V -- ; Document of,

'-The World'Bank=-,

FOR OFFICIAL USE ONLY

Repors No. 7990-CHA

STAFF APPRAISAL REPORT

/ ~~CHINA

MID-IYANGTZE AGRICULTURAL DEVELOPMENT PROJECT

JULY 17, 1990

Country Department IIIAsia Regiotal OfficeAgtic@ttural Operations Division

Thi document h a residted distibl and may be used by redpienb ondy in the peioranae ofthei offical duties Us conteuts may no ohwise be diosed witout Wodd Eank authmorton.

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CURRENCY EQUIVALENTS

Currency Unit - Yuan (Y)US$1.00 Y4.72Yl.00 - US$0.21

FISCAL YEAR

January l to December 31

'WEIGHTS AND MEASURES

1 meter (fi) - 3.28 feet (ft)lkilometer (km) - 0.62 miles1 hectare (ha) - 2.47 acres1 mu - 0.067 ha1 to (t) - 1,000 kg

- 2,205 pounds (lbs)1 kg - 2.2 pounds (lbs)

PRINCIPAL ABBREVI4TIONS AND ACMONY1S USED

ABC - Agricultural Bank oE'ChinaATEC - Agriculture technical Exteonssion---CenterBOF - .Bureau of FinanceCAAS - Chinese Academy of Agricultural SciencesCEROILS - China National Cereals, Oils and Foodstuffs Import and

Export CorporatioxiCRI - Citrus Research InstituteCFDC - County Fruit Development CorporationDAP Diammonium PhosphateFAC/CP - FAO/Vorld'Bank Cooperative ProgrammeFAO/ISP - FAO/Tnvestment Support ProgrammeFTB - Foreign' Trade BureauGOC - Government of ChinaGVAO - Gross Value,of Agricultural OutputJPMO - Joint Project Management Office1GB. - International Competitive BiddingMACHIMPEX - Chin,a National Machinery Import Export CorporationMOA - Ministry of AgricultureMOF - Ministry of FinanceMOFERT - Ministry of Foreign Economic Relations and TradePFDC - Provincial Fruit Development CorporationPLG - Project Leading GroupPMO - Project Management OfficeSPC - State Planning CommissionSTC - Scientific and Tecmnical CommitteeWCD - Water Conservancy'Department

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CHINAw FOR OMCIAL USE ONLY

MID-XANZE AGRICULTURAL DEVELOPMENT PROBJECT

Credit aPInd rj ec t Summar

borrower: People's Republic of China

Benefiglaries: Sichuan and Hubei Provincial Governments and ChongqingMunicipality

Mgjant: SDR 48.6 million (US$64 million equivalent)

Terms: Standard, with 35 years maturity

Onlending Tm: From Government to the Provinces/Municipality: 17 years,including seven years of grace, with interest at 5.51 p.a.Onlending rates to final beneficiaries would be no less thanAgricultural Bank of China charges on subloans for similarpurposes with similar maturities.

Objectives and The project objectives would be to increase production,Descrigtion: productivity and marketability of fruit in low income areas and

thus increasi .acome and alleviate poverty. It would do thisby structuring production so as to satisfy domestic and exportdemand for quality, variety and seasonality and by stimulatingthe development of effective marketing institutions. Theproject would: (a) develop 11,986 ha of new orchards onpresently uncultivated hilly slopes and rehabilitate 2,473 haof existing ones (about 801 of the planted area would be citrusand 201 lychees, longans, pears, loquats, plums, yellow peachesand kiwi); (b) increase the provincial Agriculture Bureaus'abilities to identify, propagate and distribute healthy,disease-free planting material, to institutionalize virusindexing and budwood registration programs, and to providetechnical assistance for rcsearch and extension and trainingfor managerial and technical staff in all aspects of fruitdevelopment and marketing; and (c) establish new and strengthenexisting commercially independent Fruit DevelopmentCorporations including three new joint stock companies tomarket quality fruit in local, distant and export markets byintroducing modern post-harvest techniques, packing and storagefacilities. X

B-ane-fits At full development, new orchards developed under the projectand-Risks: would produce annually 260,000 tons of citrus valued at US$61.5

million and 48,000 tons of other fruits valued at US$15.3million. Incremental production from rehabilitated orchardswould be 42,000 tons valued at US$10.8 million. Per capitaincomes would increase by an average of 180X for 130,000 poorfamilies. Beyond this, significant employment would be createdin all three project areas. The development of hilly areaswith contouring and terracing would improve environmental con-ditions. The project would also provide a replicable model forother fruit production areas. No major risks are anticipated.

This document has a restrict6d distribution and may be used by recipients only in the performanceof *, I Its ci ts r not otherwise be disclosed without World Bank authorization.

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Estimated Cost Local Forein otal------------ (US$ million)-

Nurseries and Mother Tree Gardens 1.1 0.9 2.0Orchard Establishment 50.8 39.3 90.1Orchard Rehabilitation 5.3 6.8 12.1Marketing Facilities 5.3 6.2 11.5Institutional Support 2.1 3.0 5.1

Base Cost a/ 64.6 56.2 120.8

Physical Contingencies 1.4 1.6 3.0Price Contingencies 7.1 6.0 13.1

Total Project Costs 73.1 63.8 136.9

gxJaning Pl Loal Forei: T 1ota------------ (US$ million)------

IDA 0.2 63.8 64.0Provincial/Municipal Governments 7.5 - 7.5Prefecture Governments (Sichuan) 2.5 - 2.5County Governments 25.9 - 25.9Agricultural Bank of China 13.0 - 13.0Beneficiaries 24.0 - 24.0

Total 73.1 63.8 136.9

Estimated Disbursements:

Baa.kIDA FY I991 192. 1993 1994 12995

Annual 13.0 19.0 21.0 8.0 3.0Cumulative 13.0 32.0 53.0 61.0 64.0

Economic Rate of Return: Citrus: 32%, Other Fruits: 34%, Rehab Orchards: 49%Overall Project 34%

a/ Project is exempt from taxes and duties.

CHIN

KID-YANGTZE AGRICULT DEVELOPM ROJICT

Table of Contents

Page No.I. BACKGROUND .............................. 1

A. Introduction ................................. 1B. The Agricultural Sector .......................... 1C. The Fruit Sector ................................. 2D. Sectoral Objectives and Bank Lending .... ......... 4E. Agriculture in Sichuan, Chongqing and Hubei 5...... F. Project Rationale ................................ 7

II. THE PROJECT AREAS .................................... 7A. Location of Project Areas ........................ 7B. Climate, Topography, Soils and Water Resources ... 7C. Land Use, Farm Size and Population .... ........... 9D. Present Development .............................. 10E. Infrastructure ................................... 13F. Marketing ......... ............................... 13G. Horticultural Support Services ..... .............. 14

III. THE PROJECT .......... ................................ 16A. Project Objectives and Relation to the Sector .... 16B. Project Description .............................. 16C. Detailed Features ................................ 17D. Cost Estimates ................................... 22E. Financing ......... ............................... 23F. Procurement ...................................... 23G. Disbursements .................................... 26H. Implementation Schedule .......................... 27I. Accounts and Audits .............................. 27J. Environmental Impacts ............................ 27

IV. PROJECT ORGANIZATION AND MANAGEMENT ......... ......... 28A. Project Organization ............................. 28B. Financial Management .31C. Execution of Project Works.32D. Monitoring, Evaluation and Reporting ............. 32

V. PRODUCTION, MARKETS AND PRICES ......... .. ............ 33A. Production ......... .............................. 33B. Markets .......... ................................ 35C. Marketing for Exports ............................ 37D. Prices . ........................................... 39

…-_ -- - - -- - - -- - -- - - - . - --_ _-_-_-_-_-_- . _

This report is based on the findings of an appraisal mission in May/June 1989.Members of the appraisal team included H. Eisa and R. Jaisaard (IDA) and ZhouWeiguo (RMC). Others involved in the preparation and preappraisal were B.Downs (FAO/ISP), J. Klindt, C. Youtsey;and L.Stafford (consultants).

Page NoVI. BENEFITS, JUSTIFICATION AND RISKS ................... 42

A. Benefits ........................................ 42B. Employment and Incomes ...... ..................... 42C. Cost Recovery ............... 44D. CFDCs Cash Flow ........ .......................... 44E. Financial and Economic Analyses ..... ............ 44F. Risks .............. ............................. 48

VII. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS ......... 49

Text Tables

3.1 Phasing of Nurseries, Orchards Establishmentand Rehabilitation

3.2 Summary of Project Costs3.1 Procurement Profile5.1 Yields, Planted Area and Production by Province5.2 Domestic Prices of Fruit6.1 Summary of Financial Analysis Results6.2 Summary of Economic Analysis

Armnexes

1. 1 Basic Provincial and Project Area Statistics

2. 1 Cost Summary by Component2 Cost Summary by Expenditure3 Cost Summary by Year4 Cost Estimate for Training5 Procurement Summary6 Estimated Disbursement Schedule

3. 1 Crop Budgets2 Farm Models3 Border Prices for Inputs and Outputs4 Main Conversion Factors5 CFDCs Cash Flow6 Rent and Cost Recovery7 Economic Costs and Benefits8 Key Indicators

gharts1. Implementation Schedule2. Organization3. Procurement Schedule

___ IBRD No. 21726 Project Areas

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Vorkvijg Pspers

I. Virus Indexing and Nursery Development, Establishing ofNew Orchards and Rehabilitating of Existing Ones

II. Fruit Production in the Project Areas, Constraints toDevelopment and Future Development with the Project

III. Marketing and Post-Harvesting Aspects, International MarketIV. Infrastructure and Rural Engineering AspectsV. Project Organization and ManagementVI. Detailed Project Cost TablesVII. Detailed Financial and Economic Analyses

Related Documents in the Project File:

1. China, Citrus Development Study, Sector Review, FAO/CP March20, 1987.

2. Feasibility Study Report on the Project of Agricultural Developmentin the Areas of the Upper and Middle Reaches of the Yangtze Riverwith Bank Loans, MOA, Beijing, August 24, 1988.

CHIN

Ul)-YANGTZE AGRICULTURAL DEVELOPMENT PROJECT

I. BACKGPROUND

A. Introduction

1.1 The Government of China has requested Bank Group assistance infinancing a fruit production and development project in Sichuan and Hubeiprovinces and Chongqing Municipality (Sichuan Province). The project, covering29 counties, would (i) establish new high-standard orchards and rehabilitateexisting ones in order to increase high-quality fruit production, (ii) investin post-harvest facilities and strengthen management of fruit developmentcorporations to resolve post-harvest and marketing problems, and (iii)strengthen research and extension institutions to identify, propagate anddistribute virus-free planting materials. The project, based on an FAO/CPcitrus study of March 1987, was presented to the Bank in October 1987. It wasprepared by the Sichuan, Chongqing and Hubei Bureaus of Agriculture, with.assistance from concerned counties and institutions, and, in the course ofpreparation, its scope was increased to include a number of fruits besidescitrus. A Bank preparation mission visited the project areas in October 1988.The project was preappraised in February/March 1989 and appraised in May 1989.

B. The Agricultural Sector

1.2 Agriculture in China, including crops, livestock, forestry andfisheries, provides sustenance for over one billion people; it is an importantsource of income for some 190 million farm families and accounts for about 30%of the country's GDP. Only about 137 million ha of China's land area of 960million ha are arable. Farming systems are intensive with heavy inputs oflabor, chemical and organic fertilizers, small machinery and water. Nearlyhalf of the cropped area is irrigated. Foodgrains occupy about 70% of totalcropland and account for about one-third of the agricultural output. Intensivefarming has allowed China to meet the basic food requirements of itspopulation, about 22% of the world's total, and to produce an increasinglysophisticated mix of cash and commercial crop from less than 11% of the world'sarable land. China's decade-long rural reform program has revitalized theagricultural sector, provide an impressive growth and structural change throughthe introduction of the production responsibility system, increased producerprices and enlarged the role of the market. The gross value of agriculturaloutput (GVAO) increased by 83% in real terms during 1978-88 at an averageannual rate 5%, substantially more than that of the previous 25-year period(3.2%). While significant growth has been achieved, the Government's centralconcern in recent years has been stagnating grain production, which peaked at407 million tons in 1984. Production, thereafter ranged between 391-402million tons. Major efforts have been made to bring the production back tothe 1984 level and grain production rebounded in 1989 to reach 407.9 milliontons an historical record.

1.3 Recent government strategies to increase grain production includediverse measures such as increasing state investment in agriculture, mainly inirrigation expansion and rehabilitation, and introducing partial reforms ingrain procurement, distribution, price and subsidies. Local governments inparticular have placed high priority on investments in uplands, natural

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pastures, and water surfaces for expanding production and productivity ofnonstaple food and commercial crops to meet growing demand for thesecommodities, increase local entity profits and farmer incomes, and helpalleviate the pressure on the demand for grains. Unlike in the past,government policy increasingly emphasizes that cropping must be commerciallyoriented and match with local agro-ecological conditions. This has enabledChina to achieve significant increases in the sown area, productivity andoutput of major industrial crops and truits.

C. Fruit Subsector

1.4 The fruit roduction area, which occupied 22% of the total land u,3edfor industrial cropsy in 1988 (5.1 million ha out of 21.5 million ha),increased remarkably from 1.7 million ha in 1978 to 5.1 million ha In 1988,with an annual growth rate of 11.4%. Production also increased rapidly from6.6 million tons in 1978 to 16.7 million tons in 1988, an annual growth rate of10.9%. Yields of mature orchards also grew significantly; a very roughestimate is that they grew at about 4.4% per annum during the period.r Thisrapid expansion of fruit production is large'ly due to the major economicreforms which improved producer incentives through the productionresponsibility syvs.em, de-control of fruit marketing and prices andencouragement of regional specialization. Whereas previously priority had beengiven to production of staple foods - to the virtual exclusion of other crops -the new policies have encouraged cropping matched with the agro-ecologicalconditions of particular areas. The policies have aimed to both improve sma'lfarmers' incomes and living standards and to provide consumers with a morevaried and higher quality diet. From 1978 to 1988, market fruit prices rose atan annual average rate of 10%, considerably faster than the rate of inflation,indicating that growing demand is not being met at prevailing prices. High andrising prices are major incentives for planting new orchards. Major fruitproducing areas are in Shandong, Sichuan, C-uangdong and Liaoning provinces.Major fruits are apples (32%), citrus (19%) and rears (10%). Bananas, longan,lychee, grapes and other fruits occupied 39% of the area planted to fruit.

1.5 Aggles: Apples are a major fruit, occupying 33% of the fruitproduction area, with 26% of total fruit production. From 1978-1988, the areaplanted to apples increased from 0.7 million ha to 1.7 million ha, andproduction increased from 2.2 to 4.3 million tons. The major producing areasare in Shandong (27%), Hebei (13%), Henan (11%) and Shaanxi (9%). Theremainder 40% are produced by twenty other provinces.

1.6 itrus: Citrus is reported to have originated in Chinaa and the MalayArchipelago and occupies 18.9% of the area in fruit production, and is 15.4% oftotal fruit production. Since 1978, citrus production has been one of the mostprofitable and fastest-growing subsectors of Chinese agriculture. The

r In Chinese usage, "industrial" crops include fruit from orchards., cotton,oil bearing crops, hemp, sugar cane, sugar beet, tobacco, silk, and tea.2 After the period of rapid growth of orchard establishment from 1978-1988,perhaps one-third of the area planted to orchards had not reached maturity.Assuming that all hectarage was bearing in 1978, the rate of growth of maturehectarage was therefore roughly about 6.5%, 4.4% slower than the rate of growthof production of 10.9%, indicating a rate of increase of yield of 4.4%.

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production area expanded from 0.2 million ha in 1978 to 1.0 million ha in 1988(18% annual growth rate). The gross value of citrus output was about Y5,422million (US$1,465 million)in 1988 or about 1.1% of the gross value of nationalagricultural output in that year. At present, the main citrus producing areasare along the Middle Valley of the Yangtze ri-er [in Sichuan (17%) and Hubei(8%) Provinces], in the south Yangtze region [Jiangxi (6%), Hunan (15%) andGuangxi (6%) Provinces], and in the southern coastal region [Thejiang (13%),Fujian (10%) and Guangdong (20%) "rovinces]. The eight provinces listedaccount for around 95% of the planted area.

1.7 Pears: Pears occupy 10% of the fruit production area and are 16% oftotal fruit production. Pear production over 1978-1988 increased from 1.5 to2.7 million tons, a growth rate of 6%. The major producing areas are in Hebeiand Shandong.

1.8 Bananas: Production also increased substantially, from 85,000 tonsin 1978 to 1.8 million tons in 1988, an annual average growth rate of 38%.Total banana planted area in 1987 was about 152,000 hectares and the majorproducing areas are in Guangdong Province (74% of total planted ar-,a).

1.9 Lychee and Longan: Lychee and longan originated in China and have aplanting history of 2000 years. Chinese lychee production accounts for 80% ofworld lychee production out only 1% of total domestic fruit production. Themajor producing areas for lychee are in Guangdong (76,000 tons) and Guangxi(25,000 tons) and major producing areas for longan are Fujian (37,000 tons)and Guangxi (22x000 tons). Lychee and longan are in very high demand butproduction is small due to the limited ecological, climatic zone where they canbe grown.

1.10 Peache an Fiums: In 1988, peaches occupied 170,000 hectare-s,concentrated in the eastern part of China, bv* -ith small hectarages in almostevery province except Heilongjiang. Produc :- was about 500,000 tons, ofwhich 7,000 were yellow peach. Peaches are h. J.nly consumed fresh, with onlyabout 5,000 tons canned. Planted area and production for plums are not known.The tree can be found in every province in eastern China and the fruit ismarketed fresh and dried.

1.11 Loguat and Kiwi: In 1988, loquat in China was grown in a relativelysmall area - about 23,500 hectares - mainly in Zhejiang and Fujian provinces.Total production was 31,000 tons in that year. It is mainly consumed fresh,with only about 7,000 tons canned. Kiwi, like citrus, lychee and longanoriginated in China. It was brought to New Zealand and received the new nameof kiwi, changed from 'Chinese Gooseberry'. Trtal area planted is unknown,since the majority of producing trees are found wild in Xinjiang, Ningxia andQinghai provinces. Production from wild kiwi was around 155,000 tons in 1988and was marketed fresh. Kiwi orchards have only recently been developed inHubei, Hunan, Jiangxi, Zhejiang, Sichuan, Anhui and other provinces and occupyonly 4,300 hectares in total. Production from these orchards was only 350 tonsin 19'', because most of the new hectarage is not yet bearing.

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D. Sectoral Obiectiyes and Bank Lending

1.12 The Government' slong-term objectives for the agricultural sector areto increase the production to meet the requirements created by po"ulation andincome growth, and to increase income and employment opportunities in ruralareas. Given China's shortage of arable land (0.1 ha per capita), developmentplanners have focused on the need to increase the productivity of presentlycropped areas and to efficielitly develop the few remaining areas Gf unutilizedlands. Steps are also being taken to stabilize grain outputs and to raise thethe value-added in the farm sector - by increasing the production and qualityof food crops, animal feed, livestock, fruit, fish and industrial crops - andalso in agro-processing, which is undergoing rapid expansion.

1.13 For fruit development, the Government's objectives are to increaseproduction for domestic consumption and exports, and provide an additionalsource of income for tho rural population. All types of fruit produced underthe project would be primarily consumed in the domestic market, but certaincrops would have substantial export markets. Citrus is expected to be exportedfresh to the USSR, Hong Kong, South East Asia, Canada and Eastern Europeancountries. Longan and lychee are expected to be exported in processed forms toSouth East Asia and Europe. The fruit development strategy emphasizesestablishment of new orchards with high yielding varieties, healthy anddisease-free seedlings on land unsuitable for grain cultivation. Citrus is nowbeing planted on predominantly low hills with sl-'pe normally in tne r_nge of100to 450 and would be more profitable than grazing livestock.

1.14 The Bank's lending to China's agricultural sector is designed tosupport the Government's efforts to increase and diversify agriculturalproduction through more efficient use of land, water, capital and laborresources and through the improvement of support services such as credit,research and agricultural education. Bank group agricultural lending to datehas comprised 23 operations amounting to US$2.1 billion and has uivered thefull spectrum of geographic areas and subsectors, with overall focus on landdevelopment, irrigation and drainage (5 projects), upgrading agriculturalsupport services including agricultural research, education, credit and seedimprovement (7 projects) and developing specialized subsector including rubber,forestry, fruit and fisheries development (7 projects) and area development (4projects). In recent years, the Bank group has supported a series ofprovincial development projects in which an area development approach has beenapplied, with responsibility for proposing and preparing the investmentproposals and repayment project funds resting with provincial and lower levelgovernments, thus supporting the increasing delegation of development palnningand implementation. The rural sector adjustment loan (RSAL), which wasprocessed during 1988 contributed to the articulation and strengthening of thereform process.

1.15 Implementation of most ongoing Bank Group financed projects in theagriculture sector is on schedule. Experience in ?revious Bank agriculturalprojects in China is that physical works have been on time or ahead ofschedule. Disbursements for agricultural projects, in fact, usually outpacethose in other sectors. Notable features of all the projects are the highstandard of project management, the enthusiastic participation of farmers andthe effective collaboration of government authorities at all levels. The

projects which supported land development and agricultural intensification:North China Plain Project (Cr. 1261-CHA) and Heilongjiang Land ReclamationProject (Cr. 1347-CHA) and one Rural Credit Project (Cr. 1462 CHA) have beencompleted. The project completion reports for the two land developmentprojects indicated the project implementation was successful, the economicrates of return reached or exceeded the appraisal estimates, and the technologyused for land developemnt and drainage was sound and appropriate for widerapplication. PCR preparation for the rural Credit I is under way.

E. Aericulture in Sichuan. Chongping and Hubgi

1.16 Sichuan. Sichuan Province, located in Southwest China, is the mostpopulous province in China with over 103 million people, 88 million of whom arein agriculture. Geographically, it is the fifth largest province with an areaof 570,000 km2 and is conventionally divided into three areas. The first, thelrvge Chengdu Plain, which occupies 27% of the total production area of thep.ivince, is a rich and fertile plain where grain and cash crop production issupported by the Dujiangyan irrigation system first constructed 2,500 yearsago. The second area, the West Plateau, occupies 45% of the total area and isimportant for cattle and fruit production. The third area, the southwest area,occupying 28% of the total hectarage, comprises two subregions with differentclimatio conditions, a river basin area (where the project areas are located)suitable for growing grains, sugarcane and tobacco and a mountainous area witha cool, overcast climate, which supports corn, potato and cattle production.Sichuan is primarily a grain producer, the largest provincial producer inChina, with 10% of the country's total production in 1988. Grain output, 88%of total crop output (by tonnage) in 1988, was 38 million tons, with rice 51%and wheat 17% of the total. Sichuan also has a diversified list of other cashcrops, which in combibation account for the remaining 12% of output tonnage -primarily sugar, rapeseed and fruit but also peanuts, cotton, jute, hemp, andsilkworm cocoon. Livestock production included 3.4 million tons of meat fromlarge animals (mostly pork) and 250,000 tons of milk. Output of aquaticproducts was 172,000 tons. Gross agricultural output was Y48 billion in 1988.

1.17 Chongging is a municipality in Sichuan Province with independenteconomic status. It has a total population of 14 million and a farm populationof 10.8 million and covers an area of 23,000 km. It is located on the hillypeninsula of land wedged between the Jialing River to the north and the YangtzeRiver to thte south. The rivers meet at the eastern end of Chongqing city,which is at the heart of water and land transportation in Southwest China. Themunicipality is the economic center for the upper regions of the Yangtza riverand is an important inland water port for foreign trade. It has a climatesuitable for production of grains, cash crops and fruit. Grains, mostly rice,are the major crops, occupying 84% of the total production area and producing87% of total field crop output tonnage. In 1988, grain output was 5.6 milliontons. Cash crop output, mostly sugarcane and edible oils was only 0.7 milliontons (13% of production) in that year and used just 6% of the production area.Fruit output is small at about 150,000 tons per annum. Gross agriculturaloutput was Y550 million in 1988.

1.18 Hubei. Hubel Province has a total population of 50 million and afarm population of 39 million. Its 74 counties, covering an area of 186,000km2, comprise two quite different areas. The eastern two-thirds is a low-lying

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plain drained by the Yangtze and its northern tributary, the Han Shui. Thewestern third is an area of rugged highlands dividing Hubei from Sichuan, withsmall cultivated valleys and basins. Because of varied topography, there aremany soil and climatic zones which are suitable for various crops. Hubei hasmajor irrigation facilities, with 63% of total arable land under irrigation.This has enabled Hubei to produce grains, cash crops and fruit. Like Sichuan,Hubei is primarily a grain producer (6% of the country's production) with 92%of crop output tonnage composed of grain in 1988 (23 million tons). Theremaining 8% was mainly composed of rapeseed and other oil-bearing crops,cotton and fruit, with some ramie, jute, hemp, tobacco and tea also produced.Gross agricultural output in 1988 was Y30 billion.

Recent Agricultural Performance

1.19 In line with the experience of the country as a whole, Sichuan,Chongqing and Hubei have experienced rapid agricultural development since theintroduction of the rural reforms. Grain output, still affected by pricecontrols and required deliveries, has increased moderately, 2.3% and 2.4%annually in Sichuan and Hubei respectively during the 1979-88 period. Farmoutput and farm incomes increased much more rapidly, however, due to farmerdiversification away from grain toward other cash crops and various types ofvalue-added activities. Non-grain gross agricultural output increased at therates of 7.2% and 7.8% annually in Sichuan and Hubei provinces respectively.One of the principal diversification activities has been the planting of fruitorchards, primarily citrus, because of high and increasing fruit prices. From1978 to 1988 the area planted to citrus increased by 16% p.a. in Sichuan and18% p.a. in Hubei (37,000 to 146,000 ha in Sichuan and 15,000 to 66,000 ha inHubei). The two provinces had a 19% share of the national total planted. Thatthe share of the two provinces declined to this level during the 10 year periodfrom a share of 28%, despite the two provinces' rapid growth, indicates therapidly developing national context for the subsector. Citrus growth has beenmost rapid in the southern coastal region, namely in Guangdong Province.

1.20 One reason for the relatively slow growth in the Mid-Yangtze regionis that available land for fruits is hilly and requires significant investmentin land development. However, the Ministry of Agriculture (MOA) has judged theMid-Yangtze valley to be ecologically superior to the southern Yangtze andcoastal regions because yellow shoot (greening), Tristeza and canker diseasesare present in thA a uthern and coastal provinces but not in the upper andmiddle Yangtze northern region. These virus diseases result in lower yields,smaller fruit size and shorter tree life and are part of MOA's reasoning inselecting the upper and middle Yangtze Valley for priority fruit development.At present, the more northerly areas produce mandarins and tangerines and thesouthern areas are more important for sweet oranges, pomelos, lemons and limes.

1.21 Fruit production is sensitive to variable weather conditions. Dryseason losses can be considerable in the fruit subsector, particularly when thedry period coincides with flowering, fruit set or periods of rapid fruitgrowth. The drought of 1988, for instance, decreased apple and bananaproduction by 4% and 9%, respectively, compared to 1987. Citrus production inthe main producing areas was even harder hit, with an average of 13% decreasein 1988 due to high temperature in July and August. O£1 the eight mainproducing areas, five (Sichuan, Hubei, Zhejiang, Hunan, Guangxi) suffered

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significantly reduced production. Even in non-drought years dry season damageto fruit trees reduces fruit quality and production, compared to orchards withpond (or other) irrigation. Irrigated orchards also escaped the larger damage(often 50-100% loss) due to abnormal drought conditions. To reduce this tiskimproved cultural practices and irrigation facilities would be provided underthe project for newly established and rehabilitated orchards (para 3.7).

p. Project Rationale

1.22 As part of the Government's efforts toward decentralization, thisproject would be planned and implemented by the provinces and the municipalitybut with significant guidance from the MOA. The project would raise yields,production and fruit quality by supplying improved varieties, financingfertilizer imports, utilizing international experience in virus indexing andplant certification, constructing irrigation facilities, and introducing modernpost-harvest technology and facilities for grading, fruit treatment andpacking. It would produce healthy seedlings and, in accordance with theGovernment's policy to maximize the use of available natural resources, wouldbring presently unused marginal hilly lands into production. Sound futuredevelopment would be achieved through the strengthening of research, extensionand training programs. Lessons learned from this project would be replicablein other areas. The project would also generate employment and increasefarmers' incomes in some of the poorest, most densely populated counties inSichuan and Hubei Provinces. In addition, soil conservation measuresintroduced by the project, e.g., terracing, contour planting, use of greencover crops and efficient utilization of available water resources, wouldcontribute to improved environmental conditions. The project would consolidatepresent fruit development efforts, following tne rapid expansion of orchards inthe last decade, and establish technical standards. Bank Group involvementwould give access to international fruit industry experience.

