PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No.: PIDA8760
Public Disclosure Copy
Project Name Guizhou Rural Development Project (P133261)
Region EAST ASIA AND PACIFIC
Country China
Sector(s) Crops (30%), Animal production (20%), Irrigation and drainage
(20%), Agro-industry, marketing, and trade (20%), Agricultural
extensi on and research (10%)
Theme(s) Rural markets (40%), Rural services and infrastructure (40%),
Rural policies and institutions (20%)
Lending Instrument Investment Project Financing
Project ID P133261
Borrower(s) PEOPLE'S REPUBLIC OF CHINA
Implementing Agency Leading Group of Poverty Reduction and Development of Guizhou
Povince
Environmental Category B-Partial Assessment
Date PID Prepared/Updated 25-Jun-2014
Date PID Approved/Disclosed 26-Jun-2014
Estimated Date of Appraisal 25-Jun-2014
Completion
Estimated Date of Board 29-Sep-2014
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Approval
Decision
I. Project Context
Country Context
Poverty reduction has been an important national development objective of the Chinese
Government over the past 35 years and success in reducing rural poverty has been remarkable, an
achievement that is acknowledged worldwide. In the 1980s, the de-collectivization and the
introduction of the Household Responsibility System marked the beginning of the economic reform
period and stimulated extraordinary agricultural and rural growth. In the 1990, further market
reforms, the integration into the global economy, along with investment and abundant labor supply,
provided the impetus for China’s industrial growth and urbanization. These developments have
allowed some 500 million farmers to escape poverty and some 260 million rural migrants to
transition of out agriculture to more productive activities.
Rural poverty, however, remains a critical issue. Despite outmigration, poverty remains more
pervasive and persistent in the western and inland provinces as compared to the coastal provinces.
The rate of poverty reduction has also become less responsive to broad-based growth and rural-
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urban disparity has increased. The Government also recognized that, given the stringent domestic
poverty thresholds, the number of remaining rural poor has likely been underestimated in recent
years and that adjustments to poverty measurement and poverty reduction policies were needed to
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better understand the characteristics of the remaining rural poverty and integrate the traditional
poverty reduction efforts with China’s rural-urban transformation and urbanization. In 2011, the
Government revised the rural poverty line from RMB1,196 (2009) to RMB2,300 (US$361) which
increased the number of rural poor from 27 million in 2010 to 128 million in 2011.
The Leading Group of Poverty Alleviation and Development (LGOPAD) of the State Council of
China has supported poverty reduction and rural development through strategies and policies
targeted at poor rural areas. In the mid-1980s, the Government started the Development-oriented
Poverty Reduction Program in Rural Areas. Subsequently, the Government formulated and
implemented the Seven-year Priority Poverty Reduction Program (1994-2000) and the Outline for
Poverty Reduction and Development of China’s Rural Areas (2001-2010). Support to the
development of commercial agriculture has been an important component in these multi-sectoral
poverty reduction strategies. In particular, during the 2001-2010 period, agribusinesses have been
supported both for the development of contract agriculture and for direct investment into
agricultural production.
In 2011, LGOPAD released the Outline for Development-oriented Poverty Reduction for China’s
Rural Areas (2011-2020) to provide a new direction for addressing rural poverty. The new strategy
aims to eliminate hunger and elementary needs by 2020, achieve a growth rate in rural per-capita
income that is above the national average, and promote the convergence of human development
indicators and public services coverage across rural and urban areas. It complements the existing
geographical targeting of designated poverty counties and villages with the concept of adjacent
destitute mountain areas of which 14 have been prioritized for regional development investments.
The 2011-2020 Outline also reconfirms the multi-sectoral nature of China’s poverty reduction
strategy and government support to the development of commercial agriculture in poor areas. Under
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the Outline, the government explicitly invites agribusinesses to invest into the destitute mountain
ranges that have been listed as a national priority, and to focus on economic activities that display a
comparative advantage in those areas while being conducive to environmental rehabilitation. The
Outline also encourages the development of diversified farmer organizations including farmer
professional cooperatives. China’s legal framework on these cooperatives was strengthened at the
end of 2013. It was confirmed early 2014 that the modernization of agriculture through
cooperatives also fully applied to poverty reduction programs.
According to LGOPAD, this renewed approach to rural poverty reduction involves agriculture
sector restructuring, value chain development and marketing interventions, enterprise involvement
and investments, institutional farmer cooperative development, and modern agriculture service
delivery systems. In particular, the use of a value chain approach to capture opportunities arising
from a growing domestic urban market demand is a new approach.
Sectoral and institutional Context
Guizhou is a land-locked province in southwest China with a total population of about 40 million of
which about 40 percent belong to various ethnic minorities. It is the poorest province in China. A
total of 11.5 million people are living below the national poverty line of RMB 2,300 (2011), many
of them dependent on subsistence farming. About 80 percent of Guizhou’s total land area belongs
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to the karst areas of the Wuling and Wumeng Mountains in which sixty-five poor counties are
located. Over 85 percent of Guizhou’s rural poor, 88 percent of its poor towns, 84 percent of its
poor villages, and 82 percent of its ethnic minority towns are situated in this unique karst landscape.
