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Document of
The World Bank
Report No: ICR1743
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-47200)
ON
A LOAN
IN THE AMOUNT OF US$100 MILLION
TO
THE PEOPLE’S REPUBLIC OF CHINA
FOR
JIANGXI INTEGRATED AGRICULTURAL MODERNIZATION PROJECT
December 23, 2011
China and Mongolia Sustainable Development Unit
Sustainable Development Department
East Asia and Pacific Region
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CURRENCY EQUIVALENTS
(Exchange Rate Effective June 30, 2010)
Currency Unit = Renminbi (RMB) Yuan (Y)
1.00 = US$0.15
US$1.00 = Y6.81
FISCAL YEAR
January 1 -- December 31
ABBREVIATIONS AND ACRONYMS
ABC Agricultural Bank o f China
ADP Agricultural Development Project
BP Bank Procedures
BPM Beneficiaries Participation Manual
CAS Country Assistance Strategy
CFAA Country Financial Accountability Assessment
CPP Community Participation Procurement
D C Direct Contracting
EIA Environment Impact Assessment
EMMP Environmental Monitoring and Management Plan
ERR Economic Rate of Return
FA Force Account
FM Financial Management
FRR Financial Rate o f Return
ha Hectare
IBRD International Bank for Reconstruction and Development
ICB International Competitive Bidding
ICR Implementation Completion Report
IDA International Development Association
IPM Integrated Pest Management
JIAMP Jiangxi Integrated Agricultural Modernization Project
M&E Monitoring and Evaluation
MIS Management Information System
mu Chinese area measurement, 1 mu=0.0667 ha. 1 ha=15 mu
MEIRO Machinery and Electric Product Import Review Office
MNDP Multi-Nationalities Development Plan
MOF Ministry of Finance
MOFTEC Ministry o f Foreign Trade and Economic Cooperation
NBF Non Bank Financing
NPV Net Present Value
NCB National Competitive Bidding
NDRC National Development and Reform Commission
NS National Shopping
O&M Operation and Maintenance
OP Operational Policy
PAD Project Appraisal Document
PIM Project Implementation Manual
PHRD Policy and Human Resources Development
PLG Project Leading Group
PMO Project Management Office
PMP Pest Management Plan
PPMO Provincial Project Management Office
PRA Participatory Rural Appraisal
PRC People's Republic of China
RCC Rural Credit Cooperative
SA Social Assessment
SAR Social Assessment Report
SIDD Self-Managed Irrigation and Drainage District
SOE Statement o f Expenditures
SW Small Works
TA Technical Assistance
TAG Technical Advisory Group
TOR Terms o f Reference
WDF Women Development Facilitator
WSO Water Supply Organization
WTO World Trade Organization
WUA Water User Association
QAG Quality Assurance Group
Vice President: James W. Adams
Country Director: Klaus Rohland
Sector Manager: Paul Kriss (Acting)
Project Team Leader: Ximing Zhang
ICR Team Leader: Ximing Zhang
CHINA
Jiangxi Integrated Agricultural Modernization Project
CONTENTS
Page No.
Data Sheet ........................................................................................................................ i
A. Basic Information .................................................................................................... i B. Key Dates ................................................................................................................ i C. Ratings Summary .................................................................................................... i D. Sector and Theme Codes ........................................................................................ ii
E. Bank Staff ............................................................................................................... ii F. Results Framework Analysis ................................................................................. iii
G. Ratings of Project Performance in ISRs ................................................................ v H. Restructuring .......................................................................................................... v I. Disbursement Profile ............................................................................................. vi
1. Project Context, Development Objectives and Design ............................................ 1
2. Key Factors Affecting Implementation and Outcomes ........................................... 5 3. Assessment of Outcomes ....................................................................................... 13
4. Assessment of Risk to Development Outcome ...................................................... 21 5. Assessment of Bank and Borrower Performance .................................................. 21
6. Lessons Learned..................................................................................................... 24 7. Comments on Issues Raised by Borrower, Implementing Agencies and Partners 25
Annex 1. Project Costs and Financing ......................................................................... 28 Annex 2. Outputs by Component ................................................................................ 29 Annex 3. Economic and Financial Analysis ................................................................ 31 Annex 4. Bank Lending and Implementation Support/Supervision Processes ........... 34
Annex 5. Beneficiary Survey Results .......................................................................... 37 Annex 6. Stakeholder Workshop Report and Results .................................................. 37 Annex 7. Summary of the Borrower’s ICR and/or Comments on the ICR ................. 37
Annex 8. Comments of Co-financiers and Other partners/Stakeholders ..................... 38 Annex 9. List of Supporting Documents ..................................................................... 38
Map
i
Data Sheet
A. Basic Information
Country: China Project Name:
Jiangxi Integrated
Agricultural
Modernization
Project
Project ID: P065463 L/C/TF Number(s): IBRD-47200
ICR Date: 12/22/2011 ICR Type: Core ICR
Lending Instrument: SIL Borrower:
PEOPLE'S
REPUBLIC OF
CHINA
Original Total
Commitment: US$100.0M Disbursed Amount: US$100.0M
Revised Amount: US$100.0M
Environmental Category: B
Implementing Agencies: Jiangxi Provincial Project Management Office
Cofinanciers and Other External Partners:
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 04/17/2001 Effectiveness: 05/14/2004 05/14/2004
Appraisal: 11/07/2002 Restructuring(s):
Approval: 11/20/2003 Mid-term Review: 07/31/2007 08/31/2007
Closing: 06/30/2010 06/30/2010
C. Ratings Summary
C.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Development Outcome: Low
Bank Performance: Moderately Satisfactory
Borrower Performance: Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Satisfactory
Quality of Supervision: Moderately Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank
Performance: Moderately Satisfactory
Overall Borrower
Performance: Satisfactory
ii
C.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators
QAG Assessments
(if any) Rating
Potential Problem Project
at any time (Yes/No): No
Quality at Entry
(QEA):
Moderately
Unsatisfactory
Problem Project at any
time (Yes/No): Yes
Quality of
Supervision (QSA): None
DO rating before
Closing/Inactive status: Satisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Agricultural extension and research 15 15
Agricultural marketing and trade 15 15
Animal production 10 10
Crops 10 10
Irrigation and drainage 50 50
Theme Code (as % of total Bank financing)
Other rural development 33 33
Rural markets 33 33
Rural services and infrastructure 34 34
E. Bank Staff
Positions At ICR At Approval
Vice President: James W. Adams Jemal-ud-din Kassum
Country Director: Klaus Rohland Yukon Huang
Sector Manager: Paul Kriss Mark D. Wilson
Project Team Leader: Ximing Zhang Sari Söderström
ICR Team Leader: Ximing Zhang
ICR Primary Author: Ximing Zhang
Xueming Liu (FAO/CP)
iii
F. Results Framework Analysis
Project Development Objectives (PDO) The PDO was to improve the livelihood of rural households in Jiangxi Province through
establishment of integrated, economically and environmentally sustainable, and market-
driven agricultural production systems focusing on productivity and agricultural output of
high quality and value. Improved livelihood is defined as increased income; reduced
risks; increased employment, in particular of women; and improved access to irrigation
and drainage, technologies, information, training, and markets.
(a) PDO Indicator(s)
There were nine Outcome Indicators in the final PAD (as approved by the Board),
without quantification of the baseline values or the final completion targets. The Loan
Agreement did not include any result indicators. Furthermore, out of those nine
indicators in the PAD, three were very poorly designed and virtually irrelevant to
measuring the PDO achievements and the last one (quality of irrigated land) was not
considered measurable. During implementation, the implementing agencies have used a
set of eight indicators, comprising six of the original PAD indicators (1 through 6 in the
original PAD list) plus two new indicators to measure the outcomes from the irrigation
activities. This set of eight indicators is used in this ICR for the purpose of assessing the
achievement of project outcomes, as presented in the table below. The Baseline values
were collected through a field survey and recorded in the Project Implementation Manual
(PIM, June 2005). The final set of indicators, including the revised Final Targets at
Completion, was agreed at the Mid-Term Review (MTR) in July 2007. The Actual
Achieved Values presented in the table below are the ones reported by the internal M&E
system (also recorded in the Borrower’s ICR Report).(See also ICR Section 2.3 M&E
and 3.2 Achievement of PDOs).
Indicator Baseline Value
Original Target
Values (from
approval
documents)1
Formally
Revised
Target Values
Actual Value
Achieved at
Completion or
Target Years2
Indicator 1 : Annual average income per capita for farmers in the project areas increased from
US$332 to US$508.
Value
(quantitative
or Qualitative)
US$332 US$508 US$621
Date achieved 12/31/2004 06/30/2010 06/30/2010
Comments
(incl. %
achievement)
Fully Achieved. The annual average income per capita for project farmers
exceeded the target value by 11%.
Indicator 2 : Crop output value per household increased from US$774 to US$1,107.
Value US$774 US$1107 US$1214
1 Original Target Values are from the Project Implementation Manual (PIM) dated on June 30, 2005. Baseline Values
were measured in 2005 and supplemented in 2011 (since 8 project counties dropped from the project and 8 new
counties joined). 2 Average performance of beneficiaries is from M&E systems, as well as the final government ICR Report.
iv
(quantitative
or Qualitative)
Date achieved 12/31/2004 06/30/2010 06/30/2010
Comments
(incl. %
achievement)
Fully Achieved. The actual value of crop production per capita exceeded the
original target value by around 10 percent.
Indicator 3 : Annual Orange yield increased from 8,295kg/ha to 14100kg/ha. 3
Value
(quantitative
or Qualitative)
8,295 kg/ha 14,100 kg/ha 17,835 kg/ha
Date achieved 12/31/2004 06/30/2010 06/30/2010
Comments
(incl. %
achievement)
Fully Achieved. The actual annual orange yield increased by 26% higher than
the original target.
Indicator 4 Annual Paddy yield increased from 5,325kg/ha to 5,865kg/ha.
Value
(quantitative
or Qualitative)
5,325 kg/ha 5,865 kg/ha 5,955 kg/ha
Date achieved 12/31/2004 06/30/2010 06/30/2010
Comments
(incl. %
achievement)
Fully Achieved. Annual paddy yield increased by 11.8% higher than the target.
Indicator 5 Farmer loan/agricultural enterprise loan repayment rate.
Value
(quantitative
or Qualitative)
0 98% 100%
Date achieved 12/31/2004 06/30/2010 06/30/2010
Comments
(incl. %
achievement)
Fully Achieved. Matured farmer loan/agricultural enterprise loan repayment rate
reached to 100% due to strict loan guarantee requirement, based on survey
conducted by PMO after project completion.
Indicator 6 Water fee collection rate increased from 0% to 86%.
Value
(quantitative
or Qualitative)
0 86% 90%
Date achieved 12/31/2004 06/30/2010 06/30/2010
Comments
(incl. %
achievement)
Fully Achieved. Based on survey conducted by PPMO after project completion.
Indicator 7 : Reliability of Irrigation Services4 increased from 40% to 80%
Value
(quantitative
or Qualitative)
0 80% 80%
3 PAD Outcome indicator No. 3 was defined as “increase of yield of crops”. However, it was agreed with
the client that for the purpose of project monitoring, the yields of paddy rice and oranges were going to be
used, since these are the most important products, representative of the major part of the farm incomes. 4 Reliability of irrigation service: The reliability of irrigation service is defined as the degree to which the
irrigation system, and its water deliveries, conform to the prior expectations of its users.
v
Date achieved 12/31/2004 06/30/2010 06/30/2010
Comments
(incl. %
achievement)
Fully Achieved. Based on survey conducted by PPMO after project completion.
Indicator 8 : Water Conveyance Efficiency5 of canal system increased from 0.4 to 0.7
Value
quantitative or
Qualitative)
0.4 0.7 0.7
Date achieved 12/31/2004 06/30/2010 06/30/2010
Comments
(incl. %
achievement)
Fully Achieved. Based on survey conducted by PPMO after project completion.