II. THE PROJECT AREAS

A. Location of Project Areas

2.1 The proposed project areas are in the southern regions of Sichuan andHubei Provinces along the northern bank of the Yangtze River where subtropicaland temperate fruits are grown. Most of the project activities would extendfrom Yibin County in Sichuan to Yido County in Hubei along the Yangtze Riverand its tributaries. Project locations and area statistics are given in IBRDMap No. 21726 and Annex 1, respectively.

B. Climate. Topography. Soils-and Water Resources

2.2 Climate. The Mid-Yangtze area has a temperate monsoon climate withcool winters and hot wet summers. In the project areui of Sichuan Province,the temperatures range from average daily low of 40C in January to averagedaily maximum of 300C in August with an annual daily average of 170C to 190C.The annual accumulated sunshine hours are about 1,127 to 1,617 and the frost-free period is 306 to 358 days. Annual precipitation averages 982 to 1,188 mmand average relative humidity is 65% to 84%. In Chongqing Municipality,

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climatic conditions are similar to the other project areas of Sichuan Province.Similar climatic conditions with slightly lower winter temperatures prevail inthe project areas of Hubei Province. The average daily temperature ranges from-60C to 290C, with an annual daily average of 160C to 180C. Annual accumulatedsunshine hours are more in Hubei and range between 1,550 and 1,968. However,the number of frost-free days is less than in Sichuan and ranges between 259and 327. Annual precipitation and percent relative humidity are 1,100 to 1,460mm and 70% to 81%, respectively, i.e., higher in Hubei than Sichuan. Annualprecipitation in the project areas of both provinces has an uneven distributionand annual rainfall fluctuates considerably. Dry spells and hot winds forabout two weeks in April-May and July-September are not uncommon. This cansignificantly affect fruit setting and fruit growth during these criticalperiods of fruit development, reducing yields and fruit quality. Theseproblems are compounded by high evapotranspiration (particularly during thesummer), which annually ranges between 700 and 1,110 mm. Irrigation is, thus,essential to ensuring good tree growth, increasing fruit set, obtainingconsistent yields, high quality and minimizing fluctuations in fruit supply.

2.3 Toupograghy and Soils. The project area is concentrated around thenorthern middle reaches of the Yangtze River and its tributaries. These areasare composed of hilly lands and valleys with elevations between 150 and 600 m.Slopes range from 100 to 600 with steeper slopes in the mountainous areas.Grains and other field crops are planted in the valleys, while fruit crops aremainly grown on the hilly slopes of less than 300. Soil properties in areasdeveloped for fruit cultivation vary considerably, as does the amount of soilimprovement necessary to establish good orchards. Trenching provides a soildepth of one meter. Terracing, use of fertilizers and manure in largequantities, along with providing compost at depth in the trenches and using ofgreen manure, modifies and improves soil properties. Excavated rock has fastweathering properties and progressively breaks down to increase and extend thearea of soil depth. Soils are variable depending on the parent rock and theweathering process and in Sichuan and Chongqing are derived mainly from purpleshale and mudstone. Soil pH ranges between 5.5 and 8.5 with an average of 6.0to 7.5. Organic matter content ranges between 0.8% and 3% and is usually onthe low side in hilly areas. 'n Hubei, purple soils occur but there is agreater proportion of red and yellow soils developed from shales and mudstonesand exhibiting a clayey nature. Soil pH averages about 6.5 and organic contentis around 1% to 1.5%. Soil depth is highly variable and in hilly areas variesfrom 10 to 40 cm. Overall, nutrient content is variable, and incorporation ofa green cover crop and use of chemical fertilizers to supply nitrogen andphosphate is necessary. Potassium levels in the soil are relatively adequate,but reinforcement may be needed in some areas. Supply of micronutrients, e.g.,zinc and iron, may be needed for fruit crops in areas where deficiency symptomsare recognized.

2.4 Water Resources and Ouality. To supplement rainfall, surface waterfrom the Yangtze River and its tributar'.es is pumped to ponds at differentelevations to irrigate crops by gravity. In some areas, groundwater is pumpedto irrigation ponds which also act as catchment areas for rain water. Waterquality is good in the project area and is generally suitable for irrigationwith total soluble salts of less than 1,000 ppm. Citrus is particularlysensitive to high boron levels. A low boron level is one of the importantcriteria in evaluation of water suitability for citrus development.

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C. Land Use. Farm Size and Population

2.5 About 5.1 million farm families live in the project area (29 counties)with over 90% rural. Out of a total land area of 7 million ha, about 1.4million ha (20%) is cultivated with field and tree crops. Following theintroduction of the production responsibility system, decisions on land usehave been entrusted to townships and households. The average householdoperates about 0.7 ha. Cereals and other field crops are planted in thevalleys and on some of the slopes with less than 100 to 200 inclination.Perennial tree crops (fruits and forestry) are planted at higher elevations andon terraced slopes of 300. Grasses and pine trees are sometimes planted onsteeper slopes, but such practices are discouraged where soil conservationmeasures cannot be implemented. MOA estimates that about 400,000 ha of hillyand marginal land with slopes less than 300 and adequate water resources,reasonable access to existing rail, road and river transportation and abundantlabor, could be developed to produce high qtality fruits, particularly citrus,pears, yellow peaches, plums, loquats, lychees and longans.

D. Present Development

2.6 China is believed to be the center of origin of many fruit cropsparticularly citrus. Historical records indicate that citrus has beencultivated there over the last 4,000 years and was introduced to other areas inthe world through commerce. Today, the main citrus areas are along the YangtzeRiver Valley and its tributaries and in the southern provinces. Some citrus isgrown in the southern areas of Shaanxi Province. Deciduous fruits, e.g.,plums, pears, and peaches, and subtropical fruits like lychees and longans, arealso grown in the project area. Deciduous fruits require cool temperatureswhich are found at high elevations in the ea.;tern areas. Some subtropicalfruits (e.g., lychees and longans) are grown in the southern areas of Sichuan.

Planting Material and Varietal DeveloRment

2.7 Planting Material. Current production of high quality fruitseedlings is variable because horticultural standards are not being uniformlyimplemented or adhered to. With the increased demand for seedlings, emphasishas been on quantity rather than quality. Consequently, some newly establishedorchards have had high incidence of seedling loss.

2.8 The production of quality seedlings for citrus and deciduous fruitorchards is limited by the availability of healthy budwood and disease-resistant rootstocks. Presently, available budwood and rootstock contribute tothe limited yield potential of new and replanted orchards. Grafted seedlingsare mainly produced by the public sector at research stations and agriculturalschools and lately, following the rural reforms in 1978, by farmers and smallprivate nurseries. Screening of budwood mother trees has been undertaken byresearch stations, particularly in the last two years, with increased emphasison the development of disease-free seedlings. These efforts, however, have notkept up with the surge in demand for seedlings to establish new orchards thatfollowed the lifting of price controls on fruits and vegetables. The qualityof seedlings produced to satisfy increased demand has been variable and has ledin many cases to replanting all or parts of some newly established orchards.

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Because of limited equipment, resources and lack of trained qualified staff,virus indexing and certification programs have not kept up with seedlingdemand. Consequently, farmers have produced their own substandard seedlings,which has led to the spread of fruit diseases, particularly in areas south ofthe Yangtze River (e.g., bacterial canker and yellow shoot). The project areais reported to be relatively free of both diseases, but adequate measures basedon modern techniques in virus indexing, certification programs and plantquarantine need to be implemented to ensure continued freedom from these andother diseases (e.g., Exocortis and Tatter Leaf), which could spread due toinadequate control measures. MOA has agreed to tighten enforcement of thequarantine laws to prevent introduction of diseased plant material and wouldestablish effective virus indexing programs capable of delivering neededquantities of healthy seedlings. Repeated testing of budwood mother trees on aregular schedule is essential because they can become infected through carelessuse of contaminated pruning tools and grafting knives. In addition, continuedtraining of nursery technicians in proper sanitary procedures for diseaseprevention is essential. The proposed project would give high priority toestablish virus indexing and seedling eertification programs in all stages ofproduction of propagating materials and would provide needed resources,including equipment and training of research and extension staff and farmers.

2.9 Fruit nurseries in the project area show wide variability in qualityof seedlings. Seeds for rootstock selection are usually from "wild" or "fence-row' seedlings, leading to great variability in horticultural characteristics.This is evident in seed beds, where seedlings are frequently variable in sizeand leaf characteristics. Rootstocks, often of unsatisfactory size and type,are budded and eventually result in uneven tree growth of new orchards.Seedlings' size is usually below optimum, budding height is low about 2.5 to 6cm, rather than the normally recommended pencil- size with budding height of 10to 15 cm. To avoid these problems, strict adherence to horticultural criteria,quarantine regulations, and virus indexing would be implemented in the projectby strengthening current seedling production regulations and tr, ining MOAstaff. Funds for establishment of modern citrus nurseries woulA be providedunder the project.

2.10 Varietal Development. Efforts to improve fruit varieties in theproject area were nearly halted in 1958 with the increased emphasis on grainproduction. This was coupled with pronounced neglect of horticulturalresearch. Fruit crops were accorded low priority until ru=al reforms wereintroduced in 1978 and free markets were established after 1983. Researchprograms to develop new varieties were initiated in the last decade at regionaluniversities and national and provincial research institutes, but due to thelong gestation of perennial horticultural crops, no significant results haveyet been obtained. These research programs aim to extend the harvestingperiod, by developing improved early and late varieties that would allow fruitto be harvested for six rather than three months. The research would alsodevelop improved cultural practices which would increase yields through the useof adequate irrigation, fertilizers and agrochemicals. Strengthening of suchfruit research programs through training and technical assistance is animportant objective of the proposed project.

2.11 Most of the fruit varieties currently in production are old onesdeveloped in China in the '30s or imported during that period and multipliedthereafter. In Hubei, red tangerines occupy about 70% of the citrus area,

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while sweet oranges and Satsuma mandarins are predominant in Sichuan (over60%). Realizing the limited availability of high quality varieties, the CitrusResearch Institute (CRI - para. 2.24) and Central Agricultural University atWuhan recently imported several improved citrus varieties from Spain and theU.S. for multiplication through shoot-tip grafting. Other subtropical fruitsin the project area, including lychees and longans, are usually propagated byaerial rooting (marcotage). Increased production of virus-free seedlings ofimproved citrus varieties is taking place at research stations in the projectarea, and nurseries established under the project would concentrate onproduction of seedlings of these varieties. Production of grafted lycheeseedlings of improved varieties would also be encouraged under the project.Because of climatic advantages in Sichuan, Valencia oranges would be planted insuitable areas and improved varieties of lychees and longans would replace low-yielding ones. In addition to desirable horticultural traits, economicparameters such as marketable yield per unit area and length and timing ofharvesting period, would be used to evaluate varieties for maximum land use.To augment farmers' income, intercropping with legumes and vegetable crops ispracticed during the early years of orchard development and the practice wouldbe encouraged under the project to improve soil fertility.

Cultural Practices.

2.12 Orchard Establishment. In Sichuan and Hubei, about 0.4 million ha ofmarginal hilly areas are available and are being developed as part of thecitrus expansion program. Slopes vary from 100 to 450, and although stony anduncultivated, with proper land development can support establishment ofproductive and healthy fruit trees under good conditions. Land is normallyterraced before planting which results in heavy labor requirements according tosteepness of slope. Blasting of rock has at times been necessary. Thehillsides have good water and air draining capacity, which reduce the risk ofroot diseases and frost damage. Since sunlight hours are limited (1,200 to1,600 hours annually), south facing slopes less than 300 are generallypreferred for orchards. While hilly lands have proven to be suitable forcitrus, lychees and longans perform better and produce higher yields in soilswith deep profiles. Such soils are available in Luzhou (Sichuan) where lycheesand longans would be planted under the project.

2.13 Fertilizers. In the project area, harvested green cover crops (greenmanure) are interspersed with soil in the tree holes about six months beforethe transplanting of seedlings. Organic manure is supplemented by chemicalfertilizers (mostly ammonium bicarbonate and calcium phosphate) applied atrecommended rates that depend on tree age and soil conditions. Presentrecommended fertilizer rates are based on experience, as use of soil analysisis not widely practiced, and leaf analysis is mainly done for researchpurposes. Low or excessive amounts of N in the plant tissues can seriouslyaffect fruit quality, shorten storage life of fruit and increase susceptibilityto molds and handling damage. Monitoring of N levels in leaves should besystematic in order to adjust fertilizer levels to plant needs. Monitoring ofother nutrients (P, K and micronutrients) is desirable anid leaf samples shouldbe analyzed periodically at specific stages of plant growth and fruitdevelopment. The project would provide equipment for soil and leaf analysisand training in fruit nutrition and orchard management.

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2.14 Farmers are unable to maintain recommended application rates in theproject area because fertilizer supply is currently inadequate. Marketingsupply companies at the county level are not able to obtain sufficient suppliesfrom government sources. The project would make direct provision forfertilizer supply througlh fruit development corporations and would finance itsimportation.

2.15 Control of Pest and Disease. Foot rot caused by Phvtophtora sp. isthe most widespread disease and causes significant loss in citrus trees becauseof low scion - rootstock grafting unions (less than 10 to 15 cm above soillevel). Other diseases of minor significance include sooty, green and bluemolds on fruit after harvest. Also, scale insect and cicadas spoil externalappearance of some fruits. Mites and leaf miners pose moderate problems,particularly in fruit nurseries and are usually controlled by spraying. Somebiological cor.trol methods are being developed and the proposed project wouldstrengthen the development of integrated pest management (IPM) practices.

2.16 Irrigation. Fluctuation of fruit yields in the project area occursfrequently and is mainly caused by lack of irrigation to supplement rainfall,particularly during April (flowering and fruit setting) and from August toNovember (increase in fruit size and maturity). Dry summers with highevapotranspiration rates (700 to 1,100 mm per year) contribute to yielddecrease and affect fruit quality. Some farmers use straw mulch after heavyrainfalls to conserve soil moisture, but if dry periods become long (about 2 to3 weeks), yield recovery is low because of the soil's low water holdingcapacity, particularly in hilly terraced areas. Yield losses of up to 100% dueto drought have been reported frequently. Uze of sprinkler irrigation is alsorecommended in the frost-prone areas of eastern Hubei Province. Effectivemeasures to retain soil moisture in combination with supplemental irrigationwould be adopted under the proposed project.

2.17 Pruning. Summer pruning consists of removing dead wood, autumn flushshoots and weak branches, and thinning out dense parts of the tree. Because ofthe general practice of close spacing of fruit trees, particularly citrus,farmers usually prune heavily to the detriment of fruit production. Training offarm technicians on how to form trees with good productive canopy is presentlyinadequate.

2.18 Harvesting and Post-Harvest Treatment. Most fruit is clipped fromthe trees into bamboo baskets. Despite improvements in handling since theintroduction of the responsibility system, standards of picking and handlingare still not satisfactory. Picking into field boxes or bags is generally notpracticed. The use of bamboo baskets damages the fruit and the basket hooksdamage the trees. The use of deficient harvesting practices is encouraged bypresent practices of paying for fruit by weight, regardless of quality,maturity and appearance. Fruits are only occasionally graded by size andoutside appearance, and only a very small percentage receive immediate post-harvest fungicide treatment. The project would introduce modern post-harvestmethods through training and provision of packing lines, fruit treatment,grading and suitable storage facilities.

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E. Infrastructure

2.19 Existing access roads to orchards are generally good gravel roads andcan be coutsidered to be of normal "all weather" standard. Grades are steep inplaces and bends of small radius. Existing orchards appear to be randomlysited and are often located on roads which have been already built to serviceoutlying mature orchards. Access roads generally feed down to hard-top or goodgravel roads which parallel the Yangtze River or one of its tributaries. Longdistance travel on main hard-top roads is hampered by poor surface quality andcongestion and is further constrained by fuel rationing, which limits thequantity of fuel and the areas in which a carrier may operate.

2.20 As for other means of transportation, the project areas are notdifferent from other heavy populated areas in China, which suffer fromcongestion, particularly around urban centers. Railways are the dominant meansof interprovincial citrus transportation. In 1987, about 75% of the citrusshipped from Sichuan Province was by rail, 17% by road and 8% by boat. Therail system is considered to be operating at or near capacity. Specializedtemperature controlled boxcars for transportine citrus to USSR (Siberia) duringwinter months are in short supply. Inland boat traffic may be public orprivate and the smaller boats tend to be privately-owned. Use of rivertransport is generally limited due to its slowness and lack of .onnections tonorthern areas except for the route through Shanghai and therealter by sea tocoastal areas. Use of air transport for fruit is usually limited to smallquantities of perishable fruits, e.g., lychees and longans. Therefore, landtransport by rail and road constitutes the most important means of provincialand interprovincial fruit tranisport. Sichuan Province has recently embarked ona road improvement program with Bank assistance (Chengdu-Chongqing HighwayProject, Loan 2951-CHA/Credit 1917-CHA). The province has recently establisheda special fruit transportation unit in the Provincial Bureau of Transportationto facilitate coordination and management of fruit shipping, particularlycitrus. The project would provide funds to build new access roads and upgradesome of the existing ones to new and rehabilitated orchards.

F. Marketing

2.21 The current market stat-us of Sichuan and Hub,ei citrus and other fruitoutput (and that of most other producing regions in China) is deficient. In thefirst place, the product reaching domestic and export market destinations is oflow average production quality and is further damaged by inadequate handling,packing and storage. Post-harvest treatment (fungicide treatment, waxing,protective packing, etc.) is rarely carried out, and grading is unsystematicand ineffective and is limited to size grading regardless of quality andmiaturity. Farmgate price differentials for quality are non-existent and, atthe wholesale 'svel, are minimal. Consequently, price signals are noteffective in inducing either farmers or distributors to produce qualityproducts. In the main, citrus is handled as a bulk commodity, and roughhandling is the norm. Truckloads of citrus products are usually packed inbamboo baskets or jute bags (and occasionally in cardboard boxes for export)but often they are transported without even these protections.

2.22 A second marketing deficiency is that demand and supply are seriouslymismatched in both variety and timing. The highest value orange varieties inworld markets - navel and Valencia - are produced in limited quantities in

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China. Thus, Chinese supply neither satisfies potential domestic consumerdemand for these superior varieties nor is able to enter Hongkong and otherinternational markets for them. As to timing, at present the harvest seasonfor all but an insignificant percentage of supply is concentrated in the two-month mid-November-to-mid-January period. Shortages and high prices for maturefruit are followed by over supply and low prices, followed again by shortageand high prices. This seasonal mismatch between supply and demand could besignificantly alleviated by the establishment of both early and late maturingvarieties and by the temperature and humidity controlled storage of treated,undamaged output for later release into the market. Improved timing of supplywould be particu.arly important for the domestic market, since consumptionpeaks associated with National Day at the beginning of Octaber and Chinese NewYear around the beginning of February are currently outside the productionseason.

2.23 Farmers' current strategies to take advantage of high prices outsidethe main harvest season are, in October and early November, to harvest andmarket immature fruits and, for January and February. to store output in housecellars and earthen caves for later sale. But these strategies are inedequate,since the immature fruit cannot command significantly higher prices, andtraditional storage technology results in a high percentage of loss. The lossin farmers' storage results partly because effective post- harvest treatment isnot carried out and partly because temperature and humidity are not controlled.In recent years, construction of naturally ventilated storage facilities hasbeen promoted by the CRI and village cooperatives, but little has been actuallyconstructed in the project area due to shortage of funds.

G. Horticultural Su2port Services

2.24 Research. Present horticultural research capability is sufficient tohandle project related activities in the project areas. Each province has itsown academy of agricultural sciences, and horticultural research institutesplay an active role in providing fruit growers with production and marketingrecommendations. Moreover, CRI of CAMS (located in Beibei near Chongqing) andits staff would be actively involved in the project, particularly in virusindexing and budwood registration programs. In addition to CRI, otherprincipal research institutes supporting project activities are: (i) theHortitcu-ltural Research Institute of the Sichuan Provincial Academy ofAgricultural Sciences; (ii) the Citrus Research Institute of CentralAgricultural University; (iii) the Virus Research Institute of CAAS; (iv) theHorticultural and Plant Protection Departments of Southwest AgriculturalUniversity (Sichuan); and (v) Luzhou Horticultural Research Institute(Sichuan). At the prefecture and county levels, there are several agriculturalresearch stations with significant horticultural activities that wouidparticipate in applied research programs, and training of extension staff andfarmers. Sichran Province initiated a five-year virus indexing and seedlingproduction program in 1986 with total funding of Y2.64 million. About 14national and provincial research and governmental organizations arecollaborating in the program.

2.25 Extension. The Provincial Bureaus of Agriculture and AnimalHusbandry and their agencies at the prefecture and county levels areresponsible for horticultural extension activities. The Economic Crops

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Division of each Bureau is responsible for perishables, including horticulturalcrops. The extension organization is at a crossroads between the communesystem of the '70s and the present production responsibility system (PRS).Linkages between research, awtension and farmers are evolving and assuming newdimensions. As a result of the PRS, extension staff are presently playing anadvisory role and it is up to the farmer to accept or reject extensionrecommendations. Recently, the Government established Agricultural TechnicalExtension Centers (ATECs) in several provinces. All the counties in theproject areas have county ATECs. The project would strengthen horticulturalextension activities through increased staffing, equipment and constructingadditional buildings. Both farmers and extension staff need retraining toestablish new means of communication, identify and resolve new problems.

2.26 As for present organization of extension activities in the projectarea, the Provincial Bureaus of Agriculture and Animal Husbandry and theEconomic Crops Division are responsible for defining fruit production programs.Detailed Zormulation and implementation of these programs, including extensionactivities, are carried out by the county bureaus and their staff. Extensionactivities at the village and township level are undertaken by technicians whoare usually skilled fruit farmers, who may be paid for some of theiradministrativc activities. Continued training by county specialists keeps thetechnicians up to date with government policies regarding new planting,provision of inputs, production practices and marketing aspects. Lack ofadequate extension equipment, e.g., visual aids, vehicles and farm inputs(quality seedlings, agrochemicals and spraying equipment) is hamperingextension programs, particularly the establishment of demonstration orchards infarmers' fields.

2.27 Training. Some of the institutes' fruit research scientists have hadadequate exposure and training in their specialized fields, but developments invirus indexing, plant nutrition, and post-harvest technology are progressingrapidly and their skills and knowledge need continued updating throughsubscriptions to international publications, attending symposia, and visits tohorticultural research centers in other countries. Some of the institutes haveadequate space for training and boarding, but lack training equipment. Most ofthe training at the institutes is for county, prefecture and provincial staff,while farmers are usually trained at county facilities. A few selected farmersare enrolled in some courses at the provincial level. Instructors from the CRIand Central Agricultural University have developed training programs on videothat have been used in technicians' training with good results.

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III. THE PROJECT

A. Project Objectives and Relation to the Sector

3.1 The main objectives of the project would be to:

(i) Increase fruit production in low income areas of Sichuan and HubeiProvinces and in Chongqing Municipality by establishing new orchardson presently uncultivated hilly slopes and rehabilitating existingones;

(ii) Strengthen research and extension service3 to implement sound virusindexing and budwood registration programs;

(iii) Improve fruit quality and increase value at the orchard level byproviding farmers with healthy, disease-free seedlings of marketablevarieties, helping them to improve their cultural and post-harvestpractices, and providing them with clear price incentives for graded,quality fruit production;

(iv) Streamline fruit marketing by establishing Provincial and CountyFruit Development Corporations to market quality fruit in local,distant and export markets by introducing modern post-harvesttechniques, providing investment in packing lines aud storagefacilities, and strengthening their commercial abilities;

(v) Alleviate poverty by increasing the incomes of currentlyunderemployed farmers and landless laborers; and

(vi) Provide a replicable model for other fruit production areas.

These project objectives are in line with the GOC and provincial strategy ofmaking efficient use of human, land and water resources and diversifyingincomes of rural people through production of high-value crops.

B. Project Descrigtion

3.2 For the production component, the project would finance investmentin developing model fruit nurseries (77.5 ha), budwood mother-tree orchards(120 ha), new orchards (11,986 ha), and rehabilitated orchards (2,473 ha).About 80% of the proposed investment would be provided for citrus development,with the remainder for lychee, longan, pears, loquat, plums, yellow peaches andkiwi. For the post-harvest and marketing component, the project wouldestablish new and strengthen existing Fruit Development Corporations (FDCs) atthe provincial (PFDC) and county (CFDC) levels. The CFDCs, under projectfinancing, would invest in and manage modern treatment, packing, and storagefacilities. They would purchase fruit from farmers according to their ownpricing schedules, which would implement MOA/PMO grading standards and provideadequate incentives for production of quality fruit by farmers. The CFDCswould sell the fruit purchased from farmers in local, distant and exportmarkets, but farmers would be free to use other distribution channels. The

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PFDCs would provide marketing services, such as market information andinterprovincial and export trading services to the CFDCs on a commission basis,but the CFDCs would also be free to use other channels, such as Foreign TradeCorporations and direct export sales. Regarding the institutional supportcomponent, the project would strengthen the Provincial Agriculture Bureaus'capability to identify, propagate and distribute virus-free planting materials.It would also provide technical assistance to institutionalize virus-freeindexing and budwood registration programs, post-harvest handling and orchardmanagement and would train research and extension staff in all dspects of fruitdevelopment.

C. Detailed Features

Production

3.3 Fruit Nurseries. Four principal research institutes with capabilityand experience in virus indexing and budwood production would participate inapplied research, seedling production and training programs (para. 2.24). Inaddition to provision of research equipment needed for virus indexing, threeinstitutes would be provided with controlled temperature greenhouses (200 to300 C). In addition, several insect-proof screened greenhouses would beconstructed and old ones remodellel. Virus indexed budwood produced throughshoot-tip grafting under supervision of the research institutes would be usedto plant budwood mother-tree orchards which are the main suppliers of healthybudwood to the nurseries. The project would provide funds to construct four haof greenhouses (120 poly-houses) in Sichuan for seedling production undercontrolled conditions. In addition, about 35 ha and 38.5 ha of open fieldnurseries would be established in Chongqing and Hubei, respectively.Greenhouses would be irrigated by hand-held hoses or in some cases by suspendedsprinklers. Nurseries would be irrigated by overhead sprinklers. Presentnurseries would be identified as to the source of their budwood with the objectof consolidating nurseries and using only budwood from budwood mother trees,which would be regularly supervised and tested for freedom from disease bycooperating research institutes. Only seedlings from present nurseries thatcould be verified to be healthy would be used for establishing new orchardsunder the project. The object is to gradually phase out nurseries withunproven sources of budwood. Rootstocks used in seedling production would alsobe virus-indexed and screened for trueness to type and horticultural qualities.Production of healthy seedlings would not be limited to citrus but would alsobe promoted for other fruits included in the project.

3.4 Establishment of Orchards. The project would establish 11,986 ha ofnew orchards. These orchards would be developed and managed according to thetechnical and management requirements of the project. Farmers would berequired to (a) follow project land development and improvement methods; (b)invest in and apply irrigation; (c) use healthy virus-free seedlings; (d) useapproved cultural practices and inputs; and (e) adopt approved harvesting andpost-harvest practices. The locations of orchards would have to meet thephysical and social criteria developed by the provincial and county Bureaus ofAgriculture. Among the physical criteria are: (i) suitable soils; (ii)planting on south side slopes of less than 300; (iii) proximity to sufficientgood irrigation water; and (iv) availability of infrastructure, particularlypower and roads. As for social criteria, orchards would be sited as much as

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possible in low income counties and villages, ones with per capita income aboutY200-250/annum, a level that is far below the provincial averages. Table 3.1shows the distribution of kinds of fruit to be developed under the project.

Tabl( 3.1 Phasi.j of NUrseries. Orchard Establishmentand Rehabilitation (ha)

Sinhuan Chongqir.g Hube; TotalNurseries & BudwoodMother-Tree Orcha, 28 a/ 61 108.5 197.5

Orchard Establishment 5800 2320 3866 11986Citrus 4624 2060 2699Lychees 900 * -

Longans 94 - -

Plums 66 - 67Loquats 116 200Yellow Peach - 260 567Pear - 200Kiwi - 133

Orchard Rehabilitation340 1633 2473citrus 500 240 1633Yellow Peach - 100 -

a/ Including 4 ha of greenhouses (120 poly-houses)

3.5 Locations selected for citrus orchard development are mainly inmarginal hilly lands which would need contoured terracing. Provision would bemade for purchasing blasting material to be used in difficult areas, fordeveloping contou- terracing, for improving soil fertility by using greenmanure and agrochumicals for establishing irrigation systems, and forconstructinp and rehabilitating roads. About 787 km of new access roads toorchards would be constructed under the project and about 145 km would beupgraded. These are gravel roads provided with culverts, ditches and roadreserve.

