world bank documentdocuments.worldbank.org/.../pdf/multi-page.pdfxinjiang's arid lands for crop...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 15439

IMPLEMENTATION COMPLETION REPORT

CHINA

XINJIANG AGRICULTURAL DEVELOPMENT PROJECT(CREDIT 1764-CHA)

MARCH 15, 1996

Rural and Social Development Operations DivisionChina and Mongolia DepartmentEast Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EOUIVALENTS

US$ 1.00 = Yuan 3.70 (1986 appraisal)US$ 1.00 = Yuan 3.70 (1987 -1989)US$ 1.00 = Yuan 4.72 (1990)US$ 1.00 = Yuan 5.22 (1991)US$ 1.00 = Yuan 5.38 (1992)US$ 1.00 = Yuan 5.45 (1993)US$ 1.00 = Yuan 8.70 (1994 onwards)

WEIGHTS AND MEASURES

1 meter (m) = 3.28 feet (ft)1 kilometer (km) = 0.62 miles

1 hectare (ha) = 2.47 acres1 mu = 0.067 ha

1 ton (t) = 1,000 kg= 2,205 pounds (lbs)

1 kg = 2.2 pounds (lbs)

FISCAL YEAR

January 1 - December 31

ABBREVIATIONS AND ACRONYMS

ABC Agricultural Bank of ChinaBSF Bureau of State FarmsCC Coordinating CommitteeCNMIEC China National Machinery Import and Export CorporationICB International Competitive BiddingIDA International Development AssociationLCB Local Competitive BiddingMOA Ministry of AgricultureMOF Ministry of FinancePO Project OfficePU Project UnitXAITC Xinjiang Agriculture, Industry and Trade CorporationXFIMO Xinjiang Foreign Investment Management Office

FOR OFFICIAL USE ONLY

CONTENTS

Preface ..............................................Evaluation summary . .................................... ii

Part I. Project Implementation Assessment ........ .. ............A. Project Objectives .............................. 1B. Achievement of Project Objectives ..................... 2C. Major Factors Affecting the Project .................... 4D. Project Sustainability ............................. 5E. IDA Performance ............................... 6F. Borrower Performance ............................ 7G. Assessment of Outcome ........................... 7H. Future Operation ............................... 8I. Key Lessons Learned ......... .. . .. . . .. . .. . . .. . .. . 8

Part II. Statistical Tables ............ . ............... .. .. . . 101. Summary of Assessment ........ .. . . . . .. . . . . .. . . . . . 102. Related Bank Loans/Credits ........ . . . . . . . . . . . . . . . . . 123. Project Timetable .......... .. .. . .. . .. .. . .. .. . .. . 134. Credit Disbursement: Cumulative Estimated and Actual ..... . . 135. Key Indicators for Project Implementation ...... . . . . . . . . . 146. Key Indicators for Project Operation ...... . . . . . . . . . . . . . 207. Studies included in the Project ....... . . . . . . . . . . . . . . . . 208A. Project Costs ........... ... . ... .. .. .. . .. ... . . . 218B. Project Financing .......... .. .. . .. . .. .. . .. .. . .. . 229. Economic Costs and Benefits ........ . . . . . . . . . . . . . . . . 2210. Status of Legal Covenants ........ . . . . . . . . . . . . . . . . . 2311. Compliance with Operational Manual Statements ..... . . . . . . 2512. Bank Resources: Staff Inputs ........ . . . . . . . . . . . . . . . . 2513. Bank Resources: Missions ........ . . . . . . . . . . . . . . . . . 2614. Role of Women in Project ......................... . 2715. Project Staffing ................................ . 28

Appendices A. Mission's Aide Memoire ........ . . . . . . . . . . . . . . . . 29B. Borrower's contribution to the ICR ...... . . . . . . . . . . . . 31Map: IBRD 27019

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed wiLhout World Bank authorization.


CHINA


Preface

This is the Implementation Completion Report (ICR) for the XinjiangAgricultural Development Project in China, for which an IDA Credit (Credit 1764-CHA)in the amount of SDR 57.3 million was approved on March 3, 1987 and made effectiveon January 7, 1988.

The credit was closed on December 31, 1994, two years behindschedule, following extensions granted in May 1992 and December 1993. Finaldisbursement took place on April 26, 1995, at which time the balance of SDR 303,869was canceled. Total disbursements amounted to SDR 57 million. Cofinancing ofA$750,000 was provided by the Australian International Development Assistance Bureau;in addition, the Danish Trust Fund financed some technical experts as part of projectsupervision.

The ICR was prepared by a team comprising W.P. Ting(Agriculturalist) and Li Qun (Consultant). The ICR was reviewed by J. Goldberg, Chief,EA2RS and Z. Khan, Acting Project Advisor, EA2DR. The borrower providedcomments that are included as an appendix to the ICR.

Preparation of this ICR was begun during the Bank's final supervisionmission in August 1994. It is based on the material in the project file and meetings withproject staff in the field. The borrower contributed to the preparation of the ICR bycontributing views and data requested, its own evaluation of the project's execution, andcomments on the draft ICR.

- ii -


CHINA


Evaluation Summary

Project Objectives

1. The main objective of the project was to increase agricultural productivityand farm incomes in Xinjiang, one of the poorer and less developed areas in China,through investment in irrigation, rural infrastructure, and agricultural support serviceson state farms. It was intended to serve as a model for more productive use ofXinjiang's arid lands for crop and livestock production. The project was particularlydesigned to assist ethnic minority herdsmen in raising livestock and provide productiveemployment for women. The main activities to be supported were: (a) construction ofirrigation and drainage on 27,842 ha for food, fiber and fodder crops; (b) improvementof 25,450 ha of rainfed pasture through fertilizing, fencing and seeding; (c) introductionof new and improved animal breeds; (d) construction of agro-processing facilities forvegetable oil, wool processing, slaughterhouses, raisin production, tannery and durumwheat processing; (e) procurement of equipment for agroprocessing, combines, balers,scrapers, bulldozers, etc.; and (f) construction of a training center and implementationof training programs for project personnel, plant managers, equipment operators, andfarm workers.

2. The objectives were generally well designed, spelled out in the projectdocumentation, and supported by all the stakeholders. Similarly, they appropriatelyreflected the Government's implementation capacity and were consistent with both theGovernment's development strategy and the Bank's Country Assistance Strategy at thetime of preparation.

Implementation Experience and Results

3. The project substantially achieved the objective of agricultural growth anddiversification in Xinjiang, and partially achieved secondary goals related to training.

4. In terms of physical targets, the project has achieved and, in many cases,exceeded the targets set out in the project documents. For example, total land clearingand levelling amounted to 21,824 ha, in excess of the original target of 18,200 ha; eightagro-processing plants were constructed, against an initial plan of seven factories; anda total of 583 km of roads and 744 km of transmission lines were constructed, well inexcess of the targets of 193 km and 303 km, respectively. A small shortfall occurredwith the grassland component, where 1,716 ha of irrigated land were developed against

- iii -

a target of 2,700 ha, and 5,067 ha of land were seeded against a target of 10,000 ha.Most of the completed works were of good quality and in compliance with nationalstandards for safety, health and environment.

5. In terms of agricultural output, yields and production levels for most cropswere well above the planning assumptions used at appraisal. For example, the totalannual yield of wheat increased during the project period by about 22,106 tons in Bole(with a unit yield of 3.8 t/ha, which was 7 percent higher than appraisal estimates),5,661 tons in Hami/Turpan (with a unit yield of 4.5 t/ha, which was 28 percent higherthan appraisal estimates), and 4,773 tons in Emin (with a unit yield of 3.8 t/ha, whichwas 7 percent higher than appraisal estimates. The other project crops, including cotton,grapes, rapeseed, and beets, registered similarly impressive gains. The revised economicrates of return (ERRs) for the consolidated agricultural activities in the four project areasare higher than the appraisal estimates, ranging from 21 percent for Zhaosu/Yining(against an appraisal estimate of 13 percent) to 31 percent for Bole (against an appraisalestimate of 23 percent).

6. However, the livestock development program encountered someimplementation problems as a result of the impact of the disastrous weather in the wintersof 1992-1994, and the topsoil disturbance on newly developed land. The incrementalannual fodder production increased during the project period by about 6,006 tons in Boleand 16,900 tons in Emin, with unit yields of 3.5 t/ha and 3.8 t/ha, respectively, wellbelow the appraisal estimate of 6.0 t/ha. The ERR for the livestock and grasslanddevelopment component in Zhaosu amounted to 21 percent, while the ERRs for thepasture development components in Bole and Emin were negative because of the lowpasture yields.

7. Overall, the agro-processing factories have performed well and have mettheir expected production targets and rates of return. However, some of the factoriesexperienced initial problems with raw material availability, changing market conditions,and adequate working capital. The high rate of domestic inflation prevailing during thesecond-half of the project, particularly for local building materials and equipment,increased local counterpart funding requirements and affected the timely completion ofsome of the project investments. Most of the plants were characterized by limitedtechnology transfer and relatively poor physical design. A few of the plants have yet toreach their designed output levels, while the Yili wool spinning plant has a problem ofproduct overstocking due to market fluctuations. The revised ERRs for the plants rangefrom 16 percent for the Yili tannery to 25 percent for the Emin seminola plant.