(b) Intermediate Outcome Indicator(s)6
Not defined in PAD
G. Ratings of Project Performance in ISRs
No. Date ISR Archived
DO IP Actual
Disbursements (US$ millions)
1 12/16/2003 Satisfactory Satisfactory 0.00
2 06/10/2004 Satisfactory Unsatisfactory 1.00
3 12/20/2004 Satisfactory Unsatisfactory 5.50
4 06/21/2005 Moderately Satisfactory Moderately Satisfactory 6.04
5 05/01/2006 Moderately Satisfactory Moderately Satisfactory 9.50
6 10/12/2006 Satisfactory Satisfactory 18.43
7 11/20/2007 Satisfactory Satisfactory 38.86
8 02/10/2009 Satisfactory Satisfactory 74.53
9 04/03/2010 Satisfactory Satisfactory 93.90
10 06/08/2010 Satisfactory Satisfactory 99.01
11 06/24/2010 Satisfactory Satisfactory 100.00
H. Restructuring
The project was formally restructured in May 20107. The restructuring involved the
reallocation of loan funds. During implementation savings had occurred in the categories
5 Water Conveyance Efficiency: the water conveyance efficiency is defined as the ratio between the water
that reaches a farm or field and that diverted from the irrigation water source. 6 Instead of the current results framework, the PAD in 2003 used a Logframe which did not define
intermediate outcome indicators but formulated 39 output indicators ( see PAD Annex 1). Most of these
indicators were regularly monitored and updated in the semi-annual progress reports prepared by the
PPMO. ICR values were drawn from Government ICR report based on the project information
management system (See Annex 2).
7 Report No. 54616 Restructuring Paper on a Proposed Project Restructuring of Jiangxi Integrated
Agricultural Modernization Project (Loan Number 4720-CHA) (Project Date: March 8, 2004) in the Initial
vi
of Goods; Consulting Services; Training and Study Tours; and Farm Production Sub-
Loans. The reallocation of these savings to the category Works, allowed increased
construction or improvement of additional irrigation schemes.
I. Disbursement Profile
Amount of (US$100 million) and a Restructured Amount of (US$100 million) to the People’s Republic of
China. May 5, 2010
1
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Country and Sector Background
1.1.1 In the two decades prior to the project, China had not only ensured food grain
security for its large and still growing population, but also achieved impressive growth in
agriculture and in the rural sector. Many elements regarded as critical for rural
development, such as upgrading of marginal lands, investments in the water sector, and
agricultural research and technology contributed to the substantial gains. However,
towards the end of this period agricultural growth slowed and farm income fell
increasingly behind non-agricultural income. The sector faced considerable challenges, in
particular following China's entrance into WTO. In order to maintain the effectiveness of
transitional policies and investment gains, new integrated development approaches had to
be developed.
1.1.2 Stable and sustainable growth in agriculture and ensuring food security was one
of the key areas of the Government's strategy, as articulated in the "Ninth Five-Year
Plan"(1996-2000) and the "Fifteen-Year Perspective Plan" (2006-2020). The major
challenges defined in these plans were to achieve greater self-sufficiency in grain, to raise
farmers' standard of living, to make better use of technology and to speed up the
development of nearby industries that use agricultural products and to eliminate poverty.
In the "Tenth Five-Year Plan," there was a shift in focus from quantity of food supply
towards cost effectiveness in production and larger diversity and higher quality of
products. With increasing income levels in the urban areas, consumer demand became
increasingly sophisticated requiring a higher variety of products and a distinctively higher
quality of products at competitive prices. Responding to the changing needs, the
Government's focus shifted towards regulatory responsibilities and removing the
remaining policy, administrative and regulatory constraints. In addition, to be successful,
the public sector had to target investments for creating the necessary market institutions
which enabled private entrepreneurs to make resource allocation and marketing decisions
based on undistorted and transparent price signals.
Rationale for Bank Assistance
1.1.3 These key issues were consistent with the three central themes of the CAS8,
namely: (a) to improve the business environment and help accelerate the transition to a
market economy; (b) to address the needs of the poorer and disadvantaged people and
lagging regions; and (c) to facilitate environmentally sustainable development. Moreover,
World Bank experience in financing public goods, particularly in situations where these
provide a basis for further private investments, added value to the Borrower’s aims.
8 Memorandum of the President of the International Bank for Reconstruction and Development and the
International Finance Corporation to the Executive Directors on a Country Assistance Strategy of the
World Bank Group for the Peoples Republic of China, January 22, 2003. Report No.25141
2
These were to provide an enabling environment for future economic growth in Jiangxi,
including accelerating the transition of the agricultural sector into a modern market
economy. It was also hoped that Bank involvement would attract grant financing from
other donors for technical assistance.
1.2 Original Project Development Objectives and Key Indicators
1.2.1 The development objective of the project was to improve the livelihood of rural
households in Jiangxi Province through establishment of integrated, economically and
environmentally sustainable and market-driven agricultural production systems focusing
on productivity and agricultural output of high quality and value. Improved livelihood
was defined as increased income; reduced risks; increased employment, in particular of
women; and improved access to irrigation and drainage, technologies, information,
training, and markets.
1.2.2 Key indicators measuring the achievement of the project development objective
were supposed to be obtained by a comprehensive monitoring and evaluation (M&E)
system. The following impact indicators, defined in terms of the difference between
participating project households and representative non-project households, were to be
measured: (a) Growth in on-farm income; (b) Growth in farm output value per mu9; (c)
Increase of yield of crops; (d) Product value share of three most important products as
indicator of diversification; (e) Increase of volume and variety of sales of local seed
companies; (f) Increase in sales volume of local agro-enterprises; (g) Farmer loan and
agro-enterprise repayment rate; (h) Water fee collection rates; and (i) Quality of irrigated
land.
1.3 Revised PDO and Key Indicators
1.3.1 There was no revision of the PDO. A new revised set of Outcome and Output
indicators was agreed with the PPMO at MTR as follows: (i) annual average income per
capita for farmers; (ii) crop output value per household; (iii) annual orange yield; (iv)
annual paddy yield; (v) farmer loan/agricultural enterprise loan repayment rate; (vi) water
fee collection rate; (vii) reliability of irrigation services; and (viii) water conveyance
efficiency (see also para.2.3.2).
1.4 Main Beneficiaries
1.4.1 The primary beneficiaries directly benefited from (a) crop production on farm
land with improved irrigation and drainage; (b) diversified agricultural operation,
including livestock and fisheries; (c) agro-processing and marketing activities; and (d)
training and extension outreach. The number of beneficiary households was estimated at
283,000 with an estimated population of around 1.3 million, spread over 21 counties in
the province (see Annex 2).
9 1 mu =0.0667 ha: 1 ha= 15mu
3
1.4.2 The secondary beneficiaries were those households which benefited from (a) the
improved marketing services and processing industries; and (b) increased availability of
more diversified food products, which has enhanced local people’s nutrition and food
security. The number of such secondary beneficiaries is unknown.
1.5 Original Components
1.5.1 The project had four components: (a) Irrigation and Drainage; (b) Farm
Production Improvement; (c) Market Systems Development; and (d) Project
Management, Monitoring, and Evaluation.
1.5.2 The Irrigation and Drainage Component financed: (a) physical construction
that comprised rehabilitation and extension of existing irrigation works, including main
and secondary canals, drainage structures, and pumping stations (works and goods);
construction of on-farm irrigation and drainage systems (works and goods); construction
of access and farm roads (works); and (b) institutional support for a more efficient and
sustainable operation and maintenance of the infrastructure and the land and water
resources for irrigated agriculture (technical assistance and training). Beneficiaries would
contribute their labor (or an equivalent cash contribution) to the improvements with cash
costs for construction materials and other operating costs financed by the counties using
loan proceeds and counterpart contributions. The establishment of Self Financing
Irrigation and Drainage Districts (SIDD) with the formation of Water User Associations
(WUAs) for all irrigation command areas under the project would be supported. About 90
sub-projects with about 70,000 ha of land would be covered by investments, benefiting
about 283,000 farm households.
1.5.3 The Farm Production Improvement Component included:
(a) Soil Fertility Improvement through one-time fertilization with lime and/or
phosphate fertilizer of part of the project area under irrigation rehabilitation that would
require such treatment (estimated at about 10% of the area). Farmers were expected to
provide the labor necessary for the application of the fertilizer as their counterpart
contribution.
(b) Training, Extension and Applied Research. This sub-component was to finance
applied research at universities and research institutes, technical assistance (TA), training
of trainers (in line bureaus and extension stations), and training of households and
participating enterprises. Activities to be financed included: (i) grants for applied research
(identifying, developing and adapting relevant low-cost technologies to solve specific
problems to facilitate implementation and enhance benefits from the project activities;
(ii) training of trainers, farmers; and of provincial, county and township project staff, to
ensure smooth project implementation and sustainability (delivered through TA,
individual training, workshops, and study tours); and (iii) public extension services
(participatory demonstrations, household visits, group discussions, technical training,
company led training and extension). An applied research, training and extension strategy
was included in the Project Implementation Manual (PIM).
4
(c) Farm Production Support. Complementing the funding of infrastructure
investments, the project was supposed to provide sub-loans for individual farm
households or farmer groups for the improvement of soil fertility or farm production
activities such as: (i) irrigated field crops; (ii) livestock (mainly pigs and poultry); (iii)
small-scale on-farm fish production; and (d) upland crops. Borrowing household would
be proposed by the communities and selected by the PMO or RCC based on their
willingness (as determined by their application), their needs (as determined by the
community) and their fund repayment ability. These farmers would be able to choose
their investments into improved agricultural production. The menu of investment options
would be designed in a participatory manner, in the farmers groups, through Participatory
Rural Appraisal (PRA) methods, to ensure that the farmers’ demands across different
farm production systems are met in a flexible manner throughout the project
implementation period. A detailed implementation plan (Farm Production Improvement
Manual) including the technical design, selection of beneficiaries, and financial
arrangements was developed.
(d) Support to Women and Ethnic Minority Farmers. While all activities under the
project were designed to give equal opportunities to women, this Sub-component would
ensure that women participate actively and benefit from the project. The Jiangxi
Provincial Women’s Federation would play the leading role in its implementation.
Provincial, county, and township level Women Development Facilitators would be
appointed and trained. In addition, earmarked funds would be made available to people in
the Yaoshan village, a village inhabited by people of Yao minority.
1.5.4 The Market Systems Development Component included: (a) financial support
to agro-enterprises and leading households; (b) construction, rehabilitation or up-grading
of agricultural product markets; (c)promotion of quality standards and improvements of
market information systems; and (d) promotion of farmers' marketing groups (farmers'
professional associations).
1.5.5 The Project Management, Monitoring and Evaluation Component covered:
(a) project management; (b) institutional strengthening of PMOs (goods and training); (c)
establishment of a monitoring and evaluation (M&E) system that includes environmental
and social indicators (technical assistance and training); and (d) development of
community advisory/participation groups (technical assistance and training).
1.5.6 The project design adopted an approach trying to integrate project activities in
target areas. In particular: (a) there was geographic concentration of activities in priority
irrigation areas across the project counties, including the Farm Productivity Improvement
Component and to some extent the Market Development Component, both of which were
closely located, linked to and built on the irrigation and drainage investments; (b) crop
and livestock activities were also integrated at the farm household level with the
irrigation, drainage and land improvement investments to maximize the return to these
infrastructure investments and to allow for expansion of production possibilities through
diversification and productivity increases; and (c) improving farmers' responsiveness to
5
market signals and ensuring that part of the new value added to agricultural production
accrued to farmers.
1.6 Revised Components
1.6.1 At the Mid-Term Review (MTR) the deletion of some activities included in two
subcomponents were confirmed and agreed. First, within the Farm Production
Improvement Component, sub-component (b) Training, Extension and Applied Research,
the applied on-farm research activity was dropped. At appraisal this had been expected
to be grant financed, but identification of a source of grant financing proved to be
unsuccessful. Second, in subcomponent (d)-Support to Women and Ethnic Minorities,
the women’s development activities continued but under parallel financing from the All
China Women’s Federation. The ethnic minority’s activity related to Yaoshan village
(Quannan County) ended when the county withdrew from the project. These adjustments
to the activities included in the subcomponents were recorded in the MTR Aide Memoire,
but never formalized in an amendment to the legal agreement.
1.7 Other Significant Changes
1.7.1 There were no significant changes in project design, scope, scale and
implementation arrangements during implementation, but some cost reallocations were
made among components. A Loan Agreement Revision was made in late 2005 to allow
eight counties to withdraw and eight new countries to participate in the project.10
The
main reasons for withdrawal of these counties were lack of agreement on project
objectives and design, and inability to raise the necessary counterpart funds as discussed
in Section 2.2.
