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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)


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)


(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







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.


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


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


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


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

http://wbsearch.worldbank.org/people?title=Senior+Agriculture+Economist&bl=Senior+Agriculture+Economist




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




http://wbsearch.worldbank.org/people?title=%22Senior%20Agriculture%20Economist%22&bl=%22Senior%20Agriculture%20Economist%22




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)

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National Capital

Province Boundaries

International Boundaries

JAN

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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

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PROJECT CITIES