3.6 Orchard Rehabilitation. Average yields of existing mature orchards(15 to 20 years old) sre relatively low compared to their yield potential(about 15 t/ha for citrus compared to 27 t/ha of potential yield). Fruitquality is less than optimum under present conditions. This can be attributedto: (i) lack of fertilizers and pesticides; (ii) unreliable water supply withrainfall the predominant water source; (iii) old cultural practices, i.e.,close spacing, presence of pests and diseases, severe pruning, inadequatecontrol of fruit setting, and (iv) poor fruit handling. To rectify theseshortcomings, the project would invest in irrigation facilities, provide neededinputs, implement modern cultural practices and extend proven technicalrecommendations to 2,473 ha of existing fruit orchards. These orchards wouldserve as models for the rehabilitation of other existing orchards. Selectedorchards would be 7 to 10 years old and free of virus diseases, particularlyExocortis. In the few cases where replacement of the variety is recommended,top grafting with healthy scions of suitable varieties would be practiced.

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3.7 Irrigation ant Water Resources. Irrigation is essential if consistenthigh yields and better quality fruits are to be obtained. The large annualvariability and persistent shortage of rainfall during the fruit set and fruitdevelopment period, combined with the low water retention characteristic of thesoils in hilly areas, cause plant stress unless supplemental irrigation isprovided. The proposed irrigation works essentially consist of small pumps(about 150 mm diameter) abstracting water from existing pipes to sprinkler orhand-held hoses. Mainly electric power would be used but diesel engines willalso be required in orchards not sited close to exist'-g power lines and whereelectric supplies are uncertain (Chongqing) or where t,se and fall of riverlevel would make electric pump installation expensive. There is considerableexperience of this type of irrigation in the project area, served by competentand experienced Water Conservation Departments (WCD). These departments wouldbe employed by CFDCs and PMOs to design and supervise construction of tLworks. Construction contracts would be let by the CFDCs to IrrigationConstruction Corps (semi- autonomous contract branches of WCDs).

3.8 Availability of irrigation water is assured for these small schemesbecause rivers are large and perennial, and lakes and reservoirs (large, mediumand small) have all been assessed in the National General Survey of Reservoirs1986, ini which volume and existing demand were quantified and net availablesurplus estaelished. Only water sources with sufficient surplus to meetrequirements would be used.

Post Harvest and Marketing

3.9 Marketinz. The project's marketing strategy is, on the one hand, tostructure the production side so as to best satisfy existing and potentialdomestic and export demand for quality, variety and timing and, on the other,to stimulate the development of skilled and entrepreneurial marketingenterprises that can dynamically learn about and move to satisfy changingmarket demands.

3.10 Ouality. Quality in fruit production depends on an interrelatedchain of modern production, post-harvest treatment, and handling technologies.When correctly implemented, mature, blemish-free, firm, sweet, fruit wouldresult from the effective orchard development and production techniquessupported by the project. Among the most important handling requirements formodel orchards would be harvesting into bags or lined bamboo baskets, farmlevel grading, and careful farm-to-packing-line handling and transport. Pricedifferentials for quality, which would be set by the CFDCs, would provideeffective incentives to project farmers to perform the handling requirements.Packing lines provided by the project would be operated by the CFDCs and wouldadd further quality improvement to harvested fruits through fungicide treatmentto promote longer shelf life and product uniformity and waxing to enhanceproduct attractiveness, and packing to protect the fruit in transit. The FDCsin cooperation with PMU would also work hard to arrange timely and expeditioustransportation to distant domestic and foreign markets.

3.11 The project would provide funds to establish about, 23 packing linesdistributed as follows: (i) in Sichuan, 1'5 of 3 t/hr capacity and 2 of 5 t/hr;(ii) in Hubei, 4 lines of 3 t/hr; and (iii) in Chongqing one 3 t/hr and one 5t/hr. Total capacity of these packing lines is about 75,000 tons assuming

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operation period of 50 days and 20 hr/day. Some additional tonnage could alsobe handled during the summer harvest season (e.g., Valencia). Packing lineswould handle existing production and would use local labor. They would beowned and managed by the CFDCs. Operating funds for the first year would beprovided by the project. Cardboard boxes are available in the project area andwould be used in conjunction with the packing lines operations.

3.12 Startup operations of the packing lines would take place several yearsprior to receiving output from new orchards (as early as project year 2 in manycases). Price differentials for quality set by the CFDCs would elicit higher-than-average quality from farmers, though this quality is unlikely to reach thelevels expected later from the newly established orchards. During the interimperiod, the CFDCs would gain experience and would also add significant value tofarmers' output. Grading standards would also become familiar to provincialfruit markets.

3.13 Variety. The project would result in a major increase in theproduction of improved eatly and late matttring varieties, e.g., of navel andValencia oranges. Project citrus orchards would produce 52% of their projectedmature output in these two high-value varieties, 115,000 tons per annu= intotal. Not only would these oranges be marketable in Hong Kong and in otherexport markets, but in the case of the Valencia variety, the late spring(April/May) harvest period would allow project farmers to satisfy unmetdomestic consumer demands during this period and thereby earn high prices fromboth varietal quality and timing. Seedlings of improved varieties of otherfruit crops would be multiplied and distributed under the project inconjunction with application of modern cultural practices and needed inputs.

3.14 Storage. Storage facilities to be owned and operated by the UFDCswould also be provided under the project. Because of the climatic conditionsin the project area, ventilated storage rooms would be adequate for winter andspring storage as indicated by results obtained at CRI. These rooms aredesigned to keep room temperatures around 70 to 110C by opening the vents atnight when temperatures are low and closing them during the day. Relativehumidity is controlled by keeping graded fruits in plastic bags. The projectwould provide funds to construct about 19,100 m2 of fan ventilated storage areawith a total storage capacity of 6,685 tons. CRI has conducted fruit storageexperiments, which have led to improved design of ventilated storage facilitiesand extension of storage periods up to March and early April depending onoutside temperature. These improvements include the addition of fans, groundtunnels under the stacked fruits and some insulation. Because of cooltemperatures in winter and early spring in the project area, there is no needfor cold storage during that period. The need for cold storage facilities forfruits grown under the project is not immediate but in the future it may bejustified for Valencia oranges, lychees and longans.

3.15 TransRortation. The project would provide 363 transport unitscomposed of 25 four-wheel drive cross country vehicles, 93 4-7t trucks, 2381.0-1.75t trucks, 7 mini-buses and one medium town bus to facilitatecommunication and fruit movement from producers to consumption centers. Inaddition, 3 boats for transportation of fruits along the Yangtze River and itstributaries, and 72 mono-rail installations for in-field transport to orchard

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storage and loading areas (in Sichuan), would be provided. Assurances have beenobtained at negotiations that government would provide adequate funds (US$0.2million) to procure passenger vehicles needed under the project.

3.16 Management and Integration of Marketing and Productio. One of theimportant features of the project would be the strengthening of key commercialfruit marketing enterprises e.g. the CFDCs - some of which already exist andothers of which would be established in the course of project implementation.Their primary function would be to improve the marketing of fruit in threemajor ways: (1) buy farmers' produce under differential pricing for qualitygrades and varieties, (2) provide quality-enhancing packing, storage andtransportation services, and (3) carry out initial orchard development underthe supervision of the PMO to ensure agronomic and varietal quality parameters.The projecet would provide the CFDCs with investment funds for packing andstorage (paras. 3.11 and 3.14) and transportation (para. 3.15). The CFDCswould buy fruit from farmers according to the national grading standards thatwould be established and used in this project.

3.17 In order to avoid the problems that might come with establishingcounty marketing monopolies and to encourage competition in fruit marketing,farmers would retain the right to sell to whomever they wished including theirown county's CFDC. Alternative marketing channels would be farmers themselves,CFDCs from other counties, private merchants and retailers in farmers' markets.The CFDCs, for their part, would not be required to purchase all of farmers'output in their counties. Under competition and with free prices, the CFDCsand other distributors would be able to enforce grading and handling standards.This would enable them to participate fully in distant and export markets andmeet the profitable demands of these markets for quality fruit. PFDCs wouldalso be strengthened under the project to provide CFDCs with international anddistant marketing services on an agreed commission basis. The relationshipbetween CFDCs and the PFDC would be at the convenience of the parties, andCFDCs would also be free to deal with national and provincial foreign tradecorporations. These arrangements are described in the contract between thefarmer and CFDC and in the charters of CFDCs and PFDCs.

3.18 To facilitate and streamline communication between production andconsumption centers, provincial and county FDCs would be equipped with telex,facsimile, telephone, and office equipment (e.g., typewriters, copiers,calculators and microcomputers). Such equipment is needed to improve marketintelligence, speed up the decision making process and make producers and FDCsmore responsive to market signals and consumer demand.

Institutional Support

3.19 Domestic and International Training. To achieve the project objectivesand implement its components on a sound technical basis, training at all levelsis crucial to the project. Domestic training would include courses of variableduration in the areas of nurseries, orchard establishment and rehabilitation,use of agrochemicals, cultural practices, marketing, accounting and finance.Training would be provided for orchard managers, village technicians, extensionstaff, PFDC and CFDC personnel. Instructional materials and courses would bedesigned by the provincial bureaus of agriculture, cooperating researchinstitutes and other institutions. About 500 courses would be provided to

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beneficiaries, project staff and staff of FDCs. Inte tional training forselected staff would be arranged for one to three months duration, depending onsubject matter in orchard management, post-harvest handling, marketing, virusindexing, plant nutrition, plant protection, irrigation, and use of plantgrowth regulators. A total of 83 staff (37 from Sichuan, 21 from Chongqing and25 from Hubei) would receive international training. To provide managers ofFDCs and members of the Project Leading Groups (PLG) and Scientific andTechnical Committees (STCs) with sufficient knowledge and internationalexposure to fruit production and marketing in other countries, study tours for18 staff of one month duration would be provided (6 staff from each projectlocation).

3.20 Techlnical Assistance. To strengthen research and extension staffcapability in project implementation, international experts in the areas ofvirus indexing, irrigation, nutrition, post-harvest treatment and marketingwould be invited to China to conduct special training and lecture series. Atotal of about 9-man months of consultancy services would be provided under theproject. This would interlink domestic and international training programs.

3.21 Eguipment for Research and Extension. Cooperating research instituteswould be provided with equipment for virus indexing and post- harvest research.Hand lenses, calculatorb, and visual aids (video equipment and slideprojectors) would be provided under the project for use in extension programs.Some office furniture (e.g., desks, chairs and filing cabinets) would also beprovided.

D. Cost Estimates

3.22 The :otal project cost including physical and price contingencies isestimated at JS$136.9 million with a foreign exchange component of US$63.8million or 47% of the total. The production component amounts to $117.8million (86% of the total cost), composed of or,hard establishment (US$101.8million), orchard rehabilitation (US$13.7 million) and nurseries and budwoodmother gardens (US$2.3 million). The post-harvest and marketing componentwould total US$13.1 million (9% of total project cost) and the institutionalsupport component amounts to US$5.9 million (4% of total cost). Cost estimatesare based on unit prices prevailing in the project area and current importprices of imported items. Taxes and duties are not included in the estimatedcosts. Physical contingencies are 5% for civil works and other componentsexcept for labor, land acquisition, and organic fertilizer for which they arezero. Price contingencies for both foreign and local costs when expressed inUS dollars are based on annual international price escalation rates for allgoods and services of 4.9% for 1990-1994. When expressed in Yuan, they arebased on price escalation rates of 14% for 1990, 10% for 1991, 8% for 1992 and5% for 1993-94. Estimated costs are summarized in Table 3.2 and detailed inAnnex 2, Tables 1-3.

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Table 3.2 Summary of Estimated Project Costs

% %Total TotalBase % Base

Local Foreign Total Cost Local Foreign Total FE Cost

(Yuan Million) (US$ Million)Nurseries andMother Tree Garden 5.4 4.2 9.6 2 1.1 0.9 2.0 48 2

Orchard Establishment 239.7 185.2 424.9 75 50.8 39.3 90.1 44 75Orchard Rehabilitation 24.9 32.3 57.2 10 5.3 6.8 12.1 56 10Marketing Facilities 25.0 29.1 54.1 9 5.3 6.2 11.5 54 9Institutional Support 10.0 14.1 24.1 4 2.1 3.0 5.1 59 4

Base Cost a/ 305.0 264.9 569.9 100 64.6 56.2 120.8 46 100

Physical Contigencies 6.6 7.4 14.0 2 1.4 1.6 3.0 53 2Price Contingencies 71.7 62.6 134.3 24 7.1 6.0 13.1 46 11

Total Project Costs 383.3 334.9 718.2 126 73.1 63.8 136.9 47 113

a/ Project is exempt from taxes and duties.

E. Financing

3.23 Bank Group financing would be an IDA credit of SDR 48.6 million(US$64.0 million equivalent) and would cover 47% of total project costs. Theremaining 53% would be financed as indicated in the following table of USdollar equivalents:

US$ million

a) IDA Credit 64.0b) Provincial and Municipal Governments 7.5c) Prefecture Governments (Sichuan) 2.5d) County Governments 25.9e) Agricultural Bank of China 13.0f) Beneficiaries 24.0

Total 136.9

F. Procurement

3.24 Procurement arrangements are summarized in the following table.

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Table 3.3: Procurement Profile

Procurement Method Toral

Project Element ICB LIB LCB Other NA Cost

(US$ million)Land Acquisition 0.6 0.6

(0.0) (0.0)

Works 40.6 40.6(16.2) (16.2)

Land Prep. Materials 10.8 10.8(3.3) (3.3)

Planting Materials 2.3 2.3(0.9) (0.9)

Organic Fertilizer 11.0 11.0(0.0) (0.0)

Machinery & equipment 19.7 0.8 2.2 22.7(17.0) (0.6) (0.8) (18.7)

Vehicles & Boats 8.3 0.2 8.5(7.5) (0.0) (7.5)

Fertilizer & Pesticides 15.2 15.2(13.7) (13.7)

Soil Amendments & BordeauxMixture (Fungicide) 6.1 6.1

(2.3) (2.3)

Office Furniture & Supplies 0.4 0.4(0.2) (0.2)

Training & Tech. Assistance 1.2 1.2(1.2) (1.2)

Labor & 17.5 17.5Working Capital (0.0) (0.0)

Total 63.2 0.8 62.0 12.8 18.1 136.9(38.2) (0.8) (23.6) (1.4) (0.0) (64.0)

Notes: Figures in parentheses are the respective amounts financed byIDA Credit. All amounts include contingencies.

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3.25 Works worth approximately US$40.6 million would be required for theproject. They would consist of small sprinkler systems for orchards, US$25.0million; harvesting roads, US$3.3 million; irrigation ponds, US$5.1 million andbuildings, US$7.2 million. All would be scattered, scheduled over the life ofthe project and small. None could be packaged into contracts exceeding US$0.5million and would, therefore, not be of interest to foreign contractors. Theroads and irrigation ponds, total US$8.4 million, would be completed by theparticipating farmers who would be managed by the County Bureaus of Agricultureor Communications. The buildings and small sprinkler systems, total US$32.2million however, would be let under LCB procedures acceptable to IDA.

3.26 Goods worth about US$77.0 million would be required for the project.Most of the vehicles and boats, US$8.3 million; chemical fertilizers andpesticides, US$15.2 million ; and machinery and construction equipment, US$19.9million would be through ICB. The ICB procedures would be used for a total ofUS$43.2 million or 56% of the value of all goods financed under the project. Amargin of preference equal to 15% of the C.I.F. price of imported goods or theactual custom duties and imported taxes, whichever is less, would be allowed tothe domestic manufacturers on IGB. Computers, drip irrigation and specializedoffice equipment (US$0.8 million) would be procured on the basis of limitedinternational bidding (LIB). Land preparation materials, US$10.8 million;planting materials, US$2.3 million; soil amendments and Bordeaux mixture(fungicide); US$6.1 million and the research, extension and office equipment,US$2.2 million would be procured through LCB procedures. Local shoppingprocedures would be used to procure office furniture and supplies which intotal would not cost more than US$0.4 million. Adequate local manufacturingand supply facilities offering reasonable prices exist for all goods notprocured through ICB procedures. The land preparation, plenting materials,soil amendments and Bordeaux mixture are very bulky and require labor intensiveproduction methods. The minor machinery required must be compatible with theexisting domestic machinery. Even though most of the non-ICB goods would bepackaged together, delivery would be scheduled over three years and assigned tomany locations throughout the project. Because of the above reasons and thenecessity for widespread after-sales service, foreign firms would not beinterested in bidding for the goods scheduled for LCB or local shopping.Passenger vehicles (minibuses), US$0.2 million would be financed by theGovernment. Organic fertilizer, US$11.0 million will be acquired directly fromlocal sources and it will not qualify for IDA financing. The projectauthorities have retained China National Machinery Import and ExportCorporation (MACHIMPEX) as their procurement agents. MACHIMPEX has been theprocurement agent for several Bank projects and is familiar with Bankprocurement guidelines and requirements. All procurement procedures that wouldbe used for the project have been found acceptable to IDA. The bid documentsthat would be used are those that have been used on other recent Bank financedprojects in China and they would be reviewed to assure that they are stillacceptable to IDA. Detailed lists of the goods, giving the cost and the methodof procuremenf that would be used for each item, are shown in Annex 2, Tables5.1-5.3.

3.27 Training and technical assistance worth approximately US$1.2 millionwould be required for the project. This consists of: International specialistsand overseas training, US$0.7 million and domestic training, US$0.5 million.The selection of consultants and the program for overseas training would be

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formulated by the STCs based on the detailed training program to be prepared bythe Joint Project Management Office (JPMO) by negotiations. The employment ofconsultants would be in accordance with the Guidelines for the Use ofConsultants. Assurances would be obtained at negotiations that: (i) trainingprograms would be reviewed by IDA prior to their finalization, and (ii) theterms of reference of all international consultants and study tour programswould be reviewed by IDA prior to obtaining MOF approval.

3.28 All packages valued in excess of US$200,000 for works, goods, servicesand training regardless of procurement method used would be subject to IDA'sprior review. This is estimated to cover over 25% of the works, about sixpackages, over 90% of the goods, about eight packages and 100% of the technicalassistance and overseas training. A procurement schedule, showing how thegoods would be packaged, as well as when and how they would be procured, areshown in Chart 3.

G. Disbursements

3.29 Disbursements against expenditures for goods and materials would be100% of the foreign exchange cost of imported items; 100% of the ex-factoryprice for locally manufactured items; and 75% of other items procured locally.Disbursement against the LCB contracts for civil works would be 40% of contractexpenditures. Disbursements for training, study tours, and consulting serviceswould at 100% of total expenditures.

3.30 Disbursements would be made against statements of expenditures (SOEs)in the case of overseas training, study tours, and contracts for works, goodsand services each costing less than US$200,000. SOEs for building andconstructlon would be supported by progress reports showing physical quantitiesand unit prices. For all other expenditures, documentation supporting the SOEswould be retained by the Provincial and Municipal Project Management Offices(PMOs) and made available for review by IDA supervision missions. In order toprovide for efficient disbursement, a Special Account administered by the JointProject Management Office (JPMO) would be opened in Beijing in a bankacceptable to IDA. The authorized amount is US$4.1 million which representsabout 4 months of project expenditure. To facilitate launching of projectactivities, particularly for land development, materials and civil works,retroactive financing would be provided. An amount of up to US$6.0 millionwould cover expenditures incurred after June 15, 1989. Applications forreplenishment of the Special Account would be submitted monthly, or wheneverthe Special Account is drawn down to 50% of its initial deposit, whichevercomes first.

3.31 It is estimated that the project would be completed by December 31,1994, and the closing date would be December 31, 1995. Disbursement experiencein China has been very favorable and better than Bank Group averages. Theproject disburseme-nt profile is essentially in line with that for investmentloans in China. Estimated schedules of expenditures and disbursements aregiven in Annex 2, Table 6.

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H. Imlementation Schedul

3.32 The project would be carried out over a period of five and a halfyears, from June 1989 to December 1994 (Chart 1). Training programs,procurement and installation of research and extension equipment would beconcentrated in the first year. Similarly, land development and establishmentof nurseries would be concentrated in the first two years. Establishment ofnew orchards would continue in all five years. Virus-free, healthy seedlingswould be selected by the STCs in the first two years of project implementationwith seedlings from existing nurseries until production from project nurseriescommences (year 3). Procurement and installation of packing lines would becorcentrated in the first two years. A considerable amount of planning wouldbe undertaken in the first year especially for staffing FDCs, training,procurement, land development, nurseries development, organization and'anagement. The proposed schedule is considered to be feasible due to thedemonstrated ability of MOA to implement ongoing Bank assisted projects andMOA's effective relations with the provincial bureaus of agriculture in theproject area.

I. Accounts and Audits

3.33 Records of expenditures on civil works, equipment, materials,irrigation, land development and agricultural inputs would be maintained by thecounty PMOs. These records would be forwarded to the provincial PMOs, whichwould prepare consolidated accounts including separate accounts for localexpenditures and imports. The provincial PMOs would be responsible forsubmitting reports to IDA through JPMO. JPMO will combine the provincial andmunicipal accounts into one consolidated report to be submitted to IDA.Assurances have been obtained at negotiations that the PMOs would maintain theconsolidated accounts of all components for annual auditing by independentauditors acceptable to IDA and that the audited accounts would be submitted toIDA within six months of the close of each financial year. The auditedaccounts would include details of withdrawals from the Credit account made onthe basis of SOEs and the auditor's opinion as to whether such withdrawals wereagainst expenditures eligible for reimbursement by IDA.

J. Environmental ImRacts

3.34 The environmental impact of the project would be quite positive,especially in the area of soil conservation through terracing, contourplanting, incorporation of green manure, tree crops (fruits) and increasedvegetation in the terraced areas. Vetiver grass (Vetiveria Zizanioiaes) wouldbe experimentally introduced under the project to augment soil conservationmeasures in newly established and rehabilitated orchards. No drainage orsalinity problems would result as all orchards are established on hilly slopes.The use of agrochemicals, particularly fertilizers and pesticides, would followproven and safe recommendations under supervision of trained and qualifiedextension staff and farm technicians. Farmers would be charged foragrochemicals, and only safe agrochemicals would be procured under the project,and would require IDA's prior approval. Assurances have been obtained atnegotiations that all effluents from packing lines would be treated and thatthe provincial environmental bureaus would approve the final arrangement forwaste disposal, and would set up and maintain a system of monitoring effluentquality throughout the life of the project.

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IV. PROJECT ORGANIZATION AND MANAGE 2R

A. Proiect Organization

4.1 The Governments of Sichuan and Hubei Provinces and ChongqingMunicipality would be responsible for overall project implementation under thegeneral supervision of the Ministry of Agriculture (MOA) as represented by theJPMO. JPMO has been established by the three project jurisdictions with asecretariat located at XOA in Beijing to provide interprovincial coordination.Staff of the JPMO would come from MOA and Project Management Offices (PMOs) ofSichuan, Hubei and Chongqing. To implement the project, each jurisdiction hasestablished these PMOs for interagency coordination at the provincial andmunicipality level. Similarly, each county and prefecture (in Sichuan) hasestablished its PMO in the Bureaus of Agriculture. To guide JPKO and PMOs inproject policy matters at central, provincial and county levels, the projectwould establish Project Leading Grcups (PLGs) at the respective levels. PLGswould be cbaired by a Vice Minister of Agriculture at the central level, ViceGovernors/Vice Mayor at the provincial and municipality levels and countychiefs at the county level. To foster and ie'lement fruit development,production and marketing activities, Fruit De, lopment Corporations (FDCs) atthe provincial (PFDC) and county (CFDC) levels have been established. Inaddition, each project jurisdiction has established a Scientific and TechnicalCommittee (STC) to make recommendations and establish policies on technicalaspects, particularly those related to the production of healthy seedlings,establishment of orchards, post harvesting practices and training. Theorganization for project implementation is shown in Chart 2.

4.2 Joint Proiect Management Office (JPMO). The JPMO would be chaired byan experienced MOA agriculturist (formerly a Deputy Director of MOA's Bureau ofAgriculture) and would be composed of two members representing MOA and threerepresenting the PMOs of Sichuan, Hubei and Chongqing. It would meetperiodically as needed to implement policy decisions and resolve commonproblems. JPMO would have the following functions, it would: (i) plan,coordinate and implement project activities in cooperation with the PMOs at theprovincial/ municipality, prefecture and county levels; (ii) liaise withproject jurisdictions through their representatives in implementing projectpolicies; (iii) arrange combined procurement under ICB or LIB; (iv) coordinateinstitutional development aspects, particularly overseas training and technicalassistance; (v) assist and coordinate preparation of applications forwithdrawal of the IDA credit; (vi) prepare consolidated accounts, audits andprogress reports; (vii) administer the special account; and (viii) undertakeproject monitoring, evaluation and preparation of completion report.

4.3 Project Leading Grouns (PLGs). Each major project jurisdiction wouldestablish a PLG to formulate project policies, review progress, facilitateproject implementation and resolve issues which may hamper progress. PLGswould also be established at prefecture and county levels with the sameobjectives. Membership of the PLGs at province, prefecture and county levels,would be comprised of representatives from the Bureaus of Agriculture andAnimal Husbandry, Planning, Finance, Agricultural Bank of China (ABC), andother agencies involved in the project, e.g., Land Administration, Economic andTrade Commission, Supply and Marketing Cooperatives and the Ministry of Light-

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Industry. In addition, to facilitate PLG awareness of fruit developmentactivities, the managers of FDCs at the county and provincial levels weuld bemembers of the respective PLGs.

4.4 Project Management Offices (PMOs). PHOs at provincial/municipality,prefecture and county levels would be established at the Bureau of Agricultureand Animal Husbandry and would be responsible for project implementation underthe guidance of each PLG at the respective administrative level. Each PMOwould be sta'fed with trained and qualified technical, administrative,financial, and management offices. The PMOs would have a primary function ofassisting the FDCs to undertake their fruit development and marketingfunctions. In addition, the PMOs would: (i) draw up annual, detailed workprograms and budgets for the project; (ii) review and approve lower level PMOwork plans; (iii) monitor the physical and financial progress of the project;(iv) coordinate and supervise project implementation; (v) review and approvetechnical specifications for land development, orchard establishment, orchardrehabilitation and fruit harvesting; (vi) administer and coordinate projecttraining and technical assistance programs; (vii) liaise with JPMO on ICB andLIB; (viii) undertake local competitive bidding; (ix) prepare, collate andsubmit to JPMO detailed project accounts, audits and progress reports; and (x)prepare withdrawal applications to IDA through JPMO and MOF. The PMOs at eachlevel would liaise between the project and the various technical and financialbureaus that have support functions for the project.

4.5 Fruit DeveloRment CorRorations (FDCs). FDCs are state-owned autonomouslegal entities with charters registered with the General Administration ofIndustry and Commerce which define the scope of their activities, sources andamounts of capital, borrowing powers and management structure. The FDCsestablished under the project would operate as independent entities involved infruit development and marketing activities. They would implement the variousaspects of China's management responsibility system including management byautonomous and personally responsible general managers and hired staff. Tointroduce shareholding concepts and encourage producers' participation asshareholders, the provincial and municipal governments would establish one CFDCin each jurisdiction to operate as a joint stock company with zhareholders andboards of directors. An understanding has been obtained during negotiationsthat one CFDC would be selected from each jurisdiction for a joint stockcompany and their draft charters would be submitted for IDA's review.

4.6 The provincial/municipality FDCs would operate as apex organizationsfor CFDCs, responsible for providing market information and interprovincial andfuture export marketing activities. Development and strengthening of aresponsive market inforLation system is crucial to the success of the FDCs.The PFDCs would also act as central marketing organizations for CFDCs fordesignated service fees. Assurances have been obtained at negotiations that atall times FDCs would operate as financially independent entities and would bemanaged by competent and experienced staff.

4.7 On the production side, CFDCs would establish and manage mother treegarden, open field and polyhouse nurseries financed by the project (para. 3.3).CFDCs would also have an important role in production and would interrelatewith farmers as follows: Project farmers would be required to contract withtheir county's CFDC for land and orchard development and irrigation

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construction services. The CFDC's in turn would arrarige for loans to projectfarmers to finance these services (para. 4.11). Projeot farmers would alsodirectly contribute services to orchard development under their individualcontracts with the CFDC, e.g., planting of seedlings, production of organicmanure, application of inputs and maintenance of the immature orchard. Theywould be required to use CFDC-supplied seedlings and certain CFDC-suppliedinputs. To augment the incomes of farmers during orchard development, the CFDCwould give preference in hiring to members of farmers' families. Suchactivities as nursery establishment and operation, land development, irrigationconstruction, development of county-owned orchards and construction of postharvest treatment and storage facilities would all require hired labor.

