Document of The World Bank FOR OFFI NAL USE ONLY epoit No. 8495-CiA STAFF APPRAISAL REPORT CHINA HEBRI AGRICULTURAL DEVELOPMENT PROJECT MAY 14, 1990 Agriculture Operations Division Country Department III Asia Regional Office This doessamau has a I dtscto d a a%d mOY be used bY only in the puteuummuc.. th aefir &a dudies. lbs couuteul my mat odEhewl be discosed i Weld DWuk CURRENCY EQUIVALENTS Currency Unit - Yuan (Y) US$1.00 - Y 4.72 Y 1.00 - US$0.21 FISCAL YEAR January 1 to December 31 WEIGHTS AND MEASURES 1 meter (m) _ 3.28 feet (ft) 1 kilometer (km) - 0.62 miles 1 hectare (ha) - 15 mu 1 ton (t) - 1,000 kg - 2,209 pounds 1 kilogram (kg) - 2.2 pounds - 2.0 Jin PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ABC - Agricultural Bank of China APC - Acquatic Products Company APF - Acquatic Products Bureau BAG - Bureau of Agriculture BAH - Bureau of Animal Husbandry BOF - Bureau of Finance CAAS - Chinese Academy of Agricultural Sciences CATEC - Country Agrotechnical Extension Centers DAP - Diammonium Phosphate FAO/CP - Food and Agriculture Organization - Cooperative Program GOH - Government of Hebei GVAO - Gross Value of Agriculture Output HAAS - Hebei Academy of Agricultural Sciences HAC - Hebei Acquaculture Corporation ICB - International Competitive Bidding IFAD - International Fund for Agricultural Development IPM - Integrated Pest Management ITC - International Tendering Company, China LCB - Local Competitive Bidding MAP - Monoammonium Phosphate MOF - Ministry of Finance MOFERT - Ministry of Foreign Economic Relations and Trade PLG - Project Leading Group PMO - Project Management Office SO - Statement of Expenditures SMC - Supply and Marketing Corporation WCB - Water Conservancy Bureau CHINA IFOR OMCIAL USE OnLY HEBEI AGARICULTURAL DEVELOPMENT PROJECT Credit and Project Summary Borrowers People's Republic of China Beneficiary: Hebei Provincial Government Amounts SDR 116.1 million (US$150 million equivalent) Terms: Standard, with 35 years maturity Onlending Terms: From Government to Hebei Provinces 15 years, including five years of grace, with interest at 5.5 percent per annum. Onlending rates to final beneficiaries would be no less than Agricultural Bank of China charges on subloans for similar purposes with similar maturities. Ob3ectives and The project would'alleviate poverty and increase farmer Descriptionst incomes by increasing agricultural productivity and marketa- bility in the Northeast Coastal area and the inland Heilonggang area. The project would (i) optimize conjunc- tive use of surface and well water by rehabilitating irriga- tion structures, sinking of about 9,950 new shallow wells; (ii) set up a water monitoring and evaluation system and develop a water resources plan for the province; (iii) pro- vide needed inputs, improve seed production facilities, strengthen agricultural research and extension; (iv) increase efficiency in sheep and cattle production through ammonification of wheat and corn straws, and plant- ing alfalfa; (v) produce fertilizers (urea and monoammonium phosphate) and promote use of cotton stalk in particle board and fluting paper manufacturing; (vi) strengthen agromachin- ery service stations; (vii) improve efficiency of aquacul- ture investments by rehabilitating 3,467 ha of shrimp ponds, constructing 533 ha of new ponds, modernization of proces- sing facilities and construction of fishponds and scallops chains; and (viii) provide equipment and technical assis- tance, particularly in agroindustries and overseas training programs. Benefits and At full development, the project would produce 793,000 tons Risks: of crops valued at US$175 million, 114,000 tons of fruits valued at US$35 million annually. Incremental production of aquaculture and livestock would be US$12 million. Agro- industries' value added would be US$8 million annually. Per capita income would increase by an average of 125 percent for the 540,000 poor farm families. Significant employment would be created in all components. Employment for women would be notable in the Heilonggang area. No major risks are anticipated. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - Estimated Costs Local ForeiAg Total --…------- (US$ million) ---------- Water Ctonbervancy 57.0 27.2 84.2 Agricultural Development 18.5 44.4 62.9 Livestock Development 18.3 8.7 27.0 Aquaculture 18.0 11.8 29.8 Agroindustries 19.6 35.7 55.3 Institutional Development 2.5 0.9 3.4 Base Cost /a 133.9 128.7 262.6 Physical Contingencies 6.9 7.7 14.6 Price Contingencies 19.6 12.8 32.4 Total Proiect Cost 160.4 149.2 309.6 L Project is exempt from taxes and duties. Financing Plant Local Foreign Total ---------- (Us$ million) ---------- IDA 0.8 149.2 150.0 Provincial Government 32.0 - 32.0 Prefecture/County Governments 71.6 - 71.6 Agricultural Bank of China 13.0 - 13.0 Beneficiaries 43.0 - 43.0 Total 160.4 149.2 309.6 Estimated Disbursements Bank/IDA FY 1991 1992 1993 1994 1995 1996 Annual 19 37 45 31 13 5 Cumulative 19 56 101 132 145 150 Economic Rate of Returns Crops: 342, aquaculturet 302, livestock 332 Overall Projects 322 -Liii CHI" EBB13 AGRICULTURAL DEVELOPMENT PROJECT Table of Contents Paze No. I *ACKGROUD . . . . . . . . . 1 A. IntiLoductLon . . . . . . . . I a. The Agrlculture Sector . . . . . . . . 1 C. The Livestock Subtector or.......... . 2 D. The Flsherles Subsector .t........ .. 2 E. Sectoral Objectives and Bank Lending . . . . . . . . 3 F. Agrlculture in Hebei .... ... . . . ......... 4 G. ProJect Formulation and Rationale. . . . . . . . . . 7 II. THE PROJECT AREAS . . . . . . . . . . . . . . . . . . . . 7 A. Location .... . . . . . .. . . . . . . .7 B. Climate, Topography and Soils . . . . . . . . .7 C. Water Resources and Irrigation . . . . . . . . . . . 8 D. Land Use, Farm SLse and Population 8 E. Present Develoomentp. .t....... 9 F. Support Services ..... ............ 11 0. Infrastructure . . . . . . . . 13 . . . . i1 III. THE PROJECT . . . . . . . . . . . . . . . . . . 13 A. Project Descriptlon............... 14 B. Status of Preparatlon. .......*. .... .. 24 C. Implementation Scheduled.. .... ....... 24 D. Cost Estimates . . . . . . . . . . . . . . . . . 24 B. Financing . . . . . . . . . . . . . . . . . . . . . . 25 F. Procurement . . . . . . . . . . . . . . . . . . . . . 25 0. Dlsbursements . . . . - . . . . . . ........ 27 B. Accounts and Audl ts. .... ...... .... 28 I. Environmental Impact . . . . . . . . . . . . . . . . 28 IV. ORGANIZATION AND ANAGEMENT .......29 A. Project Organization . . . ... 29 B. Management of Production Actlvities . . . . . . . . . 30 C. Financial Management... 31 D. 8xecutlon of Project Works ............. 32 E. Operation and Maintenance. .... ........ . 32 P. Project Launch Workshopr ............ 33 G. Monitoring, Evaluation and Reporting . . . . . . . . 33 This report is based on an FAOICP preparation report (Aprll 1989) and the findings of an appraisal mission comprlsingt H. Eisa, R. Jalsaard, W. Prlce (IDA) and V. Ashworth, D. Gue, A. Xaelin and R. Smith (Consultants) in Noven- ber/Decdmber 1989. K. Constant (IDA) appraised the fertlI zer plants compo- nent in February 1990. POLe No. V. PRODUCTAON, MRK TS ANn PRICE . . . . . . . . . . . . . 34 A. Production . . . . . . . . . . . . . . . . . . . . 34 B. Marketing Channels . ....... .. ...... 37 C. Markets . . . . . . . . . . . . . . . . . . . . . . . 36 D. Prices ............ .... 41 VI. BEPFITS, JUSTIFICATION AND RISKS . ..43 A. Benefits . . . . . . . . . . . . . . .43 B. Employment and Incomes . . . . . . . . . . . . . . . 43 C. Employment Opportunities for Women .44 D. Cost Recovery . . . . . . . . . . . . . . . . . .. 45 S. Financial and Economic Analyses . .... ... . 45 P. Risks .48 VII. AGREEMENTS AND RECOMMDATIONS . ..49 TEXT TABLES 3.1 Project Land Area Summary . . . . . . . . . . . . . . . . 16 3.2 Project Costs Summary. . . .... . . . . 25 3.3 Procurement Profile .... . . . ...... ... . . . 26 ANNEXES 1. Basic Provincial and Project Area Statistics Climate Water Supply and Demand Distribution of Water Conservancy Components and Distribution Within Prefectures (Appendix 1) 2. Project Cost Summary Summary Accounts Cost Summary Summary Account by Project Component Project Component by Year Procurement of Machinery Equipment and Material Estimated Disbursement Schedule 3. Cropped Areas, Yields and Production Crop Budgets Farm Models Rent and Cost Recovery Financial Analysis Main Conversion Factor Used Border Prices for Principal Products and Inputs Economic Analysis Key Monitoring Indicators 4. Shrimp; A Summary of World Market Situation 5. Selected Documents and Data Available in the Project File - v - CHARTS Project Organization Implementation Schedule Procurement Schedule Crop Calendar MAP IBRD No. 22306 - Project Locations - 1 - CHINA HEBEI AGRICULTURAL DEVELOPMNT PROJECT I. BACKGROUND A. Introduction 1.1 The Government of China has requested IDA assistance in financing an integrated agricultural development project in the Province of Hebei. The project would cover 46 counties and cities in the Heilong,jang area and 7 coun- ties in the northeast coastal area. The main objectives of the project are to assist the government in accelerating and diversifying agricuiltural develop- ment in order to alleviate poverty, raise farmer incomes and increase rural employment. The proposed project would emphasize the effective use of water and other inputs in low-yielding areas to increase agricultural productivity, integrate the use of crop by-products in livestock production and agro- industries, and develop marginal land for crop and aquaculture production. The project was identified in September 1988 and prepared in JanuarylFebruary 1989 by FAO/CP missions with participation of Bank staff. A preappraisal mis- sion visited the project area in August/September 1989 and appraisal took place in November/December 1989. B. The Agricultural Sector 1.2 Agriculture In China, including crops, livestock, forestry and fish- eries, provides sustenance for over one billion people; it iv an important source of income for some lO million farm families and accounts for about 30 percent of the country's GDP. Only about 137 million ha of China's land area of 960 million ha are arable. Farming systems are intensive with heavy inputs of labor, chemical and organic fertilizers, small machinery and water. Nearly half of the cropped area is irrigated. Food grains occupy about 70 percent of total cropland and account for about one-third of the agricultural output. Intensive farming has allowed China to meet the basic food requirements of its population, about 22 percent of the world's total, and to produce an increas- ingly sophisticated mix of cash and commercial crops from less than 11 percent of the world's arable land. 1.3 China's decade-long rural reform program has revitalized the agri- cultural sector, provided an impressive growth and siructural change through the introduction of the production responsibility system, increased producer prices and enlarged the role of the market. The gross value of agricultural output (GVAO) increased by 83 percent in real terms during 1978-88 at an aver- age annual rate 5 percent, substantially more than that of the previous 25-year period (3.2 percent). Vhile significant growth has been achieved, the Government's central concern in recent years has been stagnating grain produ_- tion, which peaked at 407 million tons in 1984. Production, thereafter ranged between 391-402 million tons and rebounded in 1989 to reach 407.9 million tons, an historical record. 1.4 Recent government strategies to increase grain production include diverse measures such as increasing state investment in agriculture, mainly in irrigation expansion and rehabilitation, and introducing partial reforms in grain procurement, distribution, price and subsidies. Local governments in particular have placed high priority on investments in uplands, natural pas- tures, and water surfaces for expanding production and productivity of nonsta- ple food and commercial crops to meet growing demand for these coamodities, increase local entity profits and farmer incomes, and help alleviate the pressure on the demand for grains. C. The Livestock Subsector 1.5 In 1988, livestock contributed 26 percent of total agricultural out- put value, compared to 15 percent in 1978. This change reflects the incen- tives provided by liberalized livestock production and marketing as a result of rural reforms. Between 1983 and 1987 total meat production increased by 9 percent annually. The largest gains were made by beef (23 percent annually) followed by poultry meat (14 percent) and pork (8 percent). Cow milk produc- tion grew by nearly 15 percent annually in the same period and egg production increased by about 16 percent annually. Per capita milk consumption of only 4 kg is also extremely low, although it is much higher in the larger cities, and has increased several times in the past decade. 1.6 Animals provide food, additional sources of income, organic manure, draft power and security. Draft animals play a major role in rural transpor- tation. In number and breadth of ownership, pigs predominate, with almost every household rearing at least one or two on household and crop residues. By weight, pork is estimated to comprise about 83 percent of total meat con- sumption. Although much livestock keeping remains largely traditional, rapid progress has been made in introducing improved commercial livestock production systems perticularly for pig and poultry. 1.7 Dcmestic demand for all livestock products is increasing in parallel with the improvement in disposable income: rural per capita income has increased fourfold and urban incomes 3.5-fold in real terms since 1978. More- over, consumption patterns for livestock products are changing in favcr of leaner meat and dairy products such as ice cream and milk, especially in urban areas. Wool consumption has also increased substantially, and China is now a major importer of raw wool. With over 187,000 tons imported in 1988, wool is the sixth largest import by value after steel, fertilizer, grain, lumber and automobiles in that order. D. The Fisheries Subsector 1.8 The fisheries subsector of China includes capture and culture of aquatic products, in the two cases harvested from both marine and freshwater sources. Total output reached a record 10.6 million tons in 1988, compared to a production of 5.3 million in 1983, an increase of 100 percent in six years. Marine aquatic products accounted for 6.1 million tons of the total and increased by 10.6 percent in 1988 over 1987. Freshwater products accounted for 4.5 million tons and their volume increased by 11.8 percent over the pre- vious year. These increases in aquatic products are mainly attrs.butable to increased production of cultivated freshwater fish and marine shrimp, which in turn increased mainly because of a large increase in the area of culture ponds. Although aquatic products account for only 4 percent of the GVAO, they are an important source of protein, with all cultivated freshwater fish con- - 3 - sumed domestically. Annual average consumption of aquatic products averages about 9 kg per capita per annum. 1.9 China has become the world's largest producer of cultured shrimps, wit'h 32 percent of world production. Production has grown at an average rate of 79 percent between 1980-89 (from 2,600 tons to 190,000 tons). This remark- able growth rate was attributed to a rapid expansion of the area of shrimp ponds, improved hatcheries and price incentives. Shrimp production has become an important source of foreign exchange. In 1988, China also became the larg- est exporter of shrimp to the United States and Japan. E. Sectoral Obiectives and Bank Lending 1.10 The Government's long-term objectives for the agricultural sector are to increase food production to meet the requirements created by population and income growth, and to increase income and employment opportunities in rural areas. Given China's shortage of arable land (0.1 ha per capita), development planners have focused on the need to increase the productivity of presently cropped areas and to efficiently develop the few remaining areas of unutilized lands. Steps are also being taken to stabilize grain outputs and to raise the value-added in the farm sector--by increasing the production and quality of food crops, animal feed, livestock, fruit, fish and industrial crops--and also in agroprocessing, which is undergoing rapid expansion. 1.11 For livestock and fisheries development, the Government's objectives are to increase production for domestic consumption and exports, and provide an additional source of income for the rural population. High-valued live- s.ock products and aquatic products are being targeted for export markets. The livestock development strategy emphasizes the provision of superior breed- ing stock and good quality feed, industrial (stall-fed) management systems, pasture improvement, the development of new pasture species, establishment of processing plants, and the provision of support services such as improved vet- erinary and scientific breeding services. The aquatic development strategy emphasizes establishment of aquaculture systems on land unsuitable for crop cultivatton--freshwater culture in swamps, floodplains, marshes and poorly drained .nterior land and marine culture in coastal lowlands. shoals and mud- flats. 1.12 The Bank's lending to China's agricultural sector is designed to support the Government's efforts to increase and diversify agricultural pro- duction through more efficient use of land, water, capital and labor resources and through the improvement of support services such as credit, research and agricultural education. Bank group agricultural lending to date has comprised 23 operations amounting to US$2.1 billion and has covered the full spectrum of geographic areas and subsectors, with overall focus on land development, irrigation and drainage (five projects), upgrading agricultural support ser- vices including agricultural research, education, credit and seed improvement (seven projects) and developing specialized subsectors including rubber, for- estry, fruit and fisheries development (seven projects) and area development (four projects). In recent years, the Bank group has supported a series of provincial development projects in which an area development approach has been applied, with responsibility for proposing and preparing the investment pro- posals and repaying project funds resting with provincial and lower level gov- ernments, thus supporting the increasing delegation of development planning - 4 - and implementation. The rural sector adjustment loon (RSAL), which was pro- cessed during 1968 contributed to the articulation of the reform process. 1.13 Experience in previous Bank agricultural projects in China is that physical works have been on time or ahead of schedule. Disbursements for agricultural projects, in fact, usually outpace those in othar sectors. Nota- ble features of all the projects are the high standard of project management, the enthusiastic participation of farmers and the effective collaboration of government authorities at all levels. Two projects which supported land development and agricultural intensification (Ncrth China Plain J;oject (Cr. 1261-CHA) and Heilongjiang Land Reclamation Project (Cr. 1347-CHA)] and one Rural Credit Project (Cr. 1462-CHi) have been completed. The project comple- tion reports for the two land development projects indicated that project implementation was successful, economic rates of return reached or exceeded the appraisal estimates, and technology used for land development and drainage was sound and appropriate for wider application. PCR preparation for the Rural Credit I is underway. 1.14 The Bank has also been involved in the agricultural development of Uebei Province through its responsibility to appraise and supervise the Hebei Agricultural Development Project financed by the International Fund for Agri- cultural Development (IFAD Ln. 107-CHA). The project was appraised by the Bank in 1982 and covered two counties in Heilonggang area (Nanpi and Quzhou). The project was implemented from 1983 to 1987 at a total cost of US$51.5 mil- lion including an IFAD loan of US$25 million. The project aimed to develop agriculture on some 123,500 ha of land through a program of groundwater devel- opment, improved drainage and salinity control. Project implementation has been adjusted to take in consideration rural reforms introduced, particularly the production responsibility system. The establishment of a Beijing Univer- sity Experiment Station in Quzhou has prcvided invaluable support to project implementation and success in meeting project objectives as testified by the Project Completion Report and FAO/CP evaluation of the project. Lessons learned during the implementation of the IFAD project we.-e (a) effective salinity control has to consider carefully balancing surface and groundwater resources, (b) alfalfa proved to be a suitable crop to reduce soil salinity, and (c) nutritional value of crop residues could be increased by ammonifica- tion technique. These lessons were incorporated into the design of the pro- posed project. F. Agriculture in Hebei 1.15 Hebei Province lies in Northern China surrounding the independent Beijing and Tianjin Municipalities. The province has a population of about 58 million, 85 percent of which is in farm households, and a land area of about 187,700 km2. About 42 percent of the land area is flat land in the North China Plain; the remainder is composed mostly of hilly areas to the north and west. Administratively, the province is divided into eight prefectures with 131 counties. The province borders the Bo Sea to the east and has a coastline of about 500 km. About 7.6 million ha of the land area is arable and 3.6 mil- lion ha of this is irrigated. Natural grassland covers 3.8 million ha, forest 3.1 million ha and sown pasture 0.9 million ha. The total sown area (not including sown pasture) was estimated in 1988 to be 6.8 million ha. In 1989 wheat and corn occupied 68 percent of the cultivated area and other crops, including cotton, oil crops, fruit and vegetables, accounted for the remain- der. 1.16 Agriculture accounted for Y 25.6 billion ,n 1988 or suout 23 per- cent of gross provincial output of Y 109.8 billion. Gross provincial agricul- tural output (GPAO) grew about 6.3 percent per year from 1982 to 1988, consid- erably slower than output in the industrial (12 percent per annum) or comer- cial (13.4 percent per annum) sectors, but impressive nevertheless. Within the agricultural sector, crops (accounting for 63 percent of GVAO) grew at S percent per annum, livestock (accounting for 27 percent) grew at 10 percent per annum, forestry (accounting for 3 percent) grew at 6 percent per annum and fish and agricultural by-products (accounting for the remaining 7 percent) grew at 15 percent per annum. Grains,l/ the major crop category, increased only slowly (at 1.8 percent per annum) and reached a total output of 20.2 mil- lion tons in 1988. Cotton production increased from 0.4 million tons of lint in 1982 to 1 million tons in 1984 and then declined to around 0.5 million tons in 1988. Hebei ranks eighth in grain production among Chinese provinces and second (after Shandong) in cotton. Dried and fresh fruit production increased rapidly over the period at 15 percent per annum. 1.17 In livestock, the growth in pork and cattle production depended on the relationship of meat and feed prices. In spite of higher demand for pork than for red meat (beef and mutton), pig production increased by only 2 per- cent per annum compared to 7 percent per annum for ruminants. This was because grain feeds were in short supply, while crop residues and other by- products suitable for ruminants were plentiful. In 1988 meat production was 1.2 million tons, while poultry and eggs 0.4 million tons, an increase of about 14 percent over 1987 levels. The continuing expansion of the livestock sector occurred largely in the smallholder subsector in the main cropping areas. Liberalized livestock markets and farmer's responsiveness to improved income-earning and diversification opportunities were the major factors. Con- centration on ruminants reduces smallholders exposure to feed price fluctua- tion and, thus, has in recent years been more attractive. Further increases in nonruminant livestock production are likely to be somewhat constrained by increasingly tight grain and concentrated feed supplies. 1.18 Production of aquatic products over the period increased even more rapidly than meat production, with an increase of 12 percent per annum. Total fisheries production in 1988 was 207,000 tons (an increase of 16 percent over 1987) of which 59 percent was from sea capture, 18 percent from mariculture and 23 percent from freshwater aquaculture. The output value of aquatic prod- ucts reached Y 725 million. There were 18,000 ha devoted to mariculture of which 17,700 ha were devoted to shrimp cultivation. Shrimp production has grown substantially, doubling over the laet four years. Production reached 36,900 tons in 1988. Current government plans are to moderate the expansion of shrimp mariculture, considering the world market situation (Annex 4). 1.19 Rural Poverty in Hebei. The rural agricultural population of Hebei is very poor compared to the urban po?ulation. Average agricultural per capita income is Y 440 (US$93) compared to the urban average of Y 855 1/ Grains include rice, wheat, sweet potatoes, maize, sorghum, millet and soybean. - 6 - (US$181). In addition, according to a 1986 household survey, there were 2.5 million farm households, with 10.1 million family members in total (21 percent of rural population), which have per capita incomes below Y 200 (US$43) per annum. A recent household survey named 49 counties as the poorest areas; 15 counties in Heilonggang, 14 counties in Taihang mountain, 14 counties in Hang Shan and 6 counties in the highland of north Hebei. It is dramatic that pov- erty of such magnitude exists this close to Beijing and Tianjin municipali- ties. The rural incomes in these two large municipalities, both of which include a substantial rural population, were much higher, Y 916 (US$194) and Y 749 (US$159) per capita, respectively. The main reasons for poverty in rural Hebei are (a) poor natural resources--infertile lands with varying degrees of excess salinity and l,mited water resources, (b) susceptibility to natural disasters such as floods and droughts and to unpredictably severe weather, (c) poor infrastructure and communications, whi-h limit opportunities (particularly in remote areas) to learn about new agricultural technologies, and (d) a poorly developed commercial infrastructure, which limits farmers' incentives to increase production. 1.20 Hebei's Eighth Five-Year Plan (1990-95) emphasizes rural reforms and the development of the agricultural sector as important mechanisms to acceler- ate economic growth. It expects that the gross provincial output would increase by 9 percent per annum and gross provincial agricultural output by 5 percent per annum over the next plan period. Grain production is expected to increase to 23.5 million tons and cotton to 0.9 million tons by 1995. These targets would be achieved through continued support by the Provincial Govern- ment for the development of the production responsibility system with increased provision of technical services. The Province expects to increase its investme-nt in water resources and the development of high-yielding, disease-resist-'t varieties. Plans have also been made to adjust output prices of grains and cotton so as to increase farmer's Incentives sand to make available the necessary inputs and credit for both crop and livestock produc- tion. Hebei would continue to support the development of rural enterprises and has targeted their development to the poor areas of the province in order to alleviate poverty and income disparities. 1.21 The major constraints to increasing crop yields and production in the province are the lack of fertilizers, improved certified seeds and irriga- tion and the presence of waterlogging, excess salinity and drought. Agricul- tural production in the province is vulnerable to variable weather conditions. The reduction in provincial grain production in 1987, for instance, was attri- buted to drought. These constraints operate strongly in the south-central Heilonggang area. With reliable water supplies, the effect of drought could be minimized. With new varieties of cotton, wheat and paddy, cropping pattern could be more intensive. With timely availability of irrigation water and appropriate and adequate inputs, crop yields in the areas of low to medium productivity could be increased substantially. 1.22 Water Resources in Hebei. The water reaources of Hebei Province are as diverse as its topography and geography. In the northeastern region large annual rainfall and the mountainous topography produce abundant surface water supplies. In the Beilonggang region, however, annual rainfall of 400-500 mm must be supplemented by irrigation to obtain high yields. Over the past 30 years some areas have been conve-ted from marginal saline wasteland to a highly productive irrigated agricultural region (e.g., Quzhou county under the recently completed IFAD project, para. 1.14). Large drainage channels to the sea combined with well irrigation have allowed effective leaching of much of the salinp 'end in the province. 1.23 Surface water, shallow groundwater and deep groundwater are the three interlinked major sources of water for irrigation. While many mountain reservoirs have been constructed, significant amounts of water flow unused to the sea as no surface storage sites exist in the flat plains regions. In the 2.2 million ha of agricultural land in Heilranggang area, there are 230,000 shallow wells and 46,000 deep wells. During the last five years, 10,000 new wells have been sunk per year. The high rate of new well drilling, coupled with lower-than-average rainfall in the area, indicate that there is a danger of overexploitation of shallow groundwater. The management of the water resources in the area needs to be upgraded to develop efficient conjunctive use of surface water and groundwater. Deep groundwater is being overexploited and less use of deep groundwater should be made for irrigation in order to conserve this resource for municipal and industrial use. G. Proiect Formulation and Rationale 1.24 The integrated agricultural development approach under the proposed project is designed to addtiss most of the major constraints limiting agricul- tural productivity in Hebei's poorest areas: the shortage and poor quality of irrigation water, inadequate crop diversification, the poor quality of final products, the limited extension network, and the weak linkages between produc- tion, processing and marketing activities. IDA's involvement in the project has resulted in significant design changes in the water conservancy and aqua- culture components as well as the introduction of greater emphasis on environ- mental aspects. The project was designed to: (a) reflect recent developments in the export markets for shrimp; (b) promote efficient use of inputs; (c) strengthen the integration of production and marketing activities; (d) increase farmers' income from livestock activities and the use of crop residues; (e) increase awareness of efficient management of water resources; Cf) expand the area under irrigation by increased conjunctive use of surface and shallow water aquifer sources, and (g) limit water use from deep aquifers to municipal and industrial purposes. II. THE PROJECT AREAS A. Location 2.1 The proposed project areas are located in the Northeast Coastal region and the Heilonggang region and include 53 counties in eight prefec- tures/municipalities of Tangshan, Qinhuangdao, Cangzhou, Baoding, Shijiazhuang, Hengshui, Xingtai and Handan. Project locations and area sta- tistics are given in Annex 1 and on IBRD Map No. 22306. B. Climate, Topography and Soils 2.2 Climate. The Heilonggang region has a continental monsoon climate with dry, moderately cold winters and hot wet summers. Average daily tempera- tures range from January lows of approximately -3.80C to over 260C in July. - a - The frost-free period is 190 to 220 days with the last frost in early April and the first in late October. The average annual rainfall is about 480 to 600 mm with over 55 percent of the total annual precipitation during July and August. The Northeast Coastal region has a somewhat wetter and milder climate than Heilouggang with an average annual rainfall of about 600 to 700 mm. The frost free period is approximately 175 to 190 days and average daily tempera- tures range from -5.90C in January to over 250C in August. In both regions the rainfall from year to year is extremely variable. In a wet year, rainfall in the Heilonggang region may reach 3.5 times that of a dry year and wet sea- son precipitation (during the summer) can exceed 80 percent of the year's total. This results in the region being pzone to both droughts, flooding and temporary waterlogging. 