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
2.1.1 Key factors and issues on the quality at entry. Initially the Borrower’s
conception was a project mainly aimed at agro-processing investment. In view of the
mixed and often poor experience of such investments in completed and on-going
projects, the Bank indicated its reluctance to lend for this purpose. At the same time, the
Bank recommended supporting investments in infrastructure (particularly irrigation and
drainage rehabilitation or improvement), where experience had shown generally good
returns from relatively small investments per unit area. Some of the poorer counties felt
that it would be impossible for beneficiaries to pay for such irrigation infrastructure
investments and that the county was not in a position to bear the cost and repay the loan
10
Original counties were: Chongren, Nancheng, Yihuang, Chongyi, Gan, Golden Development District,
Longnan, Quannan, Shicheng, Xinfeng, Xingguo, Xunwu, Zhanggong District, Hukou, Pengze, Wuning,
Yongxiu, Dexing City, Hengfeng, Guangfeng and Yugan. Of these Chongren, Nancheng, Yihuang, Golden
Development District, Quannan, Zhanggong District, Wuning and Yongxiu withdrew and Leping City,
Guixi City, Dayu, Shangyou, Dingnan, Huichang, Ruijin and Poyang joined the project.
6
and therefore withdrew from the project. During the four year extended identification,
preparation and appraisal period and the start of implementation eight countries dropped
out of the project, to be replaced by eight new counties. From the Mid-Term Review
onwards the project covered 21 counties and cities.
2.1.2 Quality at Entry (QAE) was compromised by the use of the Finance Bureau (FB)
for providing sub-loans to farmers or market entrepreneurs. This was inconsistent with
the financial intermediation policies in accordance with Bank’s OP8.30. The project
design also lacked any coherent and implementable M&E design. While it is difficult to
judge whether either of these adversely affected achievement of the PDOs, the lack of
M&E data makes any assessment of the degree of success in attaining the PDO highly
problematic. Project complexity placed a burden on project management and the Bank’s
procurement and re-imbursement requirements were criticized by the implementing
agency on the basis that they were cumbersome and unclear.
2.1.3 Assessment of project design. Project design was complex, integrating irrigation
improvement, on-farm productivity increase and market development. The four
components included 17 subcomponents or activities. Within the irrigation component
the project supported a Self Financing Irrigation and Drainage District (SIDD) approach
with the formation of Water Users Associations (WUAs) and the re-orientation of
existing reservoir management bureaus and township water conservation stations to
become water supply organizations. The management burden of such a complex and
innovative project was mitigated by having a single sector focus and concentrating
activities to the geographic areas of the selected irrigation schemes in 21 counties of
Jiangxi. In the absence of acceptable financial institutions (FIs) in the often remote
project areas, responsibility for channeling of sub-loans to project beneficiaries and
subsequent loan recovery was vested in these FBs. On-lending arrangements were
detailed in the Project Implementation Manual (PIM). In the Farm Production
Improvement and Market Systems Development component, farmers and entrepreneurs
were supposed to take sub-loans for investments such as orchard development, pig
raising or fattening, agro-processing and marketing. The amounts of funds used for sub-
lending was supposed to be collected back by the FBs and continued to be used for the
same purpose under the project to help other beneficiaries (at least before the Bank loan
received by the county was supposed to be repaid back to the province). These two
aspects were made covenants in the PAD and conditions in the Project Agreement11
.
Strong emphasis was given to participation, including Participative Rural Appraisal
(PRA). Participation allowed farmers to choose what particular enterprises they wished to
invest in. Environmental and social assessments were prepared and feasibility studies
undertaken for each of the three components financed by a US$0.5 million PHRD grant.
The project was very well – if not over – prepared with very extensive, detailed
documentation. Project design drew on experience and lessons learned from other
projects in China – in particular in regard to the importance of Government and
beneficiary commitment; the attractive benefits from relatively small investments in
existing irrigation infrastructure; the advantages of strong beneficiary ownership, the
need to integrate income generating investments with infrastructure improvement; and
11
Respectively PA, Schedule 2,B, 6(a)-(b),8,9,11 and PA, Schedule 2, B, 14(d)
7
the need for careful monitoring of the flow of project funds The complex project design
with its 17 sub-components placed too heavy a burden on project management (even
though it encouraged selection of some components for priority implementation at the
expense of others). A further significant weakness in project design was the failure to
establish realistic, readily measurable key performance indicators, with a consequent
adverse impact on project M&E (para 5.1.1).
2.1.4 Government commitment was weak during the early stages of implementation
due to the change in project concept. This was despite having a Project Leading Group
(PLG) exceptionally headed by the Governor of Jiangxi and written letters of
commitment from each of the 21 participating counties. This was mainly due to fears of
the inability of farmers or the counties themselves in these remote and severely poverty
affected areas to repay the cost of irrigation improvement and of not being able to raise
county counterpart funds. During implementation, strong commitment and management
from the Provincial Project Management Office (PPMO) supported the county PMOs and
tried to overcome the issue. However the change in overall project objective from solely
agro-processing to a balance of irrigation improvement, agriculture, livestock and
fisheries development, agro-processing and marketing, counterpart funding difficulties,
fears of non-repayment by farmers, project complexity and the management burden at the
county level led to slow progress or withdrawal of some counties. The length of the
preparation process also meant that there was lack of continuity in county leadership,
which impacted negatively on commitment. From the mid-term review (MTR) onwards,
there was good commitment at all levels of government. However, the chronic shortage
of counterpart finance and reluctance to use the IBRD loan continued to affect the degree
of commitment to some project components. The project activities that were considered
to be creating new asset value (such as irrigation works) or directly producing increased
levels of income (such as on-farm development), were accorded priority in use of the
scarce loan and counterpart funds. Those which were not considered directly productive,
such as training, research, extension and M&E were not adequately supported and were
severely cut at MTR (para 2.2.4).
2.1.5 Risks. At appraisal, the substantial risk of lack of counterpart funding was
correctly identified. This risk materialized during implementation and several of the
participating counties were slow to meet their counterpart obligations. Other risks
identified included lack of qualified staff, lack of farmer participation and lack of full
adoption of improved technologies. These latter risks were mitigated by the large training
and capacity building activities financed by the project. The main risks not identified at
appraisal were: (a) counties withdrawing from the project due to lack of interest or
inability to raise counterpart funding; (b) reduced human resources to implement project
activities efficiently and timely, partially as a result of out-migration from rural areas12
;
and (c) low priority and insufficient resources being allocated for carrying out M&E.
Ultimately, the successful project implementation to a large extent vindicates the project
approach, risk assessment and risk mitigation measures. However it has to be recognized
12
Labour costs in the rural areas have doubled over the last five years.
8
that: (a) financing of rural investments through sub-loans in areas of extreme poverty, and
mainly where the beneficiary is expected to pre-finance these investment is always likely
to be quite problematic; and (b) local governments in such poverty areas (counties) will
always have difficulty in raising the required counterpart funds to allow smooth project
implementation, and an alternative arrangements should be considered.
2.1.6 Given the strong emphasis on participation maintained during implementation and
the respect to farmers’ investment decisions, there was a large concentration of on-farm
investments in citrus orchards (as a result of a period of high relative prices for oranges).
Based on current market conditions and forecasts, there are signals that indicate some
marketing problems may arise when all this production area becomes fully productive. In
hindsight, this appears that additional marketing studies should have been prepared to
better inform investment decisions.
2.1.7 QAG “Quality at Entry” rating was as Moderately Unsatisfactory (see para
5.1.2).
2.2 Implementation
2.2.1 Initially, the county PMOs were not fully in agreement on the change in project
concept from agro-processing/marketing to an integrated project based on irrigation,
drainage, farm production improvement and market systems development and considered
the project as unnecessarily complex. Their main concerns were the need for irrigation
and drainage improvement, cost recovery form final beneficiaries and their ability to raise
the necessary counterpart funds. Also, due to the long preparation period in many
counties senior staff had changed and PMOs lacked experienced personnel.. As a result
of these difficulties, after one year of implementation, eight of the original participating
counties decided to withdraw and were replaced by a similar number of new counties.
2.2.2 During the first two years of implementation, implementation performance and
progress was slow. Shortage of counterpart funding was proven to be a major constraint,
fortunately largely removed by an extraordinary approval of a RMB 50 million grant
from central government. Slow progress in irrigation and drainage work – which had to
precede Farm Production Improvement (FPI) delayed the whole project. Supervision
found that inadequate priority was given to irrigation and drainage improvement.
Collaboration with the Water Resources Bureaus (WRB) was weak and the latter was not
sufficiently involved in the project. None of the county PMO Directors had engineering
experience. In each county Deputy Directors from WRB were appointed and eventually
a Cooperation Agreement signed between the PPMO and the PWRB.
2.2.3 Implementation of the Market Systems Development (MSD) component was
particularly difficult. During preparation there had been some 200 applicant sub-projects.
Despite approval in principle by the PPMO and the county PMO, such sub-projects also
had to pass appraisal by the Finance Bureaus (FBs), which focused entirely on the credit
worthiness of the borrower and its ability to repay. From application to loan availability
the time elapsed was generally more than two years. As a result most of the agro-
processing/marketing sub-projects dropped out and were replaced in the MSD component
9
by loans to specialist leading households13
. Due to the requirement by the FBs to have the
borrowers providing complete initial financing from their own resources, as well as
collateral and guarantees, the progress was generally slow and meant that only the better-
off farmers could participate. As a consequence of the strict procedures and supervision
by the Finance Bureau, no defaults or late repayment of individual loans were reported.
During the final supervision missions, the PPMO was advised to prepare plans for
relending amounts collected back from borrowers (repaid matured loans) for similar
development activities, as set out in the Project Agreement.
2.2.4 As a result of steadily stronger and more committed project management and
consistent support by the Bank task team, by the end of FY2006 implementation
performance noticeably improved. At the MTR in August 2007, the size of the project
components and their target outputs were redefined, leading to a slight increase in the
Irrigation and Drainage (I&D) component and small decreases in the size of the FPI and
MSD components. Some of the FPI investment activities in soil improvement, training
and extension were already the focus of other government programs. As a result both the
Soil Fertility Improvement and the Agricultural Extension, Research and Training sub-
component were cut by over 90%14
and the cost of the Women and Ethnic Minority
Development sub-component reduced to zero15
.
2.2.5 From MTR to project completion on June 30, 2010, government commitment was
excellent and project implementation proceeded without major problems. By loan closing
each of the project components had completed implementation.
2.3 Monitoring and Evaluation Design, Implementation and Utilization
2.3.1 M&E design. Neither Baseline values nor Completion targets were defined for
the nine Outcome indicators in the PAD. Furthermore, out of the nine indicators, three
indicators were considered problematic to measure and virtually irrelevant to the PDO
achievement: (a) Product value share of three most important products as indicator of
diversification, (b) Increase in volume and variety of sales of local seed companies, and
(c) increase in sales volume of local agro-enterprises. In addition, the crucial need to set
a small number of readily measurable key performance indicators (KPIs) in the PAD was
not addressed, resulting in some 49 KPIs in the Project Design Summary (Annex 1 of the
PAD), but without any indication what might be an acceptable target performance16
.
These were subsequently translated into a list of indicators from the Project
Implementation Manual (PIM)17
covering 49 output indicators, 37 outcome indicators
13
These were typically larger scale commercial farmers generally using better than average technology,
relatively well off and in many cases involved not only in production but marketing and group formation
for marketing and procurement of inputs. 14
The cost of the Soil Fertility Improvement sub-component was reduced from RMB19.7 million at
appraisal to RMB1.6 million at MTR and the Agricultural Extension, Research and Training sub-
component declined from RMB26.9 million to RMB1.6 million. 15
Women and Ethnic Minorities at appraisal was RMB50.8 million and zero at MTR
16
Given the flexibility inherent in the project design this would have been problematic. 17
Dated June 30, 2005
10
and 19 other indicators. This lack of indicator focus, the difficulty of measuring or
finding the data for some indicators and the sheer weight of numbers listed was to be an
impediment to actively implement the M&E system throughout implementation.
