered useful by PMO staff. The missions accurately reported implementation progress; identified operational problems and provided useful recommendations and solutions; paid close attention to the overall development impact of the project and were flexible in modifying project implementation in the face of often rapidly changing conditions. Supervision missions made significant contributions in the following areas: improving in technical designs and operating efficiency of agroprocessing subprojects; providing inputs to PMO on the need for more rigorous analysis of changing market conditions; emphasizing the importance of training and technical assistance in the dissemination of new production technologies; and requiring adequate provision of counterpart funding and working capital for project activities. The missions were also successful in educating PMO and agroprocessing plant managers in undertaking steps to better commercialize their management and operations to meet changing market conditions. The missions were less successful in assisting PMO to recruit overseas technical assistance. Limited Bank Group budgetary resources for - 15 - supervision prevented more frequent missions which would have been useful in maintaining momentum during the first three years of the project. G. BORROWER PERFORMANCE 42. The performance of the project's implementing agencies, the Jiangxi Planning Bureau, in conjunction with the provincial and local PMOs, was generally satisfactory. The agencies prepared a comprehensive feasibility study for the project which covered the technical, financial, economic and institutional aspects. Their overall performance during implementation was satisfactory. Due to their prior involvement in the first Red Soils Project, the PMO staff was able to coordinate project activities rather well between the participating technical departments, and was competently staffed throughout implementation. Project staff at all levels were generally committed to project objectives and demonstrated project ownership. The project components were for the most part implemented in line with the agreed implementation arrangements and appropriate action was taken to redress problems as they occurred. Due to the widespread distribution of aquaculture and livestock production households in often remote areas, it was difficult for PMO and supervision missions to meet frequently with project beneficiaries. In some instances, arising problems could have been resolved sooner. Earlier detection and intervention by local governments of serious counterpart funding problems might have been resolved sooner. Audit reports were, overall, produced and submitted on time. H. ASSESSMENT OF OUTCOME 43. The project's outcome is viewed as satisfactory since the principal objective of agricultural sector development was achieved with a relatively high degree of sustainability. The overall economic rate of return is 32.5 percent, somewhat below the appraised estimate of 39 percent. Overall, the project had a fairly strong development impact through investing in the expansion of upgraded household production, linked to value-added processing in a low income, inland province. The project is not rated highly satisfactory due to the significant implementation delays and cost overruns of the agroprocessing component which caused a decrease in appraised production capacity and the shortfalls in the overseas training component. While the mission assesses the future sustainability of the agroprocessing component as satisfactory, the actual outcome will depend upon management capability and autonomy in the local government-owned firms, the availability of raw materials at reasonable prices and other factors. The year-to-year profitability of agroindustries, compared with other industrial classifications, is very variable depending as it does on current commodity prices and availability. For example, the feed industry in China is currently working on a favorable gross margin but that in turn depends on inputs from northeast China and the agricultural and market conditions there. Should these supplies be constrained, there is no assurance that price increases could be passed on to the customer in what is increasingly a market economy. - 16 - 44. It should also be pointed out that the two large feed mills and the two large poultry-processing factories in the project have accumulated no operational experience beyond test runs. 1. FUTURE OPERATION 45. The future operation of activities initiated by the project will require additional input from PMO in the following areas: (a) facilitating continued supervision of household production activities and market development; (b) recurrent budgetary support, where required, to complete on-farm works and agroprocessing; (c) adequate provision of working capital for selected agroprocessing plants to reach full production; (d) continued monitoring of the financial profitability of all agroprocessing plants; (e) continued supervision of forestry maintenance. and (f continued market development support for agroprocessing enterprises. PMO should organize an annual development course for agroprocessing plant managers to update agribusiness management and marketing skills. Enterprise reform activities, already initiated by PMO, should be continued to allow project enterprises to compete successfully in rapidly changing markets. IDA will continue to monitor progress of the actions taken by the PMO during supervision of other projects (e.g., Animal Feed) in the province. 