8. The training program supported under the project has only been partiallysuccessful, for two reasons. First, as in many projects in China, the implementingagency was reluctant to use "hard" loan funds to finance "soft" capacity buildingactivities; as a result, only about 20 percent of the training funds were utilized. Second,the construction of the training center was delayed for several years, which slowed the

- iv -

delivery of training courses in technical, managerial, and financial aspects of projectimplementation.

9. The project closing date was extended twice, as a result of the delays inthe implementation of the training program, delays in securing the necessary counterpartfunding to complete construction of some agro-processing plants, and the redesign ofsome of the agro-processing factories in response to changing market and economicconditions.

10. IDA's performance in identification, preparation, and appraisal of theproject is viewed as satisfactory to highly satisfactory. IDA's performance in supervisionwas also satisfactory, although the project would have benefitted from more frequentsupervision visits. In 1995, after completion of the project, the Bank undertook a reviewof its operations in Xinjiang in response to allegations that the Tarim Basin Projectinvolved the use of forced labor. The Bank concluded that while the XinjiangAgriculture, Industry and Trade Corporation (XAITC) is responsible for administeringsome prisons and adjacent farms on behalf of the central Ministry of Justice, XAITC isimplementing Bank projects without the use of forced labor.

11. The borrower's performance in project preparation and implementationwas also generally satisfactory, though some aspects were deficient: there were frequentchanges of key management staff at project management offices, which underminedeffective supervision of project activities; periodic coordination problems among thePlanning Bureau, Financial Bureau, and the XAITC; and shortages of counterpart fundsand working capital, which affected timely completion of civil works and commissioningof agro-processing plants.

Summary of Findings, Future Operations, and Key Lessons Learned

12. Overall Finding. The project, which was conceived at the time whenagricultural reforms were beginning to be introduced in the state farm system throughoutChina, has played an important role in promoting key reforms in Xinjiang, such as theintroduction of the production responsibility system and dissemination of new agriculturaltechnologies. As reviewed above, the actual land development areas and crop yieldsgenerally exceeded appraisal estimates. In particular, excellent results were obtained inthe reclamation of alkaline/saline wastelands through the use of sprinkler irrigationcombined with cultivation measures, which resulted in substantial cost savings andeconomic benefits. While grassland irrigation areas and pasture yields were belowappraisal estimates, the quantity and quality of sheep and cattle production was good andgenerated high returns for households. The agro-processing component also performedwell, despite some initial problems with financing and market changes.

13. The project's outcome is viewed as satisfactory, since the first and mostimportant objective of agricultural growth and diversification in Xinjiang was achievedwith a relatively high degree of sustainability. As a result of the overall strong

v

performance of the agriculture and agro-processing activities, the project has contributedto a significant increase in sectoral productivity and household incomes. The overallproject ERR is estimated at 27 percent, significantly above the SAR estimate of 18percent. Overall, the project had a fairly strong developmental impact through theprovision of scarce investment funds for the expansion of agricultural production andvalue-added processing in a poor, underdeveloped part of China. The project is notviewed as highly satisfactory because of the limited achievements of the pasturedevelopment program and training activities and the delays in project implementation.

14. Project Impact. The crop and livestock activities supported under theproject have particularly benefited ethnic minorities and women. Living standards ofminority people on project farms are now higher than those outside the project areas.In Zhaosu, minority livestock farmers are able to follow a more settled life instead ofmoving animals between winter and summer grazing areas. This new pattern not onlyhas contributed to more efficient fattening of livestock but also has saved scarce labortime that minority households have redeployed to other income generating activities.Women have also played an important role in project implementation. They accountedfor 40 and 30 percent of all crop, pasture, and livestock production in Bole and Zhaosu,respectively; and 51 percent of all crop production in Emin and 46 percent of all grapeproduction in Hami/Turpan. However, the participation of women in training programswas not as strong. For example, they only accounted for about 15 percent of theparticipants in crop training programs in Bole, Zhaosu, and Hami/Turpan.

15. Sustainability. The benefits generated by the agriculture, livestock, andagro-processing activities are likely to be sustained throughout the life of the project, asthe project beneficiaries have strong financial incentives to operate their investmentsprofitably, the macroeconomic framework is expected to remain relatively stable, andcommodity price forecasts indicate no substantial changes in world supply and demandconditions for project production. Therefore, XAITC will not be required to provide anysignificant technical or financial assistance in the future except for routine supervisionof project activities. However, the sustainability of a few of the agro-processing plants,such as Yili wool spinning, is less certain and will require closer monitoring by projectstaff. In addition, the sustainability of the institutional development activities isuncertain, in view of the limited achievements during the project implementation period.

16. Future Operation. The future operation of the project will not require anysignificant additional technical or financial assistance from XAITC, as most of the projectactivities have been developed and are operating profitably. XAITC's mainresponsibilities will be: (a) continued supervision of agriculture, livestock, and agro-processing activities; (b) provision of recurrent budgetary support as necessary tocomplete the livestock development program in Zhaosu, which suffered a set-back dueto three successive years of extreme winter conditions; (c) ensure adequate provision ofincremental working capital as agro-processing plants reach full production; (d) closemonitoring of the financial profitability of agro-processing plants and development of

- vi -

restructuring plans as required; and (e) preparation of an operational plan and costrecovery fee structure for the training center to ensure its efficient use in the future.

17. Lessons Learned. The main lessons learned from the project include thefollowing.

(a) In addition to written assurances obtained at negotiations from provincialand local governments that working capital and counterpart funding wouldbe made available to the project units in timely fashion, the estimatedannual amount of counterpart funding necessary for the project (togetherwith the assumptions from which these figures are derived) should beidentified and discussed with the Borrower at appraisal in order to ensurethat proper attention will be paid to project financing arrangements.

(b) The Borrower should solicit advice from technical experts during projectpreparation about the design of agro-processing sub-projects and selectionof agro-processing equipment. This will ensure greater technologytransfer and more efficient physical design.

(c) Both the Borrower and the World Bank should pay greater attentionduring project supervision to the construction and commissioning of wastewater treatment facilities for agro-processing sub-projects, in order toensure that the pollution control investments are implemented in line withthe approved designs.

(d) The Borrower and the World Bank should agree to a detailed training planduring project preparation, specifying the timing, quantity, focus, andperformance indicators for training activities. This will ensure that thereis agreement at the start of the project about the priorities and phasing oftraining activities.

(e) Greater effort is required in the marketing of project production,particularly in the areas of information gathering, analysis of supply anddemand, and aggressive promotion of products.


CHINA


PART I: PROJECT IMPLEMENTATION ASSESSMENT

A. PROJECT OBJECTIVES

1. The main objective of the project was to support the Government's policy to speedup the development of China's poorer provinces in the north and west. The project was intendedto expand the irrigated area for crop production, improve pastures, and promote livestockdevelopment on twenty-three state farms in northern Xinjiang Autonomous Region, one of thepoorer and less developed areas in China. The project was particularly designed to assist ethnicminority herdsmen in raising livestock and provide productive employment for women.

2. The main features of the project were as follows:

(a) Construction of irrigation works on 27,842 ha, of which 21,842 ha wereinitially uncultivated;

(b) Improvement of rainfed pasture on 25,450 ha through fertilizing, fencing andseeding;

(c) Provision of improved animal breeds and veterinary and livestock equipment,and construction of animal sheds;

(d) Construction of seven agro-processing plants and provision of equipment;

(e) Provision of farm machinery and construction equipment;

(f) Construction of housing, community facilities, and warehouses in newlydeveloped areas; and

(g) Local and overseas training and study tours.

3. The objectives were generally well designed, spelled out in the projectdocumentation, and supported by all the stakeholders. Similarly, they appropriately reflectedthe government's implementation capacity and were consistent with both the Govemment'sdevelopment strategy and the Bank's Country Assistance Strategy at the time of preparation.

- 2 -

B. ACHIEVEMENT OF PROJECT OBJECTIVES

4. As reviewed below, the project substantially achieved the objective of agriculturalgrowth and diversification in Xinjiang, and partially achieved secondary goals related to training.As a result of the strong performance of the agriculture, livestock, and agro-processingcomponents, the overall economic rate of return of the project is estimated at 27 percent, wellabove the appraisal estimate of 18 percent.

5. Physical Results. In terms of physical targets, the project has achieved and, inmany cases, exceeded the targets set out in the project documents. Total land clearing andlevelling amounted to 21,824 ha, in excess of the original target of 18,200 ha. Drainage canalswere developed on a total of 21,424 ha, close to the target of 21,800 ha. Eight agro-processingplants were constructed, against an initial plan of seven factories. A total of 583 km of roadsand 744 km of transmission lines were constructed, well in excess of the targets of 193 km and303 km, respectively. A small shortfall occurred with the grassland component, where 1,716ha of irrigated land were developed against a target of 2,700 ha, and 5,067 ha of land wereseeded against a target of 10,000 ha. In addition, livestock development was slightly beloworiginal estimates, with 115,592 m2 of sheds and pens constructed against a target of181,800 m2. The quality of most of the completed works was good and complied with allnational standards for safety, health and environment.