2.3.2 M&E implementation. The implementation of the M&E system had a very slow
start, which was further complicated when eight of the 21 original project counties
dropped out of the project and new counties had to be selected to join the project. The
PPMO had contracted the Jiangxi Rural Survey Team of the State Statistics Bureau to
carry out a baseline survey as a part of project preparation18
as well as a mid-term (Year
3) and final (Year 6) surveys, the results of which are reflected in Annex 2. However, the
baseline survey for the eight new counties was only completed in late 2007. At the time
of the MTR in late 2007, a new schedule of KPIs was agreed with the PPMO, but was not
formalized. The surveys by the Jiangxi Rural Survey Team provided some assessment of
the impact of the project on agricultural production and farmers’ incomes. The PPMO
also contracted the provincial Environmental Research Institute (ERI) to undertake
regular surveys, which have resulted in two reports. At county level, semi-annual
environmental reports have been produced since 2008. Substantial county level training
in environmental aspects has been provided under the project for project managers,
environmental monitors and coordinators, water resources staff, private entrepreneurs,
and farmers (particularly on farm chemical usage).
2.3.3 Monitoring of Integrated Pest Management (IPM) was carried out through
provincial and county level contracts with the Agriculture Bureau and the Plant
Protection Stations. This monitoring resulted in semi-annual reports, including statistics
showing the area of main crops, the main pests, the extent of severity of attacks, the area
of prevention and the measures of control (natural, physical, use of pesticides). In
addition the Agricultural Bureau has produced two comprehensive reports, dated April
2009 and April 2010.
2.3.4. M&E utilization. Neither the M&E system nor the constituent MIS have been as
useful to project management as originally expected. Project progress reporting and
follow-up have relied mainly on the traditional method of regular field visits by project
managers. The MIS has the potential to be useful in project management, but the source
of information the MIS is unreliable and there does not seem to be interest or willingness
to take advantage of this tool.
2.3.5 Methodological “soundness”, data quality, and M&E sustainability. The
M&E component, as set out at appraisal and presented in the PAD, was both badly
designed and inadequate for the project given the capacity of the implementing agencies.
It included several indicators that would have been very difficult and time consuming to
quantify and far too large a number of output indicators to be easy to be seriously
monitored, or to provide significant/useful information to project management. Overall
project design which emphasized flexibility and farmers’ choice of enterprise made it
virtually impossible to set physical output targets. Lack of appropriate, easily measured
performance indicators in the sub-component design seriously impaired commencement
18
In March and July 2001 (para 2.1.2 refers)
11
of M&E and has continued to be a problem throughout implementation. Following the
dislocation caused by the change in counties participating in the project, inadequate
attention was given to carrying out the necessary baseline surveys of the new entrant
counties and getting the M&E system operating.
2.3.6 In spite of the difficulties with data collection, reliable information has been
recorded periodically for the first two outcome indicators, respectively (a) growth in on-
farm income; and (b) growth in farm output value. For the third outcome KPI -increase
in yield of crops- only two crops have been monitored: rice, as representative of the
lowland irrigated areas and citrus, representing the upland non-paddy area. No data has
been collected on the farmer loan and repayment rate and the water fee collection rate.
The participating Finance Bureaus have not reported any problems in loan repayment for
Farm Production Improvement (para 3.2.4) and for specialist leading households under
the Market Systems Development Component (para 3.2.6). The newly formed WUAs are
in most cases paying their water charges (para 4.2). The last KPI in the PAD - quality of
irrigated land- is too inaccurate to be easily quantified and has been replaced with two
measures: the first on irrigation water reliability and the second on water conveyance
efficiency (water saving). The final data for these indicators is presented in the Data
Sheet. In addition, a range of output indicators have also been monitored as set out in
Annex 2.
2.3.7 Due to its complexity and despite training by the contractor, the MIS has not won
the confidence and enthusiasm of the county level staff, which are mainly responsible for
entering primary data into the system. As a result the utility and longer term sustainability
of the system are questionable and it seems unlikely that the entire M&E system and
within it the MIS would continue to operate in the future.
2.3.8 Based on the above factors, the M&E design and implementation are both rated
Unsatisfactory.
2.4 Safeguard and Fiduciary Compliance
2.4.1 The project triggered seven Bank safeguard policies: Environmental Assessment
(OP/BP 4.01, GP 4.01), Natural Habitats (OP/BP 4.04, GP 4.04), Pest Management (OP
4.09), Cultural Property (OPN 11.03), Indigenous Peoples (OD 4.20), Involuntary
Resettlement (OP4.12) and the Safety of Dams (OP4.37).
2.4.2 The project’s civil works were mainly on the rehabilitation and extension of
irrigation and drainage sites, and no project civil works took place in natural habitats or
within buffer zones of natural reserves. Overall the project was managed well in
observation of OP4.01 and OP4.09. The PPMO designated staff for environmental and
pest management, and local governmental agencies (e.g. EPBs, Agriculture Bureaus)
were involved in project supervision and monitoring. The final EMP confirms that
project implementation in regard to the environment has been overall satisfactory, and
that there have been no significant outstanding environmental safeguards issues. Training
in the use of pesticides and fertilizers has been provided to local farmers; and IPM
approaches have been promoted, including pest monitoring, forecasting, pest control,
12
pesticide application and management. Continued promotion of IPM will be required in
the future.
2.4.3 At preparation, a full Cultural Heritage survey was carried out by the Borrower
but discovered no sites with archeological, paleontological, historical, religious, or unique
natural values. During project implementation no cultural property site was identified.
2.4.4 Resettlement activities were carried out satisfactorily. Since the civil works of the
project were mainly rehabilitating and extending existing irrigation works, no permanent
land acquisition was needed and only 37 mu (2.5 ha) of temporary land use was required.
All temporary use land had been well rehabilitated and compensated according to the
replacement price. A final report on resettlement implementation was also produced by
PPMO.
2.4.5 The Indigenous Peoples safeguard (OD4.20) was triggered by the involvement of
the Quannan County in the project. However when the county decided to withdraw from
the project the OD was no longer of relevance to the project.
2.4.6 The Safety of Dams (OP4.37) was triggered by 100 dams, of which 2 formed
Large II reservoirs, 3 formed Middle reservoirs, 36 formed Small (I) reservoir, and 59
formed Small (II) reservoirs. The PPMO recruited an independent Dam Safety Expert
(DSE) and provided Dam Safety Reports according to the requirement of OP4.37. The
implementation of the dam safety policy was fully in line with Bank requirements as set
out in the OP4.37.
2.4.7 The fiduciary aspects of project implementation were managed in accordance
with the Bank’s Financial Management (OP10.02), Procurement (OP11.00) and
Disbursement (OP12.00) policies. The financial management capacity of the
implementing agencies had been strengthened during project preparation through
specialized training at the start of the project. The provincial audit bureau had been
actively involved in project preparation, including assisting in the design of the financial
control and accountability system. An assessment was made of the financial management
system in 2001 and 2002 in line with the requirements of OP10.02.
2.4.7 Generally the disbursement records and accounts were well maintained.
Supervision missions drew attention to the fact that frequently for the farm production
activities the CPMO signed the agreement with the township, rather that the benefitting
farmer. Disbursement was eventually somewhat streamlined by channeling funds direct
to the counties, rather than through the municipalities. Cutting out this additional level of
bureaucracy speeded up the transfer of funds.
2.5 Post-completion Operation and Next Phase
2.5.1 All commercial operations under the project, including crop production, livestock
and fishery production as well as the agro-processing and marketing operations have been
under regular operation and are generally running well with adequate profit margins.
13
2.5.2 Future operation and maintenance (O&M) of the improved irrigation and
drainage schemes is vested in the WUAs. For the first years after improvement upkeep
costs are likely to be within the means of the WUAs, who would be able to meet annual
recurrent costs for on-farm works, irrigation channels and drains and minor structures.
However for major irrigation maintenance including primary structures, local government
must take responsibility and provide funding and technical support. Proper WUA
management provides a strong basis for sustainable use of irrigation schemes. The
Jiangxi Water Resources Bureau (WRB) has included the WUAs established by the
project in their provincial WUA development plan, which provided a good management
mechanism for long term WUA development. The PPMO and the Jiangxi Provincial
Water Resources Bureau have issued an official document on sustainable development of
WUAs established under the project.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
3.1.1 Relevance of Objectives: The objective of improving the livelihoods of rural
households through integrated, economically and environmentally sustainable market
driven production systems focusing on productivity and agricultural output of high
quality and value remains as relevant at completion as it was at appraisal. The project’s
development objective was fully in line with the Bank’s Country Partnership Strategy
(CPS) published in 2006, and it is consistent with the new CPs under preparation. In
particular it was relevant to Pillar 2 of the CPS to reduce poverty, inequality and social
exclusion through promoting balanced urbanization, sustaining rural livelihoods and
expanding access to basic social and infrastructure services, particularly in the rural areas,
and Pillar 3 to manage resource scarcity and environmental challenges, through reducing
air pollution, conserving water resources and optimizing energy use (partly through
pricing reforms) improving land administration and management and observing
international environmental conventions. The mid-term CPS Progress Report completed
in January 2009, compared the progress achieved in the 11th
Five Year Plan (2006-2010)
with the CPS and found an almost perfect correlation. The mid-term report concluded
inter alia that continued effort was needed (a) to prevent any stagnation in the reform
process and (b) to continue to remove urban-rural disparities, social exclusion and
dissatisfaction. Both objectives were included in the project, particularly the
improvement of efficiency in agricultural production, which is at the centre of both
Government policy and the Bank’s 2006 Country Partnership Strategy (CPS).
3.1.2 Relevance of Design: The Bank was correct in declining to accept the initial
project idea from Jiangxi for a project financing agro-processing enterprises. Project
design emphasized the generation of rapid benefits through economically sound and
environmentally sustainable use of infrastructure to support higher value added at farm
level.. The project design encouraged innovation such as intensive export quality
vegetable production, treatment of effluent from livestock enterprises by biogas digesters
and in general the adoption of advanced technology which included soil-less culture or
hydroponics and the use of improved seed and planting material. Design also emphasized
participation by beneficiaries, establishment of WUAs and women’s development
14
activities. All these aspects were and remain fully in line with Government and Bank
policies and guidelines. As mentioned earlier (para 2.1.2) the complexity of the project in
the number of components and activities to be undertaken was not relevant to the many
remote locations and often weak government services available. Also the need for the
participating counties to raise counterpart funds in order to participate in the project
meant that some counties withdrew and some that remained had chronic difficulties in
providing counterpart funds in a sufficient and timely manner. The lack of relevance in
design of the M&E component has also already been referred to (Section 2.3), in
particular to the failure to identify a pragmatic number of readily measurable key
performance indicators.
3.1.3 Relevance of Implementation: During the initial implementation period much of
the work of the PPMO and supervision missions was promotion of the project design and
objectives. Despite this many counties were less than fully committed. Clearance to go
ahead with preparation of an agro-processing project had been given in 1998 and the
initial preparation of such project had roused expectations and enthusiasm at the county
level which were dashed by the very much wiser but far less exciting final project design.
Consequently within a year of loan effectiveness eight of the project counties announced
their intention of withdrawing from the project. The subsequent absorption of the eight
new counties was handled smoothly, although as already mentioned (para 2.3.2) there
was a long delay in carrying out a baseline survey for them. One significant development
during implementation was securing adequate prominence of the WRB in
implementation. The MTR was generally very positive and well carried out. The
adjustments agreed at MTR had a favorable impact in providing some simplification of
the project sub-components and agreeing cost reallocations according to the PPMO’s
requests. When it became clear that few investments were likely in agro-processing
supervision was pragmatic in allowing increased investment in large specialist
households.
3.2 Achievement of PDO
3.2.1 As the PDO was so broadly defined, the assessment of its achievement has
been attempted at three levels, namely, sub-objective, outcome and output.
3.2.2 Sub-objective level:
(a) The PAD defined improved livelihood in the PDO as “increased income; reduced
risks; increased employment, in particular of women; and improved access to irrigation
and drainage, technologies, information, training and markets.” The government ICR
stated that annual average income per capita for farmers in the project areas increased
from RMB2256 to RMB3451 (an increase of 53% during project implementation period,
see Datasheet). Reduction of risk was largely as a result of improved and more reliable
irrigation and improved drainage and reduction in flooding. The project covered some
60,000 ha of paddy land and a further 10,000 ha of upland orange orchards, benefiting a
population estimated at 1.3 million. No data have been collected on the project’s impact
on employment. Undoubtedly the project would have resulted in increased employment
both as labor for the irrigation infrastructure improvement, as well as due to the
15
intensification of agricultural enterprises and the heavier yields obtained. More advanced
technology was supported including greater use of plastic tunnels for intensive vegetable
growing which covered around 300 ha, over 188,000 days of farmer training as well as
training of staff at the township and village level.