46. Future operations of participating state farm enterprises are a function of their evolution into market-oriented enterprises. These farms are already vertically integrated and some are conglomerates of diverse activities. Assuming a continuation of present government policy, the state farms may be expected to evolve into independent agribusiness corporations. At that point, the future will be determined to a large extent on quality of management, which is an unevenly distributed commodity and not subject to prediction. The commercialization of the state farms will have an overall positive effect on the economy though some of the weaker units will probably be absorbed by the stronger. J. KEY LESSONS LEARNED 47. The project design with its balance of production and processing components has proved satisfactory and key lessons are related mostly to the execution of the project. The key lessons learned from the project are summarized below: (a) Lack of availability of counterpart funds should have been spotted earlier in the implementation in order to ensure that delays in civil works could have been avoided, thereby keeping much of the agroprocessing component on schedule. Supervision missions did not fail to spot this problem but there was no mechanism to assure availability when needed. (b) More prompt attention could have been paid to counterpart funds availability if, at appraisal, annual counterpart funds allocations had been documented by amount and source. - 17- (c) More effort should have been made to ensure that training and TA procured from international sources, especially in marketing and agribusiness management for enterprise managers, had been completed early in implementation, which would have assisted greatly in the commercialization of participating enterprises. (d) More supervision missions should have been budgeted, in particular related to early disbursement and procurement problems, to ensure a more rapid onset of implementation. More and earlier training of PMO staff in ICB procurement could have prevented this problem. (e) A baseline survey should have documented key performance indicators, by component and for the entire project. This would have assisted in performance monitoring during and after project implementation. - 18- PART II: STATISTICAL ANNEXES TABLE 1: SUMMARY OF ASSESSMENTS A. Achievement of Objective Substantial Partial Negligible Not Applicable Macroeconomic X Sector policies x Financial objectives X Institutional development X Poverty reduction X Gender concerns X Other social objectives X Environmental objectives X Public sector management X Private sector development X Other B. Project Sustainability Likely Unlikely Uncertain Livestock Production X Aquaculture X Reforestation X Tea Rehabilitation X Agroprocessing X Research and Training X Highly C. Bank Performance Satisfactory Satisfactory Deficient Identification X Preparation assistance X Appraisal X Supervision X Highly D. Borrower Performance Satisfactory Satisfactory Deficient Preparation X Implementation X Covenant compliance X Operation E. Assessment of Outcome X - 19- TABLE 2: RELATED BANK LOANS/CREDITS Year of Loan/Credit Title Purpose Approval Status Preceding Operations 1. North China Plain Area Development FY82 Completed Agriculture (Cr. 1261-CHA) 2. Shaanxi Agricultural Area Development FY89 Closing date 6/30/97 Development (Cr. 1997-CHA) Following Operations 3. Red Soils Area Development Area Development FY86 Completed (Cr. 1733-CHA) 4. Hebei Agricultural Area Development FY90 Closing date 12/31/96 Development (Cr. 2159- CHA) 5. Henan Agricultural Area Development FY91 Closing date 12/31/97 Development (Cr. 2242-CHA) 6. Animal Feed Feed Industry FY96 Signed June 7, 1996 (CN-PA-3565) Development TABLE 3: PROJECT TIME TABLE Steps in Project Cycle Date Planned Date Actual/ Latest Estimate Identification (EPS) April 4, 1988 April 10, 1988 Preparation (Preappraisal) March 20,1989 October 17, 1988 Appraisal June 19, 1989 January 14, 1989 Postappraisal -- Negotiations May 1, 1989 December 12, 1989 Board Presentation January 11, 1990 February 27, 1990 Signing -- March 15, 1990 Effectiveness June 13, 1990 April 27, 1990 Project Completion June 30, 1994 June 30, 1995 Loan Closing December 31, 1994 December 31, 1995 - 20 - TABLE 4: CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL ($ million) FY90 FY91 FY92 FY93 FY94 FY95 FY96 Appraisal Estimate 5.00 21.00 43.00 52.00 59.00 60.00 -- Actual 4.99 7.19 19.84 41.77 55.08 64.13 /a -.76 Actual as % of Estimate 99.8 34.23 46.14 80.33 93.34 106.88 -- Date of Final Disbursement March 14, 1996 /a Higher actual disbursement in US dollar terms than appraisal estimate due to depreciation of the US dollar against the SDR. - 21 - TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION Project Key Implementation Indicators Unit Estimated Actual Component in SARlPresident's Report Aquaculture 1. New Ponds ha 1,167 1,462 New ponds, fish yield t/ha 7.5 6.33 11. Improved Ponds ha 1,069 2,246 Improved ponds, fish yield t/ha 6.75 6.41 111. Fish barriers ha 1,000 1,182 Fish barriers, yield t/ha 0.75 0.794 IV. Fish enclosures/a ha 276 22.7 Fish enclosures, yield t/ha 7.5 -- V. Fish cages-la ha 3.07 0.4 Fish cages, yield t/ha 150 -- VI. Pearl cultivation ha 200 200 Pearl cultivation, yield kg/ha 11 42 VII. Fish-and-duck ponds a. Layer duck-fish pond (new) no. SH 266 360 Sheds constructed sqm/SH. 175 180 Compound feed supplied kg/duck/vr 63 63.4 Production per SH t./SH 17 17.2 b. Layer duck-fish pond (improv) no. SH 268 667 Sheds constructed sqm/SH 175 179.5 Compound feed supplied kg/duck/yr 63 63.4 Production per SH t./SH 17 16.9 IXi Fish-and-pig ponds ha 0 a. Pig-fish ponds (new) no. SH 638 410 Pigs produced no./yr/hh 30 3 1 Fish produced t/yr 7.5 6.33 Pigs sheds constructed sqm/SH 42 41 Compound feed supplied kg/pig/yr 553 355 Pigs sold at full production no./yr/hh 30 3 1 b. Pig-fish ponds (improved) no. SH 282 530 Pigs produced no./yr 30 31 Fish produced t/yr 6.75 6.41 Pigs sheds constructed sqm/SH 42 41 Compound feed supplied kg/pig/yr 553 355 Pigs sold at full production no./yr/hh 30 1 X Constructionfor all ponds: Earth works cubm 1,493 2,268 Feeder canals km 93 150 Drainage canals km 136.8 220 Power supply sqm 154.4 278.1 Buildings sqm/SH 25 15 Pig sheds sqm/SH 35,880 36,600 Specialized households (SH) hh 920 940 raising pigs no. 27,600 29,000 Duck sheds sqm 80,100 154,050 Specialized households (SH) hh 534 1,027 raising ducks (eggs) ton 4.822 17,458 Production Buildings sqm 80,100 221,426 Tea Fresh Leaf Plantations Rehabilitation Yield t/ha 1.5 3.0 Price Y/ha 3.6 2.2 Improved ha 4,807 