6. Agricultural Benefits. The irrigation component was successful in rehabilitatingand expanding irrigation schemes in Bole, Emin, Hami/Turpan and Zhaosu areas. The total costof the irrigation components was US$42.4 million or 32 percent of total project cost, comparedto the SAR estimate of US$37.4 million, representing an overrun of 13 percent. The projectincluded the construction of irrigation works on 17,362 ha of land for wheat, cotton and sugarbeet production in Bole; 3,517 ha for wheat and cotton; and 1,508 ha for grapes inHami/Turpan, all of which were initially uncultivated wasteland. The project also includedimproved irrigation on 5,533 ha of wheat, cotton and rapeseed in Emin.

7. In terms of agricultural output, yields and production levels for most crops werewell above the planning assumptions used at appraisal. However, as reviewed below, pastureareas and yields were below appraisal targets due to the impact of the disastrous weather in thewinters of 1992-1994, and the topsoil disturbance on newly developed land. The total annualoutput of wheat increased during the project period by about 22,106 tons in Bole (with a unityield of 3.8 t/ha, which was 7 percent higher than appraisal estimates), 5,661 tons inHami/Turpan (with a unit yield of 4.5 t/ha, which was 28 percent higher than appraisalestimates), and 4,773 tons in Emin (with a unit yield of 3.8 t/ha, which was 7 percent higherthan appraisal estimates. Similarly, annual cotton production increased by about 10,875 tons inBole (with a unit yield of 1.1 t/ha, which was 13 percent higher than appraisal estimates), and1,680 tons in Hami/Turpan (with a unit yield of 1.2 t/ha, which was 20 percent higher thanappraisal estimates). Annual grape production increased by 15,408 tons in project areas (witha unit yield of 15.1 t/ha, which was 25 percent higher than appraisal estimates).

8. Revised financial and economic rates of return (FRRs and ERRs) were calculatedfor the consolidated agricultural activities in the four project areas, based on actual yield,

- 3 -

operating cost, and price data. All of the revised ERRs are higher than the appraisal estimates,ranging from 21 percent for Zhaosu/Yining (against an appraisal estimate of 13 percent) to 31percent for Bole (against an appraisal estimate of 23 percent).

9. Animal Husbandry Benefits. The project constructed or improved pasture on8,667 ha in Emin and 1,716 ha in Bole. In Zhaosu, the project concentrated on establishing orimproving 15,067 ha of pastures and developing livestock (about 104,000 head of breeding sheepand cattle). The cost of the pasture improvement and livestock development componentsamounted to US$2.1 million and US$4.6 million, respectively, or 1.6 and 3.5 percent of totalproject costs, compared to the SAR estimates of US$2.2 and US$6.5 million, or 1.9 and 5.7percent of total project costs.

10. The yields and production levels for pasture were lower than appraisal estimates,because pasture was planted on newly developed land where the topsoil was disturbed duringland preparation. This was compounded by the impact of the severe weather experienced in thewinters of 1992-1994. The incremental annual fodder production increased during the projectperiod by about 6,006 tons in Bole and 16,900 tons in Emin, with unit yields of 3.5 t/ha and 3.8tJha, respectively, well below the appraisal estimate of 6.0 t/ha. Yields are expected to increasefurther with stabilization of the soil. The introduction of new, improved breeds of animals underthe project has led to some productivity gains in the sector. ERRs were recalculated for eachcategory of livestock production activity, using production input costs and output prices providedby the Project Management Office. The ERR for the livestock and grassland developmentcomponent in Zhaosu amounted to 21 percent, while the ERRs for the pasture developmentcomponents in Bole and Emin were negative because of the low pasture yields.

11. Agro-processing Benefits. The project financed the development of eight agro-processing plants (two wool processing plants in Emin and Yili, two tannery plants in Yili andEmin, an oil processing plant and slaughterhouse in Bole, a seminola plant in Emin, and a raisinprocessing plant in Hami), for a total cost of US$49.7 million, or 38 percent of total projectcosts. This compares to an appraisal estimate of seven plants for a total cost of US$26.8million, or 23 percent of total project costs. All agro-processing facilities were constructed inline with the original approved designs, except for the slaughterhouse proposed for Zhaosu.This sub-project was cancelled due to a limited supply of livestock resulting from the threesuccessive years of extreme winter conditions. Several plants have not yet complied withenvironmental control regulations related to waste water management.

12. Overall, the plants have performed well and have met their expected productiontargets and rates of return. However, some of the factories experienced initial problems withraw material availability, changing market conditions, and inadequate working capital. The highrate of domestic inflation prevailing during the second-half of the project, particularly for localbuilding materials and equipment, increased local counterpart funding requirements and affectedthe timely completion of some of the project investments. Most of the plants were characterizedby limited technology transfer and relatively poor physical design. A few of the plants have yetto reach their designed output levels, while the Yili wool spinning plant has a problem ofproduct overstocking due to market fluctuations. The agro-processing component has resultedin the incremental production of 7,500 tons of edible oil, 6,000 tons of processed meat, 500 tons

- 4 -

of raisins, 10,250 tons of seminola, 340,100 pieces of silk and wool sweaters, 75,090 pieces ofhide, and 100,000 pairs of leather shoes. The revised ERRs for the plants range from 16percent for the Yili tannery to 25 percent for the Emin seminola plant.

13. Project Impact. The crop and livestock activities supported under the project haveparticularly benefited ethnic minorities and women. Living standards of minority people onproject farms are now higher than those outside the project areas. In Zhaosu, minority livestockfarmers are able to follow a more settled life instead of moving animals between winter andsummer grazing areas. The traditional system has now been replaced by grazing the animalsin summer and stall feeding in winter. This new pattern not only has contributed to moreefficient fattening of livestock but also has saved scarce labor time that minority households haveredeployed to other income generating activities. Women have also played an important rolein project implementation. As reviewed in Table 14, women accounted for 40 and 30 percentof all crop, pasture, and livestock production in Bole and Zhaosu, respectively. Similarly,women accounted for 51 percent of all crop production in Emin and 46 percent of all grapeproduction in Hami/Turpan. However, the participation of women in training programs was notas strong. For example, they only accounted for about 15 percent of the participants in croptraining programs in Bole, Zhaosu, and Hami/Turpan.

C. MAJOR FACTORS AFFECTING THE PROJECT

14. Implementation Schedule. The project was scheduled for completion in December1992, five years after signing. The major irrigation component, the largest single expenditurecategory accounting for 32.4 percent of total base costs, was implemented more or less onschedule. There were, however, delays in the construction of agro-processing facilities due todesign changes in response to changing market and economic conditions, problems withavailability of counterpart financing, and late delivery of equipment. In addition, theconstruction of the training center was delayed, as detailed design plans were only finalized inmid-1994, and construction was completed in 1995. As a result of these delays, the closing dateof the credit was extended twice, for a total of two years.

15. Training and T.A. The training program covered a wide range of topics. A totalof 9,508 project staff at the Xinjiang Agriculture, Industry and Trade Corporation (XAITC),branch company, and state farm levels received training in technical, management, and financialaspects of project implementation. Forty-eight persons proceeded overseas to receive specializedtechnical training and about 400 project staff also participated in group meetings on projectrelated topics. Arrangements were made for local and overseas study tours for staff to learnadvanced technology and management systems for agroprocessing. However, the projectcompleted only part of the training originally planned, and only about 20 percent of the fundsallocated for training was utilized. This was largely due to the reluctance of the implementingagency to use "hard" loan funds to finance "soft" capacity building activities.

16. The Australian Government through the Australian International DevelopmentAssistance Bureau (AIDAB) provided A$750,000 to the project to build capacity in the followingareas: sheep management, wool processing, meat processing, shearing, wool classification, andwool handling. AIDAB-funded experts also assisted in finalizing the specifications and bid

documents for three processing facilities (which led to substantial redesign of the originalproposals) and in designing several key livestock activities, including pastures, fencing, andsheep breeding and ram requirements. The training and assistance provided by AIDAB was wellreceived by the project staff and enhanced the livestock program.

17. The project also benefited from technical specialists provided by the Danish TrustFund. Review of the facilities and equipment for embryo transfer was undertaken by an embryotransfer specialist. An abattoir specialist reviewed the design of the Bole abattoir and a livestockspecialist evaluated livestock and feed production, disease control and management in the projectarea. In addition, technical assistance and training were also provided in grain breeding andseed production, as well as planning for a breeding station for grain and legumes. Thesetraining activities were successful.

18. Procurement. Preparation of bid documents, bid invitation, evaluation and awardwere carried out by the China National Machinery Import and Export Corporation (CNMIEC)in cooperation with XAITC. The bulk of the equipment was purchased through InternationalCompetitive Bidding (ICB), which presented a few administrative problems. By the end of1994, some 60 contracts procured through ICB were signed. The number of internationalcontracts signed on basis of other procurement methods (including for breeding stock, wherespecific genetics were critical) amounted to US$5.9 million. The balance of the equipmentpurchased was procured through local competitive bidding (LCB) and shopping because the sizeof the contracts was too small to justify ICB. Overall ICB procedures resulted in satisfactorysupply of equipment.