2.3 Topography and Soils. The southern plains area of the province (the Heilonggang region) is generally flat with a slight slope from southwest to northeast. The flatness of the land has resulted in a number of low-lying areas which are partially saline due to slow natural drainage. The Northeast Coastal area is also flat near the coast but steepens toward the north. Land near the mountains has lighter riverine alluvial soils, while the coastal land was formed from more recent marine deposits consisting of silts and clays with higher salinity from residual effects of sea water. Coastal dikes now protect these areas from high tide and storm inundation. C. Water Resources and Irrigation 2.4 7he water supply for irrigation in the North Coastal area is from the surface water flow of the Luwn He, Dou He and Yang He rivers. Despite the availability of 4.8 billion cubic meters of storage capacity, there are peri- ods of extreme low flow at the river diversion locations and other times when large flows are wasted to the sea. The surface water supplies in the Heilonggang region are limited, more variable than in Northeast Coastal areas, and require additional storage to make them dependable sources of irrigation. The lack of reliable supplies of surface water and surface reservoir sites on the flat plain prompted the Government of Hebei (GOB) to take advantage of underground water storage in the shallow and deep aquifers. Thus the main irrigation supply is pumped from shallow wells (30 to 80 m deep) and deep wells (up to 300 m deep). The shallow groundwater aquifer is generally sepa- rated from the deep groundwater by impervious zones and is annually recharged from rainfall, streamflow and irrigation. There are, however, limitations to the shallow groundwater supply without additional surface water importation into the region. Some of the shallow groundwater is partially saline but can be modified over time by salinity reclamation practices and management. Therefore, the incorporation of surface water supplies with shallow ground- water aquifers provides the potential for a highly efficient conjunctive use system that can be expanded in the future with the planned importation of Yellow River water into the region. D. Land Use, Farm Size and Population 2.5 The Heilonggang Area. About 2.2 million ha, or 69 percent of the gross land area is arable, 98,000 ha under woodland, 33,000 ha under pasture, 6,300 ha in orchards, and 57,000 ha in wasteland. Cropped area is about 3 million ha with a crop intensity of about 139 percent. Wheat is the most important crop (33 percent) followed by maize (19 percent), cotton (19 per- - 9 - cent), millet and sorghum (9 percent) and other crops including sweet pota- toes, peanuts, soybeans, oil seeds and vegetables (20 percent). About 51 percent of the cropped area is fully irrigated (primarily vells), 15 percent partially irrigated and 34 percent rainfed. Total population is about 15.6 million, of which, 14.6 million (94 percent) are engaged in agriculture. The rural labor force is estimated at about 6.2 million. Average family size is 4.2 persons, of which 1.8 aze workers. Average farm size is about 0.65 ha. 2.6 The Northeast Coastal Area. About 367,000 ha or 43 percent of the gross land area (861,000 ha) is arable, 192,000 ha in cultivated crops, 88,000 ha under woodland, 37,000 ha under pasture, 6,300 ha in orchards and 44,000 ha is wasteland. Cropping intensity is about 115 percent, i.e., less than in Heilonggang due to the short growing season with lower temperatures. Maize, the most important crop, accounts for about 31 percent of the total cropped area, sweet potatoes for 21 perc.nt, wheat and paddy for 14 percent each and other crops about 20 percent (including peanuts, soybeans, oilseeds, vegetable and fruit crops). About 63 percent of the cropped area is rainfed, while all the paddy, 80 percent of the wheat and 46 percent of the maize are irrigated. The project area involves about 250 km of coastline, primarily for shrimp development. About 64,500 ha of coastal area are suitable for marine aquacul- ture of which 13,513 ha are now in use (21 percent). These areas located principally in tidal mud flats on the saltwater side of established sea walls are not suitable for crop production and have been reclaimed for shrimp pro- duction. The total population in this project area is about 3.0 million of which about 2.8 million or 93 percent, are dependent on agriculture. The rural labor force is estimated at about 1.3 million. Average family size is estimated at 3.8 persons, of which 1.8 are workers. Average farm size is 0.5 ha. S. Present Develogment 2.7 Agriculture. In the Ieilonggang area, the predominant crop rotation in irrigated areas is winter wheat, followed by maize (65 percent) or summer cotton (25 percent), and single-crop cotton. Rainfed areas (about 60 percent) are planted with wheat followed by millet in the first year, followed by sweet potato in the second year and in the third year peanuts or soybeans. Rainfed cotton covers about 30 percent of the area. Recently, the development of early maturing wheat and cotton varieties for the southern Heilonggang area provided a breakthrough in relay cropping of wheat (winter) and cotton (spring cotton). Yield levels of both crops are comparable to single cropping. of course, adequate irrigation, organic and chemical fertilizers and agrochemi- cals are essential to achieving high yield levels and improving soil fertil- ity. The project would expand wheat and cotton relay cropping and foster development of improved high yielding varieties and application of modern cul- tural practices. Generally, Hetlonggang yield levels of all crops, except maize, are below the provincial averages, mainly as a result of inadequate irrigation, poor seeds and shortage of agrochemicals. Cotton shows considera- ble variation in yield from only 0.5 tons lint per ha in low yielding rainfed conditions to more than a ton per ha with irrigation, good seed and adequate farm inputs. Fruit crops are usually planted in marginal lands and river beds, as grains, cotton and oil crops occupy most of the arable land. With the liberalization of marketing of fruit crops, considerable development of fruits and vegetables in the province has taken place to supply urban areas. Hebei pears and Chinese dates (Golden Thread variety) are famous. The latter - 10 - (ZizyDhus iuiuba) have been planted over about 16,000 ha--generally inter- planted with cereals and other crops. 2.8 In the Northeast Coastal areas, the predominant crop rotation is wheat followed by maize (60 percent), followed by single-cropped spring maize in the second year. Paddy (Japonica varieties) is primarily planted as a single crop over about 30 percent of the irrigated area, with high yields (reaching 6-7 tons ha) based on better seeds, reasonable supplies of agroche- micals and improved cultural practices. In general, average wheat and maize yields are higher than Heilonggang due to higher rainfall and available sur- face irrigation water, better soils and crop production practices. Develop- ment of wasteland is seen as the key for increased production of high quality rice and improvement of farmer incomes in the coastal areas. Relay cropping of improved early maturing wheat and paddy varieties has been successful in inland reclaimed areas and the practice would be extended under the project. 2.9 Seed Production. Conventional rice varieties are planted in the Northeast Coastal areas rather than hybrid rice as in the southern provinces. About 40 percent of the rice seed in Hebei is supplied through the provincial and country seed companies. This is higher than the national average for China (15 percent). For cotton, the opposite is true. Hebei ranks second after Shandong in planted area to cotton, but well below the national average in the level of cotton seeds supplied through the seed companies: 35 percent vs. 60 percent. Since the national supply of cottonseed is considered to be lower than desirable, the 35 percent supply in Hebei is low indeed and con- strains the introduction and diffusion of new improved varieties and types in the area as well as improvements in yield and product quality. With the limi- tations of arable land, particularly fully irrigated areas, production increases are most likely to result from adequate supply of quality seeds of improved varieties and availability of farm inputs. New varieties of maize, millet, peanuts, soybeans and other crops have been developed at the research stations but are not widely used in the project area due to inadequate produc- tion and supply of seeds. 2.10 Livestock. The project areas' livestock population comprises large animals (cattle and equines) 1.52 million, pigs 3.1 million, sheep 1.26 mil- lion, goats 1.31 million, poultry 49.44 million and rabbits 7.2 million. In general, the productivity and output of livestock in the project area lags behind the province as a whole, especially that of the northern areas. The main constraints to improving livestock output in the province and in the project areas includes (a) the comparatively poor quality of the feed base especially for ruminant animals; (b) weaknesses in the veterinary and animal extension programs; (c) lack of credit; and (d) inadequate meat processing and cold storage facilities and weaknesses in the marketing systems. These con- straints would be addressed under the project. 2.11 Aguaculture. The Northeast Coastal project area encompasses about 13,500 ha of shrimp ponds, representing 58 percent of total provincial shrimp production capacity, and 8,800 ha of freshwater fishponds, representing 29 percent of provincial freshwater fish production. The area also includes 300 scallop operations, occupying an area at sea of 60 ha. In the project area, in 1989, a total of 21,834 tons of cultivated (head-on) shrimp were produced. The species of white shrimp cultivated is Penaeus orientalis, a species native to the Bo sea. Shrimp ponds are usually of 3 ha size, producing a single har- - 11 - vest from early September till end of October. China uses a semi-intensive culture methodology with a stocking density of 300,000 post-larvae without aeration. Ponds are drained and dried over the winter; cold winter conditions lead to eradication of diseases and pests and provide an opportunity for pond maintenance. Shrimp yields are relatively high and can reach 2-3 tons of headed shrimp/ha. Such high yields with the long season keep them competitive with southern warm areas where two crops can be produced. 2.12 Shrimp area expansion in the last five years has led to relative neglect of pond maintenance, feed efficiency, processing quality and overall improvement of the management process. This is exacerbated by the distinct compartmentalization of provincial production, processing, marketing and man- agement activities, and weak if nonexistent linkages between research, exten- sion and development. Feed standards and management oporations between the six counties in the project area are so variable that no standardi-ed norms can be found for feed quality and processing of final product. The conse- quence of these shortcomings have been reflected in lower prices of Chinese white shrimp in export markets relative to other competitors (Annex 4). These problems are being recognized by provincial, prefecture and county planners and the project emphasis on pond rehabilitation, rather than expansion, intro- ducing technical and managerial impzovement in production, processing and mar- keting is clearly aimed to address the aforementioned constraints. Freshwater fish and scallops production are typically for the domestic market with rela- tively fewer problems than shrimp. The project would include improved research, extension and training linkages among farmers and technicians to improve efficiency of production and marketing of all types of seafood. F. Support Services 2.13 Research In addition to the national research programs of the Chinese Academy of Agricultural Sciences (CAAS) and its institutes, Hebei Province depends largely for its development efforts on research programs undertaken at the Hebei Provincial Academy of Agricultural Sciences (HAAS) and related inst'2tutes in Shijiazhuang, and the University of Hebei in Baoding. Beijing UniversiLyls Regional Experiment Station at QuZhou County (southern Heilonggang) has provided strong support to irrigated agriculture, salinity control and improved cultural practices since its establisbment (in 1982) to address these problems under the recently completed IFAD-supported project. In addition, the National Cotton, Wheat and Maize Research Center in Anyang (Henan Province) provides active support in varietal development and integra- ted pest management (IPM). The Forestry Academy of Science also provides active support in perennial fruit crops, including Chinese dates and pears. Research is also undertaken by the provincial bureaus of water conservancy (WCB), agriculture, forestry, and livestock and aquatic products. Some of the prefectures and counties have specialized research institutes which collabo- rate closely with the HAAS and are mainly supported through their respective prefecture and county governments. Hebei Province has about 22 agricultural research units, with a total of 254 senior and 1,932 middle-level research scientists. Experiments are also carried out on 10,000 ha of farmland in 30 locations. These research institutes and their staff have contributed signi- ficantly to the development of improved high-yielding, early-maturing varie- ties with drought and salinity tolerance suitable for the different agroclima- tic zones of Hebei Province. However, more applied research work is needed to incorporate modern production practices and efficient use and application of - 12 - agrochemicals. Dissemination of research results and feedback from farmers and beneficiaries need strengthening. Lack of operational funds and modern equipment and a shortage of qualified trained staff to link research with extension constitute a bottleneck to advanced agricultural development. These aspects would be addressed under the project. 2.14 Extension. With the introduction of the production responsibility system, a dramatic change from top-down technical transfer and adoption to a bottom-up ar-roach has taken place. Dissemination and feedback of information to an enormouv number of beneficiaries (compared to the old commune and pro- duction brigade system) necessitated introduction of advisory extension staff, provision of extension centers at all administrative levels and modern exten- sion equipment (including comumuications media). These changes are nationwide and at present Hebei Province is participating in the process of restructuring the extension network into multifunctional, County Agrotechnical Extension Centers (CATECs). 2.15 Extension services for agriculture, forestry, livestock and aquatic products are generally well established in the project area at provincial, prefecture, county, township and to an extent at the village level. There are agrotechnical stations at the township level and farmer-operated (household level) demonstration farms at the village level. At the township level, each center is staffed with 4-5 technicians who serve 15-20 villages. Thus, each technician serves 4-5 villages and at each village, the township technician contacts 20-30 leading households who disseminate information to other house- holds. Each village has a loudspeaker system which could be connected to the township for messages and also used for couunnicating village information. Agreed production targets between village households (farmers) and township technicians are planned at the beginning of the season and the technicians at all levels and their centers share in bonuses if targets have been achieved. This incentive system clearly keeps technicians interested in successful implementation of their recommendations. The need for additional agrotechni- cal centers with better services at county and township levels is apparent and the project would provide for these needs and improve training programs. Linkages between research and extension agencies and programs would be also streamlined and strengthened under the project. 2.16 Agricultural Credit. The Agricultural Bank of China (ABC) is the largest provider of institutional credit in Hebei. It is widely represented throughout the project area with eight branches at prefecture and city levels, 53 subbranches at county level with 339 operational offices, 1,420 rural credit cooperatives and 19,855 credit stations at township and village levels. ABC resources are obtained from deposits, loans, profits and state budget. In 1989, the Hebei Provincial ABC shows a portfolio of Y 15.37 billion, of which 65 percent for commerce, 28 percent for agriculture and township industries and 7 percent for industry and other. Within the agricultural loans, seasonal loans for agricultural inputs account for 78 percent, followed by loans for wells and machinery of 5 percent each. Livestock and aquatic loans make up only 2 percent and 1 percent respectively; the remaining 9 percent for other. ABC charges interest according to the length of repayment periodss as of April 15, 1990, due to lower inflation rate (presently about 62), ABC interest rates were reduced from 11.3 percent to 10.1 percent for one-year loans and from 19.3 percent to 18.0 percent for loans over five years. Under the proj- ect, ABC would act as a fiscal agent for the Project Management Office (PMO) - 13 - accounts. The Bureau of Finance would be responsible for financial management aspects. G. Infrastructure 2.17 Transport. The project area is well served by the Province's rail and road network. All national networks cross the project as the province surrounds both Beijing and Tianjin municipalities. In addition, the city of Beidaihe in Qinhuangdao prefecture is a famous summer resort area with direct road, rail and sea links to the interior of the province as well as its coastal areas on the Bo sea. A good road network links the counties, townships and villages in the province. Sea transportation to the project area benefits Tangshan and qinhuangdao prefectures. 2.18 Power. The North China Power Grid, which would provide all electri- cal main supply to the project, is currently undergoing a major upgrade. Extensive new generating capacity is being installed, and the distribution network and substations are being modernized. The North China Grid is subdi- vided into two networks. The Jing Jing Tan Network operates at 500 kV and covers five northern prefectures, together with the metropolitan cities of Beijing, Tianjin and Tangshan. This network would supply all of the project components in the northeast of the province. The Ji Nan Network operates at 220 kV and covers the southern part of Hebei Province. It would supply power to all of the project components to the south and those of Baoding. Provi- sional estimates for the energy requirement of all components of the project are 170 GMhlyear. The North China Power Grid currently has a total generating capacity of 35,440 GVhlyear, excluding dedicated metropolitan generating plants in Beijing and Tianjin. New generating capacity which is scheduled to come on-line by the end of 1992 would provide an additional 6,600 G1hIyear which would be more than adequate to meet the requirements of the project. The Hebei Power Bureau has confirmed its commitment to provide all components of the project with adequate power supply to ensure full utilization of equip- ment. III. THE PROJECv 3.1 The project would assist Hebei Province in its development plan to alleviate poverty and increase farmer incomes by increasing productivity and marketability of agriculture, livestock and aquatic products in the northeast coastal area (Tangshan and Qinhuangdao cities) and the inland Heilouggang area. The project would: (a) strengthen the province's ability to effec- tively manage its available water resources, (b) increase and intensify pro- ductivity of existing low-yielding crops and diversify the cropping pattern, (c) promote market analysis as a criterion for increasing production and improving processing of major commodities, (d) expand agroprocessing activi- ties to rationalize fertilizer production and make use of agricultural by- products, (e) promote an effective use of crop residues in expanding livestock production and (f) strengthen provincial applied research and extension pro- grams for crops, livestock, aquaculture and water conservancy. - 14 - A. Proiect Descristion 3.2 The proposed project would expand and rehabilitate irrigation facil- ities mainly for cultivation of wheat, paddy, maize, cotton, oilseeds, vegeta- bles, fruits and alfalfa. The use of crop residue and by-products (which would increase in volume under the project) would increase available livestock feed for ruminant animals (mainly cattle and sheep) through ammonification of straw. The seed processing component for cotton, rice, maize and other crops would ultimately contribute to increased yields through the introduction and distribution of newly developed high-yield varieties suitable for Hebei's agroclimatic conditions. Agroprocessing investments would be limited to agri- culturally related activities essential to the area, i.e., two model fertili- zer plants using advanced international technologies to produce urea and mono- ammonium phosphate (MAP) and construct two factories using cotton stalk in particle board and fluting paper manufacturing. The project would also con- struct and rehabilitate shrimp ponds, and provide feedmills and shrimp proces- sing facilities to augment the province's efforts in improving shrimp quality and increasing fish and scallop production. Special efforts to strengthen agricultural research, extension programs and their linkages would be extended through the project by providing needed equipment and management training at all levels. The project components are: (i) water conservancy; (ii) agri- culture development; (iii) livestock development; (iv) aquaculture; (v) agro- industries; and (vi) institutional development. Water Conservancy 3.3 Heilongganp Area. Adequate and reliable water supply is the primary constraint to expand irrigated area and intensify agricultural production. Conjunctive use of water resources from surface water supplies and shallow well aquifers is the key to providing sustainable irrigation water to propel agricultural development. This would be attained by a two-pronged approach to improve structures to distribute surface water on a larger area, particularly in years with above-average rainfall, and provide investments for drilling of new shallow wells and laying of water-saving distribution pipes. Water avail- ability assessments and planning for the province's water resources would also be strengthened under the project. 3.4 Additional surface water would be brought into the southern portions of the Heilonggang region by the replacement of four existing pumping stations from the Wei He River that are nearly inoperable. The new pumps would provide additional installed capacity and would add an estimated 255 million m3 of surface water into the region in an average year. In addition, four sluice gates would be constructed in existing flood drainage channels to provide tem- porary surface storage within the project area. The total storage capacity formed by the gates is 36 million mn3. These gates allow capture of a portion of excess late summer surface r-unoff to be used as irrigation the following spring. The surface supplies obtained from gate impoundments vary from year to year depending on the rainfall, but are valuable in reducing groundwater withdrawals and in providing groundwater recharge. The locations of the pump- ing stations and storage gates to be constructed under the project are detailed in Annex 1, Appendix 1. On average 24,000 ha would receive a full irrigation supply and 120,000 ha would receive either partial or supplemental irrigation in areas either without irrigation or which are now served only by wells. - IS - 3.5 As for drilling of shallow vells, a total of 9,950 new shallow wells would be drilled and fitted with electric or diesel pumps at a rate of 4,000 wells per year in the first 2.5 years of project implementation until a more detailed assessment of water resources has been carried out. These new wells would be in addition to the 12,000-17,000 shallow wells drilled annually to replace older wells (about 7 percent annually of 230,000 existing wells). The shallow wells would vary in depth from 30 to 80 m with capacities ranging from 20-40 m3/hour. A typical well system equipped with water-saving pipes and a capacity of 30 m3/hour would be capable of supplying irrigation to an area of 6.75 ha, i.e., a total of 67,100 ha of rainfed land would be converted to full irrigation. In order to improve water delivery, closed conduit water-saving pipes would be installed not only with new shallow wells, but also on some existing ones. A total of 6,478 km of concrete pipes would be needed for the new wells and 3,356 km would be installed on existing wells. The pipes would vary in size from 100-200 mm and would be produced locally with methods that compact low slump concrete into standard size forms. Ash from coal-fired power plants is included in the concrete mixture which minimizes the quantity of cement needed. The pipe can withstand only 2-3 meters of pressure which is adequate for use in on-farm distribution systems covering small areas. Approximately 3,000 km of pipe per year would be produced and installed under the project. The water-saving pipes installed on existing wells would reduce water use by about 35 percent compared to open ditches, enabling an additional area of about 36,300 ha of rainfed lands to be brought to full irrigation. 3.6 In order to maintain funding for new wells and water-saving pipes, a revolving fund for this purpose with a maximum four-year replenishment cycle would be established under the project in a separate account in ABC. Farmers usually contribute 30-50 percent of well construction cost and borrow the bal- ance. This practice would be continued under the project. Assurances have been obtained at negotiations for the establishment and maintenance of such a revolving fund in the amount of Y 32.5 million at county ABC branches and man- aged by county PMOs. 3.7 Northeast Coastal Area. Surface irrigation systems would be expanded and upgraded in Tangshan and Qinhuangdao prefectures to capture and utilize most of the water that presently escapes to the Bo Sea. In Tangshan, surface water supplies from the Dou He and Luan He rivers would be regulated and interconnected to provide the irrigation water to reclaim scattered wasteland areas adjacent to presently cultivated areas. Structures to be developed under the project include: (a) expansion of the Dou le irrigation system, by constructing two surface reservoirs and installing control gates, small pump units and drainage features to bring 6,200 ha into production; (b) expansion of the Luanxia irrigation system to bring 8,620 ha of new lands into the irrigated service area with the installation of control and storage gates, pump units and conveyance facilities. The new areas in both the Dou He and Luanxia schemes would initially be planted with paddy, and as the salinity of the soil is reduced, cropping with wheat and vegetables would be extended to suitable areas. In Qinhuangdao prefecture, four separate irrigation Sys- tems would be upgraded to allow lands originally included in old, partially completed schemes to be served. The initial systems were constructed fn the 1960s and 19709 and did not have adequate funding to complete all features. In addition, some of the main canals were constructed over highly pervious soils and were built without lining. These systems now suffer from high water - 16 - losses that prevent water delivery to the lower ends of the original service areas. These improvements would expand the fully irrigated area by a total of about 14,000 ha in Qinhuangdao prefecture. Detailed descriptions of the irrigation schemes are in Annex 1, Appendix 1. The total Incremental irriga- ted areas in Heilonggang and Northeast Coastal areas are summarized in the following table. Table 3.1s PROJECT LAND AREA SUMMARY ('000 ha) Gross Cultivated area Irrisated area area Esisting With project Existing With project Beilonggang area 3,188 2,194 2,210 1,373 1,565Sa Northeast Coastal area 770 157 176 59 84/b Total 3,958 2,351 2,386 1,432 1.649 a Incremental irrigated area consists primarily of about 100,000 ha from new wells and water-saving pipes, the remaining from surface water irri- gation systems. lb Incremental irrigated area from surface water irrigation. 3.8 Water Resources Development Plan. The project includes funding of a program to strengthen the monitoring, planning, operating and managing of sur- face and groundwater resources by the WCB. The conjunctive use of surface water to supplement groundwater resources and to reclaim partially saline areas has been targeted and would be of primary concern under the project. The project would provide equipment to collect, assimilate, monitor and evalu- ate the shallow groundwater levels and withdrawals. Staff training would be provided to expand the capability of the lCB for making future estimates of groundwater availability, detenmining areas of overexploitation, measuring groundwater level response to rainfall and selecting long-term potential for additional drilling of new shallow wells. Assurances have beeiL obtained at negotiations that no new wells other than those under the project would be drilled in the Ieilonggang region until the final assessment of the ground- water resources under this program has been made. Surface water modeling and operation simulations studies of the Wei He River pump diversions into the Heilonggang area would also be conducted to establish detaiied operating pro- cedures and to maximize conjunctive use. Subregional water balances would be made to support plans for new water resource allocations and plans for future surface water imports. Strengthening of surface water management in the northeast coastal area would also be included in the program as there would be long-term competition in this region from the large municipalities of Beijing, Tianjin and Tangshan for surface water. The training activities associated with this component would range from local township staff to senior engineers of the provincial IWCB and would consist of local in-service training and over- seas training. - 17 - 3.9 Water Resources Research. The following water research topics of relevance to the project have been selecteds (a) investigation of the chang- ing surface water runoff patterns; (b) study of methods to improve or reclaim partially saline lands through surface and groundwater irrigation practices, (c) survey, evaluation and assessment of wastewater use in agriculture, and (d) future water use efficiency and water allocations. These research pro- grams would be conducted by the WCB and related institutes of the HAAS and Hebei Agricultural University (HAU). Assurances have been obtained at nego- tiations that results of water resource monitoring, water resource development planning and research would be compiled as they become available, and dis- cussed with IDA, PHO and WCB. Agriculture Development 3.10 Agrochemicals. The major constraints to increasing crop yields and production in the project area are the lack of irrigation, agrochemicals, cer- tified seeds, and the existence of waterlogging, excess salinity and drought. High-enalysis chemical fertilizers are in short supply, particularly phos- phates. Soils are generally deficient in nitrogen and phosphate and current fertilizer application rates for wheat, maize and cotton are below recommended rates. Low-analysis fertilizers such as highly volatile ammonium bicarbonate (17 percent N) and low-grade calcium single superphosphate, SSP (12 percent P205), are the main fertilizer sources. Some urea is being manufactured in the province but demand is more than supply. To address these shortages, the project would finance initial incremental needs of inputs and import about 63,500 tons of diammonium phosphate (DAP). In addition, about 740 tons of pesticides would be provided to augment provincial efforts in combatting pests and strengthening IPM measures under the project, particularly for cotton. About 6,000 tons of plastic resin, to manufacture similar amounts of plastic film, would be imported to supply plastic film ground covering for early planting of cotton, maize, paddy nurseries and vegetable seedlings. Locally produced and imported inputs would be distributed in a timely manner by the Marketing and Supply Corporation (MSC) at provincial, prefecture, county, township and village levels and at prices which would cover costs of procure- ment, transportaticn and distribution. A revolving fund managed by county PMOs would be established at county ABC branches with proceeds from the sale of inputs provided by the project to ensure procurement of future needs. Assuraences to this effect have been obtained at negotiations. 3.11 Seeds. The project would strengthen the existing seed processing facilities and institutions and improve the quality of wheat, cotton, maize, paddy and oil seeds. For cotton, the objective would be to increase the use of quality seeds from the present level of 35 percent coverage to about 75 percent in the project areas through upgrading and strengthening of 18 seed farms and two seed companies, renovating and expanding 17 existing ginneries, and introducing acid delinting technology into the province. Details are as follows: (i) contracted area for seed production of basic seeds in 18 farms would be increased from 600 ha to 1,800 ha with an annual incremental seed production of 927 tons. This would include constructing 23,760 m2 of offices, dormitories, laboratories, and store houses. In addition, 9,000 m2 of drying floors; 90 sets of small ginneries; 18 tractors (12-45 hp) and 18 sets of seed quality control, fire and safety equipment wo ld be provided; (ii) two seed companies would be strengthened and expanded to increase amounts of processed and marketed seeds from 400 tons to 2,400 tons annually and would be provided - 18 - with 3,800 m2 of store houses, processing shops and drying floors, two 1.5 tons/hr seed cleaners with conveyors, two 5-ton trucks and small items for equipment renovation and repairs; (iii) 17 existing ginneries would be renova- ted and expanded to augment the total annual capacity by 12,120 tons of raw delinted pure seeds, resulting in additional production of 15,800 tons of lint and 2,424 tons of iinters would be produced. About 17,000 m2 of seed store houses would be constructed to store additional seed; (iv) two acid delinting plants would be constructed, one with a capacity of 2-4 tons/hr and another with one ton/hr of acid delinted seeds with a total annual production of 6,500 tons of acid delinted pure seeds (single shift); and (v) basic seed growers would be provided with about 3,000 two-row and four-row secd drills to effec- tively plant acid delinted pure seed, five trucks for seed distribution and 18 tractors to help contract seed growers with farming operations. In the Northeast coastal area, the project would support improvement of wheat, paddy, maize, oil crops and vegetable seeds as follows: (i) three basic seed farms in Quinhuangdao prefecture would be strengthened and expanded to increase growing area by 117 ha, and basic paddy seed production by 309 tons/year. This would enable 1,766 ha to be planted for extension seed; producing about 4,414 tons of seeds annually; and (. ) four seed companies in Tangshan Prefec- ture would be upgraded to primarily increase improved paddy seed by 3,900 tons annually. 3.12 Agricultural Extension. In order to respond to farmers' expecta- tions from agricultural extension under the production responsibility system, the project would strengthen agricultural extension at all levels with special emphasis on county, township and village levels. The project would construct eight CATECs, six in Heilonggang and two in Northeast coastal areas. At the township level, 124 Township Technical Service Centers (TTSCs) would be fur- nished and equipped with necessary extension equipment, including visual aids and simple soil testing kits. In addition, several existing CATECs and TTSCs would be expanded, upgraded and supplied with necessary equipment including veterinary services. Each group of five new TTSCs would be supplied with nec- essary veterinary equipment and drugs. Training programs for farmers, village households, township and county technicians would be carried out. Although different bureaus handle their training programs separately, the project would promote unified and integrated delivery of services at township and village levels. Active involvement of national agricultural staff and provincial scientists at the HAAS and RAU is also envisaged. Particular attention would be accorded to implementation of IPM programs developed at HAAS and the National Cotton Center at Anyang, Henan. One county in Handan prefecture would be selected for disseminating the IPM program. 3.13 Agricultural Research Programs. Provincial agricultural research programs would encompass the following: (i) development of improved cotton varieties; (ii) irrigation and fertilizer applications for cotton; (iii) cot- ton pests and diseases; (iv) development of small farm machinery; (v) irriga- tion and fertilizer application and pest control for Chinese dates; (vi) improving quality of pears and dates; (vii) economics of drip irrigation for fruit crops in Hebei Province; and (viii) development of high yielding short season paddy varieties, water and fertilizer application. Cooperating institutes would be supplied with needed equipment under the project and oper- ating funds would be supplied by the province. - 19 - 3.14 Dates/Foodgrain IntercroEPing and Orchards. Chinese dates (Zizyphus Juluba) have been a traditional crop in Heilouggang, planted as border strips or intercropped with foodgrains and cotton. Currently, about 16,000 ha are intercropped and an additional 20,000 ha would be intercropped in Cangshou prefecture. About 50,000 households would participate in the program with an average area of 0.4 balhousehold. Increased production would help in improv- ing nutrition and alleviating poverty through improved incomes. In addition, about 1,700 ha of new pear orchards would be established and about 4,000 ha of existing low yielding pear orchards would be rehabilitated. The county &ad township Forestry Bureaus would plan and implement the orchard development component. The project would provide improved healthy planting material of high yielding varieties with good horticultural quality, agrochemicals and spraying equipment. 