4807 Maintained ha 4,807 4.807 Fertilizer applied (urea) t/ha 1 .4 1 .5 Labor/ha p-days 705 705 - 22 - Project Key Implementation Indicators Unit Estimated Actual Component in SARlPresident's Report Agroforestry I. Total slash pine stands ha 3,966 8,700 (Slash Pine)-Pulpwood m3/ha 8.9 -- (Thinning at Year 10) Poles and Logs (Yr 20 felling) m3/ha 86.3 -- Resin Tapping (Yrs 8, 9) ha 3,966 8,700 Yield t/ha 1.1 1.8 Resin Tapping (Yrs 14-20) ha 3,966 8,700 Yield t/ha 12 25.7 II. General Construction: Offices sqm 2,000 2,000 Dormitories sqm 2,000 2,255 Fire towers no. 13 8 Lb Forest service stations no. 5 2 /b Telephone lines km n.a. Fire breaks km 279 216.5 III. Forest maintenance. Area planted ha 6,705 8,700 Fertilizer applied t/ha 1.069 0.65 /c Seedlings no/ha 1,650 1,817 Seedling Survival % 80-90 92 Agroprocessing 1. Feed Alills: a. Protein concentrate mills, no. 2 2 20,000 tpa Capacitv utilization % 75 8.5 Onset of operation date 1993 1996 b. Compound feed mills, 5,000- no. 8 3 15,000 tpa Capacity utilization % 80 66 Onset of operation date 1993 1995 c. Small Compound feed mills, no. 42 0 /d 2,000-5,000 tpa II. Livestock-processing Plants a. Pig abattoir upgrading: no. I /d b. Duck-processing plants Shangrao. Nanchang plants; no. 2 /d (large capacity) c. Henghu and Hengfeng plants. no. 2 2 (medium capacity) Frozen duck output no./yr 2.5 mill. 2.5 mill. Capacity utilization % 124 100 d. Kangshang State Farm, (small no. I /d capacity) e. Yilan Pressed duck plant no. I I (Suichuan City) Pressed, salted duck output no./yr 140,000 90,000 Exported quantity % output 90 90 Capacitv utilization % 100 64 llI. Miscellaneous Processing no. 59 58 Plants a. Down-processing Plant no. I I Buildings constructed sqm 2,836 Production output mill.piece 0.3 0.22 Capacity utilization % 90 73 b. Chicken guano conversion no. I I plant:. Output t/yr 8,000 4,000 Capacity utilization % 100 50 Onset of operation date 1994 c. Bone meal plant: no. I Ld - 23 - Project Key Implementation Indicators Unit Estimated Actual Component in SAR/President's Report d. Primary tea-processing plants no. 47 47 Average total capacity tpa 120 60 Plants completed no. 47 47 Plants completed on time no. 47 47 Capacity utilization % 80 61 e. Refined tea-processing plants no. 7 7 Average capacity per year tpa 800 860 Plants completed no. 7 Plants completed on time no. 7 Capacity utilization % 90 74 f. Resin-processing Plant no. I I Buildings completed sqm 6.370 Crude resin supply tpa 4,200 2.245 Refined resin output tpa 3,000 1.620 Turpentine derivatives output tpa 600 330 Capacity utilization % 74 54 g. Package Printing Plant no. I I Construction sqm 8,525 Onset of production date 1993 1996 Capacity utilization % 75 14 1. Livestock I. Specialized Households no. 12,921 14,548/e Production a. Pig production, Model I no. 300 /d b. Pig production. Model 11 no. 3.478 5,052 Average sows per SH no. 4 4.2 Pigs produced no./yr/hh 60 72 Compound feed supplied kg/pig/yr 383 348 c. Meat duck production no.SH 1,970 2,644 Sheds constructed sqm/SH 175 175 Compound feed supplied kg/duck/yr 6 4.9 Production per SH no./SH 3,000 3.800 d. Fine-meat duck production no. SH 996 If Sheds constructed no. 996 Compound feed supplied no. SH 996 Production per SH no./SH 3.000 e. Layer duck production no. SH 979 1,119 Sheds constructed sqm/SH 175 221 Compound feed supplied kg/duck/yr 63 66 Production per SH t./SH 17 17.8 f. Geese production no. SH 5,198 3,766 Sheds constructed sqm/SH 40 37.6 Compound feed supplied kg/goose/yr 9 8.5 Production per SH no./SH 600 305 11. Duck-breedingfarms no. 23 21 Stock raising no. 4,000 4,000 Hatchery capacity no./farm 400,000 400.000 Duckling sold no./farm 400,000 400.000 III. Pig-Breeding Farms no. 4 4 a. Prefectural pig-breeding farm no. 2 2 Domestic stock procured no. 2x120 2x123 Imported stock procured no. Breeding stock sold no./vr 2x1040 1,840 Commercial pigs sold no./yr 1,440 2,874 b. Ji'an breeding farm no. I I Domestic stock procured no. Imported stock procured no. Breeding stock sold no./yr 1.360 1,200 Commercial pigs sold no./yr 2,300 4,600 - 24 - Project Key Implementation Indicators Unit Estimated Actual Component in SARlPresident's Report c. Second Provincial Breeding no. I I farm Domestic stock procured no. 130 167 Imported stock procured no. Breeding stock sold no./yr 1,500 1,115 Commercial pigs sold no./yr 540 1,316 d. Commercial Pig Farm no. I I Sow herd no. 666 415 Pigs sold no./yr 10,000 7,470 IV. Poultry-Breeding Farms a. Black Bone chicken farm no. I I Domestic breeders procured no. 6,600 12,000 Day-old chicks sold no./yr 348,000 400,000 Breeders sold at full no. 40,000 42,000 production Research & a. International study tours 89 8 Training p-mths b. International consulting p-mths 15 1 services c. Local training - SH short p-mths 12,400 12,400 courses d. Local training - others p-mths 7,621 5,426 e. Training center construction sqm 25,500 20,217 f. Scientific research '000 yuan 1990 373 Notes: /a Due to technical problem, the performance of the component is not successful. /b Other projects constructed. /c Manure was used in substitution. /d It was dropped at mid-term review. /e Total includes all specialized households. Lf Combine calculation with meat duck production. - 25 - TABLE 6: KEY INDICATORS FOR PROJECT OPERATIONS Key operating indicators in SAR/President's Report Estimated Actual FRRtERR-Total Project n.a./39 18/32.5 1. Aquaculture FRR/ERR n.a.i50 27.3/43.4 New Fish Pond 38/n.a. 15.4/16.1 Improved fish Pond >50/n.a. 36.5/73.5 Fish Barriers 50/n.a. 19.1>100 Pearl Culture 44/n.a. 54.3/79.2 Yield (t/ha) Fish (new pond) 7.5 6.33 Fish (improved pond) 6.75 6.41 Fish (fish barriers) 0.75 0.794 Pearl (pearl culture) (kg/ha) I1 42 Production (ton) Fish (new pond) 8,753 9,254.4 Fish (improved pond) 7.216 14.397 Fish (fish barriers) 750 938.5 Pearl (pearl culture) 2 6.5 SH Net income (yuan) New pond -fish-pig 14,170 18.180 -fish-duck 25,390 13.132 Improved pond - fish-pig 17.840 20.466 - fish-duck 19.230 19.144 Fish barriers 2,810 n.a. 2. Livestock Production a. Pig production FRRiERR 15>50/22 12.1/17.5 SH >50/n.a. 