19. Disbursement. The pattern of disbursements was fairly close to appraisal estimates,although the credit closing date was extended for two years to permit continued disbursementfor a few remaining activities. Total disbursements amounted to US$76.8 million, which washigher than the original credit amount of US$70.0 equivalent, due to depreciation of the USdollar against the SDR.

20. Credit Allocation. The actual allocation of funds by expenditure category were byand large, as anticipated, with a small reallocation of consultants' services and training fundsto accommodate an increase in civil works, and equipment and materials costs.

D. PROJECT SUSTAINABILITY

21. The benefits generated by the agriculture and livestock activities are likely to besustained throughout the life of the project, as the project beneficiaries have strong financialincentives to operate their investments profitably, the macroeconomic framework is expected toremain relatively stable, and commodity price forecasts indicate no substantial changes in worldsupply and demand conditions for project production. Therefore, the project implementingagencies will not be required to provide any significant technical or financial assistance in thefuture except for routine supervision of project activities. However, the government will needto continue to provide investment funds and recurrent budgetary support for livestockdevelopment in Zhaosu, which suffered a set-back due to three successive years of extremewinter conditions.

- 6 -

22. The agro-processing component is also likely to be sustainable, though the status ofa few of the plants, such as Yili wool spinning, is uncertain. The plants will need to continuallyimprove product quality, closely monitor changing supply and demand conditions in themarketplace, and be given sufficient autonomy in marketing, pricing, and personnelmanagement. In addition, they should ensure that all required waste water treatment systemsare fully operational by the end of the production testing period. All sub-projects will requireclose supervision by project staff and restructuring plans would have to be developed for anyof the plants that fail to become profitable after two or three years following commissioning.The firms should also be encouraged to implement enterprise reform measures in line with thetransition to a market economy, including the transformation of state-owned enterprises intoshare holding companies or joint ventures with foreign companies.

23. The sustainability of the training program is uncertain, in view of the limitedachievements during the project implementation period. An action plan should be prepared forthe operation of the training center to ensure its efficient use. In addition, an appropriate feestructure should be developed for the center to ensure adequate cost recovery.

E. IDA PERFORMANCE

24. IDA's performance in identification, preparation and appraisal of the project isviewed as satisfactory to highly satisfactory. This work was directly based on the Government'sdevelopment strategy, the Bank's country assistance program, the implementation experience ofearlier projects (the FY85 Second Agricultural Research Project and the FY85 Seeds Project),and detailed field work in Xinjiang. As a result, there was a fairly strong consensus betweenIDA and the Government about the overall objectives and design of the operation as well as theconditions necessary to ensure successful project implementation. During preparation andappraisal, IDA made a number of useful suggestions regarding equipment specification, trainingneeds, technical assistance, and marketing that strengthened the technology transfer elements ofthe project.

25. IDA's performance in supervision was also satisfactory. The nine missionsaccurately reported implementation progress; identified the key operational problems andprovided useful interventions and recommendations; paid close attention to the overalldevelopment impact of the project; and showed a high degree of flexibility in modifying projectarrangements in response to changing implementation conditions. Supervision missions madeparticularly important contributions in the following areas: improving the technical design andoperating efficiency of many agro-processing sub-projects, educating project staff on the needfor more rigorous analysis of market conditions, emphasizing the importance of training andtechnical assistance in dissemination of new technologies, requiring installation of suitable wastewater treatment systems in plants, and ensuring the adequate provision of counterpart fundingand working capital for project activities. Supervision staff were also instrumental in obtainingand guiding use of bilateral technical assistance from the Governments of Australia andDenmark, which markedly raised the level of technical expertise applied to projectimplementation. The project would have benefitted from more frequent supervision visits, whichwas not possible as a result of limited IDA resources available for supervision.

-7-

26. In 1995, after completion of the project, the Bank undertook a review of itsoperations in Xinjiang in response to allegations that the Tarim Basin Project involved the useof forced labor. The Bank concluded that while the XAITC is responsible for administeringsome prisons and adjacent farms on behalf of the central Ministry of Justice, XAITC isimplementing Bank projects without the use of forced labor.

F. BORROWER PERFORMANCE

27. The implementing agencies' performance in project preparation was satisfactory, asthey prepared a comprehensive feasibility study for the project that adequately covered technical,financial, economic, and institutional factors. Their overall performance in implementation wasgenerally satisfactory. Project staff at all levels were committed to the project objectives;implemented the components generally in line with the agreed implementation arrangements;responded effectively to changes in the macroeconomic and sectoral policy environment; andgenerally took appropriate action to redress problems as they occurred. Nonetheless, someaspects of their performance were deficient and required intervention from IDA supervisionmissions, as follows.

28. The coordination of project activities by XAITC could have been better. This wasin part due to the frequent changes of key management staff at the XAITC and Branch Companylevel. At times, the project was affected by coordination and cooperation problems among thePlanning Bureau, Financial Bureau, and XAITC. Lack of adequate supervision by XAITC ledto the use of some counterpart funds for activities outside the scope of the project, as noted inan annual audit report by the Xinjiang Audit Bureau. The funds were subsequently fullyrestituted by the concerned project unit. The project would have benefitted from more regularvisits by XAITC and Branch Company project staff. Some project units encountered problemswith the availability of counterpart funds and working capital, which affected timely completionof civil works and commissioning of agro-processing plants. Audit reports were received ontime, and as noted above, were candid and useful.

G. ASSESSMENT OF OUTCOME

29. The project's outcome is viewed as satisfactory, since the first and most importantobjective of agricultural growth and diversification in Xinjiang was achieved with a relativelyhigh degree of sustainability. The overall ERR of 27 percent significantly exceeds the SARestimate of 18 percent and is particularly impressive in view of the difficult weather conditionsand the changes in the macroeconomic policy environment during implementation. Overall, theproject had a fairly strong developmental impact through the provision of scarce investmentfunds for the expansion of agricultural production and value-added processing in a poor,underdeveloped part of China. The project is not viewed as highly satisfactory because of thelimited achievements of the pasture development program and training activities and the delaysin project implementation.

- 8 -

H. FUTURE OPERATION

30. The future operation of the project will not require any significant additionaltechnical or financial assistance from XAITC, as most of the project activities have beendeveloped and are operating profitably. As reviewed above, XAITC's main responsibilities willbe: (a) continued supervision of agriculture, livestock, and agro-processing activities; (b)provision of recurrent budgetary support as necessary to complete the livestock developmentprogram in Zhaosu, which suffered a set-back due to three successive years of extreme winterconditions; (c) ensure adequate provision of incremental working capital as agro-processingplants reach full production; (d) close monitoring of the financial profitability of agro-processingplants and development of restructuring plans as required; and (e) preparation of an operationalplan and cost recovery fee structure for the training center to ensure its efficient use in thefuture. In addition, the managers of the agro-processing plants will need to continually improveproduct quality, closely monitor changing supply and demand conditions in the marketplace, andbe given sufficient autonomy in marketing, pricing, and personnel management. In addition,they should be encouraged to implement enterprise reform measures in line with the transitionto a market economy.

31. IDA will continue to monitor the operation of project activities in conjunction withthe supervision of the Tarim Basin Project.

I. KEY LESSONS LEARNED

32. The key lessons learned from the project are summarized below.

(a) In addition to written assurances obtained at negotiations from provincial and localgovernments that working capital and counterpart funding would be made availableto the project units in timely fashion, the estimated annual amount of counterpartfunding necessary for the project (together with the assumptions from which thesefigures are derived) should be identified and discussed with the Borrower atappraisal in order to ensure that proper attention will be paid to project financingarrangements.

(b) The Borrower should solicit advice from technical experts during project preparationabout the design of agro-processing sub-projects and selection of agro-processingequipment. This will ensure greater technology transfer and more efficient physicalplant design.

(c) Both the Borrower and the World Bank should pay greater attention during projectsupervision to the construction and commissioning of waste water treatment facilitiesfor agro-processing sub-projects, in order to ensure that the pollution controlinvestments are implemented in line with the approved designs.

(d) The Borrower and the World Bank should agree to a detailed training plan duringproject preparation, specifying the timing, quantity, focus, and performance

- 9 -

indicators for training activities. This will ensure that there is agreement at the startof the project about the priorities and phasing of training activities.

(e) Greater effort is required in the marketing of project production, particularly in theareas of information gathering, analysis of supply and demand, and aggressivepromotion of products.

(f) Budgetary resources for supervision should be increased to ensure effective periodicmonitoring of project activities.

(g) A strong and effective director of the project management office and continuity ofproject staff at all levels are essential for successful management of the project.