(b) The achievement of the PDO aspect of integration has applied not only to irrigation
or drainage improvement followed by agricultural development. Integration has also been
a major feature in establishment of orange orchards with pig raising and fattening and the
incorporation of livestock and fish culture into farming systems. Integration also has
extended vertically through farmers groups able to jointly procure their inputs and market
their commodities.
(c) In pursuit of sustainability the project has supported the use of organic waste and
animal manure in citrus production and for high value intensive vegetable production.
Often the orange orchards have been established on previously marginal land, generally
with terracing and represent a fully sustainable land use.
(d) Environmental sustainability has been supported through construction by farmers
of biogas plants to handle waste from the pig enterprises and through stress on integrated
pest management practices. During implementation the regular monitoring of
environmental aspects and particular initiatives such as recommendation for biogas
production and use of digesters, better water and drainage control in irrigated areas,
planting of citrus concurrently with pig production in red-soil areas affected by aluminum
toxicity, and careful review of the environmental impact and necessary mitigation
measures for agro-processing units helped the project achieve the objective of being
environmentally sustainable.
(e) On economic sustainability the investment assistance provided by the project for
better crop, livestock and aquaculture production enabled farmers to get early benefits
from the irrigation and drainage improvements and to diversify into higher value crops.
Investments in the marketing systems component helped leading households develop
enterprises integrating high value crops such as citrus with livestock or aquaculture and
assist small surrounding households with supply of inputs, technical advice and market
assistance.
3.2.3 Outcome level. During implementation, the coordinating and implementing
agencies have used a set of eight indicators, comprising six of the original PAD outcome
indicators (1 through 6) plus two new ones to measure the outcomes from the irrigation.
The results framework analysis presented in the Data Sheet indicates that all eight
outcome indicators have been fully achieved.
3.2.4 Output level.
(a) Irrigation and Drainage Component: (actual expenditure US$91.45 million, 110%
of the appraisal estimate). The total effective irrigation area improved reached 69,960 ha,
of which 59,701ha in 210 farm irrigation schemes, and 10,259 ha in 772 orchard
16
irrigation schemes. Dam safety review covered 67 dams, of which 45 were strengthened;
and 218 WUAs were established. All physical works have been completed (with some
output indicators exceeding PAD targets). Around 266,910 farm households or 1.3
million people were benefited. Reliability of irrigation services of schemes increased
from 40% to 80% and for orchards from 50% to 95%. Overall increase in paddy yield is
estimated at 630kg/ha. Successful implementation provided a sound basis for farm
production improvement and the project has adequately addressed future O&M of
irrigation facilities and WUAs development (See Section 4.2).
Farm Irrigation Orchard Irrigation
Number of Schemes 210 772
Area covered (ha) 59,701 10,259
Reliability of irrigation
water supply (%)
Increased from 40% to 80% Increased from 50% to 95%
Productivity increase Paddy up by 630kg/ha Navel orange up 9,540kg/ha
Beneficiary households
(number)
266,910
Total beneficiaries
(number)
1.30 million
(b) Farm Production Improvement (actual expenditure US$ 45.37million, 100% of
the appraisal estimate). The main activity of the component was farm production
investment which accounted for around 99% of component cost and at completion
reached 119% of the MTR estimate, mainly due to the increased costs of orchard
establishment. On-farm investments were based on farmer choice with a clear trend
towards higher value activities (e.g. oranges, greenhouse vegetables) as farmers better
understood irrigation benefits, market conditions, and gained confidence in producing
higher quality, higher value products. Investment package size increased to meet higher
input costs. A total of around 23,160 households (93,000 people) benefiting from the
irrigation and drainage component received on-farm investments from this subcomponent
as well as receiving training and extension support. The number of beneficiaries is only
about a tenth of the 230,000 households forecast at appraisal, the smaller number
reflecting the much higher cost per family. Farm production investment per household
averaged RMB23,160 (US$3,200)19
, much higher than the RMB3,500 (US$422)
estimated at appraisal. Sub-loans were provided by the Finance Bureaus (FB) with annual
interest at 6.12%20
. Borrowers were allowed up to two years grace for repayment of
principal, which was considered inadequate for citrus planting where trees would only
come into bearing five years after planting. In some cases farmers were expected to repay
the loan in the following year. For poorer farmers without any cash flow from their
orchard this resulted in late payment or even default. Loan applications were reviewed by
the PMU, but even after approval were further reviewed by the FB, concentrating
particularly on the credit worthiness of the borrower and the securities to be provided to
19
For the Farm Production Improvement investment, in addition to expenditure under the Irrigation and
Drainage component. 20
In line with Agricultural Bank of China (ABC) interest charges as set out in the PAD, page 21, Table 1.
17
guarantee the loan. All borrowers were required by the FB to pre-finance their
investments, which contradict rational lending practice. As a result, the time taken from
application to actually receiving the productive sub-loan was 9 to 12 months. Some 511
demonstration households were established covering the range of enterprises of interest
to farmers.
(c) As a result of the stringent credit worthiness requirements applied by the FB; the
very long time between application and receiving the loan; and the lack of any adequate
tailoring of the loan repayment to the enterprise repayment profile the number of loans
were well below expectations at appraisal. Also the FBs were generally on-lending other
funds at its disposal rather that the IBRD loan allocation. As a result only some
US$86,000 or only about 2.5% of the US$3.33million originally allocated was utilized,
the balance being transferred to finance increased irrigation works21
.
(d) No data were provided to allow the mission to assess the performance of the FB
as the on-lending agency. FB appears to have followed the stipulations in the PAD
regarding the on-lending terms for loans to farmers. However, the excessively prudent
approach to credit worthiness and guarantees required from potential borrowers, the
inordinately long processing time from application to loan release and the lack of any
modification of the repayment requirements to conform to the enterprise’s benefit stream
undoubtedly slowed the rate of development of the component. FBs were also
responsible for the channeling of project funds through to the participating townships. In
this role the FB was generally satisfactory and supportive of the implementing agencies.
(e) In support of the Farm Production Improvement investments the component also
financed soil fertility improvement covering 218 ha, 616 man-days (md) of agricultural
technician training, 8,617md agriculture technology training at township level and
188,575md of farmer training. Some 23,000 households were directly benefitted, or about
92,000 beneficiaries. This was much lower than the 85,000 household targeted at MTR,
largely due to relaxation of the limit for per household investment and the choice of
households to opt for investment in orchards with a higher cost per unit area. Many of the
component support activities were adopted by other government programs and funding
sources, resulting in some component cost savings. These included soil fertility
improvement through lime and phosphate fertilizer application, agricultural research,
training and extension. In a similar manner the Women in Development activities were
adopted and funded on a grant basis by the All China Women’s Federation. The applied
research component was dropped through lack of grant funding (para1.6.1). As
mentioned in Para. 3.2.8 above as a result of the improved irrigation and drainage and on-
farm production improvement paddy yields are estimated to have increased by around
630kg/ha. The farm investment credit also allowed households to diversify – in particular
into citrus plantation and livestock development. As a result of these production increases
and higher value and quality of production the average per capita net income is estimated
21
Report 54616 Restructuring Paper on a Proposed Project Restructuring of Jiangxi Integrated Agricultural
Modernization Project (Loan Number 4720-CHA) (Project Date March 8, 2004 in the Initial Amount of
(US$100 million) and a Restructured Amount of (US$100 million) to the People’s Republic of China (May
5, 2010)
18
to have risen from RMB2,271 to RMB3,825. These survey results are slightly better that
the recalculated financial analysis which estimates non-project household per caput
income at RMB2,257 and project household at RMB2,980
(f) Market Systems Development. (Actual expenditure US$ 19.08 million, or 90%
of appraisal estimate). The shape of the component changed markedly during
implementation, with a large reduction in financing for markets and agro-processing
compensated by increased financing of large specialist households. At completion the
component had financed 4 markets, 16 small agro-processing enterprises, 126 large
specialist households and one farmer marketing group. In general the financial
performance of the small agro-processing units, the leading farmer specialist households
and the farmer trading group appears satisfactory. Implementation has been completed
according to the approved sub-project design and subsequent operation is in most cases
financially sustainable. A major factor in this result has been the very rigorous selection
of the applicant households, most of whom were already relatively well off and who in
most cases made much larger investments from their own resources in addition to the WB
financing. Loans were provided by the Finance Bureau (FB), bearing an annual interest
charge of 6.12%22
repaid over eight years including a two year grace period. Similar to
the Farm Production improvement loans, the applications were first reviewed by the
PMU and subsequently further examined by the FB. The average loan size for market
construction or improvement was RMB1.55 million (US$214,000), the average for agro-
processing enterprises was RMB2.07 million (US$286,000) and the large specialist
households the average loan size was RMB771,900 (US$106,600) The high priority
given to loan security by the FBs often resulted in long appraisal and delay of proposals,
sometimes as long as two years. Some of the leading farmer households directly assist
surrounding smaller farmers in marketing their produce and have been encouraged to
provide other services including supply of input items and technical advice. Performance
of some market construction/rehabilitation activity is less satisfactory since the facilities
are less than fully utilized. Although significantly different in scope during
implementation from the expectations at appraisal the component has proven successful
in contributing to the project’s achievement of the PDO. With steadily increasing labor
and other input costs and lower citrus prices further support will be required to secure the
improved incomes already obtained by the project, in particular for post harvest storage
and marketing.
3.3 Efficiency
3.3.1. The efficiency analysis by and large follows the appraisal approach, i.e. adopting
cost benefit analysis. The benefits (those not readily quantifiable not included) directly
generated from all three substantive components were compared with the total project
costs incurred, and the results below indicated that project has achieved its efficiency
goal.
3.3.2 Economic Analysis: The major quantifiable benefits (on an incremental basis) of
the project are derived from: (a) the agricultural production in the irrigation/drainage
22
In line with Agricultural Bank of China (ABC) interest charges as set out in the PAD, page 21, Table 1.
19
schemes covered by the project; (b) production from livestock and small-scale on-farm
fisheries, and (c) value addition from agro-processing and agricultural product markets.
Other significant complementary benefits not included in the analysis are from: (a) a
reduction in soil and water erosion resulting from tree crop development on the
previously barren land; (b) improvement of water utilization efficiency in the command
area; (c) improvement of institutional capacity of government services and farmers’
organizations; and (d) secondary beneficiaries who benefit from the better market
environment caused by the project or from the increased availability, variety and quality
of food commodities. While the ERR was estimated at appraisal at 17 percent, the actual
project ERR at completion was estimated at 28 percent, indicating the project was
economically viable and robust.
3.3.3 Financial analysis: Financial analysis has been conducted for major productive
activities. Farm income analysis indicates that average annual farm household incomes
was RMB2,890 higher or 32% more than non-project households The estimated FRRs for
other major project activities are summarized below:
Major Activities FRR
(percent)
Navel Orange Development 26
Livestock 40
Fisheries 36
Agro-Processing 35
3.3.4 The fiscal impact of the project for future operations is positive as the WUAs are
gradually taking up the responsibilities for covering the O&M costs for irrigation on-farm
works.
3.4 Justification of the Overall Outcome Rating
Rating: Moderately Satisfactory
3.4.1 Project objectives were highly relevant at appraisal and remained relevant at
completion. They were also fully in line with both Government and World Bank
development strategies. Design included a high degree of participation by beneficiaries
and enabled a degree of flexibility in project implementation.
3.4.2 All three of the project’s investment components contributed to achievement of
the development objective through provision of secure irrigation and drainage services,
on-farm production improvement and market systems development. Each of these
components played a part in reducing risk and improving beneficiary farm household
incomes.
3.4.3 Innovative features included establishment of WUAs; encouragement of adoption
of improved technology in agriculture to produce high value crops and livestock; and
concern for environmental aspects, in particular treatment of effluent from intensive
20
livestock units. These innovations provide a good basis for future agricultural
development and for irrigation system operation and security including adequate future
operation and maintenance of the various systems.