11.9/16.8 Breeding Farms 15-33/n.a. 15.2/21 Commercial Pig Farm 32/n.a. 11.9/17.9 Yield (head/unit) Pig (SHs) 60 72 Pig (prefec. breeding farm ) 1,040 1.840 Pig (breeding farm) 1,360 1.200 Pig (commercial farm) 9,000 7.470 Production (head) Pig (SHs) 208,680 363,744 Pig (prefec. breeding farm) (2) 2,080 3.680 Pig (breeding farm) (2) 2,315 2400 Pig (commercial farm) 9,000 7.470 Pig SH Net income (yuan) 4,200 b. Aquatic poultry FRR/ERR 15->50/31 14.4/30.2 Meat Duck SH >50/n.a. 14.2/20.8 Laying Duck SH >50/n.a. 13.6/38.9 Geese SH >50/n.a. 18.1/36.4 Duck Breeding Farm n.a. 17.9/32.4 Black Bone Chicken farm 15/n.a. 9.6/14.1 Yield Meat duck (duck/hh) 3,000 3,800 Duck eggs (t/hh) 17 17.8 Geese (geese/hh) 600 305 Black bone chicken 40,000 42.000 Production Meat duck (bird) 9 mill. 10 mill. Duck eggs (t) 14.643 19.918 Geese (bird) 3.1 mill. 1.15 mill. Black bone chicken 40.000 42.000 SH Net income Meat duck 4.700 5.488 Layer duck 11,300 19.108 Geese 3,300 5.305 - 26 - Key operating indicators in SARJPresident's Report Estimated Actual 3. Forestry FRR/ERR 24/23 241.1/25.5 Plantations 24/n.a. 23.8/23.8 Rosin Factory 50/n.a. 25.4/36.6 Yield Pulpwood (m3/ha)(10 Yr) 8.9 --(n.a.) Poles & logs (m3/ha) (20 Yr) 86.3 --(n.a.) Resin (8.9yr) (t/ha) 1.1 1.8 Resin (14-20yr) (t/ha) 12 25.7 Production Pulpwood (m3) 59,490 n.a. Poles & logs (m3) 578,900 n.a. Resin (8-9yr) (kg) 7,139 15,660 Resin (14-20yr) (kg) 80,408 223, 590 4. Tea Rehabilitation FRR/ERR 15/23 20.5/33.6 Primary Tea Factory 17/n.a. 23.6/38.7 Refined Tea Factory >50/n.a. 17.6/60.9 Yield (t/ha) Fresh leaf 1.5 3 Production (t) Fresh leaf 7,211 14.411 Refined leaf 1,759 5,417 5. Agroprocessing a. Feed processing FRRIERR 20->50/40 16.1/30 20,000 tpa Feed mill 33/n.a. 16.9/31.4 5,000 tpa Feed mill 31/n.a. 13.8/24.1 Chicken Dung Fertilizer 20/n.a. 13.6/19.1 Production (t) Concentrate feed (2) 300.000 1,900 Compond feedm (3) 90,000 11,400 b. Livestock processing FRR/ERR n.a./72 14.5/32.9 Poultry Processing Plant 22/n.a. 16/24.3 Pressed Salted Duck Processing Plant 25/n.a. 12.2/22.4 Eiderdown Plant >50/n.a. 12.2/51.5 Production Frozen duck (pieces) 2 million 220.000 Pressed salted duck (pieces) 140,000 140,000 Fertilizer 8,000 4,000 c. Package printing plant FRRfERR >50/n.a. 14.8/41 - 27 - TABLE 7: STUDIES INCLUDED IN PROJECT Survey on Water Preservation Project-Poyang Lake. This report was prepared by the Japan International Cooperation Agency (JICA) and the National Environmental Protection Agency for the government of Jiangxi, and issued in September 1993. Although the project's environmental impacts, related to the establishment of aquaculture subprojects in the Poyang Lake watershed area and directly adjoining its shorelines, were recognized as negligible at appraisal, the Bank requested from Jiangxi, under Schedule 2, para. I of the Project Agreement, a Poyang Lake Management Plan. This Plan was not forthcoming until 1994, when the government submitted via JICA the above-noted survey. The survey's conclusions are that, as first priority, industrial and domestic drainage into the lake should be controlled. As second priority, intensive livestock breeding should be managed to prevent a further influx of farm or pond effluents. Recommendations include: (a) the strengthening of laws governing water preservation; (b) the establishment of an effective coordinating organization to oversee the overall mitigation plan; (c) to secure the necessary funds for the implementation of various mitigation plans; (d) to improve water monitoring systems; (e) to conserve wetlands and bird habitats surrounding the lake; (f) to promote research on water conservancy; (g) to promote lake ecosystem studies; (h) to educate the public about these programs; (i) to promote research and development of sewage treatment equipment. The implementation of these recommendations had not begun at the time of the ICR mission. - 28 - TABLE 8A: PROJECT COSTS ($ million) Appraisal Estimate Actual/Latest Estimate Item Local Foreign Local Foreign costs costs Total costs costs Total Livestock Pig production 6.19 1.75 7.94 6.68 2.42 9.10 Poultry production 6.69 0.80 7.49 4.60 1.02 5.62 Subtotal 12.88 2.55 15.43 11.28 3.44 14.72 Aquaculture 13.40 0.97 14.37 11.38 3.73 15.11 Forestry 3.76 1.15 4.91 3.63 1.23 4.86 Tea Improvement 9.25 2.61 11.86 6.06 3.54 9.60 Agroprocessing Feed mills 4.01 7.85 11.86 4.43 6.34 10.77 Pork processing 0.47 0.13 0.60 Poultry processing 4.77 3.82 8.59 2.92 4.45 7.37 Tea processing 6.28 1.77 8.05 3.09 5.64 8.73 Resin production 0.82 0.23 1.05 0.40 0.70 1.10 Subtotal 16.35 13.80 30.15 10.84 17.13 27.97 Research, training and 4.01 1.03 5.04 2.53 0.01 2.54 TA Incremental working 16.60 6.14 22.74 27.62 11.78 39.40 capital Base Cost 76.25 28.25 104.50 73.34 40.86 114.20 Physical Contingency 5.54 1.78 7.32 Price Contingency 7.36 2.56 9.92 Total Project Cost 89.15 32.59 121.74 73.34 40.86 114.20 - 29 - TABLE 8B: PROJECT FINANCING ($ million) Appraisal Estimate Actual Estimate Local Foreign Local Foreign Source costs costs Total costs costs Total IDA 27.40 32.60 60.00 22.54 40.86 63.40 Provincial Government 9.00 -- 9.00 5.94 5.94 Municipal & Prefectural 10.40 -- 10.40 9.27 9.27 Governments End-user Contributions 17.60 -- 17.60 22.87 22.87 Domestic Loans 24.70 -- 24.70 12.72 12.72 Total 89.10 32.60 121.70 73.34 40.86 114.20 TABLE 9: ECONOMIC COSTS AND BENEFITS Economic Rate of Return Appraisal Estimate (%) ICR Estimate (%) Project as a whole 39.0 32.5 Livestock 28.1 Pig production 22 17.5 Poultry production 31 30.2 Aquaculture 50.0 43.4 Forestry 23.0 25.5 Tea Improvement 23.0 33.6 AgroprocessingL 40.0 32.9 /a Appraisal estimate of ERR for agroprocessing was based only on livestock processing. TABLE 10: STATUS OF LEGAL COVENANTS Agreement Section Covenant type Present status Original fulfillment date Description of covenant Comments Credit 2.02 3 C -- Govemment to open and maintain in US Govemment performed in accordance with dollar Special Account in a bank on terms and provisions of Agreement. conditions satisfactory to Bank and IDA. 2.03 10 C 12/31/95 Request for closing/completion date Extension granted by IDA. Closing and extensions for one year. completion dates revised to 12/31/95 and 6/31/96, respectively. 