- 10 -

PART It: STATISTICAL TABLES

Table 1: SUMMARY OF ASSESSMENT

Achievement of Objectives Substantial Partial Negligible Not apRlicable

Macro policies _X_

Sector policies _X_

Financial objectives _X_

Institutional development _X_

Physical objectives _X_

Poverty reduction _X_

Gender issues X

Other social objectives X_

Environmental objectives _X_

Public sector management _X_

Private sector development _X_

Other (specify)

B. Project sustainabilitv Likely Unlikely Uncertain

X_

HighlyC. Bank Rerformance satisfactory Satisfactory Deficient

Identification X

Preparation assistance _X

Appraisal _X_

Supervision _X

- 11 -

HighlvD. Borrower performance satisfactorv Satisfactory Deficient

Preparation _X_

Implementation _X_

Covenant compliance _X_

E. Assessment of Highly Un- HighlvOutcome satisfactory Satisfactory satisfactory unsatisfactory

_X_

- 12 -

Table 2: RELATED BANK LOANS/CREDITS

Loan/credit title Purpose Year of Statusl _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ______________________________ ap p ro v al

Preceding operations

1. Second Agricultural To expand and improve 15 FY85 CompletedResearch Project research centers responsible for(Cr 1516-CHA) priority research in food and cash

crops, aquatic products, forestry,hydrology and meteorologythroughout China, including apilot program to strengthen theextension work of ten county-levelagrotechnical extension centers.

2. Seeds Project To develop the seed industry by FY85 Completed(Cr. 1577-CHA) modernizing facilities at 18 seed

production, processing anddistribution centers, including thestrengthening of the National SeedCorporation's seed testing andcertification services. The projectwould also serve as a model forthe planned construction of over300 seed centers.

Following operations

2. Tarim Basin Project To increase agricultural FY92 On-going(Cr.2294-CHA) production and rural incomes in (closing

the Yerqiang and Weigan basins 12/97)through improvement of existingfarmland, efficient development ofunutilized wastelands andincreases in livestock production.

- 13 -

Table 3: PROJECT TIMETABLE

Steps in project cycle Date planned Date actual/latest estimate

Identification (Executive August 9, 1984 August 9, 1984Project Summary)

Preparation (preappraisal) September 12, 1985 September 12, 1985

Appraisal June 1, 1986 June 1, 1986

Negotiations January 12, 1987 January 12, 1987

Board presentation March 3, 1987 March 3, 1987

Signing September 14, 1987

Effectiveness June 1987 January 7, 1988

Midterm review December 1990

Project completion December 31, 1991 December 31, 1994

Credit closing December 31, 1992 December 31, 1994 1/1/ Last disbursement made Ap,ril 26, 1995.

Table 4: CREDIT DISBURSEMENT: CUMULATIVE ESTIMATED AND ACTUAL(US$ million)

FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95

Appraisal 4.8 21.0 44.0 67.0 70.0 - - -

estimate

Actual 5.7 19.1 37.2 48.0 57.9 71.3 75.3 76.8a/

Actual as % 143 91 85 72 83of estimate l

Date of final April 26,disbursement 1995

a! Higher actual disbursement in US dollar terms than estimated at appraisal was possibledue to depreciation of the US dollar against the SDR.

- 14 -

Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION

Key implementation indicators in Estimated ActualSAR/President's Report

I. Irrigation i) C _ __

Land Clearing and Levellinj 18,200 21,824

Bole (ha) 16,700 17,362

Hami (ha) 1,500 4,480

Tubewells 291 509

Bole (No.) 211 353

Hami (No.) 80 156

Drainage Canal 21,800 21,424

Bole (ha) 16,700 17,362

Hami (ha) 1,100 124

Zhaosu (ha) 4,000 3,767

Drainage Canal-Grape 400 963

Hami ('000m3 ) 400 963

Sprinkler Irrigation 5,800 5,533

Emin (ha) 5,800 5,533

Grape Cultivation 1,500 963

Hami (ha) 1,500 963

Trellis Construction 500 467

Turpan (ha) 500 467

Farm Roads 193 583

Bole (km) 143 493

Emin (km) 40 88

Hami (km) 10 2

ii) Grassland Irrigation

Land Clearing and levelling 2,700 1,716

Bole (ha) 2,700 1,716

Tubewells 29 49

Bole (No.) 29 49

Drainage Canal 2,700 1,716

Bole (ha) 2,700 1,716

- 15 -

iii) Electrification l l _l

Phone Lines 115 68

Bole (km) 115 68

Transmission Lines-lOkV 277 455

Bole (km) 214 381

Hami (km) 13 54

Zhaosu (km) 50 20

Transmission Lines-0.4kV 26 289

Bole (km) 26 289

Substations 35 1

Bole (No.) 31 a/

Hami (No.) 1 1

Zhaosu (No.) 3 -

H. Improved Grassland i) Improved Grassland

Fertilizer 10,000 n.a.

Zhaosu (ha) 10,000 n.a.

Seediny 10,000 5,067

Zhaosu (ha) 10,000 5,067

Fenciny 10,000 10,000

Zhaosu (ha) 10,000 10,000

ii) Fenced Grassland

Fence construction 34,700 34,833

Bole (ha) 2,700 1,716

Emin (ha) 8,700 8,667

Zhaosu (ha) 23,300 15,067

Seediny 2,175 2,175

Emin (ha) 2,175 2,175

III. Animal Husbandry i) Livestock

Cattle 320 n.a.

Emin (head) 3

Zhaosu (head) 212 n.a.

SheeR 115 n.a.

Bole (head) 25 122

- 16 -

Emin (head) 25 85


Others 260 n. a.

Bole (head) 90

Emnin (head) 60


ii) Sheds and Pen 181,800 115,592

Bole (m2

) 21,800 33,100

Zhaosu (m2) 160,000 82,492

IV. Agroprocessing i) Slaughterhouses

Buildings 22,800 2,403

Bole (m2 ) 12,900 2,403

Equipment 2 1

Bole (sets) 1 1

Zhaosu (sets) 1 -

ii) Wool Processing Plant

Building 51,500 20,736

Emin (m2) 19,550 20,736

Zhaosu/Yining (m2) 32,000 n.a.

Equipment 2 2

Emin (sets) 1 1

Zhaosu/Yining (sets) 1 1

iii) Vegetable Oil Processing Plant

Building 10,200 5,330

Bole (m2) 10,200 5,330

Equipment 1 1

Bole (sets) 1 1

iv) Raisin Processing Plant

Building 6,100 3,918

Hami (m2) 6,100 3,918

EQuipment 6 6

Hanmi (sets) 6 6

v) Seminola Plant

- 17 -

Building 6,000 6,200

Emin (m2) 6,000 6,200

Equipment 1 1

Emin (sets) 1 1

vi) Tannera l

Buildin2 - 4,790

Emin (m2) - 1,200

Zhaosu/Yining (m2) - 3,590

Equipment - 2

Emin (sets) - 1

Zhaosu/Yining (sets) - 1V. MachinerytEquipment i) Construction Equipment 75 92

Bole (sets) 64 86

Hami (sets) 11 6

________________________ |ii) Farm Machinery 859 1,693

Bole (sets) 527 1,010

Emin (sets) 65 55

Hami (sets) 47 190

Zhaosu (sets) 220 438

iii) Transportation Vehicles 136 224

Bole (No.) 97 161

Emin (No.) 9 7

Hami (No.) 11 47

Zhaosu (No.) 19 9

iv) Fuel Depot and Maintenance 576 134

Bole (sets) 573 134

Hami (sets) 3 -

v) Office and Laboratory 129

Bole (sets) 129 -

V]. Housing i) Housing and Ancillary Buildings 148,700 209,595

Bole (mi2) 140,700 170,282

Hami (m2) 7,250 30,760

Zhaosu (m2

) 750 8,553

- 18 -

ii) Storaze and Garage 138,000 145,250

Bole (m__ 30,100 73,931

Emin (m2) 14,000 14,000

Hamni (m) 87,000 53,699

Zhaosu (m2) 7,000 3,620

iii) Silage Bins 85,400 13,950

Bole (i 3) 3,400 9,500

Zhaosu (m3) 82,000 4,450

VII. Training Center Buildin - 8,000

Shihezi (mi) - 8,000

Equipment

Shihezi (sets)

VIII. Training Bole (man-months) 5,274 34,913

Emin (man-months) 440 35

Hami (man-months) 1,320 1,458

Zhaosu (man-months) 1,758 10,752

IX. Technical Assistance Bole (man-months) 6 6

Enin (man-months) 5 12

Hami (man-months) 2 -

Zhaosu (man-months) 5 1.5

X. Perfonnance indicators 1. Crops

i) Average Yields and Production

Bole

Wheat (t/ha; tons) 3.5 3.8

Beet (t/ha; tons) - 27.0

Alfalfa (t/ha; tons hay equivalent) 6.0 4.8

Cotton (t/ha; tons) 1.0 1.1

Pasture (t/ha; tons hay equivalent) 4.0 3.5

Emnu


Alfalfa (t/ha; tons hay equivalent) 6.0 3.8

Beet - 31.5

Rapeseed (t/ha; tons) 2.0 2.0

- 19 -

Hami


Grape (t/ha; tons) 12.0 15.1

Cotton (t/ha; tons) 1.0 1.2

2. Animal Products

Bole

Mutton (tons) 800 n. a.

Beef (tons) 825 n. a.

Pork (tons) 1,000 1,000

Wool (tons) 310 30

Hides (No.) 9,000 n.a.

Pelts (No.) 32,900 n.a.