3.15 Agricultural Mechanization. With the introduction of the production responsibility system, Agro-Machinery Service Centers' (AMSCs) role in provi- sion of machinery services decreased and is presently limited to fuel distri- bution, rental of large tractors and bulldozers, repair services, regulatory functions of tractor drivers training and issuance of licenses. In the mean- time, the private sector ownership of small tractors, repair service and per- forming rental services grew rapidly. Under the project, about 360 AMSCs would be provided each with 10-ton fuel storage tanks, diesel oil pumping sta- tion and small equipment. This is to improve efficiency of fuel distribution. In addition, training programs for trainers of machinery operators would be strengthened. To serve farmers' interests in the project area, the county PMOs would establish a revolving fund at ABC with an annual amount of about Y 1.5 million for the purchase of small farm machinery. The fund would be administered by ABC in accordance with its prevailing interest rates and teoms for similar purposes. Assurance to this effect have been obtained at negotia- tions. Livestock Development 3.16 Objectives and Strategy. The primary objectives of the livestock component would be to accelerate the diversification and improvement of farm incomes by increasing ruminant livestock output throught (i) improving the feed base quality, firstly, through expanding the area of alfalfa on waste and saline land, and, secondly, through expanding the use of ammonia and urea for the treatment of unpalatable crop straws; (ii) upgrading the quality of the veterinary and animal husbandry extension services by providing improved equipment and facilities, staff training and operating systems; (iii) provid- ing a revolving fund for assisting farmers to invest in expanding livestock production activities especially beef and sheepigoat breeding and fattening; and (iv) supporting livestock related research. 3.17 Ammonification of Crop Straws. The project would expand the ammonia treatment of surplus crop straws, particularly wheat, tE' increase its palata- bility and digestibility for ruminant animals (cattle and sheep). Initial success of the process at Baizing county, through an PAO project, proved that straw treatment with amonia (25-30 kg NH3/ton of straw) increased crude pro- tein levels (by about 300 percent) and nutritive value. Small farmers can obtain similar results by mixing urea and water with the straw in closed plas- tic bags. Under the project about six new ammonia stations would be estab- lished and operated by tne Bureau of Animal Husbandry (BAB) in areas wbtre - 20 - ammonia is accessible (near fertilizer plants). The stations would provide a mobile service for specialized households. At full operational capacity (year 3) each station would be expected to handle about 430 tons of ammonia annu- ally, sufficient to treat about 17,000 tone of straw. Training for BAH staff would be included under the project. 3.18 Specialized Households and Alfalfa Development. In Heilonggang some 290,000 ha of waste and saline land have been identified as suitable for reclamation through planting alfalfa. The suitability of the highly alkaline deep loss soils for alfalfa production has been amply demonstrated through the IFAD-funded project in Nanpi county (para. 1.14) where average yields of over 5,100 kg dry matter per ha over years 2-5 have been consistently achieved on previously unproductive land. Already some 60,000 ha of such areas have been sown to alfalfa. It is being used by specialized households for live- stock raising--primarily sheep/goats and cattle, but also including geese and rabbits. 3.19 Under the project nearly 17,000 ha of land would be sown to alfalfa during the first two years. The land would be leased to qualified farmers on a long-term basis (15-20 years) by the respective village cooperative. It is planned that about 1,775 specialized combined sheep and goat breeding and fat- tening farms each of about eight ha with 50 breeding ewes or kids would be established. Also, about 600 farms specializing in beef fattening (about 45 heads annually) would be established on the alfalfa areas. Investments would include land levelling and preparation, alfalfa establishment including seed and fertilizer, livestock shelters and feed storage, a chaff/straw cutter, sundry tools and livestock. An assurance has been obtained at negotiations that a revolving fund in the amount of Y 16.2 million would be established in county ABC branches under county PMO management, to assist farmers to invest in expanding livestock production activities, especially for ruminant animal breeding and fattening. 3.20 Livest.ock Research. The projec-. would finance a number of livestock related studies to be conducted by HAU and BAH. These studies would includes (i) further de -lopment of deep frozen semen collection, proctssing, delivery, and extension elstems for cattle and sheep. The study would be conducted by BAB Shijiazhuang Bull Breeding Station; (ii) an applied study of feeding and management systems for sheep fattening in the high yield cropping areas of Heilonggang conducted by the BAH Extension Station; (iii) feasibility study of introducing improved breeds of imported and Chinese sheep and goats for both meat and cashmere production. The study would be conducted by BAH Institute of Animal Husbandry and Veterinary Science; (iv) processing studies of sheep and goat produced commodities (wool, hides, and cashmere) to be conducted by HAU; tv) exotic pasture -stablishment and productivity experiments by RAU; and (vi) development of new techniques to preserve meat at room temperature by HAU. 3.21 Livestock Training. In order to reap the envisaged benefits of helping small farmers through diversification into livestock activities, effective training and extension programs would constitute an important part of livestock activities under the project. During project implementation about 92,000 county, township and village technicians, and 170,000 farmers (two-day course) would be trained under the project. These training courses would be conducted by HAU and BAB staff. Facilities provided under the proj- - 21 - ect for CATECs and TTSCs would be used. At the township level, for each five TTSCs, one would be equipped with livestock extension equipment to provide needed livestock and veterinary services. 3.22 Slaughterhouses and Cold Storage Facil5ties. The project would sup- port the construction of six new small slaughterhouses (one in each prefec- ture) to serve as a model for improving slaughtering facilities and to empha- size hygienic methods of handling meat and animal by-products. Each slaugh- terhouse would have the capacity to slaughter 115 animals (mostly pigs) per day, and each would be equipped with meat packing facilities and cold storage for 100 tons of product. Each slaughterhouse would produce 1,495 tons of pork, 115 tons of heads, 69 tons of lard and 620 tons of offal. per year. Aquaculture 3.23 Aquaculture investments in six counties of Tangshan and Qinhuangdao prefectures of the Northeast coastal area would include the following subcom- ponents. 3.24 Shrimp Ponds. The project would finance the rehabilitation of 3,219 ha of existing shrimp ponds. Special emphasis would be placed on pump- ing, water distribution, and pond infrastructure. In order to achieve a 10 percent daily water exchange over the pond area, an additional 88 pumps would be provided. Ponds would be deepened to a minimum depth of 1.8 meters and 706 sluice gates would be reconstructed. Pond dikes would be repaired where nec- essary, and inlet and outlet canals would be enlarged. The project would also construct 533 ha of new ponds including 400 ha in Changli county to support a new shrimp processing plant. 3.25 Freshwater Fishpond Construction. About 716 ha of freshwater fish- ponds would be constructed. Since freshwater fish is transported and sold live, Improvements to transport Infrastructure would be required, and 21.5 km of pond roads would be built to facilitate access to the existing road net- work. 3.26 Scallop Production. In Funing county a pilot project has been rais- ing scallops, for the last three years, in lanterns (purse nets) suspended from polyethylene rope, in the Bo Sea. No feeding is involved with scallop production, and the nutrients are derived as the scallops filter the plankton and micro-organisms available. The Bo Sea is rich in these organisms, and 80-100 countilb scallop mussels has been successfully raised in one growing season. The project would finance 2,500 chains,21 and would provide the docks, work boats and infrastructure necessary to support the scallop produc- tion. 3.27 Aguaculture Support Facilities. The hatchery production capacity in Changli county would be expanded by 2,000 m3, and the Funing scallop project to 700 m3, providing an additional annual production of 200 million shrimp post larvae and 122,500 scallop spats. Feed mill capacity would be expanded by 1,000 tons in Luannan county, and by 3,500 tons in Changli county. New 21 Seventy-fife lanterns suspended from one polyethylene rope make one "chain*. . 22 - cold storage facilities would be constructed in Funing, with 200 tons freezing capacity, and in Changli with 1,000 tons freezing capacity. Changli county would employ contact plate freezers, graders and have a large capacity ice plant. Funing county would also employ a rapid freezing technique to minimize scallop weight loss, and would utilize improved processing equipment. 3.28 Aguaculture Research Extension and Training. Aquaculture research and field tests would be the responsibility of the Hebei Research Institute and the extension work would be the responsibility of the Agriculture Exten- sion Station. This work is to improve the feed conversion ratios of the shrimp farms, and decrease the dependence on imported fishmeal. The extension work with freshwater fish would improve the carp polyculture techniques, con- tinue production trials of Tilapia nilotica and intensify yields with the use of aeration. Training of technical and management staff would be an integral part of project activities. Training programs would concentrate on shrimp pond rehabilitation, improving feed efficiency, identification and treatment of diseases and improvement of processing and marketing. About 1,130 count, technicians, 5,000 township technicians, 15,000 v,llage technicians, atid 35,000 farmers would be trained in different courses for variable durations under the project. Study tours for provincial, prefecture and county techni- cians would also be provided. Asro-Industries 3.29 The proposed project would facilitate the transfer of international state-of-the-art technologies and equipment to China for the establishment of model plants to demonstrate the technical and economic differences between indigenous and international processes, particularly for the manufacture of chemical fertilizers, and would also lead to a significant abatement of pollu- tion levels from the existing plants. Two existing fertilizer plants would be substantially revamped and expanded to produce urea and MAP fertilizers which are in short supply. Two other new plants would use cotton straw as the raw material in particle board and fluting paper manufacturing. A major part of the technologies and critical equipment required would be procurel through ICB on a turnkeylsemiturnkey basis and in accordance with Bank appraisal stan- dards. In view of the large number of obsolete small-size fertilizer plants in China which require urgent rehabilitation, the two proposed fertilizer projects may be considered trend setters for similar, but subsector-wide rationalizationlenergy conservation programs based on advanced international technologies and high-grade products. Details are as follows. 3.30 Weixian Nitrogenous Fertilizer Plant. The plant is located in Handan Prefecture in the Heilonggang area. The expansion, modernization and partial replacement by advanced processes of an existing coal-based fertilizer plant to increase its capacity from 15,000 tons per year to 30,000 tons per year and substitute the existing production of 60,000 tons per year of low nutrient powder amnonium bicarbonate (17 percent N) with about 53,000 tons per year of high nutrient granular urea (46 percent N). The local design of the revamped coal-based ammonia plant would be reviewed by an international con- sultant to facilitate optimization of process design in terms of energy con- servation, pollution control and capacity. The urea plant would use advanced international technology featuring high efficiency and low energy consumption. A turnkey contract for the supply of technology is envisaged. - 23 - 3.31 Shenxian Phosphate Fertilizer Plant. The plant is located at Qianmotan in Henshui Prefecture and currently produces 25,000 tons per year of powder single superphosphate (SSP, 12 percent P205). Replacement of an exist- ing pyrites-roasting sulfuric acid and SSP plant with new facilities to pro- duce 40,000 tons per year of sulfuric acid and about 30,000 tons per year of MAP (such as 10-45-0). The ammonia supply for the new product would be pro- vided by an existing ammonia plant, about 25 km from the project site. All major processing units (i.e., phosphoric acid, ammoniation and granulation), except the pyrites-based sulfuric acid plant, would utilize advanced interna- tional process and equipment technologies to ensure efficient and reliable operation as well ai adequate pollution control and optimized process econom- ics. 3.32 Quzhou Particle Board Plant. A new plant to manufacture 30,000 m31 year of medium density particle board would be constructed under the project, using cotton stalk as the raw material. The plant would be located in Quzhou county (Handan Prefecture) which is a major cotton growing area. The process would be similar to two factories currently being installed in Shandong prov- ince. The plant would be expected to act as a catalyst to other industries, and attract further investment in furniture production and related trades, thereby creating the potential for substantial local employment and industrial development. 3.33 Weixian Pulp and Paper Plant. A new pulp and papermill would be constructed to process cotton stalk into fluting paper for the cartonboard industry. The plant would produce 10,000 tons/year of fluting paper at full capacity, and the product would substitute a significant proportion of imports in Hebei province. This would be the first papermill in China to be speci- fically constructed for pulping cotton stalk, although the process has been successfully tested at other mills in Hebei and Shandong provinces. The fac- tory would be located at Li Jia Zhai village in Xingtai Prefecture. The annual purchase of 18,000-20,000 tons/year of cotton stalk, which previously had no commercial value, would improve farmers' income in Wei county where cotton is the major crop. 3.34 Because of the specialized nature of the agro-industries facilities, Hebei Fertilizer Corporation and the Department of Light Industry would be responsible for managing fertilizer and paper manufacturing plants owned by the counties, respectively. Some overseas training is also envisaged and nec- essary funds have been included in the project. Institutional Development 3.35 In addition to supporting research, extension, training programs and related institutes under each component, the project would also support over- all project management by providing training and technical assistance to the PM08 at all levels, particularly to their monitoring and evaluation (M&E) units. These activities would strengthen project management in cost account- ing and monitoring, reporting and evaluation systems. In addition, periodic seminars would be held on agriculture, livestock, aquaculture and agro-indus- try development to discuss M&E findings and resolve technical and management problems. Funds have been provided for short-term training and to invite Chinese experts from appropriate technical and research institutes to advise PM0s on project implementation. The training programs would be carried out in - 24 - accordance with schedules to be agreed at negotiations. Funds for purchase of needed office equipment and furniture would also be provided. B. Status of Preparation 3.36 The project is at an advanced stage of preparation. The basic data have been collected. Preliminary designs for surface irrigation and some of the agro-industry facilities have been completed by the concerned agencies and design institutes and were reviewed by IDA and found to be satisfactory. Detailed construction drawings are being prepared and would be completed by September 30, 1990. Detailed designs of civil works, surface irrigation structures and buildings for major sections of the agroprocessing plants are being carried out by specialized design institutes. Detailed construction drawings for civil works and engineering drawings for agroprocessing would require international consultants and this has been included in the retro- active financing provisions of the project. Completion of design of said facilities and preparation of engineering estimates prior to preparation of the bidding documents would be carried out by December 31, 1990. Sites for the aquaculture component have been identified and selected by the PMO and the Provincial Bureau of Aquatic Products on the basis of detailed surveys carried out by county and prefecture engineers. Site surveys, soil, water and other required testing have been completed and a survey of construction material has been completed. C. Implementation Schedule 3.37 The project would be implemented over a five-year period from 1991 to December 1995 with some activities during 1990. Completion of final designs for surface irrigation is near completion. In addition, land develop- ment, civil works and procurement of some equipment is progressing. A consid- erable amount of work has been scheduled in the first three years for detailed designing, bidding and construction of agro-industries, training programs, construction of surface and well irrigation facilities. Some of the training programs for agricultural development would be implemented throughout the five-year project implementation period. Operation of agroprocessing facilities would start toward the end of the third year following completion of construction. The proposed schedule is considered to be feasible due to the demonstrated abilities of key engineers, bureaus and design institutes involved. The Hebei Government has demonstrated its ability in project imple- mentation in several completed projects, including the recently completed IFAD agricultural development project. D. Cost Estimates 3.38 The total project cost is estimated at US$309.6 million with a for- eign exchange component of US$149.2 million or 48 percent of the total. These costs include no significant tax element since civil works and buildings are essentially free of tax, and imported materials and equipment are exempt from duties. Cost estimates are based on quantities derived from complete prelimi- nary designs described in para 3.27 and from unit prices currently prevailing for similar construction works and materials in the province and price lists of local and overseas manufacturers for plants, machinery and equipment. Engineering and management costs have been calculated at 2 percent of total costs of works. Physical contingencies are 10 percent for civil works and - 25 - fertilizer plant equipment, and 5 percent for other components, except for labor and land acquisition for which they are zero. Price contingencies for both foreign and local costs, when expressed in US dollars, are based on annual international price escalation rates for all goods and services of 4.9 percent for 1990-95, and when expressed in Yuan are based on price escalation rates of 14 percent for 1990, 10 percent for 1991, 8 percent for 1992 and 5 percent for 1993-95. Estimated costs are summarized in Table 3.2 and detailed in Annex 1. Table 8.2: PROJECT COSTs SUMMARY U S tots total Yuan MilIIon bar US$ MII ]on X ba" Local -For-.Iga Total cot. Local Foreign Total FE coot Water conservancy 268.9 120.6 897.6 82 57.0 27.2 64.2 82 32 Agriculture development 87.1 209.4 206.6 24 10.6 44.4 62.9 71 24 LivesTock davelopmant 86.5 41.1 127.0 10 10.8 8.7 27.0 82 10 Aquaculture 86.1 56.6 140.0 11 18.0 11.6 29.9 40 11 Agro-induatries S2.5 180.7 281.2 21 19.6 85.7 655. 05 21 Zmetitutlonal development 11.0 4.0 15.0 1 2.5 0.0 8.4 26 1 Total Base Costs 081.9 607.8 1.289.2 100 188.9 126.7 262.6 49 100 Physical contingncie- 82.7 86.8 69.0 6 6.9 7.7 14.6 68 6 Price contingencie 148.6 109.1 262.9 20 19.6 12.8 82.4 40 12 T=otal Project Costs 0.4 752.7 1.681.l 126 16)!4 149.2 809.0 48 110 E. Financin8 3.39 Bank Group financing would be an IDA Credit of SDR 116.1 million (US$150 million equivalent) and would cover 48 percent of total project costs. The remaining 52 percent would be financed in US dollar equivalent as followss USS million (a) IDA Credit 150.0 (b) Provincial Government 32.0 (c) Prefecture and County Governments 71.6 (d) Agricultural Bank of China 13.0 (c) Beneficiaries' Contribution 43.0 Total 309.6 F. Procurement 3.40 Procurement arrangements are summarized in the following table: - 26 - Table 3.3t PROCUREMENT PROFILE (US$ million) Procurement method Project element ICB LIB LCB Other N/A Total Land acquisition - - - - 2.9 2.9 (0.0) (0.0) Works - - 39.3 12.1 - 51.4 (12.9) (2.1) (15.0) Nachinery & equipment 44.1 7.0 40.4 28.5 - 120.0 (42.0) (5.8) (12.1) (8.0) (67.9) Vehicles 2.7 - - 0.7 - 3.4 (2.5) (0.0) (2.5) Materials 41.1 - 13.1 45.1 - 99.3 (38.0) (4.0) (15.1) (57.1) Training & technical -7.5 - 7.5 assistance (7.5) (7.5) Administration, engineer- - - - - 10.8 10.8 ing & management (0.0) (0.0) Working capital & inter- - - - - 14.3 14.3 est during construction (0.0) (0.0) Total 87.9 7.0 92.8 93.9 28.0 309.6 (82.5) (5.8) (29.0) (32.7) (0.0) (150.0) Notes Figures in parentheses are amounts to be financed by IDA Credits. 3.41 Works. All the works in the project (US$51.4 million) would be grouped into packages as large as practicable; however, none is expected to exceed US$200,000. The works are scattered over a wide geographic area and scheduled too far apart to be of interest to foreign construction firms. Approximately 76 percent of the work (US$39.3 million) would be procured on the basis of local competitive bidding (LCB) procedures acceptable to IDA. Procurement of works for agro-industries would be through LCB. The remaining works (US$12.1 million), consisting of small canals, drains, land development and minor site preparation, 'ould be undertaken through labor supervised by county governments, force account in coordination with prefectures and provin- cial bureaus. 3.42 Goods. Project goods consisting of machinery, equipment, vehicles, and materials are estimated at US$222.7 million. International competitive bidding (ICB) procedures would be used for the agroprocessing equipment, large pumps and motors, fertilizers, pesticides and some of the construction materi- als, for a total of US$87.9 million or 39 percent of all goods. A margin of preference equal to 15 percent of the c.i.f. price of imported goods or the actual custom duties and import taxes, whichever is less, would be allowed the domestic manufactures on ICB. Specialized equipment such as research equip- ment, water monitoring equipment, and seed processing equipment, up to a value of US$7.0 million would be procured in a series of packages under limited - 27 - international bidding (LIB) procedures. Passenger vehicles estimated at US$0.7 million are prohibited by government to be imported and would be fully financed by local funds. Other vehicles such as trucks and specially equipped motorized vehicles would be procured under ICB procedures. The remaining goods including small pumps, irrigation equipment, electrical equipment and small pipe, costing about US$127.8 million (57 percent of all goods) are dis- persed in location and spread over the project period to the extent that they would be let in small packages (most less than US$200,000) which would not be of interest to foreign suppliers. A large portion of this would be for wells, motors, electrical equipment, and pipes over the broad Heilonggang area pro- cured by the local farmers (end-users) and spaced over a four-year period. These goods would be procured through local shopping procedures as described in the Bank guidelines. Breeding stocks and livestock equipment costing about US$12.3 million would also be procured locally by farmers. An understanding has been obtained at negotiations that passenger vehicles would be financed by the province. A detailed listing of procurement arrangements for goods can be found in Annex 2, Table 5. 3.43 Other. Training and technical acsistance would cost a total of US$7.5 million and would be fully covered Iy IDA funding. Land acquisition, administration, engineering, management, working capital, and interest during construction, which amount to US$28.0 million, would be locally funded. 3.44 IDA Review. All procurement packages for works and goods in excess of US$200,000 would be subject to IDA's prior review. That would cover about 10 percent of the works and about 45 percent of the goods by velue, and would consist of approximately ten contracts. Assurances have been obtained at negotiations that all training and technical assistance contracts would be subject to IDA's prior review and approval which are expected to cover about five contracts. The procurement schedule (Chart 3) gives detailed projections on how and when the nine largest packages, which constitute 32 percent of the goods, would be put to bid. The China National Machinery Import and Export Corporation (MACHIMPEX) would be retained as the procurement agent for all machinery and equipment and the International Tendering Corporation (ITC) would be the agent responsible for the procurement of materials including fer- tilizers and pesticides. G. Disbursements 3.45 Disbursements for agroprocessing equipment, construction and farm machinery, vehicles (except passenger vehicles), and all imported items under ICB procurement would be 100 percent of the foreign exchange cost, 100 percent of the ex-factory price for locally manufactured items, and 50 percent of local expenditures for items under LCB procurement. Disbursement against LCB contracts for works would be 30 percent of contract expeuditures. Disburse- ments for overseas training, study tours, consulting services, and contracts for goods and services would be at 100 percent of total expenditures. 3.46 Disbursements would be made against statements of expenditure (SOEs) in cases of overseas training, study tours and consulting services; contracts for goods and services, each costing less than US$200,000; and force account work. SOEs for civil works, irrigation and drainage, farm works, and earth- works would be supported by progress reports showing physical quantities and unit prices, the latter updated annually and reviewed by IDA. In the case of - 28 - LCB contracts, disbursements would be made against the contracts themselves and other supporting documents. In order to provide for efficient disburse- ments, a Special Account would be opened in a bank acceptable to IDA and with a ceiling of US$8.3 million. Applications for replenishment of the Special Account would be submitted monthly or whenever the Special Account is drawn down to 50 percent of its initial deposit, whichever comes first. Retroactive financing of up to US$12.0 million would be made against expenditures made after December 10, 1989. 3.47 It is estimated that the project would be completed by December 31, 1995 and the closing date wor d be December 31, 1996. Disbursement experience in China has been favorable and better than Bank Group averages. The project disbursement profile is essentially in line with that for investment loans in China. Estimated schedules of expenditures are given in Annex 2, Table 6. H. Accounts and Audits 3.48 Records of expenditures on civil works, equipment and materials would be maintained by the county PM0s. These records would be forwarded to the prefectural PMO0 for submission to the Provincial PMO for review. The Provincial PMO would be responsible for submitting the project consolidated accounts and reports to IDA. Assurances have been obtained at negotiations that the provincial PNO would mailtain the consolidated accounts of all com- ponents for auditing annually by independent auditors acceptable to IDA and that the audited accounts would be submitted to IDA within six months of the close of each financial year. The audited accounts would include details of withdrawals from the credit account made on the basis of SOEs and auditors' opinion as to whether such withdrawals were against expenditures eligible for reimbursement by IDA. The Provincial Audit Bureau would undertake the audit- ing for the project. I. Environmental Impact 3.49 In order to provide adequate representation for environmental con- cerns, the Provincial Environmental Bureau (PEB) would be represented in the Project Lending Group (PLO) and in the PHO. All effluents would be adequately treated and suitable effluent control measures have been included in the design of all agro-industries plants to meet internationally acceptable emis- sion and effluent standards. Also the PEB would approve the final arrange- ments for waste disposal and would set up and maintain a system of monitoring effluent quality throughout the life of the project. Water quality would be maintained by WCB and effective salinity control measures would be implemen- ted. The IPM system approach developed at the National Cotton Research Insti- tute (Anyang, Henan) and other provincial research institutes would be experi- mented with on a large scale in one of the counties of Handan Prefecture (Heilonggang) and then extended to other project areas. Imported agrochemi- cals would be approved by the Bank prior to their procurement. Assurances have been obtained at negotiations that all effluents from agroprocessing plants would be adequately treated and that the PEB would clear the final designs of the treatment plants and would establish and maintain a system of monitoring effluent quality through the life of the project. - 29 - IV. ORGANIZATION AND NANAGEMENT A. Proiect Organizatioa 4.1 The Government of Hebei would be responsible for overall project implementation. Representatives from concerned agencies and bureaus have been assigned to serve in the Project Leadiug Group (PLG) and Project Management Office (P1O). Presently, 25 senior staff members with support staff, consti- tute the provincial PMO under the chairmanship of the Hebei Vice Governor, who is also the chairman of the PLG. PLC is composed of senior officials to guide the PMO in project policy matters at all levels. Similar arrangements, i.e., PLOw and PMOs, would also be established at prefecture and county levels to chart project policies and Implementation, respectively. PLGs would be chaired by the Vice Governor at the provincial level, the Prefecture Chief or Mayor at manicipality/city level and county chiefs at the county level. In addition, Scientiiic and Technical Committees (STCs) to make recommendations and policies on technical aspects would be established. Similar STCs at the prefecture and county level may be formed as needed. Following project com- pletion, all PM0 functions and responsibilities would revert back to relevant agencies. The organization for project implementation is shown in Chart 2. 4.2 Project LeadinR GrouDs (PLGO). Membership of the PLGs, at province, prefecture and county levels would be comprised of representatives from the Bureaus of Agriculture, Water Conservancy, Forestry, Animal Husbandry, Aquatic Products, Environment, Light Industry, Planning and Finance; Hebei Fertilizer Corporation, ABC and other agencies involved in the project. 4.3 Project Manatemnat Offices (P1(0). P10 would be established at provincial, prefecture and county levels and would be responsible for project Implementation under the guidance of each PLG at the respective level. Each P1O would be staffed with trained and qualified technical, administrative, financial and management officers. The PMOs would have a primary function of assisting each agency or entity in implementing related project components. In addition, the P1M0 woulds (i) draw up annual, detailed work programs and budgets for the project; (ii) review and approve lower level PM0 work plans; (iii) monitor physical and financial progress of the project; (iv) ciordinate and supervise project implementation; (v) review and approve technical speci- fications for agro-industries, water conservancy, development of agricultural, livestock and aquatic products; (vi) liaise with central and provincial agen- cies regarding project implementation (e.g., procurement, planning, finance, marketing, etc.); (vii) undertake procurement matters with the advice of ITC and MACHIMPEX; (viii) prepare detailed project accounts, audits and progress reports; and (ix) submit withdrawal applications to IDA. The PMOs at each level would also liaise between the project and various technical and finan- cial organizations that have support functions for the project (e.g., ABC). 4.4 Scientific and Technical Committees (STCs). To advise PLGs and Pmos at all levels, STCs, composed of technical specialists in all areas of project related activities, would be established at the provincial level and other levels as needed. STCs would be involved in planning and designing technical aspects of the project, including international training programs and techni- cal assistance. Periodic meetings between STCs and PMOs would be undertaken to review technical plans and formulate future ones. Membership of the STCs - 30 - would be composed of eminent scientists from cooperating research institutes and managers of provincial bureaus and other agencies involved in the project. B. ManaeSent of Production Activities 4.5 Crops a4nd Livestock. The Bureaus of Agriculture, Animal Husbandry and Forestry at the provincial, prefectural and county levels would be respon- sible for supervising production activities throughout the life of the proj- ect. The BAG through the PM0 would also coordinate water conservancy activi- ties with WCB. Seed companies, organized as independent units under the county agriculture bureaus, would implement and manage the seed component and supply farmers with seeds of improved crops varieties; fruit tree seedlings would be provided by the local forestry bureaus or through the seed companies. Fertilizers and pesticides would be available for purchase primarily through the Supply and Marketing Corporation ($KC) and its branches at the prefecture and county levels. SMC would manage supply of inputs at the grassroots level in accordance with allocation plans drawn up by the agriculture bureaus and the PMO8. With guidance from HAAS and the HAU, the BAG and BAR would provide technical extension and training to project area farmers. In addition to the four revolving funds established in ABC under the project for farm inputs; livestock activities; wells and water-saving pipes; and farm machinery, ABC would extend additional credit from their own resources. Assurances have been obtainrd at negotiations that all revolving funds would be managed by the county PM0s and established at ABC branches and that loans to farmers would be at interest rates no less than ABC's prevailing rates at similar terms and for similar purposes. 