4.8 On the marketiuig side, CFDCs would purchase fruit from farmersaccording to a pricing schedule differentiated by grade and sell in local,distant and export markets (paras. 3.2,3.10,3.16,3.18,5.12). The CFDCs wouldprovide extensive marketing-related services using equipment financed by theproject; all CFDCs would operate transport facilities and the majority wouldoperate packing lines and storage facilities (paras. 3.11,3.14,3.15). CFDCmarketing activities would commence in advance of new production under theproject (pars. 3.12). CFDU packing lines would be in operation as early asyear 2 and would pack and market supplies purchased from existing productionand from rehabilitated and new orchards when they come into production in year2 or 3 and year 5, respectively. CFDCs would operate in a competitive orpotentially competitive environment: Farmers would not be constrainted inselling to other buyers (including CFDCs from other counties), and CFDCs wouldnot be obligated to purchase farmers' output in their own counties (para.3.17). Farmers at their option would also not be required to repay loans indelivered fruit, but could repay them in cash (para. 4.14), thus preserving amarket relationship with the CFDCs.

4.9 An understanding was reached at negotiations on operational guidelinesfor the CFDCs regarding their financial soundness, including requirements thatthey maintain a debt-equity ratio no greater than 5:1, that corporationinvestments financed under the project should have a financial rate of returnof at least 12%, and that subloans approved by CFDCs to farmers would be atinterest rates no lower than currently prevailing ABC rates for similarsubloans.

4.10 Scientific and Technical Committees (STCs). To advise PLGs, PHOs andFDCs at all levels, STCs composed of technical specialists in all areas offruit development, including virus indexing, budwood registration, orchardestablishment, orchard rehabilitation and post-harvest treatment, would beestablished at the central, provincial and county levels and would also beinvolved in planning and designing domestic and international training programsand technical assistance. Periodic meetings between STCs at central andprovincial/municipal and county levels would be undertaken, particularly toreview previous plans and formulate future ones. Membership of the STCs wouldbe composed of eminent scientists from cooperating research institutes,managers of Provincial Bureaus of Agriculture and Animal Husbandry, and ATECsand other agencies involved in the project.

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B. Financial Management

4.11 Flow of Funds. Proceeds of the IDA Credit would be onlent by MOF tothe provincial governments of Sichuan and Hubei and to Choxigqing Municipalityat a 5.5% annual rate of interest with repayment of 17 years, including assven-year grace period. The provincial/municipality governments would onlendto the CFDCs through t.heir County Bureaus of Finance. These jurisdictionswoulc be responsible for raising counterpart funds. The foreign exchange riskwould be borne by the provincial/ municipality governments. Some IDA fundswould be disbursed directly to suppliers under ICB contracts, and an additionalportion would be used to cover the costs of institutional development aspects(technical assistance, training and equipment). Contracts would be signed ateach level of government and at each stage of relending operation, indicatingthe terms of lending and repayment obligations. Subloan applications fororchard establishment and orchard rehabilitation would be submitted to PMO fortechnical evaluation and CFDC for financial evaluation. Subloan approval wouldbe undertaken by CFDCs after consultation with county PMOs. Farmers would haveto sign contracts with CFDCs for their services in orchard astablishment. Tnecontracts would be kept at local branches of ABC. The costs of GFDC ser'ices,including procurement of inputs and installation of irrigation systems, wouldbe charged to farmer accounts. CFDC funds would be deposited at ABC countybranches, which would disburse and collect repayments for aLl subloans toproject beneficiaries, including the CFDCs (e.g., working capital after filstyear). In acting as an agent for the CFDCs, the ABC would charge a loan-processing fee. Funds onlent from CFDCs to collective orchards or farmersunder the project would be at interest rates not less than the prevailing ABCrates for si-ilar purposes, which are currently about 19% per annum fordevelopment projects. For civil works, Chongqing will usQ the Bank ofConstruction to handle funds earmarked for construction putrposes. Anunderstanding has been reached at negotiations specifying the terms andconditions of loans between the various lenders and borrowers.

4.12 A combined project agreement between IDA and the two provincesincorporating the above terms and conditions would be signed. State Councilapproval of tie Development Credit Agreement and arrangements satisfactory toIDA between the Borrower and Chongqing allowing the latter to implement theproject would be conditions of effectiveness of the Credit.

4.13 Domestic funds, which account for about 53% of the project costs wouldlcome from the provincial/municipality governments, prefectural, county andtownship governments in the form of special budgetary allocations and loans.Subloan beneficiaries would contribute about 18% of the subloan amounts mainlyin the form of labor contribution and farm manure. An assurance has beenobtained at negotiations that provincial/municipality, prefecture and countygovernments and lending inst 4 tutions would provide, in & timely fashion, therequired contributions to the counterpart funds. After 1:roject completion atthe end of year 5, beneficiaries will in general require modest amounts ofcredit to finance proper maintenance of orchards until they are in fullproduction. An assurance has been obtained during negotiations that ABC orother financial institutions would make the necessary fundirg available toproject beneficiaries after project completion and until orchards reach fulldevelopment.

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4.14 Recovery of Projbct Investments. Local branches of ABC would serve asthe agents for CFDCs in recovery of project loans from farmers for a servicecharge to be agreed between both parties. Farmers would have the right torepay in cash (and receive cash payment from the CFDCs). Full recovery of theIDA portion of total project funding would be guaranteed by the financialbureaus of the participating provinces and the municipality. Counties andprefectures would repay the provinces and the municipality, which would, inturn, repay MOF for the use of the IDA credit. Domestic funds would berecovered in a similar manner and according to terms and conditions determinedby local governments.

C. Execution of Project Works

4.15 The CZDCs and PMOs would be responsible for implementing the projectcomponents particularly land development, orchard establishment andrehabilitation, and marketing facilities. The line agencies, represented inthe PMOs, would be responsible for undertaking infrastructure construction aspower supply, roads, bridges and culverts. The PMOs would implement theinstitutional development aspects in cooperation with STCs, ATECs, and the JPNOat MOA. To initiate ths implementation phase of the proposed project, theJPMO, in collaboration with PHOs, would conduet a project launch workshop toreview the overall process of implementation and to clarify individual tasksand responsibilities at each level. Other topics to be covered would includeprocurement and disbursement procedures, project financial management,accounting and auditing, reporting and monitoring and evaluation.

D. Monitoring. Evaluation and Reporting

4.16 The provincial/municipality, prefectural and county PMOs would monitorthe project's progress and evaluate its economic and financial benefits foreach component and overall impact, including the impact of the operations ofthe PFDCs and CFDCs. In order to assess project achievements adequately, MOAhas agreed to conduct a baseline survey using the services of the EconomicResearch Institute of CAAS, which would plan the survey and finalizequestionnaires following their review at negotiations. The survey would becompleted before the end of the first year of project implementation. Underthe guidanqe and supervision of JPMO at MOA, the PMOs in the project counties,prefectures and provinces/municipality would establish a system of projectmonitoring and evaluation. Such a system would include physical indicators(land development, establishment and rehabilitation of orchards, number ofhealthy seedlings, road construction, civil works, procurement of inputs) andproduction indicators, including information on quality, grading, packing,ttansportation, etc. Financial indicators would track project financing,availability of foreign and local funds, and claims for disbursements againstcredit proceeds. Special emphasis would be accorded to monitoring andevaluation of FDCs at the provincial and county levels. The objectives of thesystem would be to identify constraints early and initiate corrective measures.In addition, the system would be expected to lead to an upgrading of FDC andPMO capabilities in project implementation and to introduce businesslikemethods of FDC operations. A list of key indicators is shown in Annex 3,Tables 8.1-8.4.

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4.17 To disseminate lessons learned during'project implementation, annualseminars attended by project staff would be organiud by the PiOs and STCs todiscussed findings ane special problems faced by different counties and entitiesincluding the FDCs. Experts from key horticultural research institutes andextension staff would participate in these seminars. Project physical andfinancii4l progress reports on a semester basis (6 months) would be prepared byprovincial/municipality PNOa and submitted to IDA through JPMO. ln addition, adetail(ed mid-term review of the project would be carried out by JPMO. Theformat of the progress reports and mid-term report has been agreed with IDAduring the project launch workshop (September, 1989). Finally, JPMO wouldprepare a Project Completior. Report for submission to IDA within six monthsafter the closing date of the Credit's disbursement.

V. PRODUCTION. MARKETS AND PRICES

A. POUTO

5.1 The incremental production of the project would come mainly from theestablishment of new and rehabilitated orchards with a broader mix of varieties,including early and late maturiag ontes. Higher productivity in these orchardswould result from higher-quality seedlings, improved irrigation, better culturalpractices, greater use of fertilizer and pestieides, better harvesting and post-harvest practices, and more effective fruit marketing. Since the new orchardswould be established primarily in hilly areas, where small shrubs and grassvegetation now dominate and where only minor grazing has been possible, changesin cropping pattern would not be an important aspect of the project.

Yield and Production

5.2 The introduction of improved virus-free varieties, balancedfertilizers, integrated pest management and dry-season irrigation under the,project would increase yields substantially. The present citrus yield at fulldevelopment ranges from 9-15t/ha compared to 24-30t/ha with the project. Theyield profile for new project orchards shows citrus production starting in year4 with gradually increasing yields until full production in years 10 to 15. Thetrees would stay at full production until about year 40, after which yield wouldgradually decline until replacement becomes economic, some time after year 50.Valencia and mandarin varieties would give 2.5 t/ha in year 4, increase to fullproduction of 27 t/ha around year 10 or 11, and maintaln this yield through year40. Sweet oranges would have the same profile through year 10 but wouldcontinue to increase to 30t/ha at year 15 and then maintain this level throughyear 40. Navels would produce 6t/ha in year 4 and reach full production in year11 with a yield of 24t/ha. Pomelo would start in year 5 with a yield profile of2.25t/ha and then increase to full production of 22.5t/ha in year 10.

5.3 The non-citrus fruit varieties start bearing at various dates and havevarious yields at the start but all reach full production in year 10 or 11.Yellow ppaches and plums start bearing in year 3 with yields of 2.5t/ha and havefull-production yields of 22.5 and 24 t/ha. Loquats, pears and kiwi startproduction in year 4 with yields of 2.25,3.75 and 2.25t/ha respectively and havefull-production yields of 15, 37.5, 22.5 t/ha, respectively. Both lychee andlongan start in year 5 at 0.75t/ha and have full-production yields of 11.25

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t/ha. All of these yields are substantially higher than current yields in theproject area, but are easily achievable in the project areas with theimprovements outlined in para. 5.1.

5.4 For rehabilitated orchards, improved yields due to new inputs andirrigation water, better cultural practices and improved management would beginin year 2 and would reach full potential in year 7 (trees about 15 year old).The incremental yields in year 7 would be 17t/ha for sweet orange, llt/ha forValencia, 16.5t/ha for navel and 15.3t/ha for yellow peaches.

5.5 Total annual project production from *uew orchards would be 256,880tons of citrus and 48,215 tons of other fruit. Incremental annual production ofrehabilitated orchards would be 40,340 tons for citrus and 1,500 tons for yellowpeaches. The area, yields and production at full development for new andrehabilited orchards are shown in Table 5.1.

Table 5.1 Yields. Planted Area and Production by Jurisdiction

I. Dxs Yield at Sichuan Chongqing Hubei TotalOrchards Full Dev. Area Prod. Area Prod. Area Prod. Area Prod.

(t/ha) (ha) (ton) (ha) (ton) (ha) (ton) (ha) (ton)Citrus:-Sweet Orange 30 1,794 53,820 1,260 37,800 966 28,980 4,020 120,600-Valencia 27 1,100 29,700 540 14,580 433 11,691 2,073 55,971-Navel 24 1,530 36,720 60 1,440 800 19,200 2,390 57,360-Mandarin 27 100 2,700 0 0 500 13,500 600 16,200-Pomelo 22.5 100 2,250 200 4,500 0 0 300 6,750Subtotal 4,624 125,190 2,060 58,320 2,699 73,371 9,383, 256,881

Other Fruits:-Lychees 11.25 900 10,125 0 0 0 0 900 10,125-Longans 11.25 94 1,058 0 0 0 0 94 1,058-Y. Peaches 22.5 0 0 260 5,850 567 12,758 827 18,608-Loquats 15 116 1,740 0 0 200 3,000 316 4,'740-Plums 24 66 1,584 0 0 67 1,608 133 3,192-Pears 37.5 0 0 0 0 200 7,500 200 7,500-Kiwi 22.5 0 0 0 0 133 2,993 133 2,993Subtotal 1,176 14,507 260 5,850 1,167 27,858 2,603 48,215

Total New Orchards 5.800 139.697 2.320 64.170 3.866 101.229 11.986 305.096

II. &Xisti.ng Incre. Area Incre. Area Incre. Area Inere. Area Incre.Orchards Yield Prod. Prod. Prod. Prod

-Citrus: 500 8,500 240 4,080 1,633 27,761 2,373 40,341Sweet Orange 17 140 2,380 1,633 27,761 1,773 30,141Valencia 11 220 3,740 240 4,080 460 7,820Navel 16 140 2,380 140 2,380

-Y. Peaches 15.3 0 100 1,530 0 100 1,530

Total Ex. Orchards 500 8.500 340 5.610 1.633 27.761 2.473 41.81

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B. MARKETS

Domestic Markets

5.6 Demand: Consumption of fruit in China has increased rapidly in recentyears, despite a fourfold increase in relative fruit prices resulting from pricedecontrol. This surge in consumption was due to rising incomes and the releaseof suppressed demand after the previous era of shortages. Total consumption offruit of all varieties increased from 6.6 million to 16.7 million tons from 1978to 1987, while per capita consumption increased from 6.8 kg per capita in 1978to 15.4 kg per capita in 1987. Dramatic though this increase is, China's percapita fruit consumption is still small compared to the world average of 65 kgper capita. Since fruit is a superior good, increases i.a per capita income willbring greater-than-proportional increases in fruit demand.

5.7 In line with the general increase in fruit demand, demand for citrusincreased substantially during the last decade, and consumption increased from0.4 kg per capita in 1978 to 3 kg per capita in 1987. It is expected tocontinue to increase rapidly. The citrus demand projection of an FAO/CP study,based on the assumptions of an annual income increase of 5.5% until 1995 and 4%thereafter, an annual growth in population of 1% over the period 1986 to 2010and an income elasticity of demand of +1.2, indicates that the per capita citrusconsumption would be 9.0 in 1995, 11.9 kg in year 2000 and 13 kg in year 2010.Such an increase has not been uncommon in the experience of other developingcountries. Consumption of citrus about doubled in the eight years 1976 to 1984in a number of countries, including Morocco, Libya, Lebanon, Bulgaria and Cuba.The experience of Taiwan may also be relevant in order to examine culturalfactors that might limit eventual per capita consumption. Per capitaconsumption in Taiwan was, in fact, 20 kg in 1983 and was undoubtedly higher in1987 in line with its higher per capita income. The World Bank Commodity PriceProjection Division projects that world average per capita citrus consumptionwould be 16.3 kg in the year 2000. This is 37% higher than the per capitaconsumption projected by FAO/CP for China in the same year.

5.8 There are several reasons to believe that the FAO/CP projection forthe year 2000 may be on the low side. First, the income elasticity estimateused in the study comes from the period of low consumption prior to pricedecontrol and may be obsolete. A more recent MOA estimate of citrus incomeelasticity is 1.8. Secondly, and probably more important, the national shift inthe mix of varieties that is occurring will result in a much longer harvestseason than at present. Current production is mainly mandarin oranges andtangerines (in total, 78% of production in 1987), and these varieties arenormally harvested almost entirely during November and December. Futureproduction will involve a major change in variety mix and harvest period. Bythe year 2000, it is expected that mandarin oranges and tangerines will be only50% of total production. The satsuma, early-maturing varieties harvested duringSeptember and early October would be 15% of national production. The late-maturing sweet orange harvested during January to March would be 25% ofproduction (Research on extending maturity of sweet orange is in progress).Valencia, harvested during April and May, would be 10% of production. Thiswould increase the period of citrus consumption from the present two-monthseason to a future eight-month one, and affordable prices would thereforeprevail for a much longer period during the year. This increase in the length

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of the consumption season is ar. independent factor not taken into account in theFAO/CP projection. MOA's projection of per capita consumption in the year 2000,which takes account of both its higher estimate of income elasticity and theincreased consumption season, is 15.8 kg per capita, a figure that is stillsomewhat below the Bank's projected world average and within the reasonablerange.

5.9 The production of citrus under the project would be too small to havea significant effect on prices in the national market. The project wouldproduce an incremental production of about 297,000 tons annually at fulldevelopment. This represents only 3% of the year 2000 projected nationalproduction (10 million tons). In the actual situation probably 80% of citrusproduction would be marketed in the projecr provinces themselves, but priceswould be formed in the national market and trade flows in and out of theproduction areas would be responsive to and would equilibrate local and nationalprices. Project farmers would benefit fully from the higher prices during theearly and late seasons, since production under the project would have a varietymix with 52% early and late maturing and navel varieties.

5.10 The incremental production of other fruit in the project would also besmall compared to national production and would also not have a significanteffect on prices. At full development, lychee and longan production would beonly 11,000 tons which would represent only 1.5% of projected nationalproduction (336,000 for longan and 388,000 tons for lychee in the year 2000).The project's production of loquats, yellow peaches, pears, plums and kiwi wouldbe negligible as a percent of national production (less than 1%). There ispresently unmet demand at prevailing prices for fresh and processed consumptionin the producing areas. Fresh lychees and longans are used widely as giftsduring festival periods, and markets in the project area appear to havedifficulty securing adequate supplies at these times. Any excess production oflongans can be dried and sold in the national market. Loquats, kiwi and yellowpeaches are marketed fresh in produce markevs or are sold to processingfactories. The demand for fresh fruit has tended to outcompete the demand fromprocessing plants, which have been operating well below capacity in recent yearsbut which would provide significant demand at lower prices and thus place afloor under prices. Plums and pears would be consumed fresh and would be only asmall fraction of local production.

5.11 Markets: The domestic market for fruit within China comprises twobasic segments, i.e., those markets near the production areas (local markets)and those which are far from production areas and require long distancetransport. The local markets range all the way from small village markets nearthe orchards to large municipal markets, such as the one in Chongqing, withvarious levels of sophistication and organization. The large distant marketsare those of major centers, such as Beijing and Shanghai and their hinterlands.The demand for oranges is large in the major distant markets, and the selectionof markets thus involves weighing of factors such as prices, transportationcosts and losses in tran,port. It is likely that farmers whose orchards arevery near to local markets will continue to sell at least some of their cropslocally because they can retain the full wholesale, and in some cases, retailprice for themselves, and they would remain free to sell to any privatewholesale channels that might emerge.

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5.12 Aside from the small amount of these direct sales by farmers, thecitrus produced under the project would be purchased by CFDCs, which wouldarrange for farm pick up and would grade, pack and transport the fruit. Somepart of the citrus would be stored for more favorable prices in periods ofrelative seasonal scarcity. The CFDCs would be trading in the full range ofmarkets - county wholesale markets, distant markets in major cities and foreigntrade corporations or foreign buyers for exports. The major role of the FDCsdoes not preclude the rigl.~. of individual producers to sell their productdirectly in open markets or to other buyers, including CFDCs from othercounties, so CFDCs will have to provide a competitive service to retain theirsource of supply.

5.13 Other fruits such as lychees, longans, yellow peaches and loquats arehighly perishable in unprocessed form, and only a small amount is presentlymarketed outside the producing area. In 1987 out of 116,000 tons of lychee and80,000 tons of longan production in China, only 320 tons of lychees and 200 kgof longans were marketed in Beijing. The processing industry for yellowpeaches, loquats and kiwi in the region could easily expand production if itcould obtain supplies. Demand for canned yellow peaches and loquat is very highin both domestic and export markets. Kiwi would be consumed fresh or sold toprocessing factories as raw material for juice, jam, wine and candy.

C. MARKETING FOR EXPORT

5.14 In China, most foreign trade is carried out by centralized foreigntrade corporations (FTCs), which are organized along product lines. The FTCsare regulated by the Ministry of Foreign Economic Relations and Trade (MOFERT).Provincial branches of this ministry are called Foreign Trade Bureaus (FTBs).The national FTCs conduct the full range of trading activities, often throughtheir provincial branches (provincial FTCs), from the identification of marketsand negotiation of contracts, to the procurement of goods from producers andshipment to buyers. The FTCs seek buyers mainly at trade fairs, such as thesemi-annual Canton (Guangzhou) Trade Fair. Virtually all of China'sagricultural exports are marketed through bulk contracts entered into at thesefairs. The major export market for citrus from China is the USSR, with whichChina has a bilateral citrus trade agreement. There are also presently smallexport markets in Hongkong, Canada and Southeast Asian countries. Citrus tradewith Hongkong and Canada is also partly done directly by the FTCs through theirHongkong and Canadian agents.

5.15 The FTCs in Sichuan and Hubei provinces and Chongqing municipality arepresently the sole exporters of citrus from their respective jurisdictions. Inresponse to the new economic reforms of the foreign trade system, the FDCsestablished under the project would also have the right to trade directly withforeign buyers. FDCs may contract with FTCs to do their business for them ortrade directly in competitive markets such as Hongkong, Canada and South EastAsian countries.

Exgort Markets

5.16 The USSR is a natural market for Chinese citrus. The bilateral tradeagreement provides for up to 200,000 tons per year of Chinese oranges andmandarins to Siberia. Since only about 50,000 tons are currently shipped, there

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is potential for a fourfold increase. Payment by the USSR is apparently abouthalf in hard currency (e.g. Swiss francs) and half in bartered commodities inshortage in China (e.g. timber, steel and fertilizer).

5.17 The Chinese citrus area is the closest to Siberia among the world'smajor citrus producing regions. Volume of supply, varieties, the rail transportlink and resulting low cost, the bilateral agreement and the USSR's acceptanceof existing Chinese quality means that China has several competitive advantagesin this sizable market. Sichuan started exporting citrus to the USSR since1982, with the volume of about 20,000 tons in 1987. Chongqing exported 7,000ton of sweet oranges and red tangerines to the USSR in 1987 and Hubei 7,000tons of sweet and navel oranges. With the project, Sichuan, Chongqing and Hubeiexpect to export 36,000, 25,000 and 29,000 tons, respectively, to the USSR andEastern European countries.

5.18 Hongkong is also a natural market for Chinese citrus from thestandpoint of geography, but it is a highly competitive market whose majorsuppliers are USA, Australia, South Africa and Taiwan. California orangescomprise 90X of total imports (to Hongkong and Macao) of 80,000 to 100,000 tonsannually because of their high quality, near-year-round availability and rangeof varieties (both navel and Valencia). Oranges from South Africa and Australiaaccount for 31 to 51 of the Hongkong market and their share is growing due totheir seasonal advantage (April-May harvesting season), which occurs whenCalifornia supplies and quality are lowest. Chinese oranges account for only 2Xof the Hongkong market share. Consumer perception of Chinese oranges as lowquality makes it difficult for Chinese oranges to penetrate the market.Hongkong wholesalers, however, report that there are examples of high qualityoranges coming from specific areas in China, and these have been able to commandhigher prices. Oranges from Hun Kong farm and Wutze Nountain in Hainan areexamples of good quality fruits.

5.19 Southeast Asian markets are just as competitive as Hongkong, andChinese oranges have to face the same tough competitors in this region, inaddition to local competition. Japan may offer some export potential as tradebarriers come down, but China will have to compete with the USA and otherinternational suppliers of oranges. Canada has historically been a market forChinese mandarins and will likely continue to be.

5.20 Of the three project jurisdictions, only Chongqing and Hubei exportedsmall amounts of oranges to Hongkong in 1987 (100-200 tons per annum of sweetoranges from Chongqing and 200 tons of navel oranges from Hubei). At fulldevelopment, the project expects to export 6,000 tons of citrus to Hongkong andMacao and 3,000 tons to Southeast Asian countries. Compared to the present,they would have increased their competitiveness due to variety and seasonalfactors, since 52X of new orchards established under the project would beplanted to early and late-maturing oranges and navel. Sichuan is also hoping tobe able to export small amounts of late-maturing lychees to Hongkong. Hubeiexported about 200 tons of satsuma mandarins to Canada in 1987, and all projectJurisdictions would attempt to participate in exports to this destinatioa, whichimports about 100,000 tons of oranges annually in total.

5.21 Despite China's desire to boost its citrus exports, penetration ofexport markets will at times be difficult due to international competition frommany sources, especially the USA. Nevertheless, there are current examples of

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Chinese oranges being successfully marketed at relatively good prices (para.5.18), and there are wholesalers who are willing to market high quality Chineseoranges. The market niche is expected to be in a medium range resemblingAustralian and South African quality. The expectation at present is that thisniche will be at the higher quality range of current Chinese production. Totake advantage of the demonstrated openness of export markets to quality Chineseoranges, it would be a wise marketing strategy to promote the market identity ofChinese citrus through enforcing a policy of not allowing low-quality citrus toreach export markets. The Export Commodity Production Areas under developmentby CEROILS in Hubei and Sichuan have made a good start in developing goodquality oranges and in ensuring that only competitive quality is exported. Withthe project, the quality of oranges would be highly improved. This arrangementwould help to counteract the present low quality image of Chinese oranges.

D. Prices

Domestic Prices

5.22 In recent years, China has implemented a number of reforms intended toexpand the role of markets and prices in directing production of and trade inagricultural commodities. At the end of 1983, fruit was changed from a CategoryTI to a Category III commodity. This important decision removed mandatoryquotas for producers to supply the government and established a national policyof market-determined prices. Producers, wholesalers and retailers are no longersubject to Government restrictions regarding the prices they set for fresh orprocessed fruit, and where and how much they buy and sell. Even though somegovernment pricing bureaus are still attempting to fix prices for some citrusproducts, they have not been successful and local authorities now anticipatethat no further attempts will be made to impose price restrictions. Bothquantity and price can, therefore, now be considered to be market-determined. Agood example of market determination of prices is the effect of the 1988 droughton prices. Reduction in production (an average of 13% according to officialstatistics) resulted ia an increase of prices of 43-61% for citrus and 12-50%for other fruits. Ths 1987 and 1988 average farmgate, wholesale and retailprices of various fcvits in the project area are summarized in the Table 5.2.

5.23 In general, farmgate citrus prices average around Yl-1.5/kgduring harvest, with wholesale price about 20% above farmgate prices and retailprices about another 20% higher. Marketing in the off-season, after 3 to 4months of storage, results in wholesale and retail prices almost double choseduring the harvesting season. Citrus prices are influenced by the grading andpacking techniques that are used. Fruit that is graded and packed according tosize and appearance commands higher average prices than bulk ungraded fruit.Waxing and packing in cardboard cartons, rather than bamboo baskets results inprices often 50% higher.

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Table 5.2 Domestic Prices of Fruit (vuan/kE)

1987 1988_- - - - - - - - - - - - - . . ......... . . . . . .

Farm Wholesale Retail Farm Wholesale Retail

Oranges:Sweet 0.9 1.1 1.3 1.6 1.9 2.2Nqavel 1.5 1.8 2.1 2.9 3.5 4.0Valencia 1.1 1.3 1.5 2.6 3.0 3.5

Mandarin 1.0 1.2 1.4 1.7 2.0 2.3Pomelo 0.9 1.1 1.3 1.8 2.0 2.4Y. Peaches 1.2 1.4 1.6 1.3 1.6 1.8Longans 2.5 3.0 3.5 4.3 5.2 6.0Lychees 2.8 3.5 4.0 6.5 7.8 9.0Loquats 1.8 2.1 2.5 2.9 3.5 4.0Pear 0.9 1.2 1.4 0.9 1.2 1.4Plum 1.0 1.3 1.5 1.3 1.6 1.8Kiwi 1.4 1.7 2.0 2.1 2.6 3.0

Sources: Provinces and Bank mission's survey for 1987 and 1988 seasons.

5.24 The project financial analysis has been conducted using actual 1987prices adjusted by 10% to reflect the general price increase. These modified1987 prices were used because actual 1988 prices were urusually high due to thedrought. The financial prices used, therefore, are real 1987 prices expressedin 1988 yuan. To be conservative, only two prices (per kg) were used fororanges: a high, export-derived farmgate price for navel oranges of Y1.7 and acommon price for all other varieties (sweet, mandarin, Valencia) equal to themain harvest price for mandarin oranges of Y1.l. For pomelo, a price of Y.owas used. For longans and lychees, the prices assumed were Y3.1 and Y2.7/kg,respectively; for loquats and yellow peaches, Y2 and Y1.3/kg, respectively; andfor pears, plums and kiwi, YO.9, Y1.2 and Y1.6/vg, respectively. These marketprices of existing production are considered very conservative for projectoutput, since quality will improve with the project.