3.02 3 C 03/15/90 Reallocation of funds from Category I to 2. Request granted by IDA. Project 2.01(a) 4 CD -- Province to ensure adequate and timely Counterpart funds constraint in budgetary provisions. agroprocessing resolved after one year delay. 2.01(c) 2 C Interest rate at no less than ABC's prevailing Compliance confirmed. rates for similar purposes. 2.07 9 C Nov I, annual Detailed work and financing plans for Compliance confirmed. following year to be fumished to IDA. Project 2.08 9 CP Project enterprises to maintain sample Only partial compliance. Livestock households for monitoring farm budgets and household surveys carried out twice. family incomes and review. findings with IDA. 3.01(ii) I C July 1, annual Province to furnish audit report to IDA within Complete compliance throughout 6 months of end of fiscal year. implementation. Project Schedule 2, para. 1 6 CP Project activities should be carried out in Poyang Lake Management Plan submission conformity with sound environmental delayed and not in accordance with terms of practices acceptable to IDA. reference. 2, para. 2 10 CP Training programs to be reviewed with IDA Reviews often delayed and in complete. annually. International TA not implemented. Covenant types: Present Status: I = Accounts/audit 8 = Indigenous people C = Covenant complied with 2 = Financial performance/generate revenues from beneficiaries 9 = Monitoring, review and reporting CD = Complied with after delay 3 = Flow and utilization of project funds 10 = Project implementation not covered in categories 1-9 CP = Complied with partially 4 = Counterpart funding II = Sectoral or cross-sectoral budgetary or other NC = Not complied with 5 = Management aspects of executing agency 12 = Sectoral or cross-sectoral policy/regulatory/ 6 = Environmental covenants 12 = Sectoral or cross-sectoral policy/regulatory/institution I action 7 = Involuntary resettlement resource allocation 13 = Other - 31 - TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS Not Applicable TABLE 12: BANK RESOURCES: STAFF UNITS Stage of Project Cycle Planned Revised Actual Weeks $ Weeks $ Weeks $ Preparation to appraisal -- -- -- -- 61.7 157.6 Appraisal -- -- -- -- 30.6 78.6 Negotiations through Board -- -- -- -- 19.9 52.8 Approval Supervision -- -- -- -- 78.5 109.2 Completion -- -- -- -- 6.3 31.4 Total 201.6 578.6 -- -- 197.0 429.6 TABLE 13: BANK RESOURCES: MISSIONS Performnance ratings /b Stage of project cycle Month/Year Number of Days in the Specialized staff Implementation Development Types of persons field skill represented /a status objectives problems Through Appraisal 10/88 to 01/89 13 208 PO, RT, ES, AQ - -- (2), IE, FA, FS, PS, AS Appraisal through Board 03/89 to 03/90 5 43 IE, PO, A, 2E - -- approval /c Supervision 1 09/89 2 6 FA, PS I I Deferred Board presentation Supervision 2 07/90 2 6 E, P0 I 1I- Supervision 3 10/9 1 5 45 E, PS, AS, AQ, El 2 1 Delayed training Supervision 4 03/92 4 40 E, LS, AS, AQ I I - Supervision 5 05/93 3 18 LS, AQ, AS I I Procurement, training delays Supervision 6 04/94 3 15 LS, AQ, AS I I Couniterpart funds Supervision 7 05/95 1 22 LS, AQ, AS H-S KS - Supervision 8 11/95 1 4 LS S S - /a Key to specialized skills: IE =Irrigation Engineer, FA =Financial analyst, E =Economist, AQ = Aquaculturalist, PS Poultry specialist, P0 = Project off-icer, AS =Agribusiness specialist, LS = Livestock specialist, RT = resettlement and training specialist, ES = environmental specialist, FS =forestry specialist. /b Perfor-mance ratings: I Problem free or minor problems, 2 =moderate problems, 3 = major problems, HS = highly satisfactory, S = satisfactory. /c Includes Negotiations. - 33 - TABLE 14: ROLE OF WOMEN IN PROJECT Women's participation in Participating Women's participation Project Component project activities (%) women (no.) in training Total project 49 Livestock production 59 7.707 65 Pig raising 58 2,992 33 Duck raising 60 4,715 32 Aquaculture 50 1,953 Forestry 28 2,111 Tea rehabilitation 55 5,987 Agroprocessing 25 540 -34- Annex A ANNEX A: ICR MISSION AIDE MEMOIRE May 11-24, 1996 1. A Bank mission comprising Messrs. Brian Brandenburg, Ronald Zweig, Robert Hing and Mmes. Li Qun and Tong Zhong visited Jiangxi province to review preparations made for the Implementation Completion Report (ICR) for the above-noted project. The mission made selected field visits to evaluate the completion progress and production status of subprojects in the project's livestock, agroforestry, agroprocessing, tea rehabilitation and aquaculture components, and held discussions with staff of the Provincial and selected County Project Management Offices. The mission wishes to express its appreciation for the hospitality and cooperation extended by project staff. Subject to review and approval by Bank management, the following paragraphs record the mission's observations made, agreements reached and matters raised with PMO staff concerning the mission's field visit observations and documentation review. General 2. PMO Reporting PMO has provided the mission with its draft Implementation Completion Report, supported by generally well-prepared documentation. PMO has used a monitoring and evaluation scoring protocol for the assessment of the technical, production and physical completion targets reached for each subproject and component, in accordance with performance standards set out by PMO and the Bank. Several of these scoring procedures were verified on actual data provided. For the aquaculture component, under which numerous fish ponds are located in remote, difficult to access areas, physical verification proved difficult but was found to be generally to correspond with reported data. Reported completion data on these ponds were found to match actual site observations. Subprojects under the other project components were easier to access to verify for actual versus reported data, due to their relative smaller numbers (agroprocessing) or concentrated geographic locations (tea plantations; forestry stands; pig and poultry breeding farms and production households). 