4.6 Aouaculture. The implementation and supervision of aquaculture activities would be under the general guidance of the Aquatic Products Bureau with most of the units being implemented and managed by the Aquatic Products Company (APC) at each county and the Hebei Aquaculture Corporation (HAC). APCs were established in 1950 and would be responsible for commrcial opera- tions including operating of feedmills, cold stores, processing plants and marketing of aquatic products. HAC would have overall provincial responsibil- ity for the breeding and production operations. Service units such as hatch- eries, feedmills, processing and cold storage plants would operate as indepen- dent units directly under the county APCs. The county companies would make contracts with individuals or groups entrusting them with responsibility for one or several fish or shrimp ponds or scallop chains. The company farm mana- gers would make contractual agreements with the respective individuals or grotps for the supply of growing stock, feed and other essential services. 4.7 Agro-Industries. All agro-industries would be owned by the respec- tive counties and managed by independent managers. Responsibility for the four plants would rest with the economic commission for the respective coun- ties (under the Provincial Planning Commission). Technical supervision would be provided by the Hebei Fertilizer Corporation, the Forest Products Institute (Beijing): and the Hebei Chemical Design Institute. The particle board and fluting paper plants would be the responsibility of the Hebei Bureau of Light Industry. The Chengdu Design Institute of the Ministry of Light Industry would have the primary responsibility for the design of the two plants. The slaughterhouses and cold storage facilities would be managed by the BAH. - 31 - 4.8 The management responsibility system would be adopted in managing all independent enterprises under the project. These independent enterprises are economic entities with legal status to operate as profitable business con- cerns with managers being responsible for profits and losses. Charters, busi- ness licenses and operating guidelines have been issued for existing enter- prises. Preliminary review of these guidelines by IDA was undertaken during appraisal and PMO is preparing charters, business licenses and operating guidelines for new enterprises. Review of these documents for existing enter- prises as well as new ones to be established under the project would be under- taken and finalized during the project launch workshop (para. 4.15). An assurance has been obtained at negotiations that draft operational guidelines for the new agro-industries enterprises would be reviewed by IDA before final- ization and they would be managed by trained, qualified and experienced staff. These enterprises sho-ild be financially sound, and maintain at all times a debt-equity ratio no treater than 5*1. C. Financial Management 4.9 Flow of Funds. The proposed IDA credit would be disbursed againes. expenditures for equipment; materials; earthworks and civil works for canals, drairs, and structures; overseas training, study tours and consulting ser- vices. Proceeds of the credit would be passed internally by the Ministry of Finance (MOP) to the Hebei Provincial Government at an interest rate of 5.5 percent with repayment over 15 years including a five-year grace period. The foreign exchange risk would be borne by the provincial government. Most IDA funds would be disbursed directly to vendors under standard ICB arrangements. An additional portion would be used by the provincial government to cover the costs of research, technical assistance and training. IDA funds to be onlent for aquaculture, irrigation, livestock, seeds and agroprocessing components by the provincial government to prefectures, and by the latter to the project counties and enterprises would be onlent at interest rates no less than ABC prevailing rates. An assurance to that effect has been obtained at negotia- tions. 4.10 Domestic funds, which account for 52 percent of project costs, would be contributed by the provincial, prefecture and county governments and proj- ect beneficiaries, which would contribute either in cash or in kind (e.g., labor and organic manure). PMOs would receive their funds through the respec- tive bureau of finance at each level. PMOs would use ABC as their fiscal agent with the latter bearing no credit risk. ABC would also recover subloans extended to project beneficiaries. ABC would not charge fees on its services to the PMOs but would recover its costs through an agreed commission on funds disbursed and recovered. 4.11 A project agreement incorporating all project terms and conditions would be signed between IDA and the Hebei Provincial Government. State Coun- cil approval of the Project Agreement as well as the Development Credit Agree- ment (DCA) would be a condition of effectiveness of the Credit. 4.12 Recovery of Project Investments. Local branches of the ABC would be responsible for both disbursement and recovery of funds from project benefici- aries. Full recovery of the IDA portion of total project funding would be guaranteed by the financial bureaus of the counties and prefectures partici- pating in the project. Counties would repay prefectures which would repay the - 32 - province which, in turn, ould repay MOF for the use of the ID credit. Domestic funds would be returned to the respective financial county bureau, except funds from the four revolving funds which would be returned to each fund respectively to maintain its viability and continuity. D. Execution of Proiect Works 4.13 Major civil works construction for surface irrigation and agropro- cessing plants would be contracted to local companies under LCB procedures. Construction contracts would be signed between the construction companies and the provincial PMO which would be responeible for contract management. Pre- fecture and county governments would organize local farm labor to carry out earthworks, erect small structures, land leveling, land development and pond construction and rehabilitation. Construo:tion of buildings and minor civil works for agriculture development, livestock, aquaculture and agroprocessing would be undertaken by enterprises through local contractors or direct labor contracts. Assembly of agro-industries equipment, some of which would be on a turnkey contract, would be undertaken through ICB. Coordination of civil works construction and equipment assembly would be the primary responsibility of the concerned enterprise. An assurance has been obtained at negotiations that the provincial PMQ would submit an annual budget, financing arrangement and program of works for new construction to IDA for review by December 31 of each year in respect of work to be carried out in the following year. S. Operation and Maintenance 4.14 Operation and maintenance (O&M) of the water conservancy component would be performed by a combination of WCB staff and the water users. In the case of the widely scattered new shallow wells and water-saving pipes, the individual group of farmers assigned a new well or a new distribution system would directly perform all O W activities. At present there is no surcharge made for the resource use of the groundwater. The surface water irrigation systems are all upgrades or expansions of existing schemes with established organizations under the WCB within the prefecture, county and township to per- form the primary O&M functions. The project includes acquisition of addi- tional OWM equipment to strengthen their capability. The costs for the OMM in each of the 14 subcomponents vould be met by a combination of water use fees and some form of contributed water user labor (either free or partial wage). The present rates would in most cases be revised in accordance with the MWR guidelines. Existing fees of 0.0Z to 0.06 yuan per cubic meter are not ade- quate and would need to be raised to Y 0.08 to cover the planned full recovery of all O&M costs plus near or full capital recovery. The need for strengthen- ing the OUM procedures for the new pumping stations in Handan and Xingtai pre- fectures has been recognized as extremely important and a O&M plan for these pump stations would be prepared and reviewed with IDA prior to initiation of operations. This document would record equipment characteristics and manufac- turers' recommendations, outline procedures for operation, define maintenance schedules and specify responsibilities for making repairs. Staff, organiza- tion and policies for setting aside the necessary funding for the OUM program for these important facilities vould be provided. Assurances have been obtained at negotiations that revised O0M guidelines for the pumping stations and a review of water charges for surface schemes would be submitted for IDA's review by December 31, 1991. - 33 - F. Proiect Launch Workshop 4.15 To initiate implementation and review of detailed design particu- larly for water conservancy and agro-industries components, IDA and local staff would conduct a project Launch workshop in Shijiazhuang in October 1990 for Staff of the provincial, prefectural and county PMOs. The purpose of the workshop would be to review the total program for implementation and to cla- rify tasks and responsibilities at each level. Topics to be covered would include procurement and disbursement procedures, financial management, and monitoring and evaluation. Special effort would be needed to review final designs of agro-industries before bidding. G. Monitoring. Evaluation and Reporting 4.16 The provincial, prefectural, and county PMOe and their M&E units would monitor the project's progress and evaluate the project's economic and financial benefits for each component and overall impact. The county PMOs would keep a correct account of physical and financial progress of each of the project components. Physical indicators would include such items as civil works and earthworks to be completed, equipmp-t and materials to be procured. Financial reports would detail project expenditures and support claims for disbursement against credit proceeds. Information on financial and physical progress would be submitted semiannually to the prefectural PMO, which would prepare and forward progress reports to the provincial PMO according to each component. Routine monitoring of physical and financial progress would enable PMOs to identify problems and make adjustments as required in the project's implementation arrangements. Monitoring of water resources by WCB would be an important part of PMO's activities. The synthesis and assembly of needed information to expand and refine provincial water resources planning would be an important goal, which would be documented in a mid-term report indicating future water resource availability. A list of key monitoring indicators for physical progress and project expenditures and a plan for IDA supervision are given in Annex 3, lables 9 and 10. 4.17 As part of the process of oroject evaluation, a baseline survey in selected project areas and of randomly selected beneficiaries would be under- taken by the provincial PMO and its M&E unit in cooperation with the Agricul- ture Economic Research Institute at Beijing (CAAS. Beijing). Draft parameters and questionnaires for the baseline survey and standardized reporting systems by the PMO would be agreed upon and finalized during negotiations. Progress reports prepared by the PMO would be forwarded to IDA every six months and a mid-term review for the project by June 30, 199? would be undertaken by the PMO to assess progress and chart Implementation of the project in the remain- ing period. Review of the water resources planning would take place at that time. The final, broad assessment of the project's implementation would be the basis for preparing a project completion report by PMO to be submitted to IDA no later than six months following the completion of the credit's dis- bursement. Assurances to the above have been obtained at negotiations. - 34 - V. PRODUCTION. MARRETS AND PRICES A. Production 5.1 The project would principally increase output in two ways: (a) by significantly increasing the yields of all crops through improved irrigation, inputs and extension and (b) by adjusting the typical cropping pattern, through new technology and irrigation, to allow relay cropping of wheat and cotton, and wheat and paddy. Crop Yields and Production S.2 Crop yields would increase substantially with the project due to improved irrigation and drainage, introduction and dissemination of improved high yielding varieties, provision of needed and modern inputs and strength- cred programs of research, extension and training. The incremental yield from rainfed to fully irrigated areas in the two project areas would reach full development in three years after completion of irrigation (Annex 3, Table 1.1). In Heilonggang, the yield of wheat would increase with the project from 1.3 to 4 t/ha; cotton (ginned) from 0.6 to 1.1 t/ha and maize from 1.2 to 4.0 tlha. Wheat and maize yields in the Northeast area are currently higher than in the Heilonggang area, and even with the project, would continue to be different. 'heat yield would increase with the project from 2.2 to 4.2 tlha and maize from 2.6 to 4.2 tlha. These yields have been achieved in the proj- ect area and under similar conditions under the North China Plain Project. Cropping Patterns 5.3 The cropping pattern in the Heilonggang project area is typically wheat-based. Cotton is planted as a single crop at present because of limited water availability and the long maturation periods of existing wheat and cot- ton varieties. It therefore competes with grains for land. With new, early maturing wheat and the improved, short-growing-period spring cotton and improved irrigation, the existing cropping pattern could be adjusted and a large increase in cotton production would take place. The new cropping system would be extended to about 100,000 ha in Handan and Xingtai prefectures. The cropping intensity would be modestly increased from 141 percent to 145 percent (Annex 3, Table 1.2). 5.4 The planting of Chinese dates, alfalfa and pears would change the cropping pattern in the Heilonggang area. Chinese dates are intercropped with foodgrains, reducing the area that could be used for grains but benefiting the grains by providing windbreaks. The yield reduction of wheat due to the date trees (about 24 percent at full development) is more than compensated by the value of the dates. Alfalfa would be planted on land with low salinity would mainly be used for animal feed and soil improvement. In time, after the land has been reclaimed, it would be suitable for a wider variety of crops. Pear orchards would be developed on marginal lands and riverbeds. 5.5 The cropping pattern in the Northeast area is similar to that in the Heilonggang area, with the exception that cotton is not grown and paddy is widely grown. With the project, 18,800 ha of wasteland would be converted to cultivation through irrigation and would be cropped with paddy (16,900 ha) and - 35 - wheat (1,900 ha). After seven years, the salt content of th6 soil, wilch would decrease gradually, would permit crop diversification into wheat, oil crops and vegetables. About 6,000 ha would be planted under the project to relay cropping of wheat, paddy and vegetables. The addition of wastelands for single crop production would bring the cropping intensity slightly down from 115 percent to 114 percent. Incremental production of various crops can be found in Annex 3, Table 1.3. Livestock 5.6 Lamb, beef, sheep skin, cattle hides and manure would be the outputs of livestock under the project. Incremental production under the project would come from breeding and fattening of sheep and cattle using alfalfa, crop by-products and ammoniated straw. Alfalfa produced from 17,000 ha of saline land developed under the project would provide high-food-value forage for sheep and cattle. Expanding the use of ammonia and urea for the treatment of low-food-value, comparatively unpalatable crop straws of wheat and corn would enrich them as feed. 5.7 Alfalfa-Based Production. The production involves converting wasteland used at present only for rough grazing of village livestock into alfalfa fields. About 2,375 households would grow alfalfa as an input into their production of sheep or cattle (1,775 households sheep, 600 cattle). Alfalfa production would begin in year 2 and peak production of 7,500 tonsiha of hay would be attained in years 4-5. Each sheep household would develop 120 mu (8 ha) and initially purchase 38 in-lamb breeding ewes and 2 breeding rams, rising to 50 breeding stock in year 5. Lambing rates would average 300 percent by year 3. Alfalfa would be supplemented with cotton seed cake and cotton seed hulls during summer months. Each household would produce 129 lambs, 8 cull ewes, 124 kg wool and 26 tons manure. Cattle households would purchase cattle for fattening, would use alfalfa from 67.5 mu (4.5 ha), would produce 45 head of finished cattle and 48 tons of manure each year. 5.8 Crop Residue-Based Production. Cartle and sheep breeding and fat- tening would also be done by 2,460 households using crop residues. Some would be new large sized cattle and sheep fattening farms (groups of households) with all feeds being purchased. Others would be existing crop farmers, who would use their own crop residues, but even here the bulk of the required feed would be based on purchased crops straw, as well as agroprocessing by- products, such as cotton seed cake and wheat bran. All of these households would be expected to treat crop straw with ammonia or urea to improve its nutritive value and palatability. 5.9 At full development in year 6, the project would generate 4,388 tons of beef and 4,597 tons of lamb annually. Recovered animal manure would yield some 6,900 kg of nitrogen, 1,750 kg of phosphorous and 5,300 kg of potassium annually. Incremental sheep skins and cattle hides would total 124,200 and 2,900 pieces annually. Aauaculture 5.10 Shrimp. The major objective of the shrimp component is to rehabili- tate a relatively limited area of ponds (a small area of new ponds is also included) and provide modern production and processing technology so as to - 36 - lower costs by increasing productivity, and increase export marketability. Production of shrimp under the project would come from 3,219 ha of rehabilita- ted ponds and 533 ha of new ponds. Due to the project's deeper ponds, better vater control and exchange, and improved feed formulation, the new ponds would yield 2.0-2.3 t/ha and the rehabilitated ponds would yield 1.8-2.3 t/ha with an increment of 0.8-1.2 ttha. The total marketed incremental production at full development would be 3,935 tons (1,106 tons from new ponds and 2,829 tons from rehabilitated ponds). 5.11 Scallcpe. The project would expand the Funing scallop production facilities in the Bo sea to produce 2,500 chains of scallops. Each chain has 75 hanging purse-type lanterns, producing 500 to 600 kg of 5 to 6 cm whole scallops. This in turn yields 60 to 72 kg of scallop mussel at a 12 percent conversion rate. At full development, the project would produce 1,250 tons of scallops with shell (or 150 tons without shell) annually. 5.12 Freshwater Fish. Fish production under the project would be a poly- culture system composed of Bighead Silver Carp, Grass Carp, Common Carp and Tilapia. A one-mu pond would yield 140 kg of Bighead and Silver Carp, 100 kg of Grass carp, 80 kg of Common Carp and 30 kg of Tilapia. This would give a yield of fish of 5.25 tlha. Annual production of the project's 716 ha of freshwater ponds would be around 3,760 tons. AgroprocessinR 5.13 Livestock Processing. The project would support the construction of six small, modern slaughterhouses which, at full capacity, would process 115 animals (mainly pigs) per day for 200 dayslyear. The slaughterhouses would cut, pack and place in cold storage the major products. Most packaged meat would be sliced, shredded or cubed for the Chinese cuisine and nonmeat prod- ucts would be processed off the premises. Each slaughterhouse would produce 1,495 tons of pork, 115 tons of heads, 69 tons of lard and 620 tons of offal per year. 5.14 Seeds. The project would support seed farm developpr-cat in both the Northeast and Beilonggang areas. Paddy seed production (extension seed) is currently estimated to be 6,247 tlyr. With the project 309 t/yr of foundation paddy seed would be produced which would provide an additional 4,415 tlyr of extension seed. Production of cotton extension seed is presently estimated at 15,300 t/yr. The project would provide for the expansion of 18 seed farms, increasing their area from 600 ha to 1,800 ha for production of 927 t/yr of foundation cotton seed. This would provide an additional 9,270 t/yr of exten- sion seed. 5.15 Cotton GinninR. The project would finance two new acid delinting plants and the modernization and expansion of seventeen existing ginneries. These would increase the total annual capacity by 6,500 tlyr of acid delinted pure seed and 12,120 t/yr of saw delinted pure seed. A8ro-Industrial Production 5.16 Fertilizer. The project would support the conversion and expansion of an existing ammonium bicarbonate plant in Weixian county to a urea plant. This plant would be classified by Chinesf standards as a medium capacity pro- - 37 - duction unit, producing 53,000 t/yr of granular urea from 30,000 tlyr of anhydrous ammonia annually. The project also would produce 16,500 t of slag, which would be processed into construction materials, from 35,000 t/yr of anthracite (hard coal) raw material. The project would help to replace the existing sulfuric acid and phosphate section of the Shenxian fertilizer plant with advanced equipment so as to incrementally produce 30,000 tlyr of granu- lated MAP. By-product pyrite slag 12,000 t/yr woula be sold as cement/slag construction blocks. 5.17 Particle Board and PaRer. Tne project would finance investment in the production of particle board in Quzhou County using cotton stalk as raw material. The factory would use the county cotton-collection stations as pro- curement and storage points for cotton stalk. Field stalk (23,400 t/yr) would be purchased from an estimated 15 to 20 km radius around the plant. The fac- tory would produce 2,370 tlyr of urea-formaldehyde resin required for particle board processing in a small plant on site. The product would be standard 1,220 mm x 2,440 mm particle board sheets ranging in the thickness from 4 mm to 40 mm. The plant would produce 30,000 m3/yr of medium density particle board. The project would also finance investment in a papermill in Weixian county to produce fluting paper using cotton stalk. This plant would produce 10,000 t/yr of fluting paper for the packing and cartonboard industries, using 18-20,000 t/yr of cotton stalk as raw material. The process would use ammo- nium bisulphite for semichemical pulping of the cotton stalk, and the quality of fluting paper would be equivalent to imported materials. The output from the Weixian plant would, therefore, amount to about 70 percent of current imports into Hebei Province. B. Marketing Channels Esxport Channels 5.18 China's external trade is conducted by a limited number of state- owned foreign trade corporations (FTCs) which function under the authority of the Ministry of Foreign Economic Relations and Trade (MOFERT) and its provincial-level foreign trade bureaus. National-level FTCs such as the Cereals, Oils and Foodstuffs Import and Export Corporation (CEROILS) supported by its own hierarchy of city offices and provincial branches, conducted all trading activities directly, from the identification of markets and negotia- tion of contracts to the procurement of goods from producers and shipment to buyers. Shrimp would be the only significant exported product in this proj- ect, beside a small amount of processed dates. Aquatic products produced under the project would be handled by CEROILs through its Hebei branch. The PTCs seek buyers mainly at the semiannual Guangzhou (Canton) Trade Fair. Vir- tually all of China's agricultural exports are marketed through bulk contracts entered into at these fairs, and this would be true of the shrimp exports pro- duced in this project. 5.19 A major drawback of this system is that producers face prices nego- tiated with the FTCs that may have little relationship with world prices. Pro- ducers have very little contact with foreign buyers since the FTCs are the predominant points of contact between China and these buyers. This leads to two serious consequences. First, local producers often do not have access to all necessary information, thereby limiting their ability to react to market opportunities. Secondly, the absence of contacts with foreign buyers means - 38 - that production enterprises forego much "free technical assistance in matters such as product quality, other product specifications and new product devel- opment. While this is the present situation, the foreign trade system is now undergoing reform, with the Government gradually giving more autonomy in deci- sion making to provincial-level institutions and exporting firms. In 1988, authority was given to eight provinces to manage export marketing directly, and to establish more flexible trade regimes, foreigu exchange allocation sys- tems and export/import marketing organizations. This has meant a prolifera- tion of local agencies involved in foreign trade. The project is in the pro- cess of requesting from the Government the right to export shrimp directly under a new brand name (para. 5.41). Domestic Channels 5.20 In general, with the exception of cotton, project producers have an array of options in marketing their output. They may sell through the state system under negotiated contract or directly to rural and urban private mar- kets. All of the cotton crop and 20 percent of the wheat crop must be deliv- ered to the state at published prices. 5.21 State Agencies. State marketing of agricultural commodities is dominated by government bureaus and associated parastatals which operate under the administrative umbrella of the Ministry of Commerce (MOC). This MOC net- work consists of three subsystemss (1) commercial bureaus which manage a com- plex of state food companies responsible for bulk procurement and state food markets handling retail sales at administrative prices; (2) grain bureaus which control purchase and processing of food and feed grain; and (3) the National Inputs Corporation and Supply and Marketing Corporation responsible for input supply (except feed grain) and purchase of farm products at the grassroots level. These MOC-administered agencies handle procurement, proces- sing, transport, storage and domestic sales of almost all major products. The MOC network has agencies at provincial, prefecture, county and village levels and plays significant roles in purchasing outputs and supplying inputs to farmers. 5.22 Private. Private or "free" market trading has become increasingly important over the last decade in response to price deregulation and the lift- ing of restrictions on long-distance trade. Nationally, the number of free markets doubled during the period of 1978-88, and the value of farm products sold in these markets increased more than sixfold. In 1988 Hebei had 3,010 private markets, 539 urban and 2,471 rural. Altogether they handle total sales of Y 7.6 billion. C. Markets 5.23 There would be no difficulty in finding markets for the incremental production of the project. Domestic demand for food and raw material is ris- ing each year due to increasing population and income. With favorable income elasticities of demand, this promises a secure domestic demand for most nonex- ported products. The increasing production of village and town enterprises brought about by the rural reforms has also increased the demand for raw mate- rials. The supply situation for individual commodities is also generally fav- orable, except exported shrimp where marketing opportunities continue but prices have recently softened (para. 5.41). It is expected that most of the - 39 - incremental production of the project would be consumed in the project areas or in nearby urban areas. Small amounts of shrimp, scallops and dates would be exported. The situation of their markets is as follows: 5.24 Crops. China has exceeded the grain production record of 1984 in 1989's harvest of 407.9 million tons, after four years of disappointing har- vests. Nevertheless, China is projected to import about 15 million tons of wheat and 1.2 million tons of rice in 1989 and 1990. Hebei's 1988 grain pro- duction was 20.2 million metric tons (5 percent of national production of 394 million tons in 1988). The overall grain supply and demand in Hebei province has been roughly in balance until recently. Current and projected trends, however, suggest a steady deterioration with annual deficits forecast to be about one million tons by 1993. Part of the incremental grain production of 0.5 million tons under the project would go to offset this deficit. 5.25 The national market situation in cotton has also been one of excess demand in recent years. At present the country's textile industry is operat- ing well below capacity mainly due to lack of raw materials. While total national production has increased over the last several years, it has not kept pace with textile-industry demand, in part fueled by large, heretofore rapidly expanding textile exports. Total demand for cotton is expected to be 4.5 mil- lion tons in 1990, with production trailing it at 4.25-4.4 million tons. The project's incremental production of cotton of 175,000 tons would be less than 4 percent of national production and would supply provincial textile indus- tries, which are presently experiencing a severe shortage of raw materials. Incremental production of fruit and vegetables would be marketed within Hebei or nearby provinces. Chinese dates are consumed widely in China, both fresh and processed, and are used in large quantities in Chinese medicine. Pro- cessed dates, in dried and candied forms and as jam and wine, are produced in quantity for both domestic and international markets. The incremental date ptoduction of 44,000 tons under the project, which would be marketed without difficulty, would be supplied to local fresh-fruit markets and to the date processing plants in Cangzhao, which are now operated below capacity for lack of raw material. Crop by-products such as cotton seed cake and wheat bran are used in livestock production. In addition, the project would promote use of ammoniated wheat and maize straw for feeding ruminant animals, and of cotton stalks in particle board and fluting paper manufacturing. This would increase value added of crop by-products. 5.26 Beef, Mutton and Manure. Beef and mutton produced under the project would mainly supply domestic markets. Provincial domestic demand for beef and mutton has been growing, and there would not be any problem in the absorption of the 8,885 tons of incremental production under the project. Current con- sumption of nonpork meat in the province is in the range of 200-220,000 tlyr and a specialized market for nonpork meat exists among the Muslim minority. Cattle and sheep manure has a ready market in the province. It has been used widely in crop production and commands a reasonable price. 5.27 Shrimp. World production was estimated to have been 2.4 million tons in 1988. The annual growth rate from 1984-88 was 6.2 percent. A growing part of this production has been the product of mariculture. Total Chinese shrimp production--both capture and culture--was about 212,500 tons in 1988 (180,000 t cultured and 32,500 t captured), 9 percent of world production. Total world cultured shrimp production has grown from about 30,000 tons in - 40 - 1975 (2 percent of world supply) to about 560,000 tons in 1988 (26 percent). About 400,000 tons of this was produced in China, Indonesia, Thailand and the Philippines, with the balance mostly from Latin America. China was the lead- ing producer of cultured shrimp ln the world with a 1989 production estimated at 185,000 tons. China exported 98,200 tons of shrimp in 1988, 15 percent of world exports of 660,000 tons and about 46 percent of its total production of shrimp making her the world's largest exporter. Her major markets are the United States and Japan, with Europe a potential market. 5.28 The international shrimp market is presently very competitive. Rapid increases in the world supply of shrimp are being paced by large increases in the exports of black tiger (Penaeus monodon) shrimp from South- east Asian countries, primarily Indonesia, Philippines and Thailand. Produc- tion using extensive technology has a very low cost of production, especially in Indonesia. The white shrimp varieties produced in China (P. orientalis) and Latin American countries (P. vannamei), such as Ecuador, Honduras and Panama, comuand a significant premium over Asien black tiger shrimp, but it is not known at present what differential would exist in the medium run as increasingly large supplies of Indonesian black tiger shrimp reach the market. 5.29 The incremental production from the project of around 4,000 t/yr would represent less than 2 percent of China's present total production and so would not materially affect either Chinese or world market conditions. About 1,500 tlyr would be exported with the remainder marketed locally. With the exception of Indonesian black-tiger production, pond-gate cost of production of white shrimp under the project (evaluated at the official exchange rate) would be among the world's lowest. Because of this and because of improved processing and packaging, the output should remain quite profitable for proj- ect producers even in the event of additional world market price declines. A detailed analysis of the world shrimp market situation can be found in Annex 4. 5.30 Scallops and Fish. Most of the project's scallops would be consumed domestically. The scallops would be sold in both fresh and frozen form. Per capita consumption of scallops in China in 1988 was 30 g compared to 1,250 g in Japan. These products are delicacies in the Chinese diet; thus with the rise in per capita income, it is expected that demand would increase. The deep freezing and packing facilities provided by the project would enable these products to be transported to urban markets inside or outside Hebei. All the carp and tilapia produced under the project would be sold to private fishmongers at the pond side or would be transported in large wooden tubs directly to the markets. 