Zhaosu

Milk (tons) - 17,300

Emin

Mutton (tons) 480 530

Wool (tons) 160 500

Hides (No.) 5,600 57,591

Pelts (No.) 17,100 32,805

Zhaosu

Mutton (tons) 14,900 749

Beef (tons) 865 225

Wool (tons) 340 366

Hides (No.) 13,200 n.a.

Pelts (No.) 62,400 n. a.

Note: a/ - financed using own funds.n.a.- not available.

- 20 -

Table 6: KEY INDICATORS FOR PROJECT OPERATION

Key operating indicators in SAR/President's Estimated ActualReport

1. BoleERR 23% 31.0%Yield (t/ha)

Wheat 3.5 3.8Corn 4.0 3.3Cotton (ginned) 1.0 1.1Alfalfa (hay equivalent) 6.0 4.8Pasture (hay equivalent) 4.0 3.5Beet 27.0

2. EminERR 14% 22.3%Yield (t/ha)

Wheat 3.5 3.8Rapeseed 2.0 2.0Alfalfa 6.0 3.8

3. Hami/TurpanERR 18% 27.6%Yield (t/ha)

Wheat 3.5 4.5Grape 12.0 15.0Cotton 1.0 1.2

4. Zhaosu/YiningERR 13% 21.1%Yield (t/ha)

Fodder crops 5.0 5.0

Table 7: STUDIES INCLUDED IN PROJECT

Study Purpose as defined at Status . | Impact of studyappraisal/redefined[ NOT APPLICABLE

- 21 -

Table 8A: PROJECT COSTS(US$ million)

Appraisal estimate Actual/latest estimate

Item Local Foreign Total Local Foreign Totalcosts costs costs costs

1. Irrigation 20.6 16.8 37.4 20.0 22.4 42.4

2. Pasture Improvement 1.2 1.0 2.2 0.7 1.4 2.1

3. livestock Development 3.6 2.9 6.5 2.8 1.7 4.6

4. Agroprocessing 6.7 20.1 26.8 20.6 29.1 49.7

5. Machinery & Equipment 0.0 17.1 17.1 1.9 14.8 16.6

6. Buildings 7.3 2.4 9.7 7.7 3.5 11.2

7. Training 0.7 0.8 1.5 0.2 3.9 4.2

Base Cost 40.1 61.3 101.3 53.8 76.8 130.6

Physical Contingencies 3.3 5.7 9.0 - - -

Price Contingencies 1.6 3.0 4.6 - - -

TOTAL 45.0 70.0 115.0 53.8 76.8 130.6

- 22 -

Table 8B: PROJECT FINANCING(US$ million)

Appraisal estimate Actual estimate

Source Local Foreign Local Foreigncosts costs Total costs costs Total

IDA 0.0 70.0 70.0 0.0 76.8 76.8

Central Government 22.0 0.0 22.0 22.0 0.0 22.0

XAITC and Branches 23.0 0.0 23.0 31.8 0.0 31.8

TOTAL 45.0 70.0 115.0 53.8 76.8 130.6

Table 9: ECONOMIC COSTS AND BENEFITS

Economic Rate of Return Appraisal estimate (%) ICR (%)

Project as whole 18.0 26.7

Bole component 23.0 31.0

Zhaosu component 13.0 21.1

Emin component 14.0 22.3

Hami/Turpan 18.0 27.6

Table 10: STATUS OF LEGAL COVENANTS

Covenant Present Original ful- Revised ful- DescriptionAgreement Section type status fillment date fillment date of Covenant Comments

Credit 3.0 1(a) 5 C The Borrower declares its commit- Project was satisfactorilyment to the objectives of the project executed under XAITCand shall carry out the projectthrough XAITC

3.01 (b) 5 C - Borrower shall carry out the project Project carried out as setin accordance with the forth in Creditimplementation program set forth Agreement.in Sch. 4 to the Credit Agreement.

4.01 (a) I C Maintain or cause to be maintained, Records and accountsrecords and accounts, adequate to maintained as required byreflect sound accounting practices. IDA.

4.01 (b) 1 C - 6/30 Furnish to IDA, as soon as Audit reports received foravailable, but in any case not later each calendar year.than six months after the end ofeach such year, certified copy ofauditors report.

Sched. 4 (1) 5 C - - Establish and maintain projectmanagement offices at three levels,with staffing, functions, andresponsibilities acceptable to IDA.

Sched 4 (2) 10 CP - - Carry out training program in Training program wasaccordance with schedule agreed delayed, which led towith IDA. project extensions.

Sched 4 (3) 10 C - - Submit feasibility studies foragroprocessing to IDA for review,including fimancial analysis that

Covenant Present Original flil- Revised ful- DescriptionAgreeimiient Section type status fillment date fillment date of Covenant Comments

demonstrates ERR and FRRsatisfactory to IDA.

Sched 4 (4) 6 CP - - Submit detailed proposal for waste While XAITC submitteddisposal for agro-processing plants waste disposal plans into IDA for review. timely fashion, these

environmental mitigationmeasures were notproperly implemented insome cases.

Sched. 4 (5a) 3 C - Funds for procurement of agro-processing equipment shall beprovided on terms and conditionsatisfactory to IDA.

Sched. 4 (5b) 3 C - Funds for state farms for landdevelopment shall be fullyrecovered through appropriatecontractual arrangements on termsequivalent to blended cost of allfunds.

Covenant types: Present status:

I= Accounts/audit 8 = Indigenous people C = covenant complied with2 Financial perfomiance/generate revenie from beneficiaries 9 Monitoring, review, and reporting CD = complied with after delay3 = l low and utilization of project funds 10 = Pro ject implementation not covcred in categories 1-9 C(P = complied with partially4 = Counterpart funding I1 = Sectoral or cross-sectoral budgetary or other NC = not complied with5 = Managcment aspects of the executing agency 12 = Sectoral or cross-sectoral policy/regulatory/6 = Environmental covenants institutional action7 = Involuntary resettlement resource allocation 13 = Other

n:\ea2ag\scobey\icrtabl O.doc

- 25 -

Table 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS

Statement number and title Describe and comment on lack ofcompliance

NOT APPLICABLE

Table 12: BANK RESOURCES: STAFF INPUTS

Stage of Project Planned Revised Actualcycle

Weeks US$ Weeks US$ Weeks US$

Preparation to n.a n.a. n.a. n.a. 92.0 n.a.appraisal

Appraisal n.a. n.a. n.a. n.a. 52.0 n.a.

Negotiations n.a. n.a. n.a n.a. 5.0 n.a.through Boardapproval

Supervision n.a. n.a. n.a. n.a. 110.6 n.a.

Completion n.a. n.a n.a n.a 4.2 n.a.

TOTAL 263.8 n.a.

Table 13: BANK RESOURCES: MISSIONS

Specialized Performance ratings 2/Stage of project Month/year Number of Days in the staff skill Types ofcycle persons field represented 1/ Implementa- Development problems

tion status objectives

Through 09/85 5 23 A,AP,E,I,LS. lappraisal . l

Appraisal 06/86 to 11 10 A,E,I,IE,LS. lthrough Board 03/87approval 3/ l

Supervision 1 09/87 2 7 A,IE. I I

Supervision 2 09/88 1 8 A. 1 1

Supervision 3 05/89 1 10 C. 2 1 Counterpartfunding

Supervision 4 10/89 1 7 IE. 2 1 Funding

Supervision 5 09/90 3 13 A,C,IE. 1 I Funding and a%training

Supervision 6 10/91 3 8 A,AP,IE. 1 I Funding and_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _train in g

Supervision 7 10/92 4 11 A,AP,E,LS. 1 I Funding and_______________ ________________ ~~training

Supervision 8 09/93 1 8 A. I 1 Project____________ ____________ _ funds

Supervision 9 08/94 2 6 A,AP. I 1 Funding andtraining

Completion A,E.

1/ Key to specialized skills: A = Agriculturalist, AP = Agroprocessing specialist, C Credit specialist, E = Economist,I = Institution specialist, IE = Irrigation engineer, LS = Livestock specialist.

2/ Performance ratings: 1 = problem free or minor problems, 2 = moderate problems, 3 = major problems.3/ includes Negotiations.