3. Implementation Completion Report Revisions. The mission has suggested to PMO the following areas where strengthening or supplemental information would enhance PMO's Implementation Completion Report: - 35 - Annex A * More detailed references related to project changes made during the Midterm Review; * Procurement information by project component, supplemental to general project procurement; * An improved annex detailing physical completion results and completion rates, and reasons for lower than projected completion; . Increased information on project impact, with particular reference to participating specialized households; * Inclusion of a section on factors affecting project implementation; . Expanded coverage of environmental mitigation and the impact of environmental protection on afforestation; - Inclusion of project management objectives and management problems encountered and resolved; * Inclusion of a section on factors affecting project sustainability; and * Expansion on the report section on "Key Lessons Learned." 4. Specialized Household Survey. The mission was also presented with an comprehensive specialized household (SH) survey, comprising socioeconomic data on 250 participating project households engaged in various types of pig, poultry and aquaculture production. Given the relative importance of household participation under the project, comprising 12 percent of the project investment cost and involving near 15,000 in number, this survey was viewed by the mission as an important part of the ICR preparation process as it sheds valuable light on project household activities and the project's impact on incremental family incomes and other socioeconomic parameters, which are reported in the ICR. 5. Project Completion Documentation. The mission reviewed the project completion documentation related to consolidated disbursement and completion reports; project component reports; estimated and actual indicators; incremental production; household, farm and factory models; and prices. 6. Requests for Clarification or Additional Information. The mission has requested PMO to complete, revise or furnish the following information or data: - 36 - Annex A * Actual consolidated investment and disbursement cost tables by project year. adjusted appropriately for the applicable RMB:Dollar and SDR exchange rates; * Selected physical completion data to allow further verification of reported physical completion rates; * A revised edition of PMO's implementation Completion Report, in line with requested revisions outlined in para. 3. Livestock Component 7. This component, comprising 12,581 pig, duck and geese producing SHs and 27 breeding and production farms for ducks, pigs and poultry, has generally been well implemented. With the exception of household goose production which is constrained by the supply of goslings, at least an equal number of nonproject households have replicated the family production models introduced by the project. All 21 duck-breeding farms have now reached full duckling production and are supplying participating duck-raising households with starter stock. In spite of the substantial breeding egg output generated by the duck-breeding farms under the project, the mission was concerned to find a large duckling hatchery located on Gongqing State Farm, with a design capacity of 26 hatching units of 10,000 eggs per hatching cycle each, with a serious breeding egg shortage problem; its new but idle hatching equipment poorly maintained. This hatchery was receiving insufficient hatching egg supplies from only its own duck-breeding farms and had-or could-not make arrangements to receive and hatch eggs from other breeding farms. The mission strongly advised PMO and the management to rectify this situation by ensuring additional supplies of hatching eggs, and to better utilize its staff of 14 to maintain this hatchery. 8. Three of the five pig-breeding (three) and commercial (two) farms have reached full production. Even though the two breeding farms release for sale fewer young breeding stock than projected due to heavier than estimated culling, this lagging progress target is serving to maintain good genetic quality of those breeding pigs due to stricter than estimated selection and culling. 9. The mission requested from PMO the following information or data: * Revised data on estimated, actual and incremental livestock component indicators and incremental outputs; * Clarification of pig breeding and commercial farm production models with respect to unit input and output prices and actual financing plans; - 37 - Annex A * Serial 1991-96 prices for feed ingredients, breeding and commercial pigs, ducks and geese; * A separate financial cash flow report of the Gongxing duckling breeding farm hatchery, incorporating a projection for incremental breeding egg supply to reach full hatchery capacity from duck breeding farms outside the State Farm. Agroprocessing Component 10. Counterpart funds constraints have caused significant delays in construction and subsequent equipment procurement and commissioning of two large-capacity feed concentrate mills and two poultry-processing plants. Construction of the latter two was further delayed by severe floods in 1995. These four subprojects are now expected to be in operation by September 1996 and have been projected to become profitable despite Bank- approved expansion beyond their SAR scope and capacity; construction delays; and the resulting cost increases. The packaging color-printing plant is in operation and is, despite substantial equipment cost overruns, expected to become profitable due to an intensive and successful marketing program. The mission has commended PMO for implementing its earlier recommendation made during the 1995 supervision to embark on a progressive marketing campaign to generate the necessary printing orders for sustained profitability of this plant. The resin-processing factory is projected to increase its output from 2,000 tons (1995) to 4,000 tons by 1999. 