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These geographic conditions, combined with poor accessibility, pose challenges to sustainable and
economically viable agricultural development. Rural poverty in Guizhou can therefore be described
as deep and persistent and rural living standards remain below living standard in urbanized areas.
Over the past decade (2000-2010), the central government has allocated about RMB10.5 billion in
support to Guizhou’s poverty reduction efforts, in addition to provincial level funds. In 2011 alone,
the central government approved RMB2.3 billion for Guizhou to advance poverty reduction efforts
and these high investment levels are expected to continue for the years to come. Guizhou’s
integrated regional development and poverty alleviation approach includes: infrastructure
development to improve connectivity; urban and industrial development and concentration of
public services in cities and towns to attract and absorb the already migrating rural population with
the perspective to provide alternative employment opportunities; the relocation (or ‘ecological
resettlement’) of 1.5 million people over the coming 10 years from fragile karst areas; and rural
development support in the form of service provision and incentive policies for key commodities
and lead enterprise development in areas with agricultural development potential and comparative
advantage.
The agricultural sector remains a key sector and provides a sound entry point for rural development,
poverty reduction and for providing long-term employment and income opportunities for those
segments for the population that will not be able to migrate. Given the structural characteristics of
agriculture–the dominance of very small farms–and the current migration dynamics, a gradual
restructuring of the sector over time is necessary to increase productivity and efficiency to allow for
steady growth of rural incomes and the catching up with urban incomes. Ultimately, a much smaller
portion of the population will be able to remain engaged in agriculture if income parity between
rural and urban areas is to be realized in the future. The restructuring of the agricultural sector to
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become more integrated and advanced will therefore be closely linked and support the broader
poverty reduction agenda. A particular challenge in this context is allow for the consolidation and
agglomeration of production to increase productivity, accelerate technological change, and facilitate
better capture of value-added at the individual farm level. Transparent markets for rural land use
rights will need to be developed in parallel to facilitate the effective and, at the same, socially
accepted consolidation of the many unsustainable small farms into larger and better coordinated
modern production farms in form of cooperatives or enterprises.
The recent improvements in transportation infrastructure also provide new opportunities for
agricultural development. A new regulatory and policy framework explicitly supports the
establishment of new farmer cooperatives in rural areas to overcome structural challenges. New
value chain opportunities are being created through changing consumer patterns that allows shifting
away from basic commodity production to a value chain approach. These opportunities appear to
remain un-tapped because of outdated agricultural production systems that are characterized by
uncoordinated and scattered production because of the large numbers of small and unorganized
household farms, limited access to capital for private investments, lack of marketing and price
information, low technical and management standards, sub-standard product quality, and often a
lack of a critical mass of production to attract investments in up-stream processing and marketing.
Furthermore, local governments tend to take on roles and responsibilities that should be market-
driven and are better placed in the hands of private farmer entrepreneurs and enterprises. It is within
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this context that Government has requested the World Bank to provide assistance for a Guizhou
Rural Development Project.
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II. Proposed Development Objectives
The Project Development Objective is to demonstrate a model for agricultural sector restructuring
and modernization, improved organizational arrangements, and strengthened public service delivery
in Guizhou’s poverty stricken areas.
III. Project Description
Component Name
Modernization of Agricultural Key Commodity Value Chains
Comments (optional)
This component will support: (a) the development or improvement of value chains for selected
agricultural commodities and products with local comparative advantage (key commodities); (b) the
establishment of new project farmer cooperatives or the improvement of existing cooperatives
producer cooperation arrangements; and (c) the strengthening of forward and backward marketing
linkages
Component Name
Public Infrastructure and Services
Comments (optional)
This component provides investment support for (i) the construction of production road
infrastructure, such as off-grade access roads to village production areas or processing and
marketing facilities, tractor roads, field tracks, and foot paths; (ii) construction of irrigation and
drainage infrastructure, land preparation and terracing; (iii) establishment of communications and
procurement of information infrastructure and equipment; (iv) construction of public market
facilities, electricity supply and other infrastructure and goods necessary to facilitate and
complement investments under Component 1
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Component Name
Training and Capacity Building
Comments (optional)
This component provides financing for farmer technical training and cooperative management
training, expenditures for extension technicians and technical services for preparing training
materials, including for ethnic minority groups and women, cooperative advisor support, review and
improvement of investment proposals for key commodity value chains, safeguards awareness and
implementation training, and others.
Component Name
Project Management, Monitoring and Evaluation
Comments (optional)
This component supports the county, prefecture and provincial PMOs with office equipment,
training, domestic and international training, and provide incremental operating funds for regular
supervision, monitoring and evaluation, acceptance checks, and for safeguards implementation
supervision and monitoring.