- 27 -

Table 14: ROLE OF WOMEN IN PROJECT

Proiect Area: Bole

Project Percentage women Percentage women Women access to Remarkscomponents engaged in project participating in credit

activity training

Crops 40 15 1665

Pasture 40 12 124

Livestock 40 36 36

Proiect Area: Zhaosu


activity training l

Fodder 30 15 450

Pasture 29 12 1200improvement

Livestock 30 12 51

Proiect Area: Emin


activity training

Crops 51 30 1400

Pasture 47 20 100improvement

Livestock 34 15 2

Project Area: Hami/Turpan


activity training

Crops 18 18 179

Grapes 46 43 1003

- 28 -

Table 15: PROJECT STAFFING

Project Area: Bole

Project Staff at appraisal New staff (incremental) Staff trainingcomponents Male Female Male Female Male Female

Crops 18 1 20 2 5 1

Pasture 18 1 20 2 5 1

Proiect Area: Zhanzu


Fodder 6 1 18 3 4 2

Pasture 4 2 8 2 5 3improvement

Livestock 6 - 8 2 4 1

Proiect Area: Emin


Crops 8 2 6 1 12 3

Pasture 4 - 2 - 5 -

improvement

Livestock 4 2 5

Proiect Area: Hami/Turpan


Crops 15 2 8 4 3 2

Grapes 17 2 23 5 18 6

- 29 -

Appendix A

SHANDONG AGRICULTURAL DEVELOPMENT PROJECT (SADP)AND

XINJLANG AGRICULTURAL DEVELOPMENT PROJECT (XADP)

AIDE MEMOIRE

April 13, 1995

1. A Bank Mission comprising of Messrs. El-Hanbali, Ting, and Ms. Li visitedShandong Province from April 11 to 13, 1995, to review the preparation of theImplementation Completion Report (ICR) for the above captioned projects. The mission wasunable to undertake a full ICR mission for the two projects and instead took the opportunityduring the supervision of the Irrigated Agriculture Intensification Project to meet with stafffrom Shandong and Xinjiang in Jinan, Shandong, for three days to review the preparationcompleted by the two provinces. Initially, the mission briefed the project staff from SADPand XADP on the new requirements for the ICR. The mission was briefed by project stafffrom the Shandong Project Management Office (PPMO), and Xinjiang Foreign InvestmentOffice (XFIMO), on the preparations they have already made for the ICR. The mission wasimpressed with the efforts made in preparing the ICRs and the completion of the tablesforwarded to the two provinces prior to the arrival of the mission. The mission would liketo thank the Shandong PPMO, for the excellent arrangements, courtesy, and hospitalityextended to the mission during their stay in Jinan.

2. Representatives from the three provinces of the Irrigated AgriculturalIntensification Project (IAIP) also participated in the above meetings to familiarizethemselves with the requirements for the preparation of their respective ICRs. A subsequentseparate follow-up session was organized to deal specifically with the requirements for thepreparation of the ICR for the IAIP.

3. The main points and actions which were discussed and agreements reachedduring the three days deliberations are summarized below:

a. the mission stressed the importance of preparing a good completionreport to highlight the excellent achievements and experiences gainedunder the project; the Bank ICR guideline should be used only as areference in the preparation of the ICRs, the ICR should be succinctand where appropriate supported by annexes/tables and an evaluationsummary. The mission stressed the importance of highlighting thepositive as well as negative aspects of the project;

b. the report should comment on the technical assistance provided to

- 30 -

XADP by the Australian International Development Assistance Bureau(AIDAB) the Danish International Development Assistance (DANIDA),and FAO/CP in the preparation of SADP;

c. the mission suggested the following areas which need to bestrengthened and/or where supplemental information is required:

i) project sustainability;

ii) key lessons learned;

iii) factors affecting implementation;

iv) future plans;

v) role of women and minorities;

vi) poverty alleviation;

vii) environmental issues;

viii) introduction of new technologies;

ix) operation and maintenance plans;

x) other social benefits; and

xi) details regarding irrigation development.

d. draft ICR prepared by the Bank is expected to be completed before July1, 1995, and will be forwarded to both project offices for theircomments in late June and comments back to the Bank by August 1,1995;

e. XFIMO and PPMO will finalize the preparation of their owncompletion reports and forward the reports to the Bank by June 30,1995.

- 31 - Appendix B

APPENDIX B: BORROWER'S CONTRIBUTION TO ICR

PREFACE

On December 2, 1983, Xinjiang Agriculture Industry and Trade Corporation (It isabbreviated to XAITC following) proposed the State Government to employ World Bank loansto implement "Agricultural Comprehensive Development Project." In October, 1984 and June,1985 the State Planning Commission, Ministry of Finance and Ministry of Agriculture sent twogroups to make on-the spot investigation, to the project. In September 1985, the experts ofWorld Bank appraised the project. In April 1986, the World Bank designated to makepreliminary estimates of the project in Beijing. In June the World Bank Evaluation Group wentthe project site to make a detailed evaluation. In July 1986 the XAITC submitted the Ministry ofAgriculture the first draft of "The Feasible Proposal of Xinjiang Comprehensive DevelopmentProject" which was examined and approved by the State ministries and Commissions concerned,and some suggestions were put forward. According to the suggestions, the XAITC revised andcompleted the proposal and submitted it to the Ministry in October. The State PlanningCommission officially ratified it on the document named Planning Arg. 1987 No. 613. TheChinese Government Delegation and World Bank officials held negotiations about the "ProjectEvaluation Report" and "The Loan Agreement" and reached up to identical views, the projectwas named "Xinjiang Agricultural Development Project", the amount of World Bank loan was57,300,000 SDR. The Project Evaluation Report and the Loan Agreement were submitted to theBoard of Directors of World Bank. In September 1987 two parties formally signed on theAgreement and from January, 1988, the project began to put into effect.

The account vith World Bank of the project is closed at December 31, 1994. Thedeadline of payment is April 30, 1995.

This project is the first large scale farms and animal husbandry comprehensive developingproject employed World Bank Loan. This project has introduced 1980s advanced technology andequipment and been training a large number of staffs of management and technology so as toefficiently speed up the farm and animal husbandry development and promote the modernizationof XAITC.

1. Project Evaluation

1.1 Project Objective

Xinjiang Agriculture Development Project has developed the agricultural production over20 State Farms in XAITC for expanding the crop irrigation area, adding farming machinery,

- 32 - Appendix B

improving the grass land and introducing the fine stud stocks and the processing equipment. Theobjectives of the project would be to cause a great advance in the agriculture and the livestock,and increase the added value so to promote the economics development of XAITC.

1.2 Project Description

The project includes the five sectors: 1) crops; 2) livestock; 3) by product processing; 4)transportation; 5) education. The contents describe as following:

1.2.1 To build 27842 ha. of crop irrigation system network for production of grain, cotton andforage grass.

1.2.2 Improving 25450 ha. of natural grassland by fertilizer applying, fencing and planting thefine variety herbage.

1.2.3 Introducing fine stud stocks.

1.2.4 To install processing plants, produce oil fat, fleece, meat, raisins and Durum wheat flour.

1.2.5 Improving two leather factories technically.

1.2.6 Purchasing the farm machinery and construction equipment.

1.2.7 Setting up the living houses, public facilities and storage house in this project area.

1.2.8 To organize a fleet or transporting the products from the project area.

1.2.9 Setting up the Shihezi Training Center.

1.2.10 Training at home and abroad and technical assistance.

1.3 Project achievement

The project has almost reached its objective. Besides the items of the Emin Durum wheatflour processing, Shihezi training center and fleet, most of the items of the project have beenfinished. At the end of 1994, the XAITC has checked and agreed to the 12 project units, in which95 percent of the project regarded as good quantity. The two leather factories, which are underinstallation and test, will be finished at June 1995. Emin factory is preparing the work for theacceptance and will finish at the end of 1995. From 1991 to 1993, Zhaosu livestock project washit by the continuous three years of natural disaster, however, the project unit has made theschedule to finish it when possible. (See the table about project achievement)

1.4 The deadline of project construction

The project was carrying out a five-year period and begins at January 1988. Due to thechange of the domestic market, the project has been adjusted by adding the new items of EminDurum wheat flour, Yili leather factory and Hami Cotton production. So we applied to the

- 33 - Appendix B

World Bank to expand more one year time to the project achievement. We also decided to set upShihezi Training Center by fully using the remaining loan for purchasing the equipment andmaterials. For to does the contracts better, the suggestion has been made to World Bank againfor another one more year, so the project actually took seven years of the achievement.

I.5 Disbursements

Up to April 30, 1995 the World Bank loan was disbursed 56,996,100 SDR, accounting for99.47 percent of project budget.

1.6 Organization structure

The project was set up by the XAITC that has three subsidiary organizational levels:XAITC, Branch and State Farm. Under the XAITC we have the project management office,which is in charge of planning and administration, organizational coordination, inspection,monitoring and equipment procurement for the project. The project finance and accountingadministration are responsible by the financial bureau under the XAITC. The transportation ofmachinery, equipment and material of the project are borne by the Material Bureau under theXAITC. Some equipment were procured under the procedures of international competitive bidby CMIOC. Some are on the basis of three price quotation or local procedure satisfactory to theWorld Bank. The XAITC had handed over the audit report and financial statement to the WorldBank according to the Bank's regulation annually.

1.7 Training and technical assistance

According to the requirement, the project has trained 9508 persons in special technologyand economic management, organized 12 special meetings, sent 15 study tour groups to abroad,and 41 persons trained in foreign countries, meanwhile 12 train group 48 persons had sent toabroad, 197 experts were invited from abroad and inner country taken the consultation lectureand demonstration for the project.

The XAITC have got 700,000 AD of grant from Australia Government through theassistance of the World Bank for livestock management, study tour to abroad, technical trainingand consulting. The assistance project was carried out by the Hassall & Associates company ofAustralia. They sent five experts to Xinjiang for technical consulting and training in the area ofBole, Emin and Yili. Organized three groups to inspect and study in Australia in the field oflivestock management, family farm, fleece grading and sheep raising. It has emerged a goodresult and given the great help to Xinjiang livestock's development.