5.31 Fertilizers. Availability of fertilizers is always a constraint for crop production in China. Fertilizers produced from the factories covered by the project would have a ready market. It would be sold to farmers, farmer groups and cooperatives at the factory gate, without the Intervention of sales agents, at negotiated prices. Purchasers would come and collect fertilizers from the factories using tractors or donkey carts. The Marketing and Supply Corporation might also purchase fertilizers from the plant to distribute out- side the direct collection area and would pay the same price as farmers. Local industries would continue to buy secondary products, slag, construction blocks, oxalic acid and liquid ammonia. - 41 - 5.32 Paper and Board Products. The Weixian papermill has letters of intent from five cartonboard manufacturers in Hebei Province for the purchase of fluting paper up to 22,500 tlyr, more than twice its annual output of 10,000 tlyr at full capacity. The Department of Light Industry estimates that annual demand for particle board in Hebei Province is 90,000 m /year, and that production is currently less than 17,500 m3/year. The full output of the Quzhou mill would increase local production to 47,500 m3/year, or about 53 percent of local demand. Neither plant would appear to have any difficulty in marketing its full production capacity. D. Prices 5.33 China's agricultural price policy over the past decade has focussed on adjusting procurement prices of goods marketed through the state-run system and reducing the number of goods subject to state monopoly purchase. While lifting price controls, the Government has encouraged a more open marketing system by easing restrictions on private interprovincial trade and sanctioning establishment of free markets, both retail and wholesale. The sum total of these measures has been creation of a more diverse and competitive cormercial environments during the ten years (1978-87) national free market trade increased from Y 12.5 billion to Y 115.8 billion. Producer prices for grain, vegetables, fruit, meat and aquatic products have more than doubled over this period as conmnodities have been traded in tree markets. Consumers, both rural and urban, have also benefitted from the -ider availability and higher quality of farm products. 5.34 This success notwithstanding, price liberalization has been associa- ted with the emergence of several disturbing economic trendss rising infla- tion, sharp supply and price fluctuations, mounting state expenditures on con- sumer food subsidies, and growing government involvement in the allocation and sale of farm inputs. The Government's response has been to reaffirm its com- mitment to achieving a more market-oriented economy over the long term while reverting to administrative control of various price bonus programs in the short run. 5.35 Output Prices. Grain and oilseeds are priced variously--at contract prices set by the government, at prices negotiated with state entities and at prices determined in free markets. Since 1984 the contract procurement system has been used instead of the quota procurement system. The contract prices for major commodities are set based on national price policy and have been rising steadily over the past five years. In 1985, the difference between market prices and contract prices was small, but by 1988 the steadily growing gap between contract and free market prices resulted in the following free market premiat wheat 60 percent, maize 75 percent, soybean 85 percent and pea- nuts 100 percent. Negotiated prices, generally higher than contract and lower than market prices, have recently been almost 15 percent below market prices. 5.36 In Hebei, grains are mainly sold at negotiated prices (wheat 80 per- cent, paddy 80 percent, corn 75 percent, soybeans, peanuts and millet 90 per- cent). Only 10-20 percent of wheat and paddy were sold at contract or market prices. Many farmers prefer to sell through negotiated channels rather than the free market, since transportation and handling is normally provided by purchasers. The quantity of grain sold through free markets for grain is thus - 42 - still small. In contrast to grains, fruits, vegetables, aquatic products and livestock products are mostly sold in the free market. 5.37 Cotton Prices. Cotton lint is the only product under the project which is still subject to 100 percent state contract purchase at prices announced annually by the government, with farmers required to produce accord- Ing to production quotas. The price of cotton was fixed at Y 2.91kg from 1984 to 1988. These low prices were primarily responsible for a decline in Hebei cotton production from 1 million tons in 1984 to 0.57 million tons in 1988, with the result that provincial textile industries are operating below capa- city due to a shortage of raw materials. The Government has been aware of this problem and provided other incentives, such as providing fertilizer and fuel at subsidized prices, while maintaining stable cotton producer prices. These nonprice incentives were not sufficient to induce farmers to expand pro- duction up to the previous level. In 1988, the Hebei Provincial Price Bureau conducted price studies and made recommendations to the National Price Bureau, which resulted in the decision to increase prices to Y 4.71kg in 1989 and Y 6/kg in 1990. Since the decision for price increases is at the national level, it is important that the Provincial Price Bureau continues to communi- cate cotton price analyses and recommendations annually, prior to the setting of cotton prices by the National Price Bureau. An understanding has been obtained at negotiations that cotton price reviews would be undertaken each year and that the results and Provincial recommendations would be communicated to the National Price Bureau and IDA. The project would provide Hebei cotton farmers with two important galns, increased yield through irrigation, new technology and high nutrient fertilizer and increased cropping intensity through relay cropping. With these productivity gains, it is expected that project farmers would allocate part of the land under various wheat rotations to relay cropping of wheat and cotton and also maintain cotton acreage at cur- rent levels. 5.38 ShrimD Prices. At current prices, Chinese production of shrimp con- tinues to be profitable, but already low world shrimp prices may turn lower, depending on how rapidly Indonesian and other Southeast Asian producers of tiger shrimp expand and how cross-elastic with superior white shrimp it proves to be in the main export markets. While China is competitive in white shrimp (not considering the special products tax it now imposes on shrimp), extensive production of P. monodon in Indonesia could drive the price toward the Indonesian pond-side cost of production, now estimated at US$2.00/kg head on, compared with January 1990 US$2.59 and US$4.51/kg cost of production for Chinese and Ecuadorean semi-intensive production of white shrimp, respec- tively. It is a prime objective of the shrimp component to produce a consis- tently high-quality product, which, if it obtains brand recognition in export markets, could narrow or close the current 15-20 percent discount off Ecuadorean shrimp that Chinese shrimp draws in the US market and thereby coun- ter some of the likely future general price decline. The development of a separate brand for the project's output therefore is an important goal of the project, which would be evaluated after the operation of processing facilities and training programs. 5.39 Imported Input Prices. Farm inputs, which are mostly distributed through the state-run distribution system, continue to be underpriced in the project area and throughout China. For example, prices of urea and DAP are sold at 30 percent below border prices. The most serious part of this system - 43 - is the limited availability of inputs, which are mostly tied with contract procurement of grain or cotton. The project would finance the import of fer- tilizer and pesticides for project farmers. It has been agreed that these inputs would be distributed to project farmers by local levels of the SMC. Assurance has been obtained at negotiations that the SMC branches would act as agents for the PM08 and would charge the farmers a price reflecting the cost of imports plus distribution margins and that the provincial PMO would review annually the resale price of imported fertilizer and pesticides and communi- cate this review to IDA. This is intended to avoid the problem cf subsidized prices and depleted fertilizer revolving fund. VI. BENEFITS, JUSTIFICATION AND RISKS A. Benefits 6.1 The major benefits of the project are incremental production, which vould result from the investment and new technology, and increased rural incomes. The crop development component of the project would provide incre- mental annual production of 520,000 tons of grains (wheat, maize and paddy), valued net of on-farm costs at US$56 million (1990 dollars); 175,000 tons of cotton valued at US$111 million; 10,000 tons of oil crops valued at US$1 mil- lion; 88,000 tons of vegetables valued at US$6.5 millions; 44,000 tons of dates valued at US$25 million and 70,000 tons of pears valued at US$10.5 mil- lion. In total, the crop component would generate incremental value of US$210 million annually. The aquaculture component of the project would produce annual incremental output valued at US$5 million, net of production costs, mostly by rehabilitating existing shrimp ponds but also by constructing a lim- ited number of new ponds for se-rimp and freshwater fish and facilities for scallop production. The livestock component of the project would provide incremental production of mutton, beef, wool, hide, skin and manure net of production costs of US$7 million annually. The agro-industrial (fertilizers, board. paper) and agroprocessing (slaughterhouses, feedmills and cold stores) plants would produce total value added of US$8 million per annum and would create a demand for cotton stalk, providing additional income of about US$0.7 million to project farmers. B. Employment and Incomes 6.2 Employment. Opportunities generated by the project would help reduce existing seasonal underemployment among the rural force in and around the project areas. Livestock activities would create 5,400 full-time jobs for employed labor and nearly 5,500 full-time jobs for family labor. For the Northeast area, full time jobs would be created for 5,540 aquaculture produc- tion families and approximately 1,500 in related processing, cold stores and feed mills. In the Heilonggang area, farming activities of the project in irrigated areas would increase annual demand for labor by about 76 million person-days (200,000 person-years). The labor increase would come mainly from the general -:&crease in labor intensity of agriculture (6.5 million person- days), from the substitution of cotton for other crops (61 million person- days), and from the increased cropping intensity due to the newly enabled relay cropping (8.5 million person-days). In the Northeast, labor increase would come from the new rice acreage on former wasteland (5 million person- - 44 - days). Date and pear production would require additional labor of 0.9 million person-days. The agro-industrial activities would create about 9,130 full- time jobs. 6.3 Incomes and Poverty Alleviation. In addition to the substantial employment effect, the improved cultural practices introduced under the proj- ect would markedly increase labor productivity and incomes to project benefi- ciaries, most of whom presently have incomes below the provincial average. Average 1987 per-capita rural incomes in Northeast and Heilonggang of Y 405 (US$109) and Y 378 (US$102) were significautly lower than the provincial rural average of Y 440 (US$118), which, in turn was about half of Hebei's urban per- capita income of Y 855 (US$230). Even within the project areas, some counties had significantly lower incomess in Heilonggang the two poorest counties had an average per-capita income of Y 250 (US$67) and the next 13 counties an average per-capita income of Y 350 (US$94). The Northeast's higher income is due to better crop yields and to the existence of some industrial activity. Remote project counties in the Northeast, however, have per capita income about 20 percent below the average. 6.4 The project would more than double the incomes of the 480,000 bene- ficiary farm families in Heilonggang. Farm model analysis shows that farm income would increase from Y 1,120 (US$237) at present to Y 2,370 (US$502) with the project and the average return per person-day would increase from Y 6 to Y 10. Per-capita income would increase from Y 280 (US$59) to Y 593 (US$126) (Annex 3, Table 3.1). The 18,000 households who would integrate livestock in their farming activities under the project would have additional farm income ranging from Y 430 (US$91) to Y 730 (US$155). The 50,000 families who would intercrop dates with wheat would earn additional farm income of Y 408 (US$86). The 62,500 families who would develop and rehabilitate pear orchards would earn additional farm income of Y 878 (US$186) annually. 6.5 In the Northeast, under the project, 60,000 families would be allo- cated 4 mu each of additional land reclaimed from wasteland for rice produc- tion. The farm model analysis show that family incomes would increase from Y 1,195 (US$253) to Y 2,857 (US$605), the average return per person-day would increase from Y 9 to Y 11, and per-capita income would increase from Y 299 (US$63) to Y 714 (US$151) (Annex 3, Table 3.2). This would also be a change from well below to well above the provincial rural average income. The 5,540 aquaculture families with new full-time jobs would earn Y 2,500 per family or Y 625 (US$132) per capita. C. EmPloyment Opportunities for Women 3.6 The major social benefit derived from the project, apart from pov- erty alleviation, is the generation of employment opportunities for women in the poor Heilouggang area. Substantial female employment would be created in the cotton production and processing. Harvesting of cotton is primarily done by women. Incremental production of cotton in the project would require about 5.8 million person-days of picking workers. This figure can be translated into about 145,000 female casual workers (40 days per season). Textile indus- tries would also employ more workers as the raw material constraint is relaxed, but no precise estimate is available. Seed cotton production under the project would hire 990 women. Since the raising of small livestock is mainly done by wamen, raising sheep would engage about 9,000 women. Incremen.. - 45 - tal female employment in new processing activities, such as cotton seed pro- cessing, meat packing, date processing, and shrimp and scallop packing, would be approximately 4,500 women. The four agro-industrial plants would employ about 400 women. D. Cost Recovery 6.7 Cost recovery for this project would have several major elements. Almost Y 250 million vould be contributed by beneficiaries in the form of cssh or labor and would involve no direct cost to the Government. The cost of che- mical fertilizers, pesticides, plastic film and seeds would be recovered by payments for these products from beneficiaries. The costs of research and training (Y 22.2 million) would be recovered through the 5 percent provincial crop and livestock taxes and the special product taxes for aquaculture and fruit of 10 percent and 5.75 percent, respectively. (These taxes would apply to the incremental production of the project.) Services provided by the water conservancy, farm machinery and veterinary bureaus would be recovered through service fees. Local government investment in agroprocessing and agro-industry In the form of equity would be recovered in the normal way from the corres- ponding share of enterprise profits. Local governments would also benefit from enterprise profit taxes. Cost recovery for investment in irrigation would be through labor contributions during project construction and O&M and through an increase of revenues from water charges (raised from Y 40 to Y 80 per 1,000 m3) which would recover 100 percent of the cash OEM, power and capital costs of the irrigation works. The cost recovery analysis in Annex 3, Table 4 shows that at present tax rates, project charges would be sufficient to cover project costs with a recovery index of 80 percent. Rent recovery at full development averages 43 percent. Discounted over the life of the project, the rent recovery index averages 45 percent. These rates show that the public authority would be able to capture almost half of the surplus that farmers would receive above the minimum return necessary to induce them to participate in the project. E. Financial and Economic AnalTses 6.8 Financial Analysis. Financial analysis has been done separately for the crop (water conservancy and agricultural development), livestock and aqua- culture components of the project. Investment and production costs are valued at 1990 prices. Water cost is estimated at Y 0.081m3. Labor includes family labor valued at Y 6/person-day. Outputs of crops are valued at the weighted average of contract, negotiated and market prices. Prices for livestock and aquaculture products are the prevailing market prices less transportation and handling costs to reflect the farm-gate prices. The analysis of each compo- nent is as follows. 6.9 Crop. A per-hectare crop budget analysis for cotton, wheat, paddy, soybeans, maize, peanuts, millet and vegetables, has been done without project (rainfed) and with project (full irrigation) for Heilonggang and Northeast separately. The result shows substantial annual incremental net benefits of all crops ranging from Y 725 to Y 9,916 per ha. This is a percentage increase ranging from 54 percent to 250 percent (Annex 3, Tables 2.1-2.2). Financial analyses have been carried out for investment in date intercropping and pear orchard development and rehabilitation, and they show high FRRs--42 percent, 48 percent and 76 percent, respectively. - 46 - 6.10 Livestock. Financial analysis has been carried out on a model basis for various livestock farms in the project areas. The analyses show positive cash flow after debt service and high rates of return ranging from 24 percent to 68 percent (Annex 3, Table 5.1) and detailed analysis can be found in the project files. 6.11 Anuaculture. Financial analysis has been carried out for rehabili- tated shrimp ponds, new shrimp ponds, new fishponds and scallop production separately and by production county. In estimating financial costs, all investment costs related to the establishment of hatcheries and pumping sta- tions, as well as investment costs for technical support, have been taken into consieeration. Investment cost is estimated at about Y 17,300/ha for rehabil- itated ponds, Y 40,000/ha for new ponds and Y 3,700/chain for scallop facili- ties. Annual production costs are estimated at about Y 24,000 and Y 15,000/ha for shrimp and fish, and Y 470/chain for scallops. The analyses show high rates of return ranging from 40 percent to 56 percent and positive cash flow after debt services (Annex 3, Table 5.2). 6.12 Agro-Industrial and Asroprocessint Plants. Financial analysis has been carried out for the fertilizer plants, the particle board mill, the paper mill, the slaughterhouses and cold stores separately. Investment includes plant design, land purchase, construction of infrastructure and buildings, and equipment. The investment is evaluated over a 20-year period, except that certain equipment is replaced at shorter intervals. Production costs take Into account technical assistance, management, marketing and training costs. All investment shows high financial rates of return ranging from 18 to 39 per- cent. Cash flow analysis has also been done. All processing plants show positive cash flow after debt service. Detailed analysis can be found in the project files. Economic Analysis 6.13 Economic analysis has been carried out for the principal components (crops, livestock, aquaculture, date intercropping and pear) and for the proj- ect as a whole, using constant 1990 border prices. In carrying out the analy- sis for the project as a whole, the agroprocessing and seed components have been excluded since these activities provide inputs to farms, and their prod- ucts, i.e., fertilizer and seeds, would be charged at border prices to the project. Some commodities have processing costs, e.g., paddy, cotton lint, beef and mutton. Processing costs have been estimated based on similar exist- ing operations and are deducted in the calculation of farm-gate prices in border-price terms. All other investment costs along with physical contingen- cies have been taken into account in estimating the economic costs of the project. 6.14 World Bank price projections or average export prices actually rea- lized by China were used to estimate the farm-gate economic prices in 1990 constant terms for traded inputs and outputs. Economic prices for nontraded goods were estimated using conversion factors (summarized in Annex 3, Table 6). These conversion factors were estimated based on an analysis of the deviation of social opportunity cost from the actual financial prices prevail- Ing in hebei caused by taxes and price distortions in nontraded goods. All economic values were converted to local currency at the prevailing official - 47 - exchange rate of Y 4.72 to US$1. Farm and unskilled labor has been valued at Y 4.8 per person-day, representing 80 percent of the prevailing average wage rate of about Y 6/person-day in the project areas. Based on the above, the results of the economic analysis are in Annex 3, Table 8.1 and summarized as follows. 6.15 Crops. Incremental costs and benefits for water conservancy and agriculture development as a whole have been estimated "with' and *without' the project, except for the wasteland paddy development. (In the latter case, siace there are no crops presently produced and the opportunity cost for the land is very small, full rather than incremental costs and benefits have been used.) Incremental costs include all investment costs plus physical contin- gencies, incremental O&M costs and water pumping costs for both wells and sur- face irrigation. Fertilizer, pesticides and other inputs to be used in the project are costed at farm-gate economic prices. All farm labor including family labor has been taken into consideration in calculating the ERR. Incre- mental benefits, including by-products are estimated on the basis of average yield projections from representative average cropping patterns 'with" and 'without' the project. Economic prices for crops and principal inputs are sum- marized in Annex 3, Tables 7.1-7.2. 6.16 Based on the above assumptions, and a 20-year period of analysis, the ERR of the crop development component is estimated at 34 percent. The relatively high return reflects the existence of sunk costs and the resulting relatively low per-hectare investment costs. This component is not rendered unprof.table by significant changes in costs and benefits: incremental yields would need to be 18 percent lower than those estimated and incremental costs 22 percent higher for the ERR to fall to 12 percent. 6.17 Livestock. Economic analyses have been carried out for the cattle and sheep subcomponents, as well as for the livestock component as a whole. The values of by-products were taken into consideration when computing eco- nomic farm-gate prices. The prices were based on average export prices for the different categories of meat and the average import price of greasy wool, adjusted for domestic transport and handling costs. The costs of alfalfa pro- duction and the upgrading of technical and veterinary support services were included. Based on these assumptions, the ERRs have been estimated: 41 per- cent for the sheep subcomponent, 33 percent for the cattle subcomponent and 33 percent for the livestock component as a whole. Sensitivity analysis shows that the livestock component is relatively sensitive to changes in benefits and costss 10 percent lower incremental benefits, or 11 percent higher incre- mental costs, would reduce the total component ERR to 12 percent. 6.18 Aquaculture. Separate economic rates of return have been estimated for the shrimp, scallop and fish subcomponents and for the aquaculture compo- nent as a whole. All investment costs related to establishment and rehabili- tation of the shrimp and fish ponds and the scallop facilities, including costs of maintenance of facilities and costs for management and technical sup- port, have been included in the analysis. The economic farm-gate price for shrimp was derived on the basis of actual export prices received for Chinese shrimp in the US market in January 1990, adjusted for transportation and handling costs. Due to the soft market for shrimp, it is assumed that a reduction in this already low January 1990 farm-gate price by 6 percent per annum for the next five years and that the price would remain constant at the - 48 - 1995 level from 1995 onwards (see Annex 4). For scallops and fish, economic prices are derived from actual financial prices. The shrimp feed economic price was estimated on the basis of the economic prices of the component ele- ments and estimated milling and other costs (Annex 3, Table 7.3). On this basis, an ERR of 30 percent has been estimated for the shrimp component, and ERRs of 63 percent and 28 percent for the scallop and fish subcomponents. The total aquaculture component's ERR is estimated at 30 percent. Sensitivity analyses shows that aquaculture benefits would need to fall by 16 percent and costs would need to increase by 19 percent for the total component ERR to fall to 12 percent. 6.19 Dates and Pears. Economic analyses have been carried out for date intercropping with wheat and new and rehabilitated pear orchards. Costs, including development and operating costs inclusive of family labor, were con- verted to economif costs using the concepts described above. The farm-gate econoadc prices of dates were based on prices received by the FTC adjusted for transpertation and handling costs. The farm-gate pear price was derived from the 1989 Hebei market price adjusted for transportation and handling costs. It is assumed that date trees have a production life of 20 years. Under the above assumptions, dates and pears have ERRs of 43 percent and 54 percent, respectively. The date and pear subcomponents are not very sensitive to changes in benefits or costs: benefits have to fall by 88 percent and costs have to rise by 520 percent before the date subcomponent would have an ERR equal to 12 percent. Benefits would have to fall Dy 69 percent and costs (which are inherently low) would have to rise by 225 percent before the pear subcomponent would have an ERR of 12 percent. 6.20 Total Project. Based on the above analyses, the total project eco- nomic rate of return is 32 percent. Its net present value (at a 12 percent discount rate) is Y 1,545 million. F. Risk 6.21 There are no major risks in the project. The Provincial Government is highly coamitted to it. Potential risks have been minimizeds (i) the risk that the VCB would manage its water resources poorly and not provide adequate amounts of water for both irrigation and agroprocessing has been minimized by investing in training of staff and by establishing a monitoring and evaluation unit in the VCB, (ii) the possible risk of aquifer depletion is minimized by limiting the number of new wells under the project until year 1993, after the WCB completes the analysis of how to balance water demand and supply without aquifer depletion and recommends future investment in water resource develop- ment and allocation, (iii) the risk of greater-than-anticipated shrimp export market weakness is minimized as a project concern, since the shrimp subcompo- nent is very small and there is a large unsatisfied domestic market, and (iv) the risk of inadequate price incentives for cotton is lessened by recent major procurement price increases and by the establishing an annual cotton price review and a channel for provincial input into National Price Bureau policy-making. - 49 - VII. AGREEMENTS AND RECOMMEN9ATIONS 7.1 At negotiations, assurances have been obtained from the Hebei Prov- incial Government that: (a) four separate revolving funds would be established and maintained at ABC fort (i) wells and water-saving pipes (para. 3.6); (ii) farm inputs (para. 3.10); (iii) farm machinery (para. 3.15); and (iv) livestock activities (para. 3.19). These funds would be man- aged by PMOs. Loans to farmers would be at interest rates no less than ABC's prevailing rates at similar terms and for similar pur- poses (para. 4.5); (b) no new irrigation wells other than those under the project would be drilled until the final assessment of the groundwater resources has been made (para. 3.8); (c) results of water monitoring, the water resource development plan, and related research would be compiled as they become available, and discussed with IDA, PMO and WCB (para. 3.9); (d) overseas training and study tours would need IDA's prior review and approval (para. 3.44); (e) provincial PMO would establish and maintain the consolidated accounts of all components for auditing annually by independent auditors acceptable to IDA and that the audited accounts would be submitted to IDA within six months of the close of each financial year. The audited accounts would include details of withdrawals from the credit account made on the basis of SOEs and auditors' opi- nions as to whether such withdrawals were against expenditures eli- gible for reimbursement by IDA. The Provincial Audit Bureau would undertake the auditing for the project (para. 3.48); (f) imported agrochemicals would be approved by IDA prior to their pro- curement, that all effluents from agroprocessing plants would be adequately treated, that the PEB would clear the final designs of the treatment plants and would set up and maintain a system of moni- toring effluent quality through the life of the project (para. 3.49); (g) draft operational guidelines for the new enterprises would be reviewed by IDA before finalization and that they would be managed by trained, qualified and experienced staff. These enterprises should be financially sound and that they maintain at all times a debt equity ratio no greater than 5:1 (para. 4.8); (h) funds onlent to project enterprises and final beneficiaries would be at interest rates no less than ABC prevailing rates (para. 4.9); (i) provincial PMO would submit an annual budget, financing arrangements and program of works for new construction to IDA for review by - 50 - December 31 of each year In respect of work to be carried out In the following year (para. 4.13); (j) revised O&M guidelines for the pumping stations and a review of water charges for surface schemes would be submitted for IDA's review by December 31, 1991 (para. 4.14): (k) provincial PM0 would (i) prepare progress reports to be forwarded to IDA every six months, (ii) undertake a mid-term review by June 30, 1993 and a review of the water resources investment plan, and (1ii) prepare a project completion report to be submitted to IDA no later than six months following the completion of the credit's dis- bursement (para. 4.17): and (1) SMC and its branches would act as agents for PM0 and would charge farmers a price reflecting the cost of import plus distribution mar- gins and that PM0 would review the resale price of imported inputs and communicate this review to IDA (para. 5.39). 7.2 Understandings have been reached at negotiations thats (i) all pas- senger vehicles would be financed by the province (para. 3.42); and (ii) a review of cotton prices would be undertaken each year and the results and rec- ommendations would be communicated to the National Price Bureau and IDA (para. 5.37). 7.3 Subject to the above conditions, the proposed project would consti- tute a suitable basis for an IDA credit of SDR 116.1 million (US$150 million equivalent) on standard IDA terms with 35 years maturity to the People's Republic of China. - 51 - Annex 1 Table 1 HEIE AGRICULTURAL DEVELOPLE"T PROJECT ole Provinclal and Projet Area Statistles Projoet County % NoelX -- - - - --- of Item/D"cription unit Province Northseat Hotlooggang Total Province Total Lend Area GOOOhe 19,699 So1 8,1'" 4,049 21 Total Arabi* Land 00OOhn 7,68 418 2,258 2,69 85 Total Cultivated Land '00Ghb 6,577 867 2,194 2,661 89 Irrigsted Are 00Oh. 8,60 215 1,854 1,109 44 Forest '00Gbe 8,180 88 98 186 6 Grosland 'OOha 162 198 58 246 29 Population: Total 1,000 57,100 2,992 15,559 10,651 a2 Agriculture 1,000 46,784 2,781 14,617 17,800 86 - Farm Laborer 1,000 21,642 1,297 6,128 7,416 84 - Families 1,000 12,048 748 8,462 4,196 85 Township No. 8,874 224 o6 1,10 82 Administrative Vilog" 1,000 5,046 844 1,641 1,65 89 Crop Areas: Weat '000 ha 2,850 28 1,005 1,026 44 Rice '000 he 125 71 0 71 57 Corn '000 ha 1,08$ 51 652 688 82 Cotton '000 ha 025 9 564 598 72 Oil Crops '000 ho 627 87 142 170 29 Vegetbles '000 ha 264 16 77 98 88 Fruit ireeo 'oG he 146 2 6 6 6 Livestock Population: Cattle '000 hoed 1,812 101 409 510 28 Sheep '000 hed 4,645 e1 726 607 18 Cost '000 head 4,912 157 1,407 1,564 82 PIg '000 hed 18,686 667 2,660 8,747 27 Poultry '000 head 104,060 6,612 81,179 8770 s8 Rabbit '000 head 10,880 561 6,205 5,608 8o Production: Gralns tooot 19,200 l,608 5,2sa 6,96 s8 Cotton 'COOt 628 6 460 460 78 Oil Crops '000o 660 54 1S5 209 80 eat too'0 1,009 TO 164 254 25 Fruit 'Oot 2,002 110 6S0 770 s8 Aquatic Product. 'OOOt 179 98 4 100 Se Total GVAO: Crops Yuan M 12,1609 1,268 6,880 6,824 54 Fruits Yuan 1 1,611 76 502 676 se Forest Yuan U 66a 28 109 182 19 Livestock Yuan U 4,868 414 1,147 1,561 s8 Fisheries Yuvn U 429 112 11 128 29 Per Capita Inco Yun 444 405 870 CHINA HEBEI AGRICULTURAL DEVELOPMENT PCCRAM ........................... Ctimatic Data ................................................................................................. .................................................................................................................... ..... .... Iteu/Location Jan Feb Nar Apr may Jun Jul AUg Sep Oct Nov Dec ............................................................................................................ ......................................................................................................... IRAINFALL C ) total MeNtonggang Region 3.S 5.7 10.2 26.6 39.7 90.5 206.1 188.9 47.4 24.4 9.4 S.1 657.5 North Coastal Region 3.3 6.8 9.4 25.S 25.4 60.4 172.8 137.0 43.8 29.6 13.9 4.5 532.4 .................................................................................................................................. ................................................................................... EVAPORATION (u) Tott Ne ionggmg Region 48.2 67.? 152.7 241.8 818.4 345.4 223.0 176.9 161.8 132.0 72.9 46.4 2487.2 North Coastal Regfon 48.8 S9.1 120.9 208.2 279.4 233.5 177.9 169.2 169.2 135.5 82.5 55.6 1739.8 ................................ ............................................................................................................................................ TEMPERATURE (deg.C) Average ............ ................ ... Hellongo ang Region -3.8 -1.1 6.1 14.1 20.8 25.7 26.8 25.3 20.3 13.8 5.4 -1.6 12.7 North Coastal Region -5.9 -3.8 3.1 11.5 18.1 22.3 25.0 24.3 19.4 12.3 4.1 -3.7 10.6 ......................................................................................................................................... SUNSIINE (Sours) total ......... .............. Heilonggang Region 185.3 178.6 218.4 230.5 280.2 271.7 227.8 227.9 222.9 217.9 181.2 178.4 2620.8 North Coastal Region 209.2 204.0 236.6 248.7 280.7 253.6 218 234.4 251.7 238.7 200.3 195.5 2771.4 Sources: Nebei Provincial Plaming Commission IXa NI-a - 53 - Annex 1 Table 3 HEBEI AGRICULTURAL DEVELOPMENT PROJECT HEBLONGGANG IRRIGATION REQUIREMENTS IRRIGATION APPLIUTtON ESTIMATES FOR HEILO lANG REGION CRQP PERCENT THERETICAL CHAXGE VOLUME OF AREA EVAP-TRANS BY QTA MU/M. UHEAT 67 5035 -1200 2569 MAIZE 39 4290 -30 1661 COTTON 26 4980 80 1316 OTHER 16 4005 0 6"1 CROPPING 148 SUJTOTAL 6187 INTENSITY EFFECTIVE RAINFALL 3387 CROP REGUtEENT 2800 PERCENT 0 CROP EFFECTIVE CROP IRRG AVERAGE ET RAINFALL REWIREMET DRY YEAR IRRIGATION 110 6806 3100 3706 WET YEAR IRRIGATION 90 5569 4200 1369 NNUAL IRRIGATION RESJIRET M3/HA. IRRIGATION METHOD EFFICIENCY AVERAGE DRY WET LONG TERM IN PERCENT YEAR YEAR YEAR MEAN WELL WITH PIPE 90 3111 4118 1S21 3290 WELL WITHOUT PIPE 65 4308 5702 2105 4555 SURFACE IRRIGATION 50 5601 7412 2737 5922 PUKP OR STORAGE GATE PARTIAL SURFACE SYSTEN SO 2800 3706 1369 2961 - 54 - Annex 1 APpendix 1 Page 1 CHINA HEBEI AGRICULTURAL DEVELOPMENT PROJECT Description of Water Conservancy Component and Distribution Within Prefectures 1. Heilonagang Area. Adequate and reliable water supply is the primary constraint to expand irrigated area and intensify agricultural production. Conjunctive use of water resources from surface water supplies and shallow well aquifers is the key to providing sustainable irrigation water to propel agricultural development. This would be attained by a two-pronged approach to improve structures to distribute surface water on a larger area, particularly in years with above-average rainfall, and providing investments in drilling of new shallow wells and laying of water-saving distribution pipes. A water planning for the province's water resources would also be conducted under the project. 