3.4.4 In addition to the achievement of the main aspects of the PDO and the project
outputs, the technical and economic efficiency ratings have been generally satisfactory
(as set out in Sections 3.2 and 3).
3.4.5 However, the original PDOs were extremely complex and included many levels.
Project implementation has shown there were moderate shortcomings in the achievement
of some of these objectives and, since the M&E system has not performed as expected,
there is also a significant lack of comprehensive and reliable data supporting the
achievements of the intended objectives.
3.4.6 Based on the above considerations, the overall rating for achievement of the
Project Development Objectives (PDO) is Moderately Satisfactory.
3.5 Over-arching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects and Social Development
3.5.1 The project was designed to improve the livelihood of farmers in areas with poor
irrigation and drainage infrastructure. Farmers without adequate irrigation were one of
the poorest strata of the society in Jiangxi Province. The project aimed at increasing the
net income of these farmers, which at appraisal averaged less than US $1 per capita per
day. The project also improved these farmers' access to land, water and financial
resources, as well as to public services. In addition, increased production and quality of
food will benefit the poor, whose expenditure share on food is large.
3.5.2 The project addressed gender issues, directly through a streamlined approach
supporting women farmers' activity, and indirectly by targeting farmer households, a
large share of which are headed by women. It is estimated that more than a third of rural
households in Jiangxi are headed by women, as their spouses work as migrant laborers
during a large part of the year in urban centers. In addition to mainstreaming gender into
all components and activities of the project, the "Women Farmer Development Activity",
which was financially supported by a small trust fund grant, contributed to widespread
participation by women.
(b) Institutional Change and Strengthening
3.5.3 The project contributed to the continuation of China's reform process to a market-
driven rural economy. It supported private entrepreneurship in rural areas and
complemented China's efforts to further integrate with international markets and adjust to
WTO requirements by developing an integrated agricultural system which produces and
markets high value and quality products which can compete internationally. The project
also supported the reforms in water resources utilization. This included promoting the
concepts of farmer participation and financial responsibility for O&M cost of irrigation
21
and drainage systems and of WUA, in line with the general concept of Self-Managed
Irrigation and Drainage Districts (SIDDs).
(c) Unintended Outcomes and Impacts
None
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
3.6.1 Neither a project beneficiary survey nor stakeholder workshop was organized for
this core ICR.
4. Assessment of Risk to Development Outcome
4.1 With the improved and reliable irrigation and drainage facilities provided by the
project farmers are able to diversify crop production, which would mitigate the primary
commodity price fluctuations. Livestock and fisheries production have proven to be
responsive and resilient to market price fluctuations by shifting species pattern and scale
of production. However, tree crop (navel orange) production has shown its vulnerability
to market conditions in the past 2 years and in response to this, the local government has
redoubled its efforts to build post-harvest and processing facilities and launch marketing
campaigns in the major cities in the country to increase orange consumption.
4.2 In many WUAs, water charges are collected based on a rate negotiated between
WUA members and local government. The water fee collected is used for normal O&M
of the schemes and generally provides the assurance of their long-term upkeep. The
farmers have been clearly informed that the water fee collected is used for their own
purpose not for others. However, collection still remains a problem in some WUAs,
where farmers believe that since the agriculture tax has been scrapped there should be no
need to pay for water. Local government will need to continue to support WUAs to
become strong and capable entities. Also, as described in para. 2.5.2, although regular
O&M at the lower levels of the system will be within the means of the WUAs financial
and technical assistance will continue to be required for major repairs, including those to
primary structures.
5. Assessment of Bank and Borrower Performance
5.1 Bank
(a) Ensuring Quality at Entry.
Rating: Moderately Satisfactory
5.1.1 Bank performance in enabling the project to be reformulated into a design
combining irrigation rehabilitation/improvement, on-farm and market development, fully
participative, flexible and demand driven was excellent. The overall PDO and strategy to
achieve it were well chosen and fully in line with Government and Bank priorities. Less
22
satisfactory aspects were the long project gestation period, design over-complexity and
flawed M&E design, which led to unsatisfactory implementation and lack of suitable key
indicators. Partly as a result of the long preparation period the eventual composition of
the market systems development component was very different from that proposed in the
PAD. At appraisal the project contained many innovations and special features as well as
a wealth of extended documentation. With the benefit of hindsight it could have been a
better strategy after agreement of the three main components to have completed a simpler
and less innovative design, as closely as possible to the original project timetable and
more appropriate for the capacity of the implementing agencies. This would have
reduced the preparation costs substantially.
5.1.2 The QAG rated quality at entry as Moderately Unsatisfactory23
. This was largely
because the design was inconsistent with OP 8.30, Financial Intermediary Lending; in
particular the ambiguity in the use of borrowed funds , the inadequate selection of the
financial intermediate and the lack of guarantee that the finance would continue to be
used for agricultural development. This QAG criticism on the selection of the Finance
Bureaus (FBs), for both delivery and recovery of loans to farmers, was in spite of the fact
that the same arrangement had already been used previously in a number of Bank
financed projects in China. The task team defended the position adopted on the basis that
in many of the remote project locations there were no viable financial institutions at the
time that were interested in lending to farmers and rural entrepreneurs and was therefore
this was the only feasible solution. The QAG also rated Technical, Financial and
Economic Aspects and Implementation Arrangements as Moderately Unsatisfactory. This
rating mainly reflected inadequate presentation in the PAD of information given in the
supporting documents (PIP/PIM). Bank Inputs and Processes were also rated Moderately
Unsatisfactory by the QAG due to the long project gestation, inefficient use of resources,
quality of Bank documents, as well as incomplete treatment of financial intermediation
aspects (OP 8.30).
5.1.3 At ICR, QAG’s reservations on the quality at entry appear to be well justified,
although overly negative. Some of the criticisms on inadequacy of preparation and
appraisal could be the result of only have seen a part of the extremely voluminous project
documentation. Regarding OP8.30, the criticism was perhaps too dogmatic, neglecting to
consider the need to reach agreement with the Borrower on practical solutions to be able
to implement the project, in an environment where financial intermediation is not easily
recognized or enforced. The achievement of a major part of the PDOs, is a reflection
that, to some extent, the overall Borrower’s commitment and the main parts of the project
design were acceptable. For these reasons, quality at entry is rated Moderately
Satisfactory.
23
Para 2.1.6 The QAG ratings were as follows: Overall rating Moderately Unsatisfactory (3); Poverty
Gender, Social Development, Environmental Aspects, Fiduciary Aspects and Policy and Institutional
Aspects Satisfactory (2), Strategic Relevance and Approach, and Risk Assessment Moderately Satisfactory
(3); Technical, Financial and Economic Aspects and Implementation Arrangements Moderately
Unsatisfactory (4). Bank Inputs and Processes Moderately Unsatisfactory (4) (including ratings of 5 for
overall efficiency of resource use and quality of Bank documents – PAD and legal documents).
23
(b) Quality of Supervision
Rating: Moderately Satisfactory
5.1.2 Bank supervision was sensitive and generally reacted quickly. The important and
difficult situation of 40% of the counties withdrawing from the project one year after loan
effectiveness and the entry of the eight new counties was adequately and efficiently
accommodated. Aspects such as agreeing financing of irrigation of orchards and
increasing the proportion of the Farm Improvement loan that could be used for orchard
development were resolved in a timely manner. Supervision missions had a good impact
in supporting the PPMO and county PMOs in project implementation management and
technical aspects including pushing the Provincial Water Resources Bureau actively
participate in the Irrigation and Drainage Component planning and management and
WUA sustainable management, providing successful training on WUA management and
Dam Safety Management, and the major changes to the Market Systems Development
component. Supervision was also helpful in the establishment and subsequent support of
WUAs. The MTR was constructive in adjusting the size of the components and setting
realistic targets for the final years of implementation. The major weakness in supervision
were: (a) failure to pay sufficient attention to establishing relevant and easily measurable
key performance indicators as the basis for satisfactory M&E and the failure to get
baseline studies undertaken for the eight new counties; and (b) failure to recognize the
limitations in the implementation of the productive sub-loans to beneficiaries and agro-
enterprises and the need to find an alternative solution.
(c) Justification of Rating for Overall Bank Performance
Moderately satisfactory
5.1.3 Based on the above considerations the overall Bank performance is rated
Moderately Satisfactory.
5.2 Borrower
(a) Government Performance
Rating: Satisfactory
5.2.1 The government performance is rated satisfactory. The central government has
provided an enabling macro-economic environment and stimulus for achieving project
development objectives, particularly through the “Socialist New Rural Construction
Program” for infrastructure development and livelihood improvement. During project
implementation, the central government abolished agricultural taxes and promoted the
development of WUAs; and the central government also, on an exceptional basis,
furnished part of counterpart funding to this project. Helped by the PHRD grant the
provincial government came up with adequate financial and human resources for project
preparation. Though at the early stage of project implementation, eight counties withdrew
from the project due to financial difficulties in counterpart funding provision, local
24
government at both provincial and county levels (after Loan Agreement revision),
managed to comply with their funding commitments despite some delays in a few
counties. The government selected and throughout implementation retained high quality
project management staff.
(b) Implementing Agency (or Agencies) Performance
Rating: Satisfactory
5.2.2 The project management offices (PMOs) at provincial and county levels were
composed of multi-disciplinary professionals and administrative personnel ready to learn
project procurement, accounting and financial management procedures. The well
prepared PIM also contributed to the successful project implementation. The provincial
PMO, embedded in the Provincial Development and Reform Commission (PDRC), was
in a good position to mobilize and coordinate the joint efforts of relevant Government
departments including the oversight agency (Finance Department) and other line
departments (Water Resources, Agriculture and Women's Affairs), to ensure effective
project implementation. The PMOs were highly responsive to the beneficiaries’ demands
and addressed implementation problems in a timely manner. Furthermore, the PMOs
established candid and open working relationship with the Bank task team to follow up
on the actions and recommendations proposed by the supervision missions. The major
weaknesses in implementation were the lack of priority given to the “soft” aspects such
as training, research extension and, most importantly M&E. As a result there was a long
delay in completing the baseline study for the eight new counties and the M&E system
has failed to be useful.
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
5.2.3 Based on the performance of the government and implementing agencies, the
overall Borrower performance is rated Satisfactory.
6. Lessons Learned
6.1.1 It is good practice to ensure that following rehabilitation or improvement of an
irrigation scheme that assistance will also be provided to help agriculture capitalize on
the improved irrigation. If this can also be linked in an integrated manner to improving
marketing arrangements the benefits will be even greater.
6.1.2 Adopting a flexible, demand driven approach to project design helps the project
adapt to changing beneficiary priorities and increases the speed of project
implementation;
6.1.3 Grouping farmers into WUAs can be a useful model to encourage greater
autonomy and equity in operating irrigation schemes. It can also provide greater security
25
of future O&M through collection of water fees. Once formed WUAs need to be well
supported in the first years by local government until they become fully developed and
established.
6.1.4 While O&M of on-farm works are the responsibilities of WUAs and farmers, who
have been empowered through the establishment of WUAs, O&M costs of main
irrigation schemes should be covered by the government to ensure sufficient funding and
technical support for the major system maintenance;
6.1.5 Long periods of project identification and preparation should always be avoided.
Any resulting benefit in quality of project design is likely to be more than offset by (i)
reduced commitment and ownership; and (ii) by increased project complexity;
6.1.6 Investments in marketing, agro-processing or other commercial enterprises
require timely and flexible funding. Implementation experience shows that IBRD loans
delivered through the Finance Bureau are unlikely to fulfill either of these essential
requirements;
6.1.7 Successful and useful M&E requires (a) appropriate and measurable key
performance indicators to be defined at project commencement; and (b) adequate
commitment from the borrower that M&E activities will be given priority, staff and
funding required to function satisfactorily.
6.1.8 Design of Management Information Systems (MIS) in particular and M&E in
general needs to recognize the need for simplicity and ease in entering information. This
is unlikely to be realized with systems that try to adopt a “holistic” design.
6.1.9 In poverty areas of China, It will always have difficulty in raising the required
counterpart funds to allow smooth project implementation. During project preparation,
the Bank should require the client provide clear counterpart funding arrangement with
funding sources, amount and schedule.