1.8 Procurement and Technical Service

The project has done eight times of ICB, and also domestic limited bidding and directpurchasing, 115 contracts have been signed with total amount of 50 million USD, in which 66domestic contracts covers 16 million USD, making up 30 percent of the total, and 49 contractswith foreign country covers 36 million USD, accounting for 70 percent of the total. The 78

- 34 - Appendix B

contracts were made through the ICD with 48 million USD, making up 89 percent of the totalamount.

The project has purchased 254 sets of tractors, 1 703 sets of farm equipment, 103 sets ofconstruction equipment, 260 vehicles, 799 heads of stud stocks, 29040 tons of steel products, andalso 21 million USD was spent for processing equipment, test instruments and office facilitieswithin seven years.

As compared with the purchasing plan of the proposal, the project has exceeded theamount of equipment. The processing equipment (21.13 million USD) has been fulfilled by 130.8percent, the machineries and vehicles (18.73 million USD) by 122.3 percent, constructionmaterials (12.14 million USD) by 114.5 percent.

Basically all the goods have been transported and distributed on time and less damaged.According to the contracts, 197 experts and technicians have been invited to Xinjiang for theequipment installing, testing and consulting so as to guarantee the machineries with normaloperation.

2. Project effect evaluation

2.1 Project effect evaluation

The project, developed unused land and enlarged crop irrigation area, has appeared abetter circulation on agricultural production, especially for the crop rotation and nature utilization.Having improved the grass land and imported the fine standard livestocks has promoted the greatdevelopment in livestock. It has thoroughly changes the way of nomadic life into the settle down,raising the lamb in winter instead of in spring, has much reduced lamb mortality. With thegrassland improvement and the forage harvest mechanization, the output of the forage grass hasincreased greatly, so that it helps increase the breeding rate and high yield of fleece. The item ofgrape production has become the key industry to the XAITC. Adopting the advanced irrigationtechnology, it has benefited the agriculture a great deal by lowering the alkaline level and savingthe water.

2.2 The evaluation to the social and economical benefit:

The project has provided 16896 persons with jobs, including 5121 minority nationalities, itis the 30.3 percent of the total and 6794 women, it is the 40.2 percent of the total.

After the project implementation, the great changes have been taken into place in theproject area.

In Zhaosu, the housing condition and living standard of the herdsmen have been improved.Most of the families have been provided with lighting and drinking water. Their income hasincreased by 880 RMB per year in 1988 to 1860 RMB per year in 1993. In Bole, the cultivatedarea has been expanded by 1.5-3 times than before, it makes possible for crop rotations and cropstructure adjustment. The cotton planting area was enlarged from 8700 ha of 1987 to 17000 ha

- 35 - Appendix B

of 1994, which obtained 14 billion RMB of economical benefit. The income of the workers wasraised from 2010 RMB in 1987 to 3300 RMB in 1994. The project in Hami was a great success.It gives work opportunities to minority nationality women and makes their social status higherthan before as well as the output of grape has surpassed the original target. It gained 6 millionRMB in 1994.

The irrigation item in Emin achieved remarkable results. It can save water by 50 percent,the unit yield of crop was increased 50-80 percent. In short, the project has made an obviousachievement in expanding production and increasing farmer's income. At the final year, theproject has made 36,929 ton of grains, 14,479 ton of cotton, 3,490 ton of rapeseed, 42,361 ton offorage grass, 182,298 tons of grape, 7,500 ton of refined oil, 340,000 piece of sweaters, 10,250ton of Durum wheat flour, 6,650 ton of meat product, 100,000 pair of leather shoes. The IRR inthe original project proposal is 18 percent, but now is restimated at 23.92 percent.

3. Project sustainability

The XAITC has made the plan to continue the development of the project, although theproject has been most successful. First of all, the XAITC will be go on to help Zhaosu toaccomplish the livestock item according to the proposal. For the by product processing items, itis mainly to improve the sewage disposal system And look for the trade partners from foreigncountries to cooperate for production And selling. Now that the XAITC is under the reformingof the enterprise, will reform some good project enterprises into the stock system, so the projectwill have uninterrupted growth in the future.

4. Achievement from the World Bank

The World Bank has done a great deal of work during the project identification,preparation, appraisal and supervision and it made valuable suggestions to the project onequipment procurement, personnel training, technical assistance and marketing. The fact hasproved the evaluation to the project made by the World bank is scientific and realistic. During theproject implementation, the World Bank has sent the mission to Xinjiang every year for theproject inspection and monitoring. The officers of the World Bank mission worked hard and, theyconcentrated their attention to the report made by the project units and made useful suggestion tothe project by going down to the farm fields, pastoral area and construction site each time. It hasplayed a positive role to the project. Since the World Bank stressed time again that the projectshould devote the much attention to the training for women and minority nationalities, so theleaders at the levels put a great efforts in this aspect and made it successful.

5. Experience

With the eight years of project management, it is important to strengthen leaders at alllevels organizationally, to improve the managing regulation that are the guarantee of successfulproject.

- 36 - Appendix B

In order to implement the project smoothly, it is absolutely necessary to promote themanaging level by paying attention to the personnel training. As the World Bank suggestedseveral times, the project has only finished the part of the training programme. So it should be toset up the Shihezi Training Center at the very beginning of the project.

Being lack of the recognition of the restriction by the project condition each other, someitems of the project have not realized its estimated beneficial result, for instance, the livestockitem that needed longer time to develop and caused meat process factory to be short of rawmaterials seriously.

6. Problem and suggestion

Even though the project has brought up a number of administrative personnel who havedone their bit for the project, it is still need to pay much attention to the training programme, soas to serve the project more in future.

Some items of the project have not completed and some have not reached the goal of theevaluation, so the project administrative setup should not be canceled, and should be furtherstrengthened to manage the project continually.

The price inflation affected the progress and normal operation of the project due to theshortage of the domestic counterpart funds and working capital. So, the XAITC has been askedto put some funds to the project otherwise, it will suffer from the loss.

The total loan of the project is 56,966,100 SDR (US$ 76,000,000 equivalent), (RMB645,120,000 equivalent). Compare the plan of the project 57,300,000 SDR (US$ 70,000,000equivalent), (RMB 249,000,000 equivalent), for the change of the exchange rate between SDRand USD. USD and RMB caused 396,120,000 RMB of loss for the project and it has becomeheavier to the loan return and reduced the beneficial result of the project, so we hope that theWorld Bank can make the suggestion to the Ministry of Finance to compensate the project for theexchange rate loss.

MAP SECTION

IBRD 2701, .-. RUSSIA - 92 9

RUSS9AN FECERAInON N FED. CHINA

/CA;ea )EILO~GJ^~,R,1 1 :- ( X z} XINJIANG AREA DEVELOPMENT PROJECT

6mGnS*t, ..-> _,/*rfOr j- Ao vRe OPR OF ) ~ \_S /;/ > '> Farms and Companies in Project

niSiNJIA X . L - 1 9QeEA A Slate FarmsB.~.1g ~ 6~ ~OF Agro-Process.ng Fac.1mtes

SX njiang Agrcult.re, Industry and Trade Corporation.- W- x, C~~~~~~~~~~~~~~~~~~~~~~~~~- 8~~~~~ Branch Companies

OCEAN K <runs i ~ i Ha isohyels n Md1lmeters

E4' E4' _ _+_ /X<) \ <) \ _ Above 3,000

200 \, j JrBm.nay / ( g \ f t *\0 = u 500-3,000Below, 500

KAZAKHSTAN .11 Hbs - ConstructRaionoadsh A1 A 0\ 111 Radroad Under Constr.ct,on

lacirengA A13- ± ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Airports

Lakes and RiversTov,ns

'f <0 / Yum/ >zg/ \\ _ (@ ProumPce Captal

TGII /; ;?~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~100 .__ County '3oundaries

-- Province Boundaries

I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~s^ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~eenta Boundariess

1A6 6 4 1115 16Rd lr 1 2 Rotrxr Ar-Prcssn

MA56 \ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IiLOMETERS

Wenquan 9 56~~~~~~sa.n hi,:,Fu~

5',-3 8 B 9 167aw~ 18 Rocket 623 a5 2600 Nf Ji -Mc

tka

Gogia xeuae6

,-

E on. Ga orrpan s a 41H3eha

pb YeO^ a0o s" WlPwrig or8Lche resnor oreopnnc0 n_s -

F. u. rrn.vnT

A State Farms0 Agro-P,ocess,ng

176 6 84 d 165 16 Red Star #1 21 Red St.r $d I WoeS Pronessng ForMry 5 R-ie Rent1

2 77 7 86 12 166 17 Red Star #2 22 Red St.r Husbondry 2 * r.,g -h r m

on ,h,. 6~~~~~~~~~~ 8 en 13 167 16 Rocket 23 3 85et i rcsig uu EnrPoesnwere r~~~~.eornor d~~~ 82 9 96 t4 221 19 H.angluan=b. =d Sn. os Wee1 Proces-ig Focry 6 neArhe Proe-in0656 erdosinronn n inb.i.goin 63 tO 161 15 Nursery 20 Red Star #3

006,8 656 .ny in.nn,innnin~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~MY 99

IMAGING

Report No: 15439

Type: ICR

world bank documentdocuments.worldbank.org/.../pdf/multi-page.pdfxinjiang's arid lands for crop...

Documents