2. Additional surface water would be brought into the southern portions of the Heilonggang region by the replacement of four existing pumping stations from the Wei He River that are nearly inoperable at the present time. The new pumps would provide additional installed capacity and would add an estimated 225 million im3 of surface water into the region in an average year. In addition, six sluice gates would be constructed in existing flood drainage channels to provide temporary surface storage within the project area. The total storage capacity formed by the gates is 36 million i3. These gates allow capture of a portion of excess late summer surface runoff to be used as irrigation the following spring. The surface supplies obtained from gate impoundments vary from year to yeat depending on the rainfall, but are valuable in reducing groundwater withdrawals and in providing groundwater recharge. The locations of the pumping stations and storage gates to be constructed under the project are shown on Map IBRD No. 22306 and are further described as follows: (a) The Zhongying and Diazhuang Storage Gates in Cangzhou prefecture would be built across existing large drainage channels and would have the capacity to impound 33 million m3 of water. (b) The Shenghuding and Wangzhuachun Storage Gates in Handan prefecture would be constructed, having a storage capacity of 3 million m3. Annex 1 - - Appendix 1 Page 2 (c) The replacement of the Nanlizhuang Pumping Station, consisting of eight units and having an installed capacity of 12 m3/sec would be made. This station would pump an average annual volume of about 96 million m3. (d) Improvements and new canals, control structures, bridges and irrigation facilities in the partially completed Jianzhuang scheme would be constructed. (e) Two deteriorating pumping stations in lower Handan prefecture would be replaced with a sinle new pumping station having 13 units and a capacity of 25 m isec. This new pumpinx station serving the Junliu irrigation scheme would deliver an average volume of 200 million m annually. Canal lining, control structure and irrigation svstem improvements would also be included. *f) The Chachezui Pumping Station would be replaced with the same 5m3/sec capacity as the original installation. The total area irrigated each year from these surface supply systems would be quite variable from year to year but on average, 24,000 ha of former rainfed lands would receive a full irrigation supply and 122.110 ha would receive either partial or supplemental irrigation in areas either without irrigation or which are now served by only wells. 3. As for drilling of shallow wells, a total of 9,942 new shallow wells would be drilled and fitted with electric or diesel pumps at a rate of 4.000 wells per year in the first 2.5 years of project implementation until more detailed assessment of water resources is carried out. These new wells would be in addition to the 12,000-17,000 shallow wells drilled annually to replace older wells (about ?2 annually of 230,000 existing wells). The shallow wells would vary in depth from 30 to 80 m with capacities ranging from 20-40 m3/hour. A typical well system equipped with water-saving pipes and a capacity of 30 m3/hour would be capable of supplying irrigation to an area of 6.75 ha, i.e., a total of 67,100 ha of rainfed land would be converted to full irrigation. In order to improve water delivery, closed conduit water-saving pipes would be installed not only with new shallow wells, but also existing ones. A total of 6,478 km of concrete pipes would be needed for the new wells and 3,356 would be installed on existing wells. The pipes would vary in size from 100-200 mm and would be produced locally with methods that compact low slump concrete into standard size forms. Ash from coal-fired power plants is included in the concrete mixture which minimizes the quantity of cement needed. The pipe can withstand only 2-3 meter of pressure which is adequate for use in onfarm distribution systems covering small areas. Approximately 3,000 km of pipe per year would be produced and installed under the project. The water-saving pipes installed on existing wells would reduce water use by about 352 compared to open ditches, enabling an additional area of 36,300 ha of rainfed lands to be brought to full irrigation. 4. In order to maintain funding for new wells and water-saving pipes, a revolving fund for this purpose with a maximum four-year replenishment cycle Annex 1 - - Appendlx 1 Page 3 would be established under the project in a separate account in ABC. Farmers usually make an initial direct investment of 30-501 of well construction cost and borrow the balance and this practice would be continued under the project. 5. Northeast Coastal Area. Surface irrigation systems would be expanded and upgraded in Tangshan and Qinhuangdao prefectures to capture and utilize most of the water that presently escapes to the Bo Rai Sea. In Tangshan, surface water supplies from the Dou He and Luan He rivers are regulated and interconnected to provide the irrigation water to reclaim scattered wasteland areas within presently cultivated areas. Structures to be developed under the project include: (a) the Dou He irrigation system would be expanded with the construction of two surface reservoirs, Installation of control gates, small pump units and drainage features to bring 6,200 ha into production; (b) the Luanxia irrigation system expansion would bring 8,620 ha of new lands into the irrigated service area with the installation of control and storage gates, pump units and conveyance facilities. The new area in both the Dou He and Luanxia schemes would initially be planted with rice, and as the salinity of the soil is reduced, cropping with wheat and vegetables would be extended over a portion of the area. The location and sizing of the project facilities and service areas are shown on Map IBRD No. 22306. In Qinhuangdao prefecture, four separate irrigation systems would be upgraded to allow lands originally included in old, partially completed schemes to be served. The initial systems were constructed in the 19608 and 19708 and did not have adequate funding to complete all features. In addition, some of the main canals were constructed over highly pervious soils and were built without lining. These systems now suffer from high water losses that prevent water delivery to the lower ends of the original service areas. Works on these existing irrigation schemes includes (a) The Yinging Irrigation System where a 68 km main canal diverts from the Qinlong River. The connection of the main canal to two in-line reservoirs would be modified to allow more reliable and direct irrigation water delivery to downstream users. Lining of 6 km of secondary canals plus extension of the system's branch canals, laterals and related structures would provide for expanding the full irrigation service area by approximately 4,000 ha. (b) The Yanghexi Irrigation System where the West Canal leading from the existing Yanghe River storage reservoir would be concrete lined for about one-half of its 31 km length (about 16 km). In addition, 6 km of subcanals would be lined and rehabilitation performed on numerous control structures. This would allow expansion by 4,660 ha of the full irrigation area. (c) The Changli Irrigation System where the existing main canal would be lined for 3 km. and where the lower portion of the scheme would be completed by the construction of 17 km of secondary canals, three main control and storage gates, eight pump lifts and numerous smaller conveyance and drainage facilities. This would allow a 4,000 ha expansion of the area to be fully irrigated. Annex 1 _ 57 - Appendix 1 Page 4 (d) The She He scheme where construwAion of a permanent diversion dam, main canal and distribution system would bring 1,333 ha of rainfed land under irrigation. It is estimated that the improvements, system expansions and water-saving lining on the above systems would expand the irrigated area by a total of 14,000 ha in Qinhuangdao prefecture. The upgraded and new facilities would also improve water deliveries to existing irrigated areas. 58 - ~~~~Annex 2 Table 1.1 HESE) 11O1UIILIURUI 0VLOPMEN? 900J1C1 PRDAlIC COST SUHIART liiin,t OOOI (US$ I 00Ol Total Project I total I otal 2friw Saes 11 foreign ease WcaI foreign total Evchang. Costs LocalI foreign lotsl I 3chaflge Costs A. Motor Conwosency errigation Develop wt 133.436.8 59,305.5 192. 742 3 3) 16 28.2?0.5 12.564 7 40.835 31 16 molts 8 water Saving Piles 132.io009 55.002.3 19?. 103 3 33 16 27.28?.5 13.171.? 41.759 2 33 1B Maer Resource Nanaguwnt 2. im 0 3.0359 S. 149 5 59 0 447.9 643. 1 I. 091.O0 59 0 Maasarch Svpourhs 1.225 0 1. 253 2 2.478 2 51 0 259.5 265.5 525. 0 St 0 Smh-total Matwr Consevancy 261.816. ? 126. 596. 6 397. 473. 3 32 32 S6. 165. 4 21.245.0 84.210 4 32 3? 6. Agriculture agrK4ct.rltu Iaoats 20. 725.1I 123. 717. I 144. 442.2 66 12 4.390.9 26.211. 2 30.602 2 66 12 Seeds Is.985.?7 86. 461 42.4"a69 62 3 3.) 8"S 5 5".60 8.9 93 0 62 3 AVriC. Stgort Services 32.841. 0 39.409. 6 72.2505 S 55 6 61.91I a S. 3495S 15.307 3 Ss 6 fruit 0evelopmnt 10.915 6 9.2467I 20. 162.3 46 2 2.312 6 1.959 1 4.27) 7 46 2 Igric easearCh 1.632. 9 1. 314.) 2.94? 2 45 0 3416. 0 276. 5 624.4 45 0 S,h-10tal Agriculture 812. 100. 2 200. 146.92 262.249 1 ?I 23 17. 394.) 42.404 4 S2, 728-S 7) 23 C. fare "a~ueY 5. 015. 3 9. 260.9 14. 278.3 65 I 1. 062. 6 1.262. 1 3. 024. 6 65 I 0. Livestock $1111 eetopeent 75. 120.3 32. 161.6 107.261 9 30 9 15.9)5.3 6.8)3.9 22.729 2 30 9 bt Straw Treatment 1.0)8.7 962. 2.001. 3 46 0 220.1 204.0 424.0 66 0 Slaughtitrneuse 9.S657 7 .596.? I?. 182. 4 44 I 2.025.6 1. 609 5 3.636 1 44 1 Livestock osseatch 793.0 390.6 1. 163. 6 33 0 161.0 82.7 250 6 33 0 S**-*to1taLivestock 86.5117. 41. III S 127. 629.2 32 0 IS. 330. 0 S. 710.1 27.040 I 32 10 SIirio Pandslee 12.737.6 5.538 6 16.276 2 30 I 2.696.12 1.173 4 3.672.)1 30 I SIwws Ponds-Raliab 42. 915. 0 2 t,666. 9 64.563. 9 34 5 9.092. 2 4. 59. 9 13. 63. 0 34 S Scallop 1.691.2 4. 182.9 5.674.1 71 0 356.3 6862 1,244.5 ?I 0 S.Upet facilities 12. 758.6 117.218.0 29.974 6 57 2 2.7?03.)1 3.647. 5 8. 350. 5 57 2 fish Ponds 14.210 2 S.248.1 20. I5&.3 30 2 3.010. 6 1.260.? 4.270.89 30 2 Aquiulture Oesatirch 740.0 941.5 1.681 S 56 0 156.6 1299. 356 2 56S 0 S.h'Tota) Aituaculture 65. 052. 6 SS. 495. 9 14054W6. 39 It 16.019.6 11.7157. 6 29.1777 2 39 It forti tigr Plants 62.9225. 8 110.282. 1 173. 201.9 64 14 13.33).?1 23.364.9 36. 896.6 64 14 Particle Board Kill 18.S32 0 42.953 0 61.465.1 70 5 2.926.) 9 .100.2 13.026.5 70 S Pawe Ni)) 11.015.2 15.463.? 26,498.9 58 2 2,333.7 3.280.5 5.614.2 58 2 S*tb-otel Igromilustrites 922473.0 168.718 9 261.191.9 65 21 19.59).? 35.745.5 55.337.3 85 2) 6.Project Mauiagement Office 111.6811.3 4.022.2 is.660.5 25 I 2,561 6ol 52.2 3.360.3 25 1 Total BASELINE COSTS 631,873.9 601.354.9 1.239.228 8 49 t00 133.671.6 126. 676.9 262.548.5 49 100 Physical Contirtgenclee 32.?00.6 36.255. 8 66.956. 5 53 6 6. 926.) 7.681.3 14.609.4 53 6 Pr ice Cont ingencies, t43.7M..3 109. 134.3 2512.9261.6 43 20 19.574. 7 12.8646.6 32.423. 3 40 12 Iota) PROJECT COSTS 808. 2 367.0 7 ...74 ------61. 1)2.0--6 12$6 160G.37_4. -4 149., 20,69 63 309.581. 489 ""II' March 20. 1990 I6.26 - 59 - Annex 2 Table 1.2 CHINA Nt811 *IIM?UAIL KVEIOPWiKTtt PiO,11Ct IOAtcI COST SUNNAIt lYuBln I0001 U) *0 0 'I Total I total Heilongagng I foreign B55* I foreign 8cw tocal foreign lotal fachane Costs Local foreign total £scharwe Costs tt:.;SS*t t::ss:StS :S3:;:t.SSt Ss:;Sftt: S:n:ut tS$S *:S:2Sst s.S:SSSZI :z$t*stu*stSst: ins.: A aitar CtonervaAcy .... ...... .. ._ Irrigation oel08sant 7.t82.6 23.0445 4 0.92S 0 28 9 12.263.3 4.t82.5 11.145.8 28 9 lells 4 motor Saving Pipes 132,100.9 65,002 3 IS?,103 3 33 21 21'.987.5 13,771.1 41.759.2 33 21 Rator esbowce Rlnagmnt 2. 114.0 3.035 6 5. 149 6 59 1 447.9 643.1 1.091.0 59 1 esearch Supports 1.225 0 1.253 2 2.418 2 51 0 2M9.5 2S 5 S221.0 St 0 Sub-totel water Conservaicy t3.322. 92.33. S 2S5.65S 0 32 30 40.9182 19.562.8 80.521.0 32 30 S. Agriculture ........... Wriculmurat 1npuis 17, 161.2 100.265 3 tl7.426.6 865 12 3.635.9 21.242.1 24.818.5 85 12 Seeds 14. U132.5 24.368.8 38.01. 3 61 4 2.994.2 S. 162.9 8.t17.1 63 4 Agrec. Si.port Services 27.086.6 34. 154 3 62.040 9 55 I 5.90S .2 7.236. t 13. 144.3 Ss I fr'uit oevelopmnt 10I916.6 9.246.7 20. 162.3 46 2 2.312.6 1. 99. I 4.271 7 48 2 AVric Research I.4g8. 4 1.040. 2 2.538. 6 41 0 317.5 220.4 537.8 41 0 ......... ........... ........ ........ ....... .............. ........ ............ .. ......... ............ ......... ........... .... ......... .... ..... sub-total Agriculture 71.594.2 169.07S 4 240.669.7 to 26 1S.168.3 35.821.1 0.9*9.3 70 26 C. farm tachitnery 3.104. I S.S6t. 3 &8M2. 0 65 1 657.8 1.200. 7 1,J58. 5 6S I 0. Livestock SHM Ove lopent *1.120.3 32. 161.6 107.281 9 30 11 15.915. 3 6.813.9 22.729.2 30 tl Am Straw treatent 1.038.7 962.? 2.001. 3 48 0 220.1 204.0 424 0 48 0 slaughterhouse 9.65.? 7.596 7 1t. 12 4 44 2 2,026.6 .1.609.5 3.636.1 44 2 livestock Rksarch 793.0 390.6 . 183. 6 33 0 168.0 82.1 250.8 33 0 Suhbfotal tLivestock 6.S11.7 41.111.5 12t.629.2 32 14 18,330.0 8,710.1 27.040.1 32 14 A. groindustries ....... .......... lertiltMr Plants 62,925.8 110.282.1 173,20? 9 64 18 13.331.? 23.364.9 36.696 6 64 18 Particle Bord Kill 18.132.0 42,953.0 61.48S. I 10 7 3.926.3 S.100 2 13.026.5 70 7 Paoer Kill 11,01t.2 1t.483.7 26.4S8 9 18 3 2.333. 7 3,280.1 S.614 2 SS 3 . ........ ....... .. ........ ..... ......... ....... .......... .... ..... .. ... ..... ..... I-- ........ Sub-total Agroindustries 92,473.0 168.718.9 261. 191.9 6S 28 I1.S91.7 35.745 5 51.337.3 65 28 f. Project anagement Office 11.838.3 4.022.2 15,860.5 25 2 2.508.1 852.2 3.360.3 25 2 ...... ..... ........... ........... .............. ........ ............. .. ... ...... ....... .. .. ........... .. .... . total SASEWttE COSTS 418,850.6 480.931.7 939.,82.3 S1 100 97.214.1 101,892.3 199,106.4 S1 100 Physical Cantingencies 20.475.2 27 367.5 47. 842. 57 ? 5 4. 338.0 , 798.2 10. 136.2 ST S Price Contingencies 101 199.7 84,629.9 1851829.7 4S 20 13 694. 1 9,891. 1 23.518.2 42 12 Total PROJECT COSTS 180,S21.1 692,929.1 1.13.44. II 12555 121t246.t1 t17;58.6 232,827.8 $1 t SSSSSSSSS*SSSSSSS*3St; t*SSSS Ss;flSSSS;tt::SSSS..:SfSS Ssa*flSS. S.flSSt ........... ....................................... ... ... ... .... ..................................................................... Ntbch 20. logo 16:.28 -60 - Annex 2 Table 1.3 HAitu aootcutluaat ogwctopmut 900dc? PsoiCI COSt susutr tlun IOa"l wss loos ............................................... ....... .............................. Northeast i letal I ' foreign Base Foretign las tocol foroln total latcharqe Costs tocal foroeln Total Inchon"ge Costs w Mater Conservancy .... I............. Itssootion eetolgpent *5.554.2 36.260 1 111. 84 3 32 37 16.00t.2 7 682.2 23.869.S 32 3? Sblotel Water Conwvacy 75.554.2 36.260. 111.814 3 32 37 16.007.2 7.U2.2 23.b89.5 32 37 8 gricultur Agricultural Iru'ts 3.563.9 23.f4f 8 27.015.5 8? 9 tSS. I 4.968.6 S.123-6 8? 9 Seeds 1.613 2 2.092 4 3.S45.5 S13 392.6 443.3 835. 9 53 1 Agruc. Sywirt Services 4.954 3 5.255. 3 10.209 7 51 3 1.049 6 I. 113.4 2.153 1 St 3 gr ic fttAsrch 134 6 274 1 408.7 6? 0 28.5 8. 1 88.6 6? 0 Sub lotul Agriculture 10.505.9 31.073.5 41.519.4 75 14 2.225.8 L.583.4 8.809.2 75 14 C form lachinery 1.910.6 3.593.7 5.504.3 65 2 404.6 761. 4 1. 166 2 6S 2 D. Aquiculture ShrMP Ponds -Ve 12.731.6 5.538 6 I8.276 2 30 6 2.698 . 1. 173 4 3.872.1 30 6 Shrem Ponds-Rebhb 42.9SI.0 21.668. 9 64.583 9 34 22 9.092.2 4.S9S.9 13.683.0 34 22 Scallop 1.591.2 4,182.9 S.674 I 71 2 3983 N6.2 1.244 5 ?1 2 Suipt facilities 12.75S 6 17,216.0 29.974 6 S7 10 2,103.1 3,647.5 6.350 S S7 10 fish Ponds 14.210.2 S.948 1 20. 158. 3 30 7 3.010 6 1.260.2 4.270.1 30 7 Aquaculturi, Reseach 740 0 941.5 1 681.5 16 I t56.8 199.9 356.2 56 I Sub-lsotal Aacultluo 89. 052.6 SS.4995.9 140. 148.5 39 47 8. 019 6 t. 757. 6 29. 777.2 39 47 ............... ......... .......... I.... ......... ......... .......... ............. ........ .......... ............... ........ .................. ... Total USEfil13 COStS 73.023.4 126.423.2 m. 448 . 42 100 36.651.5 28. 184.6 63.442.1 42 1to Physical Cmntinpcutes 12.225.6 .88S. 3 21.113.8 42 7 2.990.2 1. 83.t 4,473.3 42 7 Price Conil eales 42.99S2.5S 24.504 4 67.09619 37 22 S.880.7 2.957.5 8.838.1 33 14 ,............. ................. . ....... .... .......... ........ .......... ........ ........ ........... ........ ..... .. Total PROJCI COStS 227841.US 159.81S.8 387.65t 3 41 129 45.12863 31.625.2 76.73.5 41 121 33s3a33%3 :3333333; - 3... 33.3.3.:.33 3 3333333.... 33t3.. ** 33 33 3 3i s33.z 33s33:3 .. 33s33z ac . 0 0. . ............................................. tbrcb 20. 1SSO 16: 30 - 61 - Annex 2 CHI" Table 2.1 tEIEI a*ulCuIIuRat 0!VILPtEUT PRUOtl sumwg, acCotuts cost sumIUR Iluan 0ool IUSs I 000c S lotal I Total Total Project I Iror.sn Bass I Foreign Base 1ocaI foreign Total Exchange Cosls Ltoal foreign total Exchang Costs 1. IUVESINEIII cOsTs ................ A. tand Acquisition 10.437. 3 10.437 3 t 2.21. 3 2.211 3 I B. Civil wks Earth Wlorks S.969.7 17.801.1 73.7?t 4 24 6 118458.0 3.M1-1' 15.629 5 24 6 Stone morks 30,420.2 19.85? 9 56.218 1 3I S 7.716 1 4.20.2 11.923 3 35 5 Concrete Morks 22. 379. 3 28.471. 8 S0. 851. I 4 4 741. 4 6032.2 10.773 5 56 4 Stib-Total Civil Morks 114.169.2 66.131.4 180.900 6 31 1S 24.3)t0 14.0109. 38.326.4 31 15 C PublIc Works A Sui dinQs ..................... Pmblic Works 21.622.3 1I.060.9 42. 683. 2 3I 3 S. 2. 2 3.190.9 9.043. 0 3S 3 Bus1d4np 02.97? 0 44.932 9 97.90S 4*6 8 ti.223.9 9.019.7 20.143.6 46 8 Civil Erection 17.578.4 8.2716 25.850.0 32 2 3.724.2 1.?02.S 5.416 1 32 2 Sub-Total Public Wtor s 8 Bidings 98.1?? 6 66.265.3 166.443.0 41 IJ 20,800.3 14.463 0 35.263.3 41 13 0. Ichianry am Equiprint Agric Equephent 5.092 0 9.727.8 14. 8M 3 66 I 1.080.0 2. 061. 0 3.141.0 66 I Irrigation Equipment 50.987.4 03,073.9 104.061.3 St 8 10.802.4 11.244.5 22.046.9 Si 8 t.vestock Equipiwnt 4.9)0.4 4.169. 1 9.0U4.5 46 1 1041.4 883.3 1.924 7 46 1 fort. Plant Equip. 16.956 0 08.324.4 15.20.04 17 6 3.,92.4 12.356.9 15.949.2 77 6 Processing Equipment 14.996 3 16.315 6 91.311 9 84 7 3,117.2 16.168. 6 19.345 7 4 7 Peterch A Ext. Equip. 13.633.9 17,345.6 30. 979. 56 2 2.888.0 3. 674 9 6. 6. 4 56 2 Sub-total bechinery an Equipent 106.586. S 218.9S6 3 325.542.9 67 26 22081.U9 46.38. 1 68.971.0 67 26 I. Vehicles t.084.3 12.41I.8 13.000.2 92 1 2".7 2.630.0 2.860.2 92 1 r. fleterals fertliztrs 8.682.1 73.920 7 82.602.8 89 1 1.839 4 15.661.2 17.500 6 89 1 Pesticides 3.792.0 21.977 2 25.169.2 8S 2 803.4 4.6506.2 5.459.6 as 2 latorted NateralIs 10.394 3 39.6711 9 00.066. 2 *9 4 2,202.2 8.405 1 10,607.2 79 4 D*stic lateriel 104.202.2 33.142.5 137.344.6 24 11 22.076.7 7.021.? 29.098.4 24 11 Building Naterials 133.6 200.0 388 6 66 0 28.3 04.0 82.3 66 0 Breading Stock 42 827.0 6.054.0 48,881.0 12 4 9,073.5 1,282.6 10.356. 12 4 Si-Total tatorails 1170031.0 175.021.3 34.Q052. 3 St 28 36023.S 37,080.8 73. 104.3 St 28 G. Inc. Maoring Capital 24.916 0 - 24.S16.0 - 2 S.217,8 - 21J8 8 - 2 tt. Intwest during Const. 14.09. 7 17.881 3 31.947 0 56 3 2.978.8 3.189.? 64768.4 56 3 1. tabor 9.t111.2 - 59.1 tt2 - S 12.623.6 12. 123. 6 - 5 * . training Desest ic training 10. 003. 8. 27. 0 18. S80. 5 46 1 2. 130.0 t. 606.6 3.936.5 46 1 Overses Training 548.8 6.283.1 6.832.0 92 1 116.3 1.331.3 1,447.6 92 1 Training Fort. Plant 7t3.7 1t420.2 2,133.9 67 0 1tS 2 300.9 402. 67 0 Sub-Total training 11t.316.60 S6230.8 27.046.8 S9 2 2,397.3 3.438.1 5,836.2 S9 2 R. Technical Assistance 166.9 2.821.0 2.988O. 94 0 35.4 5971. 633. t 94 0 *. esign 8 ticense fee .................... License fee - 4.402.8 4.42.8 too 0 943.4 t343.4 100 0 tngineeringqDuign 1.926.0 t.t162.6 13.088.6 85 1 408.1 2.360.0 27173.0 85 1 Design Costs I,459.9 1,857 4 3.317.3 56 0 309.3 393.0 102.8 56 0 Sib total Design 8 Licens fee 3.38S.9 17.472.6 20.808.? 84 2 717 4 3.101.9 4.419.2 S4 2 11. Other SProeparts 279.6 1,422.7 1.702. 3 4 0 09.2 301.4 360.17 84 0 fort. Equip. Spares 88? 6 2,903.8 3.191.4 11 0 I8I.1 615.2 803.3 7? 0 Freight S Insurance 180.4 1.857.0 2.037.4 91 0 38.2 393.4 43t.6 91 0 Management 2.574.0 4.002.5 6.5?6. SI t S40.3 848. 0 1.393.3 6t t Others 13910.t S , 966.4 15876.29 12 t 2, 4. 1 416.6 3.363.8 12 t Sub-total Other 1?,832.1 12.t12.3 20.S84.4 41 2 3,778.0 2.574.6 6.352.6 41 2 lotal BASELINE COSTS 631.873.9 6078.34.9 1.239.228.8 49 100 133.t1.6 128.676.9 262,048.5 49 t00 Phlical Contingee sI* 32 700. 8 36 205. 8 68. 96. 5 5 3 9 6. 928. t *. 681. 14,609.4 53 6 Price Contitngecies 143.792.3 1t91 34.3 252,926.6 42 20 19.574.7 12 848.6 32.423,3 40 12 Total PROJECT COStS 808,367 0 702.40.0 .S6t1.It2.0 48 . 126160,7 '.4 t4.,206.8 309,081.2 4---- 4t8 ..""118 itsissGti.,. :sal.,4sax **:S*tSsi*s iiiisasS. *s*lx ss S itssissz *SSS; l. s. . sa$ .-, . ................. ..................................................... ..................................................................... ftWrh 20. t990 t6 2t - 62 - Annex 2 Table 2.2 CHNAt 4ES1i5 AGtRCULIURAL DIVEtOPNENt PRO.JCt SUNARY ACCOUNttS COSt SUNN*R? (tueat '000I fUSS * 000 ......................... ............................................ Heilonggang I Total % total I foreign Base foreign Base Local Foreign total sexharge Costs toeal foreign Total Exchageo Costs ,,,,,:,,: sn,:,:::: SS*:*s:SSSS * Sii: *,; S;............................. : ;Xs;.:* *s::t*,t: ::::s:: :ss::::.:s:: *Sn,,; I. IttVESthEtIT COSTS ................ A. tand Acquisition 5,847.2 - 5.847 2 I 1.2318 a 1.2388 - 8 Civil Hoilks Earth Mo'is 2.004 4 637 6 2.642 0 24 0 424.7 135. t 559 ? 24 0 Stone o *ks 3.4368 t.873 9 5.310. 35 728. 1 39t.0 1.125 0 35 1 Concrete oarks 7,600.8 9,670.0 t7.270 7 56 2 1.6t0.3 2. 048.7 3.659 0 56 2 Subts otal Civil Works 13.042 0 12.181.4 25.223 4 48 3 2.763. 1 2.580 8 6.343 9 48 3 C Public wtoks 8 Buildirns Public Works 12.896.4 7.031 7 19.T28. 1 35 2 2.732.3 1.489 8 4.222 0 35 2 Buidind s 48.202 7 40.883 6 89.0.6. 2 46 9 t0.212.4 8S.61.8 8.874. 2 46 9 Civil Erection 17.578.4 8.271 6 25.856.0 32 3 3,724 2 1.152.5 5.476.7 32 3 ..... ...... .... ...................... .... .................................. ......... I............ ......... ........... -- -- -- -- - - - -- -- -- -- -- -- ------- Sub-total Public .forks A Buildings 78.677.5 56.186 8 134.864.2 42 14 16.669.0 1I.904.0 28.572 9 42 14 0 Nachinery and Equigpent ....................... Agric Equipmtent 3.170 4 6.050 2 . 9.220.6 66 1 671.7 1.281.8 1.953 S 66 1 Irrigation Equipewnt 41.915.6 43.630.9 865.546.5 S1 9 8.880.4 9.243.8 18.124. 3 51 9 Livestock Equipment 4.916 4 4.169.1 9.084 5 46 1 1.041.4 883.3 1.924.7 46 1 Fort Plant Equip. 16.956 0 58. 324.4 7S.280. 4 77 8 3.592. 4 12. 356.9 tS.949. 2 77 8 Processing Etuapment 12. 788. 1 66. 077 8 7. 866.8 84 8 2. 109.3 13. 787 7 16.497 C 84 a Reseac S Ext. Equip 11.656.4 14.829.? 26.486. 0 56 3 2.469.6 3. 140.9 S.611 6 56 3 ......... ............ ................. .......... ............. ......... ........ ....... ---------. --------- -------. .... ..... . ..... ... Sib-Total taehonery and Equipment 91.400 9 192. 082.0 283.483 9 68 30 19.384 8 40.695 3 60.060. 0 6S 30 E. Vehicles 755.0 8.644.4 9.399 4 92 1 169.9 1.831.4 1.991.4 92 1 F. ateiails fertilizers 6.939.4 59.083.5 66.022.9 89 7 t.470Q2 12.517.7 03.987.9 89 7 Pesticides 2.912.3 16.879. 1 19.791.4 86 2 617 0 3.576. 1 4. 193. 1 8s 2 Itowrted Nateralls 8.706 4 33.226. 0 41.931.3 79 4 1.844.4 7.039.4 8883.8 79 4 Do st IC terias 102.*26.85 32 640.3 135.267.8 24 14 2 .742.9 6.915.5 28.658 4 24 14 Breeding Stock 42 804. S 6,060.8 48,6SS.3 12 5 9 068.7 1.282.0 10.350.7 12 6 Sob-Total Waterails 163 98o8. 047,880.7 31t.868 7 47 33 34.743.2 30.330.6 66,073.9 47 33 0. Inc. Harking Capital 17 976.0 17 2976 0 - 2 3.,O8.6 - 3.808.5 2 H. Interest during Const. 14.059.7 17.887.3 31.947 0 56 3 2.978.8 3.789.7 6,768.4 56 3 1. Labot 43. 130.0 43. 030.0 - S 9. 137.7 - 9. 137. 7 - 6 T. Training Domestic training 8.817.3 7.478.4 16.295.7 46 2 1.868.1 I.S84.4 3.452.6 46 2 Overseas training 498. 1 5.702.8 6.200.9 92 1 105.5 1.208.2 1.33. 7 92 0 Training fort. Plant 713.7 1.420.2 2.133.9 67 0 151.2 300.9 452.1 67 0 ........................... ............ ............... ......... ........... ......... .. ..... .... ............ ......... ........... Sub-total Training t0.029.0 14.601.5 24.630.6 69 3 2.124.8 3.093.5 5.216. 3 59 3 K. Technical Assistance 161.8 2.734. 3 2.896.1 94 0 34.3 6?9.3 613.6 94 0 t. Design A License fee ticense Fee 4.452.8 4.452 8 100 0 - 943.4 943.4 100 0 Engineering Design 1.926.0 11.162.6 t3.088.6 65 1 408.1 2.366.0 2.773.0 85 1 Design Costs 850.9 1.082.6 1.933 6 66 0 180 3 229.4 409.6 56 0 Sub-total Oesign S License Fee 2.776.9 16.698 0 19.474.9 86 2 588.3 3.537.7 4.126.0 86 2 H Other Spareparts 279.6 1,422.7 1.702 3 84 0 59 2 301.4 360 7 84 0 Fort. Equip. Spares 887.6 2,903.8 3,791.4 77 0 188 1 606.2 803.3 77 0 freight S Insurance 180 4 1.857.0 2.037.4 91 0 38.2 393.4 431 6 91 0 Nanagwent 2.St4 0 4.002 S 6.76 .5 61 1 545.3 848.0 1,393. 3 6t 0 Others 03,084 t 1.849.6 14.933.6 02 2 2.772.0 390.9 3.163.9 12 2 . .......... ..... ........... .... ...._....... . .. .......... ............ .... ........ ......... --------... --------- ---------... ------- Sub-total Othor 07.005.6 12.035 5 29,040 I 40 3 3.602.S 2.549.9 6.152.8 41 3 ....._................... .............. ........ ........... ......... ........... ......... ............ ......... ............ ........ ......... Total BASELINE COSTS 458.50.6 480.931.7 939 782.3 S1 100 97.214.1 101.892 3 199.106 4 St 100 Physical Cont igencws 20.475.2 27. J37. 47.842. 7 57 5 4,338.0 6,798. 2 0. 136. 2 57 5 Price Contingences Oti. 099. 7 84,629.9 186.829.7 46 20 13.6S4.1 9.891. 1 23.585.2 42 12 total PROJECT COSTS 580.52S.5 592.929 t 1.073.4S4 7 St 125 115.246.1 0l17l6.S6 232.827.8 St it7 SS;S*SnS ±SS:::tflS :SSSiS$;,, flfl*S::: t :t SSS*SSS S**SS :tSs:zst -SSZSSS*t inn;?::z siis:: arc 0... ............ ..... 0 .8: 8 . _ _ _ _ . tlFrch 20. IM9 16:28 - 63 - Annex 2 Tab le 2. 3 CHINA HIEBEI A08ICUL TUBAL DivEiOPIIENT PROJECT SUWIARY ACCOUNTS COSt SUNNANY IYuan ' 000) (USII *0001 Nlortheast I Total I Total - N ~~~~~~~~~~~~~~~~~~~~~~~~Foreign Base I Foreign Oslo toesaI foreign Total Eachange Costs LcalI foreign Total Exchange Costs I. INVESINENt COSTS A. Land Acquisition 41.090. 1 - 4.590 1 2 972.5 - 912.0 2 B. Civil Works Earth Works 53.960.3 17. 164 2 71. 129 S 24 24 11.433 3 3.636.0 IS.069 8 24 24 Stone Morhs 32. 983 4 17. 984 0 S0.96? 4 30 17 6. 988.0 3.8010. 2 10.798 2 35 17 Concrste Harks 14. 778 6 t8.8901. 9 33.080. 4 56 It 3. 131 1 3.963. 4 7.114 0 56 Il Sub,total Civil Morks 101.12? 2 53.900.0 I00.6?7 3 36 02 21.002.4 11.430. 1 32.082 0 35 02 C. Public Morks S Buildings Public Ilorks 14.720.2 8.029.2 22M0 I 30 8 3.119 9 1.701 I 4.821 0 30 8 ButIdle."g 4.774 3 4.042.4 8.823. 6 46 3 1, 01 1.S 807 9 1.869. 4 46 3 Sub-Total Public Mothks 8 Buildings I9.500.2 MOTS7 6 31.078 7 38 It 4. 131.4 2.059 0 6.690. 4 38 It 0- Nlhacinery and Equipwnt Agric Equipmnt 1.92?.) 3.67? 6 5.604 8 66 2 4048.3 779.2 1.167 4 66 2 Irrigationt Equipment 9.071.8 9,443.0 135.14.8 II 6 1.92220 2.000 B 3.922.6 01 6 Processing Equipmtent 2.208. 3 11.23?.8 13,446 I 84 4 467.9 2.3*0.9 2,848 8 84 4 Rtesearch 8 Ext Equip. 1.9??. 0 2.515. B 4.493. 3 06 2 419.0 033.0 902.0 08 2 Sub-lotel Nachinery and Equipment 1I. 184 7 258.74 3 42.009.0 64 14 3.2)7.1 0.693.? 8.910 8 84 14 E. Vehicles 329.4 3,771.4 4.100. 8 92 1 69.8 799.0 888.8B 92 I F. Naterails fertilizers 1.742.? 14.83?. 3 16.579.9 89 6 369.2 3.143 0 3.512.? 89 8 Pesticides 879 6 0.098.) 0,977.8 80 2 186.4 1.080.1 1,266.0 80 2 leiorted Natersi Is 1. 688.9 6.440. 9 8,134.8 79 3 317.8 1. 380.? 1,1723.0S 79 3 0owstl ic Rterial 1.070.? 001.2 2,0758. 24 I 333.8 106 2 440.0 24 I Building Materials 133.6 200.0 388.6 86 0 28.3 04.0 82.3 66 0 Breeding Stock 22.0 3.2 20.1 12 0 4.68 0? 0 .4 12 0 Sub-Total Rateratis 6,042.9 27. 140.6 33. 183.5 82 11 1.280.3 0,7S0.1 7,030.4 82 it G. Inc. Nothing Capital 6,940.0 6,940.0 2 1.470.3 1,470.3 2 II. Labor l50.81. 3 -11.981.? 1 3. 3*0.9 -3.38509 - 5 I. Training Dast ic Training 1,236. 3 1.04805 2.284 8 48 1 261.9 222.1 484.1 46 1 Oveirses Training 500. I 080.81 631.6 92 0 10.? 123.1 133.8 92 0 Sub-Total Training 1. 287.0 1.629 4 2.916 4 06 I 272.? 340.2 617 9 08 I J1. technical Assistance 0.2 87.2 92.4 94 0 I. I 18.0 19.6 94 0 R. Design S License fee Design Costs 609.0 774.8 1,383.8 16 0 129.0 164.2 293.2 08 0 Sub-Total Design 8 License fee 609.0 774.8 1.383.8 06 0 129.0 164.2 293.2 06 0 L. Other Others 826.0 116.8 943 3 12 0 170.1 24.8 199.9 12 0 Sub-Total Other 828.0 116.8 943.3 12 0 170. 1 24.8 199 9 12 0 Total BASELINE COSTS 113.023 4 126,423.2 299.446 0 42 100 36.657.0 26.764.6 83,442.1 42 100 Physical Contingencies 12.225 6 8.888.3 21.113 8 42 7 2,190.2 1.803 1 4.413.3 42 7 Price Contingencies 42.692.S 24,004.4 07,096.9 3? 22 0,880.7 2,907.05 8.838.tI 33 14 Total PROJIECT COSTS 227,841.0 159.810.8 387.807.3 41 129 4S. 128.3 31.620.2 76,703.0 41 121 siSi...... liii Z *:ssS.ssSs -S*sSt*i ....it %*SS Si..... asisz ......t S-4:*tiS ...... Narch 20. 1990 16. 30 CIII. mo MIC Mr-c-. W...- tIuiwtock Hellouggang., U01sa Moeavsp.h VC"01 SW 4A t fm s A tmItun 546 b SIt.. ~ t. 11 4010 *Cwsvl bI te S4wIUo of 2. 62 0 Sta loollsot 6 .4 I U~~~~~~beb.k. am. . . ~~~~~~~~~~~~~~~~~~. ..... ...... . .... .............. I n t .om om b copm6 l i n t fort.pto V 4.44A 63606P Peli f d t. P36 1qi U640*1 tA I., V *qwpirofl 3Q e.0 3.4220 1.30 II .S I19.44?89. 8.3 0 .11 . 2 ." so44 1if131,Nt, ~~~~~~~ ~ ~~~~~~~~~62.114 4 2.4 fi6 2I7 f.294 I 34071 4 - .07 is2 - lbegmred oblteoo t I7 S141 41.240? 189 492 a, .. SinaI. Notarial 21. PA?4 9490 40. Ito 6 827 2.414 . urosutq Slosh . ~~~~~~~~~~~~~~~~~~~~~" . .. .. ..... 4.. 63 43.9.... ....... .... 3*3.3.3 oblaoll.~ 21. 681 4 6.4S"20 62 S"4 7 437426 6 410 4 It. M 3 1 963 a 3.24 too * hIs beAl~44q Capeou 1. 3794 I'M97 2400 *Iple t see Scowl I 4*04 fl."2 38.6046 iw 2.00 M90140 7. ko8t s ttaiseial 9234 to 1414. S446 449 126S 89.9 OWttim 14634Mq "S40 ..416 S vp*411649 lfqt PlogI soll total FroetMq 1.469 332.6049 I. 9 IL ftIwoatfsol.t4so~ I" 4 3343 923 6 .6. I. Dump 8 Irceeoos fee b,,p Coal. teA . 9 lob 1o483 bb.,,8 leeomo toe 4680 ~~~~~~~~~.. . ..... ............ .... ..... ......... . * S ot v I#ova "i4 or.*1 8 fweerwo, 03*00, 1916 . 3443 . . . 7934~~~~~~~~~~~~~~~~~~~~~~~~~~~~~...... ..... t.o t%U3C.to 6046 4731 1o I 316 2 416 31tt.4265 IS. SolI 3620409 10.3162 I 2. 6386 6>811,0 4072no39 2.0s 3 It3.3to34 1. In36 total WoU.ll6 CRIS$ 60. 4280 '47 301 I 1 44 6 2476? 33742666 3&0.0 36at. 0409 20 362 I I..34 I .7120 t07. 281 I 3.00 3 M.0 S.62 04".Co# Ccl . qW.9s4348 6 84'244 3166 j 41 9 681W1 3.C8110 1. 42 63 I 61 9f0 4363 I .3049 St I S"9 * P. w, Coot 71 ~~2606% 41.440 4 1811?0 "93 98.6849 4.2233b1.2 47 6 21.3634 6341 1.021 I Wall a8 so4S9 1,3033 "429 1043 8045 OSCIS tMl00881v0 "4S47 A S62310 1.40113 141.u83A644.03959 77) 41 7 222168 3 pi27 3089 to.0on0a" S."8 S 0823 46. * lo0'oser haowp 3034 14 440182 364 3"6046 264917 1'91%6 410 lo 30to41106 3.1"90 11.811 a6 e 3.S" 2 1. 2. 9 .013 a 4301 bisitlO 4490429 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~. .............. ...... ............ - 6S- Annex 2 Tabile 3.1.2 IgEO ntflqSIiO Pis.catl ,,,,,........ ....... ......... project Cont i. iesc Fgr l,er Prtlel lsgeft ............ Plants Bard I11 Papr Noll Off1e tota ct ttSaSl .g.SZSIS SSS**SS tSitSz * SSSSSS.., Sfls.. * a;553 ,,, aS; 750.0 e 0S4.6 615.1 - 5.^4?. 2 1. 3 7S. 0 - - * * 2. 62. 0 10.0 264. 2 - . 5.310.? 10.0 531. 1 - ' * - 17. 2?0.? 10. o 1. M. I - 25.223.4 10.0 2.522.3 1,520.2 5,414.0 ta*# ?8 I s *o e16 4 4,933.2 2,520.1 #1i OJIb ' 0 4.044 3 25,650 - - :'. 0*., O to 0 . ba o 25,150 8,743.4 7,96.1 1i4.864 2 60 8.035 7 * - * 0.220.5 s 0 461.0 -- .546.5 5.0 4.27?.3 * - - - 9.084.S 5.0 454.2 75.280. 4 - - 1 .280 4 10.0 o . 52. 0 - 434451.1 13. 114. - 1?.865.8 s5 3.0 83.3 - - 2.034.6 26.486 1 s.0 1.324.3 .. ................. ............ . . ....... .. .... .. ........ ........... ... .. ... .... . i5.280.4 4345t. 1 13. 114.? 2t034.6 263.483.9 6.3 11.938.2 - 3 A.4 728.3 . 120.5 9 399. 4 S.0 470.0 - - - a 6.022.9 5.0 3.301. 1 *- 19.19.4 5. 0 080.6 - 41,931.3 5.0 2. 06.6 .307.5 135.267.8 S50 6 ?53.4 - - 8. 48SSS. 3 5. 0 2.442.8 ............... .... .......... .. .......... ............. ----------- .......... ..... ........ ........ ........ - * l.30?.5 311.88.t 5 . l5.503.4 7.300.0 4.345f2 2. 19.? - l?.7?6.0 0.0 0.0 31.9*-.0 - 31.04?.0 0.0 0.0 - . - - 43. 130.0 0.0 0.0 - 66.5 22.2 W7. 5 I6.295.? 0.0 0.0 - s186.8 0 .6 6.200.s 0.0 0.0 2. 133.9 . - - 2. 133.9 10. 23.4 .............. ................. ............ :.. ............ --------- ............ ... .... ........ 2. 133.9 2M33 22.2 237.1 24.630.5 0.9 213.4 - 1.535. 1 94.0 - 2.808.1 0.0 0.0 4.452.1 * - - 4.452.8 10.0 445.3 13.0a8.6 - - 13.40l.6 10.0 I. 38 S - 1.000., 566.5 - 1.33.5 0.0 0.0 ............... .................... ....... .......... ............. .............. ... ....... ........ 1?.541.4 I.000.9 566.5 - 1,474.9 0.0 1.754. I - 1.131.1 303.0 - 1.?02.3 0.0 0.0 3.1S1.4 - - 3.?91.4 10.0 379.1 2.03?.4 - - 2.037.4 10.0 203.? L its 5 - - - 6.576. 1 .0 867. 5 - 1.61?.1 014.3 11.160.8 14.933.6 0.0 0.0 2.405.2 2.is?.o0 1.21; .4 11; .*.8 22,041.1 4.3 1.240.5 ..... ........... .......... ............. .......... .............. ....... ................ .... ...... 3. 20M. 9 61. 4S. I 26.498.9 l5. 60.5 939.1*2.3 5.1 471.842.1 13. 207.0 61.465. 1 26. 408.0 1, 60 030. 782 5. . 47.842. 7 13. 391. 1 2. 529. 0 I. 0ss 3 223.1 4.,842.? 0.0 0.0 26,052.8 11,080.4 S.097.0 3.s53.9 185.6829. 4.8 8IL a ..o ........*....... ..................... .......... ............. ........... ............... .. .... ........ 212. 65.8 750. O5 4 32. 65 2 20.031.5 1. '173.454. ? 4. 8 SL 6, 7. ? nsa,,,,,, *,.flsSISS .fsflf ,fl...s.S4 sssSzS9 tSS Si, StSt lSt 136,044.4 St.S*4.0 1t8,06.3 4.721.8 512.029.I .4 31,033.6 ..................................... ............................................... ,,,,,,,,,,,,.................. ~~ .,v,c~~.3@wa4 ~~~(..t3 6g..e 4.r. $ktw~~~~~~ S'w' ~. .... ..... .... Cmtr N I 36945)mu1 cosus A leaw 6cqPl3o,4 4231 4.8483us3I27 3,3, 2 I ,6. 50 6.0 a C,vw*) lbs Iw3bp8,2) 384 a 6324 3 3. 030I 328. 0 226 4 6,1336 9 ?I32.1 3S0.01 P.42.0 1Slow florki 30. 288 a 2.) $14 S IL803 143 I .422 4 2,1WI 2 10,6UT..4 0. 0 6066.2 Csca.4oe 004,2 34 S 1$60 6.034 3 1)3 3 3.M926 3,4012 .33.18OO.4 40.0 3.1184.0 6b30343* Co-*I flooki 7 368 2.816s 46.104 8 03 3 tO. 04 2 42.0 3" I 3167S" 3 00 31S.SD. I C P*Isw N.ths 8 b.3ld..g P3*1b 11or.. 349422 3.6140 3 3.1116 62 2 2,062. 6 M.22 I 1 .. 1.0 3.18 16. Mos" 2.921 O3.140 3 .303 4 ).51) 2 . 62. . 0. Sub-liou$ Pmb),c No.3w a 6rn3ddfp 34 6422 2 .2 0 1.148 3 g402 4.8162 2). it)2a 2.012 6 2)1, S" 1S0 3,128.S * nnsw ald 3.~~ F3ic 1qa)p.3 M20 S. 432 8 6. 4.611 S M8.1 33't49)36fl 1033~~~~~3'3 4.389g2 3.84 ,2 3 84 3 .0?. . 34.IS.8 ". _ 61. P.*m.4a, t.opise 62086 -.2 3266 24.04.41. 1. Po IA 84:331t a 8) . itS . 