11. The mission requested that PMO address the following: * Provide close monitoring and evaluation support to the trial production and market entry of the newly commissioned feed concentrate mills and poultry- processing plants; * Ensure that those duck-producing SHs which will begin to sell ducks to the two new poultry-processing plants will receive a farm-gate price equitable to prevailing free market prices; * Closely monitor the supply of resin to the processing plant to ensure its target profitability at 4,000 tons; * Provide the mission with the financing plans, including loan amounts and loan terms, for all agroprocessing plants, including a loan and loan term schedule for one each of the primary and secondary tea-processing plants; and * Provide information on gender participation in relation to SH contracts. - 38 - Annex A Afforestation Component 12. This component was increased substantially at midterm review from the planting of 6,705 ha of slash pine to 8,700 ha, and this increased physical completion target has been fully met. The synchronization of slash pine planting with the commissioning of the resin- processing plant has been generally successful. The mission has expressed concern about the replacement of inorganic fertilizer application by less expensive cost organic compost in order to reduce cash flow problems during the long forest maturation process. In view of the claim by PMO advisors that such a substitution has no negative effects on tree growth and rosin yield, the mission has requested PMO to: Analyze the comparative impact of inorganic and organic fertilizer on slash pine growth by selecting, in several forest areas, 2-ha trial plots on which only inorganic fertilizer will be applied at the recommended rates. PMO should also: * Revise the aggregate forestry production and cash flow model to more accurately reflect the actual distribution pretapping expenses during the nonproduction tree growth years; and * Prepare a brief report assessing the impact of reforestation on environmental integrity and erosion control. Tea Rehabilitation Component 13. The tea rehabilitation subprojects are now entering their second tea-processing season. Actual tea yields are 3 t/ha, versus 5.6 t/ha as projected for 2000. Additional processing capacity will be built from own funds as tea yields increase in the years to come. The mission has requested PMO to: * Design, based on the phased upgrading of the four tea rehabilitation blocks in the Jindezhen area, a standard tea yield curve from which yield increases can be more accurately monitored; * Provide the necessary assistance for close and continuous monitoring of year- by-year tea yields to ensure that optimal yields will be achieved and that causes for lower than expected yields can be identified quickly; and * Provide the necessary funds to ensure that additional tea-processing capacity will continue to be constructed to keep pace with increasing tea supplies in the entire tea-producing area, and not only in the project areas. - 39 - Annex A Aquaculture Component 14. The aquaculture component has generally been well implemented. A significant adjustment was made during the project's midterm review, when the scale of each of the aquaculture subcomponents was adjusted to reflect the relative success achieved by several fish pond models during the first years of the project. Accordingly, due to the poor perforrnance of the net cage, net enclosure, and net barrier subcomponents. the size of the investment for each was reduced, with development of the first two terminated. The good performance with new and improved ponds for fish production alone or integrated with pig and duck husbandry resulted in these subcomponents being enlarged in proportion to their relative performance. 15. The pearl culture subcomponent remained unchanged at the midterm review, with the total investment completed at that time. At the close of the project, all facilities constructed by the project except for the net cages and net enclosures, had successful production and financial performance. The PMO reported that the development targets set at the midterm review were fully achieved; although in the case of fish ponds, there was considerable inconsistency in the quality of engineering applied. It should also be noted that the serious flood of 1995 only marginally affected a few projects sites in the flood affected areas. 16. Markets and Prices. For fish and livestock produced by the component, the market price has more-or-less kept pace with escalating input prices. This is likely due the large number of sites developed by the project across Jiangxi. For pearls, there has been a significant decline in prices dropping from Y 1,800/kg to Y 1,200/kg between 1993 and 1995. The project pearl farms are adjusting to the market situation by diversifying the variety of their pearl products. 17. Three issues were identified during the mission which require follow-up actions: * Subcomponent Evaluation. The quality of each subcomponent was evaluated by the PMO in reference to the engineering specifications defined at appraisal and not in reference to the performance achieved from the actual engineering employed in the development of project sites. The mission recommends that the PMO evaluate the experience gained from the project and assess whether adjustments in engineering made, improve or detract from the actual performance of each subcomponent; * Monitoring and Reporting The mission strongly recommends that each project county compile detailed information on the area developed at each project site, the total investment (fixed assets and working capital), the sources of funds, and the area contracted by each household or each farm (in the case of pearls as of - 40 - Annex A December 31, 1995, and the PMO should submit this information to the mission by June 4, 1996); * Contract Duration. The contracts provided to farmers were about three years in length after which the contracted area is re-auctioned, thereby removing incentives for further investment. In many instances. these short-term contracts result in the farmners not adequately maintaining, upgrading, and/or investing in improvement of the contracted facilities. The mission recommends that the PMO take steps to increase the term of contracts for land use to a 30-year period to follow the present Chinese government policies, based on an incentives/disincentives program related to good or poor land use management; * A more detailed environmental impact assessment on all aquaculture subcomponents; and * More detailed information on the socioeconomic aspects of men and women contracted as SHs under the component. ICR Completion Schedule 18. The draft ICR to be prepared by the Bank is expected to be completed by August 1, for forwarding to PMO for its comments, and to be returned to the Bank by September 20, 1996. Nanchang, Jiangxi, May 24. 