7. Comments on Issues Raised by Borrower, Implementing Agencies and
Partners
(a) Borrower/Implementing Agencies
7.1.1 The borrower is very satisfied with the World Bank performance, which is mainly
reflected in the following aspects:
(a) Reasonable and scientific design of the project framework provides a basic
guarantee for the success of the project. The project focus on improving the basic
infrastructure for agricultural production, establishing farmers water user
association, supporting production demonstration households which radiates to
neighboring farmers. In addition, training on production technical management
and market business information etc. were conducted by the project. At the same
26
time, market system construction was arranged and associations for farm produce
were encouraged to be established to provide easy access for farm produce to
enter into market and obtain advantageous position in the market competition,
which increase significantly the household’s income. The four components are
integrated and build on each other, which reflects the “integration” concept of the
project and achieves integrating benefits;
(b) The World Bank has been paid close attention to survey and have very good
communication with the borrower (including government, project office and
beneficiary), which is key for the project implementation. During project
preparation period, the Bank mission went to fields to consult farmer’s opinion
through participatory rural appraisal. The PHRD grant provided by the World
Bank completed 13 prior project researches, which laid a solid foundation for the
project implementation. In tackling with issues of irrigation components of
Ganzhou with mountain and hilly topography, the World Bank agreed the
solutions proposed by the project office on the basis of survey and piloting so that
the irrigation component could be progressed smoothly; and
(c) Both the Bank’s officials and experts insist on the principle of scientific
development and down-to-earth spirit with combination of flexibility. The
mission not only respects opinions of local government and beneficiary, but also
respects facts. They are hard-working, meticulous and responsible. Their
excellent working ability, rich professional knowledge leaves deep impression on
the borrower. The success of the project is closely linked with the efforts of the
World Bank officers, specialists and staffs concerned.
7.1.2 The borrower performance is satisfactory, which is reflected in the following
aspects:
(a) The central government and government at provincial, municipal and county level
attach great importance to the project. Government at each level provides
organizational, personnel and fund guarantee and line agencies provide excellent
cooperation.
(b) The project staffs’ diligent work and active participation of beneficiary lays a
foundation for the project success.
7.1.3 Aspects to be improved.
(a) Changing poverty alleviation concept and approach, while paying attention to
poverty alleviation, focuses should be placed on motivating development of
neighboring farmers and lifting them out of poverty. through demonstration
households.
(b) More efforts should be given to project training and trainings should be conducted
in various forms.
(b) Co-financiers
27
7.1.2 None
(c) Other Partners and Stakeholders
None
28
Annex 1. Project Costs and Financing
a) Project Cost by Component (in US$ million equivalent)
Component PAD
Target Actual
%of
PAD
Irrigation and Drainage 83.17 91.45 110%
Farm Production Improvement 45.21 45.37 100%
Marketing System Development 21.16 19.08 90%
Project Management and M&E 3.44 5.25 153%
Front-end Fee 1.00 1.00 100%
Total Project Cost 153.98 162.15 105%
(b) Financing
Source of Funds
Appraisal Actual Percentage
of
Appraisal
Estimate
(US$ million) (US$ million)
Government/Beneficiaries 53.98 62.15 115%
IBRD 100.00 100.00 100%
Total Funds 153.98 162.15 105%
29
Annex 2. Outputs by Component ( See Section 3.2.4 in Main Text for the data
analysis)
No. Indicator Unit
Original
Target
Values,
indicators
at
appraisal
(PIM)
Formally
Revised
Target
Values
(MTR)
Actual
Achieved
at
Completion
(ICR)
Percentage
of PIM
(percent)
Percentage
of MTR
(percent)
1 Project area
Project city No. 4 5 5 125.0 100.0
Project county No. 21 21 21 100.0 100.0
Project township/town No. 174 210 210 120.7 100.0
Project village No. 758 940 940 124.0 100.0
Villager group No. 9000 8571 8571 95.2 100.0
2 Irrigation and drainage
system
Project irrigation area No. NA 212 210 NA 99.1
Orchard irrigation
schemes No. NA 668 772 NA 115.6
Field irrigation area 10,000 mu NA 82.1351 89.5517 NA 109.0
Orchard irrigation area 10,001 mu NA 15.3486 15.3882 NA 100.3
Beneficiaries 10,000
households 28.3 25 26.69 95.1 107.6
Beneficiary population 10,000
people 126.7 120.39 129.58 102.3 107.6
3 Farm production
improvement
Farmer household 10,000
households 8.5 2.3 2.3002 27.1 100.0
Direct beneficiaries 10,000
people 34 NA NA NA NA
Low-and mid-yielding
land improvement mu 112500 6824 3276 2.9 48.0
Technician training on
agricultural techniques man/day 2942 875 616 20.9 70.4
Training on agricultural
technique at
township/town
man/day 4070 12815 8617 211.7 67.2
Training on marketing man/day 1870 324 184 9.8 56.8
Training of farmer man/time 2398000 145231 188575 7.9 129.8
Technical assistance man/month 6 NA NA NA NA
Demonstration household household 2722 511 511 18.8 100.0
Rice planting mu 147960 40279 20885.7 14.1 51.9
30
Field vegetable mu 29857 4348 7192.5 24.1 165.4
Greenhouse vegetables
(of bamboo) mu 4139 3126 1616.8 39.1 51.7
Greenhouse vegetables
(of steel) mu NA 1018 2725.4 NA 267.7
Chinese herbs mu 5174 7579.8 3640.0 70.4 48.0
Lotus mu 8312 6624.4 2145.4 25.8 32.4
Cotton mu 3006 14484 12831.0 426.8 88.6
Fruit mu 12088 49500 56239.4 465.2 113.6
Fatten pig raising head 92107 120368 114992.0 124.8 95.5
Sow raising head 5274 1526 2946.0 55.9 193.1
Chicken raising bird 352380 173159 124114.0 35.2 71.7
Duck raising bird 1240608 334398 23576.0 1.9 7.1
Goose raising bird 147980 23234 268740.0 181.6 1156.7
New pond mu 1006 706.36 923.0 91.7 130.7
Improved pond mu 12754 2808.4 3445.1 27.0 122.7
Women-headed
household household 1000 NA NA NA NA
4 Market system
development
Market construction No. 36 4 4 11.1 100.0
Small agro-processing
enterprise No.
74 20 16 21.6 80.0
Agricultural production
leading household household
46 114 126 273.9 110.5
Marketing
group/household No.
66 2 1 1.5 50.0
5 Management,
monitoring & evaluation
Domestic training man/day 10225 17970 17970 175.7 100.0
Overseas study tour man/month 22 57 57 259.1 100.0
Office equipment set 145 175 175 120.7 100.0
*Original Target Values are from the PIM dated on June 30, 2005.
Formally revised target values are from MTR.
Actual achieved at completion are from government ICR report.
31
Annex 3. Economic and Financial Analysis
A. Introduction
1. This annex re-analyzes the financial and economic rates of return (FRRs and
ERRs) calculated at appraisal, using up-dated prices, actual project costs and the latest
projections of future benefits. The accuracy of estimation has been improved by using
actual data and better projections of benefits compared to those at appraisal. In this
analysis, the actual project costs were derived from PMO records and projections were
based on the performance of current operations.
B. Project Benefits
2. The major quantifiable benefits (on an incremental basis) of the project are
derived from: (i) the agricultural production in the five command areas under the project;
(ii) production from the livestock and small-scale on-farm fish activities, and (iii)
improvement of institutional capacity of government services and farmers’ organizations.
3. Other significant benefits not included in the analysis are from: (i) a reduction in
soil and water erosion resulting from tree crop development in the previously barren land;
(ii) improvement of water utilization efficiency in command area; (iii) improvement of
farmers’ organization capacity; and (iv) secondary beneficiaries who benefit from the
better market environment caused by the project or from the increased availability,
variety and quality of food commodities.
C. Financial Analysis
4. The Jiangxi Integrated Agricultural Modernization Project has achieved its
objective through an integrated approach of rehabilitation and extension of existing
irrigation and drainage systems and improvement of farm production. The activities
under these components are integrated, i.e. they are built on each other and generate a
joint benefit that would not be achievable if the individual activities were implemented
separately from each other. As a consequence, financial analysis is estimated for the
combined irrigation and agriculture investments, reflecting in the improvement in crop
production, pattern and cropping intensity. As such, the quantification of benefit for
irrigation and drainage development, crop and orchard were conducted using one-mu
models based on “with-” and “without-project” scenarios. Similarly, for livestock, agro-
processing and agricultural product markets, appropriate models were derived to assess
incremental returns. In the crop and livestock models, investment costs for technical and
institutional strengthening were not included as these were provided to farmers cost-free
as public goods. Agriculture product price and yields were based on the averages realized
during the project years.
5. Specifically financial analysis has conducted for the following major project
activities:
6. Combined irrigation and agriculture Components: As public irrigation schemes in
China are not treated as income-generating entities (at scheme level), FRR calculation
under Irrigation and Drainage Component is not applicable. Instead, incremental farm
32
income analysis at household level (using with- and without-project models) was
undertaken for the five command areas under the project - Jiujiang, Shangrao, Ganzhou,
Jingdezhen and Yingtan (detailed assumptions used in the models are provided in the
spreadsheet files). A set of one-mu models were derived for the different crops and
representative farm models indicated that average annual farm household incomes (with
an average of four persons per household) increased by 2890 Yuan (32% compared with
non-project households).
7. Navel Orange Orchard Development: The project covered new land development
for navel orange and rehabilitation of existing orange orchards. Investment costs for
orchards included land development (explosive materials, machinery, works and labor),
irrigation facilities (water ponds, pumps, pipes and equipment) and fertilizer (manure and
chemical fertilizer). Maintenance costs after planting included fertilizer, chemicals,
irrigation water, tools and labor. For new orchards, revenues were generated from fruit
production from Year 3 and will reach full production by Year 8. As such, the FRR for
new planting navel orange production is estimated to be 26%; while for rehabilitated
orchards, incremental costs and benefits were used, which generated an additional
income of 176 Yuan/mu.
8. Livestock and On-farm Fish Activities: The livestock and small scale on-farm fish
activities (under Farm Production Component) are the major activities for poverty
alleviation. The project supported income-generation activities involving pigs, chickens,
ducks, geese and fish for which production models were developed, among which pigs
and fish are the lion’s share in income growth. Investment costs included the purchase of
breeding stock, the construction of pens and fish ponds, and provision of concentrate feed.
Operating costs for households included feed, veterinary cost, tools and utilities. The
FRRs for livestock and on-farm fish activities are estimated to be 40% and 36%
respectively.
9. Agro-processing: There were sixteen enterprises under this component, including
pepper processing unit, orange processing unit, tea-seed oil unit, and vegetable
processing unit, etc. Investment costs included civil works (land preparation and
buildings), equipment, vehicles, training and technical assistance. Operating costs include
variable costs for raw materials and packing materials, utilities, and fixed costs for
workers salaries and welfare, office overheads, insurance, maintenance of buildings,
equipment, and vehicles, and marketing costs. Financial analyses were undertaken for the
sixteen enterprises as a whole on the basis of present and projected production,
investments and operating costs. The major assumptions for financial analysis were: (a)
in line with prevailing practice for agro-processing enterprises, the project life was
assumed to be 15 years; (b) investment costs used in the analyses were based on actual
costs incurred, including procurement and installation of equipment and training; (c) the
residual value of fixed assets is estimated to be zero at the end of project life; (d)
revenues were derived from sales generated from operating capacity achieved from past
years and projected values for the future and sales; (e) the operating costs were derived
from the costs of raw materials, labor, utilities, marketing and administrative expenses; (f)
incremental working capital was included in cash flow analysis and calculated on the
basis of capacity utilization and current assets and liabilities as projected by managers;
and (g) capacity utilization for years in operation is that actually achieved, whilst future
33
projections were provided by factory managers. Based on the above, the combined agro-
processing units achieved a FRR of 35%.
10. Agricultural product markets: This was a rather small investment (about 0.5% of
the total project investment). There were only 4 agricultural product markets built up the
project. Financial model was developed for each market, and based the combined cash
flows of those four; and the FRR was estimated at 9%.
D. Economic Analysis
11. Economic analysis was carried out separately for each productive activity,
combining the investment costs for household production, and physical market
construction and the investment costs for project management, monitoring and evaluation.