3.63 O440.2I 1.0 21. Sombletal Noehias.p ed Iq.np.mn3 4.3tog2 S"06 2.83329 3920 S. 4)2.6a 3,48. 4 S,621.23 442 4 32,21. US. , 14L.6 3, 611I.S 42.4ON.0 1O.0 1"3t. I Vskcles 4992 l3ot 640o4 92) 3 3.321 a 1S"6 4,34.8 1f6S0 266.8 tort ,n I Is0.'O 4t2? 7 42 2 sit. 361 S.0 a 820 %St.3ic3n S.9313 241 S S. 1,17.8 1S0 M65 @ t400.1d bl..833Is 4.824 6 3.SSO2 0.3348 1IS0 465) commose lbtotosl4.4823 M02 336 3 7is . O.n1a5 S0 4028 Smt Id**g Notoor is Is 204 - 72238. 10 34 5.md.q Stock .2 1? 26 S 10 33 1)03e3t5 Itallosit t. 4823 2.013. 202%f 356 3362 283 1316 9 31n2 22.3M26 10 3.6S"6I 6IWt morosiag Capital 414.0 2.461 0 26)4 2.38660 4,1S44 0 LO".640 0 0 0 0 taboo- is. 341 100o . 6. 6 170 a IS."$33 00 . Doh34c 1t8w.n@O 2.363 I 236.. 2268 00 0 O.~~~~~~uws. f.e:ou.g 6336 ~~~~~~~~~~~~~~~~~... . . .. . ..... . ... ...... ...... ...... ....... 00. ... 0. Sub-ota )ta3ftn3g 2.8A24 9 S 3 2.936.4 0 0 0 0 a3 ?.e3.3ca3 866P13eaC@ 94. . 4 0 0 00 08K.qhe. 3o. S422 41 4 S 6 .2136a 0 0 00 '.' n143 lfvr.q.. 43 I....S" .. 49 41 4 In7681. 3.83 8 0.0 0.0 0360,1 . 3)0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Io2 43.6' 2.2 I 3I00 37 3 114323 0.5 0.0 Sib' bedo gig. VI302 43n.8a 62 I 3100 313 21432 0.0. 0.0 lotiol 35V.1S?SI Costs 333.6341 3 21031s6 3.446 30o.206 1 4401 J.104 3 it.its 2 64.98361.67$4.3 2,074 6 26.310.3 ,81.1 213,M.446.1 1.4 23,332.6 local 66113348 Costs 333.4)4 3 21.03%s 6J.64 1 St0.206 1 4007 S.104e3 J 36.2282 64. us291.614. 3 22.646 20.3663 3.6831 S366 44.1 1.3 23.13326 ""no I 81 C.mg...e.. 41a1. 3 3. 310 a 32? 3 3436 319 2706 3 .22?1 1,S.44) 3 3012S 3.116 I 3.11321 64 3 2).I32. 0.0 0.0 PraICI Coa33n Peee K .111S a 8. 1.4.A4 606 .04% I 93S 3,803 4 4.092S 30, 9113 9663 S,6M04 3.1414 A 28. 1 51.6666 6.11 4,5.6111.1 tiso*# e6Dci 0911 363614"94 1% M1) 24%41)4 %3.6? 138i0 8.7763 23.61323 80.680 31.340 0 3M,21 I 24.623 2.24. 2 651.6II11 a S. 6111So04 t..,.,p fueeuagin 44 M2 I 10.121 02M 332 16.31 345 0 4.3%4 6 G 6.46 26,422 S. M,633 23,0036 1.3M82 3.24 316,831 .8a 6 6 M4,5.5a Plore). 30 3810 Is 30 - 67 - Annex 2 Table 4.1 co[MA, ItE8Et URIcuttuRt AlEVEta6l0Ett POECI Projeot Coonnts by yeer lotals Including Contingencies totals Inclulding Contirg.nes Heilongganp (luau 0oI01 USSI 001 gei2 m . .. .............. ........................ ..... ........................ . ........ .............. ......... ................ .. .. .............. soiS9 91/92 92/93 93/94 94/9v Total o90/9 91/92 92/93 93/94 94s/9 lotl :SflttSt* stst:;2S. Inn.;.. s-.,..Sf *Sn..:.. s.ns..S... *SSl3aSS flfltt SSSt Sllt fSatflSS :tSf131 tSSSflS3 a. motor ComnrveIcy Irrigation O.velopwnt 20. 669.9 33.978.6 33.041 6 19.998 3 106,882.0 4.278.6 G.662.4 6.342.0 3.639 .I 20.9t8.8 iblls £ water Saving Pipes 74.893.? 84.325.6 71.73.4 I&.864. a 24s.928.6 1. 060 16.749.4 13.716.) 3.500.0 - 49.274 water Reso,c. Natraggest 2.839.? 1.418.1 1.135.6 419.6 G6,213.0 981.9 360.1 218.0 778 1244.9S Research Suipport- ).476.8 9 97 3 325.2 331.2 331. 1 . 063.9 306.2 16S. 62.4 61.4 59.4 608.0 ,,,,,,,,,,. . .. ..... .... ..... ......... ........ ........ .... ........ .......... .. ...... ......... . ... ... . . ..... ........ . Sub-total aiter Conservency 99.877 6 120.3S0.6 106.279.6 3U.21I.9 331.1 366.087. I t0.678.6 23.88t.0 20.398.4 1.274.9 59.4 72.296.4 8. Agriculture .......... Agricultural Inputs 39,476.0 36.599 7 3).899 7 2s.609.3 18.293.0 IS1.861. 8.113.I 17.261.9 6 122.0 4.7?0.9 3.26K2 29.591.3 See"ds 33,28662 9.089 7 1.4S9.1 300.3 904.5 44.639S. 6.89).6 1.803. 279.3 99.? 90.6 9.120.I Agric. Support erwvces 20.672.? 34.09s.0 11.460.9 4.66 .0 6,244.5 7t.341. 2 4.321.9 6IL695.9 2199.6 89.S 1.121.) 9273 3 fruit Develc nt 17,069.3 8,30T.6 - - 23.316.8 3.934.0 t.291. - 4, M789 Agruc Ues.rch 879.2 96. 591.0 426. ) 432.9 3.271.3 162.0 194.9 109.8 79.4 77.7 639.4 Sub-total Agriculture ;'1.583. 67. 073o 45.362.? 30,998.8 29.479,0 300.4930 23. 102. 2 17,276.4 6,7069 9,I91.2 4. 43.6 99.4)0.2 C. farm flechuery 3.389.? 5.202.9 1. 99. 3 126. 9 139. 1 0o. s0s.1 70I .$8 t.032.3 3t. 3 23. 24.3 2. t97. 2 D. Livestock SHN Oevelopnt 97. 34.9 66.230.) 6.9SM. ? - 130.600.7 1 ,6VA.s9 13,140.9 1342.8 - - 26.362.S bK Straw Tretmnt - 1.2s2. 11.364.6 S.6 9.0 2.628.9 - 248.4 261.9 1.3 0.9 9)2.S Slaugterbouse 6.242.) 9.292.4 1.943.9 689.7 1724.2 20.892.3 1,708.4 1.843.? 373.1 126.0 130.0 4.181.3 tivestock ts.rch 7276 223.1 194.6 196.4 169.9 1.468.1 190.6 44.4 31.4 29.0 29.8 29I.2 ... .. ....... ......... ......... ........ ........ ........... ............... ............ ........ ...........^^* ......... .... ..... ---..,----e *....- Sub-Total Livestock 66.344.9 16."SS.3 10,498.9 692.9 8s9. ) 9SS.99.1 13.735.9 S.2127.4 2.0)9.) 158.2 160.1 31)347.4 E. Arogindustleo * Fertilizer Plants 53,34.3 87,114.1 11.347.8 212.6G6.8 I1.063.I 1. 41S.6 13.69.4 - - 42.13.1 Pvticle Sord "oill 11.463.) St.,S987 3.910.4 1.040.6 1,092.6 79.099.4 3.6)9.9S 10239.9 70. 6 193.) 196.2 142991,2 Paw UdIl 6,824.2 23. 119.s 2,094.2 SS9.3 39.1 32 US. 2 1,390. 4, S8?. 402.0 103.4 70.0 6.St3 3 Sb-Totol Igroindustries 77.521.6 152.4*2.9 11.32.4 LS997.9 1.482.1 320.431.9 IS. 001. 0 32.238.1 14.88. 2 9m*4 266. 2 6.360t.2 F. Projct Ranagot Office 7,932.8 2.89.02 3,. O54 3.192.? 3.365,4 20.037.9 1,999.6 sn3.5 S986 5912.3 604.2 3.91.2 ...* .......... . ^.......... . .......... ........ .......... ........... ........ ........ ......... ..I..... .......... ....................... ..... . . Tote) P904ECT COSTS 3466249.6 49s.031.9 244.,01.6 7S921.0 31. 6814.4 1.173.494.I 75.8261 90.269.3 46. O.3 14 096.1 9.68.4 232.6ut.8 J9.-S.29 42.89. 299**942 19SSX %*X%sx-_ *0248*9419s *gas% ******* 83S8*8 $*s *S$* *s Vssal zsast .......................s..... .................................... s . . a..... ......... 8S.....stSSS.............. *sSfl. *..................S. . . flarch 20. ISSO 16 28 - 68 - Annex 2 Table 4.2 CHINA HIEM[ ACIlCiUt L OEVIVCLOPETl PROJtCT Project Caents by 1tr lotals Including Contingencies Totlit Including Contoencies Northeast l(uan , tuss I000) .. ...... ......... ..... ...... ... .. . ...... ..... .. ... ... .. ...... ........ ............................. 90/91 91/92 92/93 931/4 94/95 total 90/91 91192 92/93 93/94 94/95 Total IL Mater Conwevacy .... ... ..... ....... Irrigation DOvelonfint 26.397.S 43.652.6 48.530.0 33,314.3 64.0 151,959.4 5.465.4 8.661.2 9.314.8 6.180.8 I.5 29.833 8 ......... ......... ... ... ..... .......___. . .......... .. ._. _....... .......I.. _........... ......._._-.... ..... .. ...... . -.. .... ....._ Sajb-Totol Mater Conservancy 26.397.9 43.652.6 48,530.0 33.314.3 64.6 151.959.4 5 465.4 8.661.2 9.314.8 6. '80.8 It.6 29.633.8 f. Agriculture . .. ....... Agrieultural inputs 8.519. 8 8.234? 7 7368.9 8 .275.4 4.616. 35 133.2 1 776.4 1 633.9 1t414.0 1. 64.3 839 6 6.828. t Seeds 4,453.4 - - 4,453.4 922.0 922 0 Aeric. Support Services 3.812.0 6.$7t68 578.5 697.2 933.2 12.598.? 789.2 1t305.1 tIl.* 1294 16t.5 2.502.J Agric eseareh 185.6 121. 1 80.7 63.0 61.6 5t8.0 38.4 24.0 IS.5 It.7 12. t lOt 8 ..............., .,....... . .. .... ... . _....... ........ ............ ........ ....... I...... ......... ....... ....... ......... ... ...... _.. _ Sibt-otal Agriculture 11.00. 9 14.933.5 8.026 t 7.035.1 5.671.2 52.703.3 3.526. t 2.963.0 1t540.5 1t305.3 1.019.2 10.354.t C. Faril Nichinery 2,257.4 3.006.9 1.458.? 25.8 21.5 6,778. 3 461. 4 56. 6 280.0 4.8 4.9 1. 353. ? 0. A acu lture .... ...... Sher ip Po-16" 7.38t.S 9. 193.4 4.105.0 2.933.0 - 23. 613. 3 1.528 3 1.824.t 181.9 44.2 4. 684.5 Shrimp Ponds-Rstab 40,893.5 28955. I II. 131.8 - 0.980.3 8.466.6 5. 45.) 2. 136.6 - - 16. 348 2 Scallop 2 155. 4 3,201. 3 1. 191. 3 7- 148. 0 570.5 635.2 226.7 - 1 . 434. 3 Support tacilitles 1. 72t. 28,491.8 1. 1382 31. 35?. 1.598.6 5.654.3 218.5 - - 7471.4 fish Ponds 13.,36. 3 10.474.3 994.8 - 24, 625. 3 2.165.3 2. 01& 2 190.9 - 5.034. 4 *qiaculture eserch 379.3 425.0 461.9 49. 9 531. 1 2,294.2 78.5 84.3 88.7 92.2 95.3 439.1 ..... . ...... ..... ..... ...... .. ... .._...._. ___._ ........ ........ ....... ....... ........ Sub-totaI Aqw cultur. 12.467.S 80 746 9 19.022.9 3.429.9 531. I 116. 21 3 IS. 001.8 16.,021.2 3.65t. 2 636.3 95.3 3. 41 1. 9 ..... _ -. _1 ....... ....... ... .. .... .. ...... . . . ...... . ----- ----- ----- ---- ---- ----- Total PROECT COSTS t8 t13. 6 142.339.8 17.031.1 43.805.8 6 300.4 387.657.3 24. 468L 6 28. 242.0 14,86.5 8 t127.2 I. I)). t 7153. 5 33SSt:tS3 3523S 4 tS SttSi*S $S$SSSSSS43t 4f4 aSSSSfl*3 33Sita* *3tSS. . *SflSSS* 53333 *....3S . tS... .._.._.................... _.._.._ ....................._._..__...._. ............._........_....................._. _ ._ ..._.._.._.._.._. Xarch 20. 1990 I& 30 AIOn_ 2 -69 Table- cam NM5II AGRICULTURAL DVCL0IMRNT PIOJnCT Procurement of MacbIneurv ROaulument and Material (Y'000) Procurement method Project eleasut 1CB LUB LC Other Total Machinerv Constr. & O&N machinery 2.830 2,360 5,190 0 10,380 Vehicles 12,800 0 0 3,250 16,050 Farm machinery 0 0 1S,580 4,720 20,3001a Subtotal 15.630 2.360 20.770 7.970 46,730 Equtoment La.ge pumps & motors 2,830 0 0 950 3.800 Small pumps & motors 0 0 23,600 3,780 27,380 Well pumps & motors 0 0 0 35,400 35,40AOa Electrical 0 0 22,700 14,160 36,860 Misc. irrigtion 0 900 5,200 7,550 13,650 Gates & hoists 0 0 23,100 12,300 35,400 Water monitoring 0 950 2.360 5,200 6.S10 Research & extension 0 8,500 5,200 9,440 23,140 A.oniation 0 0 0 3,300 3,300 Fertilizer plant (2) 88,300 0 0 0 88,300 Cardboard plant 31,150 0 0 0 31,150 Particle board plant 76,460 0 0 0 76,460 Slaughterhouse 0 0 19,400 3,300 22.700 eGnnery & delinting 0 5,660 19,300 3,290 28,250 Seed processing 0 2,36b 17,460 2,830 22,650 Office 6,600 8,000 9,440 14,160 38,200 Cold storage 0 0 7,080 4,720 11,800 Aquaculture 0 4,250 15,100 9,400 28,750 Subtotal 205.360 30.620 169.940 129.780 535.700 Materials Cement 15,600 0 14,200 12,300 42,100 Steel 6,000 0 1,900 5,350 13,250 Timber 4,700 0 0 3,300 8,000 Fertilizers 97,500 0 0 0 97,500 Pesticides 30,000 0 0 0 30,000 Plastics & other 40,300 0 0 4,700 45,000 Well casing & misc. 0 0 27,400 0 27,4001a Water-saving pipe 0 0 0 114,700 114,7001a Aggregates 0 0 12,700 11,300 24,000 Misc. constr. 0 0 5,660 3,300 8.960 Breeding stock 0 0 0 57,920 57,920/a Subtotal 194,100 0 61,860 212.870 468,830 Total (Y'OOO) 415 060 32,980 252 570 350 620 1.051,260 (US$ million) 87.9 7.0 i-l i5743 222.7 a Locally procured goods included under one of the project's revolving funds. ANNEX 2 70 - Table 6 CHINA HEBEI AGRICULTURAL DEVELOPMENT PROJECT Estimated Disbursement Schedule IDA Disbursements Disbursement fiscal year/ Semestral Cumulative Cumulative profile /a semester ---- (US$ million) ---- (X) Yearlsemester 2 1991 X Year 1 First 7.0 7.0 5 First Second 12.0 19.0 13 Second 5.4 1992 Year 2 First 17.0 36.0 24 First Second 20.0 56.0 37 Second 29.2 1993 Year 3 First 25.0 81.0 54 First Second 20.0 101.0 67 Second 61.2 1994 Year 4 First 18.0 119.0 79 First Second 13.0 312.0 88 Second 91.0 1995 Year 5 First 8.0 140.0 93 First Second 5.0 145.0 97 Second 100.0 1996 Year 6 First 5.0 150.0 100 La Disbursement profile for China - specific investment loans. /b Included retroactive financing up to US$12.0 million equivalent and deposit in Special Account of US$8.3 million. Completion dates December 31, .1995 Closing date s December 31, 1996 71 - Annex 3 Table 1.1 REABl AGRICULTURAL DEVELOPMENT PROJEGT CropDued Areas. Yields and Production Area Converted Yield Incremental Crops to Full Irrigation Present Future Production (Rainfed) (Irrigated) Heilonggang Region (Hectare) (ton/ha) (1,0O0ton) Wheat 56,000 1.3 4.0 151.2 Maize 34,000 1.2 4.0 95.9 Cotton a/ 95,000 0.6 1.1 53.2 Cotton (intercrop) 30,000 - 1.1 33.3 Alfafa (partial irrg) 8,000 6.0 48.0 Alfalfa (rainfed) 8,000 4.0 32.0 Peanuts b/ 5,000 1.2 2.0 4.0 Chinese Cabbage 2,000 10.0 35.0 50.0 Orchard (new area) 2,000 35.0 70.0 Chinese Dates c/ 20,000 - 2.2 44.0 (intercrop) North Coast Region Wheat 4,800 2.2 4.2 9.6 Wheat (intercrop) 1,900 - 4.2 8.0 Maize 4,400 2.6 5.0 10.6 Paddy d/ 16,900 - 6.5 109.9 Orchard (new area) 800 - 35.0 28.0 Chinese Cabbage 500 15.0 35.0 10.0 Present Future Total Project Cropped Area 3,277,000 3,403,000 Total Cultivated Area 2,351,000 2,386,000 Cropping Intensity 139% 143% a/ Ginned b/ Shelled c/ Intercropped with wheat d/ Scattered wasteland near presently culivated areas in Tangshan and Qinhuangdao prefectures. I O 005 El d le!uu",Jo# ie £evftvl 414 /a pus e Udw '4 - p6 1!0* dI !Jmldd /5 t°'° ~ ~ ~ ~ ~ S deUS US- S W ,gtO us- sn wOt - zl -A 0 ^ 0-0 o o st zt "-t 3 t5Ot Ot rdt0-0) W0*o not I. CM 8 setu 01d,3 on 00 0 080 0V-W1 l' w "I'- 0 0 U00P t^4z1 o slut owl P42421 41. %IO G5C 8W-OI O'W 0 Lot AO 1O'4-S19 S 0: 0 s~ n s s ss o tC I"S SSt 00 oas sa et p.sF___ N O O O O O O 00 S~~~~~~~~~~0: 09 t O O _-4t pIIY_I o 0° o° 00a S US °~~~~~'° 8 0 ole d' 0 ° 0 " 0 0 S "I I*= a u oO tt |q / 0,49 ow- an 0 a 0 4 ooo S a oo oo u P 4 le'tWo 0-0 0 0 S 0 0 0tSI A o o 0 0 ess s s o sts 8$S n am0 a 1010R 0109 a" s°e'8n 00t op t, g - , ^ 1 c 0'0 0 0 oSt St0 aIo, I o o oos- SSllogtS 005 0 lUSEis'S~~~~~~~m m O o S-W 0*0 59 -Ob O 0 U is t-SS- a 0511 0 U 12 0Wo 0 0 QD& us 0 0 0 p.tmJw4Iam~ 00 obt 0t 0 0 0 v' at 4!41t11 0b 010 at mg OS?1 0 MtSP *+so~~~~~~ U w on t o tiS tI pe,laoI - a S'Ot ~ ~~~ ~ t'0 St^ S6t 0o-. at- tS ab Sl t Lfo1 C4 ~ ~ ~ ~ ~ 000 0 0U UI 0015 c 00 OS *-~JIAiead JYTUNe Wof9 0:°t on z es-t et° t eot lo 1 ow Ou s &t g ao w t0 tt0 mmllt St *rww ass g - a -It 0*- 0t 0 0 U Utl-I Wo 0~00510 LSW sal:i * US SI Un p,us"J4! top uvs US 01n 0 06 US 010 WI g WI 0 AS s p.lt C :51 S'OOI~~~~~~~01 0SilODsl91 0 iso: USI" ioslesqeS 55- g wt o,* as- m U 010 U L IO 0 OP P 8*I* wA,S~~~y4r sw~~~~ (50± as~m Ws mtsuA, 19Ui m 0 off 1'UkCj. WI 1Z S*1LVOIZ IL AUSt gm m:x q __ gm m ae" stim90b0I50 WM- aearais &wwwt Ge inc~~~~~~~O " poef,011.4 MM AGt0LnfAL 1*AL09f P00MC i_ Ost.I Re;0 Cro p_g5 -rlgstae C _oo Am. Yields mid Production Dflpp MAA oucrim lUe oLY To vatICn PImw IN TOTAL CROP own OF ( i&.) (1,000 TWO) MItI OM INC2WAL vraonm PFAMW PJRM OVAE PFAMW Fu~~~nom AGOE TO IWKUTS PROIJUCTIM WEA FNtlj $irrieted 17.4 24.1 S.? 8.2s 4.7 771 21 .4 6.7 Pme8.*ly 1 lrri.ed 0.0 0.0 0.0 2.80 2.60 0.0 0.0 0.0 NeWot 4.B 0.0 -4.6 2.20 2.40 10.6 0.0 -10.6 Subtotal 22.2 24.1 1.9 66.2 77.1 10.9 17.6 Vg.tel.md (1.9) (0) la Fll2 ittd 12.0 26.4 4.4 4.00 i.00 66.0 10.0 17.6 4.4 Prs"Il ly itt}"i 8.0 6.0 0.0 8.00 8.00 15.0 15.0 0.0 flefed 12.9 IS.$ -4.4 2.60 2.70 89.6 46.1 -11.4 Subteftl 49.9 49.9 0.0 162.6 168.7 6.2 10.6 P00 Fall Irril rd Z1.2 86.1 10.9 6.ll 6.E0 12.0 / 22.0 96.0 11.9 Part *e ly tri - 0.0 0.0 0.0 0.0 0.0 0.0 Walked 0.0 0.0 0.0 0.0 0.0 0.0 S.beeel 21.2 86.1 16.9 2.0 221.0 96.0 109.9 Wastelands. (6.9) (0) puxrO Fully . rrl 0.0 0.0 0.0 6.60 0.0 0.0 0.0 0.0 Partially irrIpted 0.0 0.0 0.0 4.20 4.50 0.0 0.0 0.0 Rlef.d 8.8 MS.$ 0.0 8.80 4.00 U11.6 116.6 0.0 Subtel 8=.8 88.8 0.0 U11.6 116.6 0.0 0.0 gtWDm hPtty u rigr. "_ 1.0 1.8 0.8 26.00 86.00 2t.0 45.0 20.0 i.0 (Pea o "em) Par ally nP098s 0.0 0.0 0.0 0.0 0.0 0.0 sibedd 0.0 0.0 0.0 0.0 0.0 0.0 Oebhoel 1.0 1.8 0.6 28.0 48.0 20.0 2B.0 Munn i4il Iriye 0.0 0.0 0.0 2.00 0.0 0.0 0.0 0.0 3 IVafe 0.0 ' . 15.0 18.0 0.0 1.20 1.J0 18.0 10.0 0.0 - Outol 15.0 18.0 0.0 18.0 10.0 0.0 0.0 W) St6m60 Fully Sr iew 0.0 0.0 0.0 1.60 2.00 0.0 0.0 0.0 0.0 etially lrri-wted 0.0 0.0 0.0 1.i0 1.10 0.0 0.0 0.0 flinfid 18.0 1.0 0.0 1.18 1.88 17.0 17.0 0.0 fSlbesl 15.0 15.0 0.0 17.0 17.0 0.0 0.0 SP0I00 I/ Fully ;rri9etd 0.0 0.S 0.5 26.0 .00 0.0 14.0 14.0 8.8 Pf6ZiStty *rilgwbSd 1.0 1.0 0.0 22.00 26.00 27.0 12.0 0.0 Relafed 2.0 1.8 -0.t 15.00 20.00 J0.0 .6 -7.5 Subtobal 8.0 8.0 0.0 i2.0 08.6 6.5 10.0 SUelS Fully u.Sted 0.0 0.0 0.0 2.00 0.0 0.0 0.0 0.0 Partially Irrigated 0.0 0.0 0.0 1.00 1.1 0.0 0.0 0.0 hlSRais 21.0 21.0 0.0 1.00 1.10 210 21.0 0.0 S9,6oalI 21.0 21.0 0.0 21.0 21.0 0.0 0.0 TOTAL AM FPllsirvyte 61.6 90.9 29.8 rtally irlow 6.0 B.0 0.0 blafed 114. 106. -.r.? TOTAL 1M.6 201.2 19.6 Oat CotthmSed Area 187. 170.1 18.9 Cr"opion Intaifty £16 1s1 0.00 Wies~et) l/sslsds 48).A.. cobbap ,I.ct woId also be plantd beto' paddy. Ii - 74 Annex 3 CHM ~~~~~~~~~Ta'Me 2 .1 all,.CUU T Pl§= "$ llanugoeg C s Budget at Pi l Development (YUSSAO Atit Cots aet C.i. baIrkea Pgeanut 41 I lot Chlaeae CebbCg, 1I1ma ILAt Pr.o Amt Valwe Amnabt Value LiOunt Voluv Aount Velue wmab Volvo A1 nt Voluv mount Valu* A. VltJbot ProJect4alafed C.ditl.a Yield tO" 065 1ot 1a 1 1.2 t l t0 Price I/ Y/t moo s1oe0 042 1250 * 73 10o5 440 Product Value Y 3300 1531 9n 1?60 IT"W 1320 4400 Opr.odtct Volve Y 410 04 90 s0o V0 0 0 Total vlue a718 16S 1053 1310 19611 1320 4400 Land Prearatlon "a '3/ba 1 30 30 1 30 1 so 1 30 1 30 1 30 Seede NoK 90 144 1W 202 50 76 so 120 I60 224 10 10 1t2 36 Orgpai. ftture tan 1O/0t 20 20 is teo to0 100 to t1 0 10 100 10 t00 Fortl I i Zee Ur" kg I .ks 20 416 160 240 150 240 so 60 80 6o so 126 1S0 240 PAP kg I.*/lsg 100 270 100 1iO 100 16 100 too t1o 160 SO 90 Peatici4de kg '2/g s 76 o.S 3 s 0 1 3 0. 13 0.5 13 0.3 6 1 26 S.eyer 40 40 1 40 IrrigeblA eOter as Y. Olies 0 0 Subtotal 1176 on7 638 623 621 266 472 "at Value 2340 tn 415 76T 1341 1054 3s26 Labor 300 120 130 100 t25 120 e10 Return pot Ibaday 8.6 6.4 3.2 7.9 10. I 8. 21.8 b* With Project-artIal irrigated ConditIon field ton 0.92 2.6 2.S 1.8 1.6 2 20 P.ice I/ Y/4t am0 1100 642 1250 1473 1o01 440 Product Volue Y NW20 2681 160 2357 2030 6600 Byproduct Volue 892 1i6 1SO 6o 250 0 0 Total Value Y e161 3037 1763 1935 2607 2030 680o Inputs Land Prpgratlen He '130/ha I SO 1 so 1 SO 1 30 1 30 1 SO 1 6o seeds KG 90 144 160 202 so 3s 6o 120 160 224 1o 10 I 5 43 Organic aurle ton '11/t so SW 60 30 10 100 10 100 18 1O is ISO Peorillsier Urge ke VI16/kg 300 460 200 320 200 320 l0 112 70 112 100 160 250 400 DLP kg '.01/kg 160 270 160 270 130 270 1t0 270 100 t00 1OO 160 60 90 Pletlicid. kg Y'16/kg 3 76 0.5 1S 0.6 13 0.6 13 0.8 13 0.3 a 1.5 39 Sprayer 40 40 1 40 IrrigatIon Water as '6eS 280o 164 2600 164 230o 184 230 84 200 164 2300 14 230o 184 Suttotal t126 139 1392 82n 693 672 978 Not Value 4866 1678 7e6 1106 1714 145 T22 Labor 3i LS0 t140 120 140 140 230 *eturt per lBnay 13.1 11.2 S6. 9.2 12.2 10.4 34.0 C. Wit Project-Fully trr.gated Conditlon Yield too 1.11 4 4 2 2 3 35 Prie I/ Y/t 6om0 1108 642 1230 1473 tOIS 440 Pro4dut Value Y esso 4432 2360 25O0 2946 3s0 16400 *yoredu-t Value ' 714 240 240 120 300 0 0 Totel Value 7374 4672 2we6 2620 3246 3045 1s400 Inputs Lard Preeralion a '130he 1 SO 1 S0 I SO 1 30 1 30 1 30 1 30 Sed. Ng 76 160 140 17 48 67.8 70 108 140 224 9 9 13 39 OreaIc Man ire to '11/b so 300 25 250 12 120 t1 1SO 16 t1O 30 300 pFrt: I er UWe kg Y1.6SA 600 460 300 460 280 448 70 112 *r0 112 100 160 3S0 s60 -AP kg Y'1.6g 280 .0 250 450 1I0 270 130 270 160 270 180 270 100 1go Pesticides ig 126k* 8 78 I 26 0.6 16 1 2? 1 26 O.s iS 1.S 39 Spryer 40 40 1 40 Irrigation Mwt aS d .006S 4600 360 4600 366 4600 86 460o 3s6 4600 368 4600 368 4600 386 S..eotal 1a" 10 1819 1061 1160 6o0 1s"6 mat Volvo 3476 2862 1469 1669 206 2195 13644 Labor 3O 160 10 tO 1eo 1eo Soo ieturn per mana 14.0 19.0 9.9 10.4 12.9 12.2 48.1 _.___- ------ -- - -- ---.- ------ - - -- ------------ --------- --- -------_-_--- -------- ---- ------------ HMOM7 A6UCMUtA.L DeJ AWJBr orthst Crop Sedwet at P Itt Dwelt Wi7t Rice heat Maize Srybma Peanuts Spi tch Seet Pot_to. UWit Price Amunt Value _ount Value Mount Value AMunt Value MOUnt Value Mout Valu Mount Value A. Without ProjectAened Condition Yield ton 2.2 2.6 1 1.2 1i 8.5 Price I/ Ylt 110 642 0 1478 400 4J0 Product V luwe 248 1669 1250 1768 6000 1610 Syproduct Vsalue V 112 156 60 200 0 0 Toul value Y 2670 1828.2 1u10 1967.6 6M 1610 Land Preparation ma Y80/he I s0 I 20 I 80 1 20 I 80 I 8 Seed" Ka io 202 0 120 S0 1 16 224 1.5 45 450 270 Orognic wmrr ton '20/t e S60 10 200 10 200 10 200 10 0 17 840 Forti I Ier Urea hg V1.8g 2S0 400 160 80 50 eo 200 m0 75 10 Am.Bloabonate Y..6/kgo 160 84 D?P kg n.sg 150 270 1oo 18 10o 1 loo 180 Petzetic V26/ka 0.5 IS 0.5 18 0.5 18 0.5 1s 1 26 0.8 7.6 Sprayer 0 (Plastic for sp4;nch) 86 0 lrrigation Water aS Y.06/uS 0 "utoutl 1075 597 681 72765 76 Mat Value 1495 14 67 12 2COS 942 Labor 180 14 100 125 200 120 Ratur *r Monday 11.5 8.8 6.8 9.9 26.7 7.0 b. With Projet-Partial Irrigated Condition Yield ton 2.8 a.8 1.6 1.6 21 4.5 Price 1/ Y,t 110 642 1220 1478 400 460 Product VUI e 8102 2119 1675 2a157 10000 2070 Spproduct Vale Y 166 196 60 260 0 0 Toutl Value Y 270 2516.6 1985 2l06.S 10000 2070 Landreparation me V20/ba I 80 1 80 1 80 I s0 1 so I 80 Seeds Ka 1s60 202 so 12.0 80 12 160 224 1.5 45 4AN 270 Organic Manure to Y20/t 10 200 1O 200 10 200 is 300 1 a0 7? 80 FertilIze &r Ur"e k Y1.8/kg 250 400 70 112 70 112 2S0 400 75 120 Nitrege kg 200 56U 08? kg VI. jk 150 270 110 270 150 270 100 160D 80 90 100 IS0 Pesticide k g Yi/sg 0.8 0.5 s18 0.7 18 0.5 18 1 26 0.8 e Sprayer 00 irrigation Water ex Y.06/08 2SO0 18m 2800 18 20 18 200 184 00 184 20 btout 12W 878 984 1045 1m 1182 Nat Value 1972 1444 1001 154 Om 9 Labor 140 s5 12D0 140 2SO 1I0 Return per ltoedy 14.1 9.6 6.8 11.2 25.7 7.2 aoi With Projet-Fulty Irrigated Cwndition YIeld ton 6.5 4.2 S 2 2 as 6.6 Prieu 1/ YJt 1287 1106t 642 1280 1478 400 460 Produt Value Y 66a6 4684 u 210 206C 29468 14000 24 76 Bproduct Value V 694 282 Sa0 78 80 0 0 Total Volue y s8o9 496 8510o 25788 26 14000 25176 inputs Lnd Preparation Hb Y8O/ha 2 6O 1 s0 1 So 1 so 1 SO 1 ao 1 80 El0, Seed Kg 16O a60 140 176 40 106 90 18 140 224 1.8 89 450 270 Orognic Manure toen Y20/t 10 200 12 240 12 240 1S 300 15 s00 21 600 20 400 Fertili,zera Urea kgVl.6/kg 47S 7M 80 56 20 448 70 112 70 112 m0 6o 1O UD Zink Salfate g 2 80 60 Do DAP kg V1.8Sja 217 891 18 264 130 270 180 270 150 270 100 180 1 27 Peticdes kg, Y26/kg 10 £5 0.7 i8 0.6 16 1 26 1 26 1.2 8s 0.6 18 Sprayer (Pset;i c I) 15 0 Irrigption Water No Y.06/08 l l050 840 4600 4600 aBB 460o 868 4600 868 4600 868 400 36 S"utouta 29 182770 1480 1241 188 17086 1 Net Valu e 6044 829 2080 118 1916 122 106 Labor So0 1n0 175 is0 160 Soo 140 Reurn per nday 20.1 20.5 11.6 8.9 12.0 41.0 7.6 CHIIU HEBI9 ARtICLLTURAL DEVELOPMENT PROECT Fors Model - Hot longpng Area 1/ Present-Without Project Futur-Without Project Future-With Project Other Total Other Total Othor T-tal Or1ins 8/ Crops 4/ Griann Crops Grains 6/ Crop. Area (Mu) 2/ 6.4 4.2 12.6 6.4 4.2 12.6 7.7 4.6 12.8 aros Valus (Yuan) 0/ 765.6 67.8 1,642.9 1,161.7 1,824.2 2,476.0 1,878.8 1,062.7 5,786.6 Animl Raistng 7/ 225 286 n25 Total Inc... 1,927.9 2,760.9 4,261.6 Operating Costs Land Preparation 18.6 0.4 26.2 16.6 8.4 25.2 15.4 9.2 24.6 Seed 75.8 47.6 128.6 90.5 47.6 188.8 68.8 52.9 111.7 Oranie Manure 60.6 46.7 107.2 98 65.3 161.8 66.5 78 164.6 Fertililsrs 209.4 117.6 827 262.6 164.8 416.6 892.2 284.1 626.8 Pesticidas 6.7 15.6 22.6 8.7 16.8 22.6 10.8 19.1 29.9 Irrigation Watet 0 46.6 64.8 60.9 168.9 112.9 801.8 Taxes 8/ 7.76 18.66 21.82 10.94 7.5 18.4 16.1 11.66 27.7 Other Cost 9/ 40.0 40.0 80 40.0 40.0 60.0 40.0 40.0 60.0 Feed 100.0 100.0 110.0 Tot l Cost 417.0 289.9 60B.8 560.0 868.4 1,048.4 808.7 657.8 1,866.6 Not Value of Production 848.6 567.4 1,121.1 691.7 940.8 1,717.6 1,068.1 1,804.9 2,870.0 Other Income 10/ Feol ly Income Faml ly Labor (ianday) 11/ 68 66 168.0 76 77 208.0 79 98 287.0 Return per MotuAy 6.0 8.6 10.0 Per Capita lncom 12/ 260 429 598 1/ A typical household haw 4 fml ly meomrs, husband, wife, a child and a grandparent. They have 480 workdays avi lable. 2/ Total al located ar Is l mu for which 8.8 mu for whet, 2.8 for cotton, 1.4 for mil let. Summer crops are 2.6 m for maize, 1.4 for peanut. and .4 for soyben. 8/ Groins are wheat, maise, ml1let and soybean. 4/ Other crops are cotton *nd peanuts. 5/ Area producin maize and millot is reduced to expand area producing zotton from 2.8 mu to 8.2 mu. 6/ See detail ca culations in the proj ct file. 7/ Animal raising Includes I pig and I goat/shep without the project, expand to S gota/shep with the project. 8/ Form tax 2W of not lncome. 9/ Costs of sprayers. 10/ No other employment opportunities. 11/ Labor used for far ing plus 60-60 days used In anianl raising. 12/ Based on 4 parmon per family. 04DIA HEBEI AGRICULTURAL DEVELOPLENT PROJECT Fare Model - Northeast Area 1/ Pre"snt-Without Project Fature-Without Project Future-With Project Other Total Other Total Other Total Graons 8/ Crop 4/ Orian* Crops Grains, / Crop. Ares (Mu) 2/ 7.0 0.0 7.8 7.0 0.8 7.8 11.0 1.8 12.8 Gross Valuo (Yugn) 6/ 1468.6 88.8 1671.6 1576.8 100.0 1878.8 4459.2 809.8 4768.6 Animal Raising 7/ 290.0 290.0 625.0 Total Incom 1681.8 1986.8 5298.5 Operqoi ng Cost Land Preparation 20.0 1.6 21.6 20.C 1.6 21.6 84.0 8.8 87.6 Seedb 90.9 8.7 99.6 00.9 8.7 99.6 169.1 28.4 212.6 Orgnic Manure 81.8 8.5 89.6 68.7 8.6 96.2 180.0 41.8 201.8 Fertilizers 186.9 12.6 199.7 186.9 12.0 199.? 681.5 48.4 729.9 Pesticldam 24.8 0.6 24.9 24.8 0.8 24.9 106.6 2.4 109.1 Irrigation Watar 20.0 0.0 20.0 20.0 24.6 44.5 468.7 44.2 502.9 Tanxe 8/ 9.5 1.5 10.9 9.6 2.0 11.6 84,1 4.1 88.2 %4 Other Costa 9/ 40.0 40.0 80.0 40.0 40.0 80.0 40.0 40.0 80.0 Food 120.0 120.0 180.0 Total Costa 47n.9 78.7 68B.5 478.4 98.7 697.0 1704.0 207.4 1911.4 NHt Value of Production 1010.6 14.6 1196.8 1097.9 1.8 1269.8 2755.2 101.9 2857.1 Other Incom 10J Fmi ly Incom Family Labor ("mnday) II/ 75 7 182 77 7 127 176 16 254 Return p.r Manday 9.1 10.0 11.8 Per Capita 2ncome 12/ 299 817 714 1/ A typIcal household has 4 family members, husband, wife, a child end a grandparent. They hev 480 workdays avalable. 2/ Total ellocated area is 7.8 mu for which 2 mu for ries, 2 m for wheat, 8 au for maize, .2 for sweet potatoes and 0.6 mu for peonuts. 8/ Grains arm rice, wheat and eaize. 4/ Other crop. are sweetpotatoes and peanuts. S/ Each fmily will have 4 mu roelaimd from wastlands for rice. Irrigation water will enable to plant one More o g of summer crops. 6/ See dtetI c lul ations in the project filI. ' 7/ Animl raising Includes 1 pig and 1 goat/sheep without the project, expand to 6 gos/shep with the project. 8/ Far teax 2 of not income. 9/ Costs of sprayers. 10/ No other mployment opportunities. 11/ Labor use for forming plus 50-0 days ume in animl raising. 12/ Based on 4 parson per fmily. - 78 - CHINA Annex 3 HEBEI AGRICULTURAL DEVELOPMENT PROJECT Table 4 Rent and Cost Recovery ------------------------------------------------------_--------__------------__--- Northeast Heilonggang Total (60,000) (480,000) (540.000) ---------------_-----------------------_----_------------__------------------__--- (Y'000) At Full Development Incremental Income a/ 98,700 744,480 843,180 Lests Imputed Value, Family Labor b/ 35,136 117,504 152,640 Imputed Value, Management Services c/ 9,870 74,448 84,318 Imputed Return to Own Capital d/ 4,935 37,224 42,159 Allowance for Risk/Uncertainty c/ 9,870 74,448 84,318 Subtotal 59,811 303,624 363,435 Equals: Project Rent 38,889 440,856 479,745 Project Charges Water Charges e/ 21,000 144,960 165,960 Taxes fl 4,935 37,224 42,159 Total Charges 25,935 182,184 208,119 Rent Recovery Index (2) g/ 67? 41? 432 During Project's Life h/ Project Rent 217,900 1,446,600 1,664,500 Project Charges Taxes f/ 15,560 85,090 100,650 Water Charges 21,000 144,960 165,960 Interest and Loan Repayment il 156,540 333,468 490,008 Total Charges 193,100 563,518 756,618 Rent Recovery Index (C) g/ 89? 39Z 452 Project Costs j/ 256,360 691,200 947,560 Cost Recovery Index (2) k/ 752 822 80? a/ Based on the incremental income of farm families in the farm model analysis, before deducting project charges and debt service. b/ Based on incremental labor valued at 802 of the market wage. cl Ten percent of incremental income. di Five percent of net incremental income. e/ Based on Y.08/cu meter. f/ 5? for crop and livestock, 102 for aquaculture and 5.75Z ::r dates and pears. g8 Project charges as a percentage of project rent. h/ Expressed as present values over 20-year project life, discounted at 122. i/ On-lending rates for agroindustries and aquaculture at 19.242 for 20 years and 14.4? for livestock for 8 years. ji Total project costs excluding farmer labor contribution, costs of support services (repaid from service fee). k/ Project charges as a percentage of project cost. - 79 - Annex 3 mlXNA Table 5.1 HEBEI AGRICULTURAL DEVELOPMENT PROJECT Livestock - Summary of Financial Analysis Items Annual Net Return FRR NPV at 12% (Yuan) % (Yuan) Sheep Breeding and Fattening (Alfalfa) 7,054 24 21,111 Sheep Fattening High Yield Crop Farm 1,512 29 5,634 Beef Breeding and Fattening 2,205 31 9,795 Beef Fattening High Yield Crop F&nrm 8,014 33 33,081 Sheep Fattening 7,915 39 36,308 Beef Fattening (Alfalfa) 8,752 47 39,716 Beef Fattening 30,642 68 30,642 -- _, -- - - -- -- -- _- -- --. .-- -- -- --,-- --_-- --. - - 80 Annex 3 Tab le 5.2 ,CHIN HEBEI AGRICULTURAL DEVELOPMENT PROJECT Aauaculture - Summary of the Financial Analysis Ainnual Items Incre. Net Return FRR NPV at 12% (Y'000) % (Y'000) Rehabilitated ShrimD Ponds -Changli County 1,117 48 21,552 -Fengnan County 1,563 46 8,435 -Loating County 2,829 43 19,946 -Luannan County 4,264 47 23,673 -Tanghai County 2,631 47 15,458 New Shrimp Ponds -Changli County 1,444 42 27,468 -Tanghai County 1,190 56 9,4i6 Fish Ponds -Fengnan County 2,576 43 13,846 -Laoting County 1,181 46 5,964 -Luannan County 852 48 6,004 -Tanghai County 2,281 41 11,724 Scallop Production -Funing County 2,247 40 13,178 _------ ------ _ ... --.--- ------ -.---- . ---_- ------ ------ -.- _. 04M MM ACOUCLLTURAL DeVtLOMW PRDJWT C-P "D", cotoo Insercropso ioft C'sine Unit Cost pvt PY2 PY3 PY4 PM pyo p" pya PY9 PYIO Pyl-I VW PY13 PY14 PYIS PYIS Pyl? pylg png pM Yield -Wk"t Itarim? Tor 3 3.i 3.8 3.7 4 4 3.6 3.9 3.2 3.2 S-2 3.2 3.2 3.2 3.2 3 3 3 3 3 Yiold -fttea ton/he Tor 0 0 0 0 0 0 0.6 0.9 1.2 1.5 2 2.5 2.5 $ 3.9 3.5 9.6 5.5 0.6 3.5 Volue of 04"t Yoor YUOD/t 3,WO 3,410 3.850 4.070 4,400 4.4M 3.9" 3 980 3 52D 3 520 3,m 3.62D 3 S.= S'm B,wo 3 X* 3 300 3.3CO 3 300 0 0 0 0 0 1000 isoo 9w,- iam- 4000 5m iFO6 sm 7000 fm fFA, +5W- 7000 fi-W Vs Iwo of Fresh cot" yier ygm/t 0 S20 ymon 3.300 3,410 3.9W 4,070 6,41W 4.400 4.910 $.SW S,M O.M 7.5w S.W BAM 9.52D 10.50 10,300 10,900 10,300 20.300 10,300 LOW PP"Orbtion 30 40 30 30 BD 30 30 30 30 So So So 30 $04,410 YO. 0 9! so 30 90 30 30 so 30 0 a 173 175 175 175 173 179 173 175 173 373 17S 170 173 17S 27S 17S 173 175 175 17S npfoic "Oft?. to" Y10ft 250 26D 250 250 250 250 250 2W 260- 250 290 290 2so 2W 2o 2w gW 2W 2W 2W Ures I'll Y1.41ke 480 400 4M 480 4W 4M 490 4W 400 4W 4W 490 4W 40D 400 490 dft 49D 400 480 -W(0-40,O) k. V1.9/ke 450 480 "D 450 450 450 450 450 450 450 430 450 450 4W 450 450 450 450 430 480 Pasticites 11 Vs/kg 25 29 2D 29 29 24 26 26 26 26 26 26 26 26 26 26 26 26 26 29 Sprov- no. Y40 40 40 40 40 Irriptica water me V.09/02 m SU 30 SO 308 M JIGS 80 308 M 309 M M 3M We M M M M M &ob4w obed" Yelad M 7M 75D 7M 70 TM 7M 730 750 M ?W M 730 750 750 M 700 ?W 7M 730 Svbtoul Production oang 2069 25" 209 209 2829 2M 209 25M 209 MO 25" 2529 26" 2m 21509 2=9 2529 2520 2M ftt 1#0100 of Whmt m "I tm tul tal ml Sol ml 991 "I 951 "I "I 91112 942 M 771 771 772 771 Plot Volvo of *40t witbftt d"o 2LB 210 210 21M 220 2125 210 21U 2M 210 2M 2M 2M 2LU 2M 2M =0 ZO 00 M" &~ -IM -1244 -04 -564 -254 -294 -M -694 -%W -1"4 -1174 -XIM -1134 -1134 .1134 IM .13154 _IW -IM Dooe lowsobmnt Cos" Load Ps om- tion Plopios he OPOgnic Fort; I i"r tm Yo/t do 90 Lobgw ""Way Yalud 29 5 Somill ions, b"di ins Yt 260 so Port', I I soft -#^.Si= b-, lto(17*0 ko Y.391ke St le Phosp%Dfom(22wm) V-20/ko 2e 14 w0wt " 31 YS/0 29 5 Irrisation Cost le 0 ftre Implament, "D. &O TSUI Invest. coat 764 172 Orpoig Ob"re tm Yo/t Imputs, frm %shoot 6 I a 9 so 10 10 10 to 10 10 10 10 040,0601 Fort.-Ures KO Vs.$/kg 00 Go so so so so so so so so so so so so lW4Mft PAWUiPOOMt fOr *St* lbifttfRW4* PoWeld" TX/kg 0.3 0.5 0.5 0.9 0.8 0.5 0.4 0.5 0.5 0.7 0.7 I I 1 1 1 2 I I Laboo, VS/md 20 25 so 84 40 45 45 45 45 Alb 45 11 45 Y.08148 bewof i tod ffte votop prismsed vk"t Cripm;# obowv Y/tm VIDIS 100 10 140 140 10 200 200 200 900 200 M M 00 M Cbma'scal Po-t.-UPM Y/ke n-9/ke so so so so do so so OD so so so so so Casio pe"iesdes Y/he VU/ko is is is is 33 13 13 is is is is 29 20 28 26 26 26 29 vs Labor Tied vsins I= NO IM 210 M 00 270 VO 270 VO M 00 la 270 8"-T*Uf . Operating CoMe 38 is is 33 33 13 BU US 418 4ft $10 06 PO $76 578 SM M 579 PI WS letiotice vlog V.ilillse Toul Cos" of Votes m m is 18 is U $14 30 413 469.2 518.2 we 57S an PS sm a" Si$ Po as "" PA"rao -M -M -13 -13 -18 -13 OR =7 IWT 2531.41 301.8 404 4494 5426 604 604 $424 404 404 GM Mt Pmmmt To I"* 11.134 F$oommeol lbte of Rtturn 412 Tofat Ce"s 4,M 3,9W 8,346 9, 10 2 T" 2 eye 4 076 4 231 4 202 4 239 4 239 2" 4 259 4 sn 4 430 4 450 4 450 4 459 M" PAVh" (2.440) (W md 9" I: W4 1:324 '11,24 '1:'974 1:944 2:3ft 3:259 4:282 4:2BI 151:2el 4:2BI 5:761 5:841 6:841 5:842 3:841 obt Prommik v* IV* 12.9" Financial Phim of fttum 471 HEI latUUTRL Devj TE PRWEUT Crag 1ee - Post (NM Orcor,d) u". z Cet Prl PV2 PYS tPY PYs PVf PY7 r ss PY IO PYIIn PY12 PnS PY14 Pn5 PY16, PY^? t'Y18 frY19 WMf Pr;. d I/ 0) I oQO I OX 0 I XO I 000 I 0oP I 000 I OQ NlOO 1,0 LW.000 1.000 1X 1,000 1 .0 I 00 oP 1 oo1 O Pe., *came 2 000 4: 0Q 00 8 0QOWi O 16 000 17 0Q0 20 0Q0 2S.OOO SO OQO S5,00.t SSOQ5,000 SSOD OOO00 SS,OOO 35 000 SS OQO :"ot_ft Co" _4td Prptrstin o ,'-9 Fertiliz;er 2V nl:tr.s 0o sO Loor 4; Y5/{d 2SO ut Co"- ^S" Iti he 4/ Yn.ot - i 3SO . E .:Ots; I i sto- *AP S/ n I /kgtt ow L-mber St 2XSI 250 25 Sua"Ilowett. Co 1 e044 4a4 'NWA* Rmirwt for Tre obns ,m Omri f Frt' -UP" Kg g 0 200 SOM 4tO 4tO 80 S to SW OO 6JO SW eSO gm SW Uo ecO no SW r Chemicl Fort.PW Kg 0 0 1O 00 20Q 511S SOO 400 4tO 450 teo tQO SOO teo teoD SOO seo No SWo SOO Pest:ci It 0.3 O.S 0.S I 1.S 2 2.5 a 3.s 4 6 a S S S a S 5 5 J rigt *i" 0 0 2,30 240 4d° 4oo.8 00 4.004 o0 6 4 eQO 4 eQ° 4 eOO 4,tO0 4,eOo 4,tQO 4, 4,teo 4,eOo .o .w Ct9 ie "wirii, YIOto ° 0 i0 200 200 =0 2o 250 260 2tO O SQO 390 SS Sti SEO SSO JSO SOD ss 3 O_;csi fort -urM n1/ ho O o M 4SO t2 20 7 eo MO o ofo 96 o.4 1o 4 1, ,0O .o lOo 1.040 1,040 1.040 1.040 1.0 o 1,C40 I,o Chre;eal prt- P i n h S O 4s0 t20 B1 eso SWo seDMo 9 00 'ee ceo eo 900 Noh soo 900 seoo g S*ab-te'~ ~ ~~ir 0|86, itlt lS 2 s 2 2S2 2 45S s 02 61 S 1 10 S4 6ae 4,tt is IN is noW INu in U8ls8wte n 6 tAb'o6 l Oatn Cost 131 1t7 S9 1'025 1.50 2.252 2A 3. 5028 3,4es 3a sQ4 *'62 4,tSB 4 .t 4 4't an6 4,U8 4 es8 4'6ts 4'6es 4,Me 4,MS Not R*v (2 s7T) (W?)(1 025)(I sM) (22 1.1545 4.972 6, SSO ll lf OUea 15 362 20 332 25 312 So SU2 SO,S so,30SU 30 3JU SO 312 ttO1 SU 2S027 klo P_sm Vo u Sam2 Rac@"teX of Rwavr 40 8f tiN"l S7 yf~~ts St thefory. 89 4f reo _d I t Y.ortIie tSJ Now-~*tt"i * w1f 4/ ;, 5 d t 6_g Si DAP SO -9 b X 0to MM ACRICUTIRAIL OIEsVIEPsr PRDJ£CT Crep MDeI - Poor (fehet. itoted OrhaCrd) I/ unit Cost PY1 PV PY3 PY4 P3S Pre PY7 PYS P7 P10 PI P12 PY1S PY14 Pn1 PY16 PY17 PYJ Pt? PY20 Rereeve Itte l .i Yield eb/) 0 0 1.2 1.5 2 2.5 a S.$ 4 4.5 S 5.5 a 6.5 7 7.5 a 8S. 9 to Price, _ /s) 2 '1.0t0 Ieco 1,000 1 000 I000 1 000 I 000 1,000 1 000 1 000 1 000 1 000 1 000 1 000 1 OO I 000 1 000 100)0 ger xo1.2 1,500 2.oo0 2 .0 0 2S.COW s50o 4o000 4.500 5,000 s5 0seooo 6.s0 7e000 7Q00 6.000 6C00 9.000 o,00O0 Inceme~int10.I ingu fta.i g.mpa for Tree Wnomesace Orgoic pbere te a 5 5 7 7 7 to 10 10 is R 1S 15 15 is Is 15 1i 15 Ch_i,aeI Fge.-Wr Ka 5O U) 7S 75 75 100 100 100 1E0 180 200 .J 200 2C0 200 200 200 200 200 200 Cheelcal P.r%.-P Kg 40 40 s0 so 73 75 100 100 100 tS0 1S0 10 10 1SD 18 18 180 180 10 SW0 Pwsti cides I. 1 I 2 2 2 2 a a 3 4 4 4 4 4 4 4 4 4 4 L as. s,e 5. s 10 1 15 2 40 60 eo 70 70 70 70 70 70 70 70 70 Irrigtion Cu e 2,S00 2,.0 2.200 2.210 2,20 2,400 2,800 2,500 2,200 2 "A 2,800 2.8tO 2.,00 2.200 2M800 2.,00 2.200 2.,00 2.20 2.800 Tr" lb,t.ence Caste PrDeaic "bw.r Y710/. s0 S0 5O 70 70 70 100 100 100 1 10 lSO 180 l10 180 180 180 10 180 IO CheeiUlc P.rt.-4Se 71.ehep 80 E0 120 120 120 160 uo 1S0 240 240 320 20 8 M0 M2D S 20 20 220 M CbeoletI Fort.-MP 71.5A/k 72 72 0o 185 18 80 1 1N0 270 '7 20 270 2 270 270 2o 270 270 270 Pesticides 726/ 26 26 26 e2 52 52 52 78 7o 78 104 104 104 104 104 104 104 104 104 184 Laker 5O.OS 2S 25 2 to s0 75 1CO 160 2C0 260 SD0 850 Si S SO 80 MD S0 250 80 0SO SaO !rristie. Y8.08/0t 184 14 184 14 UK4 164 184 U14 We4 184 M14 1UK S" 184 I*4 2*4 1We 14 MM4 14 P lem chi.ery La 73 7s 7n 73 7n 73 75 7s 7 280 150 IS8 INo tSO 150 UO 180 lSO t10 7.I Operating Costa 512 312 570 641 ew 751 61 927 1067 1,32 1,47S 1,52 1.25 1,2 62 11652B 1.2112 1,52 I.526 . 