5.25 In the case of oranges, a pasticular effort to use conservative pricesin the financial analysis was made because of the possibility that a nationalsituation of excess supply could result in a significant decline in the averagefarmgate price. For this conservative purpose, no price premium was assigned(i) for the premium Valencia and sweet orange varieties (which would be 69% ofproject output), (ii) for the improved quality of project output due to improvedseedlings and cultural practices, or (iii) for the seasonal premium that earlyand late-maturing output would command. The idea is that by not assigning apremium price for project output, any price decline due to excess supply in thenational market would be wholly or partially offset by the price premium thatproject output would attract due to its superior characteristics and timing. Ifthe price premium would average 25% for project output compared to nationalmain-harvest mandarin prices, the price of project output could decline by 25%before it reachfd the real 1988 mandarin price used in the financial analysis.

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5.26 The main basis for believing that there would be a significantnational price decline for oranges is the FAO/CP study, which projected thatsupply will increase faster than demand and that real farmgate prices will inconsequence decline by 25% by 1990 compared to 1986 and by 39% by 1995. Thereare two reasons to conclude that the price declines projected by the FAO/CPstudy, however, are probably too great. First, it was concluded above (para.5.8) that the FAO/CP projection of demand was probably too low, because itlumped all varieties under citrus and also did not take account of the extendedconsumption season that the new varieties would allow. This greater demand fromthe extended season would of necessity result in higher farmgate prices thanthose projected by the FAO/CP study. International trade would be a secondfactor that would tend to prevent the very large price decline projected by theFAO/CP study. The Bank international citrus price projection for the year 2000is for a real price decline of only 3%. If a large price advantage should openup for Chinese citrus, as it would if the Bank's _rojected international pricecoexisted with the FAO/CP study's projected Chinese price, exports of allvarieties would be likely to increase dramatically and result in a smallerdecline in the Chinese price than the one projected by the FAO/CP study. In anycase, the international market will almost surely govern the prices obtained forthe project's navel output (about 25% of the total). Since it is expected thatnavel would be exported to Hong Kong, the Hong Kong price is used as theprojected financial price for navel oranges.

Exnort Prices

5.27 The 1987 international price of oranges was US$456/t.1 Sweet andValencia oranges exported to the USSR from China received US$430/t and US$460/tfor ungraded and untreated oranges. Satsuma mandarin exported to Canadareceived US$447/t. US oranges, premium grade, sell in the Hongkong market atUS$1,000-1,200/t; choice grade sells at US$500-800/t. Chinese oranges generallysell in Hongkong at US$300-400. However, high-quality Chinese oranges sell atUS$600-lOOO/t in Hongkong. Navel oranges exported from Sichuan and Hubei toHongkong received a price of about US$650 in 1987. In the 1988 season, exportsto the USSR were lower than estimated due to shortage in supplies, and theprices received from the USSR were about 16% higher than the 1987 prices. It isexpected that, with the project, the project jurisdictions would be able toexport more to the USSR and other countries, because the better quality citrusfrom the project would be able to command higher prices in the USSR market andcapture a higher market share in other export markets.

5.28 For economic analysis, citrus production is valued at 1987 USSR,Hongkong and Canada borders adjusted by 15% to reflect 1989 values. Sweet andValencia oranges are valued at USSR border prices, considering that China hasgeographical advantages over other producers and will continue to export toUSSR. Exports of Valencia oranges are expected to increase, since this varietyis available in late spring and early summer when the international supply oforanges is low. Navel oranges are priced at the existing Hongkong prices forChinese navels, adjusted for domestic transportation and handling costs.Mandarin oranges are valued at Canadian border prices for Satsuma, since themajority of project mandarin would be Satsuma. These border-derived economicprices appear to be very realistic, since they are within a 5% range around

11 Mediterranean Exporters, EC indicative price, CIF Paris.

- 42 -

actual farmgate prices (Annex 3, Table 3.1). Economic prices for the years1995 and 2000 are based on the long-term citrus price movements as projected bythe World Bank which indicated that real citrus prices will increase by 6.3% in1995 and decrease by 3.2% by the year 2000. For other fruits, market prices(Annex 3, Table 3.2) are used to derive economic farm gate prices and areexpected to remain constant over t.he project life. International pricesadjusted for international and doraestic transportation costs are used to derivethe economic costs of farm inputs, such as fertilizer, pesticides and otherimported items. Economic prices for citrus, other fruits and farm inputs canbe found in Annex 3, Tables 3.1-3.2.

VI. BENEFITS. JUSTIFICATION AND RISKS

A. Benefits

6.1 The major benefits of the project are the incremental production,which would result from the investment and from the adoption of newtechnologies, and increased rural incomes. The new orchards developed by theproject would provide incremental production of citrus, lychees, longans,yellow peaches, loquats, pears, plums and kiwi. The incremental annualproduction of new citrus orchards at full development, net of on-farm costs, isvalued at US$61.5 million annually (in 1989 constant dollars). The value ofthe incremental production of other new fruit orchards at full development isestimated at US$15.3 million annually. Existing orchards rehabilited under theproject would provide incremental production of citrus and yellow peachesvalued at US$10.8 million annually.

6.2 The project would also benefit the jurisdictions involved byproviding the fruit industries with necessary services and a strong technicaland commercial base. The development of virus-free citrus seedlings, improvedsummer varieties and new cultural practices would provide benefits not only inthe project area but in the whole region. Likewise, the integrated productionand marketing system would increase the efficiency of the whole fruit industryin the region and perhaps in China. The marketing organizations developed bythe project (the FDCs), for example, would provide models that, if successful,could be established in other regions and for other commodities. The gradingsystem developed under the project would help to establish price variations byquality and grade and thereby give farmers an incentive to produce qualityproducts.

6.3 The development of the hilly areas with contouring and terracingwould improve environmental conditions. Roads built and rehabilitated by theproject would provide accessibility to markets and allow other commercialactivities requiring transportation.

B. Emloyment and Incomes

6.4 F1t2o=ment opportunities generated by the project would reduceseasonal rura_ underemployment in and around the project areas. New orcharddevelopment would cre4te job opportunities for 130,000 farm families in the

* 43 -

project areas. The rehabilited orchards would also require additionallaborers. Job opportunities would also be created in the grading, packing andstorage operations of the CFDCs and other distributors.

6.5 Income and Poverty Alleviation. The project would have a verysubstantial impact in increasing the income of project benefiaries, most ofwhom presently have incomes below the provincial average. Sichuan and Hubeiaverage rural per capita incomes are Y338 ($72) and Y467 ($99), respectively,while the average per capita incomes in the project counties of Sichuan andHubei are Y240 ($51) and Y374 ($79), respectively. The poorest projectcounties have still lower incomes: the poorest 11 out of 16 Sichuan projectcounties have an average per capita income of Y164 ($35); and the 3 poorest outof 9 Hubei project counties have an average per capita income of Y287 ($61).In percentage terms, the average per capita incomes in the project counties are71% and 80% of the respective Sichuan and Hubei provincial averages, and thoseof the poorest project counties are 48% and 62% of the respective provincialaverages. Because of its urbanized nature, Chongqing is a seeming exception tothis pattern, since the per capita income in the project counties is Y417($88), about 23% higher than the Y340 ($72) average of the municipality(although one of the 5 project counties has per capita income 22% below themunicipal sverage). The higher average per capita income of the Chongqingproject counties is not due to higher agricultural incomes, which are reportedto be substantially below the municipality average, but to their relativelylarge urban and industrial concentrations. Thus, in all three jurisdictions,the project would raise the incomes of some of the poorest farmers.

6.6 The magnitude of the increase of the incomes with the project of the80,000 farm families in Sichuan project counties, according to farm householdanalysis, would be 218% - from an estimated future family income of Yl,858($394) without the project to Y5,906 ($1,251) with the project. The return permanday would increase from Y2.9 to Y9.7. Average per capita income in theproject counties would increase from Y372($79) to Y1,181 ($250), an increase of219%, and would surpass the present provincial average per capita income by150%. (Annex 3, Table 2.1).

6.7 For the Chongqing project area's 10,000 farm families, the farmmodel analysis shows that farm income would increase by 166% with the proiect -from an estimated future income of Y2,212 ($469) without the project to _. "'R2($1,246) with the project. The return per manday would increase from Y4.7 toY9.8. Average per capita income would increase from Y369 ($78) to Y980 ($207),a 165% increase and double the municipal average (Annex 3, Table 2.2).

6. 8 Incomes of the 40,000 farm families in the Hubei project countieswould also increase substantially under the project. The farm model analysisshows that farm income would increase by 150% with the project - from anestimated future income of Y1,926 ($408) without the project to Y4,857 ($1,029)with the project. The return per manday would increase from Y2.9 to Y9.1. Theaverage per capita income would increase from Y385 ($82) to Y9,71 ($206), anincrease of 151% and also double the present average provincial per capitaincome (Annex 3, Table 2.3). The greater benefit to farm families in Sichuanand Chongqing occurs because farmers in these two jurisdictions would obtain anaverage 2 mu of new (hilly) land, while in Hubei farmers would have to operatewith just their present holdings.

- 44-.

C. Cost Recover

6.9 Cost recovery for the project would have several major elements.Almost Y77 million vould be contributed by beneficiaries in the form of cash orlabor and would involve no direct cost to the government. The cost ofextension, research and training (Y23.6 million) would be recovered by countygovernments through a special product tax of 5.75% assessed on estimated(standing) production and through fees for services. Investment in packing andstorage facilities (Y53 million) would be recovered from enterprise profitstaxes. Investment in the establishment and rehabilitation of orchards (aboutY478 million) would be recovered from beneficiaries on a 17-year amortizationschedule at the ABC rate of interest for similar loans. The cost recoveryanalysis in Annex 3, Table 6 show that at present tax rates, project chargeswould be sufficient to cover project costs with a cost recovery index of 108%.Rent recovery at full development averages 54%, varying from 40 to 60%depending on the province. Discounted over the life of the project, the rentrecovery index averages 53% These rates show that the public authorities wouldbe able to capture somewhat over half of the surplus the farmers would receiveabove the minimum retuarn necessary to induce them to participate in theproject.

D. CFDCs Cash Flow

6.10 Cash flow analysis was performed in current prices for arepresentative CFDC from each jurisdiction. The major sources of funds arefrom the IDA credit, domestic loans and grants, marketing profits, servicefees, loan repayments from farmers, and interest differentials. The mainapplications of funds are for CFDC capital investment, orchard establishmentand rehabilitation, technical service fees, and operating expenses for loanservicing. All CFDCs are required to have and maintain a debt/equity ratiobelow 5:1. Assuming that the average cost of capital is 6% for IDA fundsonlent to the CFDCs and 13% fur domestic loans, the CFDCs' cash flow (ChangningCounty, Sichuan) would yield an annual revenue surplus of Y3.8 million in Year7 rising to Y7.5 million from Year 15 onward. These funds wo-ald provideresources for building liquidity to meet lending risks as well as for futureinvestment. Detailed analysis can be found in Annex 3, Table 5.

E. FLinancial and Egonomic Analyses

Financial Analysis

Production

6.11 The financial analysis of investment in orchard development andrehabilitation has been carried out in each jurisdiction on a one-hectare modelbasis. It is assumed that new orchards will need investment in the following:(a) land terracing and contouring, (b) land improvement with organicfertilizer, (c) irrigation facilities and (d) orchard establishment. Inputrequirements would be seedlings, organic manure, chemical fertilizers,pesticides, water and labor. Investment and operating costs are valued at 1988market prices. Water cost is the cost of electricity and other inputs to pumpand transfer water for farm use and is estimated to be YO.03/cu meter. Labor,including family labor, is valued at the market wage rates of Y3.0/manday inSichuan and Hubei and Y3.5/manday in Chongqing. The analysis is sumnarized inTable 6.1 as follows:

- 45 -

Table 6.1 Summary of Financial Analysis Results

Sichuan Chongqing Hubei__........... .... ........ .. .. .. ..................

NPV at 12% FRR NPV at 12% FRR NPV at 12% FRR(1989 Yuan) % (1989 Yuan) % (1989 Yuan) %

I. New Orchards

a. Nursery-Open Field Nursery a/ 2,321 15 43,764 45 65,135 59-Mother Tree Garden 54,298 31 52,278 30 54,298 31b. Citrus-Sweet 41,810 24 43,408 25 43,026 25-Valencia 38,568 23 40,546 25 39,795 24-Navel, 50,275 34 84,820 36 79,288 35-Mandarin 38,116 23 - - 39$332 24'Pomelo 19,886 18 20,469 19 - -

c. Other Fruits-Lychee 38,002 23 - - - -

-Longan 30,078 21 - - - -

-Plum 43,008 27 - 44,224 28-Loquat 38,600 24 - - 39,824 24-Yellow Peach - - 58,065 33 58,685 34-Pear 50,275 25 - 51,117 26-Kiwi - - - - 38,091 21

II. Rehabilitated OrchardsCitrus-Sweet 60,203 4b - - 32,006 35-Valencia 38,648 34 51,609 47 - --Navel 99,730 56 - - - -

Yellow Peach - - 86,368 71 - -

a/ For Sichuan, FRR is for poly-house nursery.

6.12 Financial analysis for rehabilitated orchards has been carried, outfor sweet orange, Valencia, navel and yellow peach orchards. Investment inthese orchards is mainly in irrigation facilities and production inputs, suchas fertilizers, pesticides and water. Incremental inputs are valued at 1989prices (para. 5.24). Rehabilitated orchards would start to have incrementalyield from year 2 and would reach full production in year 7. Incrementalproduction 4ould be 17t/ha, llt/ha, 16t/ha and 15.3t/ha for sweet orange,Valencia, navel and yellow peaches, respectively. These output3 are valued at1988 market prices. The analysis shows that FRRs range from 34 to 71% (Table6.1).

6.13 As can be seen from the above, adequate financial returns would begenerated from the investments aw4 would provide strong incentives toparticipants. Furthermore, the return would be more than adequate to meetinterest and loan repayment obligations at prevailing ABC terms. Sensitivity

- 46 -

tests have also been carried out to test the effect of price reduction by 25%and 39% (para. 5.26). The results of analysis (Annex 3, Table 7.2) showsthat, if the citrus price falls by 25%, the ERR would be in the rage of 17-27%and if the price falls by 39% the FRR would still lie between 12-22%. Onlypomelo would be caused by the large 39% price decline to have a FRR below 12%,and in this extreme case, its FRR would be 9%. Price reduction would also notcause the rehabilitated orchards to become unprofitable, since the FRRs wouldstill lie between 33-45% for the 25% price reduction and 28-39% for the 39%one.

Packing Lines and Storage Houses

6.14 Financial analysis has been carried out for 3t/hr and 't/hr packinglines. Investment costs are the cost of the packing lines and the costs ofplant and warehouse construction, including installation of power and waterfacilities. Investment costs also include forklifts, weighing bridges,platform scales, handcarts and field boxes. Operating costs are the costs ofmaterials, transport, utilities maintenance, production salaries,administration and taxes. The analysis shows that, at the citrus wholesaleprice of Yl.6/kg, the FRRs of the 3t/hr and 5t/hr packing houses would be 36%and 50% respectively. Each storage house would have storage space of 500 m2

and would be able to store 123 tons of citrus. At the off-season price ofY2.2/kg, storage investment would have a FRR of 21%. (Details can be found inthe Project Files).

Economic Analysis

6.15 Economic analysis has been carried out for both new and rehabilitatedorchards (by fruit variety and for the project as a whole exclusive ofmarketing services) using constant 1989 border prices. In carrying out theanalysis for the project as a whole, packing and grading costs have beenincluded in the calculation of farmgate prices. The investment in CFDC packingand storage facilities has been excluded, since it is analyzed separately.Investment in research and extension is assumed to have broader benefits tosociety than in the project areas; thus, only 50% of this cost is allocated tothe project. All other investment costs (along with physical contigencies)have been taken into account in estimating the economic costs of the project.

6.16 World Bank price projections of export prices actually realized byChina were used to estimate farmgate economic prices in 1989 constant terms fortraded inputs and outputs. Economic prices for non-traded goods were estimatedusing conversion factors (Annex 3, Table 4). These conversion factors wereestimated by means of an analysis of the deviation of social opportunity costfrom the actual financial prices prevailing in the project jurisdictions causedby taxes and price distortions. All economic values were converted to localcurrency at the prevailing official exchange rate of Y4.72 to US$1. Farm andunskilled labor were valued at Y2.4 per manday in Sichuan and Hubei andY2.8/manday in Chongqing, using a conversion factor of 80% of the prevailingrates of about Y3.0/manday (Sichuan and Hubei) and Y3.5 (Chongqing). Based onthe above, the results of the economic analyses are summarized in Table 6.2.

- 47 -

Table 6.2 Summa y of Economic Analysis

Switching Value at 12%Base Case -----------------------

Components NPV at 12% ERR % Benefits Costs

(Y '000)1. New Orchards

Citrus

-Sweet Orange 320,323 28.4 -59.1 144.8-Valencia 213,031 33.8 -64.8 183.9-Navel 290,233 39.5 -70.3 236.8-Mandarin 40,500 25.9 -51.9 108.2-Pomelo 13,097 24.6 -48.8 95.5

Total Citrus 877,185 32.0 -63.2 171.2

Other Fruits-Lorgans 4,450 22.1 -40.8 68.9-Lychees 69,309 29.5 -57.0 132.6-Loquats 12,198 22.1 -43.4 76.6-Yellow Peaches 79,316 44.8 -69.5 227.5-Pears 8,!58 26.5 -44.9 81.4-plums 12,235 33.4 -65.9 193.2-Kiwi 20,697 37.0 -68.4 215.9

Total Other Fruits 207,163 34.2 -55.0 137.2

Total New Orchards 1,084,598 32.1 -62.6 167.5

2. Rehabilitated Orchards

-Sweet Orange 166,491 45.2 -77.0 334.9-Valencia 38,578 54.8 -77.8 349.5-Navel 22,113 62.7 -84.2 532.4-Yellow Peaches 10,382 62.2 -77.2 337.8

Total Rehab. Orchards 237,564 48.7 -77.8 349.5

TOTAL PROJECT 1,322,153 34.4 -64.9 184.8

6.17 Economic analyses have been carried out for new and rehabilitatedorchards separately. For the new orchards, analyses were done for varieties ofcitrus and kinds of fruit. The results of the analyses show that investment innew orchards would have a high ERR of about 32% (32% for citrus 34% for otherfruit). Investment in orchard rehabilitation would have even higher rates ofreturn - averaging 49% and ranging from 45-63%. The rate of return for the

- 48 -

project as a whole is estimated at 34% and its net present value is estimatedat Y1,322 million using a discount rate of 12%, the estimated opportunity costof capital in China (Annex 3, Table 7.1).

Sensitivity Analysis

6.18 Sensitivity anlyses were caerried out to evaluate the effect on theproject ERR of changes in major economic variables such as price andinvestment, fertilizer and labor costs. The results show that economicviability of the project is only marginally sensitive to these variations(Annex 3, Table 7.3). If the citrus price should fall by 20%, the averagecitrus ERR would only fall from 32% to 27%. If prices of other types of fruitshould fall by 20%, the other-fruit ERR would similarly only fall from 34% to28%. If investment costs should increase by 10%, the project ERR woulddecrease only from 34% to 33%, and if fertilizer and labor costs shouldincrease by 10%, the project ERRs would still be 33% and 34%. The ERR issomewhat sensitive to a delay in production, however. If production should bedelayed by two years, the project ERR would decrease from 34% to 25%. Ananalysis of switching values also shows that the project ERR is highly robust;a reduction in benefits of 65% or an increased cost of 185t would bring theproject ERR down to 12%.

F. Risks

6.19 The project faces no major organizational or technical risks. Therisks that do exist are either small initially or have been effectivelyminimized. The risk of inadequate management capability in project entities isminimized because mangement is essentially in place and would be strenghthenedunder the project. There are no obvious agronomic risks. Fruit production hasbeen carried out in this region for thousands of years, and farmers alreadyhave basic knowledge of production techniques. The small risk of frost damagein the eastern part of Hubei is minimized by the use of sprinkler irrigationfinanced under the project. Marketing risk is small since domestic demand isrising rapidly. The major risks are that price differentials for high-qualitygrades may not be as large as expected and that rail transportation may not beadequate to handle the increased production. The former would be minimized bythe grading system introduced under the project and the autonomy of the CFDCsto set price differentials. The latter would be minimized by the extension ofthe consumption (and shipping) season, due to the project's emphasis on earlyand late maturing varieties and on storage facilities, and by setting up aliaison unit in the provincial Bureaus of Transportation to work closely withrailway planners to effectively manage and get priority for fruittransportation.

- 49 -

VII. AGREEMENTS REACHED AND RECOMMENDATIONS

7.1 At negotiations, assurances have been obtained from the Government that:

(a) adequate funds to procure passenger vehicles needed under the projectwould be provided (para. 3.15);

(b) selection of international experts and locations for overseas trainingwould be based on a review of their terms of reference and a detailedtraining program to be prepared by JPMO and submitted to IDA for reviewat negotiations (para. 3.27);

(c) the PMOs would maintain the consolidated project accounts for auditingannually by independent auditors acceptable to IDA and the auditedaccounts would be submitted to IDA within six months of the close ofeach financial year (para. 3.33);

(d) all effluents from packing lines would be treated and that theProvincial Environmental Bureau would clear the final arrangements forwaste disposal, and would set up and maintain a system of monitoringeffluent quality throughout the life of the project (para. 3.34);

(e) at all times, the FDCs would be operated as financially independententities, and managed by experienced and competent staff (para. 4.6);

(f) provincial/municipal, prefecture and county governments and lendinginstitutions would provide, in a timely fashion, the requiredcontribution to the counterpart funds (para. 4.13); and

(g) ABC or other financial institutions would make necessary credit fororchard maintenance available to project beneficiaries after projectcompletion and until orchards reach full development (para. 4.13).

7.2 During negotiations, understandings have been reached with theGovernment that

(a) one CFDC would be selected from each jurisdiction as a joint stockcompany and their draft charters would be submitted for IDA's review(para. 4.5);

(b) CFDCs would maintain a debt-equity ratio of no greater than 5:1,investments financed under the project should have a financial rate ofreturn of at least 12%, and subloans to beneficiaries would be atinterest rates no less than ABC charges on subloans for similarpurposes and with similar maturities (para. 4.9); and

(c) the terms of loans between the various lenders and borrowers would bespecified (para. 4.11).

7.3 State Council approval of the Development Credit Agreement andarrangements satisfactory to IDA between the Borrower and Chongqing allowingthe latter to implement the project would be conditions of effectiveness of theCredit.

50

7.4 Subject to the above conditions, the proposed project wouldconstitute a suitable basis for an IDA Credit of SDR 48.6 million (US$64million equivalent) on standard IDA terms with 35 years maturity to thePeople's Republic of China.

- 51- Annex 1Tabl 1

MID-YANOT AORICULITDAL OEVELOPMUT PROJECT

Baslc Provinclal and Project Ares Stntlsti.

Sichuan Chongqing Hubei

Total Project Total Project Total ProjectIteo/Descriptlon Unit Province County S MunicipalCounty X Province County U

Total Land Area 1,O0h0 66,66? 2,614 5.0 2,311 1,106 47.9 16,590 2,176 11.7Total Arabl- Land 1,000Wh 6,841 764 12.0 716 $42 476 $,564 860 10.0Total Cultivated Land 1,0OOha 11,656 1,429 12.1 1,879 705 51.1 0,680 070 10.1Irrilated Area 1,000h9 2,780 26 9.6 826 189 42.6 2,835 194 7.7Waste & Marginal Land 2/ 1,000b 26,667 585 2.0 814 145 46.2 4,3510 404 9.8

Population:Total 1,000 108,195 12,643 12.2 14,066 6,641 40.1 49,690 4,66 9.0Agricultural 1,000 66,889 11,065 12.5 10,642 6,126 46.6 89,06 4,220 10.6Form Laborers 1,000 44,160 6,280 12.0 S,826 2,076 47.0 18,U8 1,707 12.6

Fmi lie 1,000 21,60S 2,691 12.4 2,900 1,879 47.6 6,627 1,080 12.0Townships No. 6,572 910 10.7 614 872 45.7 2,075 218 10.8Adeiniatrative Villasg No. 76,20 6,692 11.4 8,544 4,019 47.0 82,784 8,875 10.8

Production Area:Orain Arn 1,000h 9,891 1,106 12.6 1,100 592 51.0 5,092 5009 10.0Cash Crop Area 1,OOOha 1,548 18? 6.9 76 86 40.2 1,815 120 9.1Fruit Tree Ara 1,000Gb 171 92 68.6 40 80 75.0 79 22 27.6

Production:Grain. 1,000t 89,28 4,861 11.1 5,574 2,921 50.6 28,045 2,062 9.0Cash CrOpe 1,O0O 0,601 170 2.6 W09 816 62.5 2,824 1,8?7 57.6Frults 1,00b 676 19 14.7 1SO 99 66.0 287 s0 86.6Livestock 1,00Gb 8,155 SW6 11.7 541 92 17.0 8,890 290 6.6Aquatic Producte 1,00GC Us 21 18.8 a6 5 14.8 467 s0 10.7

Total VAO:Grain. Yuan Mn 11,666 1,167 9.6 160 98 51.7 741 69 6.0Cash Crop Yuan Mn 2,654 194 7.8 16 12 66.7 679 28 4.0Fruits Yuan Mn 404 59 14.0 12 6 66.7 1,908 687 88.5Forest Yuan Mn 1,22 176 11.6 18 6 61.5 648 91 14.2Livestock Yuan Mn 7,6C7 640 11.1 177 92 52.0 8,146 81 1.0Fisheries Yuan Mn 245 82 18.1 10 6 50.0 597 51 8.6

Average Net Sncme/Cepite Yuan 888 240 71.0 840 417 122.6 467 874 60.1

Notes:1/ Percentage of total Sichuan, Hubei and Chongqing Municipality.2/ Areas which are presently not used but It can be doveloped for citu. production.