The project costs used in the analysis were based on actual costs incurred. The analysis
for both cost and benefit flows was based on 2010 constant prices. The Chinese economy
during the period of project implementation, particularly since its accession to WTO in
2001, has been increasingly integrated into the world economy and it is generally
acknowledged that the economy has achieved “market status”. Therefore, current input
and output market prices basically reflect actual export and import parity prices for traded
products of identical varieties and quality. Furthermore, the project areas are in
landlocked Jiangxi Province where intra-provincial and inter-provincial trade is far more
important than international trade. As such, the financial prices are used as “proxies” for
economic prices. Similarly, no further adjustments are made to the prices of non-tradable
farm inputs and outputs. As the Chinese Yuan has been under pressure for appreciation,
the foreign exchange premium is therefore not relevant in China for now. In addition,
China waived agricultural tax in 2005.
12. Based on the above, the FRR ( before tax), which measures the return on the total
resources engaged, has been taken as the ERR for the processing units and agricultural
markets and no further adjustments are made to the cash flow of agriculture production
models as farmers do not pay agriculture tax. The ERR for the project as a whole is
calculated by aggregating the net cash flows of major productive activities (including
investment costs for project management, monitoring and evaluation), in line with the
physical achievements during the project implementation. The project ERR is estimated
at 28%, indicating the project is economically viable and robust.
13. The noticeable difference in the ERRs estimated in the ICR (28%) and PAD
(17%) for the whole project can be largely explained by (1) the under-estimation of the
benefits at appraisal. The models at ICR are more representative as they incorporate
increases from both crop productivity and intensity and cropping pattern changes in the
whole command areas; while at appraisal those were only reflected in the areas under
agricultural component; and (2) the inclusion of non-crop activities at ICR; while the
PAD ERR was based only on the agricultural and irrigation components.
14. Fiscal impact: All the farm irrigation schemes have been transferred to the WUAs,
which will cover the O&M costs of their future operation. As such, the project will have a
positive fiscal impact by reducing the government expenditures on the O&M costs of
irrigation facilities as a whole.
15. Detailed Excel files for ERR and FRRs calculations are available on file.
34
Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Sari K. Soderstrom Lead Natural Resources
Management Specialist ENV TTL
Achim Fock Senior Economist AFTAR CO- TTL
Weiguo Zhou Rural Dev. Specialist EASER CO-TTL, TTL
Derek Baker Consultant EASER Water Resources
Specialist
Chup Lim Cheong Consultant EASER Water Resources
Specialist
Richard Chisholm Consultant EASER Water Resources
Specialist
Paavo Eliste Consultant EASER Senior Economist
Houbin Liu Consultant EASER Water Resources
Specialist
Farzad Dadgari Consultant EASER Water Resources
Specialist
Greg Guldin Consultant EASER Water Resources
Specialist
Johan Heymans Consultant EASER Water Resources
Specialist
Martti Lariola Consultant EASER
Marketing and
Agricultural
Specialist
Marianne Grosclaude Senior Agriculture Economist LCSAR
Senior
Agriculture
Economist
Ou Li Consultant EASER Resettlement
Specialist
Zhelian Zhang Consultant EASER Water Resources
Specialist
Zong-Cheng Lin Sr. Social Dev. Specialist EASCS Sr. Social Dev.
Specialist
Shaojun Li Project Coordinator EASER Project
Coordinator
Yimin Feng Consultant EASER Interpreter
Patria Consuelo M.
Morente Program Assistant EASER Program Assistant
Bruce Trangma Agricultural Specialist FAO Agricultural
Specialist
35
John Weatherhogg Senior Agricultural Business
Specialist FAO
Senior
Agricultural
Business
Specialist
Supervision/ICR
Sari K. Soderstrom Lead Natural Resources
Management Specialist ENV TTL
Weiguo Zhou Rural Dev. Specialist EASER CO-TTL, TTL
Achim Fock Senior Economist EASER CO- TTL
Ximing Zhang Water Resources Specialist EASCS TTL
Jean-Phillippe Tre Senior Agriculture Economist
EASER Senior
Agriculture
Economist
Chup Lim Cheong Consultant EASER Water Resources
Specialist
Bo Zheng Consultant EASER Interpreter
Yanling Zang Consultant EASER Interpreter
Jun Zhao Consultant EASER Interpreter
Hanming Jia Consultant EASER Interpreter
Rikka Rajalahti Senior Agriculture Specialist
EASER Senior
Agriculture
Specialist
Zhelian Zhang Consultant EASER Water Resources
Specialist
Wanlong Lin Consultant EASER Resettlement
Specialist
Hongbo Ji Consultant EASER Water Resources
Specialist
Andrew Goodland Senior Agriculture Economist
EASCS Senior
Agriculture
Economist
Zong-Cheng Lin Sr. Social Dev. Specialist EACCF Sr. Social Dev.
Specialist
Yu Zhuo Disbursement Analyst EACCF Disbursement
Analyst
Haiyan Wang Disbursement Specialist LOAN
Disbursement
Specialist
Hong Wang Consultant EASER Interpreter
Najing Chen Consultant EASER Interpreter
Yuanming Liu Consultant EASER Interpreter
Yi Dong Senior Financial Management
Specialist EAPFM
Senior Financial
Management
Specialist
36
Jinan Shi Senior Procurement Specialist EAPPR
Senior
Procurement
Specialist
Martti J. Lariola Consultant EASER Consultant
Shaojun Li Project Coordinator
EASER Project
Coordinator
Patria Consuelo M.
Morente Program Assistant
EASER Program Assistant
Hongwei Zhao Program Assistant EACCF Program Assistant
Xiuzhen Zhang Team Assistant EACCF Interpreter
Dan Xie Team Assistant EACCF Team Assistant
Feng Ji
Environment Specialist EASRE Environment
Specialist
Qi Zhu
Consultant EAPFM Financial
Management
Specialist
Yan Sun Consultant EASER Social Specialist
Dawei Yang
Consultant EAPPR Procurement
Specialist
Jianxin Chen Consultant EASER Interpreter
Bruce Trangma
Agricultural Specialist FAO Agricultural
Specialist
Jason Steel
Carbon Finance Specialist FAO Carbon Finance
Specialist
Xueming Liu Senior Economist FAO Senior Economist
John Weatherhogg
Senior Agricultural Business
Specialist
FAO Senior
Agricultural
Business
Specialist
Shengwei Wang
Project Analyst /Consultant FAO Project Analyst
/Consultant
37
Annex 5. Beneficiary Survey Results
None
Annex 6. Stakeholder Workshop Report and Results
None
Annex 7. Summary of the Borrower’s ICR and/or Comments on the ICR
A The borrower is very satisfactory with the World Bank performance, which is
mainly reflected in the following aspects:
1. Reasonable and scientific design of the project framework provides a basic
guarantee for the success of the project. The project focus on improving the basic
infrastructure for agricultural production, establishing farmers water user association,
supporting production demonstration households which radiates to neighboring farmers.
In addition, training on production technical management and market business
information etc. were conducted by the project. At the same time, market system
construction was arranged and associations for farm produce were encouraged to be
established to provide easy access for farm produce to enter into market and obtain
advantageous position in the market competition, which increase significantly the
household’s income. The four components are integrated and build on each other, which
reflects the “integration” concept of the project and achieves integrating benefits.
2. The World Bank pays close attention to survey and have very good
communication with the borrower (including government, project office and beneficiary),
which is key for the project implementation. During project preparation period, the Bank
mission went to fields to consult farmer’s opinion through participatory rural appraisal.
The PHRD grant provided by the World Bank completed 13 prior project researches,
which laid a solid foundation for the project implementation. In tackling with issues of
irrigation components of Ganzhou with mountain and hilly topography, the World Bank
agreed the solutions proposed by the project office on the basis of survey and piloting so
that the irrigation component could be progressed smoothly.
3. Both the Bank’s officials and experts insist on the principle of scientific
development and down-to-earth spirit with combination of flexibility. The mission not
only respects opinions of local government and beneficiary, but also respects facts. They
are hard-working, meticulous and responsible. Their excellent working ability, rich
professional knowledge leaves deep impression on the borrower. The success of the
project is closely linked with the efforts of the World Bank officers, specialists and staffs
concerned.
B The borrower performance is satisfactory, which is reflected in the following
aspects:
38
1. The central government and government at provincial, municipal and county level
attach great importance to the project. Government at each level provides organizational,
personnel and fund guarantee and line agencies provide excellent cooperation.
2. The project staffs’ diligent work and active participation of beneficiary lays a
foundation for the project success.
C. Aspects to be improves
1. Changing poverty alleviation concept and approach, while paying attention to
poverty alleviation, focuses should be placed on motivating development of neighboring
farmers and lifting them out of poverty. through demonstration households.
2. More efforts should be given to project training and trainings should be conducted
in various forms.
Annex 8. Comments of Co-financiers and Other partners/Stakeholders
None
Annex 9. List of Supporting Documents
1. Aide Memoires and related Annexes prepared by the supervision missions
2. Aide Memoire and related Annexes of the ICR mission
3. Government ICR and its Annexes prepared by the PPMO
4. Annual Monitoring & Evaluation Reports
5. Project PAD and Loan Agreement
6. Models for financial and economic analysis (spreadsheets)
21
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G206
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G105
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G206
G206
G320
G320
G319
G319G319
G319
G323
G323
G105
G105
G319
G319
G319
G316
Chongyi
Dayu
YuduShangyou
QuannanDingnan
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Anyuan
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YuhiangDongxiang
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Guangfeng
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Xinjian
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Jing'an
Wuning
Zhangshu
FengchengWanzai
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Ningdu
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Guangchang
Ruijin
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NANCHANG
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JiuJiang
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FuzhouXinyu
Ji'an
Ganzhou
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Taihe
H U B E I
A N H U I
Z H E J I A N G
H U N A N
F U J I A N
G U A N G D O N G
PoyangLake Roa River
Xin River
Fu R
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114
30
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116 118
114 116 118B a y o f
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BEIJING
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NEI MONGOL
HEBEI
BEIJING
TIANJIN
SHA
NXI
SHAANXIGANSU
QINGHAI
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XIZANG
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ZHEJIANG
SHANGHAI
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GUANGXI GUANGDONG
TAIWAN
HAINAN
YUNNAN
HONG KONG
JIANGSU
MACAO
RUSSIANFEDERATION
MONGOLIA
KAZAKHSTAN
JAPAN
PHILIPPINES
VIETNAM
REP. OFKOREA
D.P.R. OFKOREA
LAOP.D.R.
KYRGYZREP.
National Capital
Province Boundaries
International Boundaries
JAN
UA
RY 2012
IBRD 39018
0 25 50 75
KILOMETERS
NATIONAL HIGHWAYS
EXISTING EXPRESSWAYS
PLANNED/UNDER CONSTRUCTION ROADS
RIVERS
SEAT OF COUNTY GOVERNMENT
SEAT OF LOCAL GOVERNMENT
SEAT OF PROVINCE GOVERNMENT
COUNTY BOUNDARIES
PREFECTURE BOUNDARIES
PROVINCE BOUNDARIES
CHINA
JIANGXI INTEGRATED AGRICULTURAL MODERNIZATION PROJECT
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.
PROTECTED AREAS:
PROJECT COUNTIES
Poyang Lake State Natural ReserveTaohongling Sika (Cervus Nippon kopsci) ReserveYunju Mountain Provincial Natural ReserveSouth China Tiger Protection Zone Yangling Natural Reserve Shanjiang Natural Reserve Jingpenshan Natural ReserveJuilian Mountain Natural ReserveLaohulao Natural ReserveJigongdong Mountain Natural ReserveProtection Station for Lipotes vexillfer
Nanfanshan Natural ReserveGong Mountain Natural ReserveShanbai Mountain Natural ReserveWuzifeng Natural ReserveGuanggu Mountain Natural ReserveWuyuan Evergreen Boradleaf Natural Forestry Protected ZoneXinmiao Migratory Birds Protection ZoneJiuling Mountain Natural ReserveDongxiang Wild Paddy Protecton ZoneRed Lake Migratory Birds Protection ZoneSaicheng Lake Migratory Birds Protection Zone11
10
9
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3
2
1
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21
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PROJECT CITIES