16I Not R"seu (52 (812) 620 9 1,81, 1,749 2.149 2,578 S:4 8.178 8,52 3.2 A4,72 4.92 3.472 5,972 6.472 692 7.472 637, ? Mol Pre"at Volve I4M2 Plnaiicia ROUt. P44 Re.. 76 1/ RehablIitetion of 120 yeer old tee". 2/ heed on porchesd price at the fer, in 1964. OD Vw IDal :1W Co - 84 - Annex 3 Table 6 CHINA HEBEI AGRICULTURAL DEVELOPMENT PROJECT Main Conversion Factors Used Standard Conversion Factor a/ 0.86 MachinerylEquipment b/ 1.50 Energy - Coal cl 1.40 - Gasoline 1.60 - Diesel 1.10 - Electricity 3.70 Transpot - Road 1.20 - Rail 0.90 Cement 3.00 Steel 1.90 Labur - Unskilled 0.80 - Skilled 1.60 - Management 2.00 - Technical 2.00 Other Non-Traded Goods 0.90 Earthworks - Aquaculture 0.84 - Irrigation 0.79 Structures 1.02 a/ SCF -(Official Exchange Rate)/(Shadow Exchange rate ) - 4.7/5.5 bI Based on conversion factor of 1.0 for imports under ICB and 1.5 for locally made machinery and equipment. cl The other conversion factors are based on The IBRD's Economic Prices for Project Evaluation in China. January 23, 1990 and actual financial prices prevailing in Hebei Province. - 85 - Annex 3 Table 7.1 ewu HElEI ACU.TUAi DEVELW?IENT PROJECT Border Priae for Principal Proucts an Inputs (1990 Constnt Prices) */ Cotton RIcO/ Whet Corn lost Paddy Penuts b/ Soybean Urea TSP DAP Mot Trsd Status U X X X X X 1 ii 1990 Prices World Varket Prices:(USA/t) 164 100 lo 286 268 270 126 140 160 Ocen Freight:(U18/t) 45 22 44 44 26 26 84 84 64 CIF/F09 Tianjin (USS/t) 229 78 1766 241 288 24C 159 174 184 CIF/FOB Tionjin (Yuan/t) e/ 1076 867 8253 1188 109t 1152 747 618 912 Port Chargs and Ditributors' Margin d/ 122 so 766 127 124 129 92 n9 107 Transport-Port to Wholealers e/ 45 45 67 25 07 6T7 2 62 82 -Mi II to Wholeslere f/ 12 12 12 12 12 12 12 12 12 Ex Factory Price 1266 251 740 969 692 944 684 9B1 10U Procesing Adjustmnt 703 Procssing Costs 6o s0 By-product Valus 60 8o 460 172 0 0 0 0 mll gIate Value 1110 261 7608 600 692 944 664 961 1068 Transport- Fare to Hillg / 5 5 S 6 5 5 6 5 S Economic Farmgto Price 8l11 276 7601 78t 666 989 679 9SB 1016 Financiel Faregate Price b/ 1267 642 6426 1287 1478 1250 1600 1200 1800 2000 Prices World Market Price:(USS/t) */ 168 106 1574 289 280 216 1SO 208 269 Ocean Frelht:(USSA/) 4C 22 44 44 26 25 84 U4 U4 CIF/FOS Tianjin (US2/t) 208 84 1451 196 205 191 214 287 80 CIF/FOB Tianjin (Yuan/t) c/ 976 89S 6821 917 664 699 1006 1114 1424 Port Charge and Distributors" abrgin d/ 11$ el 689 107 112 106 1t1 125 158 Transport-Port to Whol"oler e/ 45 45 67 19 67 67 82 82 82 -Mill to Wholeslers f/ 12 12 12 12 12 12 12 12 12 Ex Fectory Price 1148 277 6108 778 778 718 1166 1264 1622 Procesting Adjustment 701 Procesing Cosa 60 50 By-product values so 80 460 1t 0 0 0 0 Mill gate V lue 1208 807 S60 667 778 71a 1166 1264 1622 Transport- Frm to Miill g/ 6 5 5 6 5 6 5 6 5 Economic Farpgat Prico 1208 802 6496 662 766 708 1161 1279 1617 Financial Forga t Price h/ 1267 642 6426 1287 1478 1200 160 1200 1600 o/ Boasd on World Bank Comodity Price Forcasts, January 22, 1990, adjusted to 1960 constant priceo. b/ Based on projoeted price of peanut oil and Mal, asuming thot a ton of unshelled pe nuts yield 0.25 ton of oIl and 0.46 ton of mesl. c/ Exchang rate of Y4.72 a USf1. d/ Port cfarge of Y2/h plus OX dltributor'o margin. 0/ DIst4nce from Wholealer to port io approxiately 75 km (Tangahan to Tianjin) and 200 kmb(Hilongsno to Beijing) by roId t YO.26/ton/k adjuted by 1.2 CF. (185 km io usd for whet, corns fe rtiizers) f/ Distance from ill lto Wholelr Io approxmtely 50 kg by road at Y.02/t/ko, djusted by CF of 1.2. g/ Distance from farm to Mill i 20 m on r by ro t Y.02/t adjusted by oF o 1.2. / ased on welght verge o 19 cont, ngot nd ket pric n Habel. - 86 - Annex 3 CHINA Table 7.2 HE8EI AORICULTURAL DEVELOPMENT PROJECT Border Prices for Llvestock and Aquatic Products and Inputs (In 1990 Constant Torus) Fish Beef */ Lamb b/ Wool c/ Shrimp d/ Date. Mm l b/ Not Trade Status X X H X X U 1990 Price" World Market Prices:(USS/t) 2600 2890 8662 7618 1200 488 Ocean FreIght:(USS/t) 6o 6o 26 6o 25 84 CIF/FOB Tianjln (USS/t) 2540 2880 8e6r 7568 1175 472 CIF/FOB Tianjin (Yuen/t) f/ 11988 10961 17829 85628 5628 2218 Port Charges and Distributor' Margin g/ 1099 1011 15s6 8222 522 226 Transport-Port to Wholsalers h/ 45 46 82 84 67 82 -Processors to Wholesaler I/ 12 12 12 18 12 12 Ex Factory Price 18095 9868 18968 82246 4921 2487 Processing Adjustment (X) 50 55 6o 6o so 0 Volvo after Adjustment e647 5486 11875 19849 2461 0 By-product values 220 889 20 0 0 0 Processing Plant gate Value 6767 6 n 11805 19849 2461 2487 Transport- Farm to Plant 3J 7 7 t 7 5 t Economic Farogato Price 6O7 5767 11890 19842 2458 2488 Financial Farmgate price 8460 8500 12600 19000 2000 8000 2000 PrIces World Markot PrIces: (US$/t) 2886 2e65 8662 5948 1080 488 Ocean Freight (USS/t) 60 so 26 e0 26 84 CIF/FOB TianJin (USS/t) 2826 2659 8667 58a8 1055 472 CIF/FOB Tianjin (Yuan/t) f/ 18282 12187 17829 27674 4069 2218 Port Charges and Distributors, Margin g/ 1220 1122 1s85 2616 471 226 Transport-Port to Wholesalers h/ 46 45 82 84 67 82 -Processors to Wholesaler, I/ 12 12 12 18 12 12 Ex Factory Price 14660 11008 18988 26106 4408 2487 Processing Adjustment so 55 6o 6o so 0 Processing Costs 7290 6054 11876 15068 2204 0 By-product values 220 889 20 0 0 0 Mill gate Value 7600 6898 11896 16068 2204 2487 Trsnsport- Form to Mll J/ 7 7 6 7 C 5 Economic Farmgate Price 7408 ease 11890 1506e 2199 2488 Financial Farugat. Price 846 8500 12600 16150 2000 8000 a/ Basd on World Bank Commodity Price Forcasts, January 22, 1990, adjusted to 1900 constant prices. b/ Based on World Bank Comodity data, January 26, 1990. c/ Dominian Crossbred 656s, clean CIF U.K., adjusted for 1900 price. d/ Weighted average of CIF/USA prices for Chinese AAA In February, 1990. Assuming that the price will reduce by 6S each year for five years and remin constant at that level onward. */ Prices received by FTC In 1989, adjusted to 1990 level. For year 2000 assume that price will reduce by 10X. f/ Exchange rate of Y4.72 = USIl. g/ Port charges of Y25/t plus 9X distributor's margin. h/ Distance from Wholesalers to port is approximately 76 km (Tangshan to Tianjin) and 200 km eHllonggang to Beijing) by road at YO.88/ton/km adjusted by 1.2 CF. I/ Distance from Processing Plants to Wholeslers is approximately 60 km by road at Y.03/t/km for meet and aquatic products, end Y.02/t/km for others, adjusted by CF of 1.2. J/ Distance from farms to prooessing plants is 20 km on average by road at Y.03/t/ko, adjusted by CF of 1.2. - 87 - Annex 3 Table 7.3 CHINA HEBEI AGRICULTURAL DEVELOPMENT PROJECT Shrimp Feed Price ------------------------------------------------------------------__---------_ Compo- Unit Pricelton Feed Cost/ton Items sition --------------------- ------------------- z Financial a/ Economic Financial Economic ----------------------------------------------------------__-----------------_ Soybean Cake 35 950 713 b/ 333 249 Dried Fish (S. China) 8 2,700 2,430 cl 216 194 Shrimp Head Meal 5 1,300 1,170 c/ 65 59 Fish Meal (Imported) 18 3,000 2,483 d/ 540 447 Peanut Cake 5 1,024 1,034 e/ 51 52 Soy Flour 5 1,300 975 bI 65 49 Wheat Flour 15 993 1,011 bl 149 152 Corn Protein 2 4,900 2,107 bI 98 42 Yeast 5 2,400 2,160 cl 120 108 Amino Acid 1 2,400 2,160 c/ 24 22 Vitamins & Minerals 1 5,210 4,689 cl 52 47 Binder 0 Subtotal 100 Milling Costs 40 36 Sack & Materials 40 36 Labor 7 6 Other 0 0 Feed Cost per ton 1,800 1,498 -----------------------------------------------------------------__----------__-------- a/ Based on Luannan's feed formulae and average of prices. b/ Based on relationship between financial and economic prices of soybean, maize and wheat. cl Conversion factor for non-traded goods of 0.9 applied to the financial price. d/ Based on January, 1990 fishmeal export price (fob Chile) of $438 per ton. e/ Based on price of peanut meal of US$195 per ton. - 88 - Annex 3 Table 8.1 CHINA HEBEI AGRICULTURAL DEVELOPMEN PRJCT Summary of Economic Analysis .. .. . . ..... ... .__. ............................. ......... .......................... .. Switching Value at 12% NPV at Base Case ---------------------- Components 12% ERR Costs Benefits (Y'000) (%) (%) (%) 1. Crops -Northeast Region 124,600 24.3 19.6 -16.4 -Heilonggang Region 930,900 37.4 22.8 -18.6 Total Crops 1,055,500 34.3 22.4 -18.3 2. Aquaculture -Shrimp 63,900 30.1 17.4 -14.8 -Scallops 14,400 63.3 126.5 -55.9 -Fish 15,000 27.9 12.6 -11.2 Total Aquaculture 93,300 30.4 18.7 -15.8 3. Livestock -Cattle 91,300 30.6 9.3 -8.5 -Sheep 55.300 40.6 17.6 -15.0 Total Livestock 147,600 33.4 11.4 -10.2 4. Date Interplanting 255,300 42.6 520.0 -83.9 5. Pear 112,800 54.3 224.9 -69.2 TOTAL PROJECT 1,545,300 32.4 24.6 -19.8 MM *OULTUnxL tDV W 60J02T s~~~~~~~~~~~~~~~~~~2e M* 2ftO 1990 1991 1992 198 1994 1995 3996 1997r 199s 1999 200t0 200: 2002 200 2004 20os 2006 2007 2008 .c 2010 14 0 14.8 1.1 C..tl. 46.6 47.6 8,0 tk1w7 r 44i.7 0.4 I1.$ 19 SaIl. ~~~~ ~~2.6 8.1 1.0 Plai 11.4 7.5 1.0 C __ft.wttst 42 4 ts.7 57.9 14.5 2.7 Croo4pt.l 4 1116.6 184.8 114.0 40.2 14.1 Pre 8. 2.0 &. sIlsta. t M 32.7 80.0 172.2 564 16.a 0.0 Peemilitia" Caste Sheep C"t S26.8 45.83 87.6 6.9 41.2 46.0 46.0 4.0 46.0 416.0 46.0 46.0 46.0 46.0 46.0 46 0 46.0 46 0 46.0 46 0 46.0 Cattle 4;.s5 9.56 12.6 181.2 186.8 18.3 18.8 13.3 1i.8 18.3 18.8 VS.S IN S 185.8 16.8 18.3 1tS.S 1i*6.8 3 136. 3 I. .8 Shr6ip 16.7 56.0 42.6 42.8 42.6 42.6 42.0 42.o 42.0 42.6 42.8 42.8 42.0 42.6 42.8 42.8 42.6 426 426 42.0 42.6 $"too"p 0.2 0.7 0.9 0.9 090 0 9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0 9 0.9 0 9 094 094 0.9 0.9 Feet 6.5 32.4 15.0 1.0 IS.0 15O 0 3t.0 1s 0 16.0 i5 0 1i5. O 5.O 18.0 15.0 1s 0 15.0 1s 0 18.0 15.0 15.0 15.0 Ce.ep*-ftrtA...t 69. 69.1.1 10 69.1 59.1W s9.1 691 6 1 59.1I 69.1I 69.1 69.1a 69.1 69. S9 I 69.1 69. 69.1 69. 09.1 59.1 c'99e40*..g.n 0,0 30°.0 40.0 465.0 662.0 66.0 646.0 446.0 6461.0 646.0 64.0 6i4.0 6416.0 6460 6416.0 6440 6 60 6416.0 644.06 66 646.0 f.. ote4..g"."ll 0.2 0.1 0.1 0.5 0.0 0.8 0.4 0 4 0.5 0.6 0.5 0.5 0.8 0.5 0.5 v.5 0.1 0.5 0.5 0.5' 10.5 pse.s 1.6 0.9 8.8 4.8 A 4 S 0 7.0 6.O 9.9 11.4 12.7 12.7 12.7 12.7 12.7 12.7 27 127 32.7 32.7 12.7 "9tou Prd.astin 170.1 867.0 716.8 79.5 eW.o 96M 4 eg 96s e4.s 966.5 968.0 969.8 91e9.8 99.8 969. 99.3 6.3 c96.8 919.8 96.3 99.8 969.8 You. Iot.47.6 90.0 6119.0 a4. 0. 92 6. 964.5 O66.5 966.0 969.8 96. 6. 6. 698 99 99899.3 959.3 969. 99.3 Saeep ~~~~~~~13.8 34 4 46.3 64.1 66.8 M 4 59.4 59.4 59.4 59.4 66 4 69.4 59.4 59.4 Go94 594 94 59 so4 Be94 "'A 69.4 CettI. 6~~~~~~2.1 117.0 15n.8 17.1 167.1 157.1 167.1I 157.1 157.1I 17.1 157.1 157.1 157.1 157.1 1I7.1 157.1 157.1I 157.1 7.1 % 15.1 W15. c ..gp 88.0 60.8 67.6 68.5 so67 51. 86.7 as. 7 6.7 o6. 7 6a.7 W 56.7 6..7 66 66.7 6. 7 56.7 St7 3.7 66.7 'I 6.I Sal epa ~~~~ ~~0.6 .1 8.9 8.9 8.39 8.9 a8.9 a 9 8.9 8.9 8,9 8.9 89 8.9 a89 8.9 8 9 89 9.9 8.9 3.9e F,,,. 64 15.6 19 7 19.7 19.7 9 9.7 19.7 19.7 19.7 19.7 19.7 . 1.? 19.7 19 7 19.7 1 1 7 1a Cropop 140-tbe o 0.0 95.0 114.5 114.5 114.8 114.5 114.5 114.5 114.6 114.5 114.5 114.6 114.5 114.8 114.5 114.5 1.14.5 114.5 114.S 114.5 114.5 Cre.p.4ietisgg,ig 0.0 274.0 420.0 668.0 6t2.0 9o.o 90.0 910.0 910.0 91o.o 910.0 9o1.o 9100 910.0 910.0 910.0 910.0 91o.o 91.0 910.O 910.0 0.9. 146.r.e.epere °0.0 0.0 0. 0.0 0.0 0.0 0.0 26 0 639.2 . .0 0 1060 110.0 i 0 1ss.0 lad 0 21W.o 121:°.0 15 at40 0 Poor& 0.0 0.0 8.6 4.:5 6.6 18.6 21.6 29.7 62.0 89.1 46.9 54.7 62.9 6". 65. 6 66.6 70.6 71,.6 71.6 716 71.6 Tout leer.. tlf.t 107.6 899. e a.9 1,102.8 1.2*1.0 1,384.9 1,3.1 ,876.0 2.s 1,419.2 1.484.2 1,464.0 . 4e2.2 .49s.4 1.519 I 1.50.9 1.415 9 1. 9A 1,6.9 1.s9 1e 5.9 l*9 se le*afita (86e.0) (o04) (90.1) 268.4 661.2 872.5 879.6 411.5 426.0 481.2 4e4.9 494.7 2 9 26.1 849. 574. 57.6 67.6 57.6 Y77 6 5T7.6 eto .es vo. 1,645I" 12.45 P.1 - 90 - Annex 3 Table 8.3 CHINA HEBEI AGRICULTURAL DEVF.LOPMENT PROJECT Summary of Sensitivity Analysis Yield Price Investment Benefits Base Increase Falls Costs inc. Lag Components Case by 10% by 10% by 10% 1 Year 1. Crops -Northeast Region 24.3 31.7 16.8 17.5 14.7 -Heilonggang Region 37.4 50.5 24.3 25.5 17.5 Total Crops 34.3 45.8 22.5 23.6 16.9 2. Aquaculture -Shrimp 30.1 53.4 18.9 20.2 14.8 -Scallops 63.3 75.1 52.5 53.5 36.4 -Fish 27.9 43.7 13.7 14.9 12.3 Total Aquaculture 30.4 52.6 19.9 21.2 15.4 3. Livestock -Cattle 30.6 55.9 8.5 10.6 10.2 -Sheep 40.6 60.9 21.8 23.5 15.4 Total Livestock 33.4 57.5 12.4 14.4 11.6 4. Date Intercropping 42.6 44.3 40.8 40.9 37.2 5. Pears 54.3 58.2 50.1 50.5 41.2 TOTAL PROJECT 32.4 42.9 22.1 23.1 17.3 --- --- -- --- -- - _ -_.__ -_-_ - ---_- -- ---_-- -- --- --__ -- -- -- -91 - Annex 3 Table 9 NMl /iQCLTIJ OrMAW"IEC K... Mamitorina indicato. Inilcator; for Phyalcal 199i 1991 1995 1998 1994 1996 Progrt_ tunit Eat1 Act Est Act Eat Act Est Act Est Act Eat Act Water canervancv Sulfa 'rgloetlon C n ot it lns bNo Slivic Oates i Structures No. Water SaevIn Pipes K Mt c Tons P*&tI cLde Iporta Tons Isro.v*d Seeds: -Wh_at Ton" 49.1: Tons -Cotton Ton" d&. Tons* -Othere Tona M" ~~~~~~No. Rehab 1 b i t to edd MD -oats T nbcrcch ) he. Rbilt td 4 an NO. h -Puel PM"e No. -Sublone to Paruege 000 Y = I.Wiad Hho lds No. Amanlfication Canter MNo. Slauohter Noue No. Alfalfa f abl"la wt hn rah tmgvdms ha.hi Sbhli Pond. 8neXb.) hn. _lah Pond ha SCa lope Chains NO. Procesing acIllties NO. Ibifil n Ft riIlser Plant Stage Shonalan FPrtillter Plant Stag q'ghou Partilel- bard Stage Welalon Paper Hill Stage Coura por "o. Project Comoent "¶V Study Tours No aDuratlon TraintIn Wo./Duratlon Int rntofnAl ConuleUnt us olndres- -- .04/ronth 1to efIrna ning) lTo bo fin li"d at ProJect launch wrkshop (Sept. 191) - 92 - AMNIE 3 Table 10 Page 1 of 2 CIJA 113 AGICULTURAL DEYIOPHET PROJECT 3*4K SUPERMISION INPUT INTO K ACTIVITIES Approximate ^ Dates Expected Skill Staff Input (month/year) Activity Requirements (staff weeks) 10/90 Supervision Mission Agroindustries 10.0 Project Launch Work- Irrigation Engineering shop. Review of draft Economics final designs for agro- Procurement industries, water Financial Management conservancy, procure- ment and financial management. Reporting and M & E. 4191 Review of final Agroindustries designs for agro- Irrigation Engineering 7.0 industries and water conservancy Supervision Mission 10191 Review oft aquaculture Aquaculture Specialist and livestock develop- Livestock/Agriculturist 6.0 ment Supervision Mission 4/92 Review of seed process- Seed specialist/Agricul- ing/agriculture develop- turist 6.0 ment and agroindustries Agroindustries specialist Economist 10/92 Review of aquaculture Irrigation Engineer and water conservancy Aquaculture Specialist 4.0 components, particu- 1 First two yer. will be Initially devoted to review of designs and construction for agroinduestries, water conuervancy and *quaculture components tn *cordence with Implementation schodule chart 2. Some epeclallett my visit the project area while undertaking other operations. - 93 - Table 10 Page 2 of 2 cont'd. Approximate Dates Expected Skill Staff Input (monthlyear) Activity Requirements (staff weeks) larly water master plan, Government prepares for Mid-term review 6/93 Suwervision mid-term review mission Economist Irrigation, water master Agriculturist plan-agriculture, aqua- Aquaculture Specialist 9.0 culture and livestock Agroindustries development - agro- Specialist industries and seed processing 10/93 Government and Hebei Goverament/IDA teams 6.0 Province to Imple- ment Recommendations of Hid-term review and decide on the nature of future supervision missions. (Field visits may be needed to follow-up on mid-term results) l 1994,1995,1996 At least one super- (to be determined vision/year and last following Hid-term mission should discuss Review) with borrower prepara- tion of Completion Report ANNEX 4 - 94 - Page 1 CHINA HEBEI AGRICULTURAL DEVELOPMENT PROJECT Shrimp: A Summary of World Market Situation Tntroduction 1. World shrimp production has increased dramatically over the past two decades, mainly as a result of the expansion of shrimp aquaculture in a number of developing countries, most notably China, Ecuador, Taiwan, Thailand and the Philippines. The phenomenal rate at which shrimp production has grown in these countries and the success with which shrimp suppliers have had their production absorbed in major consuming markets such as Japan and the United States seems to indicate that producer countries with comparative advantage have a significant potential to develop exports in this sector. The fact that shrimp production and exports have grown so rapidly indicates no major insti- tutional or policy restraints in the major producing and consuming countries. The principal challenge facing the shrimp indlustry over the next decade is how to market the increasing quantities of product that will be available. In the medium term, future worldwide demand for shrimp is unlikely to grow rapidly enough to absorb the anticipated increase in supplies without a substantial decline in prices. The situation of overabundant supplies in the 1990s (in this sense) has a number of implications for producing countries. They may have to critically review their production technology, investment strategy, processing capabilities and marketing practices in order to be competitive in a declining-price market. 2. This annex aims to analyze China's position in the world market and its relation to the project's proposed investment in the production and market of shrimp. Production 3. In 1989 total world shrimp production was 2.4 million tons of shrimp. Cultured shrimp accounted for 596,000 tons or 27 percent. China became the world's leading producer of cultur~.d shrimp in 1989, producing about 190,000 tons or 32 percent of world production. Its shrimp production increased dra- matically, five fold from 1985. Most of its competitors in the export market for cultured shrimp were also in Asia, with countries in that region producing 75 percent of world production, although there were also major producers in Latin America. In 1989, the leading producers of cultured shrimp were China supplied (32 percent), Indonesia (13 percent), and Ecuador (13 percent); the Philippines and Thailand accounted for 8 percent each; India, Vietnam, Bangladesh and Malaysia together for 12 percent; and other countries for the remaining 14 percent. Many of the major exporters of cultured shrimp were also major producers of capture shrimp, but the dynamic growth in cultured shrimp production was not matched by any significant growth in capture produc- tion, which remained roughly stable since 1984. A few major exporters of shrimp had not established major culture industries by 1990, namely, Mexico and Australia. The growth in cultured production has moved China from a minor _ 95 _ ~~~~ANNEX 4 - 95 - -M Page 2 contributor to the world shrimp market in the early 1980s to the largest world exporter in 1989. 4. Chinesew production technology is semi-intensive. Yield is higher than in Ecuador and Central America. Normally yield is around 2.0 to 2.5 tons of 20-22 gram shrimp, with 30 percent to 35 percent survival rates using a direct stocking technology with stocking density of 300,000 post larvae per hectare, and a semi-intensive technology without aeration. These survival rates and yields are good and far better than many othLr countries. 5. Most shrimp production in China is of the P. orientalis species. Yhis species can be found in the temperate zones in the five most northerly maritime provinces, where water temperature ranges from 22-260C, an optimal condition for this species. White shrimp (P. orientalis and P. vannamei from Latin America) is the quality standard in both the Japanese and US markets. It has much broader usage than the now competitive *black tiger shrimp (P. monodon), which is produced largely in Southeast Asia and to a limited extent in Guangdong and other South China provinces. It has broader accep- tance because it is used in both the food service industry and the retail trade, as wel. as by institutional processors who use mid-sized shrimp for breading and cooking. Ecuador dominated this market until China surpassed them in 1988, partly due to production problems (primarily post-larvae short- age) in Ecuador. 6. China is presently the low-cost producer of white shrimp. Chinese producers have an absolute advantage in relation to the other Asian countries and more so in comparison to Ecuador and Central America (with the exception of Honduras, which uses a semi-extensive production method). Production cost per kg of US$2.59 is 57 percent and 46 percent of that of Ecuador and Panama, respectively. 7. Southeast Asian producers of black tiger shrimp, however, Indonesia in particular, have a significant cost advantage over China and all other white shrimp producers. Indonesia and Thailand, using extensive production methods, have costs of 77 percent and 107 percent respectively of China's cost of producing white shrimp. Markets 8. The United States and Japan are the major markets for Chinese shrimp, importing 47,000 tons and 38,000 tons in 1988 respectively. Due to their high incomes, the industrialized countries consumed the major fraction of world shrimp production in 1988, the United States 27 percent, Japan 22 percent and Europe about 11 percent, for a total of about 60 percent. From 1970 to 1988, shrimp consumption in Japan and the United States grew at aver- age annual rates of 6.5 percent and 3.75 percent, respectively. In the 1980s, US consumption accelerated, however, with an average annual rate of increase of nearly 7.5 percent from 1980-88. Despite the fact that the United States is itself a large capture producer, its imports increased from 115,000 tons in 1985 to 229,000 tons in 1989. Currently measured price elasticity in the United States is low (in a range from -0.2 to -0.29), compared to Japan (-0.68), but it may be ready to increase significantly since shrimp is increasingly consumed by middle-level American consumers. In contrast to that - 96 - ANNEX 4 Page 3 of the United States, Japanese consumption slowed somewhat in the early 19809, but between 1984-88, it accelerated again, averaging over 8 percent aniually during the period. Japanese imports increased from 183,000 tons in 1985 to 2S8,000 tons in 1988. 9. The EEC shrimp market, the third major market, has been expanding very rapidly during the past decade. Imports doubled to reach 270,000 mt in 1988, and during 1984-87, European imports Increased at 16 percent per annum. Coldwater pink shrimp is the preferred variety in this market, but white shrimp imports have incr ased rapidly in recent years. Per capita shrimp con- sumption, is presently only moderate at 0.75 kglcapita (compared to the United States at 1.2 and Japan at 3.0 kg/capita) but is increasing. It is expected that this market will continue to grow rapidly. In 1988, after several years of poor acceptance and low imports, black tiger imports into Northern European countries have started to expand rapidly, with Indonesia and Thailand the principal sources. Prices 10. The International shrimp market is fully responsive, able to absorb fluctuations in demand with corresponding price movements. Once minimum qual- ity requirements are met, producers have no problem selling thei. supplies. Over the past ten years, the real price of shrimp has exhibited a moderately declining price trend. The US price of imported shrimp declined by about 1.1 percent in real terms between 1977 and 1986. (Yen prices declined more drama- tically, though, as the yen appreciated). A3 worldwide supplies increase in the future due to the rapid expansion of shrimp culture, prices are expected to decline further. The large increase in supply of black tiger shrimp from Indonesia, Thailand and Philippines in 1989 resulted in a price break, with dollar prices declining by 13 percent over their 1988 levels. Japanese and US importers could not liquidate their heavy inventories from their purchase at a higher price, and had to stop buying in the last quarter of 1989. This resulted in driving the price of shrimp (both white and black tiger) down fur- ther with the lowest prices reached in January 1990. Recent market intelli- gence 1/ indicates that importers have depleted their stock and are again heavily purchasing both white and black tiger shrimp with the result that prices have now increased 10 percent to 15 percent above those of January 1990. 11. Despite this short term recovery, long term prices are still expec- ted to follow a declining trend. The Bank-commissioned Asia-Wide Shrimp study, released in 1989 by Aquatic Farms Ltd. and the 1989 PPR World Bank's Subsector Study, projected that the real price of shrimp would decrease by about 6 percent annually during the 1989-94 period in order to induce suffi- cient demaad to absorb the expected supply. It based this projection on the following projections and assumptions: production growth of 6 percent per annum, demand growth of 3.5 percent (based on import-country income growth of 3.5 percent per annum and income elasticity of 1.0), and demand price elasti- city of -0.3. 11 Shrimp Notes, March 15, 1990. ANNE 4 -97 - Page 4 12. It is doubtful that this projection is still fully valid due to the marked change in the structure of production since 1987. The very large expansion of black tiger production, for instance, had only started in that year and these studies did not differentiate between the two major shrimp categories or give projections of the price differential between them. Analysis 13. Given the competitive world market, the declining price trend and the emergence of low-cost black tiger production, the question is whether China can still remain competitive in shrimp. The cost data presented above (para. 5) shows that China is fully competitive in the white-shrimp segment of the market, since even at the current official exchange rate, it is a high- yield, low cost producer of that variety. A major question awaiting full ana- lysis, however, is whether lower-cost black tiger producers in Southeast Asia will expand sufficiently to drag the white shrimp price below even the cost of low-cost white-shrimp producers like China and Honduras. The question involves not only the relative production costs of the two varieties, but also their substitution in demand. 14. Three scenarios are possible for China: (a) Low-cost black tiger producers like Indonesia will capture a large percentage of world export demand, driving out high-cost white shrimp producers and reducing Chin#'s exports and sharply decreasing the profitability of Chinese production; (b) Low-cost black tiger shrimp will capture a large percentage of the market, but white shrimp will still conmmand a significant price dif- ferential over black tigers, enabling low-cost white shrimp produc- ers like China to continue to export white shrimp at high levels and at lower but still adequate prices, and (c) The low-cost black tiger producers fail to expand sufficiently to undercut the world market. 15. Neither the Asia-Wide Shrimp study nor the Bank Subsector study present data or analysis that would allow us to choose among these three sce- narios. The best present estimate is that scenarios (b) and (c) are the most likely, but this is not certain. There is therefore a need for an update long-term shrimp market study on a national basis, especially in view of the fact that the recent rapid growth in production now appears to be levelling off. The significant decline in world prices has already begun to affect high-cost producing countries like Ecuador. High costs of feed, labor, and other factors there have squeezed the profits of shrimp operations and invest- ment and development have declined significantly. Despite these uncertain- ties, there are several directions that Chinese shrimp policies can take to react to and withstand unfavorable international price trends. First, produc- tion efficiency can be improved through rehabilitation of existing ponds and use of Improved technology resulting in higher productivity and lower costs. Second, although Chinese white shrimp have well established demand in the United States and Japan, it nevertheless experiences a price discount in the ANNEX 4 98 - ~~~~~~Page 5 US market, compared to Ecuadorean shrimp, of about 18 percent. Investing in improved processing and marketing to increase quality should allow relative price increases that ould partially counteract the general world price decline. Third, even the inability to sell large export volumes would have the compensating advantage of freeing supplies for the domestic market where per capita consumption of shrimp is still only about 61 grams. The domestic mar- ket currently exhibits excess demand due to quota reservation for export, and domeatic prices are currently about 36 percent higher than export prices. If price elasticity of demand in the domestic market turns out to be high, the domestic market should offer a very large potential cushion in the event of an internptional market collapse, and continued investment might be fully justi- fied. 16. The Hebei Project. The major objective of the small shrimp compo- nent in this project is to demonstrate the increases in production efficiency and product quality that should prove useful in withstanding any unfavorable international price trend. It would provide modern production technology to increase productivity and lower production costs and advanced processing tech- nology to increase export marketability. These higher performance shrimp pro- duction facilities would demonstrate potential Chinese comparative advantage In shrimp production. Incremental production is expected to be only about 4,000 tons per year, of which only 1,500 tons is for exports. This volume is less thon 2 percent of present Chinese production and 1 percent of export, and would nc. iffect either Chinese or world market conditions. The project expects to obtain permission to establish its own brand of export shrimp so that its expected consistent high quality product can receive brand recogni- tion for quality in export markets. The project would attempt in this way to test wkether higher quality Chinese output could narrow or close the current discount that Chinese shrimp currently draws in the US market and thereby counter some of the likely future general price decline. ANNEX 5 - 99 - CHINA HEBEI AGRICULTURAL DEVELOIMENT PROJECT Selected Documents and Data Available In the Proiect File A. General Reports and Reference Materials A.1 The Seventh Five-Year Plan for Hebei Provincial's Economic and Social Development. A.2 Statistical Yearbook of China 1989, State Statistical Bureau D. Renort. and Studies Related to the Project 3.1 The Preliminary Analysis Report on the Feasibility of the Program for the Comprehensive Development of Agriculture In Nerbei Province by Using Foreign Investment, The Office of the Program Leading Group of the Development of Agriculture in Hebei (August 1988-Two Volumes). B.2 Hebei Agricultural Development Project, FAOICP Project Brief (Decem- ber 22, 1988). 3.3 Hebei Agricultural Devvlopment Project, PAO/CP. Preparation Report, Two Volumes (April 19, 1989). B.4 Report on the Feasibility Study of Making Use of Foreign Capital for Agricultural Comprehensive Development Project in Hebei Province, Office of the Lending Group of Making Use of Foreign Capital for Agricultural Development (Two volumes-May 1989). 3.5 The Supplementary Materials for Water Conservancy Part of the Feasibility Research Report about Hebei Province Agriculture Comprehensive Exploitment Hem Using Foreign Funds, Province Agriculture Exploitment Office, Water Conservancy Department. (August, 1989-Two Volumes). C. Working Papers C.1 Project Costs C.2 Water Resources/Irrigation Component C.3 Livestock C.4 Aquaculture C . 5 Agro-industries C.6 Seed Production C.7 Agriculture Models C.8 Financial and Economic Analyses. - 100 _ CHINA Chart 1 HEBEI AGRICULTURAL DEVELOPMENT PROJECT ORGANIZATION Hebei Provincial GovemmentI Scientific Provincial and Technical Project Leading commitee Group (P L G) STC. _ Provincial Provincial Provincial _ Project Management Bureau of ABC ------_ Office (P M 0) finan oe Prefecture <5 ~~~~~PLG <^ Prefecture Prefecture Prefecture ABC P M O Bureau of Is Finance ~~~~~ ~~~~County s ~~~~~PLG County 1 County County VLialse ABC PMO Bureau of ACTIVITIES OF PM0S Finance § -Draw up annuai detailed work programs and budgets ACTwnIES OF STCs -Review and approve lover level PMO work plans -Assist in supervising research extension -mobnitor physicai anci finanidai progress of the project ancid trnifng progrun .Coordinate and supevise project implementation -Review technical plans and formulate -Review and approve technical specificatons future plans i-ialse with central and provincial agencies in projct -Adve PLGs and PiOs on planning -ndetak i p rementation and designing of prject components -Undertake procurement g -Prepare detailed proJect accounts, audits, reports, ACTIVIES OF PLGs and withdrawal applications § -Supervise revolving funds established at ABC -Formulate project policies at all levels -Facilitate project implementation § LE6C _______f o -Resolve implementation problemsn Administrative function § ~Coordinate and advise S ~ -191 CHINA CiART2 HEBEI AGRICULTURAL DEVELOPMENT PROJECT Implementatlon Schedule YEF 1000 1991 1992 t993 1994 ts995 iTEM QUARTER t1 1231|4 t |2|3|4 t |2|9411 14 1 2|131 4t 1 |2 ||4 IRRIGATION _ 1L EL Wa_i mansm I I I I I I I I I 1, 1 I I 'I I- i AGIBRCULTURE ch,_ __ ._ _l _fXf Seef _ Pz-W L ,,1I1 l1i11llJJ-I Civ= work PAnw__ _ _ lllh Ttalnhi__ *___VI iI11FIl _ UVESTOCK_. Il Pa_i_edcs. Trairing _____< rt--I1IT Ir|f AaQUACULTtRE____I 1IL1II1 It rewpodonn-i a zi IFe med s2Z Zi__ IPardde boardP ZZplan_tII ' IIIII PROKJECT E I __A_N I11 . I11 111 KEY: __ _ Imp antion of programs|||| r~~~~~~~~~~~~ I I I I I I Opsrad on~ F~~ ~ ~~~~ -- _- _- _ I l u~~~~~l Activtis In 1990 kwkide design pfeparafio bnd dev_ lo| | t -"~~~~ad mino chll works HEBEI AGRICULTURAL DEVELOPMENT PROJECT manaWSCHEDULE __ _A_ _ I a_ . Package No. I Fertilizer Supply ICB 20.6 _ i. Package No. 2 Pesticide Supply ICB 6.4 ivo :1 Pack_age no. _ 13111 1 1 1 1 1 1 1 1 1 1 1 1 I I 2 Fertilizer Plants ICR i8. 7 *V" Package No. 4 Cardboard Mill ICB 6.5 hyin _ Package No. 5 _ I I _ I I I I I -I Partical Board Plant ICB 15.8 MoVsmo Package No. 6 Pumps and totors tCe .6 nv=o _ TT7 t tn1 Package No. I Jiniui PUMP Station LCB 1.0 aIv_i Package No. 8 Otber Nmatriala ICE 12.6 hIvo_1 Package No. 9 Technical end aesearch ICE 7.0 _tIt ACIUM _ - Ae*~ - _ _ _ f t $ I~~~~ ~ ~ _ ___ __ _ _ -e - ,,*e w l1fi ht1St .honaeev,QX W _DcrDein eO .Ceo zainslla 4 45*hI0'4150 100 ao. CHINA HEBB AG LTURAL DEVELOPMENT PROJECT CrO-pins celnder of m ain *nUsi c-op- LDCAflCNAND~P Jan F_ Mar Apr May Jun Jul Aug 'Sep Oct Nov Do LO. ,AN.F . ManMonmTenp.in -3.6 -1.1 6.1 14.1 20.8 25.7 26.8 25.3 20.3 13.8 5.4 -1.6 Wheat 7 g Whea (Cotton reay crop) Maize Cotton (moncrop) =. cotton ( ray crop) . Se-~ _ _ .. Peamut mw,"7mwwmm m2 NORIHDASTALREGION __ __ _ __ ._ _ _ _ _ _ . _. Msan KoUTenp. InoC -5.9 -3.8 3.1 11.5 18.1 22.3 25.0 24.3 19.4 12.3 4.1 -3.7 Wheal (relay aftin Paddo) c e - ____ Make (_nt_ _ op) e d . . Paddy rlaye(m a vhop)1 ,,,, ftetPotato _Ce a= Peamn utz IU Pfflastis used for eadplod1 nng of cotton In eCo wang_ and for pdy6e and vogetas In the Nonhesl MAP SECTION 11S lit. ~~~~ ~~~~~~~~~~~~~~~~~~~~~~~120 - CHINA Sl _ uivceGates ( J> w X," ' t ,^_. ~~~~~~~~~~~~~~~~~~~~~~~~~~saving pipe *1 j > C l ain ' \ _ _ _ _ t - Road, ^R,> 3 9 J sX : y Ro~~~~~~~~~~~~~~~~~~~~~~~~~~Rilroz 5 1 W(aGS,l (.) -, . 9 .................. = _ PnPnn~~~~~~~~~~PrWAce Boundariest We4diong J'-. < _ Proect RegionsA and8 42 NX o- 1 4 NEI~~~~~~~~~~~~~~~~~~~~~~~~~~ SHANXI 0 HANGNIIAKOU _ . r CO D 1 ~ _ < s J S lu A S IJIAZ UANG &-.... A 0 16~~~~~~~~~~~~~~* I X I I I k <.: :;; sT fi- KILOMETERS