I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

CHINAHIP-YANGTZE AGRICULTURAL DEVELORIENT PROJECT

PROJECT COST SUMMARY

(Yuan 1000) (USS '000)

Z Total I Total2 Foveign base hForeisn bse

Local Foreign Total Exchanige Costs Local Foreign Total Exchank Costs

A. SICA PRINE

I. NURSERY AID MOTHER TREE GARDENS 1t334.2 1900B.4 24342.6 43 0 292.7 213.6 496.3 43 02. ORCHARD ESTABLISHKENT 120.113.9 .90043.6 2109157,6 43 37 25,447.9 19,077.0 44,524.9 4 373. ORCHARD REHABILITATION 7t263.4 70259.6 14,522.9 50 3 1539.9 16538*0 34076,9 50 34. POST-MARVESTIN6 FACILITIES 124134.6 17,649.0 29,792.6 59 5 2,570.9 3,739.0 6,309.9 59 55. INSTITUTIONAL SUPPORT 49556.3 7Y816.9 12,373.2 63 2 965,3 1.6561 2621.4 63 2

Sub-Total SICHUN PROVINCE 1450402,4 123776*4 269,178.8 46 47 30,805.6 26,223.8 57t029.4 46 47b. CHON G S UNICIPALITY

1. RSERY AND MOTHER TREE GARDENS 1.504.1 1195.2 2,699.4 44 0 318,7 253.2 571.9 44 02. ORCHARD ESTABLISHMENT 46,614.5 36,852.2 83.466.7 44 15 9P875.9 7,907.7 17,683.6 44 153, ORCHARD REHABILITATION 34077.7 4,685*2 7,762,9 60 1 652.0 M.6 1,644.7 60 14. POST-HARESTING FACILITIES 6,078,0 5,403.8 1It481.8 47 2 1,287,7 1,144.9 2,432.6 47 25. INSTITUTIONAL SUPPORT 2,165,9 2i762.1 4.927.9 56 1 458.9 585.2 1,044.0 56 1

Sub-Total CHONGIN6 flUINICIPALITY 59,440.0 50,898.6 110#338,7 46 19 129593.2 10,783.6 23t376.8 46 19C. NUDEI PRWINCE

1. NURSERY MND MOTHER TREE 6ARDENS 2,SoI.3 2,030.4 4,591.7 44 1 542.7 430.2 972.6 44 12. ORCHD ESTABLISHMENT 73,144.7 58,402.9 131,547.6 44 23 15,496.8 12,373.5 27,870.3 44 233, ORHOD REHABILITATION 149447,1 200275.3 349722.5 58 6 3,060.8 4.295,6 74356.5 58 64. POST-HARUESTING FACILITIFS 6,797.4 6,133.4 12,930.8 47 2 1440.1 1299.4 2,739.6 47 25, INSTITUTIONAL SUPIST 3,207.8 39450.9 6t658.8 52 1 679.6 731.1 1,410.8 52 1

Sub-Total HUBI PROINCE 100,158.4 90.292.9 190,451.3 47 33 21,220.0 19,129.8 40,349.9 47 33

Total BASELINE COSTS 305,000.9 2649967.9 569p968.8 46 100 644618.8 56,137.3 120,756.1 46 100Phsical Contingencies 69560.8 7,403.4 13v964.1 53 2 1,390.0 1t568,5 22958.5 53 2Prire Continge.cies 71,701.4 629555.1 134,256.5 47 24 7,074*9 6,081.9 13s156.8 46 11

Total PRO8ECT COSTS 383,263.1 334,926.4 718,189.5 47 126 734083.7 63,787.7 136,871.4 47 113

-----------------------e------------------2-------.---==---------------------=90--------------------------------------06:----------

March 29 1990 12:06

NID-TMITZE AORICILUMLA DELa T PROIECIPMOECT COST SUIMT

(Yuan '000) (USs '000)

2 Total I TotalForeign ase Z Forien kse

Local Foreign Total Exchae Costs Local Foreign Total Excne Costs==5 == =3 =lS = 2= 2==

A. SICHM PROVINCE

1. IIU15MR AND NOTHER tREE 6INS 1t334.2 100.4 29342.4 43 1 292.7 213.4 496.3 43 12. RCHOMD ESTABLISHKENT 120,113.9 90043.6 210t157.6 43 78 25t447.9 19077.0 44i524.9 43 783. ORCHDRD REHAJILITATIIN 7t263.4 7,259.6 14,522.9 50 5 1,539.9 1I539.0 3,076.9 50 5

4. POST-HARVESTING FACILITIES 12,134*6 17,649.0 29#7M2.6 59 11 2,570.9 3,739.0 6,309.9 59 11

5. INSTIIUTIONAL SUPPMRT 4,556.3 7,916.9 1273.2 63 5 965.3 1,656.1 2.6214 63 5

Sub-Total SIMUAN PROVINCE 145,402.4 1239776.4 269I178.8 46 100 30,905.6 26,223.0 57,029t4 46 100

Total BASELINE COSTS 145,402,4 123,776.4 269#178sO 46 100 30,805.6 26,223.9 57,029.4 46 100Physical Contingenries 3P396,9 3,'22.0 7p11B.9 52 3 719.7 798.6 1,508.2 52 3Price Contin iensie 35,418.9 29,400.3 64v819,3 45 24 3,506.9 2,855d1 6v361,9 45 11

Total PROJECt COSTS 194,218.3 15699.9 341t117.1 46 127 35,032.0 29t967,5 64"95 46 114

March 2. 1990 1114

CHINANIS-YANTZE A6RICtIATIIAL DEVELWPENT PROJECT

PROJECT COST Smy

(Yuan '000) (05$ '000)

Z Total I TOt,I oreign oe Z Foreign ks

Local Foreign Total Exchanmu Costs local Foreign Total Exebmie Costs

A. CINOGIII NUNICIPALITY

1. N11URE AIND NOTMER TREE 1RENS 15Il.04.1 1,195.2 2,699,4 44 2 318.7 253.2 571.9 44 22. ORCHAMD ESTABLISIHENT 46U614,5 36,852.2 83466.7 44 76 9M875.9 7,807.7 1783M6 44 763, DR1HtUR RERAIIILITATION 3077,7 4685.2 7,762.9 60 7 652.0 M.6 1,644.7 60 74. PMST-'ARUESTING FACILITIES 6.078.0 5,403.0 11,481,8 47 10 192877 tl44,9 2t432*6 47 105, INSTITUTIONAL SUPPORT 2.165.B 2p762,1 4,927.9 56 4 458.9 585.2 1.044,0 56 4

Sub-Total COAII3NG NUNICIPALITY 59,440.0 50,898,6 110,338.7 46 100 12,593.2 10M783.6 23M376,8 46 t0

Total BASELiNE COSTS 59p440,0 508M8, 6 110,338,7 46 100 129593.2 10783.6 23M376.8 46 ktFlisical Continsencies 1,043,4 W152.8 2M196#3 52 2 221.1 244.2 465.3 52 2Priee Continrencies 12,573.4 11,053,7 23t627.1 47 21 1t228,7 1,068,8 2297.5 47 1o

Total PROJECT COSTS 734056,9 63,105.1 136,162.0 46 123 146043*0 120906h6 26U139.6 46 112

- --- ------- -- ------ -- ---.------ --- -

Narh 2. 1990 12:32

- 55 -

Annex 2Table 1.4

CNA

PRLIMT CWT S _AT

(YVu O0) (Up '000)

Y Totl I TotalI Foinim km I Fo" kwe

Local Foreib Toa bElui Cos Lal For" Total bhmg Cast

*. NM PUVi

1. INERV AN lOMD TnE _!S 2561.3 2,030.4 W4 . 44 2 542.7 430.2 972.8 44 22. UlCIN ESTLIENT 73,144.7 58#402.* 131i547.6 44 6 15e96.8 12,373.5 V2870*3 44 693. ORCIR RSMILUTAINI 14447.1 20275.3 3472.5 58 18 3,060.8 4#295.6 7,35.5 58 184. POBT-AIES FACILITIES 6.797.4 6,133*4 U29308 47 7 1W440W1 l2994 2739 47 75. ISm W SPPRT 3M207.8 3,4509 6,658*8 52 3 679.6 M711 1,410.8 52 3

STotal HMEt PROINCE 100,158.4 90f29 190.451.3 47 100 21e220.0 19P129.8 40349.9 47 100

Totl 11a1 COSTS 100,158.4 90t292.9 190,1.3 47 10 21,220.0 19,12.8 40,349.9 47 100Physical CAntMces 2W120.4 2,28.5 4648*9 84 2 449*2 S35.J 984*9 54 2Price Canriwin 23,709.1 22.101.1 45,810.2 48 24 24339.4 2,159.1 49497.4 48 11

Total PRJECT COSTS 125,87.9 114w922.5 240910.4 48 126 24i006A 21,823.6 45t832#2 4 114

Nlat 2. 1990 12U12

-56- Annex 2iIS*1r5 .IW pw Table 2. 1

Cmi VIM~ mi ~s_ro s s _r

UN Pm- fttwws tsao) m.s to,1 t.ei n Costs .1001 1791 O1tA. (*15' hiI

2. MI660 OSTS

6. 2.35 e(0itIU 2.-430.8 1 :8.9129MW 23 066.3 1 354 ?4wt 3

S. Cml 350w ~ ~ ~ ~ ~ ~ ~ ~~~~1-3. ., 3 .21 'Y.ftw 24mm 19.3. 20,65. 3., 35A. 9 S3 0'1.4 ,476.6 l.*1. 31 14.uman 46*e 20.4*4. 6,493. 22.)43.5 0 I 4. =.5. MA7.' 1

c. m. K W 0 toe -sto.0 5.652. 13.9's1.2 01 2,727.5 1,24. :,T . 'iF. oiUua Vl k

Vol".Mo.) 3.2.34 31)34V. 12W is i £.90.2 'O49 0.2 :.ttohuatt wi, U3.02. 140 .02. WN'u 1,147.5 5.4274

hao-toO l) 6.ti.w WA,47 .23. 75.212,5 : :4 22,oto.7 0... 16.90. ' 1

2'nultzu usm 8443. t4,090.9 X9.14. t6 IS.4 4.17.0 54 2.00.9 u

'05.) 0.4.? 8 3. 3.6 8. 3.. 143

M-'t*U l 443 36694 hOC335?i 40400 it36. 2 at 3.0, tO ' 0.3 21.009. -;W-. J%F. ?rwlu Io heat . nu

goat. 020.0 2.000.2 I'v.?7. M6 I3 :o.5 22.0.2 3.1 u

j3tpJI iMUIo oht 0,76.5 2447 3124567 1 2.0J. o.:04 !M4. %

1. am'O21uw P,iti~4o.

tqw tolmw cm M.2~~~144 19.d46.2 20.43.4 404 2721143.1 41.20.0 VN4I. 04 -40,1:;:., m 2., 30.2%. 13432.5 92 WWI 3.6 .4 :.0h !3

ti.*,U F.IsAuo aW gott4517.0 19,78. 5".39 46 U 233.1 30.2744 14.30. 4 4

fdd~~~~~~~~~~~~~ :4A PM n 0 M s

4. nor

10511 468350w 23.2 5.4 :, .3 - *. o. n0. 1.. 96 0

rim t _20" M 1 11. -5.2 43,. n I 2639.4 0. 10.07.2 n Is

Oa.ma2 5Jj 1 09,243, V. 69.43, . 62.0. 597. - 2

1 iCST 2 .24 97 ,.24 0,6.y 44 9 13.4 t5.) 42M7. 4. 4OltuwLC etog 6.56 41t.. U.M.0 5 2t 2.03. l * .53.. :,404.7 n 2

Pow C,awau .4520.3 3719.2 40.1 4 43 24 1q.020.? 23427.1 1.4.0 4

C3. Tim Ste1

ca of t2". SWt 1441A *t= :.6 t*D. t:MA .* :wt .4 't

Foss amtl 2.0. *.I 3.249) - * 433.5 4 .4 Wu.I .5 L 0.uw MM_ -942. t 3,729h:.3 3,729.3 n

hatuOol f 0-0.r:20s1*8 964. .223 43.? 5: 4 0,162 :1s.o 4-.19. e

Fo4z0 1 _ .467 251.2 26.63...... .9 1 :-6. 5 .44 5.194.? 0:

hotzagv 3,42.2 .30.1444,5. I2 t24.a 519669,2.4 9

S*'Toed F405.)iu 15FItM407.9A 40,72. M9 . 94 22 30. 23,75. 0,76. '4 2a

bw bt^fr 4 t##m4 :&Met t4.53# F&/.zF3 v I2A.1: .* 4vM3 U r

C. 24 373a I3"

C*s 49 M .4424 2 t.s3.S ,43 .9 04 0 10.0 25.0 150¢.0@ 0t 0

mm 2320120 72%#.4 1.-5.5 ,6.9 4 3* 54 "M.0 3th " 46 U

-- Saw. Cst4o 4 6,393.9 6g.323-., * 1 1,1.7 :4. 2,537. - o

Vm;:ml Sao 5 174.0 306.7 3 29.7 t O4 0 76 24.7 Z ;.4 10 0

r.45 ~ 35.466.5 260,467.9 69.0l64 06.m nw.2l 51415t 3iO.l .2 46 I

f _i Sa m 640.8 7,46.4 2306. 53 3 *.950.54t 2,3 53 1ftI ts nt C3504 72.6. u23 .2235111 .7 24 7,47.9 sn.r1 2 0 46 U

fetal 32W m -a .23l 3514.l0723,3 47 .3 72.43.?43.20.72364J1 *4 07 22

. ~~--- m - - -. -

- 57 -

uM440 iw.nv KIIt Pawt Annex 2zn ea) Table 2.2

*am In ~ ~ ~ ~ ~ ~ ~ miram im- au m Now 9459011 vqwotmamm 11T6.IMMn umAzum rgtuuu umm foual

- m ~~~~~~~~olmoow ee- .-

A. 136313931064 .0 3.1. t1, ht

*. I_ t ~ ~ ~ ~ 12. --ia. - ,ui ea*.o *.ao 10u.oIalUm , -. -, U. .4 3W .4 14". 1.0 81.3

.Ta 66.1 VMS t1.4 14,M4 U . -. 34447.9 1.0 1.49.4C. Bous 1611.6 ELI * 49.4 1.0 aJ4u.L bwunll

L46 Pi. aM Is - 00.2 144I - * 3.7 1.01.3114p Ns htmal, 907U 2,4.1 - 3773.3 1.0 3.7Oro " Fut4aue 36.0 12,329.3 711.0 -2*11.3 0.O U.'

s*-ftal hMuls 943.3 3S69.0 20U6. 3- 0- 4 3.3 1.294.1. muDS AO 13T

Imsam _mo,m 21.6 S4934A *.221. - - 47n.& 1.09o 24461i,twot [muma 443 1.34.0 336.3- 1.469.? 1.0 73.1poot4psW l an t - - 94-9.7 - .? 1.0 049

_ to_~ - - -- t.9.1 1,19".1 1.0 60.0Eoaam E _zimu - - - - 1.0 340.2

t*.totliIB a11?23. 49. 4.111 .49 44024 73,174.3 1.0 3.aU,r. 96o hots

wid40 6 662 1W4 34*3 .L. U364 0.0ohas - -3- 1#4.6 - 1174.4 04 0.4

1*-Tt vix Wk 6.46.2 .614 .34 Zea.1 1u .0mo 0.e 0.06. Fm.tslt±g su P.oa

ha,-bu 7 9.11 36.2 -10014.0 0.0 o.0Pu106 12.9 - - X.t 0. 6.0

-towr uu, a Ptatm UOJ m.IM. 3a4 0 9 0.0 0.0:1 Tus3a I 161gR_ i sa

ftneu - - -. 66.2 i ne Mt 0.0 o.0fmul-il losoas.e - - - 1I. 36.1 L 0.0 0.0

-toul * I TOO"u AA - - - 24.3 2.34J 0.0 0.01.LiU

uLeo S0 A 18W3.4 1-74.0 * - 201.3 0.0 0.0

?a Id 60d4 L8J4 1,674.0 - - 42te. 0.0 0.0

eta CuS 11i.2 1641.1.2 11904.9 .-27.1 2M. =.WU.: 1.1 699a0.4

it. - e

6. UAIUI

FM Zwo1 U04.8 10. 4t4 - -.,417.9 0 *2.'Osoas tro a 3.3 7.N& 6.0 - - 6.*66 3.0 U.:

ri- a 8 068. 3.70, 774.n - . 1.4 .o 82.,

3. f ltaa - PuI*

Foru'3i1 47.6 o?61.0 1tJ3.0 . 0.3434 0, 0.0Pu9 _ 91.9 109. 211.6 13,6.9 0.3 0.0

-f Ua w ad __1, .61 32.1 21.03. .o- - .4 ' . 0.0 0.0C. tnw m

cut at pqws Mat 3.8 11.4 ".4 912.8 1.0 4.6

hitol 13813an 1.8 119.4 94.4 - - 334 1.40 4.68. Lop 0. 011.2 - . 8-56.1 0.0 1.0

CWlt*4 , * *5 . 1 .0 0.0

tr 53 M7.A 43W.074 21. 1 - 7..3 0.3 3$tdoal mm= M 2,3 230,lVA7 34M,19 29,102.4 12,37342 210973.1 :4 .1,t

99.18 costamm 6.4 1M,09. 413. 3.3134 160. 7,338.9 04 0.4Pso. *e.omla 34 17,7.4 3,702t s t .0 3,60 31334493 419Ft=1 669 gin 2,9.8 WO3,18. 14.00. 344LS 33,14. 36~3.I N2.0 3.39uwpaw mb_.2 31. 3.10.1 341A 8,93. 1t69., 2.3 2.4t0

_n ..1981 3 3 _PodsblM 2Ut. IVAM4 #AO-$ Ime 60U ltuau WA 64O

- 58 -Annex 2Table Z.?

t. ~ ~ ~

A. FTA kmatM v&.34 En2

-mr *8 C93n,er

- -3 l -r -n vs r-s

I. D13iT 3311

*. 1.md k-na - -86 3t*36-1.) 0.0 0.0*. Cmvl 861s

9441.1" - 3,092.5 :.412.) 540.e 5.0 7ifltin Us - 112.t 110.2 - 1,192.3 5.0 59.0

s.*Ta Cvil 1 --d1412.1 Il0.2 M092.S 2,412.1 6.06.9 1.0 334.8C. 306- 2J.30 .3--3. 5.0 116.5D. att,nd s

LaId PM. atepIzs 92.0 9281.3 06.8 - 0890.9 5.0 449.0Pl&v9v1 Oatfols .71.S 03.5 -- I474.a S.0 73.73,1.0 fwtIiu, 39.0 3I40.0 340.0 -1359.0 0.0 0.0

ST*tl tmona). 903.1 1244.7 946.8 14,314.6 1.7 22.6C. Niamey Ue 4111131

IZtintae bagmI 418.1 to.8.$ 1-8.7 - - 20.640.? 5.0 1,032.046nultuug fm_st 14.2 539.5 - - - S51.7 5.0 21.7Poot-8 ta EC it *- 1.4.9 - 1,468.9 S.0 73.4gn , _a -* - - 59.6 599.6 5.0 30.0xtirw _ Eam -t 215.0 215.9 1.0 10.0

SO-Total 34T mm 432.3 180A 1t89.7 1,46.9 815.6 2341.9 S.0 1173.9

*6uitIeO - 5,479.6 ¶59.6 3.1-2.6 751.8 10,100.4 0.0 0.0

=.O- VEcla d bats - 5o479.6 ¶59.6 1,372.6 725.6 10103.4 0.0 0.09. fortiltuw a P wtia

f ttiftur 186.4 3.7ihO - - 3,-94. 0.0 0.0

S--total Fritlauo 4 P.0tnd 180.6 3.190.0 - 3,904.6 0.0 0.0. t,anta I teftvul £MstiM

'rani,6 - - -564 1563 0.0 0.0r 4ca Aouust56e -- - 192.3 192.3 0.0 o.0

Sa-toul traa,,os S P.val rcd s - - - 48.6 94.6 0.0 o.o

246.7 t7h91.6 1,142.6 19-MO.? 0.0 0.0

Sub-Tot LAM 246.7 17.9914. 1142.4 - - 19380.1 0.0 0.0

totl 1r T16 c5m 1..? 62$,12.7 142.=8 e.30.2 4.929 81,604.2 2.6 2.14L I

II. fft 13MM

Fin Towlut 13.9 398.1 S.7 493.7 5.0 24.7onw.c Fo Isals 19.:2 2:811.6 181.0 - 3-111. 0.0 0.0

Sub4stal SrAIl 1L3.0 3-201.7 270.1 - 3,685.4 0.7 24.18. FTW tIIU W4 PeUtIid

Vntifluv 28.6 3.482.9 2,463.8 - 6.30 °-°.0 0.0PvWi 17.4 8M73.2 31.2 .- - 9246.8 8.0 0.0

S-Toutal otwlar ad htluOo ¶57.0 12M.1 2,17.1 - IS15,2.1 0.0 0.0C. L31t1 VAT6

cast ot P,su V" 20.5 367.1 82.3 - - 410.0 1.0 3.5

Sub-Totl 13T3 11 tI3 20.5 367.1 a2.3 - 410.0 5.0 23.5L ;.r 39.1 s.: -.2 - - 5.945. 0.0 0.0C. 3 ctal - 3.161.6 - 3,161.6 0.0 0.0

To 111111 1T1 1c188.7 a24I.M.0 3,118.1 3.161.6 - ,714.4 0.2 48.2Ttr 33 com 2,699.4 9,46.7 7.762.9 11,481.8 4427.W.9 2.0 2.196.)

fhIl Cmt6oa. 61.1 1. U9.1 220.1 161.4 :.193 0.0 0.0mu61 CatIura *20.3 2083167. 1,207.7 43.1 539.3 23,627.1 16 374.1

totdal " T 9m 3.31t.2 ,8.5w 0 10.7 1265.0 5.m.6 212U62.0 1.9 2.V704

r _l 1[34.9 46 806.) 5,463.3 6-. a 3,116.9 03.108.1 2.1 1,45.3

Raid 2. 19O 12U2

- 59 -Annex 2

am Table 2.4NI9XMiLi ono wtit t as Piit t W

a m mm uoi PuiWiiiS NUhJUNM atiatim Ut6TtM rELm V1 t09 l I 6011

*. Lt ead tt"at* - 404 - 62. 0.0 0.0*. ctni 40*

hll01a - * * 342.2 Jt.t4 7*134 1.0 VWh7Imaos Ms . 1.1 110.0 .2,5.3 5.0 3264

1t.ciavil Ws itI 'M. 710.0 4,342.2 3593 10451.4 5.0 522.9t. b68 5.-55S2,4 - 1S.. 1.0 23.6C. kmana0

UN 94. samsts 29. 13.79- - - 444.6 5.0 '02.Plait IAtuls MA 3343.2 - - - 4.19.0 1.0 M.090,11 f.tthlus, 305.0 5,79.0 2-.934 --043.4 0.0 0.0

5.46-foul Stwu I. 1,209.7 ::2294.9 939.4 - - 2 t749.0 -. S4 91.4

Im ta _ it .1 349237.3 15.209t -- ,261.5 5.0 2,3113.atw t t 2S.2 04.4 94.5 - * t.1 5.0 t9.3

PIaSLOnWISI mt- -- 2.9*1.2 - 2942 5.0 t41.3b f_lset - - 441 440 5.to 33.4

E -mz t - - - 24.4 724.4 1.0 36.2

(S-tald 4A3Mi IS tJHT 790.3 35,S.7 36,207.7 21.2 W2.M 544.3 1.0 a2.S.1F. wuht" VA NM

1119111. - ,S070.8 a 92.6 2,334.1 4"a a a .3 0.0 0.0

544o4u1 1,1. a d - 5,01000. 6 2.A 2.134.I 424.0 0.56.3 0.0 0.00. FptIlnr a Puhn

Fatltal 30.2 Y2.6 * - 6,9 0.0 0.0

3,btotul FVui a d P1 4WN 07.2 m632.6 - 679-. 0-. 0.0it. tfll*IM T mztl *0346

T.- oww- - - 14091.1 W9.. 0.0 0.0WaedmclAaltS 190.3 392.3 0.0 0.0

$.*-taal m I TEcwue -tus , - 1 02.3 I3M.3 0.0 0.03. L_l

ia., 1~~~~~~~~~~~35.5 21.62.0 3,429.3 - 9026 0.@ 4.0

1,Ttal LM .35. 25;.62. ~ 3,429.3 29,92.0 0.0 0.0

- t t_ | r t 4 -~~~~~~~~7~ ; - - -so to. oo oo

Ttal nosmis mu272. 1244 24,019.0 z.o 6.0. 4.10.0 3.1 4,535.

R1. tm cmu

sM tsIm 24.2 2S.2 39.3 - 94.A o.0 49.9him, Fwtahu, 220.1 5.140.S 642.7 4. 6004.0 0.0 0.0

20-Tota mUI9u 24.7I 5,72.0 tmm46 - 7,.oa- 4o.1 49.9n . Fe,tosnv - Pistcit

Frtw 51.9 4,700.4 6.*9U. * t2s232r2 0.0 0.0o "wn 4210.9 t2,137.6 2.210* - 14,57.3 0.0 0.0

1.d6-tota Fatli ad Foiticia 44.0 H36.01, 9,196.6 -:6.909.4 0.0 0.0C. rITgs NM

cm of Pea eat 49.4 M70.9 4.9 a* 23 1.1 o.0 64.1

htal IRRINTION gals T. 4 71.9* 472.9a - -;.-M. 5.0 *64.1L Lai 400.1 5.0 9U3 - -16,01.4 0.0 0.0. (t CUtl -* 2*636. - Z2,36.8 4.0 0.0

Ida Cat mu 1404 2901.2 101034S 2636t - 44410.5 0.3 113.9Tau IIIELIN cum 4591.7 I3X3347.6 3412.5 t2,930.8 6.. 390.451.3 2.4 4.66.9

F_tal fatliu t ".4 3,4.9 03.3 365.4 24.2 4h4dW 0.0 0.0Wm ct14 1as 9.. 3.602.2 6,916.7 1,144.2 1,017.7 9.010,2 2.0 433.7

ToW PRW cm 5.4079 170,214.6 422-=03 4.40.4 71 240. 2.3 5.12.6

F_ _ 1 2.562.0 19.m.o 25,359. 699051 4,163.4 U4422.i 2. 3019.4

I2N 3 n2ot2

NiJ-YANOTZE ASRICOltWL DEUELUN MRECTProiJet Comwots bit Tear

Totals Itluwind CotiMmcies Ttls forluldiin i n(Yuan '000) (999 1000)

1990 1991 1992 1993 1994 Total 19902 9 19 193 1994 Totl______-- 22222 2 2 =w . 22 _ =2=_

A. SICNIAN PRWINCE

1. NURSERY MD NOIMER TREE 6ARUENS 1,579.0 630.7 223.6 326.1 38.4 2.7978 322.3 120.1 41.4 $P.3 7.0 50.12. ORCWiRD ESTALISHIENT 42.596.3 64t235.? 56,4330 73603.7 36,250.1 273118.8 0.6934 129235.4 10.450.6 1343825 6,590.9 51,352.53. ORCHA RWEIITATION 13171.9 662.5 876.4 991.1 1024.1 16437.9 266.1 126.2 162.7 163.6 IU.2 3.327,04. POST4AWESTING FACILITIES 21.023.1 11.692.3 1.t73.2 - - 34,58.6 4.290.4 2,227.1 346.9 - - 6864.45. INSTITUTIONAL SLPPT 10,909 2327.3 533.1 171.9 31.9 13.974.0 2i226.5 443.3 9.7 31.2 5.S 2,3.6

Sub-Total SICHAW POINCE 89r280,2 79,.544 59t941.4 75,002.6 37,344.5 3419117.1 18.220.4 15d152.1 11,100.3 13,636.0 679.9 648"9.53. DMUIOII MNOICIPALITY

1. NURSERY AND MOTHER TREE GARKNS 1t176.2 662,3 39.4 i93,4 849#9 3,381.2 240.0 12A.1 74.0 53.3 i54.5 641.02. ORCHMR ESTA8LISIElNT 23,932.4 25,160.9 29.675,2 12,092.3 14t52e.6 105,389.5 484.2 4M,95 5,495*4 2,1"86 2,641.6 20.012.33. OR D 1ABILITATION 5,683.4 744.3 824,0 908.3 94J.7 9,109.7 1.159.? 141.8 152.6 165.2 172.7 1,79.4. POST-IARESTINB FACILITIES 11,207.3 1U445.6 - - - 12,653.0 2,287.2 275.4 - - - 2,562.6S. INSTITVTIONA1 SUPPmRm 3.999.3 1,408.1 94.9 107.3 30.9 5,620.6 813*7 268.2 17.6 19*5 5.6 1t124.7

Sub-Total CHONING MUNICIPALITY 45,986.8 29o421*2 30,993.5 13,401*4 16,359.1 136,162.0 9,385.1 5,604.0 5,739.5 2,436.6 2,974.4 26,139.6C. HIlEI PROVINCE

_ _ __ ___ _

1. IURY AND MOTHER TREE OARIS 2,351.5 835.2 625.7 606.9 1,260.3 5,679.5 479.9 159.1 115.9 110.3 229.2 1,094*32. IiCHRIR ESTA0115IIEINT 27,337,5 41,362.0 419313.9 31,018.9 29t242.3 170,274.6 5,579.1 77978.5 7,650.7 5W63 5,316.8 32,064.93. ORCHRII REWARILITATION 13941.8 16,632,3 2,96148 3,942#4 S,052.1 42P530#3 2,845*3 39168.0 548.5 716.0 919.6 8,197424. POST-HARESTING FACILITIES 12,127.3 2,313.0 - - - 14440.4 2,475.0 440.6 - - - 2,915.55. INSTITUTIOL SUPPORT 3.742,2 2,190.9 14201.6 130.9 100.1 71995.7 763.7 417.3 337.3 23.9 18.2 16560#4

Sub-Total "Mtfl PROJINCE 59,500.4 63o33.33 46723.0 35,699.9 35,654.9 240,910.4 129142.9 12063.5 8,652.4 6,490.7 6,402.7 45.932,2----- ---- ---- --- - ---------- ------------ ----- O

Total PROJECT COSTS 194,767.3 172.302.9 137,658.0 124,102.9 89,358.4 71.189.5 39,746,4 32.819.6 25,492.2 226564.2 I16247,0 136.8714 N

Ha________ _________ __._______ _________ __________ _____h___ _________ 2____--- - ---1Hatch 2i 1990 12:06

-61-

Anrmex 2Table 4

9-YUTU3.1O SUARS4T IIIIJIfC_9 ..*Imt f., Te.eIe mm T1.. A.Id~

T.1 Ta1 total ttal *n l *oteUhl U0011,1 Ces" (7 wlt Cas" (7 unit COs" 7

1. D1111111 aCm

A. nfwmRnrmL Inw -. 1

a. ie

lbammua (80 Cer) P 4 95.8 2 47.4 47*.4Colts r ca (80 0" ) P 6 149.8 2 47.4 4 94.4

eubWl~ 1rAwe _ tVAINW to 2so.. 4 04.* 148.2S. PwT-rSUSID

Treateaa m (1 Uos 69.5 2 46.0 2 48.0SW*.mtt. (2I beo) r 2 47.0 1 Ul.S I 58.5?1_ass| cm (00.) uP_.. a 8 m. a ".5 99.8

b-Toteal FWUv4UIIS 7 21U.0 0 1.0 J 167.08. 1100

Virus bdeI.q (O0 0S) Porem 2 99.5 1 49.7 t 49.7ivitrIti (do Owe) P*resm 2 78.4 2 78.4 2 78.4

P *t S D1e_. C..l Por a 78.4 1 80.7 1 as.7Irri lgat (80 0Ui) Por 2 47.4 1 80.7 1 0.7

_r-St Substaces (s0o Da") Posm 81.s8 80.7 1 o0.7

1-Ttal _11 10 351.0 e 9t4.2 * 814.24. 81IJ !3W

Stady Tm, pope" 10 88.0 123.9 S 177.0

;ot-Tlt Sum ToUm 10 WSl.0 a ia.0 * ar.g

-ToasW D L 1RU= MO14.S 6.9 01.8D. _n10c n1318640

1Xr. a 2 42.0 U 12.9 1s 314.7NM orhrd Course 174 S17.4 99 00.8 00 J6.1bbabIIlt.tl.. Ceuro. is 68.0 40 WU.S 1s 1.7&wooed "Dump-Tre" Caro. 4 21.0 to 1.0 so 87.7obrimolotp Cm.. 4 165.4 21 U.2 a l.2A..-9 * Ft....e Cauro. 4 185.4 16 9.4 7 4.0

Dab-Totl OiUC 184 me 974.2 210 1ta.8 le 854.4c. ToMMlL AM MR4/

Pat *brroaUag lattams i*ta,-NO 1.0 64.2 1.0 62.8 1 62.80triton i _ 0.7 10.8 0.7 87.4 0.7 87.4viru Iad.'Is 01D-.sSt 1.0 68.0 1.0 34.0 1 34.0Irriatlos 10-i1 l 0.8 22.0 0.8 21.4 0.8 n.4

Sub-Tetal 1O6LZa 8.0 199.0 8.0 183.1 8 18.1MSI87MM -4/

T o1al8106 CM$ 2.7 920.2 1240.0

TOe 220.7 920.2 tlUO.J

____e_d_as lUID/intl.for too. rem ad board. ____/peroms _.__*at.rumstImt 1ifar, VW 41M for , rla irftre.

rlr care. to do anr d11_ said 0/ay *atery. anl es *11t1he S.". 84. M s4ad by 91Iu _o.atss ed WA,1e, r.**OOIvOty.