IV. Financing (in USD Million)
Total Project Cost: 140.11 Total Bank Financing: 100.00
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Financing Gap: 0.00
For Loans/Credits/Others Amount
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Borrower 40.11
International Bank for Reconstruction and Development 100.00
Total 140.11
V. Implementation
The project implementation arrangements have been set up for the provincial municipality, and
county levels.
Project Leading Groups. Project Leading Groups at the provincial, municipal and county levels,
comprising representatives from the reform and development commissions, finance bureaus, poverty
reduction offices, auditor’s offices, civil affairs bureaus, ethnic affairs commissions, women’s
federation, and other departments will provide leadership, policy guidance, and direction for project
implementation within their respective jurisdiction.
Project Management Offices. A provincial Project Management Office (PMO) has been established
in the Guizhou Provincial Poverty Alleviation Office. The provincial PMO is responsible for overall
project coordination and management, including annual work and budget planning; coordination of
municipalities and counties in public outreach, work planning, procurement, fund withdrawal and
reimbursement management and financial reporting; technical and institutional implementation
aspects; general oversight, field supervision and acceptance checks; and training and capacity
building. The PMO will also be responsible for overall project M&E and reporting to the World
Bank and will maintain and update, as necessary, the Project Operations Manual and Financial
Management Manual. Municipal-level PMOs will provide technical guidance to the counties,
supervise implementation, and assist the provincial PMO in acceptance checks, and M&E.
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County PMOs will have the primary responsibility for project management at the local level. They
will prepare county work plans and review and approve cooperative investment and annual work
plans, approve and oversee cooperatives’ use of project funds, coordinate line departments in the
implementation of cross-village (township) cooperative investments, and coordinate enterprise
participation. They will be responsible for the procurement and management of public production
infrastructure and services. They will report on the utilization of project funds, prepare semi-annual
progress reports to the provincial PMO, and recruit and train cooperative professional advisors.
They will also be responsible for identifying and addressing implementation issues and manage the
local complaints handling mechanism. All PMOs are staffed with personnel that have experience or
have been trained in project management, financial management, procurement, and M&E.
Administrative Village Committees. Village Committees will be responsible for local public
information dissemination, community mobilization, planning and implementation of public
infrastructure investments assigned to the administrative village level, and coordination of any land
adjustments for infrastructure construction, as needed.
Professional Farmer Cooperatives. Farmer Cooperatives will be established as economic entities and
registered under China’s Farmer Professional Cooperative Law. They will have implementation
responsibility for all activities under the CDF. They will organize cooperative members; prepare the
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cooperative industry investment and annual implementation plans; and administer cooperative
development funds in accordance with approved plans and project regulations. They will provide
training and technical s upport to their members; facilitate linkages between the cooperative and
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enterprises; manage cooperative-level production facilities and related services; and provide
technical training, technical exchanges and advisory services to their members. They will operate
and manage industry-related infrastructure under their ownership and enter into partnership
arrangements with relevant private sector enterprises for the benefit of the cooperative. Farmer
Cooperative Advisors will be recruited and trained by the county PMOs to assist in the
establishment and operationalization of new cooperatives; provide guidance to cooperatives in the
formulation and implementation of productive investments and annual implementation plans; and
assist the county PMOs in conducting acceptance checks, monitoring and reporting of cooperative
activities, and complaints handling.
Technical Advisory Groups. Each county will set up a technical advisory group comprising
representatives from government, cooperatives, and industry-related enterprises to provide advisory
services for the cooperative value chain investments. The advisory groups will participate in and
guide the value-chain development investment planning of cooperatives. They will provide inputs in
to investment costing, technology innovation and dissemination, production organization and
processing, and marketing research to strengthen the overall business orientation and operation of
cooperatives. They will also assist the counties in soliciting interest from qualified agro-enterprise
investors to cooperative with and invest in the project.
VI. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 ✖
Natural Habitats OP/BP 4.04 ✖
Forests OP/BP 4.36 ✖
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Pest Management OP 4.09 ✖
Physical Cultural Resources OP/BP 4.11 ✖
Indigenous Peoples OP/BP 4.10 ✖
Involuntary Resettlement OP/BP 4.12 ✖
Safety of Dams OP/BP 4.37 ✖
Projects on International Waterways OP/BP 7.50 ✖
Projects in Disputed Areas OP/BP 7.60 ✖
Comments (optional)
VII. Contact point
World Bank
Contact: Ulrich K. H. M. Schmitt
Title: Senior Operations Officer
Tel: 202-458-4734
Email: uschmitt@worldbank.org
Borrower/Client/Recipient
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Name: PEOPLE'S REPUBLIC OF CHINA
Contact: Yao Licheng
Title: Director, International Dept., Ministry of Finance
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Tel: 861068553284
Email: yaolicheng@mof.gov.cn
Implementing Agencies
Name: Leading Group of Poverty Reduction and Development of Guizhou Povince
Contact: Mr. Shu Yu
Title: Deputy Director General
Tel: 86-851-6832615
Email: nsl6687@163.com
VIII. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www.worldbank.org/infoshop
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