The World Bank Integrated Modern Agriculture Development Project () REPORT NO.: RES38475 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF INTEGRATED MODERN AGRICULTURE DEVELOPMENT PROJECT APPROVED ON DECEMBER 27, 2013 TO PEOPLE'S REPUBLIC OF CHINA AGRICULTURE AND FOOD EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Martin Raiser Regional Director: Benoit Bosquet Practice Manager/Manager: Nathan M. Belete Task Team Leader(s): William R. Sutton The World Bank Integrated Modern Agriculture Development Project () I. BASIC DATA Product Information Project ID Financing Instrument Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 27-Dec-2013 31-Dec-2019 Organizations Borrower Responsible Agency People's Republic of China Center of Budget Evaluation Project Development Objective (PDO) Original PDO The project development objective is to develop sustainable and climate resilient agricultural production systems in selected areasof Gansu, Hunan, Jiangxi, and Liaoning provinces; Xinjiang Uygur Autonomous region; and Chonqging municipality. This will be achieved by investing in (i) irrigated agriculture infrastructure improvement, (ii) enhanced climate smart agricultural practices, and (iii) institutional strengthening and capacity building. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-83210 27-Dec-2013 27-Feb-2014 21-May-2014 31-Dec-2019 200.00 173.17 26.83 The World Bank Integrated Modern Agriculture Development Project () Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The US$200 million loan for the Integrated Modern Agriculture Development (IMAD) Project was approved by the Bank’s Board on December 27, 2013 and signed on February 27, 2014. The loan became effective on May 21, 2014 with a closing date of December 31, 2019. The project had the 1st restructuring (level 2) in December 2017, after the Mid-Term Review, reallocating loan proceeds between disbursement categories; and the 2nd restructuring (level 2) in May 2019, replacing the project implementing agency. The project is in compliance with all legal covenants, as well as Bank fiduciary and safeguard policies. There are no overdue audit reports and outstanding audit issues identified and raised by the auditors in the audit reports. The IMAD Project had been one of our most innovative and successful agriculture projects. It was the first effort to implement climate-smart agriculture (CSA) on a large scale in China, covering six provinces across the country. The project had long been rated Satisfactory on both “Progress towards achievement of PDO” and “Overall Implementation Progress,” and was selected as one of two finalists for the best CSA project in the Bank at the 2018 Agriculture GP Forum. The project was also on track to meet the key indicator targets in the Results Framework. However, due to the reorganization of the Chinese government began in early 2018, which caused significant institutional and staffing changes at national, provincial, and county levels (the most of PMOs at all levels have been disbanded and staff been reassigned), especially the replacement of the national project implementation and management office (from SOCAD to the Center for Budget Evaluation, or CBE, under the Ministry of Finance) and the closing of the Designated Account, project implementation and disbursement progress have been adversely affected. Substantial expenditures have been awaiting reimbursement, and some activities could not be conducted as planned, resulting in a delay of about one year in project implementation and disbursement (although reportedly, some agreed and planned project activities have continued to be implemented over the past year to varying degrees in different project provinces and counties). The project is scheduled to close on December 31, 2019. However, according to the existing physical and financial implementation progress by the end of the August 2019, although the investment completion appears to be around 90% for the project, the total disbursements lag behind (the cumulative completed project disbursements are USD 173.17 million, or 86.6% of the total loan), and about US$27 million of the loan remains to be disbursed by the project closing date. In addition, although most of the planned infrastructure investments have been implemented, what remains to be completed are largely the “software” investments, in particular, technical assistance and training under Component 2 (Enhanced Climate-Smart Agricultural Practices) and Component 3 (Institutional Strengthening and Capacity Building) that do not require as much financing, but which are critical to ensuring that the project-financed infrastructure and equipment will be fully and effectively utilized, and managed sustainably. These software activities are also critical to achieving the project targets, such as the improvement of the water measurement and groundwater monitoring system, the soil and environmental monitoring, certification of green production, and the numbers of farmers’ organizations (i.e., farmer associations, farmer cooperatives, and water user associations) established. It is time consuming and challenging to complete these important tasks due to the need to mobilize various stakeholders, The World Bank Integrated Modern Agriculture Development Project () put a governance structure in place, and provide capacity building. Due to the reorganization, it is unlikely that these activities can be completed and targets achieved by the existing project closing date of December 31, 2019. To complete implementation of critical activities and fully disburse the loan, and to achieve the project's objectives and ensure that they are sustained, an extension of the project closing date is needed. An official request has been received from MOF, which has proposed to extend the closing date of the project from December 31, 2019 to December 31, 2020. It is noted that without the extension, there is a strong risk that the project targets will not be met, and the project performance may be assessed as MU, whereas with the extension, the project should be able to achieve all expected results and have a much better chance of getting an MS or higher outcome rating. Therefore, it is proposed that the Bank respond positively to the MOF request to extend by twelve months the current project closing date, from December 31, 2019 to December 31, 2020. Meanwhile, revisions to the project disbursement estimates have been proposed by the provincial PMOs and CBE, recalculated based on the extended implementation period and remaining funds, and reviewed and cleared by the Bank project team. No reallocation between disbursement categories is requested at this time. II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-83210 Effective 31-Dec-2019 31-Dec-2020 30-Apr-2021