- 62 -

labI. C.1CHINA

MIO-YANOTZE MRICULTURAL ODEELOPMENT PROJECT

Procur~ment List of Equipment, Material and Supplies

Unit Cost Quantity by Province Total ProcurementItem Unit Sichuan Chongqing oubel Total Coat method

(USI) (US8'000)Fertilizer and Pettides (-Urea Ton 196 8,600 1,900 2,900 6,400 1,068 ICe-Compound FertilIIer Ton 807 12,000 6,000 12,900 81,600 9,70a ICB-pesticides Ton 10,000 150 90 100 846 8,798 tCBVehicles and Boats-Truck (1-1.75t) m4. 17,000 Go 127 60 258 4,801 ICB-Truck 5-5.St No. 85,000 66 8 8o 08 8,256 ICB-Monorail & Boat 0 750 ICBSteel Products-Steel Line Ton 886 550 800 2,000 2,860 055 IC8-Steel Shlet Ton 44S 1,500 1,400 2,000 4,900 2,181 ICBPacking Llnes-St/hr No. 112,000 16 1 4 20 2,240 ICB-St/hr No. 168,000 2 1 0 8 504 ICBIrrigation Equipment-Electric Pump A Motor No. 780 616 107 495 1,420 1,106 ICB-Transformer No. 2,500 278 64 495 822 2,056 ICB'H-f Wiring Connection Km 8,600 278 54 871 698 2,448 ICB-LT Wiring '000. 1,650 62 7 74 168 269 ICB-Diesel Pump A Engine Set 760 90 424 110 624 4U8 ICe-SOmm dia. CI Pipe '000 4,700 400 140 800 640 8,P46 ICB-Mobile Sprinkler Unit Set 660 906 900 770 ICe-Rubber Pipe 'OOOm 1,600 244 97 218 654 666 ICB-Plastic Pipe '000. 1,800 600 200 800 1,000 1,86C ICB

Totel 48,161__ __ __ __ __ -- - _ _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _I

i

I

- 63 -Annex 2

°IUA Table 5.2MID-YifITZE DRIItUL OQELOFDIT PROJErT

Procurement List ot Equipment, iaterial nd SupplIes

unIIt Cost uantlty bv Prowiuce ituantity Total ProcurementItea 81rbunn w neq no IHubel Total Cat Method

Fara/Meranry Machinery (LM) (W6'OO)-SrP 2r0-2bp W0 400 95 280 748 140 LCB-Drill. 8hp 840 80 o0 10 LCD-Mureery ipment 478 120 2 57 LCE-Poly Hou Fram 2.250 120 n0 270 LCB

.4leuter end Fan710vi I20 120 as LCDI-rip Irr;Iton 670/ltu 800 0oo 60 402 LIs

-TV 420 176 1o 10 106 62 LID-Vido 420 i6 1o 8 S1 13 LID-VIdIo Cm_ra 4 10 1 1 1 3 12 LIS-Copy machine 6,60 2 4 a 11 72 LID-Slide Projector 16S 0 5 10 12 2 LID-icrC .utr 6O.80 17 1 1 19 124 LiD-Fl mecinw800 9 1 2 12 60 Li.-Telexmahine 90800 1 0 0 1 10 Lie-Cmaera 810 27 4 11 42 18 LCO-Typewriter Chine-Eeg. 2.200 is 4 10 82 70 LCB-BIulsh Typewriter 10 T4 0 9 48 6 LCB-Refierator 780 10 0 10 20 1S LCB-Telphone 140 262 0 2 264 87 LC-calculator 120 o 0 18 711 as LCD-Ibdio Tape Rarder 478 2 0 0 2 1 LCE-Welkle Talkies 200 0 12 0 12 2 LCS11wit Ewl t 0 IJB L8-le Furniture 0 228 LS

-D 1l e 0 a LSlag nMmHase Equipment 0

-Platform SCaIe 110 86 a S 49 a LCD-Mnadtart 110 lS 7 28 140 is LCB-Plastic Fleldbox 8 220D0 000 0 2000 224 LC8-Felift 8 7SD0 2 2 115 LCi-Weighbridge 61.000 2 2 122 LC88tor "eu Equipent 0

1rif t 18,8DO a 8 40 LCB.4ndcart 85 12 80 40 82 S LCB-Storabox 1 24000 9800 1670 220800 242 LCBVent nd Fen 89 24 70 94 6 LCB

-Platform Scale 110 8 a 16 27 8 LC8Rerch Equipment 0-araen houee 112.000 1 1 1 8 SO6 LCB-=I-ap Centifug. 7,800 0 1 0 1 a LCd-fractoeter 1.600 1 0 0 1 2 LC8-q Ch_mtoerph 8.100 1 0 0 1 8 LC8- t. Ab. Spectrophotrmetr 7,000 2 0 0 2 14 LCD

-E ectr c valance 2.580 1 1 2 5 LCB-Dryer 182 1s 1 it a LCD-Keldahl 2 260 2 2 8 LCB-Ceol Cobin.t 2S 760 1 1 2 S2 LC8

4 water 225 16 16 4 LCD-Meteorological eat 480 16 16 7 LCD-MutrldeItr 10,000 1 1 10 LCB-Stereo Micrecopa 480 82 82 14 LCB-Incubator 68D 1 2 8 8 LC8-ylinder eOCe2 860 0 a 8 4 LCB-nitroge Cylinder 1,070 0 1 1 1 LCB-El lea Equipment S8186 0 1 1 2 7 LCB-Spectropluotography 8.700 9 0 10 19 70 LCD-Mand refra tometer 41i l1 l16 6 LCB-nd Len6 660 o a LCB-Colorometer 214 2 2 0 LCD-Ordinary Incubator 214 17 17 4 LCBLand Prep. Material. Vr. 10,600 LCBPlentin Materials Vr. 2.800 LCBLim A Copper Sulphate Var. 872 6,100 LCBOrgnic Fertilizer Var. 11.00o oP

88,468

- 64 -

Annex 2Table 5.3

CHINA

MID-YANGTZE AGRICULTURAL DZVELOPMZNT PRO:"CT

Procurement List for Works & Small Equipment

Unit Cost Value by Province Total ProcurementItem Sichuan Chongqing Hubel Cost Method

(US$ '000)Works

Buildings 4,015 1,310 1,915 7,240 LCBIrrigation Works 4,205 285 610 5,100 LCBHarvesting Roads 1,470 553 1,340 3,363 LCB

Subtotal 9,690 2,148 3,863 15.703 LCB

Quantity by Province Quantity Total ProcurementSmall Irrigation Equipment Sichuan Ctongqing Hubei Total Cost Method

-Switch Gear 8S0 546 55 495 1,096 932 LCB-Fuel lank & Pipe 110 90 212 55 357 39 LCB-Electric Pump & Motor 800 10 268 0 268 214 LCB'-1501100mn Pipe 10,100 60 44' 48 152 1,535 LCB-150a die. RC Pipe 9,00( 168 54 118 340 3,060 LCB-100lm dia. Plp. 6,500 350 118 260 728 4,732 LCB-Valve (Gate) 50-150mm dia. 40 8,000 1,100 2,150 11,250 450 LCB-Plug & Connector 5 51.500 13,150 29,000 93,650 468 LCB-HoselTab Connee\tor 20 4,693 2,575 5,688 12,956 -259 LCB-Mini Sprinkler Installation 25 0 45 32,016 32,061 802 LCBSubtotal 12,491

-Contract Labor 12,400 LCB

49,594----------- _ ----------------------------------------------------------------------------- -------

- 65 -

Annex 2ona" Table 6

MID-YANOTZI AQRICULTUIAL OEVELSiPMT POJECT

Estimete DIelberu.mot Schedule

TDA DIebarS.mSloibrusentFiesal Year Sameetrol Cumulativ Cumultive Profile /Sst …r -- U-- *IllIon)---- ---- (5) Toe/Soooter S

1.01 Yeaor let 0.0 6.0 lot2nd 7.0 18.0 20.0 2nd 26.0

1.02 Year 2lot 9.0 22.0 1lt2nd 10.0 $2.0 50.0 2nd 58.0

Year 3lot 10.0 42.0 lot2nd 11.0 58.0 .00 2nd 75.0

1.94 Year 4let 5.0o 6.0 let,2nd 8.0 61.0 95.0 2nd 90.0

1906 Year 5lst 8.0 s4.0 100.0 let 100.0

O/ Doisburseomnt protil- for China - agriculture Iono.

Copletlon datet December 81. 104.Closing dates Dcmber S1, 1006.

- 66 -

Annex 3CHIN Table 1 .1

MID-YANGTZE AGICULTWAL DEVELOPMENT PROJECTPhasing of Nureelres Orchard Estbl lsh nt and RNa#billtation

NMa Orchards P *bl lttItlon----------------------------- _______ - -------- - -- _____ -

Tot I PY1 PY2 PYs PY4 PYS Totel PY1 PY2~~~~~~~~~~~~~-- -- - -- - - - - - - _- - - - _

Sichuan

Mother-Tree Garden 24 6 8 8 6Poly-Nouu Nursery(120 hove.) 4 4Cttrus 4624 1100 1870 980 1224 0 4J0 600

JIncheng 1794 800 400 400 694 140 140Valencia 1100 00 500 1oo 0 220 220Novel ISWO 200 470 480 480 140 140Mandarln 100 0 0 0 100Poinlo 100 100

Lyche 794 160 850 200 200Long.n 200 0 94Plum 66 0 0 66Loqurt 116 SO 6o

Total Orchards 6600 1800 16o 1106 1424 0 500 G0oChongqlng

Mother-Tree Gardon 20 26Open Field Nurzey 85 a5

Citrus 2060 700 690 670 0 0 240 240Jinchen 1260 480 420 410Valencia 540 140 200 200 240 240

* Nvel 60 0o 0Pomelo 20J 70 70 60

Yel low Peach 260 40 120 100 100 100

To l Orchards 2820 740 610 770 0 0 840 84ONubel

Mother-Tr" Gorden T0 T0

Open Field Nursery 86.6 86.5

Citrus 28 0 865 846 659 489 219 1688 60o s8JJinche n 963 150 240 269 9s8 94 1688 60o 0 16Valencia 488 65 101 180 6e 44Koavl 6O 120 200 240 160 60Mandarin 500 200 300 0

Yellow Pe"eh 6o7 170 227 170Loquat 200 60 80 60

Plum 67 20 27 20Poor 200 60 60 6oKl-l 188 40 5a 40Total Orchards 860 "6 1816 1009 489 216 163 600 68

Grand Total U1 2925 4005 2975 1668 210 2478 1640 8_ _______ ___ ___ __ .__. _ ._._____________ __