1996 -41- Annex B ANNEX B: BORROWER'S CONTRIBUTION TO THE ICR 1. Jiangxi Agricultural Development Project (ADP) is a successful project. Its implementation achievements, which is the results of joint efforts made by all parties concerned, is satisfactory and is attributed to the active participation and indigenous work of project farmers, to the careful management of project management office (PMO) and the guidance and support by governments at each level and the World Bank. After five years implementation, the project has achieved good economic, social, and ecological benefits. The success of Jiangxi ADP also plays a demonstration effect to a larger agriculture development project in the future. 2. We think the general assessment of this report is true, objective, comprehensive and fair. All data and benefits calculated in the report conform with the practical situation of the project. The report concludes that the project was successful and proposes key lessons that should be learned. These lessons provide a valuable reference for future operations and the proposed second phase project. We will pay full attention to them in preparation for the second phase project. 3. As it is mentioned in the report, we think that the success of Jiangxi Agricultural Development Project mainly reflects in the following aspect: (a) The project utilized the IDA credit to finance comprehensive agriculture development, importing new stocks, new technology, advanced equipment and scientific project management experience; (b) The project took full advantage of the natural resources and low labor cost in the project areas to improve agriculture productivity through comprehensive agriculture development; (c) The project generated employment opportunities for farmers. All participating farmers were trained and their skills were significantly improved. Women, in particular, participated actively in the project activities, about 49 percent of the trainees were women, thus further improving women status in the project; - 42 - Annex B (d) Farmer's income in the project area are obviously higher than the farmers in the nonproject areas, and the local government income also increased at the same time; (e) Farmer's awareness of commercialization in the project areas were further enhanced. and agricultural production shifted from subsistence level to a successful, cash-based production of moderate size; (f) Due to the introduction of new animal stock and technologies., the project models were widely accepted and replicated by farmers in nonproject areas; (g) The forestry and tea components have protected land, prevented water and soil erosion and improved surrounding ecological environment. The agroprocessing component has increased added value of agroproducts and has strengthened market and export competitiveness; (h) The Provincial PMO has formulated a series of project management measures, technical specifications and standards which proved to be viable and effective. (i) Management of the PMO staff at each level was enhanced and a young but relatively mature team, experienced in project management, has been established. This will provide a guarantee for success for the future project; (j) The success of the project reflected Jiangxi provincial government's good implementation capabilities and were generally consistent with both the Bank's own development strategy and the Bank's County Assistance Strategy at the same time. 4. We think that the key lessons pointed out in the report are positive and have practical significance. Implementation problems, especially the unavailability of counterpart funds which delayed plant operation, and the failure to accomplish overseas training will require great attention in the future preparation of the second phase project. We will take effective measures to address and resolve these issues. We believe that all these problems can be solved as our national economy further develops. 5. Project implementation received consistent assistance and guidance from FAO and the World Bank. The IDA officers worked very hard to supervise and visit project sites on their field trips and proposed measures for improvement whenever problems were discovered. They adjusted project content in accordance with the practical situation, in order to guarantee smooth implementation of the project. Their work was efficient and - 43 - Annex B of high quality during the whole project implementation. Cooperation between both parties was friendly and sincere and opinions on project issues were exchanged frankly. This help solve various problems which occurred during project implementation. 6. We completely agree with the opinions in the report. We will conclude experiences and draw lessons to remedy our deficiency for the benefits of the proposed second phase project. We sincerely wish to continue our cooperation with the World Bank. and we will make efforts to prepare for the second phase project and make it generate better achievements in the future. IMAGING Report No: 16 050 Type: ICR
Группа Всемирного банка · Implementation Completion and Results Report
China - Jiangxi Agricultural Development Project
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