NU-Y1MOZE ACIOL1aAI OeAiON.0U PRDL

Sidcu Crop Shdel - Jincha Orange

~~~~~~~~---____________________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ( as )

unit cast Pn Pm2 P18 PY4 P5 P16 PV7 P18 P19 PTIo PIll P122 Pn11 P114 P115 P116 P117 Ptl8 P119 PnM

Wo14(tn/a 2.5 8 10.5 is518.78 24 26 2? 27 27 21.5 30 30 30 30 30 30Price uaa/tanul) 1/ 1.112 1.112 1.112 1.112 1.112 1.112 1.112 1.112 1.112 1,112 1.112 1.112 1 112 1.112 1.112 i1.12 1,112

CStr_ Inc_ 2.7tO 6.672 11.676 18. 6 20,60 2 sM 26.912 30 024 so 024 30 024 81 as0 360 33.8 60 38,360 33. 360 33.360 3336Cras ft.wO 0 0 0 2.780 211,678 16,660 20,50 26,60 20 912 8D0024 30,024 30,024 81,9 360 33 .360 33.360 33.360 33,360 33.36

Investmt CosteLoad Pr ation

Cnpolesiv 2/ Y1lll7t 8 300O ICP F.rtiliver 31/ /t 1500tiot */ 't3.0/md 6.300Oron Ihaw,. Seed S/ 12/kg 300

PlantingCost of Se n 6/ 1.0/unit 1 300f rti lr-P 7/ Y1.0/h 1'300Laor 81 18.0/si J60

Irriatian Cas 10.6 633 So3 64Pe.lalmnt 9/ 218

Sahots t nvest. Cat 11,400 1.713 0 0 a 0 0 0 0 633 0 0 0 0 98 0 0 0 0 64oRegiresent for Tre obintononce

O ic l"Wore tan 0 a a 11 12 Ls 16 20 20 20 20 20 20 20 20 20 20 20 20 20I FoclPrt. -urge lC 0 0 300 356 8 481 MY7 717 615 918 918 918 918 918 918 913 913 913 91,3 913

Compound Fsrt(o1- S) Kg 0 326 4U 67 786 e0 10SO S1060 1050 1OS0 1050 1060 1060 10 1060 1060 1050 100 10650Pesti;ide t 0 21 21 40 40 40 58 Be 58 S5 so B6 s6 so 6 S 56 a6 56 66Lbaor baday 0 18 10 440 475 5868 5s 660 660 770 790 790 7M0 790 790 790 7M 70 790 790tregiatian Ca * 0 1o,00 1,73 916I0 2.160 2,890 2,590 2,S0W 2.50 2,590 2.850 2.590 2.690 2,690 2,t40 2,50 2.590 2.590 2,590 2.890

Trea Ibintenance Castsorganic lnure 16D/t 0 460 480 Uo 720 900 1.06 1,200 1,200 1.200 1,200 1.22 0 1,200 1.200 1,200 2.200 1.200 1.200 1S200 1,200Chesical Fort.-Urs" 10.6/bg 0 0 160 218 234 269 362 430 489 548 5 546 54 O 54064 346 56 548 546 56 546Caeaau FortC(1-UI-15) ° 1.0/ 0 0 826 411 5" 62S7 75 60 0 1ago0 1.060 1oos0 1 o06 1 0so 60 10 0 a10 1,060 , 060 1.060 1.050 1.060 0a

Pticee m 0 77 777 1.480 1.460 1 460 1.961 1.961 1.961 2.072 2,072 2,072 2'072 2.072 2.372 2.072 2.072 2 072 2.072 2,072Laor 10 si 0 45 540 1,80 1.40 1,755 1,765 2,040 2.040 2,310 2,870 2.370 2.370 2.370 2.870 2,870 2,370 2.370 2.370 2,370Irrigation YOWL27/eS 0 29 47 so B S 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70F:: wipment LS 68 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Fs P Toole LS 0 0 44 44 4 0o 180 150 15 n5 IS0 1so 1SO 150 150 15 150 50 15 1S0Special Product Tm 5.75 0 0 0 160 384 671 969 1,19 1,IW 1.662 1 726 1726 1720 1.8022 1,u 1918 .918 1.91 1,9168 ,916

S&b-Total Operating Cast 6 1,851 2,394 4,846 4,982 6,0so 7,237 6,100 6,494 9,062 9:186 9.186 9.116 . 2e2 ,878 9,8 9,8e78 9,378 9,a87 9.376Toals Icasts 11,466 18.044 2.394 4 384 4.932 6,060 7.287 6100 6494 9695 9.8 9.8 9.IN6 9.2322 9.77 9.8 9889389881,2

T Revenue (11.460)(1.0 4)(2.394)( 1.56) 1.740 5,626 9.443 1,7501 194 127 20,6 8 2085 20,6 2, 4S410 2a.55 2.962 23,962 2. 296

Wt Present Vagu1 41810financlal Mes of Return 249

1lto: This is an saaepl of adoral crop .a-ls. Other crop saels for citrus nd other fruits by varieties an by Juriadictions con be fatnd In the Projet Fi les.

1/ bea an 1987 enderln financial price adjusted by lOs to derive 19 price.21 bploslve at 8000o at/bat n n10/set.8/ OrianIc frs IlLaer 60 tan/he at Wilan.4/ Itouire 2100 ENdy 0* 3.0/sendey.5/ f Ieire 150 g at ,0/kg.

/1 0 seoedlng at 11.0/sedlSIng.7/ Only CAP Is used at planting at 130 kg/ho.e/ Ragir 120 mdaws at 18.0se nday.0/ Ibtized sprayer price d would spray 20 he Other caste inclwde

,,..,

i3

I-'

Annex 3

-68 - Table 2.1

CHMDUID-YAUTZE AUIoCL1tAL OEVlEAPIT PROJECT

Para Uodgi - Sichue. Prow ic. 1/

Preeent-Uithout Project Futur.-Witheut Project Future-With Project

Other Totel Other Total Other Citru 11/ TotalGraln. $/Crops 4/ Grimm crop to0/ Groin crep Velcil

Are (Mu) 2/ 5.5 1.0 6.5 5.s 2.0 7.5 4.0 0.5 4.0 6.5Output (Kg.) 2,200.0 2,750.0 2,200.0 7,200.0Groom Value (Yuan) m90.0 400.0 1,2M0.0 1,100.0 900.0 2,000.0 610.0 312.6 7,200.0 532.5AniasI Raising 5/ 600.0 700.0 700.0Total lecee 1,6U0.0 2,700.0 9,002.5

Opearting Coet"

Seeds 22.0 13.0 35.0 41.0 30.0 71.0 30.0 7.6 0.0 n7.6

Fertil nr 240.0 16.0 250.0 260.0 3.0 335.0 230.0 22.0 4J0.0 662.0Orgnle Mnure 46.0 24.0 - 56.0 6.6 75.0 148.0 49.9 13.6 320.0 *35.Pestlldee 11.0 0.0 19.0 82.4 25.0 67.4 28.0 6.S 62.0 591.$Fare LMahinery 0.0 0.0 0.0 30.7 0.0 30.7 22.4 0.0 40.0 62.3Animal Powr 27.5 5.0 $2.5 69.2 1S.0 74.8 48.1 3.6 0.0 40.9Irrigation Water 24.6 10.0 34.3 79.S 41.0 120.8 57.7 10.8 19.0 6.0Feed 100.0 120.0 120.0Other Cost 0/ 63.0 67.0 M.2.5Rspaymmt and Interest Ceste O36.0Total Cogt 370. 74.0 607.3 561.8 274.0 1042.3 4W6.0 06t 1,871.0 3,16.0

Nat Value of Production 1,272.0 1,57.3 0,006.6

Other Iucem 7/ 200.0 200.0 0.0Family lucer 1,472.6 1,67.6 5,905.6Fmily Labor (anday) 2/ 80 W0 409 880 160 570 240 40 823 .0

Rturn per Matby 2.6 2.9 9.7Per Capita Ine / 205 372 1161

1/ A typical husahold ha S _faily _hr, husband, wif. two children and a grandparent. TWy have 6W0 mandays vlaIlble2/ Total are Ia 6_ for which 5.6 Su *e planted for grain. and 1 am for other crep.8/ Ce_pese of t m of rice, 2.5 no of wheat eud potato. Corn o nernally found Intarcroped wlth potatoe.4/ Norma ly Is a mixed of peauts, r_, ar cne, tobacco and Oe.5/ Anml, raising lncl_de 2 pigs, chiln and ducasO/ Frn tax, OX of not Income.7/ Other lncome freo hired labor out 07 days at .3.0/day.S/ Labor used In farming plus 00 days usd In animal raising.9/ Ueaed en S prwna par family.10/ Add one eu to other creop.11/ Allocat 2 en fre grinnd eOh r cros ad acquire 2 more e of n land.

ig-vYAusZ ANIOLTRAL fEVELPMf t MOJECT

Per. Mdl ^ Cho.,qlne MIanicip.Ii 1/

Pr.sget-W).t Project FaturWitim" Project Futre-Wtb Project

OCher Totel Othr Tote Cltu / tote)Grafl" 2/ Crope Orion Cree 4rains Jlchen

Ate (Mu) 5.0 0.0 6.0 5.0 0.0 3.0 1.0 2.4 7.4OAtpt (ts.) 2,450.0 2.60.0 2,0.0 2,0.0 2,0.0 4,90.0 7,450.0arm Value (Y1u) 1,292.0 0.0 1,202.0 1,20.0 0.0 1,20.0 1,202.0 4,00.0 6,02.0Aa.l seib n. ,/ m.0 u00.0 9o0.0Tote loe" 2,092.0 2,102.0 o,m.0Operatin COst

Se_1 Va. 0.0 .5 53.5 0.0 58.5 58.6 0.0 go.5FertilIzer 76.5 0.0 76.6 70.5 0.0 7.6 70.6 266.0 32.SOrgpnic Mbngr 20.0 0.0 20.0 20.0 0.0 20.0 20.0 115.¢ 135.0Psticide 20.0 0.0 20.0 20.0 0.0 20.0 20.0 46.0 08.0Farm Mbealhiey 6.0 0.0 3.0 5.0 0.0 3.0 3.0 24.0 29.0 1Anise Powe 30.0 0.0 80.0 30.0 0.0 80.0 30.0 0.0 80.0Irer ;ion Voter 3.0 0.0 3.0 3.0 0.0 8.0 5.0 51.0 34.0Feid 0.0 0.0 U28.0 0.0 0.0 1J0.0 0.0 180.00Utr Costs 0.0 0.0 0.0 0.0 0.0 92.0 0.0 503.0Rbeyasnt asd Interest Cost.Totea Costs N3.0 0.0 420.0 213.0 0.0 435.0 213.0 474.0 I,30.0Not Volue of Production 1,078.0 0.0 1,06.0 1,079.0 0.0 I,77.0 5,672.0Other Income 4/ 420.0 46C.0 210.0Famtly tees.. 2,0o3.0 2,212.0 5,112.0famly LAWor (UNoy) S/ 850 0 470 350 0 470 350 129 593.0Intrn per M1NY . .6 4.7 6.6ar, Cepit Income 6/ ad7 in 660

1/ A ty"lel bssbold bas S tooly smete, husband, f*tt, two *1l)d4. sN 2 9rAdpeMs. ThI bsv M _e ysd oval labl. Per pet.2/ Pleated 2 Mof rice dXring Mey-Augwt, 8 M of gitet *iur during Nov"Ir-Aprl) thi offset potee lnercreped with core durint Vey-St.a/ Cpo of 4 pip.4J l_co froM 2 peruos work 2 weeth at 18.6/dey (120 days)

Jinle 190 days _sod to raeisin p;g.0/ Sesd e. a Pa d per faoly.7/ 2.4 f t eddtlogl la fEt e s lope ellocsted frm townip evo*romet.

*x

ID-YANGTZE CURIOiLlUAL DEVELWMDIT PROJECT

fare Medel - Nubel Mm Orchards 1/

Preet-Without Project Fture-Without Projoet Future-With Project

Potatoe Corn Rica Total Potatoes Corn RICe Total Vegeables Rica CItrue TotalJi-

Are (Mu) 2/ 8.5 8.5 2.4 5.9 8.5 3.5 2.4 5.9 0.2 2.4 3.5 5.9Output (Kg.) 4,875.0 1024 914.0 6,260.0 1280 1,257.0 1000.0 1257.0 6720.0Gosa Voalue (Ym) 487.6 40S 847.0 1,192.5 525.0 490 470.0 1,49S.0 160.0 478.0 5720.0 6858.0Anisel Ralsing 8/ 520.0 620.0 620.0total Incom 1712.5 2113.0 6n06.0

Operating Cost

Seds 20.0 20.0 2.50 86.0 20.0 20.0 25.0 O6.0 0.6 25.0 0.0 26.6Fertiliaer 84.0 118.0 46.0 248.0 96.0 120.0 58.0 271.0 7.0 58.0 $52.0 412.6Orlanic Manure 10.0 16.0 20.0 46.0 10.0 15.0 27.0 62.0 8.0 48.0 264.0 820.0Peticidms 10.0 10.0 20.0 40.0 17.0 18.0 22.0 57.0 1.5 21.6 4S6.0 476.1Fare Machinery 10.0 0.0 10.0 20.0 10.0 0.0 15.0 25.0 22.0 0.0 22.0AnimlI Peer 10.0 10.0 16.0 86.0 15.0 10.0 20.0 45.0 26.0 0.0 26.0Irrigation Water 5.0 0.0 6.0 10.0 5.0 4.0 5.0 14.0 12.0 26.0 37.0FPed 4/ 64.0 90.0 06.0Other Coost 6/ 02.0 74.0 $28.0 828.0Reay ment d I ureat Coet 690.0 690.0Tot l Cost 149.0 166.0 141.0 694.0 175.0 187.0 167.0 099.0 17.7 207.6 2114.0 2486.8

Nat Value of Production 1128.6 1,414.0 142.8 270.4 8606.0 4642.7

Otbhr Income / 26.0 612.0 314.0Fi _ly lI ace 1418.5 1,926.0 4656.7Feel ly Labor (Manday) 7/ 410.0 480.0 40.0 210.0 170.0 500.o

Retura per Mbnday */ 2.0 2.9 9.1Per Capital I qn. 9/ 2P U66 971

1/ A typical household bh 56 fe_tly _b r buhband, wife, two children a*d a gr_afther. They have 690 _ndays ovailoble per year.2S/ Total land area Is 6.9 au planted .5 mu of potatoes In January, InStrcroped corn potatooe field in April and planted 2.4 au of rice It Voy.8/ Composed of 2 pigs, raied by the greafatebr for 10 months.4/ resently ued 820 kg of corn ad corn stah at an avere value of Y.2/kg. l the futtre sill used more corn and low stalkh, thu the feed Isvoluwd t V8/kg.C/ Farm tax, 5S of net inca..6/ Frm other ideliesm wtivitih uch a* raising kchiehn, gathering fort products (frod) and catching fish free paddy fields, speding

on averae of 80 mndays.;/ Fer farming pluo 60 days of pig railing.

9/ To labor d tn farming . S9/ Good en6 persons pr fm ly. x

w

- 71 -Annex 3Table 3.1

CHIN

MID-YANOtZE AGRICULTURAL DEVELOPMENT PROJECT

eorder Prices for Principal Products and Inpute (in 199 Constnt Tern.)

Jinchng Valencia Novel Mandarin Urea DAP

N6 Tr*a Status X X X X U u

1969 Prices

World Market Price(C/to") 1/ 478 611 600 490 125 '0Freight (S) 0 0 0 a 8s soCIF/PFO Port (S/ton) 478 511 00 447 108 15iCIF/FO0 Port(Y/ton) 2/ 2,288 2,412 2,882 2110 769 986

Port Cherges and Distributors'Margin 8/ 167 174 190 162 26 26

Transport:Port-Wholoeal-r 4/ 120 126 72 186 6 tRepacking St Wholeseler 6/ 267 257 267 267 0 0Wholesler Handling Costa 100 100 100 s0 6s 94Spoilage 6/ 60 60 60 s0 0 0

TransportiFere-Wholeaslm- 7/ 24 24 24 24 24 24

Economic Price (Y/ton) 1,609 1,681 2,189 1,402 698 1,078Financial Price (Y/ten) 5/ 1,288 1,872 1,7I' 1,279 900 1,400

2000 Prices

World Mfrket Price($/ton) 9/ 467 526 617 504 16o 269Freight (S) 0 0 0 0 8s a8CIF/FOB Port (3/ton) 497 26 0617 407 213 807CIF/FOB Port(Y/too) 2/ 2,299 2,468 2,912 2,204 1,029 1,449

Port Charge and DietributorsMargin 8/ 169 170 198 1" 26 26

Treasport:Port-4holese,er 4/ 120 126 72 185 5 5Repecking t Uholoaler S/ 267 257 207 257 0 0Wholeealer Handling Cost 100 100 100 s0 98 10Spoilage P/ 60 58 58 as 0 0

Transport:Fere-Wholosler 7/ 24 24 24 24 24 24

Economlc Price (Y/ton) 1,572 1,747 2,214 1,490 1,170 1,688Financial Price (V/ton) O/ 1,288 1,872 1,765 1,279 1,200 1,600

1/ oeed on 1947 USSR border prices for Jincheng (US1480/t) and Valencia (USU460/t), Canadian borderprice for Madelrin (UOS447/t) en USI640/t Hongkong price for Novel, adjustod by 1OX for 199 constantprlce. Ure and D*P prices are based on World Sank Coomodity Price Projoction,Janwuary 22, 1990.

2/ Exchange rte of Y4.72 * US$l.8/ Port handling charge of Y92/ton plus 8.9X xporters' mrgln for citrus. Port charge of Y25/ton

for Ur an CAP.41 Based on rall transport chrge. to USSR borders of YO.085/tbo/be, and an average di stanc of 4000 km

and cost of 60/t, to Hangkong borders, adjusted by rail transport converPton factor of 0.9.5/ Cost of cardboard cartons (SThob/t O YS/box), adjusted by convelofo factor of .9.0/ SS spoilage.7/ Sased on roa traneort charges of YO.2/ton/ks, and an everas distance. of 100 kwm,

djusted by transport converslon factor of 1.2.O/ ia)ed on 1967 f%^ ncinl prie., adjuted 11S to reflected 199 price trend.9/ osai on long run price projection that citrus prices *Ill b incroesd by 6.83 in 19M

and dacr bsd iy 8.23 In yer 2000, World Bonk Comrodity Price Projection, November 1968.

IUD-YMI 11Ll UAL OiE.OASW C

IFnascial mad _;nac P.Te. fto fruits

Pe-to Lryets i- Pt_m Loi_et ellm Peac P_er l

Flt,ncial Ecngac Flamacisl _Tcgalc Fmincial b cFgaPnaclal _gle FPscial bEnaic Financial bEa_le Financial b_ie.. Fin nl '_ ic

1W? brik.t Pries (ton) 1.400 1.40t 4,600 40 8,g50 8,0 100 1.0 29.300 2,600 1,600 1,60 1,400 1,400 2. 00 2.500Tamport fru fmmoalors 1/ 5 6 a 6 5 6 s t 5 a 5 a 5 t S i

-Howl Cno .a 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4411ortk coau 7 7 10 to 9 9 9 9 20 go 9 9 a 8 20 so-Retil lhrgln 1SW 118 4a4 848 S840 17 178 247 847 1UN 18 inI up8 247 287-To* 2/ S7 0 184 0 94 0 48 0 67 0 4 0 87 0 67 0

Wholgelo V lvo (Y/ton) 1.209 1.248 8.999 4,122 8,040 S.U1 I.8'6 16,= 2.17 2,20 1.11S 1.425 1.210 1.244 2,157 2,223

-Tranoport ferm Form 3/ 10 19 10 1O 1i0 180 so 6O 20 2S 2D 24 100 216 30 20tlmd II mg Cow" a a t 6 6 6 a 6 6 a 6 t a 6 6 6

Assume 4/ o9 72 192 192 144 144 7S 75 107 107 so Ot 51 51 106 1l0-Tas S is 0 210 0 1s8 0 02 0 1t1 0 74 0 go 0 li 0.Wholsle Marein 48 40 18 15n li 1n8 6o so 66 06 as 5 55 41 4' a5

Faragte Value CY/ton) 1.015 1,100 0,2 a an88 2466 260 1.30 1.409 1an 2 01)0 1.188 1.270 674 930 1.814 2.006Adjuotad Valtu by 1N for 1969 1.167 1.2 a 779 4.127 26 8 , 09 1 475 1 612 2.05 2 ,No 1. 8 1461 1.006 1.070 2067 2.80T

1/ TrpMort frm bolcIcaa rketa to rntai I irkcets en average of 25 km at 0.2/tflm. adjuatd by 1.2 of tran_gorttien cenvriaen factor for anesic priew.2/ Real ing tae of Sen not volue of fruits.3/ Truneport coats from farms to _rklt 100 km ean asraga. adjute by 1.2 of tranaportatien c r Teaien factor for semic priema.4/ 6S epoiaIa.51 Fare. tseam of 5.763. t

~ImI0

- 73 -

Annex 3

CHINA

MID-YANGTZE AGRICULTURAL DEVELOPMENT PROJECT

Main Conversion Factors Used

Standard Conversion Factor a/ 0.86Machinery/Equipment b/ 1.50Energy - Coal c/ 1.40

- Gasoline 1.60- Diesel 1.10- Electricity 3.70

Transpot - Road 1.20- Rail 0.90

Cement 3.00Steel 1.90Labor - Unskilled 0.80

- Skilled 1.60- Management 2.00- Technical 2.00

Other Non-Traded Goods 0.90Earthwork - Irrigation 0.79Structures 1.02

a/ SCF -(Official Exchange Rate)/(Shadow Exchange rate ) 4.7/5.5h/ Based on conversion factor of 1.0 for imports under ICB and 1.5 for

locally made machinery and equipment.c/ The other conversion factors are based on The IBRD's Economic Prices

for Project Evaluation in China. January 23, 1990 and actual financialprices prevailing in Sichuan and Hubei.

NIll.YNI:CT A8RCLlURAL DJP9T FROJET

Source and,Leas of Funds: Onaninne County FDC

(Y'000 current prices)

sub- 2001- Sub-Year 1/ 1986 1987 198B 1969 Tot 190 1991 1992 19 1994 195 1996 17 198 19 2000 2001 Total Total

Sources of Funds1. W~np-Tdim Loan

(a) M Credit drnadoen 2/ S400 6soo 4000 1600 400 p17000 17000b) omstic Loins-Development Lon 600 600 1660 2250 900 700 500 60 6wl-Poverty Al eviation Loan 10 200 360 0 350

Ce) Financial Dev. Funds-rant l1O 120 60 S0 400 0 400-Interest-fre 'Funds 10 IS0 6o 130 0 I880-Low-Iaterast Funds 600 600 1680 2300 900 600 S0 6000 6500

2. Nerkcting Profits 8/ 15 20 25 80 90 113 M6 340 340 340 840 882 864 487 6S0 684 6640 10976 110658. Service 4/

-mdlinoe sln lCOo is 20 25 Uo0 is is 9 7 ;43 203- Orcerd" 840 48 58 440 42 8'- 29 20 Iss 579-Frait-bearing Tee. 0 35 44 62 6o 98 124 US8 188 1276 1965 1963-latorial wpply 3 3 4 5 14 140 152 11O 60 S0 S0 6o 60 60 60 60 540 1402 1416

4. Sublon Intreet S/ 0 100 80 820 30 390 890 8 310 290 260 20 S0 a890 39S5. vWoduetion-Support Fund. 6/ 9 a 8 e 12 4 66 180 13 10 180 14 188 80 807 2 4293 63 62256. oppaymant 0 176 1788 1785 1783 2186 29000 2900

Totel Souriua 2369 986 857 815 48 9180 10o97 6787 3871 2404 972 1068 2125 8048 3095 3174 3S99 82888 87064

Appl Icstlomo rf Furnd 4 71. Investment in Conat. 20D 1!0 100 450 1600 IS00 1140 600 S00 6a40 s72. Inveat. Now Orchardn 168068 20 o 600 306D 7100 6650 4870 2310 940 23670 267508. Fre for TAhnicel Service 45 70 70 1S 60 92 9z 92 92 92 92 92 90 80 75 400 1339 1524-4. Operational Expense 105 110 115 150 480 200 220 250 290 800 250 280 250 280 250 270 2700 5470 5980 -5. Lon supymnt 7/

-0t!. R_nt 60 00 0s 80 1010 1230 13-e Loan 1020 1020 1020 1020 L2920 17000 17000tiomeetic Reptymant 686 665 685 U68 7930 10670 10670-Repayment for the fi rat 4 years S60

Total Appl cations of Fund" 195 988 485 820 4195 8980 10462 611i2 282 18S2 842 842 2127 2125 2115 2130 24960 64819 72894

Not Revenue 684 1 -129 -5 201 200 517 58S 889 872 630 724 698 921 980 1044 10409 17869 14890

Cumulative Cash Floe $84 8WS 206 201 2D1 200 717 1802 1891 2463 S 3817 4515 8486 6416 747i0 17669 17869 14890

1/ This CR1C his aIready ben In oporation imer 1986 the cah floe will dsho 24 years fre 196-2009 with the pre.nt project prriod of 20 year, atarting year 199.2/ Total project coat Is Y34 *;lIeon of which Y17 elli ion from the World Bonk. Y28.7 mi Iion would be used t&r mother tree pardwn and orchard eatabli usant and- Ys.8 million wuld be usd for FDC'. onetruction end direct investmnt.

8/ Marketing profita are composed of males of fruit from packing I inta (Y80/t) and from conventional tresOnu_t (Y12DJt). Only 885 of the profit can be kept by CFDC.4/ Service Income are cooeed of comnisioe on male of seedling (Y.08/eedling), esebliehInt of now orchard. 6/ha) fruit production ('IOt of 705 of prodction)

end mterial supplies (2 of the total value af purchaed materiels).S/ Paymnt of eubion Interest from beneficiaries.6/ Out of YSD/t production aupport fund, Y24/t is for CFDC, the rest goe to Provincial and Prefecture Governmnt..7/ Interest rates are as follows: World Dunk loan to CFDC 65 P.s. Domeatic Bank loan 91 pas, Doa.etic borrowing 5 p.m from 199 on.

Landinf from CFDC to new orchard. *ill be at ABC previing rate presently at 19.241 pa.

M

- 75 - Annex 3Table 6

CHINA

UID-YANGTZE AGRICULTURAL DEVELOPMENT PROJECT

Rent and Cost Reco--ry

Tot lSichuan Chongqtng Hubel Project(60,000) (l0,000) (40,000) (180,000)

(V '000)At Full DevelopmentIncremental Income s/ 828,624 80,700 116,000 476,524

Lm :Imputed Value, Family Labor b/ 10,468 8,508 1,920 15,070Imputed Value, Management Services c/ 82,882 8,070 11,000 47,652Imputed Return to Own Capital d/ 60,se0 4,6e0 25,080 90,600Allowance for Risk/Uncertainty c/ 82,882 8,070 11,600 47,062

Sub-Total 180,198 15,498 50,200 201,891

Equals:Project Rent 187,081 21,212 5,600 274,048

Project Charge

Management Fee and Taxes J/ 26,8865 ,211 10,150 41,090Debt Service f/ 71,800 5,860 29,440 100,160Total Charge 99,695 8,501 89,590 147,840

Rent Recovery Index M) 9/ 8 40 so 54

During Project's Life h/Proj ect Rent 428,400 160,680 878,82 988,212

Project ChargesTaxes i/ 84,042 5,494 11,880 60,s86Interest and Loan Repayment j/ 201,600 80,184 180,807 4e8,161

Total Charge 285,642 91,078 191,697 519,017

Rent Recovery Index (S) 9/ 56 51 51 5s

Project Costa k/ 225,454 86,260 160,944 478,664

Cost Recovery Index (3) /I 106 106 115 108- -- ~~~~~~~~~~~~~~--- -- - ---- -- --- ---- --- --- - --

*/ 8aed on the Incremental Incom of farm families In the farm model analysis, beforededucting project charges and debt service.

b/ SOed on lnerementel labor valued at 80% of the market wage.c/ Ten Percent of net Incremental Incom.d/ On famlly Investment at Y28,818/ha assuming 12X rate of return to alternative uses.*/ 83 on management fto and 6.76% on special product taxes.f/ Assuming 19.24X ABC rate of Interest paid, 6 year grace periods and 15 year

repayment periods, all converted to 1968 values.g/ Project charges as a percent of project rent.h/ Exprss d as present values over 25-year project life discounted at 12X.1/ 6.75X on special product tax, 8X management fee end 8R of gross value of sale.j/ Assuming IDA fund onlendbd at 5.1 end local funds at 18X. Both for 17 years with

7 year grace, discounted at 12X.k/ Total project costs excluding former labor contribution, cost of support services

(repaid from service foe) and mrketing facilities (repaid from profit they generate).1/ Project chargs as a percent of project costs.

CHDIA

MM1-YAM=Z A88CLLUaAL. 0eVa.89,UI PROTr

TotaI Project

Economic Analee a: E -I nic Costs and Saafits */(Yan Iii i.on)

19 1991 1992 19I 19 1995 1996 1997 1998 1999 2000 2001 2002 2008 20O4 2006 2006 2007 2006 2009 2010 2011 2012 2013 2014

invetamnt Coeta

1. MM Orchards-citrus 62.9 68.2 46.7 27.1 4.3-Othar Fruits 12.9 17.2 1S.5 7.8 1.9Subtotal Naw Orckards 75.8 00.4 64.2 84.6 6.2SS. RAbab. Orchard 29.6 15.4 0.8 0.1

Subtotal Invetent Coats 106.4 9S.8 64.5 34.7 6.2

Smramntal Anual Costa

-citru 0.2 8.9 28.4 88.0 42.2 48.7 69.2 64.8 66.7 69.9 70.2 70.2 70.2 70.2 70.2 70.2 70.2 70.2 70.2 70.2 70.2 70.2 70.2 70.2 70.2-Othar Fruits 0.8 3.5 6.8 10.3 11.9 18.8 15.5 17.2 17.7 18.6 18.6 18.6 18.6 18.6 18.6 18.6 18.6 18.6 18.6 18.6 18.6 18.6 16.6 18.6 18.6-Rhab Orchards 1.1 2.6 3.2 3.9 4.8 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4 4.4

SUtotAl QOerting Cta 1.6 14.9 82.9 52.2 18.4 66.5 79.1 66.2 68.9 92.9 98.8 98.8 e8.3 96.8 98.8 93.8 98.8 98.8 98.8 98.8 98.8 98.3 es.3 9S.8 98.8

Taotl Costa 107.0 110.7 97.4 68.9 64.6 66.5 79.1 66.2 88.9 92.9 93.3 98.3 98.8 98.8 98.3 98.8 98.8 98.8 93.8 98.3 98.8 98.3 9 9.3 98.8 98.8

Sncr_ntal Sof Its

-Cietru 0.0 0.0 0.0 12.0 41.6 91.2 152.3 214.8 260.2 S88.1 187.8 413.2 424.9 481.6 436.7 441.9 446.5 446.8 449.0 449.0 449.0 449.0 449.0 449.0 449.0-Ohr Fruits 0.0 0.0 0.9 8.3 20.8 86.6 46.6 49.6 59.3 69.8 64.2 98.1 98.6 101.1 106.1 16.7 109.4 109.1 109.1 109.1 109.1 100.1 109.1 109.1- 109.1Rehab Orckards 0.0 6.4 18.4 24.2 12.6 42.5 52.2 60.2 63.6 63.6 64.6 64.8 64.6 6.8 64.8 64.6 64.8 64.8 64.8 64.6 64.8 64.8 64.6 64.8 64.6 C%

Total Danfita 0.0 6.4 17.8 44.6 94.6 170.8 25.1 824.6 408.1 471.2 6s6.6 57.1 66.3 S97. S 607.6 618.4 620.7 620.? 622.9 020.9 620.9 622.9 622.9 620.9 i.9 1

Not lneremental lanafita -107.0 -104.3 -o0.1 -42.4 29.9 10S6 172.0 228.4 814.2 878.3 448.5 477.8 495.0 604.2 514.8 520.1 3W7.4 529.4 529.6 529.6 529.6 529.6 529.6 529.6 529.6

Met Presnt Va lu 1.322eonomic Rats of Return 34.43

s/ Dati led analysis tf diffaraft variatfe, af citru and differant type f fruits ca be fund in the project files.

_ 77 -

Annex 3Table 7.2

CHINA

MID-YANGTZE AGRICULTURAL DEVELWPEEMT PROJECT

Suwuary of FRR for Citrus Sensitivity Analysis

........................ _._..__.__.____..___.................._....._

Price falls by 25% Price falls by 39%.. .. .......... .. ... .......... ...................... .........

NVP at 12% FRR NVP at 12% FRR(ljw9 Yuan) % (1989 Yuan) 0

. ... .... .. _.. ... _. ._. . . . . . . . . . . . . . . . . . . . . . . .

I. New Orchards

-Jinchenu 18,871 19 5.102 14-Valencia 16,793 18 3,464 13-Navel 46,026 27 27,251 22-MandarLn 14,420 17 1,123 12-Pomelo 3,024 13 (61788) 9

II. Rehabllitated Orchards

-Jincheng 40,589 33 29,583 28-Valencia 34,887 38 25,503 32-Navel 69,320 45 52,320 39.... _.........

- 78 -

Annex 3Table 7.3

CHINA

MID-YANGTZE AGRICULTURAL DEVELOPMENT PROJECT

Summary of Sensitivity Analysis-------- _--_--_---------------------------------_------___-------------__----___-----------_

Price Invest. Fert. Labor BenefitsBase falls costs costs cost lagCase by 20Z inc. 102 inc. 102 inc. 102 2 years

--------------------------------------------------------------------- __------__---------_---

I. New Orctards Economic Rate of Return (2)

-Sweet Orange 28.4 24.2 27.4 28.0 28.2 21.2-Valencia 33.8 28.9 32.5 33.3 33.5 24.4-Navel 39.5 34.0 38.1 39.0 39.2 27.8-Mandarin 25.9 21.5 24.7 25.5 25.6 19.1-Pomelo 24.6 20.4 23.8 24.0 24.4 18.3

Subtotal Citrus 32.0 27.3 30.8 31.5 31.7 23.3

-Lychee 29.5 24.4 28.2 28.9 29.2 21.1-Longan 22.1 17.7 21.0 21.7 21.9 16.2-Loqauts 22.1 18.1 21.4 21.5 21.7 16.6-Yellow Peach 44.8 38.0 43.0 44.1 44.6 29.6-Pear 26.5 21.0 25.3 25.9 26.2 18.3-Plum 33.4 28.9 32.5 32.8 33.1 24.6-Kiwi 37.0 31.7 35.5 36.8 36.7 26.2

Subtotal Other Fruits 34.2 28.2 32.8 33.0 32.6 25.0

Subtotal New Orchards 32.1 27.3 30.9 31.6 31.9 23.3

II. Rehabilitated Orchards

-Sweet Orange 45.2 38.5 42.8 44.7 - 30.5-Valencia 54.8 45.9 51.3 54.5 - 33.8-Navel 62.7 52.9 58.7 62.5 - 38.1-Yellow Peach 62.2 50.7 58.0 61.3 - 35.2

Subtotal Rehab. Orchards 48.7 41.2 45.9 48.2 - 31.8

Project 34.4 29.2 33.0 33.9 34.2 24.5

--.-------------------------------------------------- _-------------__--------__-------------

"I 112 PT1P74 P75" Totl "I P72 Total

Usit 53 ActuI SAN Actual SA ACual WA Actul WA A.t.* WA Aatal A3 Actua SO Actul SA Actal

t. M rellard It. fihbtaIltted Orebha*

Uothar Traabcm ha S 0 1 *24P*lg ll_ sm(U0 hs) h 4 4Citns ba 1100 1870 0 1224 0 4024 480 480

S_" 4 he 800 400 400 64 1754 140 140

Vaecl bh 5 go00 100 1100 220 220

11|"1 bh 200 470 480 480 I150 140 140

llumerla 'h 100 100Pemlo he 100 100

Lychea ha 150 0 200 2So 70 70

Leap ha 94 54

PIus ha 66e Pi=ua he so 1a6

Total Orcards ha 100 160 116 1424 0 00 600 C00

Mother-Troe Garde. h 2Q 26

_Oe Flood rasg ha 8 8

Citrs ha 700 690 670 0 0 20e0 240 240

we"a a,'"" he 480 420 410 1260VlwIeeb ha 140 200 200 50 240 240

Nvel ha 0o 0 omelo ha 70 70 so 200

Val le Pach bh 40 120 100 260 100 100

o tal Orcards ha 740 10 770 0 0 2820 840 s40

lNetar-Tre Cordes ha 70 70

GPM FPaid Uurry ha .5 86.5

Clt*u ha S5 646 05o 489 216ie 2e49 au OU to

S"eat OraPb ha 150 240 269 1o *4 on M00 M83 1m88valecla he M 10 I8O 6 44 4U

Haval ha 120 200 240 too me n0

Nasisria he 20D 800 S0

Vollaw rom" ha 170 227 170 Be? so

Lo"qut ha 6o so so 200 crI"Plu ha 20 27 20 6 l x

Peas ha so 6o so 200

Kil ha 40 58 40 188.

TotalTorar ha 36 1815 1009 4i9 210 86m 600 638 1688

Grand Total ha 2026 4005 2075 1668 216 11060 1040 688 2478

OWMA

MID-YANOTZ AORICIL7URAL DEVELOPMIT PROJECT

Kby Vonltoring Indiectorn - Irrigtion

Indiectore for Physical Unit m Pm2 pns PU4 P7Pr"r SR Act"aI SAR ActuI SM Act"aI SM Actul SR Actu"I SAR

I. lIe Orcharb

( SickunsDlliomi Pump, HOIprlnkl-ro he 110 13 120 142 60

Electrie Drip ha s0 20Elecric Pip, N lMprln&ler ha 1,JO0 1,'0 1,1#6 1,424 5,200Sub-TotaI ha 1,450 2,06U 1,510 1,36 5,10

awgl PbON ha 562 s0 01e 1,046Electric Drip ha 10 10Electric Pump, Mini Sprinkler ha 144 102 164 404Sub-Total h& 740 610 77o 2,520

tc) NubsD0n P.LPp, MM ha 69 1a5 100 44 22 83Electric Psp,661 ha 664 977 820 64 2,600Electric Pup, Sprinkler ha 1t 1?7 161 as 33 5O

Sub-Total 1,814 1,006 489 i16 3,765OD

II. Rehbiltte Orchards°

(a) SicuanDiesl Pip, INHMprinkler ha sO 50Electric Pump, llNlSprlniler ha 450 450Sub-Total ha 5O0 SW

(6) CkongIngDiesl Pm, IN ha 12 192Electric Pmp, Mini Sprinkler ha 48 4JSub-Ttot I ha 240 240

(c) HbASDWas#o Pump, INI ha 60 as 1iElectric Pimp,IN ha 600 626 1,225Eletric Pomp, Sprinkler ha 120 126 246Sub-Total ha 0 3 1,,W

III. tir Planting c

(a) SleaNursery be 1 1Planting Out ha 10 10

(b) Cboagqingmuarey ha 1Plasting Out ha 10 10

(c) HublNursery ha 1 1Plantlin Out ha 10 10

aunA

MID-YANTZE AGRICULTURAL DEVELVPMEMT PROJECT

Key Monitoring Indicators - Road

Indicators for Physical Unit Pi PY2 PY8 PU4 PY5 Total

Progres SAR Actual SAR Actual SM Actual SAR Actual SAR Actual SAR Actual

I. Nor Orchards

(a) Sichuan km 88 47 80 85 146

(b) Choning km 52 s6 54 162

(c) Hubei Iv 69 188 144 44 21 488

Sub-Total 174 241 229 T9 21 748

II. Rehabilitated Orchards

(a) Sichuan km 88 47 80 85 145

Totel 207 288 268 114 21 888

_ IOD

MID-YANGTZE AGRICULTtRAL DEVELOPMENT PROJECT

Key Monitoring Indicators - Packing and Storage Facillties

Indicators for Physicel Unit PY1 PY2 PYs PY4 PYs TotalProgreso SAR Actual SAR Actual SAR Actual SAR Actual SMR Actual SAR Actual

(a) Sichuan

Install of Packing Lines-St unit 0 12 8 1aInstall of Pecking Lines-St unit 2 2Construction for St lines unit 12 a 16Construction for St lines unit 2 2Storage construction 6002 a 3

(b) Chongqing

Initell of Pecking Lines-8t unit 1 1Install of Packing Linea-St unit 1 I oConstruction for at lines unit I IConstruction for St lines unit 1 1Storage construction 600.2 8 8

(c) Hubei

Inst ll of Pecking Lines-St unit 4Construction for St lIne unit 4Storage construction 8OO2 1

- 83 -

Chart 1

CHINA

Chart 1. Mid-Yangtze Agricultural Development Project

Implementation Schedule

198ga/ 1990 1991 1992 1993 1994 1995

Production

Land Development - -NurseriesBudwood Mother

OrchardsOrchard

EstablishmentOrchard

RehabilitationProcurement of

Inputs -- --

Marketing Facilities

Procurement ofLines

Installation ofPackinS Lines -

Constructlionof Storage

Institutional Support

Domestic Training ----------- … --International

TrainingTechnical

AssistanceEquipment

Procurement

Reporting

Semi-AnnualProgress Reports - - - - - - - - - - _ - - - - - - - -

Mid-Term Review

a/ From June 15, 1989 under retroactive financing arrangement.

- 84 -CEAR? 2

CHINA

MID-YANGTZE AGRICULTURAL DEVELOPMENT PROJECTProject Organization

Project LdTing Group (PLO)

_ _ _ _ _ _ _ EScientific a*noTechnical Co mittee

JoTnC ProJect Zbnavaaont r- - - (SIC)Offc ( JPUO) B Jng o

l~~~~~~~~~~~~~~~~~~~~~~

Provincial Fruit Dcv. Provincil ProJct Provnc STC F Corporation PFDC Managemt Office (PHO)

I II I -I l Prefecture PLO

Prof cture PllOI (Sichuar. Only)

r r------- Cunt PMO ------- ^

| County Fruit Dov - -- --- - - nty PlO County mTCLCorporation C CC I

Legend:

… - - - -…Coordination and adviseAdministrative Function

- 85 -

Chart 2EaplaUstiom

Provincial PRO (cont'd)CENTRAL

market.ingPLO: - Review and approve lower level PMO

work plansFormulate project policies at - Monitor physical andall levels financial progressFacilitate p r o j e c t - Coordinate and supervise projectimplementation implementationResolve implementation problems - Review technical specifications

- Undertake LCBJPMOs - Liaise with JPMO regarding ICB & LIS

- Prepare detailed accounts and progress- Plan, coordinate project reports for review by JPMO

activities - Prepare withdraval appalications to- Implement project with IDA through JPMO

provincial, prefecture andcounty PMOs COUNTY

- Liaise with projectjurisdictions CFDC:

- Arrange procurement under ICBand LIB - Implement nurseries component

- Implement overseas training and - Prepare feasibility reports for

TA production component- Prepare accounts, audits and - Implement orchard establishment and

progress reports rehabilitation on behalf of- Prepare project completion beneficiaries

report - Operate packing lines, transpor-tation- Forwardwithdrawal application1s and storage facilities

to IDA and progress reports - Coordinate marketing with PFDC- Assist beneficiaries in provision of

PROVINCICL inputs and technical advice- Undertake LCB procurement

PFDC*PEO:

Provide market information toCFDC - Implement project policies as agreedCoordinate interprovincial by PLGdomestic marketing and exports - Develop work plans in cooperation withProvide services to CFDCs CFDC

- Resolve project implementation

PHD. problems- Prepare annual budgets aad work

Draw up annual detailed work program in cooperation withprograms and budgets County PMO (cont'd)Assist FDCs to undertake fruitdevelopment and CFDCs

-. Prepare progress reports, accounts andaudits

- 86 -Chart 23xplanation

SCIENTIFIC & TECHNICAL COMIHTTDE

- Provide technical advice toPLGs, JPMO, PHOs, and FDCs atall levels

- Advise on varietal developmentand quality aspects

- Planning of institutionaldevelopment, particularlyoverseas training and TA

- Meet periodically to reviewtechnical project parameters

.

CHIM POa'.Um mumIDUL. FOR gSJ f AM SUA1TIAS Kid-Yangtze Agricultural 9evelopeent Project

a. ~~~~~ .'90 . 91 *92 Va

a & | ICB | 5-8 17.7 _-|

,jdPebtiieer & L B1-|a;lt Peti -. iii i5-=III]11i-§

co, IiCB 19.7

par-ka- No.-

Pakg IO. 4 OD 09*a""^o r

2nd yra. Fertilizer & CB 5.8 o"Fmaticides

Materials LB 1.

Package No. 6'lt y6e Fiat5tttg LC 0. m

Materials aB .

&fas yr,a.wung LCB 0.9 "MD-Msterlils CU

Materials c 0.

Oranic Pettil zer Direct mm M.dS sin buses Putch. 11.2 A.vml

Computers Lia 0. Office Frurnture & & 0.4 -- *-

equipment LS

T0TtA L 70.9 ee.eoai.

aVWdUSUm O FIVN%U*)M,OACW W g 0OCe* N14 es O4UOWUMef14

s.in Ms.1iin1I IOWAEI14

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